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Massive Cuts Loom for Federal Mental Health and Housing Programs

February 16, 2011

The White House unveiled the President’s budget proposal for FY 2012 requesting modest increases for mental illness research and services, as well as veterans housing programs. The President’s budget proposal is juxtaposed against action that begins in the House today on a separate omnibus spending bill for the current fiscal year (FY 2011) that includes significant reductions for housing programs, special education services and mental illness research and services. 

It is important to note that both the President’s FY 2012 budget and the omnibus FY 2011 “continuing resolution” are focused on imposing restraint on discretionary non-security spending. This excludes funding for mandatory entitlement programs such as Medicare, Medicaid and Social Security. These entitlement programs as well as most military, veterans and other homeland security spending are exempt from the tight limits on overall discretionary spending that are in the President’s budget and reductions in the House “continuing resolution.” 


Advocates are urged to contact their House member and voice opposition to the cuts proposed for FY 2011 for mental illness research and services, special education services as well as supportive housing for people living with mental illness. 

At a time when states are already imposing deep cuts to mental illness services (over $2.2 billion over the past two years) further cuts in federal funding will only make it more difficult for the most vulnerable to access critical safety net treatment and supports. 

Further cuts will result in homelessness and additional costs imposed on already overburdened emergency medical services, law enforcement, schools, corrections and emergency shelters.

All House offices can be reached by calling 202-224-3121 (not a toll free call), or send a message to your House member.

View further information on the President’s FY 2012 Budget

FY 2011 “Continuing Resolution”

Even though we are five months into the current federal fiscal year, federal agencies are still operating under a “continuing resolution” that is keeping FY 2010 funding levels in place for most programs. The current “continuing resolution” runs through March 4, 2011. This week, the House is considering a “continuing resolution” that funds the government for the remaining months of FY 2011, through September 30, 2011. 

House leaders are using this bill to seek cuts of as much as $61 billion from current year budgets for non-security discretionary programs. This amounts to an average 9 percent reduction across domestic agencies, although the proposed cuts the House will take up next are not expected to be allocated evenly. In most cases, the bill proposes to cut agencies and programs back to their FY 2008 level.

Neither the Senate, nor the President, is expected to go along with these proposed reductions. At the same time, this bill does set the mark for future negotiations over FY 2011 spending levels. These discussions are expected to drag on past the March 4, 2011, expiration of the current “continuing resolution,” through which all federal agencies are currently operating under FY 2010 levels.  

Here are details of the proposed funding levels and reductions in the House FY 2011 “continuing resolution.”


Overall, the National Institutes of Health (NIH) would be subject to a $1 billion reduction. This would be imposed on a current (FY 2010) NIH budget of $31 billion – about a 7 percent cut, bringing NIH back to its FY 2008 level.  For the National Institute of Mental Health (NIMH), this would mean an $86 million cut below the FY 2010 level of $1.49 billion. This would bring the NIMH budget down to its FY 2008 level of $1.404 billion. A cut of this magnitude would further erode the “pay line” for NIMH – the cut off of investigator initiated grants for basic scientific and clinical research on schizophrenia, bipolar disorder, major depression and other serious mental illnesses impacting children and adults. 


For the Substance Abuse and Mental Health Services Administration (SAMHSA), the House bill proposes a $200 million “general” reduction below the current FY 2010 level ($3.583 billion). This is a 5.5 percent reduction below current levels. The bill does not specify how this $200 million reduction is to be allocated across SAMHSA’s three separate centers (mental health services, substance abuse prevention and substance abuse treatment), although the expectation is that the reductions would touch all SAMHSA programs. In addition, the House bill also eliminates the small amount of increased funding SAMHSA has received since FY 2008 (less than $3 million at the Center for Mental Health Services) and assumes no funds for congressionally directed earmarks at the agency ($14.5 million in FY 2010).


No agency takes deeper cuts in the House “continuing resolution” than HUD. Within the HUD budget, the Section 811 program is hit particularly hard – a 70 percent reduction below the current FY 2010 level of $300 million. The House “continuing resolution” proposes only $90.36 million for Section 811, with complete elimination of funds for development of new supportive housing units for non-elderly people living with disabilities, including serious mental illness. 

Further, the $90.36 million in the “continuing resolution” for Section 811 is likely insufficient to account for renewal of existing rent and operating subsidies associated with the program. For FY 2011, these costs are projected by HUD to be at least $49 million for “project-based” operating subsidies (known as PRACs) and $87 million for “mainstream tenant-based voucher” renewals. PRAC renewals are needed to keep existing supportive housing units in place for current tenants. Likewise, “mainstream” voucher renewal funding is needed to keep certain rental vouchers in place. Insufficient funding for these operating and rent subsidy renewals would mean that current lease compliant tenants in 811 housing would be at risk of losing their housing. 

By contrast, the House bill does allocate $3.2 billion for McKinney-Vento Homeless Assistance Grants, an amount sufficient enough to renew existing permanent supportive housing units under Shelter Plus Care and SHP. Likewise, increases are provided in the “continuing resolution” for both the Section 8 tenant-based and the Section 8 project-based programs to renew expiring rent subsidies and vouchers for the remaining months of FY 2011. 


The House “continuing resolution” is not expected to cut funding for most programs at the Department of Veterans’ Affairs, most prominently veterans medical care which currently operates on a two-year budget cycle designed to prevent delays in Congress in passing annual spending bills from disrupting medical care. However, other discretionary activities at the VA – including the joint VA-HUD VASH program that targets supportive housing and services to homeless veterans – will depend on this FY 2011 “continuing resolution” for new funds in the current fiscal year.


The House “continuing resolution” would impose deep cuts on education.  Special education grants to states would be cut by $557 million, funding that is vitally important to students living with mental illness. These students have the highest drop-out and failure rates of any disability group and rely on special education services and supports to help them stay in school and to improve their academic performance. Education is the foundation in life that allows students living with mental illness to ultimately lead independent and productive lives. Deep funding cuts in special education services threaten to interfere with these students ability to succeed in school.