DOJ warns states they could lose billions in welfare funds over immigration reporting

The U.S. Justice Department has warned states that billions of dollars in federal welfare funding could be at risk if state agencies fail to report immigrants known to be in the country illegally.

The department’s Office of Legal Counsel said states receiving money through Temporary Assistance for Needy Families and Supplemental Security Income must report people unlawfully present in the United States to the Department of Homeland Security. The new interpretation reaches beyond the agencies directly responsible for administering those programs.

Universities, motor vehicle departments and other state bodies that may have information about people without legal status could also fall under the requirement. Deputy Assistant Attorney General Joshua Craddock said noncompliance could bring “serious consequences, including loss of program funding.”

The position adds to the Trump administration’s pressure on states to cooperate with federal immigration authorities. Since returning to office in January 2025, President Donald Trump has expanded immigration enforcement and sought penalties for states that restrict cooperation with federal officials.

All 50 states, Washington, D.C., and numerous U.S. territories receive money through the affected programs. Federal TANF grants exceed $16.5 billion a year, while SSI benefits exceed $60 billion. Immigrants without legal status cannot receive either benefit. States have already sued over DHS access to personal information belonging to TANF recipients, and courts have limited some administration efforts to compel information sharing while allowing access to certain data in other cases. The Justice Department’s opinion argues that a 1998 rule misread the 1996 welfare law by treating “State” as referring only to specific agencies rather than state governments.

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Failure to comply may lead to serious consequences, including loss of program funding.