Last year, California communities won more than $683 million in federal homelessness funds through what is called the Continuum of Care program. About 90% of that went to permanent housing projects, which currently house tens of thousands of Californians, according to Newsom. The new rule threatens to put those people back out onto the street, he said in a news release.
The new policy also prohibits the use of federal funds for diversity and inclusion efforts, support of transgender clients, and use of “harm reduction” strategies that seek to reduce overdose deaths by helping people in active addiction use drugs more safely. And it gives preference for projects in cities, counties and states that ban homeless encampments.
Both lawsuits allege that the Trump administration’s funding changes violate the Administrative Procedure Act and the Constitution by defying the rules Congress set out for distributing the funds. Congress authorized a two-year grant cycle in 2024, meaning local jurisdictions wouldn’t have to reapply for funds in 2025. The Trump administration flouted that decision when it suddenly forced jurisdictions to reapply, the lawsuits allege.
The lawsuits also claim the administration didn’t go through proper protocol before enacting the changes to its funding strategy, which would have included giving cities and counties more time to comply with the new rules, and allowing stakeholders to comment on the changes.
In Santa Cruz County, Ratner is of two minds about the lawsuits. On one hand, he believes the abrupt way the Trump administration rolled out the funding changes was “very inappropriate.” But he worries a lengthy court battle could tie up funds his county needs to pay people’s rents.
The National Alliance to End Homelessness sued the Trump administration over similar allegations tied to a smaller, $75 million pot of homelessness funding in September. A judge sided with the Alliance, and temporarily barred the federal government from distributing those funds. But now that money is frozen, unable to help unhoused residents as the case moves forward.
“While we’re waiting for these issues to get resolved, we have programs that are going to run out of money to support people.”
Robert Ratner, director, Housing for Health
Ratner worries that could happen again in this case. Santa Cruz County is set to start hitting serious financial problems as soon as February, Ratner said. That’s when a $1.2 million supportive housing grant, which currently houses about 50 people in different apartments around the county, is set to expire.
The Trump administration doesn’t expect to start awarding Continuum of Care money until May. It’s unclear how the lawsuits will affect that timeline.
In the meantime, Ratner and other homeless service providers are trying to remain optimistic.
“At this point, we don’t know how long the litigation process will take, but we’re hopeful it leads to a more workable path forward,” Sacramento Steps Forward CEO Lisa Bates said in a statement. “Of course, any delay in federal funding would have real impacts on communities across the country, including ours, to operate shelters, rapid rehousing, permanent supportive housing, and essential system coordination.”
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.