Eight States May Proceed With Challenge to Education Dept. Grant Cancellations, Judge Rules

Eight Democratic-led states may continue their lawsuit challenging a U.S. Department of Education policy that halted millions of dollars in teacher-training grants, despite a U.S. Supreme Court ruling that allowed the Trump administration to terminate the funding. U.S. District Judge Angel Kelley issued the decision Thursday, allowing the states’ claims to move forward in federal district court.

According to Reuters, the states argue the administration unlawfully ended the Teacher Quality Partnership and Supporting Effective Educator Development grant programs—initiatives they say are critical to addressing nationwide teacher shortages. The Trump administration sought to dismiss the case after the Supreme Court’s April ruling, asserting the dispute belonged solely in the U.S. Court of Federal Claims, which handles monetary claims against the federal government.

Kelley, presiding in Boston, agreed that recent Supreme Court holdings prevent her from ordering the government to reinstate the terminated grants, many of which provided support for teacher-preparation programs and diversity, equity and inclusion (DEI) efforts. However, she concluded the states may still challenge whether the Department of Education exceeded its legal authority when it eliminated the funding.

“If the states prevail,” Kelley wrote, “organizations that received grants that were terminated could file a new case before the Court of Federal Claims seeking money damages.” She emphasized that while the grants cannot be restored through her court, the states “are not without remedy.”

The litigation has already faced procedural turbulence. In March, U.S. District Judge Myong Joun issued a temporary restraining order requiring the government to reinstate the grants. The Supreme Court, in a 6-3 order, paused that ruling in April. Kelley noted that the court’s brief order created confusion in the lower courts, appearing to conflict with a 1988 Supreme Court precedent.

That uncertainty eased somewhat in August when the Supreme Court permitted the administration to proceed with cuts to National Institutes of Health grants linked to DEI and LGBTQ health-care research. Justice Amy Coney Barrett, casting the deciding vote, endorsed a “two-track” litigation approach that allows challenges to agency policies in district court while reserving monetary claims for the Court of Federal Claims.

Kelley relied on Barrett’s reasoning, saying the framework “preserves binding authority and upholds the systemic stability” of long-standing judicial doctrine.

The case is State of California et al. v. Department of Education, No. 1:25-cv-10548.