The Maine Department of Health and Human Services has implemented a revised reimbursement rule for communities that operate emergency shelters, which significantly reduces the rate paid to Portland. This city, known for accommodating the largest number of individuals in emergency shelters compared to any other location in Maine, is expected to be significantly affected by this adjustment.
Effective from April 1, Rule 26 establishes that the state’s payments are now directly linked to the “zero-bedroom rate,” a benchmark set for studio or efficiency apartments. This rate, adjusted annually, is based on fair market rents specific to each location, as determined by the federal Department of Housing and Urban Development. Portland officials have expressed concern about the increased burden on the city, while the department maintains that the rule simply reaffirms existing policy, indicating that previous reimbursements to Portland were overly generous.
According to a statement from the Department of Health and Human Services, as of October 1, 2024, the reimbursement rate for an individual in Portland was set at $48 per night, and this rate remains unchanged following the new rule’s implementation. However, a state-filed notice of violation against the city last fall highlighted that Portland had been requesting $84 per night, a figure justified by city officials based on shelter operating expenses.
Portland Mayor Mark Dion had previously criticized the comparison of shelter operational costs to those of efficiency apartments, noting the inherent differences in expenses, such as facility leasing, utilities, maintenance, and staff salaries necessary for shelter operations. The city had not been made aware of any issues with its reimbursement requests until the notice was issued, despite the state having reimbursed at the $84 rate since July 2023.
In response to reduced state assistance, the city has already anticipated financial adjustments in its proposed budget for the next fiscal year. City Manager Danielle West’s budget accounts for the anticipated $4.4 million impact of Rule 26. Additionally, a proposal by Governor Janet Mills that would limit emergency housing assistance to three months within a year could potentially increase the city’s financial shortfall to $5.9 million. General Assistance, which offers local aid for rent and basic necessities, typically allows municipalities to receive a 70% reimbursement from the state for eligible expenses.
The proposed budget reflects a conservative approach, considering both potential funding cuts. If the proposed cap on rental assistance does not go into effect, the city may reduce its reliance on reserve funds to address the budget gap. Despite these challenges, Portland is preparing for less state aid, a situation that has caused frustration among city leaders.
Mayor Dion has emphasized that the rule change could undermine Portland’s efforts to enhance shelter capacity, aimed at alleviating large encampments that pose health and safety risks. The city continues to explore legal options and plans further discussions with legal counsel to address these concerns.
