Why It’s Happening

The federal government funds itself through annual appropriations. When Congress and the White House can’t agree on a budget, or pass a stopgap measure, funding authority lapses. Under the Anti-Deficiency Act, agencies like HUD are legally barred from spending money without appropriations. Most federal staff must stop work because the government cannot accept voluntary services That’s when a government shutdown begins. 

On September 19th, House Republicans approved stopgap legislation to keep current spending levels until Nov. 21. However, the measure failed to get the necessary 60 votes in the Senate the same day, as did a separate Democratic-led funding measure. 

This sort of funding dilemma isn’t new. HUD has operated under shutdown contingency plans before, most recently in 2019 and again in 2023. The difference today: HUD is entering with fewer staff and tighter budgets, meaning disruptions are more likely and response times slower. 

Who It Impacts 

For PHAs, the effects are immediate and practical: 

• Executive Directors and finance staff trying to ensure housing assistance payments (HAP) keep flowing. 

• Residents relying on vouchers and operating subsidies. 

• Owners/landlords expecting timely payments. 

• Developers and partners with RAD or capital projects in motion. 

• HUD field staff who would normally support agencies, but may be furloughed. 

What Happened in 2023 

When Congress failed to pass a full-year budget in 2023, HUD activated its contingency plan. This gave PHAs a preview of what happens when funding stops flowing: 

• Mass furloughs: Most HUD staff were sent home on October 1, 2023, with only “excepted” employees, those protecting life, safety, or property, continuing to work. At the time, HUD had 8,573 employees on board. Only 244 were retained under the plan, and up to 965 could be recalled intermittently. This meant agencies saw immediate slowdowns in approvals and oversight 

• Minimal operations: While PHAs were not required to close, many agencies had to adjust hours or staffing. Residents did not immediately lose assistance, but the risk of delayed payments grew with each passing week. 

• Program impacts: 

• • Public Housing & HCV: Agencies could draw down previously obligated funds in eLOCCS, but new awards were frozen. 

• • Grants (CDBG, HOME, HOPWA): Accessible if no staff review was required; otherwise, funds were stuck in the pipeline. 

• • Technical assistance & oversight: HUD’s TA Center ran on contractor capacity, but requests requiring staff review were delayed. 

• Carryover funds: HUD leaned on limited multi-year funding to keep some functions alive, but furlough notices went out quickly once reserves proved insufficient. 

The lesson from 2023: core subsidies may continue for a time, but new approvals, grants, and HUD support stall fast. PHAs that acted early, drawing down funds, communicating with landlords and residents, and tightening reserves, were better prepared. 

What We Can Expect to Happen This Time 

HUD’s contingency plan determines what continues and what stops. Here’s what PHAs can expect if the shutdown proceeds: 

Public Housing 

• Operating funds: Subsidies will continue only if previously obligated; no new operating funds can be released without appropriations. NAHRO released a statement on 09/30 stating funds for October through mid-November have been obligated.PHAs may still use HUD’s systems to draw down previously obligated funds, including EIV, PIC, VMS, and LOCCS. But any action needing HUD staff review will be delayed unless tied to an imminent safety risk. 

• Capital funds: Already-obligated dollars may be drawn down through eLOCCS, but new 2025 capital formula funds are on hold until a budget passes. 

• Inspections: Contracted inspections obligated before the shutdown may proceed; HUD staff inspections limited to life-safety emergencies. 

• Technical Assistance Center (TAC): TAC may remain open, but anything requiring HUD staff review will be delayed. 

Housing Choice Voucher (HCV) 

• HAP & admin fees: Payments already obligated will be disbursed on schedule. Agencies can also use HUD-held reserves to cover emergencies and prevent terminations. 

• Requests needing HUD review: Actions like HAP/fee frontloads, ModRehab, Mainstream, and SRO adjustments will not be processed during the lapse (except for imminent threats to life/property). 

Community Planning & Development (CPD) 

• CDBG, HOME, HOPWA, Homeless Assistance Grants: Previously obligated funds remain available through eLOCCS if no HUD review is required. 

• Staff recall: May occur only in cases of imminent threat to human life or property. 

• Consolidated Plans: May be automatically approved if HUD cannot act, but these auto-approvals could still be reversed later because HUD staff cannot review them within the 45-day statutory window. 

Family Self-Sufficiency (FSS) 

• Staff furloughs: The FSS team will be furloughed. 

• Grant access: Grantees can continue to draw previously obligated funds in eLOCCS. 

• Requests requiring HUD approval: Adjustments (e.g., requests exceeding 10% of grant funds) will not be processed during the shutdown. 

• TA activities: Technical assistance dependent on HUD review may be canceled or delayed. 

Moving to Work (MTW) 

• Non-HAP funding assignments: Not processed unless safety is at risk. 

• Payments: Only already-obligated MTW funds can be scheduled. 

• HUD staff support: Technical questions will not be answered during the lapse. 

Rental Assistance Demonstration (RAD) 

• New applications: May be submitted but will not be reviewed until after the shutdown. 

• Closings: HUD will allow closings to proceed if a failure would jeopardize financing (e.g., RAD deals with strict tax credit deadlines.), but new applications will wait until the government reopens 

• Post-closing construction: Expected to continue, since funds are already obligated and construction oversight can resume after the shutdown. 

How PHAs Should Respond 

1. Communicate with landlords and residents. Be proactive about what’s funded and what could be delayed. Clear communication prevents panic. 

1. Check reserves. Know exactly what you have in HAP reserves or operating reserves in case obligations stretch thin. 

1. Draw down obligated funds now. If you have approved capital or grant dollars sitting in eLOCCS, pull them before the system slows down. 

1. Document everything. Keep records of communications, payments, and HUD requests that go unanswered. This will matter if you need waivers or post-shutdown relief. 

1. Prioritize safety. HUD will only act on imminent threats. Make sure your internal protocols for emergencies are clear and ready. PHAs should document emergency conditions clearly if they want HUD action during a shutdown. 

1. Stay connected. Industry groups (NAHRO, PHADA, CLPHA) and partners like AMA can keep you updated on what’s moving behind the scenes. 

Final Word 

Shutdowns create uncertainty, but PHAs that stay prepared, communicate clearly, and manage reserves can minimize disruption. The mission doesn’t stop, even if HUD’s phone lines go quiet.