Federal HUD Change Could Cut Permanent Housing Funds, Threatens Stability

The Department of Housing and Urban Development released a Continuum of Care grant notice on November 26, 2025 that will materially alter federal funding rules for homelessness programs. The notice reduces guaranteed funding for permanent supportive housing from about 90 percent of current levels to a cap of about 30 percent in some categories, while increasing emphasis on transitional housing and supportive services. That policy change prompted immediate concern from statewide coalitions and local providers over the potential loss of stable housing for people with long term needs.

Montana Continuum of Care Coalition leaders and housing agencies ran scenarios showing that the state could see roughly 70 percent less guaranteed funding for permanent housing programs under the new structure. Helena Housing Authority is among the local agencies currently receiving permanent supportive housing funds. In response, the coalition voted to revise allocations to preserve limited permanent funding for the three public housing authorities that receive it, those being Missoula, Helena and Butte, as well as for one Crow Tribe project. The allocation adjustments aim to concentrate remaining guaranteed funds on programs that serve the most vulnerable households.

Providers and policy experts raised practical concerns about the shift toward transitional housing. They warned the transition could create service gaps during reconfiguration, impede continuity of care for chronically homeless residents, and increase the risk that some people will lose stable housing and require emergency shelter or crisis services. Local nonprofits and government offices that deliver supportive services may face sudden demand for transitional programs even as permanent placements shrink.

HUD application deadlines and timelines for transition grants now shape an accelerated decision cycle for providers and local officials. Agencies must decide quickly whether to retool existing programs, reapply under new priorities, or seek alternative funding sources. For Lewis and Clark County residents, the most immediate impacts will be on placement stability for those currently in permanent supportive housing and on service capacity for providers who help navigate housing and healthcare needs.

County leaders, housing authorities and community providers are preparing next steps, including reallocating funds within the coalition framework and pursuing all available transition grants. The coming weeks will determine how effectively local systems can shield the most vulnerable residents from disruption and preserve long term housing stability in the face of major federal policy change.