October 17, 2025

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New York City’s public school system has filed a federal lawsuit against the U.S. Department of Education, challenging nearly $50 million in grant cuts that officials say were imposed because of district policies supporting transgender students.

The lawsuit, filed Thursday in Manhattan federal court, alleges that the Education Department unlawfully withheld funding intended for after-school, technology, and special education programs. City education leaders claim the funding cuts came after federal officials objected to district policies allowing transgender students to use facilities and participate in programs that match their gender identity.

Chancellor David Banks said the loss of grant money could disrupt essential services for thousands of students citywide. “The Department of Education’s decision places our most vulnerable kids at risk and undermines schools’ efforts to create inclusive, supportive environments,” Banks said at a press conference.

The complaint argues that the city’s policies are consistent with state law and federal civil rights protections. Attorneys for the city contend that the Education Department’s actions were arbitrary and punitive, and call for the immediate restoration of funds.

A spokesperson for the U.S. Department of Education said it does not comment on pending litigation but emphasized the importance of compliance with federal guidelines. The legal battle comes as school districts nationwide debate how to balance civil rights compliance, local control, and the needs of all students.

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