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 Ms. Nan P. Roman
President
National Alliance to End Homelessness


Mr. Chairman, Mr. Kerry and members of the Subcommittee, I am honored that you have invited the National Alliance to End Homelessness to testify before you today on ways to make progress in the struggle to end homelessness in the nation. As you will see, the National Alliance to End Homelessness is convinced that not only could our nation do a better job of helping homeless people, but that ending homelessness is well within our reach. I look forward to working with you in pursuit of this goal.

The National Alliance to End Homelessness is a nonpartisan, nonprofit organization that was founded in 1983 by a group of leaders deeply disturbed by the emergence of a new social phenomenon - thousands of people living on the streets. It is important to remember that prior to the 1980s, there was not widespread homelessness in the nation. While there were certainly problems like mental illness, drug abuse, and deep and pervasive poverty, people experiencing these problems were able to find a place to live. But then the seeds of deinstitutionalization, loss of affordable housing stock, destruction of a million units of single room occupancy housing, new kinds of illegal drugs and an increase in poor, single parent households began to take root. And in the 1980s, they grew into homelessness. The absence of wide-spread homelessness before the 1980s is a reminder that homelessness is not inevitable. It has not always existed, and it does not have to exist now.

From its founding in 1983, the focus of the National Alliance to End Homelessness (the Alliance) has shifted as the problem of homelessness has changed. Once focused on food and shelter, today the Alliance and its 2,000 member nonprofit and public sector agencies and corporate partners in every state in the nation are focused on permanent solutions to homelessness.

Your hearing today is timely. The nation stands at a crossroads on the issue of homelessness. Down one path lies the institutionalization of a system which can manage but cannot eliminate homelessness - a system with direct costs of at least $2 billion per year and indirect costs far in excess of that. Down the other path lies an end to homelessness - the shift to an improved system that is results- and outcome-oriented. The choice between these two paths will be made over the next few years, and it will be made by you here in Washington, and in communities around the country. Let me explain.

Where We Stand on Homelessness

A recent federal report, based upon the most extensive survey to date of homeless assistance providers and their clients (conducted by the US Bureau of the Census) describes the situation. As of 1996 there were 40,000 programs to assist homeless people in the nation. This is an industry - an infrastructure of assistance that has largely been formed in the past ten years. It is also an industry that is based upon federal funding. With an infrastructure of this size and complexity, one might expect the size of the homelessness population to have been reduced. In fact, this is not the case. Despite this growing infrastructure of assistance, between 1987 and 1996 the size of the homeless population increased by as much as a quarter.

Is homelessness growing because the homeless system is ineffective? The answer is no. In fact, the homeless assistance system helps hundreds of thousands of people to escape homelessness every year. And it is becoming more effective. Through the Continuum of Care process much progress has been made, and the vast majority of people who become homeless exit the system relatively quickly and do not return. So, for most individuals, the existing system does end homelessness.

But, the homeless system cannot end homelessness overall, nor can it reduce the number of homeless people. This is because it can neither prevent people from becoming homeless, nor change the overall availability of housing, income, and services that will truly end homelessness. In other words, it cannot close the front door into homelessness, and it cannot open the back door out of homelessness.

Mainstream social programs, on the other hand, do have the ability to prevent and end homelessness. These are programs like welfare, health care, mental health care, substance abuse treatment, veterans assistance and so on. However, these programs are over-subscribed and under-funded. Increasingly, rather than being a true safety net that prevents people from becoming homeless, these mainstream systems shift the cost and responsibility for helping the most vulnerable people to the homeless assistance system. Perversely, the better the homeless system gets, the worse the mainstream system gets.

So there is a very dysfunctional situation that is quickly becoming institutionalized. There is a homelessness assistance system that manages the problem but cannot solve it. There is a mainstream system with far more resources that, instead of solving the problem, has more incentive to shift cost and responsibility to the homeless system.

If this dynamic is not changed, homelessness will never go away. If this approach to the problem is not altered, the American people will be paying to support the current system forever. How can this system be changed? Would the block grant proposal that is being considered help us make progress toward ending homelessness?

Ending Homelessness

To end homelessness, people will have to be prevented from becoming homeless - the front door to homelessness will have to be closed. In addition, homeless people will have to find somewhere to go when they exit the system - the back door out of homelessness will have to be opened. These are not unrealistic goals. They can be accomplished within the current parameters of the mainstream and homeless systems. But to do so will require four steps.

Planning to End Homelessness

First, jurisdictions and the federal government can plan to end, not simply to manage, homelessness. A preliminary requirement is much better data collection at the local level. Data can identify who is homeless, why they are homeless, how they use the homeless and mainstream systems, and what is effective in ending their homelessness. Based on solid data, jurisdictions can begin a planning process which brings to the table the mainstream programs and resources that are required to do the job.

Closing the Front Door into Homelessness

Second, to prevent homelessness the mainstream programs must be adjusted so that incentives favor helping the most vulnerable people rather than shifting this responsibility to the homeless system. Federally funded mental health, substance abuse, and veterans programs, as well as corrections are among those mainstream programs whose clients often become homeless. We ask your assistance to change this dynamic.

Opening the Back Door out of Homelessness

In terms of opening the back door, recent analysis of homelessness has revealed that while most people (perhaps 80%) who become homeless exit the system relatively quickly, the remaining 20% has a much more troubled experience. 10% of the single adult population (approximately 150,000 people) virtually lives in shelters. This group is also chronically disabled. It might seem that housing chronically homeless and chronically disabled people in shelter is a cost effective way of providing assistance. It is not. In New York City, for example, this 10% of the single population uses 50% of the City's shelter resources. The group is also costly to other public systems, being high users of hospital emergency and intensive care facilities, jails and prisons, and mental health beds. In addition to the 10% of the single population that is chronically homeless, an additional 9% lives in a combination of shelter, the street, jails and prisons, the homes of friends and relatives, and hospitals. This group also exacts a high public cost.

So how can the back door be opened more widely?

The 80% who exit the system quickly (both families and single adults) enter the system because they have had a housing crisis that has resulted in their homelessness. Despite the near universal shortage of affordable housing for poor people, they will find a way to house themselves. Since the homeless system is unable to address the real cause of their problem - the overall national shortage of affordable housing - its best course of action is to facilitate their accommodation to this shortage and help them make it more quickly. Accordingly, the Alliance recommends a "housing first" approach for most homeless people - getting them quickly back into housing and linking them with appropriate mainstream services - thus reducing their stay in shelter to an absolute minimum. Although people who become homeless typically need services, such services are more effective when they are delivered in permanent housing, rather than while people are in unsettled, temporary housing. (There are exceptions. For example families fleeing a domestic violence situation usually need a period of time in a sheltered and secure environment. Families in which adult(s) are just finishing treatment for substance abuse also need intermediate levels of supportive housing.)

For chronically homeless people, there is also an answer -- permanent supportive housing, usually preceded by outreach and some intermediate treatment/housing. Such housing is over 80% effective in achieving stability and is very cost effective. Approximately 150,000 units of such housing would essentially eliminate chronic homelessness, empty the system of those who live in it through no choice of their own, and change the dynamic of homelessness. This can be done by retaining the set-aside of 30% of the homeless funds for permanent supportive housing. Further, it will require that the renewal funding for these units (Shelter Plus Care and Supportive Housing - permanent program) be shifted to Section 8. This is probably the most significant step that could be taken to end homelessness. We ask your help to achieve it.

Building the Infrastructure

Finally, while it is certainly true that the homeless assistance system can shorten people's experience of homelessness, and that mainstream programs can be better targeted so that their clients and wards are not vulnerable to housing crisis, ultimately this must be done in the context of the larger systemic causes of homelessness. There is not enough affordable housing; earnings from employment and benefits have not kept pace with the cost of housing for poor people; and services that are needed for support and stability are not available to very poor people. Whatever is done must be done in the context of addressing these underlying needs.

The Federal Role

Accountability

So, there is a choice to be made - to go down the road of ending homelessness, which clearly is possible. Or to further institutionalize the current system that can manage, but not end, homelessness. In which direction does a block grant approach lead? Would a block grant help to turn the system in the direction of ending homelessness? Based on what is currently known about homelessness and what will be required to end it, I do not believe that a block grant is the best method of distributing resources.

To make progress, the homeless and mainstream programs must become accountable for achieving the goal of ending homelessness. The homeless system must perform better by providing more supportive housing and quicker turn-around. And the mainstream system must perform better by reducing the amount of homelessness it causes and providing more resources to help people while they are homeless. The structure of block grants works against such accountability. Based on experience, jurisdictions will receive block grant funds year after year, regardless of performance. There is no incentive to be more innovative, to bring new resources to the table, or to focus on ending rather than managing homelessness. In block grants, compliance takes the place of performance. The problem becomes even more institutionalized.

Outcomes

A critical issue, and a good test of the effectiveness of any homeless funding, is how it will address the need for permanent supportive housing. Permanent housing is expensive and difficult to site. Many local governments resist the creation of permanent supportive housing. Yet housing is the one thing that research has shown will actually end homelessness. A funding program will not be successful unless it is able to address the creation of permanent supportive housing.

In a block grant program, the decision to create permanent supportive housing must be made locally. The difficulty localities have in deciding to develop permanent housing is confirmed by the Continuum of Care experience in the late 1990s. As localities were given more and more responsibility for funding decisions, less money was spent on housing programs and more - up to a high of over 60% -- on services. Despite its proven success, localities simply could not deal with the difficulties of creating permanent supportive housing. Finally, two years ago, federal leadership was reasserted. Senator Bond and Representative Lewis, with the support of authorizers in both houses and on both sides of the aisle, insisted that outcomes of federal homeless spending be improved. They targeted 30% of the homeless money to permanent supportive housing. The difficulty of developing permanent supportive housing is a good example of why Federal leadership is required to maintain the focus on outcomes and to remove certain decisions from a politicized local environment.

Nonprofit Role

It is also important, in considering the structure of federal homeless assistance funding, to recognize the role that nonprofits have played on the issue. A block grant is a major alteration of this role. Since homelessness first emerged, it has been nonprofit organizations that have led the effort to address it. Entrepreneurial leaders, most of them in the faith community, saw the problem and created programs and organizations to address with it. They have brought many important values to the task, including charity, leverage, consumer involvement, self-help and empowerment. It is true that nonprofits cannot end homelessness alone. The public sector is definitely needed -- but primarily at the mainstream level. A block grant inserts the public sector, not where it is most needed at the mainstream level, but where it is less needed -- supplanting the role of nonprofits.

Requiring Performance

Could a general block grant proposal be improved to address some of these concerns? Certainly, improvements could be made. An incentives pool could be developed to reward jurisdictions that make progress toward ending homelessness, that create permanent supportive housing for the chronically homeless, that improve planning for exit from mainstream systems, or that bring mainstream resources to the table. A high percentage of the money could be spent on permanent housing for the chronically homeless, and renewals of such housing could be shifted to Section 8. The block grant could be made "presumptive," redeemable only after all parties have been brought to the table to agree upon a plan that makes progress toward ending homelessness, and after previous years' progress toward ending homelessness is demonstrated. Local Advisory Boards made up of providers and consumers as well as mainstream program representatives could write fund applications and monitor performance. Data collection and local planning to end homelessness could be required.

A Choice to Be Made

Everyone agrees that principles must govern how the federal government deals with its responsibilities. In regard to homelessness, the principle is simple: federal funds should to the maximum extent possible achieve the desired outcome - ending homelessness. Federal leadership is required on this issue. We have seen what happens in its absence - spending on shelter, on services, and on the development of a substandard housing and services system for very poor people.

The nation is at a crossroads on the issue of homelessness. At the National Alliance to End Homelessness we believe that the choice is stark - institutionalization of a system that can only manage but never end homelessness; or an outcome-driven system that can achieve our goal. The Alliances hopes to join with the members of the Subcommittee to travel along the second path toward ending homelessness.


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