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White House Releases FY 2003 Budget Proposal, $105 Million Increase Proposed for NIMH, $7 Million Increase Proposed for PATH, Freeze Proposed for Mental Health Block Grant

As is being widely reported in the press, President Bush today laid out his $2.12 trillion budget plan for FY 2003 - with major increases proposed for defense, homeland security and 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 2003 that Congress will act on through appropriations bills that must be enacted by October 1, 2002.

Overall, President Bush is proposing to increase federal discretionary spending by 9%. However, only specific priorities - defense and homeland security in particular - will reach this level for increased spending. These huge increases mean that most other federal discretionary agencies will receive increases of only 2% -- in most cases barely enough to keep pace with inflation. Further, for the first time since 1997, the federal government is projected to run a deficit in FY 2003 under the President’s plan.

Further details on the President’s FY 2003 budget plan is available at: http://www.whitehouse.gov/omb/budget/fy2003/index.html.

NIMH

For FY 2003, the President is proposing $1.359 billion for scientific and clinical research at the National Institute of Mental Health (NIMH). This is a $105 million increase over the agency's FY 2002 appropriation of $1.254 billion - a proposed 7.8% boost. The President is proposing an overall increase for NIH of $3.71 billion in FY 2003 (up nearly 14% to $27.3 billion). This would complete the bipartisan goal of doubling the NIH budget over the five-year period of 1998 to 2003.

However, it appears that the 7.8% increase for NIMH places the agency far below the overall recommended percentage increase for the entire NIH. In recent years, as Congress has significantly enlarged federal investment in biomedical research, increased funding at NIH has been evenly distributed across each institute. However, in this year’s budget request, the Bush Administration is proposing to direct more than half of the increase at NIH to two priorities: bioterrorism and cancer. The result is that two institutes, Cancer (NCI) and Allergy and Infectious Disease (NIAID), receive substantially larger increases than all other NIH institutes. As Congress moves forward with deliberations on the FY 2003 budget, NAMI will be advocating a percentage increase for NIMH that, at the very minimum, is equal to the average percent increase for the other NIH institutes.

CMHS

The Administration's budget proposes to increase funding for the PATH program by $7 million, up to $46.9 million (a 17% increase). PATH is 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 163,000 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, VA and Labor.

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), Childrens Mental Health ($96.7 million) and PAIMI protection and advocacy ($32.5 million). The Administration is also proposing a $7 million reduction for CMHS's own $230 million discretionary budget - known as “Projects of Regional and National Significance.” The Administration’s budget notes that these reductions would be achieved through “efficiencies” within existing CMHS research programs.

Finally, the Administration’s budget proposes a $127 million increase for substance abuse treatment programs at the Center for Substance Abuse Treatment (like CMHS, part of SAMHSA). This includes a $60 million increase for the Substance Abuse Block Grant for FY 2003, boosting funding up to $1.8 billion.

HUD

The Bush Administration is proposing a $2.1 billion increase for the Department of Housing and Urban Development (HUD), bringing total HUD spending to $31.5 billion. For the Section 811 program the Administration is proposing to increase funding by $10 million, up to $251 million. The 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. 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 2003, 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 $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 is an increase of $9 million over the amount Congress allocated for the current fiscal year for Section 811 mainstream renewals ($23 million). The Bush Administration’s budget proposes to fund all of these rent subsidy renewals through the Section 811 program, rather than through the much larger $17.5 billion Housing Certificate Fund as all other existing Section 8 vouchers are renewed.

The President’s budget proposes to continue separate funding of $40 million for Section 8 vouchers for non-elderly people with disabilities adversely affected by designation of public and assisted housing as “elderly only.” Under the proposed budget, this funding would come from a separate request of $204 million for 34,000 new Section 8 (“incremental”) vouchers. 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).

For homeless programs, the President's budget is proposing a $7 million increase in funding for the McKinney-Vento Homeless Assistance Program, up to $1.13 billion. The Bush Administration’s budget includes a new plan to end chronic homelessness within 10 years. Surveys indicate that as many as 200,000 persons experience chronic (as opposed to short-term or episodic) homelessness. Numerous studies have made clear that individuals with severe mental illness and co-occurring substance abuse disorders are disproportionately represented among this chronic homeless population. In the budget, the Bush Administration is proposing to consolidate programs from the Federal Emergency Management Agency and the Department of Veterans’ Affairs.

The budget also proposes to maintain the 30% permanent housing set aside and 25% local services match in place as part of the McKinney-Vento program. The permanent housing set aside and the local services match have been important factors in persuading states and localities to invest their federal homeless funds in permanent supportive housing through programs such as Shelter Plus Care. Unfortunately, the President’s budget does not include the other critical element in promoting long-term investment in permanent supportive housing for homeless individuals with severe mental illness - renewal of expiring rent subsidies under the Shelter Plus Care program. It is expected that as much as $95 million will be needed in FY 2003 to renew all expiring rent subsidies under the Shelter Plus Care program. Without these funds, many communities will not be able to keep their Shelter Plus Care housing operating, or will not be able to fund new permanent supportive housing, thereby preventing further progress in ending chronic homelessness.

VA

In the State of the Union last week, President Bush vowed to approve a historic increase in spending for veterans' health. The President's FY 2003 budget includes an increase of about $1.5 billion in medical care spending for the Department of Veterans’ Affairs, bringing the budget to $23.5 billion. This is a 7% increase over the FY 2002 budget of $21.3 billion appropriated by Congress last year. 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 his top priorities to include improving the disability claims process, enhancing the coordination of care that is delivered through the VA and the Department of Defense, and focusing resources on treating disabled and low income veterans. 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 $24.5 billion, $1 billion more than the Bush Administration request.

The Bush Administration’s proposed budget also proposes $409 million for VA medical research, a 10% increase (or $38 million) over the FY 2002 level of $371 million. VA research programs have made important contributions in the areas of medicine and health that benefit veterans with severe mental illnesses. The Independent Budget for the VA recommends an increase in medical research at the VA to $460 million.

Employment and Rehabilitation

The President FY 2003 budget contains a major initiative to restructure dozens of job training and rehabilitation programs that exist across numerous federal agencies including Departments of Education, Labor, Veterans’ Affairs and HHS. Included in this proposal is a plan to increase funding for state grants to state Vocational Rehabilitation (VR) agencies by $134 million - up to $2.616 billion (a 5.4% boost). This would be done by consolidating programs under the jurisdiction of the Rehabilitation Services Administration (RSA) at the Department of Education such as Supported Employment ($38.2 million) and Projects With Industry ($22.9 million). In addition, the President’s budget proposes to set up a new $30 million state incentive bonus program to reward state VR agencies that meet and exceed performance measures for placing individuals with disabilities into competitive employment. This proposal would likely further reward state VR programs that avoid serving people with more severe disabilities - particularly individuals with severe mental illnesses.

The President’s budget proposes to increase funding for the Office of Disability Employment at the Department of Labor by $9 million, up to $47 million. This office coordinates federal policy and funds demonstration programs designed to address the very high unemployment rate among people with severe disabilities - estimated as high 80% for individuals with severe mental illnesses. Finally, the Bush Administration’s budget proposes $40 million in FY 2003 for activities at the Social Security Administration to continue implementation of the 1999 Ticket To Work and Work Incentives Improvement Act (TWWIIA). The budget also continues funding for state infrastructure grants to support outreach programs and TWWIIA state Medicaid buy-in programs.

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. Many of these proposals were put forward in 2001 and have been revived or amended for 2002. Many require action by Congress in order to be implemented such as reforming and adding an outpatient prescription drug program to Medicare ($190 million over 10 years) and expanding tax credits for the purchase of health insurance for the uninsured. The budget also notes that SSA and the Centers for Medicare and Medicaid Services (CMS) will be developing a legislative proposal for a more accurate standard with respect to SSI disability awards (and related Medicaid coverage).

However, some of these health care initiatives can be implemented without congressional approval and will require additional funding in FY 2003. Among these are $15.6 million for the President’s New Freedom Initiative to promote community integration for people with disabilities (including a new home and community-based waiver program for children residing in psychiatric residential treatment centers). More information on the New Freedom Initiative is available at: http://www.hhs.gov/newfreedom.


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