KY joins suit against Trump administration over federal dollars that support housing
Kentucky’s governor joined a nationwide lawsuit Tuesday attempting to prevent President Donald Trump’s administration from limiting how much federal money communities can use to permanently house homeless residents.
Critics of the new federal policy say it would leave vulnerable individuals homeless, including thousands in the Bluegrass State.
Gov. Andy Beshear joined the lawsuit alongside governors and attorneys general from 19 other states and the District of Columbia to block the federal government from capping the amount of continuum of care dollars communities and organizations can put toward permanent housing at 30%.
“The drastic policy changes would gut more than $15 million in federal funding to the commonwealth, putting 700 households at risk of returning to homelessness and 1,200 Kentuckians at risk of losing their housing,” Beshear’s office said in a Tuesday news release.
Continuum of care programs coordinate homelessness services in local communities. These can include mental health counseling, rehabilitation for substance use and housing support, typically provided by nonprofits. Monies are administered to these programs through the U.S. Department of Housing and Urban Development.
Under the new HUD proposal, no more than 30% of federal money can go to long-term housing support programs, such as permanent supportive housing and rapid rehousing, where a resident can stay in a unit up to two years. These types of services have been historically prioritized by HUD for funding across multiple presidential administrations.
Lexington receives more than $2.5 million every year from HUD for the continuum of care program. Ninety-two percent of that money, over $2.3 million, goes toward permanent supportive housing and rapid rehousing services.
Under the proposal, only around $765,000 could be used for those same services.
Instead, the Trump administration wants to prioritize services that provide mental health and substance use treatment and short-term transitional housing programs — services HUD has also historically deprioritized.
“The shift (in federal funding priorities) is just a more punitive and treatment oriented philosophy,” New Beginnings executive director Christy Shuffett said. “There’s not research that the model that they’re shifting to is effective, and so it’s very concerning to see us moving from evidence based practices.”
New Beginnings, a Lexington organization that provides permanent, supportive housing for formerly homeless individuals with serious mental illnesses, relies on more than $600,000 annually from HUD to house 24 people.
“If we lost all of our funding, all 24 of those people would likely be without a home,” Shuffett said.
Sheffett also said if the proposal moves forward, nonprofits will not have time to retool their services to meet the requirements and goals HUD wants to put in place. Applications for continuum of care funding from HUD for the current fiscal year are due by Wednesday, Jan. 14.
“It just feels like this is very rushed. It doesn’t give providers and the folks who are benefiting from the programs time to make a solid plan to be able to move forward,” Sheffett noted.
The Kentucky Housing Corporation estimates 233 beds in the Bluegrass Area Development District, which includes Fayette County, are supported through federal continuum of care dollars. Statewide, 2,610 Kentuckians with disabilities could lose housing under the new proposal, according to KHC.
The governor’s office says 324 Kentuckians rely on permanent, supportive housing services supported by continuum of care dollars.
Homelessness is a growing problem in Lexington, where the city counted 925 homeless individuals in 2025, a 34% increase since 2020.
The Lexington-Fayette Urban County Council commissioned a study this year which recommended the city build a new emergency homeless shelter. Mayor Linda Gorton established a task force to bring additional recommendations on pursuing the homeless shelter, as well as other policies Lexington could pursue to address homelessness. The task force held its first meeting Nov. 13.
This story was originally published November 26, 2025 at 2:49 PM.
