“The hit is harder to weather for the small counties who don’t have as much [local funding] to fall back on,” Finnigan said. “And for the larger counties, that’s not necessarily so simple to understand what might happen and whether or how they can respond. But, they do at least have other resources to try to shuffle around.”
Susannah Parsons, director of policy and legislation for All Home, said that in the past, HUD typically continued funding for housing that had already been built. But with the new guidelines specifying that only 30% of the funding can go to permanent housing, it’s unclear how providers will make up the shortfall. The Terner Center estimates that about 6,800 people exiting homelessness in the Bay Area’s nine counties live in housing funded by the federal government.
“These are folks who are formerly homeless. Most of that — all of them — are elderly and disabled,” Parsons said, adding that because of the changing guidelines, “We’re anticipating significant disruptions in the system, and local jurisdictions right now are having conversations about where to look for immediate funding support to cover those gaps.”
But Paul Webster, a senior fellow with the conservative think-tank the Cicero Institute, said agencies can maintain their funding if they cease harm reduction practices and adopt the policies outlined by the federal government.
“It’s really up to the providers,” Webster said. “If you look at just the last 15 years of how effective this current approach has been, if I was a provider, I would be thanking HUD for encouraging me to … actually start funding things that work to get people better and get them out of homelessness.”
At last count, there were 187,000 people experiencing homelessness in California. Webster pointed to a 2024 report from the State Auditor that found the state was not doing enough to track outcomes, despite $24 billion allocated for homelessness between 2019 and 2023. He lauded HUD’s new funding guidelines as “desperately needed.”
“This latest funding round is to improve the health and long-term economic dependence for people who are homeless,” Webster said. “And that’s a contrast to the past, whose goal was to increase housing stability. So instead of housing stability, [HUD’s] goal is to improve health and, essentially, self-sufficiency.”
Abode Service’s Wan said she thinks it is unlikely the new funding priorities will prompt her organization to change its approach to addressing homelessness, even though she realizes that puts future funding at risk.