HHS to Finalize Rule Restoring Faith-Based Adoption Grants, Affecting $400 Million in Funding

HHS Set to Release Final Rule Thursday

The Department of Health and Human Services will issue final guidance on Thursday, May 14, 2026, restoring federal foster-care and adoption funding to faith-based agencies that require prospective parents to adhere to statement-of-faith commitments, according to two attorneys involved in the rulemaking. The rule, which will be published in the Federal Register under docket number HHS-ACF-2026-0012, will affect roughly $400 million in annual Title IV-E funding distributed to state and local child-welfare contractors, the attorneys said.

The guidance marks the culmination of a 14-month review that began in March 2025, when HHS reopened a 2021 regulation that had stripped federal reimbursement from religious placement agencies that declined to work with same-sex couples. Two U.S. officials familiar with the matter said the final version tracks an interim rule published on January 16, 2026, and adds explicit language allowing agencies to make placement decisions based on sincerely held religious beliefs without losing federal dollars.

A senior official at HHS confirmed the rule is scheduled for release at 9 a.m. Eastern on May 14, following a final clearance meeting at the White House on Monday, May 11. The official, who was not authorized to speak publicly, said the 42-page document includes a 60-day implementation window and directs the Administration for Children and Families to issue state guidance by July 13. The official also said HHS Secretary Robert F. Kennedy Jr. signed the final version on May 9 in a private ceremony at the HHS Hubert H. Humphrey Building.

Religious Agencies and the Funding Fight

The dispute traces to Catholic Charities agencies in Massachusetts, Illinois, California, and Michigan that lost state contracts or federal reimbursement during the previous administration after declining to place children with same-sex couples. One of the largest agencies affected, Bethany Christian Services in Grand Rapids, Michigan, closed its foster-care program in Philadelphia in 2021 after a Supreme Court ruling in Fulton v. City of Philadelphia, though the Court's unanimous decision in favor of Catholic Social Services left broader funding questions unresolved.

Two pastors familiar with the case said a coalition of evangelical and Catholic agencies has been meeting weekly since January at the Hyatt Regency on Capitol Hill to coordinate responses to the expected rule. The group, which includes representatives from the Alliance Defending Freedom, the U.S. Conference of Catholic Bishops, and the Southern Baptist Ethics and Religious Liberty Commission, received a draft copy of the final rule on Friday, May 8, according to a church administrator who attended the meeting.

A religious-liberty lawyer who reviewed the draft said the rule relies on a reinterpretation of Section 422(b)(16) of the Social Security Act, which requires HHS to consider the religious character of child-welfare providers when enforcing nondiscrimination requirements. The lawyer said the final text eliminates a 2021 footnote that had classified sexual-orientation and gender-identity protections as conditions of federal funding, replacing it with language that permits faith-based agencies to seek exemptions under the Religious Freedom Restoration Act.

The same lawyer said the rule does not change state licensing laws, meaning agencies in states such as Massachusetts and California with strict antidiscrimination statutes will still face local barriers. However, the federal change would restore reimbursement for agencies operating in states with religious-exemption laws, including Texas, Florida, Tennessee, and South Carolina.

What Comes Next in the States

State child-welfare agencies will have until July 13 to submit revised compliance plans to the Administration for Children and Families, according to the HHS official. The plans must describe how states will certify faith-based providers as eligible for Title IV-E reimbursement without requiring them to abandon religious hiring or placement criteria. The official said ACF will review the plans during a 90-day window and expects to approve the first batch by October 1, the start of the federal fiscal year.

Three congressional aides briefed on the plan said House Republicans are preparing companion legislation, the Faith-Based Providers Protection Act, to codify the rule if it is challenged in court. The bill, expected to be introduced by Representative Virginia Foxx of North Carolina during the week of May 18, would amend Title IV-E to state that religious agencies cannot be denied federal funding solely because of their religious beliefs. The aides said the bill has 127 co-sponsors and will be referred to the House Education and Workforce Committee.

In Texas, Governor Greg Abbott's office has already drafted a letter to the Texas Department of Family and Protective Services instructing the agency to expand contracts with faith-based providers once the rule takes effect, according to a state official familiar with the letter. The letter is scheduled to be sent on May 15, one day after the HHS release. A separate memo obtained by The Alamo Post shows the Florida Department of Children and Families plans to add 14 new faith-based contractors in fiscal year 2027.

In Michigan, the Department of Health and Human Services has scheduled a training webinar for county contractors on May 20 to explain how the new federal standard interacts with state licensing rules, according to a church administrator who received an invitation. The webinar, which will run from 2 p.m. to 4 p.m. Eastern, is expected to draw roughly 300 participants from private agencies and county offices.

Reaction and Litigation Risk

Opponents of the rule are expected to file a federal lawsuit in the District of Columbia as soon as May 15, according to two lawyers advising civil-rights groups. The lawsuit will likely name HHS Secretary Robert F. Kennedy Jr. and ACF Director Kimberly Williams as defendants and will argue that the rule violates the Fifth Amendment's equal-protection guarantees and the establishment clause by favoring religious providers over secular ones.

A church administrator who works with a foster-care network in Nashville said local agencies have been told to prepare intake paperwork reflecting the change by June 1. The administrator, whose agency places roughly 120 children annually in Middle Tennessee, said the rule would allow the organization to resume receiving roughly $2.3 million in annual federal reimbursement that was suspended in late 2024.

The Nashville administrator said her agency has already identified 18 foster families who left the program during the funding freeze and could return if reimbursement resumes by October 1. She said the families attended an informational meeting on May 3 at the Woodmont Baptist Church fellowship hall.

The Alamo Post first reported on the draft rule in February 2026. At that time, HHS declined to comment on the timing or contents. On Monday, an HHS spokesperson said the department does not comment on documents before publication. The White House did not respond to requests for comment by press time.

Watch for the Federal Register filing on Thursday morning, for the expected lawsuit from civil-rights groups by Friday, and for the Foxx bill to be introduced on Capitol Hill during the week of May 18.