Trump Administration Threatens Mass Layoff of Federal Workforce if Government Shuts Down on October 1

By Kim Johnson, NLIHC Senior Director of Policy 

A memo from the Office of Management and Budget (OMB) released on September 24 instructs federal agencies to carry out mass layoffs in the event of a government shutdown on October 1, the beginning of fiscal year (FY) 2026. Congress has yet to reach an agreement on any final FY26 spending bills and remains divided on passing a continuing resolution (CR) to maintain funding for federal programs and services.  

According to the memo, federal programs, projects, and activities (PPAs), “whose funding would lapse” October 1, “are no longer statutorily required to be carried out. Therefore, consistent with applicable law…agencies are directed to use this opportunity to consider Reduction in Force (RIF).” The memo outlines three conditions agencies should consider when targeting employees for layoffs:  

1. Discretionary funding for the employees’ PPA lapses on October 1.
2. Another source of funding is not currently available to continue the PPA’s work.
3. The PPA “is not consistent with the president’s priorities.”  

Agencies are further instructed to issue RIF notices to “all employees working on the relevant PPA, regardless of whether the employee is expected or furloughed during the lapse in appropriations.” Further, once an FY26 spending bill is enacted, “agencies should revise their RIFs as needed to retain the minimal number of employees necessary to carry out statutory functions.” The memo’s language suggests the Administration continues to look for opportunities to carry out rescissions to federal programs that would enable such staffing reductions. 

The Trump Administration pursued massive staffing cuts to federal agencies earlier this year, including a proposal to eliminate 50% of HUD staff. While that proposal did not fully materialize, as of April, an estimated 2,300 staffers—roughly 23% of the workforce—had left the agency, including a 70% staffing reduction in HUD’s Office of Fair Housing. These reductions have impacted HUD’s ability to carry out basic functions, like reviewing and administering grants and providing communities with technical assistance.  

No Funding Agreement in Sight  

After unexpectedly cancelling a meeting with Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Hakeem Jeffries (D-NY) last week, President Donald Trump is scheduled to meet with the Democratic leaders, as well as Senate Majority Leader John Thune (R-SD) and House Speaker Mike Johnson (R-LA), today (September 29) at 3 p.m. ET, in a final attempt to negotiate an agreement on a CR before the October 1 deadline.  

Congress has already introduced and failed to pass two CRs. The first, introduced by House Republicans on September 16, would have extended funding through November 21, and provided $88 million for additional security for members of Congress, the administration, and the judiciary. The second, introduced by House and Senate Democrats on September 18, would have extended funding through October 31. In addition to providing additional security funding, congressional Democrats’ CR included a provision permanently extending enhanced “Affordable Care Act” (ACA) tax credits, which help people with low incomes better afford healthcare coverage. Without action from Congress, these credits are slated to expire at the end of the year, putting over four million people at risk of losing their health insurance (see Memo, 9/22).  

The White House is calling on Congress to pass the first “clean” CR introduced by House Republicans, while congressional Democrats insist any CR include an extension of the ACA credits. Republicans carry both chambers of Congress and the White House, but a CR requires at least 60 votes in the Senate to be enacted; accordingly, Democratic support will be required to pass any funding extension.  

The Need for Additional Funding for Voucher Renewals  

While both the House and Senate fiscal year (FY) 2026 spending bills for HUD programs reject the drastic spending cuts and programmatic overhauls proposed in President Trump’s FY26 budget request, neither spending bill provides sufficient funding to ensure renewal of all existing Housing Choice Vouchers (HCVs) or Emergency Housing Vouchers (EHVs). Without sufficient funding, vouchers will be lost through attrition—when a household no longer needs their voucher, the voucher cannot be reissued to a new family because it is no longer attached to funding. When renewal funding is insufficient—or when funding is cut—households that rely on a voucher to keep a roof over their heads actively lose their rental assistance, putting them at risk for housing instability, eviction, and in the worst cases, homelessness.  

At current funding levels, over 2.4 million households receive rental assistance, accounting for just one in four households who qualify. Under the House’s FY26 spending bill, an estimated 181,900 fewer households would be served; in the Senate, 107,800 fewer households would receive rental assistance. Loss of these vouchers would disproportionately affect older adults, people with disabilities, and families with children. 

Shutdown Risks for HUD-Assisted Households  

A government shutdown would likely impact HUD’s ability to review and administer grants, provide technical assistance, and perform other basic functions. Despite this uncertainty, in the event of a shutdown, people who rely on HUD assistance to pay their rent will continue having their rent paid at least through November.  

Take Action 

Use NLIHC’s toolkits and resources to take action on FY26 funding, including by:   

• Using NLIHC’s advocacy toolkit, “Opposing Cuts to Federal Investments in Affordable Housing,” to call on Congress to protect and expand affordable housing and homelessness resources, including NLIHC’s priorities:  
• Full funding to renew all existing tenant-based voucher contracts, to ensure the people and families who rely on an HCV or EHV to keep a roof over their heads do not lose their assistance.
• $4.922 billion for HUD’s Homeless Assistance Grants (HAG) program, and for HUD to stick to its commitment to a two-year Notice of Funding Opportunity (NOFO) for the Continuum of Care Program.
• $5.7 billion for public housing operations, and at least $5 billion to address public housing capital needs.  
• $15 million for the Eviction Protection Grant Program (EPGP), as provided in the Senate’s spending bill.
• At least $1.3 billion for HUD’s Indian Housing Block Grant (IHBG) program and $150 million for IHBG-Competitive funds, targeted to Tribes with the greatest needs.   

The toolkit includes talking points, advocacy materials, engagement ideas, and more resources for advocates to weigh-in with their members of Congress on the importance of these vital resources!    

• Emailing or calling members’ offices to tell them about the importance of affordable housing, homelessness, and community development resources to you, your family, your community, or your work. You can use NLIHC’s Take Action page to look up your member offices or call/send an email directly! 
• Sharing stories of those directly impacted by homelessness and housing instability. Storytelling adds emotional weight to your message and can help lawmakers see how their policy decisions impact actual people. Learn about how to tell compelling stories with this resource.   

National, state, local, Tribal, and territorial organizations can also join over 2,800 organizations on CHCDF’s national letter calling on Congress to support the highest level of funding possible for affordable housing, homelessness, and community development resources in FY26.    

Visit NLIHC’s Advocacy Hub for more information and resources that can help you take action and help protect the affordable housing programs people rely on.