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House Committee Reports Spending Bill for Veterans and Housing Programs – Increases Included for VA Medical Care & HUD Section 8, Cuts for All Other Housing Programs

July 27, 2004

Last week the House Appropriations Committee approved a massive $92.9 billion spending bill that includes the FY 2005 budgets for the Departments of Veterans Affairs (VA), Housing and Urban Development (HUD) and numerous independent agencies. The entire bill is 2.4% above spending levels for the current fiscal year (FY 2004). However, because of the big increases needed for veterans’ medical care and the HUD Section 8 voucher program, all other agencies and programs in the bill were cut by as much as 4.3%. This is because of the strict limits governing all discretionary spending bills for FY 2005, a process that is forcing unpopular trade-offs.

The future of this VA-HUD spending bill is very much in doubt. The Bush Administration has issued a preliminary veto threat as a result of cuts proposed for NASA and space exploration. Moreover, when Congress returns from its summer recess in September, it is unlikely that the bill will see further action in either the House or the Senate. Instead, it is expected that the VA-HUD bill will be folded into an "omnibus" appropriations bill that will be taken up after the presidential election in November.

In the meantime, it is important for NAMI advocates to keep pressure on Congress:

  • to maintain the increases for veterans’ medical care proposed in the House bill,
  • to resist further cuts to housing programs that serve people with mental illness – including Section 811 and McKinney Homeless Assistance grants, and
  • to fully fund the Section 8 rental voucher program and reject efforts to convert the program to a block grant.

To view NAMI testimony to the House Appropriations Committee on the FY 2005 VA-HUD Appropriations bill, click here.

Details on the House FY 2005 VA-HUD Appropriations Bill

Housing

Section 8 – The good news is that the House bill largely restores the $1.6 billion in cuts to the Section 8 rental voucher program that had been proposed by the Bush Administration. The President’s proposed budget for Section 8 would have left HUD and local housing agencies $1.6 billion short of funding needed to renew every voucher under lease. Additionally, the House bill largely rejects the President’s "Flexible Voucher" proposal to "block grant" the Section 8 program. NAMI opposed this proposal that would have eliminated current requirements for housing agencies to target rental vouchers to extremely low-income households (those at 30% of median income and below) and allowed agencies to impose time limits on rental assistance.

Section 8 is a critically important housing resource for individuals with severe mental illnesses who depend on Supplemental Security Income (SSI) for basic needs. SSI beneficiaries are (on average) at only 18.5% of median income and must pay (on average) 105% of their monthly income to rent a modest 1-bedroom apartment. Access to a Section 8 voucher – which pays the difference between actual rental costs and 30% of the recipient’s income – is critically important to getting and keeping housing in the community.

Specifically, the House VA-HUD bill funds the Section 8 program at $14.7 billion, $491 million over FY 2004 and $1.56 billion above the President’s request. This includes $13.3 billion for Section 8 voucher renewals, $581 million, or 5% over last year, and $1.5 billion over the Bush Administration’s request. For the project-based side of the program, the House bill includes $5.3 billion, or $270 million over current year funding, which $10 million below what the President requested. Note – project-based rent subsidies are tied to the actual housing unit (as opposed to an individual tenant) and are not portable.

At the same time, the House bill does include language for "budget basing" of the Section 8 program. This appears to remove the obligation for local housing authorities that administer Section 8 to renew every voucher they have under lease. NAMI is concerned that this "budget basing" proposal could create enormous incentives for housing agencies to avoid using their Section 8 program to serve individuals living on SSI whose vouchers cost more to renew because of their extremely low incomes.

Section 811 – As noted above, the increases included in the House bill for VA medical care and Section 8 result in every other agency and program in the bill facing an across the board reduction BELOW current levels. For programs at HUD, this is a 4.3% reduction. In the case of the HUD Section 811 program, this translates to a cut of $11.092 million below the program’s FY 2004 level – reducing funding from $249.092 million, down to $238 million. Further, because of the costs associated with renewing both existing rent subsidies under the program ($28.89 million for tenant-based, and $2.349 million for project-based PRACs), funding available for new 811 projects and vouchers will be further squeezed.

It is important to note that the report accompanying the bill takes HUD to task for providing unreliable estimates of the anticipated costs of renewing Section 811 tenant-based rent subsidies. As a result, the bill proposes to limit funding for new 811 tenant-based assistance to $10 million. This would largely exempt the capital/project-based side of the 811 program (funding for non-profits to develop new units) from cuts -- $196.311 million would be available for the FY 2005 competition.

Homeless Assistance – The House bill would fund programs under the McKinney Homeless Assistance Act at $1.206 billion, $53.525 million below current levels and $76.4 million below the Bush Administration’s request. Among the programs funded under the McKinney Act are Emergency Shelter Grants, Supportive Housing (SHP), Section 8 moderate rehabilitation (SRO) and Shelter Plus Care – all critical resources serving homeless individuals with severe mental illnesses and co-occurring substance abuse disorders. As with the Section 811 program, the proposed cut to homeless assistance is driven by the increases required for veterans’ medical care and Section 8. As in past years, the House bill fully funds renewal of all expiring Shelter Plus Care rental subsidies and keeps in place the 30% minimum requirement for permanent housing development and the 25% local match requirement for services.

Veterans Medical Care

The House bill provides total funding of $30.3 billion for the Veterans Health Administration for 2005. This includes $19.5 billion for VA medical services; $4.7 billion for medical administration; $3.7 billion for VA medical facilities and $385 million for VA medical research. This is $1.2 billion more than President Bush requested and $1.9 billion above current year funding. The House bill rejects several controversial Bush Administration proposals for fees and collections from certain non-service connected veterans using the VA health system.

The House bill does not set a specific budget for mental illness treatment services within the VA – the largest single provider of psychiatric treatment in the nation. Of great concern to NAMI are the estimated 117,000 veterans who have a service-connected impairment for psychosis and the more than 180,000 who are service-connected for Post Traumatic Stress Disorder (PTSD). In 2002, more than 750,000 veterans received mental health services from the VA (about 17% of veterans served by the VA). During this same period, the VA provided care to more than 206,000 veterans with psychosis, 97% of whom were high priority on the basis of their low-income status.


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