Rhode Island joins new lawsuit over Trump administration’s homeless grant changes
The latest federal lawsuit in the battle over homelessness service funding involves nearly the same coalition of Democratic-led states, the same Rhode Island federal judge, and advocates’ hopes of the same outcome: stopping the Trump administration from changing its grant rules.
Rhode Island and 21 other states and the District of Columbia filed the complaint Tuesday in U.S. District Court for the District of Rhode Island. The case comes more than a week after a judge stopped the Department of Housing and Urban Development (HUD) from restricting funding from “Housing First” programs that provide a subsidized, stable residence for formerly homeless people without any conditions, such as requiring tenants to seek treatment for a mental health or substance use condition.
Housing advocates claimed victory on June 29 when Judge Mary McElroy ruled against HUD’s attempt to shift the majority of its 2025 Continuum of Care funding away from permanent housing programs toward transitional housing and other short-term interventions. HUD’s move could have left some 170,000 people homeless across the country, advocates warned.
McElroy had ruled in favor of two lawsuits— one filed by a coalition of Democratic-led states, another from a group of cities and nonprofits led by the National Alliance to End Homelessness — that were consolidated.
In the meantime, HUD had issued a new 2026 funding notice on June 1 that sought to effectively shift nearly a third of the $4 billion Continuum of Care program away from applications seeking to build permanent housing.
A suggestion from the judge
The coalition of communities and nonprofits, including two in Rhode Island, sought to halt the 2026 changes through a supplemental complaint, but McElroy rejected the filing since it would “unduly elongate the court’s resolution” of the 2025 cases. Her ruling opened the door for separate litigation.
“The plaintiffs are undoubtedly free to file a separate action challenging the conditions contained within the June 2026 NOFO should they choose to do so,” McElroy wrote in her order.
Plaintiffs in the new lawsuit — attorneys general from 21 states and two Democratic governors — are asking the court to strike down the June 1 funding notice.
“The Trump Administration consistently and constantly targets our most vulnerable Americans, and this case is no different,” Attorney General Peter Neronha said in a statement Tuesday. “Those experiencing homelessness are in dire need of support, and these unlawful conditions on funding for permanent housing will cause tens of thousands of people to lose their homes.”
The recently nixed 2025 notices included a 30% cap on the proportion of local program funds that go to projects involving permanent housing. Plaintiffs in the states’ lawsuit argue this year’s changes create a de facto 68% cap on permanent housing funds by reserving $1.3 billion for applications for transitional and supportive services-only programs.
Plaintiff states argue the 2026 funding notice violates the Administrative Procedure Act, which requires federal agencies to notify the public before major policy changes and provide time for comment.
“HUD buttressed this unlawful cap with a series of funding conditions designed to punish applicants who adhere to a Housing First model of service delivery,” the lawsuit states.
A coalition of municipalities, counties and nonprofits raised similar concerns in another complaint filed in Rhode Island’s federal courthouse on July 2 which was assigned to McElroy. Lead plaintiffs in this case include the National Alliance to End Homelessness and the National Low Income Housing Coalition, along with Providence-based nonprofits Crossroads Rhode Island and Youth Pride Inc. — among other groups and cities across the country.
The states’ lawsuit filed Tuesday is also assigned to McElroy.
Neronha filed the lawsuit alongside the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Vermont, Virginia, Washington, Wisconsin, and the District of Columbia. The governors of Kentucky and Pennsylvania also filed on behalf of their states.
Virginia was not among the plaintiff states in the Democratic coalition’s 2025 lawsuit.
The plaintiff states claim HUD’s latest cap will defund effective homelessness strategies and leave communities “to pick up the pieces.”
“By capping permanent housing at 68% percent, the de facto cap will cause programs to lose funding, which means residents losing housing,” the lawsuit states.
HUD’s latest changes could result in at least 97,000 people ending up back on the streets, the states’ lawsuit claims. Plaintiff states cite estimates by the National Alliance to End Homelessness, the lead plaintiff in the July 2 lawsuit, which analyzed the impacts of shifting funding away from permanent supportive housing.
The Washington D.C. nonprofit projects Rhode Island would lose more than $5 million in permanent housing funding, while 441 people in the state would be put at risk of reentering homelessness.
Eighteen organizations submitted 32 proposals for 2026 Continuum of Care funding, Sarah Saint Laurent, coordinator for the state’s Continuum of Care, said.
“We anticipate announcements going out next week,” Saint Laurent wrote in an email Tuesday.
A HUD spokesperson did not immediately respond to request for comment but officials have previously defended the 2026 changes, saying theContinuum of Care program will “fund results, not the status quo.”