The Brief

A federal judge in California today ordered the Trump administration to restore 500 National Institutes of Health grants that it suspended at UCLA in July over accusations the campus tolerates antisemitism.

Judge Rita Lin’s decision provides researchers at the university a major respite as UCLA and University of California leaders contend with Trump’s demands for a $1.2 billion settlement over a litany of accusations, including that the campus permits antisemitism. It’s a claim that more than 600 Jewish members of the University of California community in a public letter say is “misguided and punitive.” Meanwhile, UCLA’s leadership highlighted its efforts to combat antisemitism days before Trump’s settlement demands.

“Cutting off hundreds of millions of research funds will do nothing to make UCLA safer for Jews nor diminish antisemitism in the world,” the public letter signed by UC Jewish professors, students, staff and alumni says.

Last week several UC faculty groups and unions sued to halt the administration from pursuing its settlement demands, describing them as an “unlawful threat of federal funding cuts” to “illegally coerce the UC into suppressing free speech and academic freedom rights.”

Lin’s decision follows her string of orders since June that have restored hundreds of other UC research grants from multiple agencies. Her injunction is preliminary; the trial is ongoing.

Today’s action restores virtually all of the 800 UCLA science grants the government froze in July — a value of more than $500 million. Lin’s order today of restoring 500 National Institutes of Health grants follows her decision last month that 300 National Science Foundation grants suspended in July be restored. The federal government complied with her August order by reversing the freezes.

The science grants pay for research into life-saving drugs, dementia, heart disease in rural areas, robotics education and a whole gamut of science inquiries across the country. They help fuel the country’s research enterprise and are the top source of federal research grants at the UC. The UC system has battled the Trump administration over various efforts to slash its funding since President Donald Trump’s second term began. The science funding is also a key source of income and training for graduate students, who are the next generation of publicly funded academics.

Lin’s latest order also restores three Department of Transportation grants and an unknown number of Department of Defense grants that the Trump administration terminated this year.

Lin gave lawyers for the Trump administration until Sept. 29 to submit a report confirming that they complied with her orders to restore the grants.

How we got here

In June, Lin issued a preliminary injunction, later upheld by the Ninth Circuit Court of Appeals, that ordered the Trump administration to restore 114 National Science Foundation grants and several dozen other grants from the Environmental Protection Agency and National Endowment for the Humanities at all UC campuses.

Then in August, Lin sided with the lawyers for the researchers in undoing the funding freezes for the 300 National Science Foundation grants. The lawyers argued that the Trump administration’s surprising decision in late July to suspend those grants violated Lin’s June injunction.

Lin’s latest order similarly says that the federal government violated her June preliminary injunction when it suspended the 500 National Institutes of Health grants at UCLA, also in late July. Core to her rationale is that the science agencies terminated UC grants en masse, in violation of a law, the Administrative Procedure Act, that requires federal agencies to explain in individual detail why the grants were terminated. Her rationale echoes other federal district court rulings about grant terminations.

How this relates to recent Supreme Court decision

Lin’s decision also creates a potential opening for other researchers seeking to challenge their grant terminations after an August U.S. Supreme Court decision seemingly made that process harder.

In that decision, the high court said the right venue to sue to get a defunded grant restored is the little-known Court of Federal Claims, not a traditional district court. A slim majority of justices said that plaintiffs need to argue in the Court of Federal Claims to get their money back while they argue in a traditional district court to challenge the policy that led to the grant’s termination in the first place.

But Lin concluded that that Supreme Court decision can’t apply to the UC researchers because of a quirk in who can file suit in the Court of Federal Claims. Because research grants are contracts between a university and the federal government, only universities have “standing” to bring a suit to the Court of Federal Claims. The Supreme Court decision didn’t take on the issue of individuals, Lin wrote, but the high court justices still believed plaintiffs should have some way to argue that their funding should be restored.

Here’s how Lin’s order creates an opening: Lawyers for the federal government argued to Lin that because the plaintiffs are individual UC researchers and not the UC campuses themselves, they can’t sue at all to restore their grant funding. But Lin balked at that rationale at the Thursday hearing and in her written order Monday.

“The district courts are the only forum where the UC researchers could defend their constitutional and statutory rights, and the Ninth Circuit has already determined that they may bring their claims here. This Court will not shut its doors to them,” Lin wrote.

She added in her written order that the lawyers for the federal government presented an “extreme” view that the researchers couldn’t sue anywhere, even in the hypothetical scenario in which the federal government terminated “the federal funding of all Black researchers, or every researcher with an Asian last name — and the researchers would have nowhere to sue to undo those wrongs, unless their universities decided to sue in the Court of Federal Claims.”

What the Trump administration has argued

In justifying the grant suspensions in July, the National Science Foundation and National Institutes of Health each sent UCLA letters accusing the university of using race-based admissions, allowing transgender women to compete in women’s sports and not doing enough to address antisemitism on its campus.

But California barred public campuses from admitting students based on race in 1996 when voters through a ballot measure ended the practice. Representatives from the two science agencies wrote in July that though UCLA maintains it doesn’t use affirmative action, its “holistic review” admissions process is de-facto race-based admissions.

The letter from the National Science Foundation said the agency believes that “UCLA’s ‘holistic review’ admissions process, which considers factors such as an applicant’s neighborhood/zip code, family income, and school profile — and invites the disclosure of an applicant’s race via personal statements — is a transparent attempt to engage in race-based admissions in all but name.” The letter from the National Institutes of Health was virtually identical.

While the Supreme Court in 2023 overturned the use of race in college admissions in a 6-3 decision, Chief Justice John Roberts wrote that students are free to discuss their identities and how they overcame hardships in admissions essays.

“Nothing in this opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise,” Roberts wrote.

All three criticisms in the agencies’ July letters match the policies Trump is pursuing through executive actions to reshape higher education and the federal government. They also mirror the policy playbook fleshed out in Project 2025, a conservative publication that has shaped Trump’s current term in office.

UCLA addresses antisemitism

The UCLA grant suspensions followed a federal Department of Justice report in July that accused the campus of not doing enough to address antisemitism, particularly related to events during last year’s pro-Palestine protests and encampment. The report came months after UCLA commissioned a task force to investigate antisemitism on campus and come up with recommendations that UCLA leaders said they’d implement.

Students and faculty protesting Israel’s war in Gaza have themselves accused UCLA of bias against them, including Arab, Muslim and Jewish UCLA community members.

Trump’s settlement demand “does not make Jewish students safer,” the Jewish Public Affairs Committee of California said in a statement last month. The advocacy group is composed of 39 organizations that offer family services, political advocacy, immigration legal aid and other services.

The Jewish public affairs committee acknowledged several strides UC and UCLA made to curtail antisemitism and promote safer campuses. “Meaningful progress is already underway in California,” the group wrote.

A downtown hearing kicked off Wednesday, during which a federal judge will consider holding the city of Los Angeles in contempt of court. The hearing is the latest step in a long-running legal saga regarding the city's response to the region’s homelessness crisis.

The hearing was ordered by U.S. District Judge David O. Carter, who has been overseeing a settlement in a lawsuit brought against the city by the L.A. Alliance for Human Rights, a group of downtown business and property owners. L.A. Alliance sued the city, and county, in 2020 for failing to adequately address homelessness.

Several witnesses are expected to testify during the contempt-of-court hearing, including Gita O’Neill, the new head of the region’s top homeless services agency, and Matt Szabo, the L.A. city administrative officer.

L.A. County Supervisor Kathryn Barger watched at least part of Wednesday’s hearing in the courtroom.

Why now?

Carter said in court documents that he’s concerned “the city has demonstrated a continuous pattern of delay” in meeting its obligations under court orders. During a hearing last week, the judge pointed to several delays, including recently reported issues related to data and interviewing city employees.

The judge noted that similar concerns have come up at previous hearings. Carter told attorneys for the city in March 2024 that he “indicated to the mayor that I’ve already reached the decision that the plaintiffs were misled” and “this is bad faith,” according to court transcripts.

The judge said in a Nov. 14 order that he’s concerned the “delay continues to this day.”

The contempt hearing is expected to cover whether the city has complied with court orders and provided regular updates to the court under the settlement agreement.

Reducing delays

Attorneys for the city have pushed back against the hearing, filing objections with the judge and making an unsuccessful emergency request with the 9th Circuit Court of Appeals to block it from happening.

City authorities also asked the appeals court to press pause on the judge’s order to appoint a monitor in the case to make sure the city stays on track with the settlement. The city argued that Carter handed the monitor “a blank check to interfere with the democratic process,” according to court documents.

The appeals court partly denied the city’s request. It allowed Wednesday’s hearing to move forward, but it agreed to pause the appointment of Daniel Garrie as monitor.

In light of that response, attorneys for the city have argued that looking at the city’s cooperation with Garrie “would be inappropriate” during the hearing and that L.A. “cannot be held in contempt for either the substance or the manner of its compliance with the order,” according to court documents.

Previous hearings related to the settlement have elicited tense questioning of witnesses and harsh words from the judge, who has been vocal about reducing delays and moving the case forward.

In an opening statement Wednesday, Theane Evangelis — one of the attorneys representing the city — urged the judge to “turn down the heat” on the closely watched case. Evangelis said the “city is constantly under fire” in court while L.A. has made “enormous strides” in getting people off the streets.

Elizabeth Mitchell, lead attorney for L.A. Alliance, said the city treats transparency as a burden.

She said Wednesday that the “city still fights oversight harder than it fights homelessness” and that the court should address L.A. 's “consistent” delays throughout the case.

What’s next?

The hearing is expected to continue past Wednesday, potentially resuming Friday or early next month, when more witnesses can appear in person.

City authorities told the court they believe a one-day hearing won’t be enough time to go over all the evidence.

California will face a nearly $18 billion budget deficit in the new fiscal year due to higher-than-expected spending, despite an economic boom largely driven by AI enthusiasm and strong revenue, the nonpartisan Legislative Analyst’s Office said Wednesday.

To make things worse, the $17.7 billion shortfall could balloon to an annual $35 billion by fiscal year 2027-28, as spending continues to grow and debts come due, the office warned in its annual fiscal outlook.

The gloomy forecast is a refreshed look at California’s financial future since June, when the state Department of Finance projected a $17.4 billion deficit for the upcoming fiscal year. The widened budget gap could undercut the legacy of Gov. Gavin Newsom, as he will likely be forced to make tough budget choices in his last year as governor.

It also means that for the fourth year in a row in his tenure, California is projected to have a deficit despite revenue growth.

“Today’s fiscal outlook underscores the challenging decisions ahead,” said Assembly budget chair Jesse Gabriel of Encino. He said the committee “remains committed to crafting a responsible budget that prioritizes essential services, uplifts working families and protects our most vulnerable communities.”

But state Sen. Roger Niello of Roseville, the Republican vice chair of the Senate Budget Committee, attributed the structural deficit to Democrats’ “unstoppable spending problems.”

“The state must assess the effectiveness and sustainability of the programs that were created during the surplus and make necessary corrections,” he said in a statement.

Since June, the state has witnessed stronger-than-expected tax revenues, raking in $6 billion more than projected between July and October. But the revenue gains in the new fiscal year will “almost entirely” go toward K-12 schools, community colleges and state reserves by constitutional requirements, the office projected.

Additionally, the fiscal challenges California faces also have persisted, if not deepened, due to steep federal cuts to health care and housing and homelessness services, as well as growing stock market uncertainties driven in part by President Donald Trump’s drastic tariff shifts. It raises a major question as to if, and how, the state can absorb the costs of those federal cuts.

Spending outpacing revenues

The state is projected to spend $6 billion more than previously anticipated next year, including $1.3 billion implementing Trump’s budget bill, which is expected to kick millions of Californians off Medi-Cal, hike health care premiums and shift much of the cost for programs such as food stamps onto the state, the LAO said. The increase is largely because the state must now shoulder a larger share of the cost to continue to provide benefits, said Carolyn Chu, chief deputy analyst with LAO.

The added cost of the federal cuts to health care will grow to $5 billion annually by fiscal year 2029-30, the office projected.

California also stands to lose hundreds of millions of dollars in funding for permanent housing under new policies the Trump administration rolled out last week, just as some counties are starting to see drops in their homeless population. Homelessness agencies warn that thousands of Californians could be kicked out of their subsidized housing and back on the streets.

The loss of federal funding could put more pressure on the state to step in with financial assistance — at a time when Newsom has expressed no interest in releasing more homelessness dollars to cities and counties.

Blaming local officials for stagnant progress on homelessness, Newsom in January proposed zero dollars for the Homeless Housing, Assistance and Prevention program, the main source of homelessness funding for local governments. The Legislature later successfully negotiated a $500 million investment — half what it used to be — and delayed the funds until next year with virtually no guarantee they will continue.

Graham Knaus, CEO of the California State Association of Counties, told CalMatters he expects the state to follow through on its funding commitment.

“We are now facing a federal government that is eviscerating the same funding at the federal level, so we should expect a substantial increase in homelessness,” he said. “And our only chance is for the state to stand with us … and protect those that are the most vulnerable.”

Fourth fiscal year in a row of deficits

The annual forecast by the nonpartisan fiscal adviser is a mere snapshot of California’s fiscal future and can be drastically different from the state finance department’s own projection, which is expected in January. In January 2024, Newsom’s office projected a $38 billion deficit for fiscal year 2024-25 — roughly half the $68 billion budget shortfall the LAO had projected a month before.

Earlier this year, California’s Democratic leaders scrambled to plug a $12 billion budget hole in fiscal year 2025-26, relying on internal borrowing, dipping into state reserves and halting new Medi-Cal enrollment for undocumented immigrants to avoid other deep cuts to social services. They largely blamed Trump for the shortfall, arguing the threat of sweeping tariffs and federal funding loss plunged the state into “deep uncertainty.”

Coffee is among the products facing steep tariffs under the Trump administration.

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But even before Trump retook office, California already faced a structural money problem, in part due to the state’s heavy reliance on wealthy earners’ income tax and capital gains, which rise and fall with the stock market. The state witnessed a record $97.5 billion surplus in 2022 during an economic boom, followed by an estimated $56 billion deficit over the next two fiscal years.

The state for three years used “temporary fixes,” such as internal borrowing, spending down reserves and suspending tax credits to plug multibillion-dollar budget holes, but now it’s “critical” for state lawmakers to reduce spending, raise revenues or both, the legislative analyst warned.

“California’s budget is undeniably less prepared for downturns,” the analysts noted in their report. “Continuing to use temporary tools — like budgetary borrowing — would only defer the problem and, ultimately, leave the state ill‑equipped to respond to a recession or downturn in the stock market.”

How sustainable is the AI-driven economy?

While all signs point to high uncertainty and low consumer confidence in the state economy, tech companies’ investment in AI has propelled the stock market to a “record high” and boosted tech workers’ income — the “lone bright spot” in the state’s economic outlook, Petek said.

But is it sustainable? Petek is cautious.

The stock market appears to be “overly exuberant,” as some investors are borrowing more to buy high-cost stocks, a sign of a stock market downturn, the report notes. Even if the market holds, lawmakers should treat it as a temporary or unsustainable gain, Petek said.

And there’s no guarantee that revenue gains from the stock market would be enough to fill a deficit of $30 billion to $35 billion, which the state is projected to hit in a few years. Since the state is constitutionally required to spend roughly half of any excess revenue gains on schools and reserves, it would need $60 billion in revenue higher than anticipated to close a budget gap that big, Petek said.

“Our view is that that’s highly unlikely to occur,” he said.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.