(AP) – The Trump administration will require that homeless service providers force people to receive behavioral health treatment in order to access long-term, federally supported housing, a move that could mean organizations across Oregon would have to choose between receiving federal dollars or state dollars — but not both.
On Thursday, the U.S. Department of Housing and Urban Development (HUD) announced a major overhaul of the $3.9 billion federal Continuum of Care program, the largest homeless services initiative it oversees.
The changes slash the amount of funding available for permanent housing projects and upend federal support for the longstanding homeless services model known as “Housing First,” which aims to quickly connect people to housing by removing preconditions like stable employment or sobriety that can be barriers to entry.
The federal dollars also have a slew of new eligibility conditions that several Oregon providers said would put them in conflict with state funding rules. For instance, while federal grantees now must require people placed in permanent housing take part in services like addiction treatment or employment training, Oregon requires all services be “voluntary” to be eligible for the $80 million it set aside for permanent housing projects over the next two years.
Other provisions in the new federal grant requirements include that applicants must be in areas that enforce laws prohibiting public camping and illicit drug use, comply with federal immigration enforcement and must not use “a definition of sex other than as binary,” referring to the recognition of nonbinary and transgender people.
“The feds are saying one thing and the state is saying another thing, and that doesn’t work for me, the service provider, to be in compliance,” said Marion County Commissioner Danielle Bethell. “I’m out of compliance with one government or the other.”
County officials and service providers told InvestigateWest this clash will force them to choose between using either state or federal dollars for their housing projects, forgoing one stream of government funding entirely.
But since many groups rely on both to keep services afloat, providers would have to scale back their services accordingly, potentially pushing hundreds of formerly homeless Oregonians in federally supported programs back onto the streets almost “overnight,” Polk County Commissioner Jeremy Gordon said.
The National Alliance to End Homelessness, an advocacy group, goes even further, estimating the Continuum of Care program changes alone could displace upwards of 2,500 Oregonians currently living in permanent supportive housing or rapid rehousing programs.
“For a lot of providers, they’re going to be asked to do things that are kind of outside our DNA — things that we don’t believe in, things that undermine human dignity,” said Jimmy Jones, director of the Mid-Willamette Valley Community Action Agency, an anti-poverty service provider in Marion and Polk counties that receives about $2.1 million for housing services from the Continuum of Care program.
“Providers are going to have to make a choice whether or not they’re going to comply with these expectations for federal funds or are going to go their own way,” he continued.
At a press briefing on Friday morning, federal housing officials lauded the changes as long-overdue reforms to increase fairness and competition among providers, even as some may end up pushed out of the program.
“We have laid out the rules of the road,” a HUD spokesperson said. “If they want to take us up on this opportunity of funding, organizations are more than welcome. If organizations decide that adherence to certain policies or certain criteria is more important than the federal dollars, they are more than welcome to look at other sources of funding.”
Both Republican and Democratic members of Congress have raised alarm about the rapid changes.
In late October, as a leaked draft of the changes circulated, more than a dozen Republicans in the U.S. House of Representatives urged HUD to take a more measured approach to implement its desired policy changes and extend existing awards for another year to avoid destabilizing local programs that keep families housed. On Thursday, 42 members of the U.S. Senate Democratic caucus, including Oregon Sens. Ron Wyden and Jeff Merkley, sent a letter imploring the agency to “immediately reconsider” the policy changes.
Continuum of Care dollars are expected to continue flowing as normal to communities through the end of the year. After that, federal funding is not guaranteed — and it is unlikely state dollars could fill in the gap, as Oregon has already cut back its housing agency’s budget for the 2025-2027 fiscal year by more than $1 billion due to dropping revenue forecasts.
Brooke Matthews, a program manager for the Oregon Community Continuum of Care, said the 26 rural and frontier counties she represents rely heavily on federal dollars to conduct outreach and house vulnerable people. The group received nearly $2.8 million for such efforts this year.
Small and rural counties are already stretching every penny to reach people experiencing homelessness, she emphasized.
“These are disabled veterans. These are people with disabilities. These are families with children,” said Matthews.
‘Out of compliance’
Established in the mid-1990s, the federal Continuum of Care program created local planning bodies by the same name that serve as the sole applicant for federal dollars supporting homelessness services, such as permanent and transitional housing, data collection, case management, and homelessness prevention.
Continuums of Care were intended to streamline a largely fragmented process that saw local providers apply for grant opportunities on their own without collaborating on strategies to meet the needs of the broader community.
Roughly $65 million was allocated across Oregon’s eight continuums in January, during the final days of the Biden administration — the vast majority for permanent supportive housing, a kind of long-term housing with on-site services specifically aimed at helping people with disabilities. The funding also went toward temporary rental assistance known as rapid rehousing.
Speculation over prospective changes to the program’s funding rules has swirled for months: Providers said federal housing officials began notifying them around September of plans to scrap approved Continuum of Care applications and redo the entire process again for the funds set to be doled out in 2026.
The requirements ultimately released Thursday mirror an executive order signed by President Donald Trump in July directing agencies to wind down “Housing First” programs in favor of transitional housing and other short-term interventions to curb the homelessness crisis.
It also gives added preference to faith-based groups previously ineligible for funding opportunities and places a 30% cap on spending for permanent supportive housing. Currently almost 90% of the program’s dollars goes towards this type of housing.
Trump and other administration officials have long criticized “Housing First” policies for failing to tackle what they say are “root causes” of homelessness, like mental illness and substance use, by providing little incentive for future self-sufficiency.
“Our philosophy for addressing the homelessness crisis will now define success not by dollars spent or housing units filled, but by how many people achieve long-term self-sufficiency and recovery,” HUD Secretary Scott Turner said in a statement Thursday about the changes.
Supporters of the model, however, argue that providing affordable housing is more cost-effective than treatment-first tactics and gives people stable ground for them to begin addressing the other struggles they may be facing.
How HUD intends to define some of the new criteria remains unclear. If interpreted broadly, some of the conditions, like enforcement of anti-camping laws, could put Oregon out of the running entirely, according to Matthews, program manager for the Oregon Community Continuum of Care.
Matthews asked officials with HUD’s Oregon field office during a meeting if a state law that limits when local governments can intervene with encampments would violate anti-camping grant conditions, and they responded that it would be “a good assumption for us to make,” she recalled.
“Rural Oregon is scrappy and creative,” Matthews said. But the threat of losing $65 million in Continuum of Care dollars would be a huge hit, she said. “I don’t have a creative enough solution for how you overcome (that).”
That is if providers are even able to throw together an application that meets the sweeping changes to the Continuum of Care on short notice. Normally, the process of compiling an application takes months of effort, but HUD’s deadline to apply for 2026 funds is 10 weeks away.
“It’s a big lift,” explained Gordon, the Polk County commissioner. “There’s extensive data gathering, community input and administrative lift. … Asking us to build something brand new or shift in gears, it’s going to cause a lot of sunk costs and red tape.”
Jones, director of the Mid-Willamette Valley Community Action Agency, said he’s alarmed about how the overhaul could disrupt coordination between local homeless service providers. Some may choose to stay the course with the state’s “Housing First” programs or revert back to the “Housing Ready” model reminiscent of the 1980s and 1990s that HUD is now incentivizing.
“The entire continuum will be jeopardized in some ways,” Jones said, “because there is no coordinated local approach to homelessness when you have polarization of these two models to such extremes.”
‘House of Cards’
HUD is already facing several lawsuits challenging changes to grant eligibility requirements, including two suits about the Continuum of Care program that predate Thursday’s announcement.
In May, more than two dozen local governments, including Oregon’s Multnomah County and the cities of Bend, Portland and Wilsonville, sued in the Washington District Court over grant agreements requiring them to comply with federal immigration enforcement and other policies or risk losing their funding. A federal judge has paused any changes while the suit is litigated.
Another lawsuit brought by the National Alliance to End Homelessness and Women’s Development Corporation challenges changes to a housing development grant that was overhauled in September.
Ann Oliva, CEO of the National Alliance to End Homelessness who also worked at HUD for a decade across three presidential administrations, said it’s not unusual for a new administration to reissue grant applications or tweak policies unrelated to eligibility before dollars are awarded.
It is another thing, she said, to rescind already awarded dollars or condition the ability to apply for grants without congressional approval.
“When Congress says the funds need to be used for this purpose and (awarded) through a national competition, that seems pretty clear that the competition should be national,” Oliva said. “When the criteria is set such that most of the country isn’t even eligible to compete fairly, that’s where a line gets crossed.”
For Oregon groups, the potential loss of federal Continuum of Care dollars would likely worsen their financial challenges after the state cut funding for tackling homelessness and housing insecurity. In June, citing a roughly $373 million budget deficit, Oregon lawmakers approved a $2.6 billion two-year housing budget for the state’s housing services agency, the Housing and Community Services Department. That’s about $1 billion less than the last budget cycle.
Eviction prevention programs saw the greatest decrease in funds, dropping about 75% from 2023-25 funding levels. Emergency shelter providers are also seeing reductions to state funding funneled to their region through local homelessness planning groups.
Gov. Tina Kotek’s office declined to immediately comment on the Continuum of Care program changes and plans to address impacts to Oregon.
Tillamook County Commissioner Erin Skaar, who previously headed up an anti-poverty nonprofit, said most service providers have “cobbled together” funding sources to make ends meet. For instance, a provider might use a state grant to pay for staffing or wraparound services at a permanent supportive housing site, and rely on a federal grant for the cost of rent and maintaining the building.
“In many cases, it’s a bit of a house of cards. … You start pulling some of those cards out from underneath it, it may or may not make it,” Skaar said. “I don’t think any of us think that somehow we’re just going to slide through this unscathed and (provide) all the same quantity of services we have in the past.”
According to Jones, for months, he urged state officials and housing groups to get ahead of the federal government’s full-scale shift in policy and how it would reshape the landscape for providers. He says he was met with responses expressing confidence in state law and the hope the changes would be blocked by a court.
Even if lawsuits block the most significant changes from going into effect, Jones believes the direction the administration is headed will set back providers’ efforts to address the homelessness crisis for years to come.
“They can do whatever they like, giving the money to whomever they want,” he said. “It’s going to turn full beds into empty beds and two years from now everyone is going to be writing think pieces about what went wrong.”