National Alliance on Mental Illness
page printed from
(800) 950-NAMI;

Housing Update: Congress Begins Work On FY 2001 HUD Budget


For Immediate Release, June 8, 2000
Contact: Chris Marshall

Congress is now moving forward on the FY 2001 budget for the U.S. Department of Housing and Urban Development (HUD), including housing and homeless programs serving adults with severe mental illnesses. On June 7, the House Appropriations Committee cleared its version of the FY 2001 VA-HUD Appropriations bill - the massive $77 billion bill that contains the $30 billion HUD budget. The Senate Appropriations Committee is expected to move its version of the VA-HUD Appropriations bill on June 14.

Despite the fact that the federal budget is now in surplus, Congress is still forced to write the VA-HUD bill (and all discretionary appropriations bills) under tight budget allocations, limiting the ability of Congress to meet the increases for HUD programs contained in the President's FY 2001 budget proposal. Until Congress and the Clinton Administration agree to loosen the caps on federal discretionary spending, it will be very difficult to increase the current investment in programs such as affordable housing and supportive services for adults with severe mental illnesses. Efforts to increase funding for HUD programs are further complicated by the fact that they must compete with other high priority programs that are part of the VA-HUD bill including veterans' health care, environmental protection and NASA. The President has indicated that he will veto a bill that contains large cuts in environmental protections and cuts to the AmeriCorps program.

HUD Section 811 Funding Frozen

The result is that HUD programs serving adults with severe mental illnesses are either frozen or increased only slightly in the House bill. For example, the Section 811 program (funding for group homes and other community housing options that serve adults with severe disabilities, including severe mental illnesses) is frozen at $201 million. President Clinton had proposed to boost Section 811 funding by $9 million in his budget. Efforts are now underway to develop a bipartisan amendment to add back this $9 million increase requested by the Administration when the VA-HUD bill reaches the full House, perhaps as early as next week.

In addition to seeking additional funds for Section 811, the Clinton Administration had proposed to double, to 50%, the amount of program funding that is diverted to tenant-based rental assistance, away from capital advances to non-profits and project-based rental assistance (the traditional form of 811 funding). Tenant-based assistance, also known as a voucher, provides a monthly rent subsidy to individual eligible low-income tenants, thereby allowing them to select their own housing in the community (typically without supports linked to the housing). Capital advances and project-based assistance are by contrast direct assistance to non-profit sponsors to increase the stock of affordable housing for specific populations and typically involves linking support services directly to the housing.

The draft House VA-HUD bill limits the tenant-based portion of the program to 25%. NAMI supports efforts to limit the percentage of Section 811 funding going toward tenant-based assistance to 25% out of concern that shifting the program to a tenant-based approach runs the risk of undermining the original purpose of Section 811 -- to serve the housing needs of adults with the most severe disabilities who need supports and services linked to housing. The House bill also contains language encouraging HUD to allow non-profit disability organizations, such as NAMIs, MHAs, CMHCs, etc., to administer these Section 811 "mainstream" vouchers. This allows non-profits to compete against housing authorities to receive these vouchers for their community.

The House VA-HUD bill also funds a separate allocation of $25 million for tenant-based rental assistance for non-elderly adults with disabilities (including people with severe mental illnesses). 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 of New Jersey.

As with the Shelter Plus Care rent subsidies noted below, the House bill finances the $25 million in "disability" vouchers through a complicated set of assumptions about unspent Section 8 vouchers that are expected to be returned to HUD later this year. This practice, known as "Section 8 recapture" allows Congress to require HUD to redirect vouchers that housing authorities and property owners can no longer use or cannot timely distribute. Specific language in the House bill orders HUD to allocate these "recapture" funds in specific order, giving highest priority to programs serving the most vulnerable populations - Shelter Plus Care tenants and non-elderly people with disabilities. This funding mechanism was required by Congress given the extremely tight budget constraints placed on this year's VA-HUD bill.

Homeless Programs Frozen - Shelter Plus Care Renewals Shifted to Section 8

For homeless programs, the draft House bill proposes to freeze McKinney Homeless Assistance ("Continuum of Care") funding at its current level of $1.02 billion. The Continuum of Care includes a range of permanent housing and service programs such as Shelter Plus Care, Emergency Shelter Grants, Section 8 Moderate Rehab and Single Room Occupancy. Nearly all of these permanent housing programs under the federal McKinney program serve currently or former homeless adults with severe mental illnesses.

A key provision in the draft House bill (as well as in the Clinton Administration's budget) proposes to add $37 million to the Housing Certificate Fund (the $13.3 billion account at HUD that renews all expiring federal rent subsidies) in order to shift funding for expiring Shelter Plus Care rent subsidies from the homeless Continuum of Care (McKinney) program into the Section 8 program.

The Shelter Plus Care program is a critical permanent housing resource for adults with severe mental illnesses. Many Shelter Plus Care (as well as permanent supported housing, SHP) projects that were begun in the mid and early 1990s are now facing a funding crisis as 5-year rent subsidies are now coming up for renewal. In states and communities across the country, this housing is at risk because local officials are giving low priority ratings to rent subsidy renewals as part of HUD's "Continuum of Care" process for allocating federal homeless funds at the local level.

The result is that formerly homeless adults with severe mental illnesses are now at risk of losing subsidized housing through no fault of their own. The solution that NAMI supports is to shift renewals for all expiring Shelter Plus Care and SHP permanent housing rent subsidies into the HUD Section 8 program. This will ensure that access to subsidized housing for formerly homeless adults with severe mental illnesses is not subject to the local Continuum of Care process and the limited resources in the federal homeless program. Being a part of the Housing Certificate Fund will provide both tenants and sponsors (non-profits and local governments) with predictability about the long-term stability of the permanent housing these programs were intended to promote and protect.

By contrast, a provision in the FY 2001 Senate Agriculture Appropriations bill combines emergency for expiring Shelter Plus Care and SHP rent subsidies from 1999 and 2000 with a requirement that HUD fund these subsidies out of the FY 2001 McKinney homeless appropriation. This proposal ended up in the Senate Agriculture Appropriations bill as a result of a lingering controversy over FY 2000 emergency spending for military and foreign aid spending. Thus, rather than shifting this burden to the Section 8 Housing Certificate Fund, the Senate appears to be leaning toward requiring HUD to fund renewals out of the existing $1.02 billion federal homeless program - as 5-year (rather than 1-year) commitments.

NAMI supports the intent of this proposal, i.e. to require HUD to first ensure that existing Shelter Plus Care and SHP housing is continued. At the same time, many advocates are concerned that this approach could seriously undermine the ability of states and localities to invest in new permanent housing and services for current homeless populations that are on the streets and in shelters and jails. Their ability to transition from homelessness is dependent on new resources being devoted to permanent housing. NAMI is concerned that the forthcoming FY 2001 Senate VA-HUD bill will continue this approach by requiring HUD to use the federal homeless appropriation to first fund renewal of expiring rent subsidies as a required priority.

Additional background information on the emerging crisis in the federal homeless program and the threat to renewal of Shelter Plus Care and SHP housing is contained in the testimony submitted by NAMI Board member Sue Davis to the Senate Banking Committee on May 23. This testimony also contains NAMI's views on proposed changes to the federal homeless program and background on the multiple links between mental illness, public treatment programs and homelessness. Due to its length, the testimony by Sue Davis is being sent in an accompanying NAMI E-News.


NAMI's highest priority is to ensure that all expiring Shelter Plus Care and SHP rent subsidies are renewed - both those that were not renewed in FY 2000, and those that will expire in FY 2001. Formerly homeless adults with severe mental illnesses currently in permanent supported housing should not be placed at risk of losing their housing through no fault of their own. NAMI believes that the best way to accomplish this is for Congress to shift the budgetary responsibility for renewing these rent subsidies from the homeless program to Section 8 Housing Certificate Fund. Congress and HUD should not allow formerly homeless adults with severe mental illnesses to become homeless again because of intense competition at the state and local level over limited federal homeless funds.

NAMI advocates are urged to contact their senators and urge them to support as part of the FY 2001 VA-HUD bill:

  • shift of Shelter Plus Care and SHP rent subsidy renewals to the Housing Certificate Fund (this proposal is already in the House VA-HUD bill),

  • increased funding for the HUD Section 811 program (at least to the $210 million level recommended by the President),

  • a separate allocation of tenant-based rental assistance of at least $25 million for non-elderly adults with disabilities who have lost access to affordable housing because of "elderly only" designations of public and assisted housing, and

  • an upward adjustment of the overall allocation for the House and Senate FY 2001 VA-HUD Appropriations bills in order to ensure proper investment in HUD programs that serve non-elderly adults with severe mental illnesses who face worst case housing needs or are homeless (or are at risk of homelessness).

All Senate offices can be reached by calling the Capitol Switchboard at 202-224-3121 or by going to the policy page of the NAMI Web site at and click on "Write to Congress."