Lawyers for Catholic Charities had urged Judge Schmidt to prevent the state from abruptly ending the partnership, which they said has worked well for decades. Judge Schmidt wrote in his ruling the longevity of the relationship did not entitle them to automatic renewal of their contracts.

Judge Schmidt's ruling made no mention of the religious freedom issue, an issue Tom Brejcha, lead attorney for Catholic Charities, said after the hearing that he would like to ask Judge Schmidt to consider.

When the civil union bill went into effect in June, Catholic Charities said its religious principles do not allow it to place foster and adoptive children in the homes of unmarried couples, including those in civil unions. It said it would refer those cases to other agencies.

"The court's decision regarding Catholic Charities' foster care services makes a sad day for the children of Illinois," Bishop Thomas John Paprocki said.

"The State of Illinois is actively taking steps to push Catholic Charities out of foster care services, which would end a partnership that dates back to the mid-1960s with the creation of the Illinois Department of Children and Family Services. The message from the state of Illinois is simple: Organizations that only place children in accord with their religious beliefs are barred from state contracts — Catholics need not apply."

Peoria Bishop Daniel R. Jenky, CSC, said, "Clearly the intent of the civil union law was not to force the state to end these contracts and force the transfer of thousands of children's cases.

"We continue to believe we can adhere to our religious principles and operate within Illinois law," he said.

During the hearing, Judge Schmidt focused on whether the state violated the property rights of Catholic Charities when it declined to sign new contracts. Lawyers for the Illinois Attorney General argued Catholic Charities policy of licensing only married couples and single parents living alone as foster parents, while referring couples in civil unions to other agencies, violated state anti-discrimination laws that now accommodate couples in civil unions.

But lawyers for Catholic Charities argued that the agencies had a reasonable expectation that the contracts wouldn't end without sufficient warning or a public hearing, given the decades that they have existed and the infrastructure that has been built around them.