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In response to an executive order, the Department of Housing had revised its federal grant guidelines
SACRAMENTO, Calif. — A federal judge has temporarily blocked the Trump administration from enforcing new limits on how states can use federal homelessness funding, halting a policy shift that advocates warn could have pushed tens of thousands of Californians closer to homelessness.
The ruling pauses a recent executive order that sought to cap spending on permanent housing projects under the federal Continuum of Care program at 30%, down from roughly 90%. The program, administered by the Department of Housing and Urban Development (HUD), has long emphasized a “housing first” approach that prioritizes permanent housing as a pathway out of homelessness. The new criteria, however, criticizes that approach as “a profound failure.”
California joined other plaintiffs in challenging the policy, arguing the abrupt funding cap would undermine existing housing projects and destabilize services statewide.
“So going from a cap of really effectively no cap to 30% was pretty significant,” said Trent Simmons, a representative of Sacramento Steps Forward, which distributes federal homelessness funding to local agencies.
Under the executive order, the Trump administration sought to redirect funding toward temporary and transitional housing, paired with stricter requirements such as work participation and treatment for mental health and substance use disorders.
“The factors that ultimately bring somebody to experience homelessness are just as varied and diverse as the factors needed to help somebody exit it,” Simmons said.
The proposed changes were outlined in a new HUD Notice of Funding Opportunity, or NOFO, which advocates say created widespread confusion. Many local agencies had expected stable, two-year funding covering both fiscal years 2024 and 2025.
Instead, the revised NOFO placed future funding in uncertainty.
According to Gov. Gavin Newsom’s office, California organizations received more than $683 million in Continuum of Care funding last year, with about 90% allocated to permanent housing projects — funds that would have been affected by the cap.
Housing advocates say limiting permanent housing would worsen an already severe crisis.
“We can have all the temporary housing in the world, but if there’s no place for people to go, there’s no place for people to go,” said Niki Jones, director of the Sacramento Regional Coalition to End Homelessness.
In a statement, a HUD spokesperson said, “HUD will continue working to provide homelessness assistance funding to grantees nationwide. The Department remains committed to program reforms intended to assist our nation’s most vulnerable citizens and will continue to do so in accordance with court orders.”
The pause leaves the future of the proposed funding changes uncertain as litigation continues.
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