‘Blatantly unlawful’ federal spending freeze sends state scrambling

SPRINGFIELD — State agencies, nonprofit organizations and a host of other entities that rely on federal funding were thrown into chaos Tuesday following the release of a White House memo that froze – at least temporarily – the distribution of all federal grants, loans and other financial assistance programs.

Late Tuesday, however, the Associated Press reported that a federal judge in Washington, D.C., issued a ruling temporarily blocking the spending freeze.

Gov. JB Pritzker accused President Donald Trump’s administration of “trying to confuse the American people,” but said the state is nonetheless making contingency plans should tens of billions of dollars in federal funding disappear.

“The United States Constitution clearly states that Congress has the power of the purse and sets laws to obligate federal funding for all 50 states,” Pritzker said. “What Donald Trump tried to do in the last 24 hours is illegal.”

The initial memo, from the White House Office of Management and Budget, was released late Monday. It directed all federal agencies to “temporarily pause” the distribution of federal financial assistance funds by 4 p.m. Tuesday in order to “provide the Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities.”

It quickly became unclear, however, just how far the instructions were meant to go. The initial memo indicated it was not meant to apply to Social Security or Medicare payments. But the White House later clarified that it also was not intended to interrupt funding for Medicaid, SNAP benefits, aid to farmers and small businesses, Head Start, rental assistance, “and other similar programs.”

States including Illinois reported they had lost access to their Medicaid systems. But White House Press Secretary Karoline Leavitt later posted on social media that the website was down as part of a web outage. In a late-afternoon news conference, however, Pritzker said many programs beyond Medicaid had in fact been affected, at least for part of the day.

“Nothing that came in that memo last night would indicate that all of a sudden you’d have the systems going offline,” Pritzker said. “And yet, that’s exactly what happened because they intend — they intend — to make cuts to these programs. That’s why they went offline. Don’t let them fool you that there was some kind of website outage.”

Pritzker said he fears Illinoisians will suffer greatly with any sudden cutoff in federal funding, such as for programs that pay for critical services provided by nonprofits and health care for millions of Americans.

“This is a demonstration of cruelty against people who depend on us, working families who rely on federal assistance to pay their rent, people who need help paying their utility bills, parents who need critical programs like Head Start for quality affordable child care, and 3.5 million Illinoisans who get their health insurance through Medicaid,” Pritzker said.

Trump’s administration also hasn’t communicated with states about the freeze.

“When our agencies reached out to the federal agencies, we literally were informed that they are not to speak with us,” Pritzker said.

Pritzker said possible major spending cuts or freezes by the federal government are being kept in mind as he prepares to introduce a budget on Feb. 19, but he said it’s challenging to prepare for unknown actions by the White House.

Attorney General Kwame Raoul speaks at virtual news conference on Tuesday announcing a lawsuit against the Trump Administration’s federal spending freeze. (Screenshot of videoconference)

Illinois Attorney General Kwame Raoul and four other Democratic attorneys general announced they would file a lawsuit in Rhode Island to block the directive from the federal Office of Management and Budget.

Raoul said the unilateral action by the Trump administration was “another blatantly unlawful action” as the U.S. Constitution delegates spending decisions to Congress.

“Congress is given the power to appropriate the funding,” Raoul said in a news conference. “The executive branch cannot unilaterally disregard those appropriations passed by a separate and equal house of government. We will collectively fight this unconstitutional mandate.”

Federal funding plays a significant role in nearly everything state government does, including PreK-12 and higher education, Medicaid, public health services and highway maintenance.

In the last fiscal year, which ended June 30, roughly $34.4 billion in federal funds flowed through state agencies and programs, according to Comptroller Susana Mendoza’s office. Halfway through the current fiscal year, the state has received about $20.4 billion in federal funds.

One of the largest categories of federal funding for Illinois is Medicaid, the health insurance program for low-income and disabled individuals that covers about 3.5 million people in the state. The federal government pays about 52% of the cost of the Medicaid in Illinois.

In his initial memo Monday outlining the freeze, Matthew J. Vaeth, acting director of the Office of Management and Budget, said the action was intended to apply to “federal financial assistance” programs.

“The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve,” Vaeth said in the memo.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

This article first appeared on Capitol News Illinois and is republished here under a Creative Commons license.

Gov. Pritzker’s office detailed all of the impacted programs:

Access Issues for Federal Funding Portals

Despite official information from the federal government stating that programs that provide assistance directly to individuals will not be impacted, state agencies and partner organizations reported issues accessing payment systems throughout the day on January 28. Federal officials have not responded to requests for more clarity or on the status of payments and the systems, further adding to the uncertainty. Illinois officials experienced issues with the following systems:

• Payment Management System (PMS) portal operated by the U.S. Department of Health and Human Services (HHS). Throughout the day on January 28, 2025 Illinois officials and partners were unable to access the portal for at least part of the day for following programs:
  • Medicaid and ACA expansion populations
  • Home-delivered and congregate meal sites for seniors,
  • Public Assistance and Hazard Mitigation Grant Program (disaster recovery and mitigation programs)
  • Child care and Head Start programs
  • Temporary Aid to Needy Families (TANF)
  • Vaccinations and disease surveillance
• Electronic Line of Credit Control System (eLOCCS) portal operated by the U.S. Department of Housing and Urban Development (HUD).
  • Rental assistance programs for people who are homelessness and/or have disabilities.

Resources for Illinois Families and Children

• Medicaid:
  • Provides health care to 3.3 million low-income Illinoisans including children.
• Child Care and Development Block Grant (CCDBG):
  • Supports child care for low-income families for 140,000 children in over 80,000 households.
• Low Income Home Energy Assistance Program (LIHEAP):
  • Assists 300,000+ low-income households annually with energy bills.
• Temporary Assistance for Needy Families (TANF):
  • Provides cash assistance and work support for 75,000 low-income residents.
• Permanent Supportive Housing (PSH) and Rapid ReHousing:
  • Provides housing support for approximately 2,600 families and 9,000 Illinoisans.
• Child Welfare Programs:
  • Support for foster care services, adoption services, guardianship and reimbursement for residential placements, impacting 20,000 children in care statewide.
• Child and Adult Care Food Program (CACFP):
  • Provides meals to children enrolled at participating daycare centers, as well as older individuals with disabilities at adult day centers, providing 1,000,000+ meals to Illinoisans per year.

Support for Older Illinoisians

• Administration for Community Living (ACL) programs, including:
  • Nutrition programs -13 million meals served in 2024
  • Supportive Services (e.g., transportation, in-home care)
  • Family Caregiver Support Programs – 16,000+ caregivers in Illinois
• Senior Health Insurance Program (SHIP):
  • Provides support to older Illinoisans with enrolling in healthcare. SHIP provided counseling to 103,000 beneficiaries in FY24.
• Medicare Improvements for Patients and Providers (MIPPA):
  • Helps low-income Medicare beneficiaries enroll in cost saving benefits, which supports 74,000 Illinoisans.

Critical Public Health Services for Illinoisans:

• Maternal and Child Health Services (Title V):
  • Provides funding to improve the health of mothers and children through initiatives like prenatal care and infant screenings.
• Substance Abuse and Mental Health Services Administration (SAMHSA) Programs:
  • Funds mental health and substance abuse prevention and treatment services, including opioid response initiatives.
• Federally Qualified Health Centers (FQHCs):
  • Funds health care for underserved populations, including preventive and primary care services.
• Centers for Disease Control and Prevention (CDC) grants support programs for:
  • Immunizations
  • Disease surveillance (e.g., HIV/AIDS, tuberculosis)
  • Public Health Emergency Preparedness (PHEP)
• Ryan White HIV/AIDS Program:
  • Provides essential medical care and services for individuals with HIV/AIDS.
• Preventive Health and Health Services (PHHS) Block Grant:
  • Funds state-level public health initiatives, including chronic disease prevention and health promotion.

Support for Illinoisians with Disabilities

• Section 811 Housing:
  • Provides housing support and services for persons with disabilities.
• The Illinois Council on Developmental Disabilities (ICDD):
  • State agency that advocates for policy changes to promote choice, independence, productivity, and inclusion for people with developmental disabilities in Illinois.
• Employment Supports for Disabled Workers:
  • Funding includes pre-employment transition services, supported employment programs, job training activities, and vocational rehabilitation programs.
• Respite Support for Families:
  • Funding for emergency respite support for individuals with disabilities benefiting more than 1,100 families.

Economic Development for Illinois Communities

• Community Development Block Grant (CDBG):
  • Provides grants to communities to expand housing and other economic development efforts. ​
• Community Services Block Grant (CSBG):
  • Provides funding to combat poverty through local programs like job training and housing assistance.
• State Small Business Credit Initiative (SSBCI):
  • Provides funding to help small businesses access low-interest loans, venture capital and other financing.
• Workforce Innovation and Opportunity Act (WIOA) Title 1 Funding:
  • Funds programs and resources to provide job search, education, and training activities to help jobseekers and our workforce.

Infrastructure:

• Broadband Equity Access and Deployment (BEAD):
  • Access to significant federal funds for broadband expansion.
• Federal formula funding for transportation infrastructure:
  • Includes highway, transit, and aeronautics programs and projects
• Federal discretionary grants funded under the Infrastructure Investment and Jobs Act and Inflation Reduction Act, including: ​
  • National Electric Vehicle Infrastructure Program
  • Chicago Region Environmental and Transportation Efficiency Program
  • Charging and Fueling Infrastructure Grant
  • Airport Improvement Grants
  • Port Infrastructure Grants
  • Grants to Amtrak to improve passenger rail
  • Rail Safety Grants

Agriculture

• Meat and Poultry Inspections:
  • Provides risk oversight the entire meat and poultry supply chain. IDOA receives reimbursement from the federal government for up to half of its inspection activities.

Disaster Mitigation:

• Disaster Recovery and Mitigation Programs: Five state disaster programs are federally funded and would be unable to proceed:
  • Public assistance (PA) and individual assistance (IA)
  • Hazard Mitigation Grant Program (HMGP)
  • Building Resilient Infrastructure and Communities (BRIC)
  • Flood Mitigation Assistance (FMA)
  • Pre-disaster Mitigation (PDM)