(CN) – Nearly half of the states in the union took the Trump administration to court Tuesday in another challenge to the Department of Housing and Urban Development’s efforts to shift funding for homeless individuals from permanent housing.
The 24-state coalition, led by attorneys general from Washington state, New York and Rhode Island, argues that the Department of Housing and Urban Development’s effort to move away from the “Housing First” model will dismantle safety nets and cause a surge in homelessness nationwide.
“Instead of investing in programs that help people stay safe and sheltered, the Trump administration has embraced policies that risk trapping people in poverty and punishing them for being poor,” states the complaint.
of 44 page complaintfiled in federal court in Rhode Island, revolves around Administrative Procedure Act claims and the federal government’s alleged changes to its flagship homelessness program, Continuity of Care.
Each year, the Department of Housing and Urban Development (HUD) distributes billions of dollars through the Continuum of Care to state, local and nonprofit providers to provide vital housing services to those facing homelessness. After its introduction in 1994, Congress structured the program in 2009 to provide long-term stability for these providers, directing most of its funding toward permanent housing, rental assistance, and supportive services projects.
After more than two decades of operating under the Housing First model with a focus on permanent housing, the Trump administration reversed course in favor of short-term transitional models.
Many countries in the coalition already sued federal government in November 2025, challenging its funding announcement for that year that would have blocked funding for many funded Continuum of Care projects.
Most importantly, the announcement sought to limit Continuity of Care funding for permanent housing projects to 30%, down from nearly 90% statewide for funding that will expire this year.
A court order permanently enjoined enforcement of the federal government’s notice, and a subsequent act passed by Congress requiring HUD to renovate existing projects led to a summary judgment ruling in favor of the states.
Despite the loss, HUD published a new announcement last month to reimpose a permanent housing cap at about 68% of Continuum of Care funding instead of the previous strike at a 30% cap — though states say it’s still too steep a drop.
While the 2025 announcement sought to change existing policy through an arbitrary cap on permanent housing funding, this year’s announcement seeks to create a $1.3 billion set aside from the $4 billion available solely for projects related to transitional housing and supportive services, the states say in the complaint.
“The ‘Housing First’ experiment failed Americans by housing the vulnerable without results,” HUD Secretary Scott Turner said in June. press release. “This ideology promised to end homelessness. Instead, billions of taxpayer dollars were wasted while homelessness rose to record levels. Housing alone will not solve a crisis caused by addiction and mental illness.”
The Department of Housing and Urban Development recorded an estimated 770,000 homeless individuals nationwide in 2024, a record number.
The notice, according to HUD, requires Continuum of Care (CoC) recipients to “review and prioritize” the most successful projects, as opposed to automatically renewing funding for “failing providers,” in an effort to root out waste and abuse.
Housing First, which prioritizes permanent and stable housing without prerequisites, has been HUD’s flagship policy for more than 20 years, and the model is widely recognized as one of the most effective tools in addressing chronic homelessness.
Estimates of the National Alliance to End Homelessness outlined in the complaint suggest that the proposed change in funding would put 97,000 continuing Care-funded permanent housing residents at risk of losing their housing — a number at record lows, according to the alliance.
Nearly 24,000 individuals would lose their housing in New York and California alone, according to the same data.
“The Trump administration is once again trying to undermine HUD’s long-standing Housing First approach, which has kept and continues to keep our most vulnerable residents housed,” said California Attorney General Rob Bonta. press release. “Congress and the courts have made it clear that funding for permanent supportive housing must be protected. We will continue to fight to ensure that those who have secured housing stability do not lose it.”
States contend that HUD’s proposed funding conditions are designed to penalize applicants who adhere to the widely adopted Housing First model.
“A large number of CoC-funded permanent housing projects will lose their funding or see it reduced, resulting in tens of thousands of homeless individuals and families who will someday be pushed back onto the streets, with state and local governments left to pick up the pieces,” the states said in the complaint.
The coalition argues that the Trump administration’s actions are unfounded and in direct violation of the Congressional-passed McKinney-Vento Homeless Assistance Act of 1987, which directs HUD to prioritize renovation of existing projects to ensure housing stability.
By limiting permanent housing to 68%, states argue that it is impossible for HUD to meet congressional mandates requiring contract renewals for all projects within program requirements and standards that have a clear and demonstrated need.
Continuing care providers often operate permanent long-term rental housing programs and staffing models that depend on annual funding renewals and “typically have little capacity” to replace that funding, according to the states.
The coalition also worries about the potential snowball effect of a loss of permanent housing funding, noting that it would likely shift significant costs to other public services for members of the homeless community who suffer from behavioral health needs and other challenges.
“This escalation places new burdens on emergency medical systems, state and federally funded behavioral health providers, long-term hospital facilities, local jails and child welfare programs that serve homeless families,” the states state in the complaint.
In addition to Washington, New York and Rhode Island, the coalition includes attorneys general from Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Oregon, Vermont, Virginia and Wisconsin, the Governors of Kentucky and Wisconsin, Kentuck.
“I cannot sit back and allow the Trump administration to break the law and jeopardize housing funding for over 2,000 of our neighbors who are struggling financially,” Minnesota Attorney General Keith Ellison said in a statement. press release. “The Trump administration’s plan to cut funding for evidence-based strategies to reduce homelessness is illegal and cruel, so I’m challenging it in court. Trump will not deport Minnesotans in my time.”
The Department of Housing and Urban Development did not respond to an initial request for comment.
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