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July 29, 2003

DETAILS OF THE HOUSE-PASSED FY 2004 VA-HUD SPENDING BILL (HR 2861)

HOUSING PROGRAMS

1) HUD Section 811 Funding Frozen, No New Funds Added for Rent Subsidy Renewals
The Senate VA-HUD bill includes level funding for the HUD Section 811 program, bringing the program at $250.57 million.  This is just slightly ($55,000) more than the Bush Administration's request for the program for FY 2004 ($250.515 million).  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 a critical source of funding for housing for non-elderly adults with severe mental illnesses. 

HR 2861 keeps in place the current balance in the 811 program between funding for non-profits for capital and project-based assistance and tenant-based rental assistance (75% for capital/project-based and 25% for tenant-based).  Tenant-based rental assistance, also known as a voucher, provides a monthly rent subsidy to eligible low-income tenants, thereby allowing them to select their own housing in the community (typically without supports linked to the housing).  By contrast, capital advances and project-based assistance are direct assistance to non-profit sponsors to increase the stock of affordable housing for specific populations and typically involve linking support services directly to the housing. 

In FY 2004, both the capital advance/project-based and tenant-based ("mainstream") sides of the Section 811 program will continue to face a growing challenge with respect to 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 from the Section 811 program.  For the capital advance/project-based side, HUD estimates that as much as $8 million will be needed to renew expiring project- based rent subsidies (also known as PRACs).  However, Congress expects as much $5.9 million to be available in carryover funds from FY 2003 for PRAC renewals that can be used in FY 2004.

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 in FY 2003 for Section 811 tenant-based renewals ($32 million).  The end result is that the burden for renewing project-based and tenant-based rent subsidies is expected to drain off as much as $50 million from the Section 811 program in FY 2004, funds that cannot be used for new housing so long as Congress freezes overall funding for Section 811. 

The result is that HR 2861 anticipates $213.3 million will be available in FY 2004 for new capital grants and PRACs  for non-profits and tenant-based "mainstream" vouchers ($2.8 million more than in FY 2003).  Because the carryover of funds for PRAC renewals from FY 2003, only $42.7 million is included in the House bill for FY 2004 funding for renewal of expiring PRACs and tenant-based vouchers.  Finally, HR 2861 directs HUD to transfer $470,000 in funds from Section 811 for the "Working Capital Fund" to upgrade the agency's data and information systems. 

2) Homeless Funding Increased, Shelter Plus Care Renewal Funding Added
The House VA-HUD bill includes a $24.96 billion increase for federal homeless programs under the McKinney-Vento Homeless Assistance Act, bringing the program's funding up to $1.242 billion.  This is $83 million below what the Bush Administration requested for FY 2004.  This difference is due in large part to the House's inability to fund an additional $50 million in FY 2004 for the Bush Administration's "Samaritan Initiative" to end chronic homelessness over the next decade.   

McKinney-Vento 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 and transitional housing programs serve currently or former homeless adults with severe mental illnesses and/or co-occurring substance abuse disorders.

HR 2861 continues the current policy of establishing a minimum 30% 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 bill would also continue the 25% local match required for services).  The House bill requires HUD to ensure that all expiring rent subsidies under the Shelter Plus Care (S+C) program are renewed (HUD estimates that this will cost $194 million in FY 2004).  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 1990s are now coming up for renewal.  HR 2861 contains language specifically directing HUD to ensure that all expiring S+C rent subsidies are renewed in FY 2004.  During debate on by the House on July 25, an amendment offered by Representatives Barbara Lee (D-CA) and Jan Schakowsky (D-IL) to restore $83 million in FY 2004 funding for McKinney-Vento programs – as recommended in the President's budget – was rejected 192-232.
 
3) Section 8 Vouchers Targeted to People With Disabilities
The House VA-HUD Appropriations bill rejects the Bush Administration request for $36 million in FY 2004 for new Section 8 tenant-based vouchers for non-elderly adults with disabilities (including people with severe mental illnesses).  The President and HUD Secretary Martinez had made this request as part of the FY 2004 budget to ensure funding for new 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." 

It is important to note that even in the absence of funding for new disability vouchers in FY 2004, PHAs and private owners of assisted housing are continuing to designate properties as "elderly only" and off limits to non-elderly people with disabilities.  The absence of new funds for these vouchers means that there will likely be no alternative resource available for prospective tenants that are ineligible to reside in these properties because of their disability (including mental illness). 

HR 2861 includes an overall allocation of $18.43 billion for the Housing Certificate Fund (HCF), also known as the Section 8 program.  This is more than $1.3 billion above the FY 2003 appropriation and is (according to the report accompanying HR 2861) enough to renew every expiring Section 8 voucher in FY 2004.  However, outside estimates have questioned this assumption and during debate on July 25, the House voted 217-208 to transfer an additional $150 million from the "Working Capital Fund" (HUD's information technology systems) to the Section 8 renewal account.  Finally, HR 2861 contains no funding for the Bush Administration's HANF (Housing Assistance for Needy Families) proposal to allow states to take Section 8 funds as a block grant.

VETERANS' PROGRAMS
The FY 2004 House VA-HUD Appropriations bill funds overall spending for the Veterans Health Administration (VHA) at $27.2 billion, the same amount as requested by President Bush.  This is a $1.4 billion increase over FY 2003.  However, this $27.2 billion total is $1.8 billion below what House leaders agreed on this past spring as part of the FY 2004 budget resolution.  At that time, House Veterans' Affairs Committee Chairman Chris Smith (R-NJ) received a commitment from House leaders for at least $29 billion for veterans' medical care. 

During debate on HR 2861, the House set aside two separate amendments offered by Chairman Smith that would have added this promised $1.8 billion increase.  These amendments were ruled out of order since each would have pushed overall spending for the VA-HUD Appropriations bill above the $90 billion aggregate ceiling allowed for the bill.

The $27.2 billion total for the Veterans' Health Administration includes just under $18 billion for direct medical services for veterans, $4 billion for VA facilities and $5.1 billion for medical administrative costs.  The bill also includes $408 million for medical research, a $10.6 million increase over FY 2003.  The House bill rejects several controversial Bush Administration proposals for fees and collections from certain non-service connected veterans using the VA health system.  Specifically, the President assumed $1.5 billion in collections from certain veterans and $264 million in user fees for non-service connected veterans.  On July 21, the House Appropriations Committee stripped these proposals from the bill. 

The VA medical care system is one of the largest providers in the nation of both inpatient and outpatient psychiatric care.  It is estimated that 454,598 veterans have a service connected disability due to a mental illness.  Of great concern to NAMI are the 130,211 veterans who are service connected for psychosis (104,593 of whom were treated in the VA for schizophrenia, according to 1999 data).  The report accompanying HR 2861 includes a specific directive to the VA to ensure that no fewer than two new Mental Illness Research Education and Clinic Centers (MIRECC) in VISNs which currently do not have a MIRECC and have a hospital with an already strong mental health care program.  This report also urges the VA to continue to increase the number of Mental Health Intensive Case Management (MHICM) teams and to fully staff existing teams.  These MIRECC teams are part of an ongoing VA strategy to ensure that any savings derived from the closure of inpatient psychiatric beds be transferred into community-based treatment services for veterans with severe mental illness, and not to programs serving lower priority veterans.

Finally, HR 2681 contains a directive for the VA to ensure that each VISN follow through on plans to implement mental health services in each Community Based Outpatient Clinic (CBOC).  This directive grows out of concern (shared by the NAMI Veterans Committee) that many CBOCs provide only the minimal levels of basic mental health services.  In its report accompanying HR 2861, Congress recommends that the VA expedite their ability to provide better care by increasing the mental health capacity of CBOCs.


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