New Trump Administration Rules Could Cut Off Crucial Federal Homelessness Funding

Since taking office in January, President Donald Trump and his administration have repeatedly moved to cut off funding to cities and counties that have policies counter to the president’s agenda — leaving people like R.J. Sloan caught in the middle.

Twenty years ago, Sloan didn’t think he would need government help to keep his life on track. He was living the American Dream: working for a giant pharmaceutical company and owning two homes. Then a health issue triggered a bout of depression that led to more serious mental health challenges — and eventually, a psychotic break.

“I started running away from helicopters, trying to read my thoughts, I was certain they were the CIA,” he recalled. “I left my apartment, lost everything, including my two dogs. … And I started running around San Francisco, living in Golden Gate Park, eating out of trash cans.”

After several years living on the streets, Sloan, now age 60, connected with Episcopal Community Services, a nonprofit that operates 23 permanent supportive housing sites around the Bay Area, serving more than 2,300 people.

He secured an apartment at Bishop Swing Community House, a 134-unit supportive housing development in San Francisco’s South of Market District.

Initially, just surviving was a struggle.

“My first five years here, I wore the same clothes every single day. I never changed my clothes. I rarely showered or brushed my teeth. I was in such a bottomed-out phase of life,” he said.

But over time — and with a lot of help — Sloan said he’s been able to rebuild his life. He credits the resources available at Bishop Swing Community House.

These kinds of supportive housing developments don’t just provide a safe place to live: they offer mental health services, medical care, and, crucially for Sloan, case managers who encouraged him to move forward — when he was ready.

“The supportive part of supportive housing is crucial,” he said. ”You’re encouraged to make your appointments and you’re encouraged to keep up with the goals that you set. Every six months, we set new goals. You know, what are you capable of now, R.J.? Of course, you couldn’t do this 10 years ago, but you know what, I have a feeling you could do this now.”

Eventually, Sloan started working part-time as a front desk clerk at a nearby homeless shelter — work that now helps pay for his apartment. However, the bulk of his rent is covered by the federal government through a U.S. Department of Housing and Urban Development program known as Continuum of Care — a key source of funding for local governments and nonprofits trying to tackle homelessness.

The program helps cover housing costs and support services for thousands of homeless individuals like Sloan.

Santa Clara County receives around $34 million a year. San Francisco gets about $50 million annually.

However, that funding is now at risk as the Trump administration moves to impose new conditions on the federal money. It’s part of a broader pattern of the Trump administration seeking to withhold money to pressure democratically led cities and counties to change policies the administration doesn’t like.

Earlier this year, when HUD sent out grant applications, local officials balked. Under the new rules, local governments must certify that they do not have diversity, equity and inclusion (DEI) programs, don’t promote “gender ideology,” and don’t have sanctuary immigration policies.

San Francisco and Santa Clara joined six other counties in suing the Trump administration over these new conditions. Earlier this month, they won a temporary restraining order halting the new grant conditions. Today, the counties return to court where the same judge will consider a permanent injunction as the case moves forward.

“We’ve seen this kind of dynamic with the Trump administration again and again, where they’re placing unlawful and unconstitutional conditions on federal funding,” Santa Clara County Counsel Tony LoPresti said. “They’re essentially weaponizing federal funding to force locals to take action that they cannot force local governments to take.”

HUD did not respond to a request for comment, but in March, HUD Secretary Scott Turner defended the change on the social media site X.

“HUD’s Continuum of Care Program was meant to provide funds to end homelessness, unfortunately, it was used as a tool by the left to push a woke agenda at the expense of people in need,” Turner wrote.

LoPresti, however, insists that the new conditions are illegal, partly because they exceed what Congress outlined when authorizing the program. He also notes that many of the requirements are so vague that they’re impossible to comply with.

“The ongoing focus around diversity, equity, and inclusion is a great example of that,” he said, noting that there’s no clear definition of what qualifies as DEI.

The lawsuit also highlights that while the new grants prohibit recipients from recognizing transgender people, “HUD’s own regulations mandate ‘equal access’ to CoC ‘programs, shelters, other buildings and facilities, benefits, services, and accommodations is provided to an individual in accordance with the individual’s gender identity.’”

LoPresti said the stakes are incredibly high.

“Our ability to really make progress in combating homelessness and making sure that those families have not only shelter, but the services that they need, really hinges in large part on our ability to access these federal funds,” he said.

Homelessness in the expensive Bay Area is a problem that leaders have struggled to address for decades. More than 8,000 people are unhoused in San Francisco, a number that’s ticked up slightly in recent years. Santa Clara County has also struggled to curb homelessness and saw a sizable increase in the number of unhoused people in its last count in 2024.

Beth Stokes, executive director of Episcopal Community Services, warned that cutting off funding to developments like Bishop Swing Community House would be incredibly shortsighted.

“Would you rather have people on the street, suffering, their health completely deteriorating, with no quality of life?” she asked, “Versus being here — this is stable. This is peaceful. People get well here. And it’s actually a better bargain for the taxpayers.”

Stokes said if the new grant conditions go through, she is hopeful that her organization will be able to find other funding sources to help cover Sloan and other residents’ rent. However, she acknowledged that they might have to delay other projects aimed at getting even more homeless people off the streets.

Sloan, the Bishop Swing Community House resident, said he cannot imagine a world without the supportive housing he’s relied on for 15 years.

Without it, he said, “I would have entered homelessness, exited and entered and exited, and entered homelessness many, many times.”

“I can’t imagine not living here, to be honest with you. I’m scared to death of that third psychotic break. I don’t know what caused the first two. So I think I’d like to age in place right here,” he said.