By Nate Raymond

(Reuters) -Democratic-led states filed a lawsuit on Tuesday alleging the Trump administration had effectively dismantled AmeriCorps by abruptly canceling grants and cutting 85% of the workforce of the federal agency for national service and volunteering.

In a lawsuit filed in federal court in Baltimore, 24 Democratic-led states and the District of Columbia argue that Republican President Donald Trump does not have the authority under the U.S. Constitution to gut AmeriCorps, which was created by Congress.

The move to eliminate the agency’s grants and cut its workforce is part of an unprecedented push by Trump and the Department of Government Efficiency championed by his billionaire adviser Elon Musk to shrink the federal government’s spending and workforce.

AmeriCorps has a roughly $1 billion budget and had more than 500 employees when Trump took office.

Its grants fund local and national organizations that offer community services related to education, disaster preparedness, conservation and more.

Its programs place more than 200,000 volunteers nationally to help provide services ranging from assisting with after-school programs to delivering meals to seniors to responding to local disasters.

When wildfires struck the Los Angeles area earlier this year, AmeriCorps members helped distribute supplies and support families.

California Attorney General Rob Bonta, who is co-leading the lawsuit, in a statement accused DOGE of "dismantling AmeriCorps without any concern for the thousands of people who are ready and eager to serve their country — or for those whose communities are stronger because of this public service."

White House spokesperson Anna Kelly said in a statement that AmeriCorps had failed eight consecutive audits and identified over $45 million in improper payments in 2024 alone.

"President Trump has the legal right to restore accountability to the entire executive branch," Kelly said.

In February, Trump signed an executive order directing federal agencies to plan to reduce the size of their workforces and prepare to initiate mass layoffs.

Since then, AmeriCorps has placed at least 85% of its employees on administrative leave and notified them they would be terminated effective June 24.

Last week, the agency began issuing notices that it was terminating nearly $400 million worth of AmeriCorps grant programs, which support volunteer and service efforts. Grant cancellations and program termination notices were sent to 1,031 programs, the lawsuit said.

The lawsuit, which is co-led by the attorneys general of California, Delaware and Maryland, alleges the administration had violated the separation of powers under the U.S. Constitution by frustrating its ability to administer grants appropriated by Congress or carry out statutory duties