by Dave Soulia, for FYIVT.com

Lawmakers Raise Concerns About Shift from Motel Assistance to Shelter Development

A dispute is emerging between House lawmakers and the Department for Children and Families (DCF) over how more than $11 million in emergency housing funds were carried forward and used during the current fiscal year.

At issue is approximately $11.1 million in General Assistance (GA) emergency housing funds originally appropriated in State Fiscal Year 2025 and carried forward into FY2026. According to testimony and internal communications reviewed by the House Human Services Committee, DCF expected at least a $5.5 million underspend in the GA emergency housing line.

Rather than leave those funds unused, the department indicated it intended to utilize the money for shelter services — a different budget category primarily administered through the Office of Economic Opportunity (OEO) and the Housing Opportunity Program (HOP).

House Human Services Chair Rep. Theresa Wood (D – Washington – Chittenden), raised concerns in a January memorandum to House Appropriations, writing that decisions about shifting funds between specifically appropriated purposes fall under legislative authority, not administrative discretion.

Legislative Authority vs. Administrative Flexibility

In her memo, Wood wrote that the Department expected at least a $5.5 million underspend in General Assistance emergency housing and intended to use those funds for shelter services.

She stated that “it is Legislative purview, not Administrative purview, to make a decision regarding the utilization of funds specifically appropriated for one intended purpose being transferred to a different purpose.”

The dispute centers on whether DCF effectively redirected GA emergency housing funds into shelter development and operations without seeking a formal budget adjustment through the Legislature.

Documents provided to lawmakers show that of the $11.1 million carryforward, approximately $5.7 million was obligated under a “Shelter Development” line item in FY2026. Additional funds were used for shelter operations and emergency housing expenditures.

Within that shelter development total, roughly $1.3 million is tied to a specific shelter project that “met with challenges,” according to departmental explanations shared with legislators. Lawmakers have been told the funds are obligated but may need to be redistributed depending on the project’s outcome. The project has not been publicly identified in committee testimony.

Broader System Redesign Underway

The issue surfaced as the Human Services Committee continues to debate broader changes to Vermont’s homelessness response system, including how to prioritize access to shelter and whether to reduce reliance on motel placements in favor of expanded shelter capacity and case management.

During February hearings, committee members acknowledged that Vermont’s emergency housing system is operating under constrained resources and that difficult tradeoffs are being considered within the governor’s proposed budget framework.

Rep. Esme Cole, D-Hartford, referenced the $11 million carryforward during committee discussion, underscoring lawmakers’ concern about clarity and transparency in how funds are being deployed.

Prevention Funding Also Under Pressure

At the same time, community partners have testified that homeless prevention funding was reduced in FY2026 to accommodate expanded shelter capacity costs.

In her memo, Wood noted that a $2 million increase requested for OEO shelter services required significant reductions to homeless prevention and response grants affecting 14 community-based providers.

Advocates are also requesting an additional $1.32 million for HOP Financial Assistance, which provides short-term rental assistance, security deposits, rental arrears payments, and other stabilization supports. Providers have warned that without additional funding, prevention resources will be exhausted before the end of the fiscal year.

That request, however, is separate from the shelter development funds now under scrutiny.

Distinct From Opioid Settlement Funding

The carryforward controversy comes amid other high-profile housing debates, including discussions surrounding overdose prevention centers (OPCs). However, funding for those facilities comes from opioid settlement dollars, not GA emergency housing appropriations.

Testimony indicates OPC funding has been structured at approximately $1.1 million per year — distinct from the $1.3 million shelter development obligation now in question.

A Structural Tension in Housing Policy

At the heart of the dispute is a structural tension: GA emergency housing is traditionally used for motel placements and direct emergency assistance, while shelter development funds support the creation and expansion of physical shelter capacity.

Lawmakers appear concerned that shifting funds between those purposes without formal approval undermines legislative control over appropriations. DCF has not publicly indicated that funds were misused, but rather that shelter capacity expansion required flexibility as one-time federal dollars expired and demand remained high.

The House Human Services Committee has signaled that it expects clearer accounting and may seek additional clarification before approving related budget adjustments.

With Vermont continuing to report elevated levels of homelessness and ongoing pressure on both shelter and prevention systems, the funding dispute reflects a broader policy crossroads: whether to prioritize emergency motel placements, long-term shelter infrastructure, or rental assistance aimed at preventing homelessness altogether.

For now, lawmakers are pressing for answers about how the $11.1 million carryforward was allocated — and whether the Legislature’s intent was followed when those dollars were redirected into shelter development.