National Alliance on Mental Illness
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October 13, 2004

Senate Committee Reports Spending Bill for Veterans and Housing Programs – Increases Included for VA Medical Care & HUD Section 8, Cuts Restored for All Other Housing Programs

On September 21, the Senate Appropriations Committee approved a massive $92.9 billion spending bill (S 2825) that includes the FY 2005 budgets for the Departments of Veterans Affairs (VA), Housing and Urban Development (HUD) and numerous independent agencies. The entire bill is 2.4% above spending levels for the current fiscal year (FY 2004). However, because "emergency designation" for veterans’ medical care in the Senate bill, cuts to most other programs in the bill (including affordable housing) have been avoided. By contrast, the House bill does not include this emergency designation and as a result, includes cuts to most HUD programs of as much as 4.3%. This is because of the strict limits governing all discretionary spending bills for FY 2005, process that is forcing unpopular trade-offs.

The future of this VA-HUD spending bill is very much in doubt. While the House passed its version of the VA-HUD bill on July, x, the Senate is unlikely to come to be brought forward prior to the expected pre-election adjournment of October 8. Instead, it is expected that the VA-HUD bill will be folded into an "omnibus" appropriations bill that will be taken up after the presidential election in November.

In the meantime, it is important for NAMI advocates to keep pressure on Congress:

  • to maintain the increases for veterans’ medical care proposed in the House bill,
  • to resist further cuts housing programs that serve people with mental illness – including Section 811 and McKinney Homeless Assistance grants, and
  • to fully fund the Section 8 rental voucher program and reject efforts to convert the program to a block grant.

View NAMI's testimony to Congress on the FY 2005 VA-HUD Appropriations bill.

Details on the Senate FY 2005 VA-HUD Appropriations Bill


Section 8 – The good news is that the Senate bill completely restores the $1.6 billion in cuts to the Section 8 rental voucher program that had been proposed by the Bush Administration. The President’s proposed budget for Section 8 would have left HUD and local housing agencies as much as $2.2 billion short of funding needed to renew every voucher under lease. Additionally, the Senate emphatically rejects the President’s "Flexible Voucher" proposal to "block grant" the Section 8 program. NAMI opposed this proposal that would have eliminated current requirements for housing agencies to target rental vouchers to extremely low-income households (those at 30% of median income and below) and allowed agencies to impose time limits on rental assistance.

Section 8 is a critically important housing resource for individuals with severe mental illnesses who depend on Supplemental Security Income (SSI) for basic needs. SSI beneficiaries are (on average) at only 18.5% of median income and must pay (on average) 105% of their monthly income to rent a modest 1-bedroom apartment. Access to a Section 8 voucher – which pays the difference between actual rental costs and 30% of the recipient’s income – is critically important to getting and keeping housing in the community.

In rejecting the Bush Administration’s "Flexible Voucher" proposal, the Senate Committee legislative report characterized it as "so flawed that it cannot be corrected" and that inadequate funding would result in "a shrinking commitment to housing resources for those with the greatest need." The report goes on to note that the proposed elimination of the current "extremely low-income" targeting requirement (30% of median income and below) would result in people with disabilities being forced into substandard housing or being at risk of homelessness.

Specifically, the Senate VA-HUD bill funds the Section 8 program at $20.7 billion, including $19.04 billion for renewal of all vouchers under lease in FY 2005. This is as much as $2.2 billion more than the President’s request. This represents an enormous victory in the effort to maintain access to decent, safe and affordable housing for adults with severe mental illnesses, especially SSI beneficiaries. NAMI is extremely grateful for the bipartisan leadership of Senators Kit Bond (R-MO) and Barbara Mikulski (D-MD) in rejecting this proposal to cut funding and "block grant" Section 8.

Section 811 – The VA-HUD bill proposes $250 million for the Section 811 program, $908,000 above the current FY 2004 level of $249.1 million, and $1.3 million above the President’s request of $248.7 million. More importantly, the recommended funding level in the Senate bill rejects a $11.09 million (4.3%) cut to Section 811 that was included in the House bill. For programs at HUD, this is a 4.3% reduction. Both the House and Senate bill also include funding for renewal of existing rent subsidies under both the 811 tenant-based program (also known as the "mainstream" program) and the project-based program (known as PRACs). For FY 2005, this is projected to be $28.89 million for tenant-based, and $2.349 million for project-based. This funding is taken off the top of the overall Section 811 appropriation and further restricts funding for development of new 811 units in FY 2005. PRACs), funding available for new 811 projects and vouchers will be further squeezed.

Homeless Assistance – The Senate VA-HUD bill proposes to fund programs under the McKinney Homeless Assistance Act at $1.26 billion, $458,000 above the FY 2004 level and $22.4 million below the President’s request for FY 2005. Among the programs funded under the McKinney Act are Emergency Shelter Grants, Supportive Housing (SHP), Section 8 moderate rehabilitation (SRO) and Shelter Plus Care – all critical resources serving homeless individuals with severe mental illnesses and co-occurring substance abuse disorders. As in past years, the Senate bill fully funds renewal of all expiring Shelter Plus Care rental subsidies, projected to cost $186 million in FY 2005. The Senate bill also keeps in place the 30% minimum requirement for permanent housing development and the 25% local match requirement for services.

Veterans Medical Care

The Senate bill provides total funding of $28.354 billion for the Veterans Health Administration for FY 2005. This includes $19.498 billion for VA medical services; $4.7 billion for medical administration; $3.745 billion for VA medical facilities and $405.593 million for VA medical research. This is $1.2 billion more than President Bush requested and more than $1.9 billion above current year funding. The Senate bill rejects several controversial Bush Administration proposals for fees and collections from certain non-service connected veterans using the VA health system.

Most importantly, the Senate VA-HUD bill – unlike the President’s budget and the separate House proposal – contains an emergency designation for as much $1.2 billion of the proposed increase. This emergency designation is related to the expected stress on the VA medical care system that will be occurring as active duty, reserve and national guard service personnel return from Iraq and Afghanistan during FY 2005 and begin turning to the VA system for treatment. This emergency designation allows for extra funds to be added to the bill without being counted against the VA-HUD bill’s strict overall allocation.

The Senate bill does not set a specific budget for mental illness treatment services within the VA – the largest single provider of psychiatric treatment in the nation. Of great concern to NAMI are the estimated 117,000 veterans who have a service-connected impairment for psychosis and the more than 180,000 who are service-connected for Post Traumatic Stress Disorder (PTSD). In 2002, more than 750,000 veterans received mental health services from the VA (about 17% of veterans served by the VA). During this same period, the VA provided care to more than 206,000 veterans with psychosis, 97% of whom were high priority on the basis of their low-income status.

Finally, the report accompanying the Senate bill makes a special note of support for the VA’s efforts to focus on ending chronic homelessness among veterans with severe mental illnesses. According to the report, the VA will spend as much as $1.47 billion in FY 2005 ($100 million more than in FY 2004) in medical care funding to homeless veterans and another $188 million in specialized homeless programs ($12.3 million over FY 2004). The report goes on to request a detailed plan from the VA by next spring on a plan to end homelessness among veterans.