Key facts
- A U.S. appeals court allowed the Trump administration to proceed with changes to a $4 billion homelessness program.
- The changes aim to shift funding from permanent housing assistance to temporary housing and supportive services.
- The ruling stayed a lower court's decision that had blocked the U.S. Department of Housing and Urban Development (HUD) from implementing the changes.
- The Continuum of Care program has provided resources for homeless people since 1987, focusing on a housing-first model.
- Plaintiffs, including 22 states and advocacy groups, argued the funding shift would endanger tens of thousands of people.
- The appeals court found HUD was likely to succeed on appeal and would suffer irreparable injury if the stay was not granted.
A U.S. appeals court on Wednesday allowed the Trump administration to proceed with its plan to overhaul a $4 billion homelessness program, a decision that reverses a lower court's block on the initiative. The ruling by the Boston-based 1st U.S. Circuit Court of Appeals stayed a decision by U.S. District Judge Mary McElroy, who had barred the U.S. Department of Housing and Urban Development (HUD) from shifting funds away from permanent housing assistance toward temporary housing and supportive services.
The Continuum of Care program, established in 1987, has long prioritized a housing-first model, which places individuals in permanent housing without preconditions like sobriety or employment. Grants also support services such as childcare, job training, and mental health counseling.
The administration has criticized the housing-first approach and sought to redirect funds. HUD's plan involved setting aside $1.3 billion of the program's more than $4 billion appropriation for fiscal year 2026 for transitional housing and supportive service-only grants. This move was challenged by 22 mostly Democratic-led states, the District of Columbia, and a coalition of advocacy groups, who argued it would reduce funding for permanent housing and risk displacing tens of thousands of people.
Judge McElroy had concluded that HUD violated the Administrative Procedure Act by not allowing public comment on the changes. However, the three-judge panel of the 1st Circuit Court of Appeals found that the administration was likely to succeed on appeal, stating the decision was not subject to notice-and-comment requirements. The panel also noted that HUD would suffer irreparable injury if a stay was not granted, given the December 1, 2026, deadline for awarding Continuum of Care funds.