Federal funding changes could mean thousands falling back into homelessness, Arizona advocates say

The Trump administration is reportedly considering dramatic changes to federal funding for homeless services. Arizona advocates are raising concerns that thousands of formerly homeless people could lose shelter as a result.

A Continuum of Care is a collaboration of organizations and local government agencies working to reduce homelessness. Continuums of Care are supported by grants from the U.S. Department of Housing and Urban Development. Arizona has three Continuums of Care — one for Maricopa County, one for Pima County, and one for the rest of the state.

HUD Continuum of Care grants brought more than $107 million in federal funding to Arizona in 2024, according to the Arizona Housing Coalition. Up to two-thirds of that funding went toward permanent supportive housing — that’s a long-term housing option, typically for people with disabilities or illnesses.

Now, according to reporting from Politico, HUD is considering capping the amount of Continuum of Care funds that can go toward permanent housing at 30%.

“HUD is no longer in the business of permanently funding homelessness without measuring program success at promoting recovery and self-sufficiency. There will be more news on this much needed paradigm shift soon,” HUD told Politico.

Nicole Newhouse, with the Arizona Housing Coalition, said the possible funding cap could result in the loss of more than 3,000 permanent supportive housing beds in the state.

“Then the question would be, what would happen to the people who occupy those beds — people who are older, or infirm, or disabled, or in some way need permanent, supportive care?” Newhouse said. “Rapid changes without adequate time to plan could very easily result, perhaps unintentionally, in more people being unhoused.”

Congress remains at an impasse over how to fund the government as the federal government shutdown drags into its fourth week.

When lawmakers decide on an appropriations bill, Newhouse’s organization is advocating for Congress to adopt a provision that would extend current Continuum of Care grants for one year to give homelessness agencies and organizations more time to react before any new changes take effect.

“Every administration has the right to make changes that are long-lasting and part of their agenda,” Newhouse said. “This small provision would just put a pause for one year on those major changes to give everybody a beat to be prepared for the change.”