Volunteers of America Mid States’ Unity House shelter and rapid re-housing program is among many at risk of losing funding.
The U.S. Department of Housing and Urban Development is moving away from funding long-term housing, putting the stability of hundreds of formerly homeless people in Louisville and across Kentucky at risk.
The shift in priorities under President Donald Trump was detailed in the Notice of Funding Opportunity released earlier this month. It outlines how the administration plans to distribute nearly $4 billion in Continuum of Care grants.
For decades, the federal government prioritized long-term housing programs, and organizations adapted their services accordingly. Now, the Trump administration says these programs can account for only 30% of a local agency’s funding request.
Catherine McGeeney, communications director for the Coalition for the Homeless in Louisville, said this marks a significant shift that will leave many programs in financial uncertainty.
She said that out of roughly 1,600 people in Louisville participating in long-term housing programs, about 1,000 could be forced back onto the streets. The changes also limit options for people currently unhoused.
“We have already cut off referrals for permanent supportive housing in Louisville, because there isn’t guaranteed funding for projects into next year,” McGeeney said. “What that means is that for people who are unsheltered or in shelters, who are seeking housing solutions, their already-limited options are going to dwindle more.”
Statewide, the 30% cap could eliminate rental assistance for 2,610 formerly homeless Kentuckians with disabilities, according to the Kentucky Housing Corporation.
Long-term housing programs at risk include permanent supportive housing, which combines rental assistance with support services like case management, transportation and mental health counseling. These programs often serve people with physical or mental disabilities.
Instead, the administration wants most funding to go toward transitional housing programs that aim to move people out of homelessness within a year by providing services such as substance use treatment, mental health support and job training.
McGeeney said that while transitional housing works for some people, many currently in permanent supportive housing need continued long-term support.
“Transitional housing is very effective as an intervention among certain groups who don’t need long-term support, but not as effective among people with disabilities who do need support,” she said.
HUD will also favor programs that require treatment for substance abuse or mental health conditions as a prerequisite for housing.
The shift reflects a deeper ideological change.
HUD, aligned with some conservative critics of traditional housing policy, argues that short-term, sobriety-centered programs are key to long-term stability.
Service providers, however, say cutting long-term housing will leave many people without support.
Local programs under threat
The funding changes come as homelessness is rising.
Louisville’s 2025 point-in-time count found 633 people living on the streets, up from 595 last year. Nearly 1,300 people statewide were unsheltered during the same period, a 25% year-over-year increase.
Volunteers of America Mid-States, which serves Kentucky, Tennessee, West Virginia and Southern Indiana, operates several programs threatened by the new guidelines.
At the VOA Home campus in Louisville’s Shelby Park neighborhood, Unity House offers temporary shelter and rapid re-housing for families. About 25 families live in individual rooms, ranging from small single-bunk spaces to larger rooms with multiple beds.
Families eat together in a cafeteria, and children can use a study room where a Jefferson County Public Schools teacher provides tutoring.
When families move into rapid re-housing, they receive up to a year of financial assistance and case management.
Tamara Reif, VOA’s senior director of housing services, said the goal is long-term stability, with families working and eventually paying their own rent and utilities.
“We try to get their credit up so that they can really prepare to be able to go out on their own,” Reif said. “We’re helping them with any legal issues that they may be facing … just checking in on all of those things to ensure that they are really taking care of their whole selves, so that when the time comes, they’re ready to be on their own.”
HUD classifies Unity House as long-term housing. Reif said VOA could revise the program so it fits the transitional housing category favored by HUD.
Programs applying for funding are scored based on specific criteria, and those aligned with HUD’s preferred model receive more points. This effectively encourages agencies to adopt the new approach.
If VOA modifies Unity House, it could earn more points by offering additional programming like financial literacy classes and counseling. HUD wants programs to provide 40 hours a week of structured offerings, with fewer hours required for participants who find employment.
Reif said VOA’s sober living programs, Freedom House and Liberty Place, already meet those requirements.
“Certainly it would require a lot more staff, but we do have at least a model, a structure of how they are fitting in 40 hours, because that’s a requirement for residential treatment,” she said.
VOA also provides case management for people in permanent supportive housing, including 75 clients supported by a Louisville Metro grant and residents of The Chancery, a 34-unit complex that opened last month. Those services are now at risk.
If funding is cut, Reif said VOA will be “scrambling to help them figure out what success looks like for them” and may have to “be creative” to keep those programs going.
Adrienne Bush, executive director of the Homeless and Housing Coalition of Kentucky, said the outlook is even worse outside Louisville and Lexington. Rural areas have fewer services and almost no alternative funding sources.
“If these cuts go through as intended, it will just wipe out programs where we do have them,” she said.
Bush said rural and suburban regions have seen the largest increases in street homelessness over the past year.
While most service providers oppose the changes, some are hesitant to speak out. HUD’s Notice of Funding Opportunity says officials may consider media reports, public complaints and a provider’s history of “subsidizing activities that conflict with the NOFO” when deciding whether to award funding.
Bush said her organization must continue advocating for sound housing policy, regardless of political pressure. She said HUD’s changes are “disappointing” and will likely increase homelessness.
“We know what works,” Bush said. “The challenges of the homeless service response system have not been about the program models or approaches that have been taken, it’s been a challenge of scale.”
‘A monumental change’
Last year, Louisville’s housing providers received $23 million in Continuum of Care grants — $17 million of that for long-term housing. The Coalition estimates HUD’s new approach could cut that to $7.2 million, a 57% decrease.
Nationally, most Continuum of Care funding last year went to long-term housing programs. Advocacy groups warn that the cuts could “upend homelessness response systems” and “increase homelessness.”
Long-term housing has been the centerpiece of federal homelessness policy since the early 2000s, a strategy reinforced by the 2009 HEARTH Act.
But groups like the Cicero Institute, a conservative think tank, have long opposed this approach and now have influence in policy discussions.
Devon Kurtz, the institute’s public safety policy director, said the new funding priorities represent “a monumental change” comparable to the HEARTH Act.
Kurtz said service providers shouldn’t be surprised.
“I think we see this in the language of the executive order from back in July where there is this emphasis on pathways to self-sufficiency,” he said. “If they’ve been reading the room … this should not be a surprise.”
The Cicero Institute also provided model legislation for camping bans, including The Safer Kentucky Act, which made sleeping on the streets a Class B misdemeanor.
The law also banned state funding for Housing First programs, which do not require sobriety or treatment before providing housing. State lawmakers argue these programs enable drug use, despite evidence they improve outcomes.
HUD is now aligning with that view.
“I worry about subjecting non-drug-using individuals to drug-using individuals in the same housing,” Kurtz said.
He also argued that the rise of fentanyl has changed the landscape since Housing First gained popularity.
The National Alliance to End Homelessness estimates HUD’s changes could push 170,000 people back into homelessness. Kurtz and others dispute that figure.
Kurtz said some people may not achieve self-sufficiency in one or two years, but transitional housing could be effective for those without severe disabilities.
“I don’t believe this administration is going to allow 170,000 disabled people to be evicted like that, I just reject that premise,” he said. “Some number of them are going to be able to move on and be self-sufficient.”
If the number of people needing long-term housing is higher than HUD’s 30% target, he said agencies should communicate “honestly and cooperatively” with the federal government to adjust.
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