Subcommittee on Housing and Transportation


Oversight Hearing on Consolidation of HUD's Homeless Assistance Programs

9:30 a.m., Tuesday, May 23, 2000 - Dirksen 538

Prepared Testimony of Mr. Fred Karnas
Deputy Assistant Secretary for Special Needs Programs
Department of Housing and Urban Affairs


Mr. Chairman and Committee members, thank you for the opportunity to represent Secretary Cuomo and the U.S. Department of Housing and Urban Development today. There is no question that homelessness remains one of the most pressing social problems facing this nation. You are to be commended for your interest in finding ways to improve our nation's response to this crisis.

Thank you also to my fellow panelists. I have worked with all of their organizations for many years and, while we may differ in some respects on the appropriate policies to end homeless, there is no question we share a common commitment to ending this American tragedy.

Mr. Chairman, as you know, addressing homelessness has been a top priority throughout President Clinton's administration. The President has consistently sought and Congress has granted increases in HUD's homelessness assistance budget and the Administration has transformed the way the Federal government, in cooperation with our local governmental and non-profit partners, is attacking homelessness. Almost universally, communities argue that this approach, called the Continuum of Care, has been a successful tool for addressing the needs of persons who become homeless because it balances local decision-making and flexibility with strong national performance goals. For this reason, HUD strongly opposes moving from the current Continuum of Care performance-based approach to a formula-based process of distributing homelessness assistance funds.

To understand why the Department feels so strongly, it is important to be aware of both the philosophical foundation of the Continuum of Care approach and the practical results of this process.

The Continuum of Care initiative had its genesis in President Clinton's May 1993 Executive Order calling for a "single coordinated Federal plan for breaking the cycle of existing homelessness and for preventing future homelessness." The Interagency Council on the Homeless, a working group of the Domestic Policy Council chaired by the Secretary of HUD and co-chaired by the Secretaries of the Department of Health and Human Services and the Veterans Affairs, was charged with carrying out the mission by reviewing existing programs and identifying areas for improvement. The Continuum of Care emerged from this interagency effort. The primary initiator was HUD's Office of Community Planning and Development (CPD), under the leadership of then-Assistant Secretary Andrew Cuomo. CPD had the lead administrative role in both staffing the Interagency Council and operating HUD's homelessness assistance programs.

The process began in June 1993 when CPD conducted the first of 18 interactive forums throughout the country to solicit comments and insights from the homelessness assistance community. By the time the last of these forums was held in February 1994, HUD had heard from thousands of not-for-profit providers of services and housing, advocates, economic and community development leaders, state and local government officials, and homeless and formerly homeless persons. To supplement the input from the forums, HUD sent a questionnaire to more than 12,000 organizations and individuals asking for recommendations. HUD then completed an analysis of the problem and, in cooperation with its federal partners, crafted a plan of action, entitled Priority: Home!! The Federal Plan to Break the Cycle of Homelessness.

Forum participants and survey respondents reported that there was little or no comprehensive planning at the local level, that their efforts to address homelessness remained fragmented, and invariably their focus was on short-term emergency assistance. HUD, which administers more than 80 percent of the targeted homeless funds, proposed a two-fold response. First, implement the Continuum of Care as a new, seamless system for providing both housing and services to help homeless people - with a special emphasis on achieving independence and self-sufficiency. Second, increase federal funding to adequately address the problem of homelessness. This two-track proposal was adopted as the centerpiece of the Federal Plan.

It is one thing to propose a new policy; it is another to implement it. A new set of administrative procedures and program reforms was required. Instead of focusing solely on the quality of an individual project with no connection to the larger community's efforts to address homelessness, HUD staff developed ways to reduce fragmentation at the local level. Programs were retooled and, within the limitations of the existing statutes, a process was designed that provided incentives for collaborative planning and local priority setting - but still ensured that national performance measures would be met.

The Continuum of Care strategy fundamentally challenged both the perceptions of and solutions to homelessness while revolutionizing America's response to the problem in several fundamental ways:

First, it redefines homelessness as more than simply a housing problem - and re-focuses attention beyond "band-aid" fixes to long-term solutions. Priority: Home! The Federal Plan to Break the Cycle of Homelessness acknowledged that homeless people need housing, but often also need other support services including job training, drug treatment, mental health services, and domestic violence counseling.

Second, it encourages communities to develop a comprehensive plan - The Continuum restructures the relationship among federal, state and local governments, nonprofits, and other community stakeholders by engaging citizens in a common planning process to craft a comprehensive system of housing and services for homeless persons.

Third, it awards "performance-based grants." A successful Continuum of Care includes: (1) outreach; (2) emergency shelter; (3) transitional housing with appropriate services; and (4) permanent housing or permanent supportive housing. While not all homeless people need access to each component, all four must be present and coordinated within a Continuum of Care. A winning application is one that focuses on a coordinated community-based strategy that emphasizes independence and self-sufficiency to the maximum extent possible.

A 1996 study by the Columbia-Barnard Center on Urban Policy confirmed the impact of these changes through a series of case studies of local communities. Among their findings:

The concept of "community participation" has expanded, bringing together a broad-based group of public and private stakeholders. In the past, these stakeholders did not have the incentive to plan together.

HUD has created valuable fiscal incentives for communities to think "outside their boxes," to define the structural causes of homelessness. Further, this policy encourages communities to design comprehensive systems of housing and services to help homeless people find permanent housing and prepare for independent community living.

This has required community groups to take the time to develop a deeper understanding of existing local resources, needs, service gaps and funding priorities. Communities are rewarded for planning proactively rather than relying on traditional reactive, crisis-oriented responses.

Since the inception of the Continuum of Care policy HUD has regularly engaged in a dialogue with our non-profit and governmental partners that has further refined and improved the Continuum of Care process. In 1996, we asked communities, as part of their Continuum of Care application, to prioritize the projects they would like funded in their communities, recognizing that local decision-makers had much more knowledge than the Department to decide which projects should be funded first, or which ones needed to be funded before others to make the service system work. In 1997, communities were given the responsibility of determining how renewals should be funded. This year, based on dialogue with our local partners, we are asking for legislation in the President's budget that would further improve the way permanent housing renewal projects are funded by automatically funding them out of the Section 8 Housing Certificate Fund, ensuring that these critical investments are preserved.

It is no secret that early on in the implementation of the Continuum of Care policy, the Department had serious concerns about the management aspects of the annual application process that includes over 400 Continuums and 3,000 project applications. However, over the years, the Department has instituted internal changes in the process, including computerizing significant portions of the process, that have mitigated some of the early concerns. Currently, we believe we have achieved an appropriate balance between the management demands of the process and our programmatic goals of ensuring national performance standards.

The result of the policy and management changes are significant:

The number of communities that have replicated the Continuum of Care approach continues to increase. Since 1993, HUD's primary strategy has been to foster the Continuum of Care by including it within the framework of the agency's Consolidated Plan, undertaken by every large community and State in the nation. As a result, 83 percent of the U.S. population currently resides in communities with Continuum of Care strategies. HUD's target for the year 2002 is 86 percent. Our most recent tally indicates that 646 cities 1,860 counties and two territories are covered by Continuums (many continuum partnerships include multiple counties).

The number of transitional and permanent housing units linked to supportive services has increased significantly. Increasing the number of formerly homeless persons in programs that provide transitional and permanent housing with supportive services (e.g. job training, counseling and mental health services) is a clear indicator of success. With the inception of the Continuum of Care, HUD has significantly increased the number of these units (units with services) funded. As of 1999, HUD has funded approximately 235,000 such units. This figure is up from an estimated 164,000 in 1996. The number is expected to grow to over 258,000 by the end of 2000.

The number of formerly homeless persons moving from transitional housing to permanent housing has increased significantly. Helping more homeless people access and remain in permanent housing is the ultimate goal of the Continuum of Care effort. Transitional housing provides shelter and supportive services for up to two years, although clients are often ready to move well before the end of the two-year time limit. It is critical that permanent housing be available when persons are ready to move from transitional housing. Well over 300,000 people have moved to permanent housing as a result of HUD's Continuum of Care funding. The number of persons with disabilities - including mental illness, substance addiction, HIV/AIDS, other physical disabilities - being assisted increased from 2,816 in 1992 to over 69,000 in 1999.

The funding base for homelessness assistance has been significantly broadened. A key factor in a community's success in obtaining Continuum funding is its ability to leverage additional public and private dollars. States, cities and counties, as well as non-profit organizations, foundations, and businesses provide leveraged resources in two ways. First, there are statutory match requirements for Continuum of Care funding. This program feature encourages local Continuum of Care programs to seek, find and secure public and private resources to develop needed housing and service programs.

Second, HUD strongly encourages communities to bring other supplemental resources to bear in assisting homeless persons. HUD provides additional points during the competitive review process to applications based on the amount of leveraging obtained for proposed projects. These supplemental resources provide a vital source of assistance to the projects. Examples of supplemental resources include: donated buildings, equipment, materials, and services, such as transportation, health care, and mental health counseling. This year HUD has further incentivized leveraging by providing additional points to those applications that show a real connection between HUD Continuum of Care funding and other mainstream federal resources intended to assist low income persons, such as TANF, Medicaid, and mental health block grant funding.

In 1999, every dollar of funding awarded by HUD was matched by more than two dollars in resources provided by communities through leveraging ($1.8 billion). The Barnard-Columbia report suggested that one of the keys to the increase in leveraging is the inclusive process required to develop a thorough continuum.

Mr. Chairman, the success of the Continuum of Care has translated into significant funding for excellent projects in your home state. In 1999, seven Continuums in Colorado were awarded just under $8.5 million to fund projects like a new Shelter Plus Care project for homeless Veterans in Pueblo, housing for homeless young mothers in Denver, and several critical housing and service projects sponsored by the Colorado Coalition for the Homeless.

Nearly as important as what the Continuum is accomplishing is how it is accomplishing its goals - by bringing people with energy and vision together, focusing them on common goals, and rewarding innovative solutions. In any given community, HUD encourages and funds an array of programs that provide mental health services, health care, substance abuse treatment, and day care services - all connected to housing. Federal dollars are maximized by local dollars. Agencies are working together - not at cross-purposes.

It is based on these successes that the Department strongly opposes any effort to move to formula driven approach to allocating HUD's homelessness assistance resources. As I stated earlier, through continuing dialogue with our local partners, we believe we have struck the appropriate balance between the programmatic goal of consistent and aggressive national performance standards to break the cycle of homelessness and the day-to-day management needs of the Department.

The Department does agree with the General Accounting Office's testimony regarding the need to streamline the various HUD McKinney programs and make program rules more consistent across programs. These changes can easily be made without moving to a formula-based approach, which we believe would result in:

a disruption in the current local planning processes that have built a level playing field involving equal participation by a wide variety of stakeholders, from service providers and homeless persons to businesses and local government.

a disincentive for bringing other dollars to the fight against homelessness. As stated earlier, the current competitive process serves as a powerful tool for leveraging other private and public funding to address homelessness.

reduced accountability. The current competitive process establishes clear performance expectations and rewards those who perform. This approach has resulted in an almost universal improvement in the quality of both local homelessness assistance systems and individual projects. There are numerous examples of communities that, after losing in the competition because they did not take the effort to address homelessness seriously, have sought technical assistance from the Department and developed significantly improved homelessness assistance systems. A formula-based approach guarantees funding with no incentive for improving the quality of the system, and reduces long-term accountability for program performance against national standards.

The success of the Continuum of Care approach had been acknowledged by many, from mayors like Dennis Archer in Detroit and Alexander Pinellas in Miami-Dade County to advocates like Sue Marshall here in the District of Columbia, to the Harvard-Ford Foundation Innovations in Government program which selected the Continuum of Care as one of the 10 top government innovations in 1999.

But even more importantly, it has transformed the lives of hundreds of thousands of homeless persons. Put simply, the Continuum of Care save lives. People who are homeless are the poorest of the poor -- people who literally have nowhere else to go. More than 400 partnerships across the country have replicated the Continuum of Care, and each one has a story to tell about people who have been rescued from joblessness, abuse, violence, drugs, and even death as a result of the care and services of the Continuum system. In Boston, a man who was living in "the weeds" received help for a medical condition and is now a shelter volunteer living in his own apartment. A woman in Alexandria, Virginia who had been homeless and addicted to drugs for years was helped to overcome her substance abuse problem and develop new job skills through a HUD-funded transitional housing program. Today she is drug free, cares for her children, works as a Federal contractor, and owns her own home. In Colorado, a veteran who had spent 18 years on the streets received support from Continuum of Care programs, which allowed him to obtain a home and rebuild his relationship with his family. And for children who are homeless - for whom it is often difficult to go to school - the Continuum of Care, along with other Federal, state, and local programs, is helping them get off to a better start in life.

We believe this the time to build on this success, not dismantle it in favor of an untested approach.

We look forward to working with you in our common effort to end homelessness in this nation.


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