MmmAttorney General Jennifer Davenport joined a 14-state lawsuit seeking to recover federal funding the Trump administration canceled for upgrades to unemployment insurance systems, including fraud prevention and faster claims processing.
The suit, filed in the U.S. Court of Federal Claims, challenges the Labor Department’s May 2025 termination of grants with more than $45 million remaining across the participating states. The states contend the cancellations violated their grant agreements and are seeking monetary damages.
New Jersey lost three grants originally totaling nearly $20.7 million: $11.25 million for technology modernization, $6.84 million to improve access and $2.609 million for program integrity. Davenport’s office did not specify how much remained unspent when those grants were terminated.
“The people of New Jersey deserve services that work when they are needed most, not pointless disruption by the federal government,” Davenport said.
The funding, authorized through the 2021 American Rescue Plan Act, supported projects designed to strengthen unemployment systems after the pandemic overwhelmed state agencies. The Labor Department awarded more than $780 million nationwide.
New Jersey planned to use its grants to move claims technology to a cloud-based platform and hire investigators to detect fraud. Davenport’s office said the cancellations would prevent security upgrades, system improvements and program expansions.
The states allege the department abruptly canceled the agreements on May 22, 2025, citing changed funding priorities despite previously approving multiyear project schedules.
They argue the agreements did not permit termination on that basis and accuse the department of denying them notice and an opportunity to object.
Wisconsin Attorney General Josh Kaul and Maryland Attorney General Anthony Brown are leading the lawsuit.
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October 16, 2025