Chicago, Denver Fight Withholding of Migrant Support Funds

The Trump administration violated the constitutional separation of powers when it withheld funds for migrant services, an attorney argued Monday on behalf of Chicago and two other municipalities.

Chicago, Denver and Pima County, Ariz. hope to defeat the federal government’s argument that the case belongs entirely in the Court of Claims rather than a Chicago federal courtroom. Allegations of constitutional violations should be heard in federal court, the municipalities argued in asking for a preliminary injunction.

Chicago and Denver saw tens of thousands of migrants bused north from Texas in recent years, and Pima County—home to Tucson—is on the border with Mexico. Their funding was targeted by Elon Musk and the Department of Government Efficiency earlier this year, not long after Donald Trump took office for a second term.

“This isn’t a circumstance where they’re attempting to figure out how to make good,” attorney Lucy Prather of the City of Chicago’s Law Department told a Northern District of Illinois judge. “They just determined they’re not going to do what Congress directed.”

The municipalities sued the administration after it froze funds authorized by Congress to support migrant services. The Shelter and Services Program was intended to reimburse state and local governments that incur costs to care for migrants whom federal authorities release: “services necessitated by the federal government’s immigration policies,” the plaintiffs wrote.

That changed after Elon Musk promised to “clawback” funds that he said were going to shelter “illegals,” and the Federal Emergency Management Agency “de-obligated” the grants shortly afterward, the plaintiffs allege.

The cities want a preliminary injunction requiring the government to unfreeze the funding and process pending and future reimbursement requests.

But the Department of Homeland Security no longer has a policy to release immigrants into the community, attorney Patrick Johnson of the US Department of Justice said Monday.

If municipalities don’t require the funds “because there are no longer shelters because of new immigration policies,” he said, “then that can’t violate separation of powers.”

All the plaintiffs’ arguments derive from essentially a contract dispute, Johnson said, meaning they belong in the Court of Claims—an argument the Trump administration frequently deploys in defending its cuts.

US District Court for the Northern District of Illinois Judge Matthew Kennelly asked attorneys to consider whether it would be appropriate to combine the preliminary injunction arguments with a trial on the merits and decide the matter all at once.

There’s no urgent basis for emergency relief, Johnson argued, saying the money won’t be spent elsewhere.

“They’re not being told ‘you’ll never get it back,’” he said. “We have concerns they spent it improperly.”

But Congress made clear that the money must be spent for specific purposes, Prather said.

The administration’s stated suspicion that the funding was used illegally is “another way of saying ‘we don’t agree Congress should have passed this law,’” she said.

Chicago, Denver and Pima County are representing themselves.

The case is Chicago v. Dep’t of Homeland Sec., N.D. Ill., No. 1:25-cv-05463, oral arguments 9/22/25.