HSH proposes FY 2025-26 budget; warns of large one-time revenue drop, hiring freeze and position gaps

Gigi Whitley, chief of finance and administration for the San Francisco Department of Homelessness and Supportive Housing, presented the departments proposed budgets for fiscal years 2025-26 and 2026-27 at the Feb. 14 commission meeting, warning of near-term revenue volatility and structural funding cliffs over the next several years.

Whitley said the proposed budget decreases year over year by about 11% in FY 2025-26 and a further 9% in FY 2026-27, driven largely by the planned expiration or one-time nature of state and local grants and by revised revenue projections for the Our City Our Home (Prop C) fund. She described a roughly $80.5 million drop in the first year of the proposed two-year window tied to one-time funds, and said additional declines are expected in the following year as some state grants and one-time allocations end.

Budget and staffing specifics - Hiring freeze and salary savings: The department has increased its salary attrition expectation to $3.4 million, which Whitley said requires keeping 18 general-fund positions unfilled. She said a mayoral hiring freeze and prior midyear adjustments add another roughly $2.4 million in salary savings and that, at the time of the hearing, 57 positions were frozen, 24 of which are filled temporarily and for which HSH has requested unfreezing approval.

- Grants and revenue risk: Whitley reiterated that HSH has benefited from large state grants in recent years (HAP rounds and other state funding) and that several grants are scheduled to expire through FY 2028-29. She said HSH is preparing a revised Our City Our Home expenditure plan and will pursue competitive grants, including an anticipated spring application for Encampment Resolution funds (the department may seek up to $20 million depending on application rules). She also said HSH continues to plan around CalAIM and Medi-Cal waiver opportunities to braid housing-related supports with healthcare funding.

- Program continuity and reductions: The proposed budget prioritizes sustaining core services (housing operations, shelter, prevention and outreach) while absorbing some cost increases (master-lease rent, provider insurance), but it does not meet the mayors general-fund reduction target without program-level trade-offs, Whitley said. The submission to the mayors office was due Feb. 21, she said. HSH staff also described efforts to find underspending in contracts that could be redirected to cover critical operational shortfalls for providers.

Why it matters: HSH said the fiscal profile reflects both a record expansion of housing and shelter over the past eight years and a funding structure increasingly dependent on time-limited state grants and ballot-funded revenue that may fluctuate. Commissioners and providers said the mayoral hiring freeze and pending budget decisions create operational uncertainty for nonprofits and for programs such as outreach and supportive housing operations.

Questions raised and follow-up requested Commissioners asked for more program-level budget detail, including contract-level line items and the timeline for rapid-rehousing awards that had been frozen pending mayors office review. HSH said it had transmitted a memo to the mayors office this week and expected action soon, and that staff will present further analysis of housing-placement trends and the impact of building lease-ups at a future meeting.

Ending: Whitley said the mayor will release a proposed budget by June 1 and HSH will engage in the city budget process. She urged commissioners and stakeholders to expect continued uncertainty tied to federal, state and local revenue and to follow the departments proposed Our City Our Home expenditure plan when it is finalized in mid-March.