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NAMI Offers Testimony On Homeless
Program Consolidation Legislation

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

Attached below is NAMI Board member Sue Davis' testimony submitted to the Senate Banking Committee on May 23 on the emerging crisis in the federal homeless program and the threat to renewal of the Shelter Plus Care and SHP housing programs. 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.




MAY 23, 2000

Chairman Allard, Senator Kerry, and members of the Subcommittee, I am Sue Davis, of Scottsdale, Arizona. I am a member of the Board of Directors of the National Alliance for the Mentally Ill (NAMI). I am also Executive Director of NAMI Arizona - NAMI's statewide Arizona affiliate. I am pleased to have this opportunity to offer NAMI's views on the subject of consolidation of HUD's homeless programs.

NAMI is the nation's largest national organization -- 210,000 members -- representing persons with serious brain disorders and their families. Through our 1,200 chapters and affiliates in all 50 states, we support education, outreach, advocacy and research on behalf of persons with serious brain disorders such as schizophrenia, manic depressive illness, major depression and severe anxiety disorders.

The Role of "Deinstitutionalization" in Homelessness

NAMI feels strongly that while our nation has made significant progress in scientific research on severe mental illness and development of new treatments, we are still witnessing a national tragedy as a result of our inability make these newer, more effective treatments accessible to the most vulnerable and isolated people with severe mental illnesses. The reasons for this gap between scientific advancement and access to treatment are numerous and complicated: the inability of states and communities to successfully implement "deinstitutionalization," chronic underfunding of public programs, the shift of public mental health resources away from programs serving the most severely ill consumers, state laws that restrict involuntary treatment to the most narrow circumstances and the growing trend of "criminalization" of mental illness. While these reasons are varied and complicated, what is clear is that the social experiment of "deinstitutionalization," begun nearly a generation ago, has failed in many communities across the country.

The Link Between Lack of Access to Treatment and Homelessness

Perhaps the most tangible and vivid example of the failure of our society to successfully shift people with severe mental illnesses from outdated public psychiatric hospitals to community-based settings (the basic policy underlying deinstitutionalization) is the staggering problem of homeless people with severe mental illnesses. Since the early 1980s, studies have consistently shown that between 25 and 40 percent of homeless individuals have a severe mental illness, not including persons who have a primary diagnosis of substance abuse. These studies also suggest that this subpopulation of homeless adults is growing, both in terms of numbers and percentage.

A recent report prepared for HUD by the Urban Institute entitled "Homelessness: Programs and the People they Serve," indicates that 39 percent of homeless people interviewed reported having a "mental health problem" during the past month, 45 percent during the past year, and 57 percent at some point in their lifetime. This report also found that 11percent of single homeless adults reported that they received federal Supplemental Security Income (SSI) benefits - a 300 percent increase from the last study completed in 1987. Assuming that one-third of our nation's homeless have a severe mental illness, using the Urban Institute's figures of 845,000 "on any given night," this means that as many as 338,000 people with severe mental illnesses are using public streets, sidewalks, parks, bus stations, public libraries as places to live.

Need to Target Chronic Homeless with Severe Mental Illnesses

More importantly, adults with severe mental illnesses are also using temporary homeless shelters and local jails and prisons as permanent housing resources. As recent studies have shown (including studies of New York City and Philadelphia by Dennis Culhane of the University of Pennsylvania), this chronically homeless population is consuming a large and growing proportion of shelter resources, over long periods of time, rather than to meet short-term acute shelter needs.

NAMI believes that in order to make the most effective use of federal homeless dollars - and more importantly, to make significant strides in ending homelessness -- special emphasis should be placed upon the permanent housing needs of adults with severe mental illnesses who comprise such a large share of this chronic homeless population. Such a shift in emphasis will help to ensure that emergency shelter resources go to individuals and families experiencing a short-term housing crisis, rather than long-term problems that can only be met through permanent housing.

NAMI Supports Greater Emphasis on Permanent Housing in the Federal Homeless Program

In NAMI's view, Congress has made some important incremental progress in recent years in restructuring federal homeless programs by ensuring that appropriate resources are directed to permanent housing for the chronically homeless with severe mental illness. This has been brought about through investment in a range of programs such as the Emergency Shelter Grants program, the Supportive Housing program, the Shelter Plus Care program, and the Section 8 Single Room Occupancy program. These efforts have provided the foundation for local non-profit organizations, as well as state and local government, to address the problem of homelessness. NAMI has supported these programs because of the strong emphasis in the original McKinney authorizing legislation on permanent housing for people with disabilities.

The Shelter Plus Care and SHP programs provide the vivid examples of this success. Through Shelter Plus Care and SHP, non-profit organizations have been able to work successfully with government grantees to involve local landlords in solutions to homelessness and reduce the stigma experienced by adults with severe mental illnesses in the private rental market. New Shelter Plus Care and Section 8 project based assistance, as well as SHP capital and operating funds, promoted a new "industry" of non-profit housing providers who successfully learned the "nuts and bolts" of housing development for people with disabilities. These groups now form the core of a new housing delivery system which is attempting to expand permanent housing options for people with disabilities who are homeless or at-risk of homelessness.

Unfortunately, combining these programs within one appropriation initially eliminated this emphasis on permanent housing, and virtually halted the development of new permanent housing projects. Without a statutory focus on permanent housing, McKinney funding was quickly diverted to supportive services projects - clearly not the intent of the original McKinney legislation. In response to this shift of resources into services, rather than permanent housing development, NAMI has supported the 30 percent permanent housing set aside in HUD's annual appropriation over the last few years.

In our view, support for increased emphasis on permanent housing within federal homeless programs does not equal lack of support for services. Over our 20-year history, NAMI has been a forceful advocate for increasing access to community-based treatment and support services for individuals with the most severe and disabling mental illnesses. Thus, we want to clarify that NAMI's support for the permanent housing set aside in this legislation should not be misinterpreted as lack of support for funding of services that are a critical part of efforts to end homelessness.

NAMI feels strongly that responsibility for treatment services and community supports lies most appropriately with the public mental health system and other human service programs, not with HUD and local housing programs. In recent years, NAMI has been very concerned that the growing share of federal homeless dollars going to services has had the perverse effect of letting health and human service programs off the hook for what should be their primary responsibility.

In order to restore proper balance to federal spending on these priorities, NAMI also supports significant increases in funding for programs at the federal Center for Mental Health Services (CMHS) at the Department of Health and Human Services (HHS) that target services for homeless mentally ill individuals. The most important of these are the Mental Health Block Grant and the PATH program. The President's FY 2001 budget proposal seeks a 17 percent increase for the MHBG (up from its current $356 million to $416 million). NAMI supports this proposed increase and is urging Congress to target all additional funds to evidence-based, outreach-oriented service delivery models for persons with severe mental illness.

In particular, NAMI is urging that any increase in MHBG funding be directed to assertive community treatment, including the Program of Assertive Community Treatment, or PACT. For the PATH program, the President is proposing a $5 million increase, up from its current $31 million level. These increased federal resources, while a small part of overall public mental health spending at the state and local level, are needed to ensure increased emphasis on permanent housing in federal homeless programs does not undermine efforts to develop sound federal policy.

Current HUD Policies and Permanent Housing Renewals

During the past few years, HUD's policies regarding the McKinney programs have been modified virtually every year, with both positive and negative outcomes as a result. On the positive side, the creation of the "Continuum of Care" approach has promoted more comprehensive and coordinated planning of community based solutions to the problem of homelessness. NAMI supports this emphasis on long term strategic planning, and believes that it should be incorporated within any future McKinney reauthorization.

However, it is very clear that the impetus for the implementation of the "Continuum of Care" process in states and local communities centered around competition for funding and the hope that a community's McKinney funding would increase. Unfortunately, the "Continuum of Care" approach was implemented by HUD at a time when the demand to renew existing HUD McKinney permanent housing projects began to escalate dramatically. HUD's unsuccessful attempt to balance and manage these dynamics - that is rewarding the goal of planning with an increase in funding while also taking care of renewals - has, in fact, caused most of the problems which the committee is attempting to address through a block grant approach.

For approximately 885 formerly homeless people with disabilities in 21 communities around the country, the outcome of HUD's "Continuum of Care" process has meant a loss of federal housing assistance under the HUD McKinney Shelter Plus Care and SHP programs during this fiscal year. HUD explains the renewal crisis as a failure of local communities to adequately prioritize the renewal of McKinney permanent housing projects, when, in fact, it is a failure by HUD to address the larger issue of renewal funding generally within HUD's current "Continuum of Care" policies.

It is important to point out that many communities and states that received sizeable Shelter Plus Care grants from 1992 through 1994 would never have been able to obtain sufficient funding to renew all Shelter Plus Care rent subsidies under HUD's current policies, even if the Shelter Plus Care renewal projects were the only projects submitted in the "Continuum of Care" application. This is especially the case in my home state of Arizona where in Maricopa County we are facing an acute crisis related to Shelter Plus Care renewals. In the 1999 round of "Continuum of Care" funding, Maricopa County had over $3 million in Shelter Plus Care rent subsidies that were not renewed.

NAMI believes that this was, and is, a crisis that HUD should have seen coming. Yet, until this year, there was no effort on HUD's part to protect people with severe mental illnesses who were served by Shelter Plus Care or SHP from losing their housing assistance. (For example, HUD could have directed that Shelter Plus Care program participants be given HOME tenant based rental assistance, or receive priority for Section 8 "turnover" subsidies at Public Housing Authorities, or be funded "off the top" of the McKinney appropriation).

Many communities and states have become increasingly frustrated and confused by the continuous modifications to HUD's McKinney policies and funding guidelines - some of which directly contributed to the current renewal crisis. In many ways, HUD's guidelines have created a "de-facto" block grant approach, with "pro-rata needs" funding published by HUD for every community in the United States. Unfortunately, HUD's scoring policies for the annual McKinney competition have also become increasingly complex each year, and have caused some communities to question HUD's objectivity in the scoring process.

It is clear from these dynamics that legislation is needed to codify critical aspects of HUD's McKinney Act programs and ensure that: (1) all permanent housing rental assistance and operating subsidy funding is renewed by HUD for projects in compliance with statutory and regulatory guidelines; and (2) ensure that at least 30 percent of McKinney funds are directed towards permanent housing for people with disabilities; and (3) ensure that localities and states clearly understand their obligations and responsibilities within the context of federal McKinney programs.

NAMI believes that these three goals - not the block grant vs. competitive grant issue - should be the most important aspects of any legislative reform within the HUD McKinney programs. We believe that these goals, and our specific recommendations outlined below, can be accomplished either with a block grant or with modifications to the existing competitive grant process. For that reason, we are not recommending one approach over the other.

NAMI Recommendations for Federal Homeless Program Consolidation

1. Shift Rent Subsidy Renewals to the Housing Certificate Fund

NAMI strongly recommends that funding for all Shelter Plus Care rental subsidy renewals, as well as the renewal of SHP funded leasing assistance and operating costs, be permanently shifted to the Section 8 appropriation. Congress must ensure that all formerly homeless people with disabilities assisted by these two programs receive the same commitment of continued federal housing assistance that is provided to the recipients of Section 8 rental assistance. Congress should also ensure that these households continue to receive assistance under the Shelter Plus Care and SHP programs and that these funds not be converted to Section 8 assistance, as HUD has done with Section 811 tenant based assistance appropriations.

2. Continue the 30% Permanent Housing Set Aside

As stated above, NAMI strongly recommends that Congress continue to require that at least 30 percent of the HUD McKinney Act appropriations be directed towards permanent housing for people with disabilities. If Shelter Plus Care and SHP renewals are shifted to the Section 8 appropriation, we recommend that at least 30 percent of the HUD McKinney appropriation be expended on new permanent housing. We also recommend that Congress consider raising this percentage for new housing production over time to 50 percent - a percentage which was historically sustained before local "Continuum of Care" groups were given responsibility for prioritizing projects.

3. Emphasize Long Range Planning Through the "Continuum of Care"

Congress should include a strong "Continuum of Care" planning component to encourage the development of long range strategies to address homelessness in local communities and states. The best way to do this is to incorporate a "Continuum of Care" planning component as a distinct and separate element of the "Consolidated Plan" process. This approach would provide a mechanism to ensure that there is a framework and structure in place for the planning process. NAMI believes that local and state governments - in partnership with non-profit groups, homeless advocates and self-advocates, and the private sector - have a responsibility to address homeless issues within their Consolidated Plans, yet that rarely happens in practice. Inclusion of the "Continuum of Care" strategy in the Consolidated Plan would help to leverage resources for permanent housing development, as well as funding for essential supportive services through HUD's other programs. NAMI believes that Congress should provide specific criteria for the development of the "Continuum of Care" component of the Consolidated Plan to ensure that the inclusive process now underway in many communities and states is maintained and strengthened.

4. Limit Administrative Funds

Consistent with current practice, NAMI believes that no more than 5 percent of HUD McKinney funds should be used for administrative purposes, including the preparation of "Continuum of Care" strategies. If the current problems with the HUD McKinney process are addressed, the entire process should work more smoothly. Local and state governments should be expected to participate in the development of "Continuum of Care" strategies as a matter of policy and practice. In fact, many have played a strong role in this process for years without the need for additional administrative compensation.

If a formula block grant is enacted, NAMI recommends that the legislation include a temporary "hold harmless" clause to assist localities and grantees that received substantial funding under the national competition for McKinney funds in the 1990s. Without such a provision, a block grant could cause problems similar to the current Shelter Plus Care renewal crisis. It would be unrealistic to expect localities to immediately be able to identify alternative funding for McKinney funded activities.

5. HUD Technical Assistance Should Focus on Emerging Needs

Finally, NAMI would like to recommend that HUD's current approach to McKinney-funded technical assistance (TA) program be modified. Currently, most TA funding is distributed to local TA providers in each state, with multiple grants as small as $15,000 being awarded in some HUD Field Offices. This approach by HUD has helped to "spread the money around" but has not helped to address critical policy and program issues such as: leveraging mainstream mental health and substance abuse treatment funds; coordinating with efforts to address work disincentives in Social Security's disability income support programs; obtaining federal job training and employment resources for homeless people through mainstream job training programs (e.g. "one stop" centers); and obtaining priority for "graduates" of McKinney programs in Public Housing Authority programs.

NAMI would particularly urge that Congress require HUD to focus its limited resources for technical assistance to a few emerging policy areas that call out for specific attention for interagency coordination and creative approaches. Among these are (a) helping homeless adults with severe mental illnesses move toward employment by accessing the new Ticket to Work and Work Incentives Improvement Act (P.L. 106-170), (b) fostering leveraged funding of service dollars from HHS for integrated treatment for co-occurring mental illness and substance abuse and (c) coordinating with innovative programs such as jail diversion and mental health courts that seek to address the disturbing trend of "criminalization" of mental illness.


Chairman Allard and Senator Kerry, on behalf of the member organizations of NAMI's consumer and family membership, we would like to thank you for the opportunity to offer our views on consolidation of HUD's homeless programs. We look forward to working with you and all members of the Banking Committee to improve the performance of HUD's homeless programs to ensure that they improved to bring an end to homelessness for all people with disabilities.