Massachusetts is facing a major financial crisis as the cost of its emergency shelter system is set to exceed $1 billion in the coming years. Governor Maura Healey’s administration has updated its budget estimates, revealing that the state will likely spend more on emergency shelters than initially planned. Over the next fiscal year, costs for housing migrants and local families are expected to exceed $1 billion, up from the earlier estimate of $915 million. This increase suggests that the demand for shelter services is not expected to decrease.
The updated numbers came out just hours after Healey signed a new state budget into law. This budget allocates $325 million for the shelter system and uses $175 million in leftover pandemic funds to help cover these costs reports the Boston Herald.
The high spending isn’t expected to drop soon. State officials have hinted that more taxpayer money will probably be needed to keep the shelter system running in the coming years. In a presentation to a state commission, Healey’s team indicated that if the number of people needing shelters doesn’t go down, Massachusetts might spend over $1 billion in fiscal years 2026 and 2027.
Senator Ryan Fattman, a Republican from Sutton who is part of the commission, suggested that lawmakers should consider making permanent changes to the shelter system to keep it effective and affordable. He stressed that the system can’t continue to support anyone who arrives, no matter where they come from, without clear rules and financial sustainability.
The revised estimate for the current fiscal year was adjusted based on the assumption that the shelter system will continue to serve 7,500 families, keep four overflow shelters open, and maintain the same level of support as in the previous fiscal year. The initial estimate of $915 million did not fully account for the costs of running the overflow shelters.
A spokesperson for the budget office said the current shelter system is financially unsustainable and will need changes. They recently introduced new policies to manage shelter use, including a five-day limit at temporary shelters and a nine-month cap on stays in emergency assistance shelters.
Most of the spending this year is expected to go towards providing shelter and associated services, with over $775 million allocated to service providers. Additional funds are planned for overflow shelters, school and municipal support, intake and clinical assessments, and work authorization initiatives. However, there is a concern that by January 1, 2025, there could be a $470 million shortfall if additional funds aren’t secured.
Half of the required funds for fiscal year 2025 have already been allocated, but the rest may come from leftover pandemic-era funds. If these funds are not available, the state might have to cut back on direct shelter services, reduce overflow shelters, or limit additional services.
Governor Healey has already taken steps to reduce shelter demand. Families with children and pregnant women can only stay in overflow shelters for five days now, compared to the previous month-long limit, and must wait six months before accessing the main shelter system. The state is also prioritizing Massachusetts families facing sudden homelessness due to eviction, disasters, or veterans.
As the costs of the emergency shelter system have soared, reaching $793 million by mid-June, some are concerned about future financial pressures. Critics argue that the system’s current approach is unsustainable and needs reform to ensure it serves those most in need while managing costs effectively.
