California blocks Trump administration from withholding homelessness funds

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California scored a legal victory Monday that, for now, undermines the Trump administration’s efforts to drastically cut funding for homeless housing. 

Changes that would have diverted huge chunks of federal funds away from permanent housing and funneled them instead into temporary shelters and sober living programs will remain suspended after the Trump administration dropped its appeal of an earlier court loss. While the broader case is still being litigated, the new development could provide some reassurance to California counties waiting for the federal funds.

“We continue to fight for Californians and the rule of law, and we continue to win,” Attorney General Rob Bonta said in a news release. “People experiencing housing insecurity or homelessness need the federal government’s continued support — not a rollback of assistance.”

In November, the federal Department of Housing and Urban Development attempted to change the way it doles out money for homeless services via its Continuum of Care program. It decreed that jurisdictions applying for a piece of about $4 billion in federal homelessness funds can’t spend more than 30% of that money on permanent housing — a move that would result in a significant cut to the type of long-term housing that can resolve someone’s homelessness. 

Last year, California communities spent about 90% of their federal Continuum of Care funds on permanent housing. 

Gov. Gavin Newsom’s administration quickly joined 19 other states and the District of Columbia in suing to stop the Trump administration’s changes. In December, a federal judge in Rhode Island temporarily blocked the changes and ordered HUD to process funding applications under the original rules. The Trump administration appealed that ruling, leaving local governments and homeless service providers unsure of what they would be awarded funding for, and when. 

The federal government on Monday dropped its appeal. While the rest of the lawsuit will move forward, and could take months to resolve, counties should be able to access permanent housing funds in the meantime.

Instead of prioritizing permanent housing, as has been the rule in the past, the Trump administration wants to focus more on shelters that get people off the streets quickly and temporarily, and on programs that require residents to be sober. HUD also attempted to ban the use of federal homelessness 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.

A HUD spokesperson said the agency stood by its funding reforms.

“HUD remains committed to reforming the failed ‘Housing First’ approach and restoring the Continuum of Care program to its core objectives; reducing homelessness and promoting self-sufficiency for all vulnerable Americans, ensuring taxpayer dollars are directed towards those goals,” a spokesperson said in a statement.

HUD experienced another legal setback last month when a federal judge in Rhode Island shot down the agency’s attempt to upend another, smaller, source of federal homelessness funding. At issue in that case was a program called the Continuum of Care Builds grant, which funds the construction of new homeless housing. HUD last year made grantees reapply under a very different set of criteria, which seemed to disqualify organizations that support trans clients, use “harm reduction” to prevent drug overdose deaths or operate in a “sanctuary city.”

About $75 million in federal funds had been frozen as that case moved forward.

In March, the court found HUD violated the law through its “slapdash imposition of political whims.” 

“This ruling is a victory for people across this nation who have overcome homelessness and stabilized in HUD’s permanent housing programs,” Ann Oliva, chief executive of the National Alliance to End Homelessness, which filed the lawsuit, wrote in a statement. “Today’s news reinforces a fundamental truth: that the work to end homelessness is not partisan, and never should be interfered with for political means.”

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