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Housing Update: Congress Completes Action On FY 2001 Housing Budget; HUD Issues Section 811 Awards For 2000

For Immediate Release, October 20, 2000
Contact: Chris Marshall

By separate votes of 85-8 in the Senate, and 386-24 in the House, Congress yesterday completed action on the FY 2001 budget for the Department of Housing Urban Development (HUD) - including housing and homeless programs serving adults with severe mental illnesses. President Clinton is expected to sign the bill - known as the VA-HUD-Independent Agencies Appropriations Act (HR 4635) - within the next few days.

In addition to funding for housing programs at HUD, HR 4635 also contains the budget for Department of Veterans Affairs - including the VA hospital system and related outpatient clinics that serve veterans with severe mental illnesses (see details below). Because of record federal budget surpluses, and the willingness of Congress and the President to agree to spend funds this year above the self-imposed caps on discretionary spending, this year's final VA-HUD contains long overdue increases for critical programs at both the VA and HUD that serve adults with severe mental illnesses. Included below is an analysis of funding levels in the legislation, which covers the federal fiscal year that runs through September 30, 2001.


This year's HUD budget will contain the largest increase for the Section 811 programs in nearly a decade - up from its current of $201 million to $217 million. Section 811 is divided into 2 parts: capital advance/project-based and tenant-based vouchers. The capital production portion (75% of funds in the program) provides a capital grant and project-based assistance (the difference between operating costs and resident contributions) to non-profit disability groups that compete for funds. The housing produced by the 811 program serves non-elderly people with severe disabilities, including severe mental illnesses.

By contrast, the tenant-based or "mainstream" portion of the Section 811 program funds rental vouchers (monthly rent subsidies) for individual tenants with severe disabilities. This year, Congress again limited this program to a maximum of 25% of program funds. NAMI supports this 25% limit and opposed HUD's efforts to double the "mainstream" program at the expense of capital/project-based. Investment in capital advances and project-based assistance has the added benefit of adding to the permanent stock of accessible affordable housing for persons with severe disabilities.

In addition, for many adults with severe mental illnesses, tenant-based rental vouchers have proven ineffective in obtaining decent, safe and secure housing. Factors such as discrimination, tight rental markets, isolation in the community and lack of supportive services linked to housing have made individual vouchers difficult to use for some, though not all, consumers. In this year's budget for 811, Congress has again directed HUD to ensure that non-profit organizations can compete for allotments of vouchers under the program, along with housing authorities (the traditional entity for administering HUD's rental assistance at the local level).


HUD's FY 2001 budget will again include a separate allocation of $40 million under the Section 8 program for tenant-based rental assistance for non-elderly adults with disabilities (including people with severe mental illnesses). This $40 million level is $15 million above the original request put forward by the Clinton Administration. This amount is separate from the $452.9 million dollars included in the final VA-HUD bill for 79,000 new or "incremental" Section 8 vouchers requested by the President. These 79,000 vouchers will be distributed to housing authorities for the benefit of all low-income households.

Over the past four years, Congress has appropriated more than $170 million for vouchers targeted specifically to individuals who have lost, or will in the future lose, access to housing as a result of designation of assisted and public housing as "elderly only." As in the past, the effort to push for both Section 811 and the separate allocation of tenant-based assistance for people with disabilities was championed by Representative Rodney Frelinghuysen (R-NJ) and Senator Kit Bond (R-MO).

NAMI is extremely grateful for the leadership of Representative Frelinghuysen and Senator Bond. However, there is growing concern about the commitment of leaders at HUD to ensure that these resources are spent consistent with congressional intent. For the 5th year in a row, Congress has directed HUD to make these vouchers available to people with disabilities in the community who lack access to decent, safe and affordable housing because of the loss of housing that has occurred through the "elderly only" designation of public and privately-owned assisted housing. In NAMI's view, adults with severe mental illnesses have been especially disadvantaged in the process of "elderly only" designation - largely because of the stigma associated with mental illness.

Moreover, because only public housing authorities can apply for these vouchers, local disability advocates have found it difficult to access these resources for their community. This is further complicated because of HUD's more than two year delay in compiling a congressionally ordered inventory of privately owned assisted housing that has changed tenant selection policies to disfavor non-elderly people with disabilities since 1994.

Despite HUD's slow efforts to ensure that these resources reach people with disabilities living in the community, demand for this program is growing. This is due in large part to a combination of extremely tight rental markets across the country and a growing number of adults with severe disabilities who are living in substandard housing, paying as much as 70% to 80% of monthly SSI benefits for rent, or living at home with aging parents. It was therefore disappointing to NAMI that in July, HUD unilaterally moved to divert 400 rental vouchers from this program to a Clinton Administration initiative to transition individuals from institutions and nursing homes. This new program is part of an overall plan to assist states in adhering to the U.S. Supreme Court's decision in the L.C. v. Olmstead case.

While NAMI strongly supports the overall goal of assisting states to transition people out of institutions and into the community, there is concern that this proposal has served to establish a precedent that this limited program (the Section 8 voucher set aside tied to "elderly only" designation) has become the sole affordable housing response to the massive issue of Olmstead implementation. Instead of looking to HUD's multi-billion dollar programs such as "incremental rental assistance" and its block grants such as CDBG and HOME, the agency decided to "rob Peter to pay Paul" within this extremely limited, discreet disability program.

NAMI, and partners in the Consortium for Citizens With Disabilities (CCD), were unfortunately not able to stop HUD's unilateral action through congressional intervention. Efforts are continuing to ensure that in the future HUD uses other larger programs to assist states with Olmstead plans, instead of diverting resources from this set aside of Section 8 assistance for people with severe disabilities who are already in the community living in substandard housing, paying more 50% of monthly income for rent or living with aging parents.


As many NAMI advocates know, as many as 40% of the homeless in most major cities are persons with severe mental illnesses. As a result, NAMI has taken a strong interest in HUD's $1 billion homeless program under the McKinney-Vento Act. Programs under McKinney-Vento - renamed after the recent passing of Representative Bruce Vento (D-MN) - are allocated at the local level through the "Continuum of Care." This includes a range of permanent housing and services programs such as Shelter Plus Care, permanent supportive housing (SHP) grants, Emergency Shelter Grants, Section 8 Moderate Rehab and Single Room Occupancy. Nearly all of these permanent housing programs under the McKinney-Vento Act serve currently or former homeless adults with severe mental illnesses.

While Congress again froze funding for the basic Continuum of Care program at $1.02 billion for FY 2001, they added a new $100 million account to cope with the emerging crisis of how to renew expiring 5-year rent subsidies under the Shelter Plus Care program, while still allowing communities to use funds to invest in new permanent housing for people who are currently homeless. A similar concern exists with the SHP permanent housing program where most rental contracts have a 3-year term which must be renewed, or the housing is at risk of being lost. Failure to deal with this issue would have resulted in communities either closing down existing housing serving formerly homeless people with disabilities, or giving up on ever developing new housing for those who are currently homeless.

Earlier this year, the Clinton Administration had proposed to solve this problem by prospectively shifting the renewal of expiring Shelter Plus Care rent subsidies to the $13 billion Section 8 account. Such a move would have ensured long-term stability for both Shelter Plus Care projects and their tenants. However, key congressional leaders argued that such an approach lacked needed accountability in the renewal process. At the same time, there was consensus in Congress that something had to be done to ensure that formerly homeless tenants living in Shelter Plus Care and SHP permanent housing (most of them with severe mental illnesses) did not lose their housing through no fault of their own.

The result is that HR 4635 establishes a new $100 million account at HUD dedicated solely to renewal of expiring Shelter Plus Care rent subsidies. It is estimated that this is sufficient to renew all expiring subsidies in both the 2000 and 2001 rounds of the McKinney-Vento competition. In addition, HR 4635 maintains provisions in the overall $1.02 billion Continuum of Care homeless program that favors development of new permanent housing for individuals who are "chronically" homeless (those who use shelters and other transitional programs as permanent housing - most typically persons with severe mental illness).

For example, HUD will again be responsible for ensuring that 30% of overall McKinney-Vento funds go toward development of new permanent housing for people who are currently homeless. Likewise, communities will again have to provide a 25% match for federal funds used for services, rather than permanent housing (an incentive for health and human service programs to play a role in ending homelessness). This 30% permanent housing set aside will also give SHP permanent housing rent contract renewals an advantage in the competitive "Continuum of Care" process, since they will not have to compete with costly 5-year Shelter Plus Care renewals. In addition, Congress has requested that HUD implement a mechanism in its grant review process to ensure that the permanent housing component of SHP is given high priority.

The end result is that an infusion of $100 million in the federal homeless program will strike a careful balance that will allow local jurisdictions to both renew rent subsidies tied to permanent housing for formerly homeless people and develop new permanent and transitional housing, as well as fund homeless services programs. Additional background information on Shelter Plus Care renewal issue is available at:


As part of this year's VA-HUD appropriations bill, Congress added a provision to the federal McKinney-Vento homeless program to promote local coordination among homeless programs and "publicly funded institutions" such as psychiatric hospitals, jails, juvenile justice facilities and foster care programs. This proposal was authored by Housing Subcommittee Chairman Rick Lazio (R-NY) as part of his federal homeless programs reauthorization bill (HR 1073). Specifically, this new federal policy would require state and local government grantees receiving federal McKinney-Vento funds to develop and implement discharge coordination policies. Since most state psychiatric hospitals and local corrections systems do not directly receive federal homeless funds, the scope of this new law will be somewhat limited.

At the same time, local agencies administering homeless programs (housing authorities, county community development departments, etc.) will have substantial leverage (the threat of losing federal funds) to force psychiatric hospitals, jails and other institutions to coordinate activities. For the first time, homeless programs will be able force agreements and coordinated plans to ensure that people are not discharged directly into the homeless service system. However, as many NAMI members know from experience, the best discharge plan or interagency agreement can amount to little without the commitment and resources to fund permanent housing and evidence-based programs such as PACT. However, NAMI is supportive of this new provision as a tool that can be used by homeless agencies to begin to reverse the costly cycle of homelessness, criminal justice, and short-term psychiatric hospitalization that too many adults with severe mental illness find themselves in.


HR 4635 contains more than $22 billion for the discretionary budget for the Department of Veterans Affairs (i.e. excluding entitlements such as disability benefits). Of this total, $20.3 billion goes to support the VA's medical care system (hospitals, clinics, nursing homes, etc.). This represents a $1.355 billion increase over last year's VA medical care budget. HR 4635 does not set aside or specify a specific level of funding for mental illness treatment programs as such decisions are largely left to the discretion of individual Veterans Integrated Service Networks (VISNs).

However, the Senate Appropriations Committee report accompanying the bill calls on the VA to maintain adequate treatment and services capacity for veterans with mental illnesses, including substance abuse services. In addition, the Senate report requires the VA to report back to Congress within 180 days on medical errors and adverse events involving veterans with mental illness in the VA system. The report from the House Appropriations Committee calls on the VA to conduct an internal review to ensure that VISNs have proper waiver procedures in place to ensure that veterans have access to non-formulary medications where appropriate. The House report also directs the VA to develop performance indicators on how psychiatric FTE staffing reductions are affecting quality of care. Finally, HR 4635 appropriates $351 million for the VA medical research budget, a $30 million increase over last year.


Finally, NAMI would like to thank several key leaders in Congress who advocated for increased funding for housing programs serving adults with severe mental illnesses and for changes in federal policy to make these programs more responsive to NAMI's priorities as part of the FY 2001 VA-HUD bill: Senate VA-HUD Subcommittee Chairman Kit Bond (R-MO), House VA-HUD Subcommittee Chairman James Walsh (R-NY), Representatives Rodney Frelinghuysen (R-NJ), Alan Mollohan (D-WV), Marcy Kaptur (D-OH), Senators Barbara Mikulski (D-MD) and Tom Harkin (D-IA).


On October 5, HUD Secretary Andrew Cuomo announced that $132 million in capital advances (funds for development costs) and project-based rental assistance (funds to cover the operating costs minus tenant contributions) have been awarded to non-profit disability organizations to build and develop community housing (as noted above). These awards will result in 1,500 low-income people with disabilities getting housing under the Section 811 program in the current fiscal year. In order to qualify, an individual must have a disability (including chronic mental illness) and be "very low income" (30% of area median income and below, about $10,000 for an individual.

The full list of awardees can be viewed through HUD's website at: and Successful applicants for the 25% of the 811 program dedicated to tenant-based rental assistance (a.k.a. the "mainstream" program) are expected to be announced in the next few weeks.


A new technical assistance manual has been published and focuses on how non-profit disability advocacy organizations, such as NAMI affiliates, can push the local affordable housing system to be more responsive to the needs of low-income adults with severe disabilities. As was noted above, most of HUD's affordable housing programs are administered by local agencies such as housing authorities and state, city and county community development agencies. While there are federal guidelines tied to federal dollars, local officials still have wide discretion in how funds are spent. Moreover, since federal housing programs are not entitlements, disadvantaged and vulnerable populations such as adults with severe mental illnesses must often wait years for assistance.

This publication, "Going It Alone: The Struggle to Expand Housing Opportunities for People With Disabilities," details how to document housing needs and offers strategies on how to make affordable housing programs more responsive. This manual was published by the Technical Assistance Collaborative (TAC) and the Consortium for Citizens With Disabilities Housing Task Force (of which NAMI is a member), through a grant from Fannie Mae. NAMI members who would like a free copy of "Going It Alone" should send request with complete mailing information to Other publications on affordable housing for adults with severe disabilities are available at: