Visualizing the Impacts of the President’s FY2026 Budget: Returns to Homelessness and Major Setbacks Could Be Ahead 

In early May, the President released a proposed FY2026 budget that recommends eliminating the federal Continuum of Care (CoC) program within the U.S. Department of Housing and Urban Development (HUD), shifting its resources to the Emergency Solutions Grant (ESG) program. The proposal would also slash the overall budget for homelessness assistance and other critical anti-poverty programs.

Given that the homeless services system only has enough funds to permanently house 16 percent of the households in its shelters during a given year, such changes in the federal budget and program structures would be a major setback in national efforts to end homelessness. The proposal reflects the vision of the President, and may have some influence on policy in the years to come. This brief offers a series of visuals that help explain the potential impacts if the White House’s FY26 budget proposal is enacted.

Analysis: The President’s Proposal to End the Federal Continuum of Care Program 

The President’s proposal would eliminate funding for the federal CoC program, effectively ending its operations and representing a major shift in the way the nation delivers homeless services. Currently, HUD grants out resources via a national funding competition to well-established regions called “Continuums of Care,” or CoCs: systems of local control and decision-making that feature multi-year planning efforts, established data systems, and coordinated entry approaches focused on simplifying access to services.

The budget proposal would upend this structure, no longer routing funds to CoCs but to the state and local government agencies receiving ESG grants. What would be lost if funds aren’t sent directly to communities through the existing CoC program? The answers include: 

• Losses of Local Control. With more state involvement in resource decisions, those states may deny resources to some communities that currently benefit from federal CoC program funds, or not adhere to well-researched, community-specific plans for addressing homelessness.
• Less Focus on Potential Success. Shifting away from the CoC program approach means deciding who gets funds based on a formula — not a competition that rewards the best plans or ideas for addressing homelessness. 
• No More Permanent Supportive Housing. The nature of services would change. Unlike the CoC Program, ESG does not allow resources to be used for Permanent Supportive Housing (PSH), which provides robust services paired with a housing placement for people experiencing chronic homelessness; however, ESG can be used to provide Rapid Re-Housing (RRH), a shorter-term rental subsidy paired with services. Further, unless Congress changes the ESG program, it is also unlikely that most current residents living in CoC-funded RRH would be able to shift to an ESG-funded RRH subsidy.

Based on the number of CoC-funded permanent housing beds (which includes PSH and RRH) maintained by homeless services systems throughout the country¹, the Alliance estimates that eliminating the CoC program would end or severely disrupt the current housing placements of 217,828 formerly homeless people. 

The President’s budget, in effect, recommends an end to the CoC program that Congress authorized in 2009. However, the Administration’s budget recommendation is just that — a recommendation — not law, and achieving this goal would require Congressional action. Although the President is asking Congress to end the program as a part of its funding process, this type of significant change normally requires the consideration of Congressional authorizing committees focused on homelessness and housing who have, notably, not taken steps in any direction that would end the CoC program.

Estimating the Overall Impact 

The beds at risk of budget cuts currently house the most vulnerable people who have experienced homelessness, including people with disabilities and/or health conditions, and people who were homeless repeatedly or for long periods of time. The Alliance estimates of the number of people impacted (217,828 formerly homeless people) is based on the number of CoC-funded beds falling into the following categories: Permanent Supportive Housing (PSH), Rapid Re-Housing (RRH), Single Room Occupancy units (SROs), and “Bridge Housing” (transitional housing designed to later connect residents with RRH programs).

Many beds within such housing programs are supported by other funding streams — thus, these forms of housing would not completely disappear. However, if Congress moves forward with the President’s budget proposals and consolidates the CoC program into the ESG program, the repercussions could be huge, rivaling the size of major natural disasters like the 2025 Los Angeles fires, or creating housing instability for a population that surpasses the size of California’s current homeless population (and is the nation’s most populous state). 

Notably, such a change could occur around the same time as the Emergency Housing Voucher (EHV) Program reaches a funding cliff. EHVs are housing vouchers targeted toward people who are homeless or at risk of homelessness; they have been reaching vulnerable populations, such as people who are chronically homeless or living unsheltered. The program is currently running out of funding. If Congress doesn’t add new dollars as part of its FY2026 appropriations legislation, the program will end, endangering the housing of at least 58,793 people.²

For current residents of CoC-funded housing (and EHVs), states and communities could identify new resources to help them stay in their homes. However, in balancing competing priorities, they may make other choices. Notably, the growing currently homeless population needs housing and the President has recommended shifting more financial responsibility for other major programs like Medicaid and SNAP to the states as well. It is unclear how states will manage the possibility of increasing their contributions to multiple social needs programs at once (or within a short period of time).

While federal funding constitutes a significant portion of funding for housing assistance nationwide, there may be other resources available for this new group of unstably housed people. Some residents will find ways to stay in their homes without a subsidy or identify new lower-cost housing opportunities, private charities may help to bridge some portion of these gaps, and some landlords may be willing to lower rents. However, most will certainly fall back into homelessness. To provide a sense of the scale of potential housing instability, if all CoC-funded PSH and EHV residents reentered homelessness, it would represent a 36 percent increase in homelessness. 

Uneven Impacts of Potential Permanent Supportive Housing Loss by State 

The CoC program is a major source of federal funding for PSH, and some states are currently more reliant on the federal CoC program than others. The impact of eliminating this funding source would not be evenly felt across states: for example, 75 percent of Louisiana’s PSH beds for people experiencing homelessness are funded by the federal CoC program, while only 45 percent of Vermont’s dedicated PSH beds as funded with CoC dollars. States with higher reliance on federal funding for their housing programs will see a staggering gap in resources should the CoC program end.

Rural and Suburban Communities Would Suffer the Most Permanent Supportive Housing Losses 

The CoC program’s design ensures that all types of communities have funding to reduce and end homelessness. Major cities and urban areas are least reliant on the federal CoC program to provide PSH to their residents. Presumably, they garner relatively more resources from state and local governments as well as foundations and other private actors.

Rural and suburban areas evidently do not receive the same attention from such funders — thus, as a collective, they rely more on the federal CoC program. Roughly half of their beds are federally funded through the program, compared to 37 percent of those in cities.

Some individual CoCs are heavily reliant on federal CoC program funding for PSH. For 45 percent of them, the federal government funds at least half of their PSH beds. For data on specific CoCs, please refer to the above map or this additional visualization. 

Analysis: The President’s Proposal to Cut Homeless Assistance Grants and Other Vital Assistance Programs 

In addition to ending the federal CoC program, the President has recommended significant funding cuts for Homeless Assistance Grants and other housing and anti-poverty programs. 

Potential Losses to Homeless Assistance Programs and HOPWA 

As with the CoC program, the President’s budget would similarly end funding ($505 million/year) for the Housing Opportunities for Persons with AIDS (HOPWA) program, suggesting that its participants could be served within ESG (although not all HOPWA recipients would qualify). Collectively, the funding currently alloted to these Special Needs Assistance Programs (ESG, CoC, and HOPWA) would be cut by $532 million.

Historically, homelessness counts have largely trended downward; however, over the last eight years, the number of people experiencing homelessness has increased by 40 percent. Additionally, homeless service providers have never had enough resources to offer housing solutions to everyone in need — during a given year, they are only able to provide permanent housing to 16 percent of people served in their shelters. An amount such as $532 million could help serve the increasing number of people becoming homeless.

To illustrate the scale of the loss, $532 million is enough to provide RRH subsidies to 62,691 households. Realistically, when communities experience funding losses, they make a wide variety of decisions to balance their budgets — few would simply apply 100% of their losses to their number of available RRH subsidies. Nevertheless, the value of what would be lost is clearly significant. 

Potential Losses to the Broader Homeless Assistance Portfolio

In performing their work, homeless services systems and providers must assemble resources from a multitude of sources, spanning all levels of government and the private sector. Thus far, this brief has focused on the CoC and ESG programs. However, in providing PSH and other forms of permanent housing to nearly 700,000 people, homeless services systems also draw upon other federal programs, such as Housing Choice Vouchers, Section 811 (Supportive Housing for Persons with Disabilities Program), and the Community Services Block Grant. The President recommends restructuring and cutting funding for many of these programs as well, which would further hurt efforts to end homelessness. 

Many nonprofit organizations — who do good work on a daily basis and are engaged in responsible spending — are among those grappling with how to manage these funding losses. Federal funding for homeless services goes directly to organizations that promote housing stability to build stronger, more resilient communities; many of them are connected to faith traditions, and most provide resources to their community’s most vulnerable residents. They use federal funds to prevent homelessness before it happens and rehouse people experiencing a housing crisis. 

Even when federal funds are not at risk of being eliminated, these organizations think critically about how they use their limited resources. Grant recipients spend the majority of federal funds on rental subsidies, apartment leases, and supportive services for people in need. These CoC funds help move people experiencing homelessness back inside and ensure that people who need support to remain housed do not again experience homelessness.

What’s Next

Congress is still considering the President’s budget for FY2026. Rather than cuts and consolidation, the Alliance is recommending an $867 million strategic increase in federal funding to end homelessness and is offering information about how advocates can take action. 

Please note that the National Alliance to End Homelessness does not receive any federal funding.