Congressional Justifications for 1998 Budget Estimates

Community Planning and Development
Homeless Assistance Grants

Program Highlights

NA = Not Applicable.

NOTE: Amounts shown in this justification include funds for Native American homeless assistance in 1996 and 1997. Beginning in 1998, such funding will be requested under the Native American Block Grant, and Native American tribes will not be eligible for McKinney Act homeless assistance programs, pursuant to P.L. 104-330.

Summary of Budget Estimates

1. Summary of Budget Requests

The 1998 Budget proposes $823 million for Homeless Assistance Grants, this same funding level provided in 1996 and 1997. The Department has proposed legislation that would consolidate HUD's six McKinney homeless assistance programs--Shelter Plus Care, Supportive Housing, Emergency Shelter Grants, Section 8 Moderate Rehabilitation Single Room Occupancy (SRO), Rural Homeless Grants, and Safe Havens--as well as the Innovative Homeless Initiatives Demonstration Program into a performance-based grant program. This consolidation would enable localities to shape a comprehensive, flexible, coordinateu t;contcontinuum of care" approach to solving rather than institutionalizing homelessness. Over the last 3 years, many communities have made great strides in developing holistic approaches to solving homelessness; continued support from the Federal Government will further improve these efforts. In 1998, HUD will encourage communities to place emphasis on meeting the special needs of those homeless persons with mental illness.

2. Changes From 1996 Estimates Included in 1997 Budget

The Congress appropriated $823 million, a cut of $297 million from the 1996 request. The 1996 Budget was the second year in which a consolidation of existing homeless assistance programs was requested to allow a simpler, less paper-intensive system through which localities could develop coordinated community-based efforts to address and prevent homelessness. Congressional action resulted in a single appropriation, but the same separately authorized programs. Therefore, the full appropriation was distributed among the various programs, as follows:

• Emergency Shelter Grants ($115 million)

• Supportive Housing Renewals, Technical Assistance, Other ($33 million)

• Competitive Homeless Assistance Grants ($675 million)

The Notice of Funding Availability (NOFA) for the competitive Homeless Assistance Grants funds was published on March 15, 1996, under which applicants could apply for funding under the Supportive Housing, Shelter Plus Care, and Section 8 Moderate Rehabilitation (SRO) programs. The announcement of the awards for this competition was made in September 1996. While it was originally estimated that all 1996 and prior year funds would be obligated by the end of 1996, the required steps in the grant award process, including second submission approvals, prevented this from happening. Virtually all 1996 Emergency Shelter Grants funding, which was distributed by formula, was obligated by the end of the fiscal year. It is anticipated that obligation of 1996 funds will occur largely during 1997. Actual outlays in 1996 were consistent with original projections.

The 1997 Budget proposed $1.12 billion for Homeless Assistance Grants, including $1.01 billion for a consolidated performance-based homeless assistance program and $110 million for a Homeless/Innovations Challenge Grant. Congressional action reduced funding to $823 million, the same level that was provided in 1996. Legislation authorizing a consolidated program was not enacted.

Obligations in 1997 are currently estimated to be significantly higher than originally estimated. As stated above, 1996 awards were not announced until the end of that fiscal year, and so the amounts for competitive grants were not obligated in 1996, as planned. It is anticipated that the obligation of these funds will occur largely during 1997. This is in addition to the obligation of 1997 funds. Outlays in 1997 are lower than originally estimated for the same reason. Some of the anticipated outlays resulting from the planned 1996 obligations will not occur during 1997, thus reducing the current estimate below the Budget estimate.

Explanation of Increases and Decreases

This Budget proposes $823 million for Homeless Assistance Grants in 1998. This is the same level of funding enacted in 1996 and 1997. Further, the 1998 Budget does not propose the Homeless Assistance Fund, with the related Homeless/Innovations Challenge Grant. The entire amount would be applied to the proposed performance-based grant program. Obligations in 1998 are expected to drop following the obligation in 1997 of all 1996 and 1997 balances. Conversely, outlays will increase as grantees begin to expend amounts obligated during 1997.

Program Description and Activity

1. Legislative Authority. Existing homeless assistance programs are authorized under the Stewart B. McKinney Homeless Assistance Act of 1987, as amended. Authorizing legislation may be required to establish a consolidated grant program.

2. Program Area Organization. Reducing homelessness is one of HUD's top priorities. Comprehensive community-based efforts are necessary to move from the current crisis of homelessness. The Department again proposes to consolidate the activities of HUD's six existing McKinney homeless assistance programs and the Innovative Homeless Demonstration Program into a single performance-based program to enable localities to shape comprehensive, flexible, coordinated continuum of care approaches to solving, rather than institutionalizing, homelessness.

This simplified program will address several key problems that plague community efforts to address homelessness. The McKinney grant programs currently require providers of housing and services to apply under discrete funding categories for particular needs. Each categorical program has its own set of rules and reporting requirements--which increases process and paperwork and hampers project development and implementation. The consolidated program will enable communities to better design continuum of care approaches that reflect local conditions and opportunities, ensuring that each of the elements of the continuum of care system are in balance.

The Consolidated Plan would serve as the basis for the homeless assistance application, identifying needs and inventory, assessing the needs of homeless citizens, and linking efforts to address homelessness together with other housing and community development resources. In addition, for a community to receive their homeless assistance funds, a local board--including homeless providers (representing a broad range of subpopulations), advocates, representatives of the business community, and homeless persons themselves--would develop a more detailed plan describing the comprehensive homeless assistance system to be created to fill gaps between the identified needs and inventory described in the Consolidated Plan. This document would specify the facilities, permanent housing, and services to be created and by whom, and would establish benchmarks for measuring performance. The community would have maximum flexibility to shape solutions, but would be held to high performance standards as a condition of funding.

a. Program Purpose. Homeless assistance grants provide Federal support to one of the nation's most vulnerable populations. These grants assist localities in establishing systems that can address the needs of different homeless populations while providing coordinated continuum of care systems that ensure the support necessary to help those who are homeless attain permanent housing and move toward self-sufficiency. A consolidated grant program will replace the existing maze of separate programs with a single performance-based grant to States and localities. It will require broad participation by not-for-profit providers and others, both in developing and implementing continuum of care plans, and it will make creation of a continuum of care system and performance a basis for receiving funds.

b. Eligible Applicants/Participants. Eligible applicants/participants are States, units of local government, nonprofit organizations or public housing authorities. Broad community participation in the development and implementation of a homeless strategy is encouraged to facilitate comprehensive, effective and coordinated approaches to homelessness.

c. Eligible Activities. Grantees will have significant flexibility both in eligible uses of the fund and in administering the grant. The program will incorporate and extend flexibility to all eligible activities currently authorized under the existing homeless programs. Grantees can choose from a broad menu of activities and exercise the flexibility to select those that best address local circumstances. Specifically, recipients will be authorized to carry out activities to benefit homeless individuals and families, including acquisition, rehabilitation, new construction, operations, real property leasing, tenant assistance, supportive services, administration, and capacity building. These activities would support the following types of projects: Emergency Assistance; Safe Haven Housing; Transitional Housing; Permanent Housing and Permanent Supportive Housing for Homeless Persons with Disabilities; and Single Room Occupancy Housing.

d. Program Allocation. Homeless assistance funds would be available to States, units of general local government, nonprofit organizations or public housing authorities. Funding will provide localities with the capacity to establish continuum of care strategies and the resources to help implement those strategies.

This Budget also request that 1 percent ($8.23 million) of the total funding be provided for technical assistance. Technical assistance has previously been available only under the Supportive Housing Program. However, such support is necessary for grantees in all homeless assistance programs to overcome a variety of problems that hinder successful completion and implementation of projects. These include difficulties with capital financing for initial acquisition and rehabilitation; resistance from residents to homeless shelters in their neighborhoods; and coordination of project development, project operations, and ongoing service delivery. It would greatly benefit homeless assistance providers to be able to learn from the experience of technical assistance providers and apply this to their program operations.

a. Mission. To break the cycle of homelessness; and to move homeless persons and families to permanent housing and self-sufficiency.

b. Objectives and Benchmarks. The overall objective of the Homeless Assistance Grants program is to provide assistance and supportive services to homeless persons and families to enable them to achieve permanent housing and self-sufficiency.

Other factors, such as poverty and individual challenges exacerbate problems that cause people and families to be without homes. Coordination and collaboration of housing and supportive services, i.e., continuum of care systems, are crucial to breaking the cycle of homelessness. The attainable goals for some homeless persons is self-sufficiency to the extent possible. To this end, two of the benchmarks under this program are to increase the number of

transitional housing beds and permanent housing units, including those that are linked to supportive services. Another is to increase the number of persons that move from transitional to permanent housing.

1. Authorization. Existing homeless assistance programs are authorized under the

Stewart McKinney Homeless Assistance Act of 1987, as amended. Authorizing legislation may be needed to establish a consolidated performance-based grant program.

2. Balances Available

a. Unobligated Balances. The following table compares the program obligations with funds available by year:

b. Obligated Balances. The status of obligated balances is as follows:

	Actual 1996	Estimate 1997	Estimate 1998
	(Dollars in Thousands)
Obligated balance, start of year	$259,660	$858,310	$2,284,099
Obligations incurred	784,819	1,711,252	823,000
Subtotal	1,044,479	2,569,562	3,107,099
Outlays:
Homeless Assistance Grants	-186,169	-285,463	-474,275
Obligated balance, end of year	858,310	2,284,099	2,632,824

.