An abrupt shift in the way the federal government allocates funds to help the homeless has shocked groups that provide housing aid throughout Kentucky, a change advocates say could put many low-income, mostly disabled Kentuckians back on the streets.
“We are looking at a severe cut to our existing programming,” said Adrienne Bush, executive director of the Homeless and Housing Coalition of Kentucky, which helps provide homes for about 60 households. “There are folks who without this program would be homeless. They most likely will be homeless again without rent support and case management.”
Overall, the changes announced Nov. 13 by the U.S. Department for Housing and Urban Development (HUD) could put more than 2,000 Kentucky households at risk of becoming homeless again, according to an analysis by the Corporation for Supportive Housing, which is working with providers.
In Louisville, the changes could cause more than half the 1,900 people in what’s called “permanent supportive housing” to lose housing, according to the Louisville Coalition for the Homeless.
“This puts everything at risk,” said Katharine Dobbins, CEO of Wellspring, a Louisville nonprofit that specializes in finding homes for and supporting people with severe mental illness. “Many people we serve come from chronic homelessness. There’s a reason people are chronically homeless. They usually are pretty disabled.”
At stake is much of about $48 million that flows to Kentucky each year in HUD money, with the largest portion, $23 million, going to Louisville. Most of it is used for permanent, supportive housing to help people find and stay in homes with services including counseling, mental health and addiction treatment, financial education and other help.
For more than a decade, HUD has prioritized such spending as the best way to combat homelessness, with about 90% going to permanent housing. But the new federal rules announced Nov. 13 cut to about 30% what states can spend on permanent housing.
‘Biden-era slush fund’
This month, the federal government announced a major shift in how it allocates funds, stressing that the majority of money now must go to short-term, “transitional” housing aimed at getting people into jobs and in charge of their own housing.
Generally, transitional housing is covered for about 24 months.
In a news release, HUD announced the new funding priorities as “monumental reforms” aimed at ending the “Biden-era slush fund.”
“We are stopping the Biden-era slush fund that fueled the homelessness crisis, shut out faith-based providers simply because of their values and incentivized never-ending government dependency,” HUD Secretary Scott Turner said in the news release. The new plan, Turner said, will carry out President Donald Trump’s mandate to “make our cities and towns beautiful and safe.”
It also announced a new method to score applications for HUD money that considers public safety, self-sufficiency, enhanced treatment options and “cracks down on DEI, gender-ideology extremism, and the misuse and abuse of taxpayer dollars on illegal aliens.”
‘Cruelty and criminalization’
Advocates, including the Washington D.C.-based National Low Income Housing Coalition, say the changes will simply worsen the nation’s struggle with homelessness.
The HUD changes “signal a fundamental shift in federal homeless policy away from effective, humane approaches and toward wasteful cruelty and criminalization,” it said in a news release.
In Kentucky, around 3,700 individuals with disabling conditions live in permanent, supportive housing, which advocates say has proven to be the best solution for preventing homelessness.
“We know that permanent housing is the solution to homelessness,” said Catherine McGeeney, communications director for the Louisville Coalition for the Homeless, which coordinates HUD funding for the area. “It effectively ends homelessness.”
And the changes will affect a wide range of programs throughout Kentucky including housing help offered by domestic violence, veterans and mental health groups as well as agencies that directly serve the homeless, Bush said.
At Volunteers of America (VOA) in Louisville, staff are looking at how to best try to preserve funds for programs such as Unity House, that help families in its shelter with services meant to help them become independent and move to housing, said Tamara Reif, director of housing services. The nonprofit agency also provides case management for residents in permanent housing supported by Louisville city government.
“Case management is what keeps folks housed,” Reif said. “The more services you provide to people, the more they are going to stay housed and not return to homelessness.”
The new federal rules allow case management but now require at least 40 hours a week for services including counseling, job training and other aid. Work hours may be included in the 40-hour requirement.
VOA typically provides about six hours to 10 hours a week of case management.
More than 50% of clients VOA now serves already have jobs and most of the rest are seeking employment, Reif said.
‘Bad for all of us’
In Kentucky, advocates agree self-sufficiency is an important objective, stressed in services offered to the homeless. But many clients with severe mental illness, addiction and other disabilities simply can’t go through a short-term “transition” program and be expected to survive independently, they said.
“It will be bad for all of us, even if you’re not currently experiencing homelessness,” Bush said. “If you’re frustrated with the number of people on the streets or camping, it’s just going to cause that number of people to grow.”
McGeeney said she understands the frequent complaints by some about the growing number of homeless encampments and people on the streets.
That’s because the number of people losing housing is growing faster than local housing services can accommodate, she said.
In 2025, about 5,800 people in Kentucky were considered homeless through an annual “point in time” count, a number that has increased every year since 2022, Bush said.
Last year, programs in Louisville placed 1,600 people into housing even as another 3,300 people became homeless, McGeeney said.
“We know the programs we are running are very effective,” McGeeney said. “Ninety percent of the people we put into permanent housing stay housed. We just don’t receive enough funding for those programs.”
Now agencies are likely to receive less money unless they can reorganize or repurpose services to align with the new HUD requirements.
But the changes — combined with unusually short deadlines — have left agencies scrambling to decide how to provide as much help as possible to the homeless.
In past years, HUD typically announced funding criteria for the following year by late summer, McGeeney said. And typically, the federal government would simply renew most existing programs that met standards.
This year, the notice for applicants was issued Nov. 13 with a deadline for applications of Jan. 14 to apply for HUD funds with dramatically different rules. And new awards of funding won’t be announced until early May, though some federal grants will expire before May 1.
‘Scramble’ to apply
“It’s so quick to shift everything over,” said Ra’Shann Martin, executive director of the St. John Center in Louisville.
St. John provides a day center for homeless people as well as providing housing for 200 formerly homeless people, Martin said.
“Housing is the long-term solution we want for everybody,” she said. “Supportive housing is the intervention that has been the most effective at helping people succeed.”
But getting next year’s application together while trying to preserve resources for the 200 people it helps house has been a “scramble,” she said.
“It’s very possible to adapt but just adapting in such a short timeline with so many vulnerable people in our care contributes to the scramble.”
The expiration of some grants with no guarantee of renewal is another concern, said Dobbins, with Wellspring.
Her agency currently provides housing for 24 women with mental health and addiction issues in a program called Journey. Most have experienced significant trauma including sexual abuse and trafficking.
The HUD grant that provides money to pay rent and provide support services to those women expires Jan. 31. If it’s renewed, funds wouldn’t resume until after May 1, she said,
“I’m extremely concerned about this population of women,” Dobbins said. “When the grant ends, their rent ends because there’s no money coming through to pay their rent. Most need support services and we can’t pay staff to provide support. Talk about a cliff.”
This story was originally published by the Kentucky Lantern and republished here with permission.