Ana Muñiz, Assistant Professor of Criminology, Law and Society, is quoted in USA Today for her expertise regarding Senate Bill 54, or California's "sanctuary state bill". She elaborates as to the legality of withdrawing federal funding from sanctuary states, and the extent of power that both the federal and local governments have on this issue.
From USA Today:
That discretion could be used against California to strip its federal money, but state officials would bring legal challenges.
“I think (restricting funding) is legally a gray area right now,” said Ana Muniz, assistant criminology professor at University of California, Irvine. “The federal government can’t compel local governments to act, but there is also the legality over the federal government forcing the state to act. Withholding money could be seen as an overstepping.”