Federal agencies are funded through December 11 under a stopgap law signed September 2, and the same law blocks the Office of Management and Budget (OMB) from finalizing its rewrite of the federal grant rules through that date. Your federal awards stay under current rules at least that long. In Sacramento, Governor Newsom vetoed both bills that would have paid nonprofits faster and covered more overhead costs, citing cost pressures and the need for agency discretion.

San Francisco is moving its homelessness contracts toward paying for outcomes while more of its rapid rehousing clients land outside the city. Dates to hold: October 13 for two federal comment periods, October 15 for the city's contractor input form, December 11 for federal funding, December 31 for the voucher handoff, and January 1, 2027, for the Medi-Cal transition.

What changed since last week

The federal grant rule rewrite is on hold through December 11. Section 157 of Public Law 119-103, the stopgap funding law signed September 2, bars OMB from issuing or finalizing its May 29 rewrite of the federal grant rules (2 CFR 200, the Uniform Guidance), or any substantially similar rule, through December 11. A version finalized before the law passed "shall not have force or take effect" through that date. If the proposal returns after December 11, it would bar fixed-amount subawards and allow fixed-amount awards only where a statute authorizes them. It leaves indirect cost rates alone. Public Law 119-103

Families on Emergency Housing Vouchers get a federal backstop. About 41,000 households nationally still hold these vouchers, the funding for which was set to run out this year. Section 153(b) of the same law makes HUD tenant protection vouchers available to every family under lease with one on September 30, to be provided by the end of 2026. National housing groups asked HUD on September 9 to explain how the handoff will work. San Francisco separately proposed $27 million in September for roughly 650 of these households. National Housing Law Project

HUD's Continuum of Care comment period closes October 13. HUD's September 11 notice proposes rewarding five activities in future Continuum of Care competitions: transitional housing with supportive services, supportive services only projects, participation agreements, drug-free and sober housing with on-site behavioral healthcare, and coordination with law enforcement and first responders. HUD says all five are already eligible costs or models. Applications for the 2026 Continuum of Care and Youth Homelessness Demonstration competition closed September 30 under a court stay; HUD's appeal is undecided. HUD notice | HUD competition page

The Census Bureau's proposal on who gets counted also closes October 13. It has two parts. One provides that no questions about race, ethnicity, or sexual orientation appear on the short-form decennial questionnaire; it sets no limits on the American Community Survey. The other defines "usual residence" and would not count for apportionment foreign citizens who are neither U.S. citizens nor lawful permanent residents. That part addresses apportionment only; it is silent on the other census counts many funding formulas use. Census proposal

What to do: tell your finance lead that federal awards remain under current rules through December 11, and release any budget decisions held pending an October 1 rule change that will not happen.

Why the Governor vetoed both nonprofit payment bills. On September 27, Governor Gavin Newsom vetoed AB 880, which would have required state grant programs to reimburse indirect costs at the grantee's requested rate, up to 35% of the award, unless another law prohibits it, and would have brought nonprofit grants under the Prompt Payment Act. His veto message says he has vetoed nearly identical bills before and remains concerned the policy would move grant money toward indirect costs and away from project implementation, creating "significant cost pressure" on the state. He also vetoed AB 1039, which would have required a 25% advance on qualifying state awards of $150,000 or less. That message says a statewide mandate would limit the state's oversight of public funds, notes that existing law already allows agencies to make advance payments, and urges them to use that authority "to the fullest extent possible when appropriate." AB 880 veto message | AB 1039 veto message

Recovery housing gets a state funding test. AB 1556, signed September 29, conditions state homelessness funding for recovery housing on Housing First core components, no eviction for relapse alone, on-site overdose reversal medication, and a written return-to-use policy. San Francisco's July drug-free housing ordinance, which allows eviction for drug use, would apply only to projects built without state funding, Mission Local reported. Governor's Office | Mission Local

What to do: send each state grant manager a written request for an advance on your next agreement, citing the Governor's call to use existing authority.

Homelessness contracts move to outcomes as placements move out of town. Department of Homelessness and Supportive Housing (HSH) data reported by Mission Local on September 30 shows 58% of rapid rehousing voucher holders are housed outside San Francisco as of 2026, up from 22% in 2021. The HSH Request for Information (RFI), open until 5 p.m. October 15, says the city intends to pay for clients served and outcomes achieved and may fund fewer programs at higher levels. In a September 24 interview with The San Francisco Standard, HSH Director Mike Levine said rental assistance should be judged by whether tenancies hold at three, six, and even 12 months out, and that the city underspends on prevention. Providers are about to be paid for housing outcomes, while the rental market is pushing placements out of the city. Mission Local | Request for Information | San Francisco Standard

A city food security office reaches the full Board. Mayor Daniel Lurie's ordinance creating an Office of Food Security Coordination within the Human Services Agency (HSA) was on the Board of Supervisors' September 29 agenda for a first vote, following a positive recommendation from the Rules Committee. It needs a second vote before it goes to the Mayor. The office would coordinate food programs now spread across nine city entities, add a Food Security Council, and sit in the agency that already administers more than 70% of city food funds. Office of the Mayor | Board agenda

What to do: include your 2025 and 2026 rapid rehousing placement addresses and six- and 12-month tenancy data in your RFI response, and decide whether to make the case for prevention, which Levine says the city underspends on.

Washington bought time through December 11. Sacramento and City Hall did not.

OMB, your December 11 clock. The grant rule rewrite, or anything substantially similar, cannot be finalized through December 11. If it returns, fixed-amount awards and subawards change; indirect rates stay. Model milestone-paid federal awards on cost reimbursement.

HUD, your voucher tenants. Families under a lease with an Emergency Housing Voucher as of September 30 can receive tenant protection vouchers by December 31. Ask your housing authority how the handoff will work.

HUD, your Continuum of Care scoring. The 2026 Continuum of Care competition closed September 30 with HUD's appeal undecided, so budget fiscal year 2027 as competitive. File an October 13 comment on what future competitions should reward.

The Census Bureau, your demographic data. Comments close October 13 on dropping race, ethnicity, and sexual orientation questions from the decennial short form, and on who counts for apportionment. The residence rule addresses apportionment only and is silent on the other census counts many funding formulas use, so ask in your comment how those counts would treat the residents it excludes. Your American Community Survey data is not affected.

The Department of Health Care Services, your January 1 revenue. Members with unsatisfactory immigration status move to fee-for-service January 1, 2027, without Enhanced Care Management or Community Supports. Doula, community health worker, chronic care management, and county specialty mental health services continue. Count affected members and price the gap this quarter.

Sacramento, your state contract cash. Budget no advance unless one is agreed in writing. AB 2765 binds the California Department of Social Services to report time-limit counts to the Legislature and 58 counties and to automate compliance for extended foster care youth; enrollment protection remains intent, so ask your county about redetermination.

San Francisco, your outcome measures. HSH may fund fewer programs at higher levels and pay for outcomes while placements move out of the city. By October 15, decide which outcomes you can prove and at what scale.

San Francisco, your food grants. If the food security office passes, the agency that already holds most of the city's food funding gains a formal coordinating role. Ask your HSA program officer what changes for your grant.

Correction: Our September 17 and 24 issues treated October 1 as a live start date for OMB's grant rule rewrite, and the September 24 issue warned of an October 1 federal shutdown. Both missed the September 2 law described above, which funds the government and blocks the rule through December 11.

Working through any of this? Valix Collective helps Bay Area nonprofit leaders turn policy shifts into operating decisions. Book a strategy call.

Jason McMonagle
Founder, Valix Collective LLC
[email protected]

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