July 1, 2025
| States sue Trump administration for slashing $1B in school mental health funding |
| The cuts could lead to thousands of students losing key services. |
| By Madina Touré | 07/01/2025 01:08 PM EDT, Politico |
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NEW YORK — New York Democratic Attorney General Letitia James and the top prosecutors of 15 other states are suing the Trump administration for canceling over $1 billion in federal mental health grants in rural and low-income communities. The lawsuit, filed Monday in the U.S. District Court for the Western District of Washington, challenged the Education Department’s decision to cut funding for two mental health grant programs that Congress established and increased funding for in response to a series of school shootings, including a 2022 elementary school shooting in Uvalde, Texas. The lawsuit names the Education Department and Secretary Linda McMahon as defendants. The two programs have won bipartisan support. “These grants have helped thousands of students access critical mental health services at a time when young people are facing record levels of depression, trauma, and anxiety,” James said in a statement. “To eliminate these grants now would be a grave disservice to children and families in New York and nationwide.” The Education Department, which announced the grant terminations at the end of April, said the funding conflicts with the administration’s priorities. The attorneys general have argued that if the funding cuts proceed, it will lead to layoffs of hundreds of school-based mental health professionals and end services for thousands of vulnerable students. In the first year alone, nearly 775,000 students received mental or behavioral health services, the prosecutors said. Over 1,200 school-based mental health professionals were hired and 95 percent were retained. The coalition of attorneys general also represent Washington, Maryland, Massachusetts, Maine, Michigan, Colorado, Delaware, Illinois, Rhode Island, Oregon, New Mexico, Wisconsin, Nevada, Connecticut and California. A spokesperson for the Education Department did not immediately respond to a request for comment. The prosecutors are asking the court to deem the grant terminations unlawful, reinstate the funding and stop the agency from undertaking what they deemed ideological moves. A department official previously said that mental health grantees were violating the letter or purpose of federal civil rights law, including a policy of “prioritizing merit, fairness, and excellence in education.” How we got here: Congress established the Mental Health Service Professional Demonstration Grant Program in 2018 following the mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida. Two years later, Congress built upon that work with the School-Based Mental Health Services Grant Program to help schools hire and retain school-based mental health staff. In the wake of the 2022 shooting at Robb Elementary School in Uvalde, Congress boosted funding for both programs, appropriating over $100 million annually to each through 2026. The prosecutors contended that the cancellation of the funding undermines Congress’ authority and equity directive, according to the lawsuit. They also charged that it flouts the Administrative Procedure Act because of the lack of notice. Additionally, they accused the Trump administration of violating federal rules that dictate the continuation of grant awards. “Defendants concluded that, due to the alleged conflict with the current Administration’s priorities, Plaintiffs’ grants were not in the federal government’s best interest,” the lawsuit states. “However, defendants have never alleged, much less demonstrated, any performance issue which could serve as the basis for Plaintiffs’ discontinuances.” Why this matters: New York stands to lose at least $19 billion in previously approved funding if the cuts go through, including over $7.6 million for the State University of New York. SUNY Binghamton, for example, would be forced to pull mental health professionals from schools serving over 9,000 rural students — and lay off 10 full-time staff and several part-time employees and graduate assistants. “At a time when school-based mental health services are more important than ever, SUNY is proud that our campuses play a vital role in training mental health providers and we will vigorously defend this important work,” SUNY Chancellor John King said in a statement. |
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FEDERAL
(following is from the National Council)
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The following message is from FamiliesUSA:
Dear Health Advocates,
Earlier today, Senate Republicans narrowly passed their version of the budget reconciliation bill with the tie breaking vote cast by Vice President JD Vance. You can find a statement from our Executive Director Anthony Wright here, in which he said:
“This bill betrays the promises made by the President and by Senators to not touch Medicaid or slash away at our health care system and social safety net. This will not just leave 17 million more Americans uninsured, but harm the health and well-being of everyone as it will throw the budgets of their home states into crisis, and wreak havoc on hospitals and providers across the country.”
While House leadership hopes to call a final vote on their bill tomorrow, a number of House Republicans continue to voice concerns about the health sections of the bill that make deep cuts to Medicaid. Thus, it is imperative that we continue to fight against this harmful legislation:
- Take Action
- Call your members!
- (866) 426-2631 or (202) 224-3121 (Capitol switchboard)
- Don’t forget about district offices!
- For call scripts, see these resources compiled by our partner Community Catalyst.
Fasting Protest Webinar
Join FRAC, Families USA, Coalition on Human Needs, and other national organizations for a 30‑minute webinar on the #EmptyPlatesProtest (protestfast.org) — a national relay fast to oppose harmful cuts to Medicaid, SNAP, the Child Tax Credit, and other basic needs in the budget reconciliation bill. The webinar will be tomorrow, July 2 at 5:15 pm ET. We’ll update you on this campaign, discuss the reconciliation bill, spotlight the moral impact of these cuts, and give you practical ways to get involved — from pledging to fast, to spreading the word, to contacting your elected officials.
New and Updated Resources
Families USA has compiled a section by section breakdown of the Senate-passed version of the bill.
For fact sheets, materials, and ways to get and stay engaged, see our Defending Medicaid page. For a detailed analysis of what all 50 states are at risk to lose, see this new resource from Manatt.
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Senate Budget Reconciliation Bill Sacrifices the Well-Being of Working Families to Give Tax Breaks to Billionaires |
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This statement can be attributed to Isha Weerasinghe, Director of Public Benefits Justice at the Center for Law and Social Policy (CLASP). Washington, D.C., July 1, 2025—The budget reconciliation bill passed today by the Senate on a vote of 51-50, with Vice-President Vance casting the tie-breaking vote, will cause significant harm to millions of children and families, all for the sake of providing more tax breaks for the wealthy. The bill includes substantially more funds to accelerate the devastating immigration enforcement actions that are tearing families apart and undermining the safety and well-being of vulnerable children, including those who are U.S. citizens and asylum seekers. The Senate’s version of the bill contains deeper cuts to Medicaid than the version passed by the House last month, excludes many lawfully present immigrants from eligibility, and expands the House’s work requirement to include some parents, which will cause millions more people to lose health insurance. This means that children and seniors, along with millions of middle-class and working families, people who need long-term care, and those who live in nursing homes will be at risk of losing their health insurance. An estimated 17 million people will lose health insurance, and 8 million people will be at risk for losing food assistance–in the same bill that gives tax breaks to billionaires and corporations. In addition to these harmful Medicaid cuts, the bill also adds dangerous provisions to the Supplemental Nutrition Assistance Program that will restrict access, tighten eligibility, and shift major costs from the federal government to states, potentially forcing them to end their SNAP programs entirely. This represents a major threat to the health care and food assistance that millions of families depend on for their health, well-being, and stability. The bill also denies immigrants key federal benefits like Medicaid and SNAP that they contribute to, and creates barriers for them to apply for legal or permanent status by raising fees. The bill will also cut off access to the Child Tax Credit for an estimated 2.6 million U.S. citizen children simply because their only caregiver(s) lack a Social Security number. The Institute on Taxation and Economic Policy indicates that, under this bill, the wealthiest households in the country will see an average tax cut of about $65,000, while the households with the lowest incomes will only receive an average tax cut of $110. This disparity is particularly stark, given that this bill does nothing to support the needs of families with low incomes who are especially harmed by the lack of affordable child care and increased cost of living. The Senate bill also affects college affordability and the financial well-being of students by limiting student loans for programs and eliminating repayment options for new borrowers facing economic hardship or unemployment. The bill would also restrict access to Pell Grants for over 4.4 million students, making it harder for students with low incomes to cover costs and finish their programs. The bill will now go to the House, whose leadership has made it clear that they will push it through as quickly as possible to meet a self-imposed July 4th deadline. Given the disregard for children, workers, immigrants, and families shown in the House’s reconciliation bill, provisions targeting the most vulnerable are likely to remain intact. Like the House bill, the Senate’s version will harm the health, security, and well-being of communities across the country. CLASP urges House lawmakers to reject this damaging bill and focus on policies that prioritize workers, children, and families over billionaires. ### |
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Good list of Medicaid and other provisions in the Senate bill that is now with the House from Modern Healthcare:
Medicaid
Creates work requirements for working-age adults who do not have disabilities or dependents starting no later than the end of 2026. The Health and Human Services Department would be required to issue guidance on implementing the policy by the end of this year. Beneficiaries would have to document at least 80 hours a month of work or other qualifying activities. The CBO estimates the provision would reduce spending by $326 billion.
Bans new state provider taxes and cuts existing ones to from 6% of a provider’s net patient revenues to 3.5% over several years. The bill also tightens standards for what provider taxes are legally permissible, and bars most states from using state-directed payments to order Medicaid managed care companies to reimburse providers more than 100% of Medicare rates. States that haven’t expanded Medicaid under the Affordable Care Act of 2010 would be able to pay up to 110% of Medicare. Combined, the measures would cut federal spending by $275 billion.
Orders states to maintain updated information on Medicaid enrollees, such as verifying addresses and removing deceased people from the rolls. It would save $17 billion.
Requires eligibility redeterminations every six months for adults covered under the ACA Medicaid expansion, generating savings of $63 billion.
Establishes a $50 billion fund for rural hospitals and community health centers over five years.
Mandates cost-sharing up to $35 per service for Medicaid expansion enrollees with incomes above the federal poverty level, which is $15,650 for a single person in the contiguous states and slightly higher in Alaska and Hawaii, starting in October 2028. That is projected to reduce spending by $7.5 billion.
Limits retroactive provider reimbursements for newly enrolled Medicaid recipients to one month instead of three. It is expected to save $6 billion.
Reduces federal Medicaid funding to states that use their own tax revenue to cover undocumented immigrants through Medicaid. The provision would cut spending by $11 billion.
Caps Medicaid payments for emergency services provided to migrants in expansion states, saving $29 billion.
Bars Medicaid payments for most legal migrants in the U.S., generating savings of $6.2 billion.
Prevents Medicaid payments going to large healthcare providers that offer abortion services for one year, which targets the Planned Parenthood Federation of America.
Permits states to apply for waivers allowing home- and community-based services for more people, at a cost of $6.6 billion.
Medicare
Increases Medicare physician reimbursements 2.5% in 2026, but drops a House proposal to peg future payment updates to the Medicare Economic Index. The one-year increase would cost $2 billion, instead of $8 billion under the House-passed bill.
Triggers Medicare cuts under the Statutory Pay‑As‑You‑Go Act of 2010 that could include reductions in provider reimbursements. CBO projects that under the House bill, the White House Office of Management and Budget would have to curtail Medicare spending by $45 billion in 2026 and $490 billion from 2027 to 2034 because the House bill added $2.3 trillion to the deficit. The Senate bill adds $3.3 trillion to the deficit, but a revised estimate was not available.
Prevents most immigrants, including most asylum recipients, from getting Medicare benefits, saving $5 billion.
Does not include a delay in $16 billion in cuts to Medicaid disproportionate share hospital payments for three years.
Health insurance exchanges
Prevents premium tax credits from being provided to most migrants and disallows them for enrollees whose status is in doubt, which would save $130 billion.
Institutes stricter eligibility and income verifications for exchange subsidy recipients and requires new checks for low-income enrollees with zero-premium plans.
Allows health insurance companies to demand premium payments before beginning coverage and to remove customers who are in arrears, regardless of income.
Ends eligibility for tax credits during special enrollment periods.
(Those three provisions combined would reduce spending by $213 billion, but because some people would be impacted by all those provisions total savings would be reduced by $79 billion.)
Other provisions
Telehealth services would be covered under high-deductible health plans without cost sharing, at a cost of $4.3 billion.
Health savings account eligibility would be expanded and funds could be used to pay for direct primary care arrangements, costing $6.4 billion.
Partial measures
Provisions delaying rules on nursing home staffing, enrollment in the Medicare Shared Savings program, and easier enrollment in Medicaid and the Children’s Health Insurance Program were allowed by the Senate parliamentarian only for the portions of the regulations that have not yet gone into effect. The savings have not been estimated.
Several immigration provisions restrict eligibility for Medicare, Medicaid and the exchanges by limiting access to legal permanent residents and a few other categories of people. These measures were modified after the Senate parliamentarian ruled stricter versions out of order. New estimates on the savings are not yet available.