Proposal Would Offset Section 8 Reserves, Including MTW Agencies
On July 24, the Senate Appropriations Committee advanced its FY 26 Transportation, Housing and Urban Development (T-HUD) funding bill with strong bipartisan support, approving the measure by a 27–1 vote. The full appropriations text was released the following day.
Earlier this year, the President released the administration’s recommended budget proposal, and the House approved its FY 26 funding bill on July 17. In contrast to the deep cuts in the President’s proposed budget and the House bill, the Senate’s version takes a more balanced approach by increasing funding for many HUD programs. Still, PHADA is concerned that the bill cuts public housing funding and includes reductions to several key programs.
Key provisions include:
- An 11% cut to the Public Housing Operating Fund.
- Level funding for the Public Housing Capital Fund.
- Increases for core voucher programs, including:
- A 5.7% increase for Voucher Contract Renewals.
- A 5% increase in Administrative Fees.
- Reductions to key housing and development programs, including:
- A 6% cut to the Community Development Block Grant (CDBG) program.
- A nearly 47% cut to the Choice Neighborhoods Initiative.
- Modest but meaningful increases for two resident services programs, with:
- A 12.5% increase for Resident Opportunities and Self-Sufficiency (ROSS).
- A 10% increase for Family Self-Sufficiency (FSS).
The bill also boosts the Operating Fund Shortfall account from $25 million enacted FY 25 levels to $214 million. While helpful, this increase does not make up for the significant Operating Fund cut.
Concerning Provisions
Notably, the package includes no continuation funding for the Emergency Housing Voucher (EHV) program, which currently supports roughly 57,000 formerly homeless or housing-insecure households. It also does not provide HUD with authority to repurpose Tenant Protection Voucher funds to address anticipated EHV shortfalls in 2026—authority the House version does include.
Additionally, the Senate proposal authorizes HUD to perform a statutory offset based on “excess amounts” in PHAs’ Section 8 Housing Choice Voucher program net restricted asset accounts, including HUD-held reserves. MTW agencies are not exempt despite their financial flexibility. While some protections exist for committed funds, agencies must prove their case, and HUD has the final say. PHADA is deeply concerned that this approach could undermine fiscal stability for all agencies and set a troubling precedent by penalizing prudent management and increasing financial uncertainty for PHAs.
See the table below for a full funding comparison.
Notable Policy Riders
The Senate package also includes several policy directives, or “riders,” instructing how appropriated funds are to be spent, including:
- Shifting PBCA contracts to cooperative agreements, which PHADA strongly opposes. However, the bill does allow PHAs and affiliates to compete for PBCA awards and still allows for at least one PBCA per state.
- Reinforcing HUD’s responsibility to enforce the Fair Housing Act, while prohibiting the agency from requiring specific local zoning changes under the 2025 AFFH interim rule—preserving local decision-making.
- Prohibiting HUD from using its flawed FSS Achievement Metrics (FAM) scores to determine FSS awards, except for bonus awards.
- Disallowing HUD from closing or relocating any field or regional office unless explicitly authorized, and requiring at least one staffed, functional field office per state.
PHADA will provide a detailed analysis of the Senate’s proposal in a future Advocate. In the meantime, members are urged to contact their legislators to share how proposed cuts or policy changes would impact their agencies and residents.