Proposed Federal Cuts Threaten Supportive Housing
As Congress returns from the Thanksgiving break, it will start to debate the next federal budget. One proposal has emerged with potentially devastating consequences for communities nationwide, which would be to impose major reductions to Supportive Housing and the HUD Continuum of Care (CoC) program. These cuts would directly undermine housing stability and essential services for an estimated 170,000 people— including families, veterans, youth, and individuals recovering from chronic homelessness.
This is not an abstract policy change. It is a decision that could push tens of thousands back into homelessness, overwhelm local systems, and reverse more than a decade of progress in reducing chronic homelessness.
What the Proposal Would Do?
The proposed changes would redirect CoC funding away from Permanent Supportive Housing (PSH) and toward transitional housing, despite strong evidence that PSH is the most effective intervention for individuals with the highest needs. The changes would also introduce new eligibility criteria that would disqualify any applicant that:
- Currently uses or has ever used racial preferences in program design.
- Employs harm-reduction practices, such as needle exchange programs.
- Defines “sex” in any way other than strictly binary.
These provisions would exclude many experienced and effective providers from accessing federal homelessness funding.
What’s at Stake: The Role of CoC and Supportive Housing
The Continuum of Care (CoC) program is the backbone of the nation’s homelessness-response system. CoCs fund a range of critical interventions, including Permanent Supportive Housing (PSH), which provides long-term housing with case management for individuals with the highest needs; Rapid Rehousing, which offers short- and medium-term rental assistance; Street Outreach, which engages people living unsheltered; Coordinated Entry, which matches individuals to appropriate services; and Transitional and Specialized Housing, including programs for survivors of domestic violence, youth, and people with complex behavioral health needs.
Supportive housing has one of the strongest evidence bases in social policy: it reduces returns to homelessness, improves health outcomes, and lowers public-system costs. Cutting these programs means cutting the very solutions proven to work.
Both Housing and Services at Risk
Advocates estimate that the proposed reductions would jeopardize housing and services for more than 170,000 people, including:
- Individuals in PSH who rely on long-term rental assistance and supportive services
- Families in Rapid Rehousing who could lose support mid-lease
- Participants in transitional or bridge programs who would have no next step
- People recently exiting homelessness who could lose stability as funding disappears
For many, supportive housing is life-preserving. Without it, thousands could be forced into shelters, cars, encampments, or unsafe environments.
Cuts at the Worst Possible Time
These reductions come at a time when rents continue to rise sharply and shelters remain at capacity, regularly turning people away. Unsheltered homelessness has reached record levels. Communities are phasing out temporary pandemic-era funding that had expanded critical services. By withdrawing CoC support, years of progress are being reversed. This significant shift places additional strain on local governments and nonprofit providers, who are already operating at their limits.
The Human and Economic Costs
Eliminating or restricting supportive housing results in well-documented increases in emergency room visits and hospitalizations, incarceration and law enforcement contact, child welfare involvement, and reliance on high-cost shelter beds. Every dollar cut today becomes multiple dollars of crisis spending in the future.
This debate is about more than a budget line—it is about whether the country will continue investing in proven solutions or turn away from the people and communities who rely on them most.