Can states opt out of federal programs and still receive funding?

1. What “opting out” usually means in practice

When a state “opts out” it most commonly refuses to enroll in a particular federal-state partnership — for example turning down an expansion of a program, declining a grant with strings attached, or setting state rules that make federal program participation unworkable — and in so doing the state relinquishes the specific federal funds tied to that program, a trade-off reflected repeatedly in federal funding negotiations and program designs ^{[4] [5]}.

2. Not all federal money moves as one block; Congress controls the purse

Most federal funding is allocated by Congress through statutes and appropriations; Congress determines discrete pots of money for agencies and programs, and those appropriated sums flow to states under program rules — so a state rejecting one program’s terms typically does not forfeit unrelated appropriated funding unless Congress or statute says otherwise ^{[1] [6]}.

3. The executive branch can try to withhold or freeze funds, but legal checks matter

Administrations can and have attempted to freeze or withhold funds to exert leverage on states — the Trump administration froze more than $10 billion in childcare and family assistance funds to several states in January 2026 (California, Colorado, Illinois, Minnesota and New York), citing alleged misuse ^[5]. But prior efforts to withhold payments tied to sanctuary jurisdictions were blocked by courts, and watchdogs and judges have rebuked unilateral impoundments as illegal, creating a legal barrier to blanket executive pruning of state funds ^{[7] [3] [2]}.

4. Legal distinctions: conditional grants versus categorical penalties

Many federal-state programs are conditional grants: Congress attaches eligibility criteria and states that meet them receive funds; if a state declines the conditions, it loses that grant money. By contrast, the executive branch cannot typically impose new, extra-statutory conditions on congressionally appropriated funds or reassign those funds to punish policy disagreements without running afoul of appropriations law and court rulings ^{[1] [2]}.

5. Politics, enforcement discretion and selective freezes

Recent administration moves illustrate a political strategy: selectively freezing or threatening to cut funds to states perceived as noncompliant on issues like immigration or fraud to compel policy changes ^{[5] [3] [8]}. Such tactics can succeed in the short term if agencies have statutory levers or if states negotiate, but they also expose the administration to litigation and Congressional pushback, and Congress can respond by enacting clearer statutory language or overriding the executive through appropriations ^{[6] [2]}.

6. Real-world outcomes and limits for states that opt out

A state can legally refuse some federal programs — as some have done historically for specific nutrition or welfare options — and still receive large streams of federal funding for other purposes; however, opting out carries predictable costs in lost program dollars and federal services, and efforts by the federal government to go beyond withdrawing program funds to cut broader payments have been met with court blocks and criticism from nonpartisan oversight bodies ^{[4] [7] [2]}.

Conclusion: a qualified yes — with guardrails

So the short, qualified answer is: yes, states can opt out of particular federal programs and still receive other federal funding, but they will forfeit the specific program dollars they reject and are vulnerable to politically driven enforcement actions; the federal executive’s ability to withhold broader appropriated funds is constrained by statute, oversight (GAO) and the courts, and those constraints have repeatedly checked overreach ^{[1] [2] [3]}.