National Alliance on Mental Illness
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Congress Begins Work on Funding Bill of Housing and Veterans' Programs

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 July 19, the House and Senate appropriations Committees cleared its version of the FY 2002 VA-HUD spending bill (S 1216, HR 2620) - the massive $84.2 billion measure that contains both the $31 billion HUD budget and $23.8 billion VA budget. Both the full House and the full Senate may take up the VA-HUD spending bill as early as today. Congress must complete action on this measure before FY 2002 begins on October 1.

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 make large increases for housing and veterans' programs. Nevertheless, both the House and Senate bills contain important increases for HUD and VA programs that are targeted to individuals with severe mental illnesses.


1. HUD Section 811 Funding Increased in House Bill, Frozen in Senate Bill As a result of strong bipartisan support among key members of the House Appropriations Committee, the House version of the VA-HUD bill increases the Section 811 program by $28.2 million - up to $240.9 million. This is $23.15 million above the President's request. Among the members of Congress that successfully pushed for more funds are Representatives Rodney Frelinghuysen (R-NJ), James Walsh (R-NY), Marcy Kaptur (D-OH) and David Price (D-NC).

The Section 811 program provides funding to non-profit organizations to develop group homes and other community housing options that serve adults with severe disabilities, including severe mental illnesses. Section 811 is critical source of funding for housing for non-elderly adults with severe mental illnesses. By contrast, the Senate bill funds the Section 811 program at $217. 7 million - the same amount requested by President Bush.

In addition to adding funds for the 811 program, the House bill also requires HUD to limit the amount of program funding that can be diverted to tenant-based rental assistance, away from capital advances to non-profits and project-based rental assistance (the traditional form of 811 funding). The Senate bill contains a similar limitation. 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. Finally, the House bill contains guidance to HUD to simplify the application process for non-profits groups competing for program funds.

2. Section 8 Vouchers Targeted to People With Disabilities Both the House and Senate bills expand the existing allocation of Section 8 tenant-based vouchers for non-elderly adults with disabilities (including people with severe mental illnesses). Over the past five years, Congress has appropriated more than $210 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 Frelinghuysen and Senators Kit Bond (R-MO) and Tom Harkin (D-IA). 3. Homeless Programs Frozen, Shelter Plus Care Renewal Funding Added to Senate Bill For homeless programs, both the House and Senate bills propose to freeze McKinney-Vento Homeless Assistance ("Continuum of Care") funding at its current level of $1.02 billion - the same amount requested by President Bush. The Continuum of Care includes a range of permanent housing and service programs such as Shelter Plus Care, SHP (permanent supportive housing), 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 and/or co-occurring substance abuse.

Both the House and Senate bills continue the current policy of establishing a minimum set aside of overall homeless program funding for development of permanent housing serving chronically homeless people with disabilities - as opposed to services for homeless individuals and families. The Senate bill maintains the current threshold at 30%, while the House bill increases the set aside to 35%. NAMI strongly supports this policy as the most effective means of developing more permanent supportive housing.

Several recent studies have demonstrated that permanent supportive housing is the most effective means of addressing chronic homelessness experienced by individuals with severe mental illness and co-occurring addictive disorders. NAMI therefore strongly supports the proposal in the House bill to not just continue the permanent supportive housing set aside, but also to expand it to 35%. Both the House and Senate bills also continue the requirement for local jurisdictions to come up with a 25% match for services funded through the federal homeless dollars.

In addition to continuing the permanent housing set aside, the Senate bill also contains a directive for HUD to work with other federal agencies including the Departments of HHS (including the Substance Abuse and Mental Health Services Administration), VA and Labor to push these agencies to come forward with resources to fund services for homeless individuals. This directive is part of an overall effort to free up more HUD resources for development of permanent supportive housing.

A key provision in the Senate bill, but not the House bill, would continue a separate allocation of $99 million to renew all expiring operating subsidies under the Shelter Plus Care (S+C) program. The Bush Administration's request contained a similar proposal. The House bill proposes to defer any additional funds for S+C renewals until FY 2003. S+C is a critical permanent housing resource for adults with severe mental illnesses. Many S+C (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.

Without separate funding for S+C and SHP renewals, thousands of formerly homeless adults with severe mental illnesses will be placed at risk of losing subsidized housing through no fault of their own. NAMI therefore supports continuation of BOTH the separate $99 million account for Shelter Plus Care renewals, and an additional $23.6 million in funding needed to cover renewal of SHP permanent housing operating subsidies.


Representatives John LaFalce (D-NY) and Barbara Lee (D-CA) are expected to offer an amendment to the House VA-HUD bill (HR 2620) as early as today that would transfer $122.6 million from other programs at HUD to fund renewal of all expiring S+C and SHP permanent housing rent subsidies in FY 2002. NAMI strongly support this amendment and encourages all advocates to contact their House members to voice support for the LaFalce-Lee amendment.


Both the House and Senate VA-HUD Appropriations bills increase overall spending for the Veterans Health Administration (VHA) by more than $1 billion - and more than $300 million above President Bush's request. The VHA budget includes funding for 172 medical centers and 876 outpatient clinics.

Both the House and Senate bills have specific directives to the VA to improve care for veterans living with severe mental illnesses. For example, both the House and Senate bills direct the VA to fund additional Mental Illness Research, Education and Clinical Centers.

The most important of these directives relates to the VA's efforts to limit access within the newer atypical anti-psychotic medications. Specifically, the House bill would require the VA to suspend treatment guidelines which include a "fail first" policy now being used as part of a restrictive formulary that limits access to certain anti-psychotic medications used for treating schizophrenia. This would suspend these guidelines until the NIMH completes its ongoing assessment of the relative effectiveness of atypical medications. This policy, currently implemented in some areas, is forcing veterans with schizophrenia to begin with less expensive medications, before having access to other atypical antipsychotics. The Senate bill, by contrast, directs the VA to suspend its "fail first" policy for 90 days and report back to Congress on a scientific justification for its policy.


NAMI strongly supports the language in the House bill and urges advocates for veterans with schizophrenia to contact members of Congress to express support for the House bill.