CHICAGO — A federal judge temporarily blocked a Trump administration effort to freeze federal grants and potentially trillions of dollars in spending, but not before the Republican president’s declaration caused widespread tumult and confusion within Illinois government and among social service agencies, nonprofits and universities.

The decision late Tuesday afternoon by U.S. District Judge Loren AliKhan in Washington, D.C., came as Democratic leaders across the country, including in Illinois, vowed to fight the spending pause, which they viewed as unconstitutional.

AliKhan blocked the action minutes before it was set to go into effect at 4 p.m. The administrative stay pauses the freeze until Monday.

The judge’s decision capped a day filled with confusion, anger, frustration and fear across the nation after President Donald Trump’s Office of Management and Budget called for the temporary pause on funding, including for programs related to “foreign aid, nongovernmental organizations, DEI (diversity, equity and inclusion programs), woke gender ideology, and the green new deal,” which was a sweeping environment-friendly initiative to combat climate change.

But among the most immediate impacts appeared to be the Medicaid system, a state and federally funded health insurance program for people with low incomes and disabilities.

Illinois state agencies reported Tuesday morning that state employees were unable to access Medicaid payment systems, a top spokesman for Gov. JB Pritzker said. The system came back online for Illinois later in the day.

“Our state agencies were unable to access the Medicaid system until an hour ago, preventing payments for services,” Pritzker said at a news conference late Tuesday. “This has been reported from states across the nation.”

The situation also spurred initial legal action.

Illinois Attorney General Kwame Raoul’s office joined about 20 other attorneys general in suing the Trump administration to stop the implementation of the policy.

Raoul said the funding freeze would “have a devastating impact on the public safety, prosperity and quality of life” of the public. He said the move could not only hurt Medicaid recipients but also farmers, research projects at state universities, war veterans and state and local law enforcement’s ability to go after child predators and other criminals.

Democratic U.S. Sen. Tammy Duckworth said freezing federal grants could also hurt funding for hospitals, child care and disaster relief, while U.S. Sen. Dick Durbin said food inspections, as well as food assistance and Head Start programs, could also be at risk.

‘It was a mess’

Illinois Head Start Association Executive Director Lauri Morrison-Frichtl said the Trump order left Head Start child care programs in Illinois, which serve 28,000 children statewide from low-income families, in disarray after an error message appeared Tuesday on an online portal for federal funds.

Three programs, including the Two Rivers program in Aurora, were on the verge of shutting down because they could not pay their employees, Morrison-Frichtl said. After the federal judge blocked the freeze and the portal was again operational, those programs planned to stay open.

“It was a mess,” said Kelly Neidel, executive director of the Two Rivers Head Start. “Canceling and then starting back up again. It causes uncertainty with staff, and I’ve worked there 35 years and this was probably one of my worst days there.”

The Trump administration had planned to start the freeze as it begins an across-the-board ideological review of federal spending, and the White House budget office said in its memo that the pause would not affect Medicare and Social Security programs. But the guidance was less clear about Medicaid, and, in Illinois, state agencies reported “issues with accessing federal funding sites and disbursement systems, including Medicaid systems,” Tuesday morning, said Pritzker spokesman Matt Hill.

White House press secretary Karoline Leavitt confirmed the Medicaid portal was shut down but said no payments were affected.

About 3.4 million people in Illinois were on Medicaid during the fiscal year that ended June 30.

Illinois House Majority Leader Robyn Gabel, a House Democrat point person on Medicaid issues, called the Trump administration’s move “extremely disturbing.”

“Those are the people who will suffer the most. There are people throughout the country on Medicaid. It’s a big program throughout the entire country. Many of these people voted for Trump. They expected him to help them, not hurt them,” said Gabel, of Evanston. “We are looking at it. We are really trying to figure out exactly how this is going to impact us and what the possibilities are of a response. So, it’s all very sudden. So, we’re not sure yet. But we are looking at it and really trying to figure out what our response can be.”

In the fiscal year ending in 2024, Illinois agencies received nearly $30 billion in direct federal aid, according to a report from the state Commission on Government Forecasting and Accountability. More than $19 billion in federal funding went to the Department of Healthcare and Family Services in Medicaid-related payments, according to CGFA.

Billions went to grants in other parts of state government, including some $2.3 billion to the Department of Transportation, $401 million to the agency tasked with economic opportunity and $314 million to the Environmental Protection Agency, the same report said.

“Democrats and Republicans alike will be negatively impacted by this pause in funding,” Raoul said. “On January 20, our nation had a peaceful transfer of power. But let’s be clear, January 20 was an inauguration, not a coronation. Congress is given the power to appropriate the funding. The Executive Branch cannot unilaterally disregard those appropriations passed by a separate and equal House of government. We will collectively fight this unconstitutional mandate.”

GOP lawmakers back Trump

While Illinois Democrats hammered the Trump administration for the move to freeze spending, some legislative Republicans applauded the effort.

GOP state Sen. Neil Anderson of Andalusia said it’s unclear how the policy will shake out in coming weeks and argued Trump was elected in part on bringing “government efficiency” to Washington.

“I don’t think anybody would disagree with the idea that there’s probably a lot of government waste out there in grant programs to fund,” Anderson said. “So, there should be nobody against taking a brief pause and going over those things to see where we can be more efficient.”

Added state Sen. Andrew Chesney, a Republican from Freeport who was also a Trump delegate during last year’s Republican National Convention in Milwaukee: “Any state that has federal funding that they are seeking, there are rules for that federal funding. If they do not want that federal funding, they don’t have to accept it.”

Chicago Mayor Brandon Johnson sought to tamp down concerns over the late-night order but could not provide details on how Chicago’s budget would be affected or whether the Trump policy could eliminate federal funding for the CTA Red Line extension.

Johnson’s $17.1 billion budget for 2025 counts on $2.7 billion in federal grants, according to records in the city’s publicly accessible computer portal.

“This is something that is well outside the purview of the executive office,” Johnson said. “These appropriations have been mandated by the legislative branch.”

Johnson’s budget director, Annette Guzman, said her office was conducting an analysis of what impact the freeze could have on city finances but said “further digging” was necessary.

“It all comes under the framework of understanding the legality of the orders to begin with … whether or not these (executive orders) have the authority over congressional spending,” Guzman said.

Red Line questions

The long-planned extension of the Red Line south to 130th Street is likely the biggest single project awaiting federal funding. The Chicago Transit Authority signed an agreement locking in a federal grant days before Trump took office, and officials said Tuesday morning they continued to view the agreement as binding.

“The Red Line Extension Project’s funding grant agreement that the CTA and FTA (Federal Transit Administration) executed, like similar grant agreements that the CTA secured for projects such as the Red Purple Modernization Program, is a binding and legal commitment by the federal government to provide the committed and obligated funds,” CTA spokeswoman Tammy Chase said in an email. “As a result, we do not interpret any recent activity to have any impact on the federal government’s commitment to fund this essential transit project.”

The CTA, like other transportation agencies, also relies on federal funding for a variety of other construction projects. Chase said the agency’s law department was reviewing the latest federal directive “as it relates to future federal funds for CTA beyond funding grant agreements already in place.”

The Chicago Housing Authority also is analyzing the directive and its impact on the agency, a spokesperson said.

Earlier Tuesday, Bridge Communities in Glen Ellyn, a nonprofit that helps homeless families become self-sufficient, could no longer access the federal grant portal through the U.S. Department of Housing and Urban Development.

“Some federal funding we were awarded is now on pause, which affects our ability to service our families,” Bridge Communities CEO Amy Van Polen said before the judge temporarily blocked the freeze.

The nonprofit spent about $400,000 on capital renovations to the apartments it owns, where homeless families live until they can get back on their feet, and is awaiting reimbursement that had been expected to come in the form of a federal grant. Bridge Communities is also awaiting a $100,000 grant to cover operating expenses.

“It’s highly, highly concerning to all of us,” Van Polen said.

Jen Walling, executive director for the Illinois Environmental Council, said she learned Tuesday morning from an environmental group in Bloomington that it doesn’t have the federal money necessary for its recycling education program.

“I think for some things, they’ll be lawsuits because there’s probably actual contractual agreements. For some things, they’re just going to be out of luck,” Walling said.

Nonprofits and universities remain concerned

Mark Fowler, executive director of the Northwest Municipal conference, a consortium of 43 suburban North Shore and northwest suburban governments, said local communities collectively receive about $18 million in federal dollars each year to put toward road work and other projects.

The impact of the Trump administration’s move was not immediately clear, but Fowler said he talked with the governor’s office Tuesday, and asked his organization’s 43 suburban members to report any problems.

Other funding left uncertain included roughly $1.9 million in grants awarded through the National Endowment for the Arts to 80 groups in Illinois, including the Art Institute of Chicago and the Chicago Symphony Orchestra.

John Peller, executive director of AIDS Foundation Chicago, said the organization was blocked Tuesday from accessing the computer portal it uses to access federal funding. Peller said his organization receives about $26 million for housing services annually from the federal government, and it provides housing for over 1,300 households a year with 1,000 of those people living with HIV.

“Obviously we’ve had no notice to prepare and this freeze on funding really is an immediate and dire threat to services for people living with HIV,” Peller said. “We just cannot continue to pay rents for folks indefinitely without federal dollars. So, the long-term consequences of funding delays like this are that folks might end up becoming unhoused and that would have serious consequences for people living with HIV and their health.”

Universities known for their research were also bracing.

University of Chicago Provost Katherine Baicker sent a message to university employees Tuesday morning asking researchers working under federal grants to temporarily stop spending money on non-personnel expenses, such as supplies, equipment and travel. She also asked them not to start any new experiments.

“This is not a request that I make lightly,” she wrote. “The research enterprise is at the core of our University’s mission and is of profound importance to the daily work of our faculty, researchers, staff, and students.

“I also know that this is insufficient guidance and that you must have many questions (as do I),” Baicker wrote. “I wish that I had more information to share now, but will continue to be in touch as we learn more. But we must for now proceed under the assumption that grant expenditures incurred after today while this memorandum is in effect may not be covered by federal funding.”

A freeze in funding could also affect many Chicago area federally qualified health centers, which are community health centers that receive federal dollars to help care for patients with low incomes.

Erie Family Health Centers, which has 13 locations in Chicago and the suburbs, was still trying to make sense of the rapidly changing news Tuesday afternoon, spokesperson Kate Birdwell said in an email. She noted that it wasn’t yet clear what the federal funding freeze could mean for health centers like Erie or which federal grants might be on pause.

She said Erie is in “a strong financial position and stable for now,” but “any long-term pause to federal grant funding or Medicaid support would be devastating to Erie and other community health centers.”

Thresholds, which serves people with mental health and substance use disorders in Illinois, tried to draw down federal grant money that it’s owed after the freeze was announced, and was unable to obtain those funds as of Tuesday afternoon, said Mark Ishaug, Thresholds president and CEO.

Thresholds receives about $20 million in federal grants each year, such as grants for serving people experiencing homelessness, veterans and for mental health, he said.

Thresholds will continue to provide services “in the hope that very soon this debacle is going to be righted,” Ishaug said. Thresholds can access a line of credit, if need be, but the situation is unnerving, he said. The nonprofit organization serves about 10,000 people a year, helping to keep many of those people out of institutions, such as hospitals and prisons, he said.

“It is effective. It is morally right. It is cost-efficient,” Ishaug said of the services Thresholds provides. “Everything we are doing is making individuals and communities stronger.”

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(Tribune reporters Lizzie Kane, Jeremy Gorner, Addison Wright and A.D. Quig contributed.)

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