The Department of Education started an investigation Thursday into a new California law that bars public schools from disclosing to parents the sexual orientation of their children.

If the three-month-old law were to be found in violation of federal rules and the Trump administration acted on threats to withhold funding, the state could lose up to $7.9 billion, California Department of Education officials said.

The investigation is the latest move by the Trump administration to address gender identity and sexual orientation in schools and beyond. In January, President Donald Trump signed an executive order saying the U.S. would recognize only two sexes, male and female.

At issue is California Assembly Bill 1955, which prohibits schools and their staffs from disclosing a student’s sexual orientation, gender identity or gender expression.

The Department of Education contends the state law violates the Family Educational Rights Privacy Act, which gives parents the right to access their children’s educational data, including reviewing records regarding sexual orientation.

It also allows parents to request record corrections or amendments, and gives them some control over the disclosure of personally identifiable information.

“Teachers and school counselors should not be in the business of advising minors entrusted to their care on consequential decisions about their sexual identity and mental health,” Secretary of Education Linda McMahon said in a statement. “That responsibility and privilege lies with a parent or trusted loved one.”

Assemblymember Chris Ward, D-San Diego, who authored the bill, said requiring school officials to expose students’ gender without their consent is “immorally invasive.”

“Parents have always retained the right to have meaningful conversation with their children and play a crucial role in their development,” he said in a statement.

State Superintendent of Public Instruction Tony Thurmond said educators are trying to protect students who do not want their sexual orientation outed, even to their parents.

“Our students must be safe in order to learn,” he said in a statement. “I have heard from so many students and families whose safety has been impacted by forced outing policies. To our LGBTQ+ youth and families, I want to make sure that you hear us as loudly as we hear you.”

California Teachers Association President David Goldberg reiterated Thurmond’s position and said the Trump administration is threatening to withhold money from some of the state’s most vulnerable students, who rely on it for food and special education services.

“We respect our justice system and follow laws in California,” he said.

Trump signed a separate order in February, banning transgender women and girls from competing in female sports and threatened to rescind funds from educational programs that deprive women and girls of fair athletic opportunities.

On Tuesday, the Department of Education opened an investigation into the Portland Public Schools for allegedly allowing a male track athlete to compete in a March 19 girls track-and-field competition.