California is in the middle of one of the busiest stretches of education litigation in its history, with active lawsuits over transgender student privacy, in-state tuition for undocumented students, special education grants, school construction equity, and student data privacy, alongside several recently resolved fights with the Trump administration over federal funding. The latest California education lawsuit news is dominated by a February 2026 case in which a federal judge blocked the U.S. Department of Education from cutting $4.9 billion in annual school funding over the state’s gender identity disclosure law.
$4.9 Billion Blocked Over Transgender Student Privacy
On January 28, 2026, the U.S. Department of Education notified California that the state and some local school agencies were out of compliance with the Family Educational Rights and Privacy Act (FERPA) and demanded they adopt “pro-parental notification approaches” regarding students’ gender identity.1Courthouse News Service. California Sues Trump Administration Over Demand to Let Schools Disclose Students’ Gender Identity The target was California’s AB 1955, a state law that bars school districts from requiring staff to disclose a student’s gender identity to parents without the student’s permission.2Politico. Bonta Sues to Block Trump Funding Threat Over Student Forced Outing Law Education Secretary Linda McMahon alleged California had “egregiously abused” its authority by pressuring districts to “keep quiet” about transgender students.
Attorney General Rob Bonta sued on February 11, 2026, in the U.S. District Court for the Northern District of California. The state argues that FERPA covers educational records, not general information about a student’s identity, and that conditioning $4.9 billion in annual school funding on compliance with the federal demand is unconstitutional.3EdSource. California Challenges Trump Administration’s Threat to Withhold $5 Billion Over Gender Identity Disclosure The same day, U.S. District Judge Noël Wise issued a temporary restraining order blocking the federal government from withholding the funds while the case proceeds, and ordered the parties to confer on next steps.4Courthouse News Service. Feds Blocked From Cutting $4.9 Billion From California Schools Over Transgender Policy The case remains active.
DOJ Challenge to In-State Tuition for Undocumented Students
On November 20, 2025, the Department of Justice sued California in the U.S. District Court for the Eastern District of California, seeking to invalidate state laws that provide in-state college tuition, scholarships, and subsidized loans to undocumented immigrants. The complaint targets Assembly Bill 540, passed in 2001, and parts of the California Dream Act, arguing they conflict with a 1996 federal statute that bars postsecondary education benefits for people without legal immigration status unless the same benefits are offered to U.S. citizens regardless of their home state.5Los Angeles Times. Trump Sues California Over In-State Tuition for Undocumented Students
The DOJ said California’s policies “discriminate against American students and families” and “create incentives for illegal immigration.”6U.S. Department of Justice. Justice Department Files Complaint Challenging California Laws Providing State Tuition A spokesperson for Governor Gavin Newsom called the suit “meritless, politically motivated.” The University of California said its policies are “consistent with current legal standards.”5Los Angeles Times. Trump Sues California Over In-State Tuition for Undocumented Students The New York Times reported it was the third lawsuit the Justice Department had filed against California in a single week.7New York Times. UCLA Undocumented Students Tuition DOJ Lawsuit California
Special Education Grant Terminations
In September 2025, the Department of Education’s Office of Special Education Programs terminated 25 grants totaling more than $14.8 million under Part D of the Individuals with Disabilities Education Act, plus nine grants worth over $3.5 million through the Rehabilitation Services Administration. The department pointed to a lack of alignment with administration priorities, specifically language related to diversity, equity, and inclusion.8Disability Scoop. Trump Administration Yanks Funds From Dozens of Special Education Programs
Four California programs lost about $3.5 million in annual funding. The California Department of Education’s special education teacher training program was cut over a commitment to hiring staff “reflective and representative of the communities served.” San Diego State University lost funding for a goal to “increase the diversity of the enrolled candidates.” Cal State Los Angeles’s Braille training program was terminated for promoting “culturally responsive teaching,” and a second San Diego State program lost its grant for covering “cultural humility” in orientation modules.9EdSource. California Faces Federal Funding Cuts for Special Ed Teachers, DEI Targeted California had been awarded a five-year State Personnel Development Grant in 2022 totaling $10.5 million, with funding ended after three years.10K12 Dive. Three States Sue Over Special Education Teacher Training Grants
California, Rhode Island, and Wisconsin sued in the U.S. District Court for the Northern District of California on June 9, 2026, alleging the department violated the Administrative Procedure Act by skipping required notice-and-comment rulemaking and relying on unpublished policy priorities. The case (No. 3:26-cv-05549) is active, with no substantive rulings as of mid-June 2026.11Civil Rights Litigation Clearinghouse. State of California v. United States Department of Education
School Construction Equity: Rodriguez v. California
Not every active case involves Washington. In October 2025, 14 students, parents, and teachers from low-property-wealth school districts filed Rodriguez v. State of California in Alameda County Superior Court. The suit challenges how California hands out roughly $4 billion in school modernization funds under Proposition 2, the $10 billion construction bond voters passed in 2024.12EdSource. School Renovations Funding Lawsuit California
Plaintiffs come from districts including Salinas City Elementary, San Bernardino City Unified, Stockton Unified, and Coachella Valley Unified. They argue the state’s “first-come, first-served” application process and its 40 percent local matching requirement favor wealthy districts with larger tax bases and more administrative capacity, creating wealth-based discrimination the state constitution’s education guarantee forbids.13Public Advocates. School Facilities and Modernization, Miliani Rodriguez v. State They want the court to halt the current distribution system and replace it with a sliding-scale formula tied to local property wealth.
A 90-minute preliminary injunction hearing was held on May 27, 2026, before Judge Patrick McKinney. He did not rule from the bench, saying he was “torn” between the case’s potential merits and worry that freezing $4 billion in grants would stall necessary repairs in both wealthy and low-wealth districts. A ruling is expected in June 2026 and a trial in early 2027.14IJPR. Parents Say California Is Spending More on School Upgrades in Wealthy Districts
i-Ready Student Data Privacy Class Action
In December 2025, parents Lila Byock and Nicki Petrossi filed a putative class action against Curriculum Associates, the maker of the i-Ready education software used in K-12 classrooms. The complaint alleges i-Ready collects detailed behavioral, demographic, and technical data from students, including race, gender, disability status, and time on task, and shares that information with third-party advertising and marketing companies without parental consent. Claims are brought under the Federal Wiretap Act, the California Invasion of Privacy Act, and other state consumer protection and privacy statutes.15The Guardian. California Parents Sue i-Ready Student Data16EdTech Law Center. M.C. v. Curriculum Associates
Curriculum Associates denies selling student data or using it for advertising, and says consent is obtained through contracts with schools and districts. The company filed a motion to dismiss in February 2026, and the plaintiffs filed their opposition in April 2026. The case is pending. Curriculum Associates holds a $20 million contract with the Los Angeles Unified School District, which has committed over $1.6 billion to edtech firms since 2022.15The Guardian. California Parents Sue i-Ready Student Data
Recently Resolved Federal Funding Fights
Several of the biggest fights that filled headlines through 2025 have now closed, most in California’s favor.
The $939 Million Freeze
On June 30, 2025, the Department of Education froze more than $6 billion in formula grants nationally for programs covering migrant children, English learners, teacher training, educational technology, after-school and summer learning centers, and adult education. California’s share was about $939 million.17California Office of the Attorney General. Attorney General Bonta Sues Trump Administration Freezing Billions Education Bonta co-led a 25-jurisdiction lawsuit on July 14, 2025, arguing the freeze violated the Antideficiency Act, the Impoundment Control Act, the Administrative Procedure Act, and the separation of powers.18K12 Dive. States, Districts Federal Funding Freeze Lawsuits The case was dismissed on August 25, 2025, after the administration agreed to release the full balance by no later than October 3, 2025.19California Office of the Attorney General. Attorney General Bonta Secures Full Relief California Schools Lawsuit
Pandemic Relief Deadlines
On March 28, 2025, Secretary McMahon told state education chiefs that the time to spend remaining COVID-era relief funds had ended that day at 5 p.m., canceling over $1 billion in grants nationally despite earlier approved extensions. California stood to lose roughly $200 million. On May 6, 2025, Judge Edgardo Ramos of the Southern District of New York halted the cancellation for the plaintiff states and barred the department from modifying spending extensions without at least 14 days’ notice, calling its reasoning “not a reasonable explanation.”20Education Week. Judge Reverses Ed Dept’s Abrupt End to States’ Time to Spend Covid Relief
The Anti-DEI Certification Requirement
The Department of Education’s “Dear Colleague” letter and subsequent anti-DEI certification requirement were blocked in August 2025 when U.S. District Judge Stephanie Gallagher in Maryland, a Trump appointee, granted summary judgment against both actions under the Administrative Procedure Act.21K12 Dive. Federal Maryland District Judge Anti-DEI Certification Dear Colleague Letter The administration did not appeal. On February 6, 2026, a joint motion to dismiss the related multistate suit permanently resolved the dispute and protected $4.9 billion in federal education funding for California from conditions tied to the administration’s reading of Title VI of the Civil Rights Act.22California Office of the Attorney General. Attorney General Bonta Secures Agreement Protecting $4.9 Billion Funding
Teacher Training Grants at the Supreme Court
The one major loss for the states came on April 4, 2025, when the U.S. Supreme Court, 5-4, stayed lower court orders that had kept Teacher Quality Partnership and Supporting Effective Educator Development grant payments flowing. The majority found the federal government was likely to show the district court lacked jurisdiction under the Administrative Procedure Act to order the payment of money. Chief Justice Roberts voted to deny the stay application, along with Justices Kagan, Jackson, and Sotomayor in dissent.23SCOTUSblog. Department of Education v. California
Where California’s Recent Equity Settlements Stand
Two settlements from recent years are now the vehicle for much of California’s education equity spending, and both are still being implemented.
Ella T. v. State of California, filed in 2017 over inadequate reading instruction for low-income students of color, settled in February 2020 for $53 million. Fifty million dollars went to literacy programs at the 75 California elementary schools with the highest concentration of third-graders scoring at the lowest level on state reading tests, and $3 million funded a new statewide literacy expert position.24Education Week. California Agrees to $53 Million to Settle Lawsuit Over Low Literacy Achievement Participating schools had to conduct root-cause analyses and build three-year literacy action plans.25Public Counsel. Groundbreaking Settlement in California Literacy Lawsuit A Stanford Graduate School of Education study found third-grade reading achievement at participating schools improved by 0.14 standard deviations, roughly a quarter of a school year, compared to similar schools. At Joshua Elementary in Lancaster, the number of third-graders meeting state reading standards nearly doubled.26The 74. Reading Scores Climb After Targeted Intervention at California’s Worst Performing Schools
Cayla J. v. the State of California, filed in November 2020 over pandemic learning loss among low-income, Black, and Latino students, settled in early 2024. The agreement guaranteed at least $2 billion of California’s $7.5 billion Learning Recovery Block Grant, protected from future budget cuts, with spending allowed through the 2027-28 school year. Funds must flow to the lowest-performing student groups, and districts have to track outcomes of at least one evidence-based strategy over three years. If the state fails to pass the required legislative changes, plaintiffs can revoke the settlement and return to trial.27EdSource. California Agrees to Target Most Struggling Students to Settle Learning Loss Lawsuit