Alliance Alert: The ongoing uncertainty surrounding federal funding for school-based mental health services highlights how fragile our system remains for children and young people. Early identification and support are among the most effective ways to prevent mental health and substance use challenges from becoming more serious, yet schools continue to face workforce shortages, growing demand, and unpredictable funding that make it harder to provide these critical services. New York has made important investments in expanding youth mental health supports, but sustained federal and state commitments are essential to ensure every child can access timely, voluntary support before they reach a crisis.
As policymakers continue to debate the future of behavioral health funding, it is more important than ever for advocates, providers, families, and young people to stay informed and engaged. At the Alliance for Rights and Recovery’s Annual Conference, we’ll feature several workshops examining the latest federal and state policy and funding changes affecting mental health and substance use services, including discussions on how these decisions will impact children, families, schools, and communities. Join us to learn how we can work together to strengthen early intervention, expand access to support, and build a behavioral health system that supports young people long before they need emergency or crisis services.
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Judge Blocks Trump’s Mental Health Funding Cuts As AGs Sue Again
By Ethan Geringer-Sameth | Crain’s Healthcare | July 30, 2026
A federal judge issued a temporary restraining order on Monday blocking the Trump administration’s latest attempt to terminate school-based mental health program funding.
The decision mirrors a similar ruling in December after the administration first tried to rescind more than $100 million in annual grants to school districts nationwide. While the funds are safe for now, school leaders in New York say the whiplash cut attempts could disrupt school district budgets that have already been approved for the fall.
New York and a coalition of 14 other states sued the U.S. Department of Education earlier this month to stop the cuts, which included $19 million earmarked for SUNY and other New York school systems, according to Attorney General Letitia James’ office. That lawsuit came months after another federal court issued a permanent injunction in a similar case brought by the states last year.
Despite the injunction in the previous case, the administration sought to end the funding again earlier this month by “terminat(ing),” rather than “discontinu(ing),” the grants, a distinction the states attorneys general argued did not change the legality of the cuts. On Monday, U.S. District Judge Kymberly Evanson of Washington’s Western District sided with the states in the latest lawsuit, finding they would likely prevail in challenging the cuts as “arbitrary and capricious” in violation of the federal Administrative Procedure Act.
“It is unlawful to make funding decisions for approved multi-year Grantees by evaluating their original grant applications against new unpublished priorities not in effect at the time that the Grants were approved,” Evanson wrote, summarizing the previous ruling.
Students’ mental and emotional health has been a growing concern for school districts across the state, particularly since the pandemic. Schools in New York received a flood of money from federal Covid-19 relief funding and increases in state aid to improve school-based services, but worry over the mental health of students remains high. A 2024 survey from the Council of School Superintendents, which represents nearly all superintendents in the state, found 67% were “high(ly) concerned” about student mental health, the most of any category.
Robert Lowry, the Council’s senior finance and policy analyst, said the timing of the cuts, coming after voters approve school district budgets in May, could leave schools scrambling to pay staff.
“The prospect of any of these funding sources being cut would be a concern and it’s especially disturbing that this would happen so late,” he said.
“Presumably they’ve made plans…(for) the coming school year, so it would be very disruptive,” Lowry added of the school districts.
The bulk of school mental health services are conducted by psychologists and social workers. The state under Gov. Kathy Hochul has also poured millions into mental health “first aid” training for students.
Funding for school psychologists and social workers is crucial, in part because of the pressures of a limited pool of mental health workers in the state, Lowry said.
Unlike teachers, mental health clinicians are in demand far beyond the education sector, making school districts’ ability to pay competitive salaries critical, he explained. “Whatever schools can get to help pay for mental health services, we’re grateful for, there’s a huge need.”