‘A huge loss.’ San Diegans brace for Trump’s second run at gutting homelessness programs

The largest federally funded program dedicated to reducing homelessness survived a Trump administration effort to shrink it last year. Now the program, which provides housing assistance and services worth tens of millions of dollars a year for San Diego County residents, is in jeopardy again.

A federal judge blocked the administration’s first attempt to cap so-called Continuum of Care spending on permanent supportive housing in December and then denied the administration’s attempt to reverse it in April. Congress also rejected an attempt to scale the spending back in this year’s transportation and housing spending law.

Now the U.S. Department of Housing and Urban Development wants to adjust the 2026 Continuum of Care Notice of Funding Opportunity to “optimize self-sufficiency,” moving away from funding long-term housing that ends homelessness to focus more on funding shelters and support services, with increased requirements to receive assistance.

HUD announced this month it plans to redirect about $3.6  billion in federal homelessness money away from permanent housing in its upcoming June 1 funding announcement  — a move that, if it withstands court scrutiny this time, would redistribute more than $40 million in annual grants flowing to San Diego County. 

HUD Secretary Scott Turner told U.S. senators in a subcommittee meeting last week that advocates of long-term housing assistance “fed a homeless industrial complex that simply warehoused the homeless and called it a day. Compassion requires results, not just resources.”

Last year, California spent roughly 90% of its Continuum of Care money on permanent housing. The National Alliance to End Homelessness, the lead plaintiff in the lawsuit that blocked round one of the Trump administration’s efforts to slash the program, estimated the cap on permanent supportive housing spending would have pushed about 170,000 people nationwide out of permanent supportive housing — roughly 26,000 of them in California.

That would have meant a loss of more than $400 million for the state.

President Donald Trump proposed cutting Continuum of Care funding entirely in his budget proposal, though Congress isn’t expected to approve that. 

The ongoing uncertainty is causing some local providers to proactively wind down programs they don’t think will be funded long term. 

Before the courts stepped in to save the funding, San Diego’s Regional Task Force on Homelessness decided to prioritize preserving existing housing. They advised providers they would have to wind down Rapid Rehousing programs across the county. Such programs provide housing and supportive services over two years aimed at making people more independent — exactly what the administration says it aims to do. That program serves 851 people, who would be allowed to finish their time in the program, with no one taking their places.  

Still, such budget reductions weren’t enough and they also had to cut 443 people in permanent supportive housing, which serves heads of households with disabilities. 

The Regional Task Force on Homelessness never went forward with that plan, but for Interfaith Community Services in North County, the uncertainty had a greater impact. 

The nonprofit has begun moving more than 45 people with disabilities out of HUD-funded permanent supportive housing units and into other subsidized buildings, paid for in the interim with private donations.

“We don’t believe they will be funded after the next fiscal year,” Interfaith Community Services CEO Greg Anglea said. 

“We don’t feel comfortable waiting around and leaving those 45 households in limbo,” he added.

Tamera Kohler, chief executive of the Regional Task Force on Homelessness, said that she expects HUD to set the renewal funding floor at 60% in the upcoming cycle, as Congress directed in this year’s HUD appropriations law — double the 30% proposed cap that triggered the lawsuit. That wouldn’t pose as big a challenge for the organization’s budget.

For now, it is planning to wind down rapid rehousing. “That’s a huge loss,” Kohler said,

She said the people served by the program are people who haven’t been chronically homeless and need short term support. 

“They needed case management and financial assistance just to get back to being a solid renter,” Kohler said. “And we’re not going to have that tool available to us.”

Permanent supportive housing combines a long-term subsidized lease with on-site case management for people who have been chronically homeless and have a diagnosed disability — mental illness, a physical disability or long-term substance use. 

The model, sometimes called Housing First, has been the dominant federal approach since the George W. Bush administration in the early 2000s. It rests on the idea that people stabilize faster once they are housed.

San Diego housing providers say the Housing First programs HUD wants to cut are crucial  to continuing to reduce homelessness, which has declined countywide for two consecutive years, dipping nearly 7% year-over-year in 2025 and 1% this year.  They say the cuts would also push people with disabilities who need long-term support back into homelessness.“We need to do treatment first and then housing later. It’s not novel by any means,” said Gilberto Vera, a senior attorney at the Legal Aid Society of San Diego. “We’re kind of reverting to old policies that we know do not work and at the same time gutting the funding for this.”