New Jersey Secures Agreement Safeguarding More Than $1 Billion in Federal Education Funding

A multistate settlement announced by Acting Attorney General Jennifer Davenport prevents the federal government from withholding congressionally mandated education funds from New Jersey schools, resolving litigation over the Trump Administration’s interpretation of federal civil rights law.

NEW JERSEY - Acting Attorney General Jennifer Davenport announced that New Jersey and a coalition of 19 attorneys general have reached an agreement with the Trump Administration that protects more than $1 billion in annual federal education funding for the state. The agreement resolves a lawsuit challenging the U.S. Department of Education's efforts to condition education funding on a new interpretation of Title VI of the Civil Rights Act of 1964.

Background of the Dispute

The lawsuit stemmed from an April 3, 2025, directive from the U.S. Department of Education, which informed state and local education agencies that they would risk losing federal funds unless they certified compliance with the Administration’s revised interpretation of Title VI regarding diversity, equity, and inclusion efforts.

New Jersey acknowledged compliance with federal law but declined to certify under the new requirements, arguing they were vague, contradictory, and unsupported by law. On April 25, 2025, New Jersey and other states filed suit, asserting that the funding threat violated the Spending Clause, Appropriations Clause, separation of powers, and the Administrative Procedure Act.

"The U.S. Department of Education’s nonsensical decision to cut off funds for our schools is an affront to hardworking families across our state, especially those in need of specialized education services,” said Governor Mikie Sherrill.

Settlement Terms

The agreement announced this week applies to New Jersey concerning relief previously obtained in the American Federation of Teachers litigation in which a federal court vacated the April 3 directive. Under the settlement, the federal government is barred from withholding education funds based on those conditions, and the multistate lawsuit is dismissed without prejudice.

The protected funding supports programs for students with disabilities, students from low-income families, multilingual learners, teacher recruitment and training, and services for children in foster care or without stable housing.

“Once again, we have turned back the Trump Administration’s unlawful attempts to threaten critical federal education funding to New Jersey. The agreement we’re announcing today ensures that the Trump Administration cannot cut off funding for our students — especially for students with special needs and other vulnerable youths — based on its misguided attack on programs that promote equal access to education in K-12 classrooms,” said Acting Attorney General Davenport. “Kids and teachers deserve these resources, and New Jersey taxpayers — who pay far more to Washington in taxes than they get back — deserve better than the constant attacks on their wallets and values by President Trump.”

“By securing this settlement, the multistate coalition is protecting more than $1 billion that directly supports students with disabilities, students from low-income families, multilingual learners, and other vulnerable children who rely on these programs every day,” said Acting Commissioner of Education Lily Laux. “This outcome preserves our school districts’ ability to focus on what matters most: creating safe, inclusive, and supportive learning environments where all students can thrive and achieve academic excellence.”

Multistate Coalition

Attorneys general from 18 other states joined New Jersey in the agreement, including California, New York, Massachusetts, Illinois, and Washington. State officials said the resolution ensures continued access to federal education dollars while clarifying that the vacated federal directive imposes no obligations on New Jersey schools or education agencies.

The agreement was formalized in federal court filings dated Feb. 6, 2026, concluding the litigation for participating states while preserving the underlying funding protections for New Jersey’s education system.

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