SFHA approves FY2026 operating budget; officials lay out cuts and contingency plans amid federal funding uncertainty

The Housing Authority of the City and County of San Francisco on Wednesday approved its fiscal year 2026 operating budget, adopting a base case that assumes a Senate spending proposal and detailing steps staff will take to reduce potential federal funding shortfalls, officials said. The authority's budget presentation identified the housing assistance payments (HAP) program for housing choice vouchers and several other programs as the primary exposure to federal budget changes.

Roy Lobo, SFHA budget manager, told the commission staff used the Senate bill as the base scenario while modeling a range of outcomes. "The budget right now that's for approval is based on the base scenario, so the senate budget," Lobo said. Under the projections presented, the authority expects a calendar‑year 2025 HAP allocation of about $417 million and modeled a range of shortfalls: a $20 million shortfall under current projections for 2025, roughly $43 million if a Senate proposal bill shaped outcomes differently, and larger reductions under a House bill scenario. At the program level, staff projected a $1.5 million loss for the housing choice voucher program under the base case (Senate bill) and a larger loss under the House bill scenario.

To blunt potential shortfalls staff outlined immediate and planned actions that have already been implemented or could be expanded: applying for HUD shortfall supplemental funding; stopping issuance of new tenant‑based vouchers; ending local absorption of portability (charging other jurisdictions rather than absorbing costs); reinstating interim income reexaminations; and eliminating vacant positions. Lobo said operating savings removed roughly $4.4 million from the proposed budget, including elimination of about 10 vacant positions and reductions of general expenses by about $1.6 million. The presentation showed nine positions eliminated on the staffing slide.

Emergency Housing Vouchers (EHV) are another focus. SFHA reported it currently administers about 925 EHVs and is planning to move EHV participants to available project‑based vouchers where feasible; staff said they are seeking HUD approval to do so. The authority projected a $7.5 million shortfall risk for EHVs in 2026 under certain scenarios and said it is prioritizing transitions for existing EHV participants and coordinating with city partners.

Staff described contingency plans to preserve resident payments in the short term if a federal funding disruption occurs. Lobo said October payments were covered under current obligations but called the November outlook uncertain if federal appropriations are delayed. "At this point, residents and contractors shouldn't expect a break in service," Lobo said, "but if it lasts longer, we'll have to advise people otherwise." Commissioners asked staff to return with quarterly updates and noted the authority would bring a revised budget to the commission if federal action requires it.

After discussion the commission voted unanimously to adopt the FY2026 operating budget on the Senate‑bill base case and approved associated program actions presented by staff. The board also separately approved a one‑year contract extension and $200,000 increase to the contract with Paul Edwards Management to continue administration of the EHV program through Sept. 30, 2026; the contract amendment brings that contract's cumulative not‑to‑exceed total to $3,900,300, staff said. Staff said Paul Edwards Management (PIM) has administered EHV tasks including annual recertifications, interims, landlord relations and weekly coordination with service providers since 2021.

Staff said they will return with budget actual reports and, if necessary, proposed budget revisions once federal appropriations are finalized.