Twenty-Four States Sued to Block a Federal Fraud Check on Welfare Data. The Program Has Never Once Been Measured for Fraud.
On August 3, a coalition of 24 states and the District of Columbia sued the Trump administration to block a new federal rule that would let the Department of Health and Human Services share welfare recipients’ Social Security numbers, income, and immigration status with the Department of Homeland Security. The states call it mass surveillance dressed up as oversight.
The program at the center of it, Temporary Assistance for Needy Families, has a separate distinction that neither side’s press release mentions: it is the one major means-tested benefit program the federal government cannot estimate a fraud or improper-payment rate for at all — not because nobody has looked, but because Congress has never given HHS the legal authority to make states report the underlying numbers.
The lawsuit is narrower than that broader gap — it challenges one specific data channel to DHS, not federal oversight of TANF generally. But it lands squarely inside a program category regulators have been trying and failing to get a clear look at for years.
- $186,000,000,000 in improper payments the federal government reported across 64 programs in FY2025 — TANF is not one of the 64 — GAO-26-108694, Apr. 27, 2026
- 10.62% SNAP's FY2025 national payment error rate — the closest measured proxy, since TANF has no equivalent published figure — USDA / GAO
- $16,000,000,000 TANF spends annually with zero required improper-payment estimate — a gap GAO flagged to Congress in 2022 and again in 2025 — GAO-25-108205
The dispute traces to a single document: a Systems of Records Notice the Administration for Children and Families, a division of HHS, published in the Federal Register on June 23. It modifies the government’s TANF Data system to let ACF share years of recipient records — Social Security numbers, addresses, marital status, employment history, and immigration category — with other federal agencies, including DHS, and even outside contractors helping with “program integrity reviews.” A new routine use in the notice took effect July 23; several news outlets reported the practical rollout beginning August 11.
California Attorney General Rob Bonta (D-CA) and New York Attorney General Letitia James (D-NY) co-lead the coalition with D.C. Attorney General Brian Schwalb (D-DC). Twenty other Democratic attorneys general joined directly. Two more states — Kentucky and Pennsylvania — are represented by their governors, Andy Beshear (D-KY) and Josh Shapiro (D-PA), because their states’ elected attorneys general, Republicans Russell Coleman and Dave Sunday, did not sign on. The complaint names HHS Secretary Robert F. Kennedy Jr. and ACF as defendants; DHS, now led by Secretary Markwayne Mullin (R-OK), is the agency the states say would receive the data.
The legal theory runs on four tracks: the Administrative Procedure Act (the states say ACF exceeded its statutory authority and acted arbitrarily), the Computer Matching and Privacy Protection Act (no formal matching agreement exists between ACF and DHS), the Privacy Act of 1974 and the Social Security Act (limits on how SSNs and income data can be shared), and the Constitution’s Spending Clause (an unconstitutional new condition on federal TANF funding). The states’ complaint calls it an “extravagant claim[] of authority” and a “gross breach of personal privacy,” arguing the 1996 law that created TANF put states, not Washington, in charge of verifying who qualifies.
Every year, GAO totals up the federal government’s improper payments — money sent to the wrong recipient, in the wrong amount, or without required documentation. The fiscal year 2025 tally, published April 27, came to $186,000,000,000 across 64 programs at 15 agencies. Medicaid posted a 6.12% error rate. SNAP posted 10.62%. TANF posted nothing, because HHS does not report a number for it at all.
That is not an oversight. HHS has told GAO for years that two provisions of the Social Security Act — the same 1996 law the states now cite in their own defense — bar the agency from compelling states to hand over the data it would need to calculate a TANF improper-payment rate. In April 2022, GAO recommended Congress fix that by giving HHS explicit authority to require the reporting. As of GAO’s most recent check, in April 2025, no bill addressing it had been introduced. TANF, a $16,000,000,000-a-year block-grant program that funds cash assistance in every state, has run for three decades without the kind of fraud measurement Medicaid, Medicare, SNAP and the EITC all get every year.
“HHS reported it does not have the authority to obtain the information it needs to estimate or report improper payment information for its Temporary Assistance for Needy Families program.”
U.S. GAO, GAO-25-108205 — Temporary Assistance for Needy Families: Actions Needed to Improve HHS Oversight
That is the backdrop the June 23 notice landed in. ACF says the new data-sharing routine exists to “verify whether TANF grantee agencies are complying with TANF program requirements” and to check that states are confirming recipients’ citizenship or immigration status before paying benefits — in other words, to build exactly the kind of cross-agency verification capability TANF has lacked since GAO first flagged the gap. The states are not disputing that gap exists. They are disputing this specific fix, on this specific legal footing, running through DHS.
This is not the administration’s first attempt to force a look at these programs. On January 7, HHS froze $10,000,000,000 in TANF, Child Care and Development Fund, and Social Services Block Grant money bound for California, Colorado, Illinois, Minnesota and New York, citing “serious concerns about widespread fraud.” Roughly $7,350,000,000 of that was TANF funding alone. The same five states sued, a federal judge granted a preliminary injunction the following month, and on July 14 the administration rescinded the freeze rather than keep litigating it.
The June 23 data-sharing notice was already in motion before that freeze was dropped, and its new routine use took effect nine days after the retreat. Whether or not the sequence was deliberate — the record does not establish intent either way — the practical effect is that as one oversight mechanism died in court, a second one was already queued up behind it. The states are now fighting that one too, on different legal grounds.
Nationally: TANF distributes over $16,000,000,000 a year to states, territories and tribal governments for cash assistance and related services to low-income families with children.
New York: $2,700,000,000 in annual TANF allocation; roughly 190,000 people receive direct cash assistance, including 127,000 children.
California: Roughly 350,000 families receive TANF-funded cash assistance in a typical month.
Maryland: About 38,000 monthly recipients; $228,000,000 in annual federal TANF funding.
Source: New York and California attorney general press releases, August 3, 2026
Bonta’s framing is unambiguous: “The Trump Administration is exploiting a program designed to ensure children do not go hungry and to help needy families get back on their feet in order to fuel its mass surveillance effort. It’s cruel, unnecessary, and illegal.” James struck a similar note: “Instead of helping families struggling with the rising cost of living, this administration is trying to turn antipoverty programs against the people they’re supposed to serve.” The complaint itself goes further, accusing the administration of having “used every means at its disposal to erode federal confidentiality protections and deploy unsubstantiated allegations of ‘fraud’ in order to target Plaintiff States’ antipoverty programs, TANF included.”
HHS has not backed off the fraud rationale. Assistant Secretary for Children and Families Alex J. Adams put it plainly: “We have a responsibility to protect taxpayer dollars and ensure these programs serve the families they were created to help.” Both statements can be true at once — a privacy objection to one data channel, and a genuine three-decade measurement gap in the program that channel would partly close — and neither side’s press release mentions the other’s point.
Twenty-four states are suing, on real privacy and process grounds, to stop one specific channel of data reaching DHS. That fight will be decided in court, not in this article. But it is being fought inside a program that has gone thirty years without the fraud measurement every comparable federal benefit already gets — a gap GAO has been asking Congress to close since 2022, in writing, without success. Whatever a judge rules on the SORN, that gap does not close itself, and neither side’s August 3 press release proposed closing it.
