A multistate settlement announced by Acting Attorney General Jennifer Davenport will prevent the federal government from withholding more than $1 billion in annual federal education funding from New Jersey schools, resolving litigation over the Trump administration’s attempt to tie that funding to a new interpretation of federal civil rights law.
According to New Jersey officials, the agreement settles a lawsuit challenging the U.S. Department of Education’s effort to condition education funding on compliance with the administration’s revised interpretation of Title VI of the Civil Rights Act of 1964, particularly as it related to diversity, equity, and inclusion efforts in schools. State officials said the settlement ensures that the federal government cannot withhold those funds from New Jersey based on the now-vacated directive.
The dispute began with an April 3, 2025 directive from the Department of Education telling state and local education agencies they could risk losing federal money unless they certified compliance with the administration’s new Title VI requirements. New Jersey said it already complied with federal law but refused to certify under what it described as vague, contradictory, and legally unsupported conditions. On April 25, 2025, New Jersey and other states filed suit, arguing that the funding threat violated the Spending Clause, Appropriations Clause, separation of powers, and the Administrative Procedure Act.
Gov. Mikie Sherrill criticized the funding threat in a statement released with the settlement announcement, saying, “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.”
The agreement announced this week applies to New Jersey through relief previously obtained in the American Federation of Teachers litigation, where 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 has been dismissed without prejudice.
State officials said the protected funding supports a wide range of school programs, including services for students with disabilities, students from low-income families, multilingual learners, teacher recruitment and training, and programs for children in foster care or without stable housing.
Davenport said the settlement blocks what the state sees as another unlawful attempt to threaten critical school funding. “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,” she said. Davenport added that New Jersey taxpayers deserve better than repeated attacks on programs that support students and families.
Acting Commissioner of Education Lily Laux also said the settlement protects funding that directly supports vulnerable students and preserves districts’ ability to focus on safe, inclusive, and supportive learning environments. “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,” Laux said.
Attorneys general from 18 other states joined New Jersey in the agreement, including California, New York, Massachusetts, Illinois, and Washington. According to state officials, the resolution confirms that the vacated federal directive no longer imposes obligations on New Jersey schools or education agencies and preserves continued access to congressionally mandated federal education dollars.
The agreement was formalized in federal court filings dated Feb. 6, 2026, bringing the litigation to a close for participating states while preserving the funding protections New Jersey sought for its education system.