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Details on FY 2006 Funding for Housing Programs

November 22, 2005

On November 18, Congress gave final approval to separate bills funding the Departments of Housing and Urban Development (HUD) and Veterans' Affairs for FY 2006.  The bill, known as the Treasury-Transportation-HUD Appropriations Act (HR 3058), is expected to be signed by President Bush within the next week or so.

It is important to note that all programs within the HUD budget will be subject to the expected 1% across-the-board reduction being imposed on all discretionary spending programs for FY 2006. 

Housing -- Section 811 Funding Restored, Homeless Funds Increased

The final agreement on FY 2006 funding for HUD includes full restoration of funding for the HUD Section 811 program.  The Section 811 disability housing program had been proposed for deep cuts in the President's FY 2006 budget proposal -- including complete elimination of the capital advance/project-based side of the program.  However, the final bill does not include a Senate sponsored provision that would have (for the first time) addressed the growing burden within the Section 811 associated with renewal of tenant-based subsidies that has been eroding funding for development of new 811 units for the past five years (details included below).

The final version of HR 3058 includes a total of $34 billion for HUD for FY 2006, $2.1 billion above FY 2005 funding, and $4.9 billion above the President's request.  For Section 811, the bill includes $239 million -- the same as current year funding.  Within this $239 million allocation, Congress is specifically directing that $155.7 million be made available for development of new housing units (funding for capital and project-based assistance).  $78.3 million would be allocated for renewal of expiring tenant-based rental assistance (details included below) and no more than $5 million would be available for new tenant-based vouchers.  

More importantly, the legislation firmly rejects the Bush Administration's proposal to cut Section 811 funding by $120 million and completely eliminate the capital advance/project-based side of the program.  In addition, this fall the Bush Administration sought to rescind the entire allocation of funding for new Section 811 fund for FY 2005 as part of an effort to reallocate prior year funding for the federal response to Hurricanes Katrina and Rita.  Congress rejected this proposal as well. 

Capital advance and project-based grants to local non-profit disability organizations are the traditional form of Section 811 assistance and actually expand the inventory of accessible supportive housing serving individuals with severe disabilities -- including severe mental illness.  This is in contrast to tenant-based rent subsidies that cannot be used to develop new supportive housing units. 

Since the President's budget came out in February, NAMI (along with colleague national disability groups) fought to restore funding for Section 811.  NAMI is extremely grateful for the leadership of Representative Joe Knollenberg (R-MI) and Senator Kit Bond (R-MO) for their efforts in restoring funding to Section 811.   

Unfortunately, the final agreement on HR 3058 does not include a Senate sponsored proposal directing HUD to renew expiring Section 811 tenant-based rental assistance contracts from the Housing Certificate Fund (also known as Section 8).  This would have resulted in a renewal burden for FY 2006 that is expected to be as high as $78.3 million being shifted out of the Section 811 budget, into the Section 8 account -- without a corresponding reduction in funding for new Section 811 capital advance/project-based units.

NAMI strongly supported this shift of 811 tenant-based renewals out of Section 811, and into the much larger Housing Certificate Fund.  The large and growing burden of Section 811 tenant-based renewals has been significantly eroding the capacity of Section 811 to produce new supportive housing units for the past five years.  Without this shift, tenant-based renewals are projected to completely consume 811 funding by 2013.

The final agreement also restricts funding for new Section 811 tenant-based assistance to $5 million for FY 2006.  NAMI supports this provision given the administrative problems and lax oversight of the 811 tenant-based program by HUD and local housing agencies.  NAMI feels strongly that additional investment of funding in the 811 tenant-based program is not warranted until the program is fixed -- especially given the large and growing demand for supportive housing among people with severe disabilities (including sever mental illness).        

Additional information on the HUD Section 811 program is available on the NAMI Web site.

Section 8 Funding Boosted

The final HUD budget for FY 2006 includes $15.57 billion for Section 8 tenant-based assistance, $807 million above FY 2005 funding, but $272 million below the President's request for FY 2006.  Section 8 project-based assistance is funded at $5.1 billion, about $210 million below the FY 2005 level and the same amount requested by the Bush Administration (project-based contracts, i.e. rent subsidies tied to specific housing units). 

More importantly, the final agreement rejects any legislative proposals to reform the Section 8 program contained in the Bush Administration's "Flexible Voucher" program (S 771/HR 1999).  These proposals would allow housing agencies to direct rental vouchers to higher income households and require voucher-holders to contribute a higher percentage of their monthly income toward rent.  NAMI continues to be concerned that these efforts to reform Section 8 would have a negative impact on people with disabilities living on SSI.

Instead, the final bill adopts a House provision that allocates funding to local housing agencies for renewal of all expiring Section 8 vouchers.  This will set individual allocations for housing agencies based on rental voucher costs during a 3 month period during the summer of 2005.  This means that some housing authorities will be getting additional funds for 2006, while others may be receiving an allocation below their actual costs for renewing rent subsidies for the coming year.     

Additional information on the Bush Administration's Section 8 proposal is available online.

Homeless Funds Increased

The final bill boosts funding for programs under the McKinney-Vento Homeless Assistance Act by $110 million over current levels, increasing funding to $1.35 billion.  Also included in the final legislation is funding for permanent housing programs such as Shelter Plus Care and SHP, as well as renewal of expiring rent subsidies.  In addition, HUD would be required to continue directing a minimum of 30% of McKinney-Vento funds for permanent housing, with a 25% local match required for services.