Congressional Justifications for 1998 Budget Estimates

Community Planning and Development
Homeless Assistance Program

Program Highlights

NA = Not Applicable

NOTE: Obligations are from appropriations prior to 1995.

a/ Includes the spendout of pre-1995 appropriations for the Shelter Plus Care, Supportive Housing, Section 8 Moderate Rehabilitation (Single Room Occupancy), Emergency Shelter Grants, Innovative Homeless Initiatives Demonstration and Supplemental Assistance for Facilities to Assist the Homeless programs.

Summary of Budget Estimates

1. Summary of Budget Request

The Budget proposes no appropriations for 1998 for the separate homeless assistance programs that are included in this justification, which presents obligation and expenditure data for these pre-1995 appropriations. For homeless assistance in 1998, the Department is requesting $823 million for a consolidated Homeless Assistance Grants program which would consolidate the activities of HUD's six McKinney programs and the Innovative Homeless Initiatives Demonstration Program into a single performance-based formula program. The Homeless Assistance Grants program is discussed more fully in a separate budget justification.

2. Changes from 1996 Estimates Included in 1997 Budget

Actual obligations of $137.7 million in 1996 were only 47 percent of the estimate included in the 1997 Budget. Most of the unobligated amounts are within the Section 8 Moderate Rehabilitation (Single Room Occupancy) program. Obligations are occurring at a slower pace than expected for a number of reasons. After awards are made, a grantee must return second submission documents to HUD. These documents must include evidence of site control, firm financing commitments, firm construction cost estimates for rehabilitation to be completed, and rent calculations. There are often problems encountered fulfilling second submission requirements which delay the obligation of funds. Grantees may have lost their site or encountered other difficulties which require them to request an extension for submitting second submission documents. Once the second submission documents have been approved, barring any delays, the Public Housing Agency (PHA) administering the project has 90 days to execute an obligating document. The reduced obligated amount in 1996 will impact the obligations in 1997 in that the Department now anticipates the remaining unobligated funds will be obligated by the end of 1997. In addition, actual budget outlays of $268.4 million were $40.6 million less than estimated as a consequence of the above delays.

3. Changes From Original 1997 Budget Estimates

The estimate of obligations increases dramatically, from $9 million in the Budget estimate to $153.9 million in the current estimate, mainly due to the delays in the obligations within the Section 8 Moderate Rehabilitation (Single Room Occupancy) program during the previous year. It is anticipated that all unobligated funds will be obligated by the end of 1997. Outlays are expected to increase slightly due to the above as well.

Explanation of Increases and Decreases

The absence of obligations in 1998 reflects the anticipation that all unobligated amounts within these homeless assistance programs will be obligated by the end of 1997. Outlays will show a steady decline after 1997, to reflect the spendout of the remaining obligated balances.

The proposed rescission of $10 million in 1998 ($6 million from Supportive Housing and $4 million from Shelter Plus Care) assumes the recapture of funding for approved projects in prior years which were either not undertaken or utilized less funding than originally budgeted. Recaptures would be from funds available from P.L. 103-124 and prior years.

Program Scription and Activity

1. Legislative Authority. The homeless assistance programs included in this justification are authorized by Title IV of the Stewart B. McKinney Homeless Assistance Act (P.L. 101-77), as amended by the Cranston-Gonzalez National Affordable Housing Act (P.L. 101-625) and the Housing and Community Development Act (HCD) of 1992 (P.L. 102-550).

2. Program Area Organization. HUD's homeless assistance programs provide a wide range of assistance to homeless people and families. These programs were developed in an attempt to address the varied and complex problems facing homeless individuals and families by targeting funds to the particularly vulnerable homeless (i.e., persons with disabilities, the severely mentally ill, and families with children). Moreover, the Shelter Plus Care program targets assistance to disabled homeless individuals--primarily those with alcohol or drug problems, suffering from AIDS or related diseases, or who are seriously mentally ill. Since 1995, the Homeless Assistance Grants appropriation was enacted which provided consolidated funding for homeless programs. However, while funding has been provided in a single appropriation, authorizing legislation for consolidated program administration has not yet been enacted.

A brief description of the separate programs follows:

a. Shelter Plus Care. This program provides rental assistance to homeless persons with disabilities. Supportive services at least equal in value to the aggregate rental assistance must be provided by grant recipients, using other Federal, State, local and private resources. Eligible recipients include States, units of general local government, Public Housing Authorities and Indian tribes. Grants are awarded on a competitive basis.

b. Supportive Housing Program. This program provides supportive housing and services especially to deinstitutionalized homeless individuals, homeless families with children, homeless individuals with mental disabilities and other persons including those with AIDS. Participants must match the acquisition/rehabilitation/new construction costs of a project and provide a percentage of operating costs. This Federal assistance is provided through grants for acquisition/rehabilitation/new construction, and annual payments for operating costs and supportive services, and through contracts for technical assistance. Grants are awarded on a competitive basis.

c. Section 8 Moderate Rehabilitation (Single Room Occupancy). This program provides funds to be used in conjunction with moderate rehabilitation of housing described in Section 8(n) of the U.S. Housing Act of 1937 for occupancy by homeless individuals as authorized by Title IV of the McKinney Act. The amounts made available under this program are allocated on the basis of a national competition. Eligible applicants include Public Housing Authorities and pursuant to Section 1405 of the HCD Act 1992, private nonprofit organizations.

d. Emergency Shelter Grants. This program was established to assist communities in providing temporary emergency shelter for the homeless. Funding can be used to renovate, rehabilitate, or convert buildings to be used as shelters. Grants are also used to operate emergency shelters, provide essential social services to homeless individuals, and prevent homelessness. Grants are allocated to States, metropolitan cities, urban counties, the Insular Areas and recognized Indian Tribes. The allocations for States, metropolitan cities, and urban counties are distributed by formula which uses several objective measures of community need, including poverty, population, housing overcrowding, age of housing and growth. The allocations for Insular areas and for Indian tribes are based on their historical share of Community Development Block Grant funds.

e. Innovative Homeless Initiatives Demonstration. This program was authorized to provide assistance for projects which advanced innovative, Continuum of Care efforts to assist homeless persons through coordinated housing and service approaches. Grants to eligible recipients, including States, units of local government, Indian tribes and nonprofit organizations, were awarded on a competitive basis. Authorization for this program expired at the end of 1994.

f. Supplemental Assistance for Facilities to Assist the Homeless (SAFAH). This broad-based program was designed to provide comprehensive assistance for particularly innovative programs or alternative methods of meeting the immediate and long-term needs of the homeless, and also supplemented assistance provided under the Supportive Housing Demonstration and the Emergency Shelter Grants programs. Authority for SAFAH was terminated by Section 1403 of the Housing and Community Development Act of 1992.

Status of Funds

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	$1,470,590	$1,329,606	$1,193,917
Obligations incurred	137,652	153,949	...
Subtotal	1,608,242	1,483,555	1,193,917
Outlays	-268,362	-289,638	-260,540
Adjustment in unexpired accounts	-10,274	...	...
Recovery/Rescission of Prior
Year Obligations	...	...	-10,000
Obligated balance, end of year	1,329,606	1,193,917	923,377