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February 3, 2003

White House Releases FY 2004 Budget Proposal, $50 Million Increase Proposed for NIMH, Increases Proposed for PATH and Childrens’ Mental Health Programs, Freeze Proposed for Mental Health Block Grant

As is being widely reported in the press, President Bush today laid out his $2.25 trillion budget plan for FY 2004 - with major increases proposed for homeland defense, but only a 2% increase for biomedical research, and level funding for most other health service and support programs. The proposal unveiled today includes spending requests for all federal programs for FY 2004 that Congress will act on through appropriations bills that must be enacted by October 1, 2003.

Overall, President Bush is proposing to increase federal discretionary spending by 4%. However, only specific priorities – defense, homeland security, substance abuse treatment and international AIDS activities in particular – are at, or above this 4% increase level. Most other domestic discretionary agencies and programs would receive increases of only 2%, in most cases barely enough to keep pace with inflation. Release of the President’s budget is complicated this year by the fact that Congress has not yet completed action on spending bills for the current fiscal year (FY 2003). As a result, comparing the President’s funding requests for FY 2004 to relevant levels for FY 2002 and FY 2003 creates some confusion.

Below is a detailed analysis of the proposed FY 2004 budgets for agencies and programs of importance to people with severe mental illnesses and their families. Where possible, comparisons are made to funding levels in the FY 2003 appropriations bills now before the House and Senate.  Additional details on the President’s FY 2003 budget plan

NIMH

For FY 2004, the President is proposing $1.382 billion for scientific and clinical research at the National Institute of Mental Health (NIMH). This is a $50 million increase over the amount the President requested for NIMH for FY 2003 ($1.333 billion) a 3.6% increase. This request for FY 2004 is also higher than the $1.351 billion amount for NIMH in the current spending bill for FY 2003 now before the Senate. While this proposed increase for NIMH is far below the 8% to 9% annual increases that NIMH has been receiving from Congress in recent years, it is larger than the overall 2% increase for the entire medical research budget at the National Institutes of Health (NIH).

FY 2003 will mark the end of the five-year bipartisan effort in Congress to double the NIH – from its FY 1998 level of $13.6 billion, to its expected FY 2003 level of $27.2 billion. It is expected that in 2004 and 2005 funding increases for all of the NIH institutes will be held far below the increases that Congress enacted from 1998 through 2003. This decline in budget increases could have a devastating impact on the ability of NIMH (and NIH as a whole) to sustain the ongoing multi-year research grants that have been initiated over the past 2-3 years. This is especially the case if Congress accepts a proposal being floated by NIH to limit annual “cost of doing research” adjustments to individual grants to 1% per year. NAMI remains very concerned that this coming fall-off in budget increases for NIH does not wipe out the new research that has been undertaken at NIMH in recent years – particularly new grants that have been initiated in conjunction with NIMH’s research plan on bipolar disorder. Therefore NAMI will be supporting efforts in Congress – led by Senators Arlen Specter (R-PA) and Tom Harkin (D-IA) – to push for an 8.5% increase for NIH over the next 3 years (enough to triple the NIH budget by 2008).

CMHS

The Administration's budget proposes to increase funding for the PATH program by an additional $3 million for FY 2004 – up to $49.9 million. This increase is on top of a $7 million increase that was proposed for by the Bush Administration for FY 2003 and is still pending before Congress. PATH is a formula grant program to the states that funds services for homeless individuals with severe mental illnesses. CMHS estimates that this increase in the PATH program will result in an additional 147,000 homeless individuals with severe mental illnesses being served by state and local PATH grantees. This increase in PATH funding is part of an overall Bush Administration initiative designed to refocus federal homeless spending and end chronic homelessness within the next decade. This initiative includes activities at several departments including HUD and the VA.

The President is requesting a $10 million increase for the Childrens’ Mental Health program at CMHS – increasing funding from its current level of $97 million up to $107 million. At the same time, the President’s budget proposes to freeze most other programs at the Center for Mental Health Services (CMHS) - part of the Substance Abuse and Mental Health Services Administration (SAMHSA). This includes funding for the Mental Health Block Grant ($433 million) and the PAIMI protection and advocacy ($32.5 million).

The Bush Administration FY 2004 budget also appears to revive a proposal from last year to reduce funding for CMHS's own $230 million discretionary budget - known as “Projects of Regional and National Significance (PRNS).” For FY 2004, the President’s budget proposes $212 million for the CMHS PRNS function. In its FY 2003 budget proposal, the Administration assumed that certain programs under the CMHS PRNS heading would be terminated. Among these were certain community technical assistance centers and ongoing community action grants.  The current FY 2003 spending bill now before Congress restores funding for these technical assistance centers and community action grants for FY 2003.

Finally, the Administration’s budget proposes a large $194 million increase for substance abuse treatment programs at the Center for Substance Abuse Treatment (like CMHS, part of SAMHSA). This includes funding for a White House initiative to for a new voucher program at the state level that would allow local faith-based substance abuse treatment programs to better compete for federal funds.

HUD

The Bush Administration is proposing a 1.3% increase for the Department of Housing and Urban Development (HUD), bringing total HUD spending to $31.3 billion. For the Section 811 program the Administration is proposing to increase funding by $10 million above its FY 2002 level, up to $251 million.  This is the same amount that the President proposed for FY 2003 – a request that is still pending before Congress. The Bush Administration’s budget also proposes to maintain the current structure of the Section 811 program, with 75% of funds going toward capital advances and project-based assistance to non-profit groups to build and manage housing for people with disabilities (including non-elderly adults with severe mental illnesses). The other 25% of the program would continue going toward tenant-based rental assistance (portable vouchers), also known as the Section 811 “mainstream” program.

In FY 2004, for both the capital advance/project-based side of the Section 811 program and for the tenant-based mainstream side, HUD faces a continued challenge to fund renewal of expiring rent subsidies. In both cases, these ongoing obligations to renew funding associated with units already in existence are expected to drain limited resources. For the capital advance/project-based side, HUD estimates that $8 million will be needed to renew expiring project- based rent subsidies (also known as PRACs). On the tenant-based “mainstream” side, HUD projects that $42 million will be needed in FY 2004 to renew expiring tenant-based rent subsidies that were originally funded in prior years. This is an increase of $10 million over the amount Congress allocated for the current fiscal year for Section 811 mainstream renewals. The result is that fully 20% of HUD 811 funds in 2004 will be going toward maintaining the rent subsidies associated with the program (i.e., keeping current tenants in their housing), as opposed to expanding the inventory of supportive housing for people with severe disabilities.

In addition, the President’s FY 2004 budget contains an unspecified proposal to link the 811 program to the Administration’s ongoing initiative to end chronic homelessness over the next decade. This proposal (known as the “Samaritan Initiative”) is included in the HUD budget as $50 million request for new permanent supportive housing and grants for outreach to people experiencing chronic homelessness (including homeless people with mental illness and co-occurring substance abuse). HHS and the VA are proposing to contribute $10 million each in FY 2004 for services to accompany the program. Details on the Bush Administration’s chronic homeless initiative were included in a January 30 NAMI E-News message. The Samaritan Initiative is also part of the Administration’s proposed $1.528 billion request for the McKinney-Vento Homeless Assistance Act. This also includes the cost of renewing rent subsidies associated with the Shelter Plus Care program – estimated by HUD to cost $194 million in FY 2004.     

The President’s budget proposes to add $36 million in FY 2004 for Section 8 vouchers for non-elderly people with disabilities adversely affected by designation of public and assisted housing as “elderly only.” Congress has funded this allocation of tenant based vouchers since 1996 in response to the erosion of affordable housing resources for non-elderly people with disabilities that has occurred as a result of the growth of “elderly only” housing.  This effort has been championed by key leaders in Congress including Representative Rodney Frelinghuysen (R-NJ) and Senator Kit Bond (R-MO).  This request is part of a larger controversial proposal to convert the entire Section 8 tenant-based voucher program to block grant program to the states,  identified in the budget as “Housing Assistance for Needy Families” (HANF).

VA

In FY 2001 the VA provided treatment to an estimated 4.1 million veterans, including over 886,000 veterans who received mental health services—454,598 veterans of which are service connected for a mental illness. The President’s FY 2004 budget includes an increase of about $2.6 billion in medical care spending for the Department of Veterans’ Affairs, bringing the budget request to $26.2 billion. This budget request is said to be the largest annual increase ever requested by a President and is an 11% increase over the FY 2003 budget request of $23.6 billion. The overall request for VA medical care does not separate out spending for either inpatient or community-based psychiatric care for veterans with severe mental illnesses.

The President's budget also outlines a number of changes that will focus VA’s medical care to provide the necessary treatment and services to veterans with disabilities, special needs, or low incomes. Earlier this year, VA restricted enrollment to veterans with the lowest priority level (“category 8”), allowing veterans with more severe health needs and lower incomes the ability to access care in a more efficient manner. Also among the President’s top priorities are to increase coordination between VA and the Department of Defense (DOD) and to ensure that veterans’ disability claims are processed accurately and in a more timely manner. By contrast, the Independent Budget for the VA - a comprehensive policy document developed by the Veterans Service Organizations, and endorsed by NAMI - recommends an increase in medical care spending to $27.2 billion, $1 billion more than the Bush Administration request.

Education

The Individuals with Disabilities Education Act (IDEA) guarantees a free, appropriate public education to each child with a disability in every state and locality across the country. Over 6.5 million children received education services in 2002—an increase of 1.8 million children in the last 10 years. The President’s budget includes an increase of $1 billion for special education to help states and localities meet their obligations—an increase that would bring IDEA Part B state grant funding to $9.5 billion. This is a 9% increase over the FY 2003 budget request of $8.5 billion. NAMI has strongly advocated that IDEA be fully funded during the reauthorization this year to ensure that Congress makes good on the promise to schools for the funding of special education programs. When IDEA was enacted, Congress agreed to fund up to 40% of the excess cost associated with educating a child with a disability.  Congress has never funded more than 15%.

While the President’s budget is supportive of the principles of IDEA—the budget document states that IDEA is in need of significant reforms, including implementation of recommendations made by the President’s Commission on Excellence in Special Education, which included:

  • strengthened accountability for states to improve results for children with disabilities, using IDEA funds for performance awards and technical assistance;
  • promotion of pre-referral interventions and identification methods that will help ensure that children who need special education are identified early and are not misidentified as having disabilities because they never received appropriate instruction (in areas such as reading) in the early years; and
  • reduction of paperwork and administrative tasks so that school personnel can focus on the needs of children, rather than bureaucracy.

Health Care Initiatives

Included in the Bush Administration’s budget for the Department of Health and Human Services (HHS) are numerous proposals to expand health coverage and reform the Medicare and Medicaid programs. Most of the proposals are still in their formative stages and are not yet formal legislative bills that must be submitted to Congress. Foremost among these are a $400 million program to reform the Medicare program by fostering greater private sector involvement and adding coverage of outpatient prescription drugs. This proposal will be one of the most high profile and partisan debates in Congress in 2003. Details on the proposal are not available yet, particularly with respect to the controversial issue of whether prescription coverage will be made available to Medicare beneficiaries that elect to remain in the current program (instead of enrolling in a new private sector Medicare health plan).

The President’s budget also declares that the Administration will be coming forward with legislative proposal to grant states more flexibility with respect to their Medicaid programs. Early indications are that the proposal would require states to continue to provide “comprehensive” benefits for all mandatory Medicaid populations, including children and adults with severe mental illness receiving Supplemental Security Income (SSI). States would then be given enhanced flexibility for services to “non-mandatory” Medicaid populations. NAMI will be closely monitoring development of the Bush Administration’s Medicaid reform proposals as they are submitted to Congress.  An outline of the plan is available here.

Finally, the President’s FY 2004 budget contains a previously announced 5-year $1.75 billion proposal to promote transition of people with disabilities (including children and adults with severe mental illnesses) from institutional settings into the community. This proposal is part of the President’s New Freedom Initiative. Details on this proposal were included in a January 31 NAMI E-News message.

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