WASHINGTON >> The Education Department is preparing to withhold millions of dollars from Connecticut schools over their refusal to withdraw from an athletic conference that allows transgender students to compete on teams that correspond with their gender identity.

The move to withhold about $18 million intended to help schools desegregate could have national implications for both transgender athletes and students of color.

The department’s Office for Civil Rights has warned officials at three Connecticut school districts that it will not release desegregation grants as planned Oct. 1 unless the districts cut ties with the Connecticut Interscholastic Athletic Conference over its transgender policies. Negotiations among the parties continued Thursday evening.

Officials with the conference, which governs high school athletics in the state, say their policies conform to Connecticut law.

The five-year grants totaled about $45 million, and the remaining $18 million was destined for districts in New Haven, Hartford and southeast Connecticut that operate magnet schools under a federally approved voluntary desegregation plan. The money generally allows students from Black and Hispanic communities to attend high-performing schools outside their neighborhoods.

Education Secretary Betsy DeVos has championed similar school choice programs for decades, and President Donald Trump has highlighted the issue in his reelection campaign.

But that drive is colliding with the administration’s intent to broadly deny legal protections to transgender Americans. The Education Department has already withdrawn Obama administration guidance that encouraged schools to allow transgender students to choose bathrooms that match their gender identity.

But some district officials said withholding money to coerce schools into withdrawing from an athletic conference was the administration’s most forceful move yet to end protections for transgender students.

“It’s effectively extortion,” said New Haven’s mayor, Justin Elicker. “The federal government is trying to force us to take a side against transgender individuals.”

Angela Morabito, a spokeswoman for the Education Department, said the administration gave the three school districts several opportunities to quit the sports league before threatening to pull the grant funding.

“It’s not extortion to require school districts to follow federal law,” Morabito said. “In fact, it’s the opposite. Congress requires the department to withhold funds from schools that aren’t in compliance with the law.”

The issue of transgender athletes on female high school sports teams is the subject of a federal lawsuit in Connecticut. But well before a ruling, the Education Department in May warned the Connecticut Interscholastic Athletic Conference that it considers allowing biologically male athletes to participate in girls’ sports a violation of Title IX, the 1972 law that prohibits sex discrimination in programs that receive federal funding.

“Connecticut applicants declined — on multiple occasions — to assure the Office for Civil Rights that they are in compliance with Title IX,” Morabito said.

The department’s move threatens the existence of Connecticut’s magnet program, school officials said. Elicker predicted that losing $3 million in funding this year and next year would result in deep programmatic cuts.

But the potential withholding of desegregation grants by the administration has broader implications, said Sarah Hinger, a senior staff lawyer for the American Civil Liberties Union’s Racial Justice Program; 16 states have policies similar to Connecticut’s.

“The intent and the impact here is to send a message to try to influence how other school districts will act, and that is deeply concerning,” Hinger said. “This is certainly very troubling for both LGBT students and students of colors. This is one more example of how DeVos has undermined and undercut their rights.”

The grants are intended to encourage districts to create magnet schools that offer challenging academic content or distinct teaching approaches. New Haven Public Schools has received the funds for more than 20 years, helping students attend any school in the district and attracting some students from the suburbs, said Michele Bonanno, the district’s magnet school coordinator.

“The intent of the magnet grant is to carry out the intent of Brown v. Board of Education,” Bonanno said, citing the landmark 1954 Supreme Court case that declared racial segregation in public schools unconstitutional. “You can imagine how heartbroken we’ve been. To pit a minority community against the LGBT community is disgraceful.”

The Education Department has told districts the grant funding will come through as scheduled if they sign an “assurance” form attesting that they will not participate in the athletic conference.

The forms state that the Office for Civil Rights has determined that “by permitting the participation of biologically male students in girls’ interscholastic track,” the Connecticut Interscholastic Athletic Conference has “denied female student-athletes benefits and opportunities.”

The Education Department focused its attention on Connecticut after the Alliance Defending Freedom, a conservative Christian organization, filed complaints against the athletic conference and the Glastonbury school board on behalf of three high school student-athletes. The students contend that the policy gives transgender students an unfair advantage in athletic competition, which can be critical to college recruiting and scholarship opportunities.