The SAMHSA Funding Report, the National Policy Shift, and What It All Means for Tennessee's Advocacy

A Federal Report Built on the Truth Providers Already Knew

In March 2026, SAMHSA's Center for Financing Reform and Innovation released Recovery Housing: Funding Sources and Financial Sustainability, a national report examining how states can expand access to recovery housing by addressing funding limitations and aligning policy with recovery housing sustainability. The report draws from a survey distributed by NARR to its state affiliates in January and February 2025, along with additional discussions with payers, policymakers, financing experts, and providers.

The findings are instructive. Across thirty-one responding states, sixty-five percent of NARR affiliates identified resident payments as the single largest source of funding for recovery housing. Fifty-nine percent reported insufficient funding for capital expenses such as property acquisition and renovation. Sixty-nine percent identified the prioritization of direct treatment services over recovery housing as the leading funding challenge. Taken together, these findings reinforce what recovery housing providers have reported for years: recovery housing plays an essential role in the continuum of care, yet stable funding remains one of its most persistent barriers.

The report also identifies several promising financing strategies, including state revenue contributions and funding requirements tied to certification. That point matters for Tennessee. TN-ARR has used the data to support ongoing conversations with TDMHSAS leadership, regional planning councils, local officials, and other partners about the need to prioritize certified recovery housing within funding and referral systems. Those conversations are not about preference for one organization. They are about ensuring that public dollars support recovery housing that meets clear, accountable, nationally recognized standards.

The report is publicly available through the SAMHSA Library and should be in the hands of every recovery housing advocate, grant administrator, local official, and state legislator who makes decisions affecting this field. It gives Tennessee's recovery housing community a national data framework for what providers already know from daily practice: certified recovery housing needs reliable infrastructure, sustainable funding, and policy alignment if it is going to meet the level of need in our communities.

The Federal Funding Landscape Is Shifting and Certification Is at the Center

The SAMHSA report did not arrive in isolation. It landed at the same moment that federal housing and homelessness policy is undergoing its most significant restructuring in years, and that restructuring is creating both opportunity and urgency for certified recovery housing providers across the country.

The U.S. Department of Housing and Urban Development released its FY 2026 Continuum of Care Notice of Funding Opportunity in June 2026, making $4.04 billion available for homelessness assistance programs. The CoC program represents the federal government's primary competitive grant vehicle for homelessness response, and its priorities have materially shifted. HUD has signaled a deliberate move away from permanent supportive housing as the default investment and toward transitional housing, treatment, recovery, and self-sufficiency programming. A $1.3 billion set-aside for new projects within that competition prioritizes exactly those categories.

For certified recovery housing operators, this shift matters in practical terms. NARR certification now meaningfully strengthens CoC applications. Referral partners, including local Continuums of Care, are actively seeking certified providers who can demonstrate outcomes data, accountability frameworks, and stable operations. The operators who will be best positioned to capture this funding are those who have already done the work of meeting national quality standards. Tennessee's certified providers should be watching this competition closely and engaging their local CoC coordinators now.

Alongside the CoC restructuring, states are deploying opioid settlement dollars in ways that are creating new models for recovery housing investment. Michigan committed $37.5 million in opioid settlement funds toward recovery housing in its FY 2026 budget, including capital investment for property acquisition, new construction, and bed capacity expansion in underserved areas. New York directed $5 million through its Office of Addiction Services and Supports specifically toward newly certified recovery residence providers to enhance existing sites and operations. Rhode Island's behavioral health department has formalized a policy requiring current NARR certification as a prerequisite for any vendor seeking state funding contracts.

Each of these examples reflects the same directional logic: states that have invested in recovery housing certification infrastructure are now able to attach public dollars to quality standards in a way that jurisdictions without that infrastructure simply cannot. Tennessee passed HB1351/SB1240, establishing a statutory definition for recovery residences and creating minimum standards that certifying organizations must incorporate, effective January 1, 2026. That law gives Tennessee the legislative foundation. What the state has not yet done is connect that foundation to dedicated funding streams. That is the gap the national examples above are beginning to close.

What the Current Law Does and Does Not Do

Tennessee has taken meaningful steps forward. The amended SAFE Act now gives the Commissioner of TDMHSAS the authority to approve organizations that certify recovery residences in Tennessee. These are real and important developments.

Progress, however, is not the same as a completed framework. The minimum standards codified in state law establish a baseline for accountability across certifying bodies operating in Tennessee. TN-ARR, as Tennessee's NARR-authorized affiliate, certifies recovery residences under the full NARR Standard, which includes 31 standards across four domains and 10 principles. That national framework addresses ethical governance, peer support structure, resident rights, operational accountability, and the social model principles that define quality recovery housing.

It is also important to understand what the current law does not do. Tennessee does not impose a civil or criminal penalty simply for operating an uncertified recovery residence. The law requires uncertified operators to disclose their status and post signage to that effect. It also directs certain funding, referral, and clinical partners to give preference to certified recovery residences. Preference, however, is not the same as guaranteed access. When certified bed capacity falls short, referral partners may still face a difficult choice between an uncertified environment and no placement at all. In that moment, the preference framework offers limited practical protection for the individual who needs safe housing.

This is the structural gap that dedicated infrastructure funding can help address. Expanding certified bed capacity is not simply an organizational goal for TN-ARR. It is one of the most direct ways to make Tennessee's recovery housing framework function as intended. The SAMHSA funding report points to this same issue by identifying funding strategies that can incentivize certification, strengthen quality assurance, and improve sustainability for recovery housing. TN-ARR’s advocacy for dedicated recovery housing funding is not a side issue. It is central to making certified recovery housing reliably available to the people and communities that need it.

What Other States Are Showing Us

The national landscape provides a useful map. States that have moved most effectively on recovery housing policy share a common pattern: they established a certification framework first, then connect public funding to that framework, and use the resulting infrastructure to position providers for federal opportunities.

Texas requires that any recovery home receiving state funds, grants, or contracts be certified through its NARR affiliate. Massachusetts has directed that state agencies and their vendors can only refer clients to certified alcohol and drug-free housing. Rhode Island's state behavioral health authority requires active certification as a condition of any contract. These are not suggestions or preferences embedded in soft policy language. They are enforceable requirements that create market accountability and give certified operators a meaningful competitive advantage in accessing public dollars.

The Model Recovery Residence Certification Act, developed by the Legislative Analysis and Public Policy Association in partnership with the White House Office of National Drug Control Policy, provides a template that states can adopt and tailor to local conditions. The model legislation establishes a certification system grounded in NARR-based standards, assigns oversight to an independent certifying body, draws clear boundaries between recovery housing and licensed treatment, and aligns public funding with provider quality. Tennessee's SAFE Act amendments already reflect several of these principles. The question is whether Tennessee will move toward the enforcement and funding alignment mechanisms that give those principles real operational weight.

California offers a cautionary example from the other direction. As recently as January 2026, a senior voice in that state's recovery housing advocacy community noted publicly that California still lacks a clear, enforceable, statewide certification for recovery residences, one that is distinct from treatment and grounded in nationally recognized standards. Without that clarity, recovery housing exists in what advocates there have called a policy gray zone, where providers operate under inconsistent rules, counties struggle to decide what they can fund, and residents are often unsure of what they are actually receiving. Tennessee has already done what California has not: established the definitional and minimum standards framework. The risk for Tennessee is different. It’s not that the foundation is absent, but rather that the structure above it remains unbuilt.

The Funding Vehicles Worth Watching

For Tennessee's recovery housing advocates, providers, and policymakers, several federal and state-level funding streams deserve immediate attention.

State Opioid Response Grants. Congress appropriated $1.575 billion in SOR funding for FY 2026. SAMHSA's guidance for SOR grants identifies recovery housing as an allowable and encouraged use of funds. Many states have created dedicated recovery housing sub-grant programs using SOR dollars, including voucher programs and new home development. Tennessee's Department of Mental Health and Substance Abuse Services administers SOR funding, and TN-ARR has ongoing relationships with TDMHSAS leadership that position the state's certified providers to advocate for recovery housing within SOR allocation decisions.

HUD Continuum of Care Competition. The FY 2026 CoC NOFO, released June 2, 2026, with applications due August 26, 2026, includes a $1.3 billion set-aside for new transitional housing and supportive services projects. Certified recovery housing providers who can demonstrate outcomes data and community partnerships are strongly positioned under HUD's current prioritization framework. Tennessee providers should engage their local CoC coordinators without delay.

HUD Recovery Housing Program. The SUPPORT Act created a dedicated HUD funding stream for recovery housing serving individuals with substance use disorders, administered by states. Multiple states are opening funding rounds throughout 2026. Tennessee advocates should be in contact with the Tennessee Housing Development Agency about the state's RHP allocation status and any upcoming application opportunities.

Opioid Settlement Funds. Tennessee, like every state, has received opioid settlement dollars. How those dollars are directed is a policy decision, not a foregone conclusion. Michigan's decision to dedicate $37.5 million toward recovery housing infrastructure did not happen automatically, it happened because advocates made the case that housing instability is a predictable post-treatment crisis and that settlement funds represent a one-time opportunity to address it structurally. Tennessee's recovery housing community has the data and the relationships to make that same case to state and county settlement oversight bodies.

SAMHSA Recovery Community Support Program. RCSP does not typically fund bricks-and-mortar housing costs, but it does fund peer support services, recovery coaching, and wraparound programming delivered within recovery residences. Organizations that operate recovery housing alongside peer support programs are strong candidates. RCSP strongly favors organizations led by people in recovery, which describes the heart of the certified recovery housing community in Tennessee.

Nationally, the Table Is Set. Tennessee Needs to Use Its Seat.

Nationally, states continue to move toward recovery housing policies that recognize certification, quality standards, and recovery housing as a distinct recovery support service. The pattern is clear: states that align recovery housing policy with nationally recognized standards, connect funding to quality, and invest in certified capacity are better positioned to protect residents and use public resources responsibly. Tennessee has the legislative foundation. The next step is sustained policy and dedicated investment strong enough to raise the walls, because a foundation without a structure above it shelters no one.

The national developments described in this article represent both validation and momentum. NARR's engagement with federal partners, SAMHSA's publication of a recovery housing funding report built in part on NARR affiliate data, and the federal government's reorientation of homelessness funding toward accountability-based transitional programs all point in the same direction. Recovery housing is moving from the margins of policy conversations toward the center of recovery infrastructure planning.

For Tennessee, that movement creates a specific and time-sensitive obligation. The federal funding landscape is reorganizing around the exact qualities that certified recovery housing already demonstrates. Accountability, peer support, structured recovery environments, and measurable outcomes. The states and providers that act now by building CoC relationships, tracking settlement fund decisions, engaging TDMHSAS on SOR allocation, and making the case for dedicated recovery housing infrastructure investment will be positioned to expand certified capacity precisely when the national policy environment is most favorable.

The national table has room for Tennessee. The work now is to make sure that seat is used well.

Marlana Smartt Byrge | TN-ARR Advocacy Co-Chair

Further Reading

Recovery Housing: Funding Sources and Financial Sustainability — Insights from NARR-Certified Recovery Residences Substance Abuse and Mental Health Services Administration (SAMHSA), 2026 Publication No. PEP26-08-001 https://library.samhsa.gov/product/recovery-housing-funding-sources-and-financial-sustainability/pep26-08-001

HUD FY 2026 Continuum of Care Notice of Funding Opportunity U.S. Department of Housing and Urban Development, 2026 https://www.hud.gov/news/hud-no-26-038

Housing Supports for People with SUD/OUD: The Opportunity of Opioid Settlement Funds National Academy for State Health Policy, 2026 https://nashp.org/housing-supports-for-people-with-sud-oud-the-opportunity-of-opioid-settlement-funds/

SAMHSA Funding Guide for Recovery Housing Sober Living App, 2026 https://soberlivingapp.com/blog/samhsa-funding-guide-recovery-housing