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Deep Cut Proposed for Section 811, Funding for Homeless Programs and Section 8 Vouchers Boosted

April 3, 2007

Overall, the President is requesting $36.15 billion in funding for the Department of Housing and Urban Development (HUD) for FY 2008, nearly $2 billion below the amount that Congress is soon expected to approve for the agency for the current fiscal year.  As with the proposed budgets for both FY 2006 and FY 2007, the President's budget again seeks a deep cut for the Section 811 program, the only program at the Department of Housing Urban Development (HUD) that still produces housing for people with severe disabilities. 

The President's budget would cut Section 811 nearly in half, dropping funding down to $125 million from its expected FY 2007 level of $237 million.  Nearly all of this proposed reduction would come from the portion of the 811 program that produces new units of permanent supportive housing, the capital advance/project-based side of the program, i.e. capital grants and project-based rental assistance directed to non-profit disability groups that develop supportive housing (specifically, housing targeted to individuals with severe disabilities who need services directly linked to their housing). 

The President's FY 2008 budget proposes to direct most of the $125 million in the Section 811 program to the renewal of existing rent subsidies (both tenant-based and project-based), with a small amount left to fund new capital advance/project-based grants and new tenant-based subsidies.  The $125 million would be allocated as follows:

  • $75 million would be directed to tenant-based renewals – to renew the existing 811 tenant-based vouchers now in use,
  • $20 million for project-based renewals (also known as PRACs) – renewing rent subsidies that are tied to 811 properties,
  • $15.84 million for new capital advance/project-based grants to non-profit disability groups, and
  • $15 million for a new demonstration program that would allow funding from the Low-Income Housing Tax Credit (LIHTC) program to be integrated into 811 housing developments.

This is the third consecutive year that the President's budget proposed deep cuts to the capital advance/project-based side of the 811 program.  Both the House and Senate rejected these proposals in 2005 and 2006.  What makes this budget proposal different is the addition of this new demonstration initiative that marks an important step forward in the effort to reform Section 811 so that additional sources of capital can be brought into to supplement the dwindling availability of funding in the program to develop new supportive housing units.  

Homeless Programs Funding

In a rare bright spot for the HUD budget, the President is requesting a $146 million increase for programs under the McKinney-Vento Homeless Assistance Act, boosting funding to $1.586 billion.  This increase would continue efforts by the Bush Administration to move toward ending chronic homelessness by 2012.  The budget also includes a proposal pushed in previous years to consolidate existing competitive McKinney-Vento programs into a single Continuum of Care grant process for states and localities. 

Section 8 Rental Vouchers

The President's budget is seeking $16 billion for the Section 8 tenant-based rental voucher program for FY 2008, an increase of .5% over the current 2007 level.  The Section 8 tenant-based rental assistance program funds vouchers that pay the difference between rental costs and a percentage of tenant income (for those able to access a voucher).  Most of this increase for Section 8 would go toward a $113.5 million boost in administrative fees (funding for state and local agencies administering the program, as opposed direct funding for rental assistance which would increase by only $8 million in the budget).  The budget also requests $5.813 billion in funding for the Section project-based rental assistance program for FY 2008.  The Section 8 project-based program ties rental assistance to specific affordable units, opposed to tenant-based vouchers that are assigned to individual tenants and are portable.    

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