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February 18, 2003

Congress Completes Action on 2003 Omnibus Appropriations Bill, Legislation Covers Current Year Spending for Mental Illness Research & Services, Housing & Veterans Programs

Late last week Congress completed action on a massive $397.4 billion omnibus spending bill for FY 2003 that includes current year funding for federal agencies supporting mental illness research, community services, housing and veterans programs. This omnibus spending bill (HJ Res 2) contains 11 separate spending bills (known as appropriations) for the remaining months of the current 2003 fiscal year, which actually began on October 1, 2002 and will run through September 30, 2003. President Bush’s signature on this massive spending bill brings an end to the most drawn out process for passage of legislation covering federal agency budgets in recent memory.

In order to accommodate additional spending for Medicare payments to physicians and hospitals, special education and implementation of a new election reform law, lawmakers agreed to a .65% across-the-board cut to all federal agencies in order to try and stay under an overall limit demanded by President Bush. In a few narrow instances, including veterans’ medical care, specific programs will be exempted from this across-the-board cut.

Included below are funding levels for federal agencies and programs of interest to individuals with severe mental illness and their families. It is important to note that these funding allocations are being made nearly five months into the current federal fiscal year. Since FY 2003 began on October 1, 2002, nearly all discretionary federal agencies and programs have been operating on a "continuing resolution" that has kept spending at FY 2002 levels.

It is also important to note that these totals do NOT include the .65% across-the-board reduction that congressional leaders and the White House agreed to in final negotiations. This .65% reduction is applied at the agency level. In enacting this small across-the-board cut as part of this massive spending bill, Congress has left agency directors significant discretion (and encouragement) to first look toward administrative costs and overhead before seeking reductions in direct services or grant payments to states and localities.

Highlights of the FY 2003 Omnibus Spending Bill

Mental Illness Research at NIMH

The final FY 2003 spending bill includes an 8.4% increase for the National Institute of Mental Health (NIMH), raising funding from its current level of $1,245.3 million, up to $1,349.8 million (a $104.5 million increase). This increase is part of the bipartisan effort, supported by President Bush, to complete the 5-year doubling of the National Institutes of Health (NIH) – raising annual NIH budget to $27 billion. While Congress met the goal of raising overall NIH spending to $27 billion for FY 2003, increases for the current fiscal year at several institutes lagged far behind those enacted in recent years. This is certainly the case with NIMH, its 8.4% increase for FY 2003 is far below the average 12% to 13% increases received from FY 1999 through FY 2002. This fall off for FY 2003 is the result of disproportionately large increases for bio-terrorism research at the National Institute for Allergy and Infectious Disease (NIAID) and a reallocation of funds from across NIH to the Centers for Disease Control (CDC).

Mental Illness Services Programs at CMHS

The FY 2003 Omnibus spending bill includes an overall 3.7% increase for programs at the Center for Mental Health Services (CMHS), part of the federal Substance Abuse and Mental Health Services Administration (SAMHSA). This includes modest increases across nearly all programs and priorities at CMHS. In some instances, these increases are above the President’s request for FY 2003 and were not included in previous House and Senate spending proposals. Among the increases for CMHS for FY 2003 are:

• a $7 million increase for the Mental Health Block Grant (MHBG), increasing funding from $433 million up to $440 million (the MHBG is the state formula grant program financing services for adults with severe mental illnesses and children with severe emotional disturbances),
• a $3.5 million increase for the PATH program (the formula grant program to the states funding services for homeless individuals with severe mental illnesses), boosting funding to $43.35 million (Note, this increase is actually $3.5 below the level recommended by President Bush and the Senate),
• a $2.2 million increase for the Childrens’ Mental Health program, up to $98.7 million, and
• a $1.5 million increase for the PAIMI (protection and advocacy) program, boosting funding to $34 million.

For CMHS’s discretionary budget (known as Programs of Regional and National Significance or PRNS), the final spending bill rejects a $7.5 million reduction that was proposed by the Bush Administration over a year ago. This included reductions that would have been achieved by discontinuing a number of technical assistance centers and new community action grant programs. Overall, Congress has allocated for $246 million for the PRNS program (compared to the program’s $226 million in FY 2002). Within the PRNS budget, Congress has included a number of set asides and requirements for new and ongoing activities at CMHS. These include:

• $95 million for school violence prevention,
• $30 million for children exposed to violence and terrorism experiencing PTSD,
• $5 million for the ongoing CMHS jail diversion program,
• $3 million for the CMHS suicide prevention center,
• $5 million for the 2^nd year of a new outreach and treatment program for older Americans diagnosed with mental illness,
• $1 million for new community action grants (CMHS grants to local mental health authorities and other non-profits for a range of activities including replication of evidence-based practices, co-occurring disorders and criminal justice), and
• $2 million to renew existing CMHS consumer technical assistance centers, with a requirement for the agency fund 5 such centers in FY 2003.

In addition, Congress has used this FY 2003 Omnibus Appropriations bill to direct CMHS to fund $8.9 million for 29 separate "earmarks" (i.e., specific projects in specific states and communities requested by members of Congress on behalf of their constituents. Among these projects are $400,000 for a early intervention program for children with mental illness in East Providence, RI, $400,000 for Ventura County, CA for criminal offenders with mental illness and $300,000 for implementation of Texas Medication Algorithm in Tarrant County, TX.

Finally, this omnibus spending bill includes an additional $3 million for FY 2003 for the Mental Health Courts program at the U.S. Department of Justice. These new funds are on top of a $5 million allocation for FY 2002 for which the Justice Department will soon announce funding awards.

Funding for Veterans’ Programs

The final Omnibus Appropriations bill includes a $2.5 billion increase for the Veterans’ Health Administration, raising total spending for VA medical care to $23.9 billion for FY 2003. This is $1.1 billion above the Bush Administration’s request for veterans’ medical care. In addition, the final agreement exempts veterans’ medical care from the .65% across-the-board reduction being applied to all federal agencies. The VHA budget includes funding for 172 medical centers and 876 outpatient clinics. The VHA is the largest systems in the country that provides 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).

Funding for Housing and Homeless Programs

The Omnibus Appropriations for FY 2003 contains funding for important housing programs at HUD including the McKinney-Vento Homeless programs, Section 811 supportive housing and the Section 8 rental voucher program. This includes funding to renew all expiring rent subsidies under the Shelter Plus Care program (permanent supportive housing for chronically homeless individuals with mental illness and co-occurring substance abuse disorders) and the Section 811 program (both tenant-based and project-based subsidies).

• Section 811 – For FY 2003, Congress has funded the HUD Section 811 program at $259 million, a $16 million increase over FY 2002. 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. This year’s budget will require HUD to keep in place the 25% limit that can be diverted to tenant-based rental assistance, as opposed to capital advances to non-profits and project-based rental assistance (the traditional form of 811 funding). For FY 2003, both the capital advance/project-based and tenant-based ("mainstream") sides of the Section 811 program face a continued 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 limited resources from the Section 811 program. For the capital advance/project-based side, HUD estimates that $6 million will be needed to renew expiring project- based rent subsidies (also known as PRACs). On the tenant-based "mainstream" side, HUD projects that $32 million will be needed in FY 2003 to renew expiring tenant-based rent subsidies that were originally funded in prior years. This $16 million increase for FY 2003 is not nearly enough to cover the $38 million needed for tenant-based and project-based renewals, i.e. as much as $12 million less will be available in FY 2003 for development of new housing units for people with severe disabilities.
• McKinney-Vento Homeless Assistance – Overall, Congress has appropriated $1.23 billion for federal homeless programs under the McKinney-Vento Homeless Assistance Act, a $102 million increase for FY 2003. 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. The new budget keeps in place the 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 (it also continues the 25% local match required for services). Included in this total is $193 million for renewal of all expiring rent subsidies under the Shelter Plus Care (S+C) program. However, no funds are included for renewal of rent subsidies under the SHP permanent housing program. Inclusion of funding for S+C renewals will ensure that thousands of formerly homeless adults with severe mental illnesses will not be placed at risk of losing subsidized housing through no fault of their own.
• Section 8 Vouchers – The final budget for FY 2003 does not include any funds to expand the existing allocation of Section 8 tenant-based vouchers for non-elderly adults with disabilities (including people with severe mental illnesses). This is a major disappointment given that the President’s budget requested $40 million for this purpose and a previous House spending bill for FY 2003 had included $36 million. Over the past five years, Congress has appropriated nearly $300 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." At the same time, the final budget does include a directive to HUD to ensure that previously allocated rental vouchers for people with disabilities remain targeted to this priority population in the case of turnover (i.e., when a recipient returns their vouchers to a housing authority).

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