A Bipartisan Funding Deal Protects HUD’s Continuum of Care Grants for Now, After Months of Advocacy and Court Battles Over Proposed Cuts
President Donald Trump’s administration appears to have given up its efforts to significantly overhaul funding for homeless services and supportive housing, at least temporarily. But advocates warn that the fight to preserve this funding is far from over.
On February 4, Trump signed a bill to end the partial government shutdown that started in late January. The bill signing ended months of negotiations between advocacy groups and federal lawmakers over funding for homeless services and provides some much-needed clarity for service providers for the rest of the fiscal year.
The final agreement includes $77.3 billion for the Department of Housing and Urban Development in Fiscal Year 2026, a $7.2 billion increase from the previous year. It also includes $34.9 billion for new tenant-based rental assistance, $600 million for new tenant protection vouchers, and $4.4. billion for Homeless Assistance Grants.
The bill also includes language that requires HUD to automatically approve renewal funding for Continuum of Care grants, which has been a significant point of contention between advocates and lawmakers. This provision is expected to reduce any funding hiccups that HUD may have caused in its attempts to rewrite its funding guidelines.
CoC grants are the largest single source of federal funding for homeless services, and advocates had previously criticized HUD for creating a “life or death” scenario for many service providers with its proposed changes.
“This outcome is a direct result of communities speaking with one voice,” Deborah De Santis, CEO of the Center for Supportive Housing, said in a statement. “Advocates and leaders from housing, services, businesses, and local governments across the United States met with congressional offices, shared potential impacts, and pushed for a solution that centered people’s housing stability. Congress listened, and the final bill protects essential housing and services at a moment when stability and safety are critical for individuals and communities.”
What HUD Tried to Change and Why Advocates Called It ‘Life or Death’
Last year, the Trump administration proposed a series of significant changes to its homeless services funding programs. For instance, HUD proposed capping expenditures for permanent supportive housing at 30% of a grantee’s total award, down from the current 90% limit.
Advocates warned that change alone could have led to more than 170,000 people losing their homes, as most permanent supportive housing funds are awarded on a renewal basis. That means the money goes to operating and maintaining existing permanent supportive housing buildings.
HUD also proposed prioritizing applications for funding from faith-based organizations, which they claimed were deprioritized under former President Joe Biden’s administration. The agency also sought to prohibit grantees from incorporating Diversity, Equity, and Inclusion principles into their programs and from using the Housing First service delivery method.
National Alliance to End Homelessness CEO Ann Oliva told Invisible People at the time that the proposed changes are a “betrayal of HUD’s mission.”
A federal judge in Rhode Island temporarily blocked the proposed changes from taking place last year, arguing that the move seemed designed to inject chaos into the homeless services system. HUD withdrew its proposed changes after the ruling was issued. Still, a spokesperson for the agency has said the agency continues to work toward improving the “success” of its homeless services programs.
Marcy Thompson, NAEH’s vice president of programs and policy, wrote in a recent blog post that the government funding bill is a “strong rejection” of Trump’s proposed budget, which would have significantly slashed funding for homeless services and affordable housing. The funding bill also shows how public pressure can impact policy debates, she added.
“It cannot be overstated how significant it is that Congress—in both chambers and across party lines—prioritized the inclusion of provisions to protect CoC Program funding against very real threats from the administration,” Thompson wrote. “This did not happen by accident. It is a testament to the thousands of people who elevated the concerns related to HUD’s handling of FY2025 CoC Program funding.”
Why Service Providers Are Still on Edge
While the government funding bill has been celebrated by many, there are still challenges ahead for homeless service providers. For example, the Trump administration has signaled that it will continue trying to overhaul homeless services funding and force service providers to accept ideological demands in exchange for money. Courts have thus far thrown cold water on these efforts, but uncertainty remains.
At the same time, many local governments have budget issues they need to address, which could make service providers more reliant on federal funding. For instance, Los Angeles County cut more than $200 million from its homeless services funding allotment to balance its budget, The LA Times reported. That means there is less local money available for service providers in the county, which could make them more reliant on other funding sources.
Meanwhile, the number of people experiencing homelessness across the U.S. is expected to climb as the cost of living puts additional pressure on low-income households. Multiple states have reported increases in homelessness during their local Point in Time Counts, spanning from New Jersey to Colorado. That means there are more people in need of services and support with less money available from local sources.
“Let this be the proof point needed to keep us moving forward,” Thompson wrote. “Because this is not the end of the fight. We must now mobilize and build off the momentum that we have created.”
Why This Moment Demands More Public Engagement, Not Less
Now is not the time to be silent about homelessness in the United States or anywhere else. Unhoused people deserve safe and sanitary housing just as much as those who can afford rent or a mortgage.
Poverty and homelessness are both policy choices, not personal failures. That’s why we need you to contact your officials and tell them you support legislation that:
- Streamlines the development of affordable housing
- Reduces barriers for people experiencing homelessness to enter permanent housing
- Bolsters government response to homelessness
Together, we can end homelessness.