This Would Be ‘Devastating’: California Sues to Stop Trump’s Chaos-Inducing Federal Funding Freeze

Following a Monday Executive Order from President Donald Trump That Seeks to Freeze All Federal Aid, California Officials Attempt to Make Sense of the Chaos

U.S. President Donald Trump takes a question from a reporter during a news conference in the Roosevelt Room of the White House in Washington, D.C., on Jan. 21, 2025. | Credit: Andrew Harnik, Getty Images

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Scrambling to respond to the Trump administration’s late Monday night directive to pause a wide, but as-yet-unspecified, swath of federal spending programs, California’s Democratic elected officials and agency heads offered two consistent responses today:

We don’t know what this means yet and;
It’s almost definitely illegal.

Leading the charge out of Sacramento is Attorney General Rob Bonta who, along with 22 other Democratic state attorneys general, filed a fresh lawsuit challenging the ordered funding freeze and asking a court to block it from going into effect.

“This directive is unprecedented in scope and would be devastating if implemented,” Bonta said in a statement.

A host of nonprofit organizations filed suit prior to the state attorneys general, prompting a federal judge to put a temporary hold on the funding freeze minutes before it was scheduled to go into effect. The judge called it a “brief administrative stay” to maintain the status quo through Friday while court challenges proceed.

The chaos began Monday evening when, in a two-page memo, the president’s acting director of the Office of Management and Budget ordered federal agencies to “temporarily pause” all financial assistance that could be “implicated” by any of the president’s prior executive orders. Since taking office just more than a week ago, President Donald Trump has issued a flurry of edicts to remake federal policy and governance.

The White House held a press briefing earlier today to emphasize that this was simply a temporary pause on spending and that individual financial assistance programs like Social Security, Medicare, food stamps, Pell Grants and rental assistance would not be affected by the order.

“The reason for this is to ensure that every penny that is going out the door is not conflicting with the executive orders and actions that this president has taken,” White House press secretary Karoline Leavitt told reporters.

If the order were to be allowed to take effect, nobody knows which specific programs will be affected and for how long.

Before the judge intervened, the administration sent a follow-up memo to all federal agencies with a list of more than 3,200 federal spending programs. Agency staff were asked to provide the White House with budgetary details about each program and answer a series of questions, including whether the program might support undocumented immigrants, impose an “undue burden” on domestic energy exploration or promote “diversity, equity and inclusion” efforts, abortion or “gender ideology.”

Programs listed include those that provide aid for disaster victims, housing for low-income resident and farm workers, foreign aid, air and water pollution monitoring and early childhood education.

Even top state officials remain unsure how this would affect Californians.

“We’re currently reviewing the OMB memo and working with our federal counterparts to get clarity,” said H.D. Palmer, a spokesperson for the state’s Department of Finance. “While this is clearly a fluid situation, we remain confident in our ability to continue serving Californians.”

That same statement — word for word — was issued by the spokespeople from California’s housing, health care services, workforce development, economic development, energy and social services departments.

As for California’s governor, Gavin Newsom said: “I’m not going to react in a negative light, because I have confidence that will be worked out. Right now, we’re just trying to get our Medicaid system opened up. It’s down. Medi-Cal in California. I think that’s the case in all 50 states. So they turned that off. So that’s something our state’s working overtime to address.

“It appears that the president and his team are backing off or backtracking as it relates to their intent to have done that, in a way that will impact the support being provided to the roughly 15 million people that rely on Medicaid. We could react to all this or we could have a more constructive wait-and-see.”

Many of California’s elected Democratic officials insisted that the results of this order would be more dire.

Newly elected U.S. Sen. Adam Schiff warned that the order “will have immediate and deeply destructive consequences for recovery efforts, law enforcement funding, health care access, and so much more.”

U.S. Congressman Jared Huffman, whose district spans the coast north of San Francisco, warned that “millions of students relying on Pell grants, federal student loans, and federal work study will have their plans to pursue postsecondary education and further their careers thrown into chaos as federal financial aid disbursements are paused.”

That was contradicted by a U.S Department of Education memo, which reiterated that federal Title IV aid, which includes student loans and grants, aren’t part of this freeze.

Critics of the funding freeze have characterized it as a radical presidential power grab. The U.S. Constitution gives Congress the authority to authorize federal spending. Though past presidents have occasionally treated congressional appropriations as a suggestion rather than a mandate, Congress put strict guidelines on when and how an administration can delay or withhold money it has been ordered to spend during the Nixon administration. Russell Vought, Trump’s budget office nominee, has called that 1974 law unconstitutional.

In a memo released Tuesday, the White House insisted that the funding freeze was not an “impoundment,” as described by that law, but “a temporary pause to give agencies time to ensure that financial assistance conforms to the policies set out in the President’s Executive Orders.”

The lawsuit filed today by Bonta and other Democratic state prosecutors say that such an attempt at clarification only “increases confusion” about what is and isn’t subject to the freeze, which they still characterize as an unconstitutional usurpation of Congress’ spending powers.

Meanwhile, some states began immediately reporting problems accessing funds from Medicaid, the public health insurance program for low-income people, even though the freeze was not supposed to affect this program, according to the Washington Post. Some early childhood educators funded through the federal Head Start program and federally-funded medical researchers have reported being unable to access their payments, according to the New York Times.

Even though Head Start preschool programs were later deemed by the White House to be exempt from the funding pause, some providers in California had trouble getting into their payment portals this morning amid the panic and confusion, said Melanee Cottrill, executive director of Head Start California. Some of the state’s roughly 160 Head Start programs are run by school districts, others by nonprofits with small reserves and budgets propped up with other federal dollars that are now in question.

“We did have a couple of programs on the verge of closing their doors until we got into the payment system this afternoon,” Cottrill said. “There is a lot of pressure right now from the federal government to cut programs and I’m concerned that the families we serve are going to feel the impact of those, and it’s going to really hit the system as a whole.”

In a separate statement, University of California President Michael Drake said that it was “not yet possible to know the full extent” of the funding freeze decree’s implications. The university system has hundreds of millions of dollars in financial aid at stake, along with billions in research grants.

With hundreds of billions of dollars on the line, legal experts expect the challenge to this order to move through the courts quickly. But in the meantime, the suddenly uncertain fate of thousands of federal programs has left many service providers and those who rely on those services with feelings that range from anxiety to despair.

“In California the scale of these impacts is unimaginable,” said Andrew Cheyne, managing director of public policy for the advocacy group GRACE/End Child Poverty in California. “We’re looking at the intersection of cuts to programs in education, public benefits, health care, child abuse prevention, in ways that would unravel the fabric of our state.”

The Housing Authority of the City of Los Angeles said in a statement it was seeking confirmation from HUD that rental assistance would not be canceled for the 60,000 households in the city that rely on it.

“We are also seeking guidance on how this freeze will affect grants, homeless funding and other funds as these resources are important in addressing the housing crisis in Los Angeles,” the housing authority added.

Antonio Aguilar, an outreach manager for Small Business Majority in Northern California and the Central Valley, worried that small businesses seeking disaster aid — especially after the Los Angeles fires — could be affected.

“Even though that may not be the intent of this executive order, it leads to confusion,” Aguilar said. “It will take time to get it sorted out.”

This is an evolving story; check back for updates.

Adam Ashton, John D’Agostino, Adam Echelman, Ana Ibarra, Jeanne Kuang, Alejandro Lazo, Felicia Mello, Levi Sumagaysay and Mikhail Zinshteyn contributed to this story.

This story originally appeared on CalMatters.org, a nonprofit, nonpartisan media venture explaining California policies and politics.