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When it comes to church/state separation, the #1 rule is (usually) pretty simple: If you’re getting taxpayer money, you can’t discriminate against a group for their race/gender/orientation/etc. for any reason. If you’re paying for everything on your own, go do what you want. That’s overly simplified, I know, but it’s the gist of the law.
In Illinois, Catholic adoption agencies used to be given taxpayer money to run their businesses. In the process, they wouldn’t allow gay couples to adopt because it went against their faith. But now that civil unions are legal in the state, they’re no longer allowed to discriminate like that.

'Catholic Charities turned away Rick Wade, left, and Tim Kee of Marion, Ill., when the couple tried to adopt a child three years ago.' - Dan Gill, NYT

Instead of welcoming the new influx of prospective parents as any rational, loving person would’ve done, most of the Catholic Charities have closed shop. Apparently, they feel it’s better to let the kids remain without parents than to send them home with a loving gay couple.
And the Catholic groups are still complaining about it, as if they’re the victims:

“In the name of tolerance, we’re not being tolerated,” said Bishop Thomas J. Paprocki of the Diocese of Springfield, Ill., a civil and canon lawyer who helped drive the church’s losing battle to retain its state contracts for foster care and adoption services.

But Anthony R. Picarello Jr., general counsel and associate general secretary of the United States Conference of Catholic Bishops, disagreed. “It’s true that the church doesn’t have a First Amendment right to have a government contract,” he said, “but it does have a First Amendment right not to be excluded from a contract based on its religious beliefs.”

Yeah! How dare we not tolerate bigotry!?
I don’t feel bad for any of them and neither should you. Let them whine all they want. No one’s asking them to do anything crazy. The state is simply telling them to treat gay couples like they treat straight ones. If they can’t handle that, the problem is entirely in their own minds and their faith itself.
As for the comment about being excluded because of their religious beliefs, it’s just not true. The state isn’t saying, “We’re not giving you these contracts because you’re Catholics.” They’re saying that no group can discriminate for any reason while getting funding to support their bigotry. The Catholics brought this problem onto themselves.

In Illinois, Catholic Charities in five of the six state dioceses had grown dependent on foster care contracts, receiving 60 percent to 92 percent of their revenues from the state, according to affidavits by the charities’ directors…
When the contracts came up for renewal in June, the state attorney general, along with the legal staff in the governor’s office and the Department of Children and Family Services, decided that the religious providers on state contracts would no longer be able to reject same-sex couples, said Kendall Marlowe, a spokesman for the department.

We’re all better off now that they’re leaving the adoption business in the state. In fact, you can help hasten the process by making sure other groups have the resources they need to take in the children abandoned by Catholic Charities. Let the discriminatory practices die away quickly.

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Hemant Mehta is the founder of FriendlyAtheist.com, a YouTube creator, podcast co-host, and author of multiple books about atheism. He can be reached at @HemantMehta.