Federal government shuts down many functions
UPDATED as of 8:00 pm Eastern time on Tuesday, October 14.
The Office of Management and Budget (OMB) has posted an updated version of its Frequently Asked Questions During a Lapse in Appropriations, dated October 3, 2025. Several of the questions and answers relate to treatment of government contracts and awards during a shutdown.
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October 1, 2025 — With Congress unable to agree on appropriations bills or a continuing resolution, many government activities stopped at the end of September 30, the last day of fiscal year 2025. The closure is likely to last for at least several days, because the House is not scheduled to be in session until October 6. The last time this occurred, the shutdown lasted a record 35 days, from December 22, 2018 to January 25, 2019.
What activities continue: The administration determines what federal agency functions must be continued during a shutdown. Staff who carry out those essential functions, as well as staff whose positions are not funded through annual appropriations and political appointees confirmed by the Senate, are required to work during the shutdown, but are not paid until the shutdown ends. Other staff are furloughed – they do not work during the shutdown but after it ends they are paid for the time they did not work. If a shutdown lasts more than a few days, determinations of crucial tasks and needed workers may shift.
Agency RIFs: In the last week of September there was significant concern that this shutdown would lead to many federal employees losing their jobs, based on an Office of Management and Budget memo telling agencies to “consider” issuing reduction in force (RIF) notices for employees whose job funding lapsed and whose work tasks were “not consistent with the President’s priorities.”
RIFs and furloughs are different things; a furlough is a temporary layoff with back pay later, whereas a RIF terminates a job, although a RIF’d employee receives a 60-day notice and may be transferred to a different position.
Only a few federal agencies incorporated RIF plans into their shutdown contingency plans, however, and USDA and HUD were not among them. Overall, the current furloughs reportedly impact around 550,000 federal workers, 23% of the current workforce.
USDA shutdown plan: USDA’s current plan has one page devoted to Rural Development. It shows that nearly 83% of RD’s staff are furloughed, compared to 49% of the department’s total staff. “Limited” RD activities will continue, including making Section 521 Rental Assistance payments for contracts already in effect, for as long as the funding is available. RD staff have told stakeholders that available RA funds will cover the program at least until the end of October.
RD does not have authority to renew RA contracts that expire during the shutdown.
According to the plan, the agency will continue servicing loans “only as necessary to protect RD’s interest in properties.” This seems to imply what past RD plans stated explicitly – no new loans, grants, or loan guarantees would be issued during a shutdown.
HUD shutdown plan: HUD’s plan seems to indicate that almost 94% of its employees are furloughed, with 16% of them to be recalled intermittently, but that many of its programs are functioning.
Programs such as HOME, CDBG, and Continuum of Care will continue to disburse funds when funds have been obligated and no further action by HUD employees is necessary. When HUD review or action is required, the department will recall employees “as necessary to avoid an imminent threat to the safety of human life or property.”
Monthly subsidy programs such as public housing, housing choice vouchers, and multifamily assistance contracts, will continue to operate while funding is available. Unlike USDA, HUD does have the authority to renew Project-Based Rental Assistance contracts that expire during the shutdown.
The plan notes that “nearly all of HUD’s fair housing activities will cease during a lapse” in appropriations.
National Flood Insurance Program expiration: The continuing resolution that funded the government from March 15 through September 30 authorized NFIP, so the program expired after September 30. FEMA can continue to pay claims so long as it has funds available, but it must stop issuing or renewing policies.
Long-term effects: At this point, it is difficult to determine how long the current closure may last and what its long-term impacts may be. The Congressional Budget Office estimated that around 750,000 workers could be furloughed every day of the shutdown, with the daily cost of their compensation totaling roughly $400 million.
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NOTE: As of mid-afternoon Eastern time on September 29, 2025, HAC could find no new information about what might happen to rural housing programs in the event of a federal government shutdown. If we receive any news we will post it here.
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Follow HAC’s reporting on appropriations in the HAC News (subscribe here) and on our web pages for USDA and HUD funding.
Federal agencies are required to prepare contingency plans identifying which functions will continue during a government shutdown and which will not. The summary below is based on the most recent plans posted online for USDA, HUD, and the Treasury Department. All of them were prepared during the Biden administration. USDA’s January 2024 shutdown plans are still online, while HUD’s and Treasury’s plans have been removed and not replaced. OMB’s shutdown page refers readers to individual agencies. OMB’s September 2023 FAQs remain online.
A brief federal government shutdown probably would not impact most people who receive housing assistance but, at some point after the first few days, the housing effects would begin to be noticeable. In fiscal year 2019, a record 35-day shutdown from December 22, 2018 to January 25, 2019 led some owners of USDA-financed rental properties, unaware that the agency had enough Section 521 Rental Assistance (RA) funding to last through January, to threaten to evict tenants who could not pay full rent on their own. Fortunately, Congress reached a funding agreement before any RA renewals were missed that February. (More details about the 2019 shutdown are included at the end of this post.)
KEY TAKEAWAYS
- A brief federal government shutdown probably would not impact most people who receive housing assistance but, at some point after the first few days, the housing effects would begin to be noticeable.
- Section 521 Rental Assistance disbursements would continue, but not until the 30th day of a shutdown, and only if funding is available, according to USDA Rural Development’s shutdown plan, dated January 2024.
- No new rural housing loans, grants, or loan guarantees would be committed during a shutdown.
- HUD’s monthly subsidy programs – including public housing operating subsidies, housing choice vouchers, and multifamily assistance contracts – would operate only while funding remained available, according to HUD’s September 2023 contingency plan. If they ran out of money during a shutdown, they would cease to operate.
WHAT SHUTS DOWN
USDA Rural Development
Rural Development’s contingency plan, dated January 2024, indicates that State Directors, their staff, and some employees in the Washington, DC national office and the Customer Servicing Center in St. Louis would continue working during a shutdown.
Rental Assistance
RD’s plan says that Section 521 Rental Assistance would continue “only … if a threat to RD’s property interests becomes imminent (day 30) …, and funding remains available under existing rental assistance agreements. … On and after the 30th calendar day of a funding lapse, RD will assign the minimum number of employees needed to disburse Rental Assistance payments, pursuant to the exception for the protection of property (RD’s security interest), on the presumption that, after 30 days, the threats to RD’s property will have become and will continue to be imminent.”
The amount needed for RA can vary considerably from month to month. The RA payments each month are for the RA contracts that expired during that month, and each payment obligates a full year of RA funding. For example, the RA contracts that expired during November 2024 and were renewed in late November or early December will not be impacted again until they expire in November 2025.
The contingency plan does not have a provision – which was included in a previous version – stating that, if the agency has used up all its RA funds, “additional servicing options” could be provided to rental properties. In 2019, for example, USDA was considering permitting owners to use project reserves to cover costs. That shutdown ended before the agency completely ran out of RA money, so they did not have to decide whether to allow the use of reserves.
Loans, grants, and servicing
According to USDA’s contingency plan, no new loans or grants would be committed during a shutdown. No new loan guarantees would be issued under any of the housing programs or the community facilities program. For Section 502 guaranteed loans only, lenders and borrowers could choose to proceed with closing if USDA had already issued a valid conditional commitment. The lender would be assuming the risk until the shutdown ended and a guarantee was issued.
RD activities that are considered necessary to preserve the government’s property would continue during a shutdown, and loans and escrow accounts are considered to be government property. Therefore RD would keep processing nightly updates for each RD financial system, making insurance and tax payments from borrowers’ escrow accounts, and “reconciling and submitting for initial processing” collection activity including amortized payments and payoff activity. Some foreclosure sales would go forward. Servicing of existing guaranteed loans would continue, including processing loss claims.
Disbursements of construction loans and grants would continue during a shutdown.
HUD
HUD’s plan is dated August 2023. It explains that, since 2019, appropriations language has allowed HUD’s salaries and expenses funding to be carried over into the next fiscal year. The plan explains that funds remaining from an expired continuing resolution – such as the CR that ends on December 20 – cannot be used for new obligations. The department’s senior leadership would decide how much of that funding to use and for what functions.
Programs operating with HUD funding that was obligated before a shutdown would continue to operate. Much of the Federal Housing Administration’s and Ginnie Mae’s work would continue during a shutdown. Monthly subsidy programs, however – including public housing operating subsidies, housing choice vouchers, and multifamily assistance contracts – would operate only while funding remained available. If they ran out of money during a shutdown, they would cease to operate.
Treasury
The Treasury Department’s plan, dated September 2023, states that the CDFI Fund’s programs would not operate during a shutdown, without providing any further details.
WHO KEEPS WORKING
Generally, during a shutdown, federal staff in the affected agencies do not work unless their functions are considered essential. Furloughed employees are also not allowed to do their jobs voluntarily while the government is closed. In the past, Congress and the President have usually agreed to pay furloughed employees retroactively after a shutdown ends, but they are not required to do so.
Presidential appointees (i.e., agency officials who were confirmed by the Senate) are not furloughed. They are not paid, however, unless funds for their salaries are appropriated after the shutdown ends. “Schedule C” employees, also known as political appointees (these jobs do not require Senate confirmation), are subject to the same rules as civil service employees to determine whether their roles are essential during a shutdown.
WHAT A SHUTDOWN MEANS FOR GOVERNMENT CONTRACTS
A 2023 Office of Management and Budget document explains that during a shutdown a federal contractor can proceed with work that is not impacted by the lapse in funding. For example, if an agency has already obligated funds representing the entire price under a contract or task order before the funding lapse began, the contractor can conduct the work. At the agency, however, routine operational and administrative activities relating to contract or grant administration cannot continue.
WHAT HAPPENED IN FY19
Fiscal year 2019 began on October 1, 2018 with parts of the federal government, including USDA and HUD, open under continuing resolutions. After a final CR expired, they did close down on December 22. The government reopened on January 25, 2019, under another CR that expired on February 15. A final consolidated appropriations act was signed into law by President Trump on February 15.
USDA Rural Development
The first HAC News issue after the shutdown began, published on January 15, 2019, reported that limited functions were continuing at USDA’s national office in Washington, DC and the Customer Service Center in St. Louis. Loan closings were not taking place and applications were not being processed.
Rental Assistance
USDA RD was able to renew Section 521 Rental Assistance contracts that expired in December and January. If the shutdown had continued, however, the agency would not have had enough money to renew the approximately 700 RA contracts that expired in February and 1,000 in March.
By January 25, 2019, when a deal was reached for a three-week CR, the HAC News reported that USDA was considering short-term measures, such as allowing owners to use project reserves to cover costs, but had not yet finalized any plans or notified property owners/managers. The need for providing information directly from USDA had become clear when managers of USDA-financed properties in Arkansas, Louisiana, Missouri, and Mississippi sent notices to tenants telling them their RA was ending in January and they would be responsible for paying their full rent, then backpedaled when informed by USDA the RA would be paid.
After the shutdown ended, the February 11, 2019 HAC News quoted a notice USDA sent to owners and managers of USDA-financed properties with Section 521 Rental Assistance: “We are pleased to inform you that Rental Assistance for Section 514/515 properties has been obligated through April. … We understand that the most recent lapse in appropriations created anxiety and uncertainty regarding the status of your contract obligations. We are hopeful that this communique and the fact that all contracts are obligated through April will provide you reassurance and operational predictability in your management of these critical low-income resources throughout rural America. Thank you for your partnership in delivering the Rural Housing Service affordable housing mission.”
A January 2019 memo from the National Housing Law Project explained the rights of federally assisted tenants during the government shutdown. NHLP is preparing an updated memo for a possible October 2023 shutdown.
Homeownership Programs
On February 1, 2019, after the shutdown ended, USDA’s single-family programs office announced it would issue new Certificates of Eligibility to all Section 502 direct applicants who had valid COEs on December 21 before the government shut down. The agency did not have enough money to obligate additional Section 502 direct loans until it received funding beyond February 15, however.
Section 504 repair loans and grants were available on February 1. USDA planned to prioritize applicants with immediate health and safety hazards.
Other Impacts
There were additional housing-related impacts from the FY19 shutdown, and only a few are summarized below.
Some HUD Project-Based Rental Assistance contracts expired early in the shutdown, as reported in the January 15, 2019 HAC News. About 21,500 households with average incomes under $13,000 per year were impacted by the expiration of 650 PBRA contracts that ended in December. More were expiring in January and February and HUD would need to determine whether it had funds available to renew them. Property owners could use their reserves, if available, to cover shortfalls. Public housing capital funding was unavailable, and operating funds would not be able to carry public housing authorities beyond February.
The shutdown’s effect in Indian Country was “substantial and unique,” the Center for Indian Country Development at the Minneapolis Federal Reserve reported, although calculating a dollar amount was not possible. Because of the unique relationship between the U.S. and Tribes, Tribal services are often closely tied to federal funding. Government employment is disproportionately high in Indian Country, Tribal staff such as those who plow reservation roads were furloughed, and Tribal education funds were in danger.
Disaster spending, particularly funding for Puerto Rico’s recovery from Hurricane Maria in 2017, was also delayed by the 2019 shutdown. Congress had appropriated $20 billion in CDBG-DR funds for Puerto Rico, but only $1.5 billion of that money was approved before the shutdown, and HUD did not disburse it during the shutdown. HUD approval of disaster spending plans or amendments from California, Florida, Georgia, Missouri and the U.S. Virgin Islands was also put on hold.
