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. William Shelton
Director
Virginia Department of Housing and Community Development


Oral Statement Presented at the Hearing

Introduction

Good morning Mr. Chairman, and distinguished members of the subcommittee. Thank you very much for the opportunity to testify before you today. My name is Bill Shelton and I am the Director of the Department of Housing and Community Development for the Commonwealth of Virginia. I am also a Board member of the Council of State Community Development Agencies (COSCDA). I am here to speak on behalf of COSCDA regarding the potential consolidation and block grant of the McKinney Homeless Assistance Programs.

First of all, I want to thank the committee, and you Mr. Chairman, for holding this hearing on such an important issue. Unfortunately, homelessness is an issue that touches every city, state, and rural area in our country, and the problem requires the attention of federal, state, and local governments. In addition Mr. Chairman, we want to thank you for your interest in and commitment to involving states in the administration and delivery of housing programs. It is our belief that state and local governments provide the best vehicle for planning and coordinating the delivery of services to the homeless and addressing their needs with a tailored, comprehensive strategy.

We believe the problem of homelessness in America is a persistent and complex issue requiring creative, flexible, and comprehensive strategies to successfully address the problem. For those reasons, we whole-heartedly support efforts to consolidate and block grant the McKinney Homeless Assistance programs to state and local government. Consolidating and block granting these programs has numerous benefits, many of which I will touch upon this morning.

Flexibility and Local Needs

From statesí perspective, the primary rationale for block granting these programs to the state and local level is to provide the flexibility required to effectively and comprehensively address the needs of homeless people in our communities. Block granting these programs will allow state and local governments to tailor the use of McKinney funds to the specific needs of the states and localities. We do not believe that homelessness can be solved with a one size fits all national competition.

In the state of Virginia, programs that address the needs of the homeless have long been predicated on the central belief of the McKinney Act: the belief that there is no single or simple solution to the problem of homelessness. Virginia has historically utilized significant state funding to provide the flexibility needed to address the diverse needs of our homeless population. In addition to state funded programs, Virginia is currently developing a strategy for blending federal TANF dollars with state resources to further deepen and strengthen the programs available to our homeless population. With the block granting of McKinney programs, Virginia will be able to further maximize our flexibility in designing comprehensive strategies.

A Coordinated and Comprehensive Approach

The consolidation and block granting of these programs allows state and local government to more effectively plan and coordinate services for the homeless. Under the current Super NOFA process, states and cities are uncertain what resources will be available to fund various projects, thereby decreasing the ability for states and local governments to effectively plan a comprehensive strategy.

In contrast, Virginia has a strong tradition of coordination among State agencies, housing and service providers and the homeless advocacy community. The Virginia Interagency Council for the Homeless, established in 1990 and modeled after the federal interagency council, is comprised of federal and state agencies, advocacy groups and coalitions and housing and service providers. The existence of VIACH has fostered communication, cooperation, coordination and collaboration among the participants. The block granting of McKinney funds will enhance this system of coordination and will allow state and local governments to effectively tailor programs and funding to respond to the needs identified through VIACHís collaborative process.

Lastly, the consolidation of these programs will replace a current system that is very difficult for many organizations to successfully navigate. The current Super NOFA process requires applicants to spend inordinate amounts of time and money preparing and producing applications, not to mention the inordinate amount of time HUD requires to make funding decisions. All of these factors adversely impact the ability of state and local governments, and their partners in service delivery, to plan effectively and act swiftly in addressing the pressing needs of their communities.

Having highlighted our strong support for block granting and outlined the rationale for doing so, I would like to speak briefly on a number of key components of consolidation.

Codification of the Continuum of Care

States are supportive of the Continuum of Care concept and would be open to codifying the planning process, assuming adequate resources are allocated to administer and coordinate the process on the state level. The Continuum of Care process currently in place provides an effective mechanism for involving service providers and advocates in the planning process. It brings together non-profits, service providers, advocates, and government to assess needs, coordinate activities, and prioritize projects. Block granting McKinney to the state and local level, where there is a greater understanding and appreciation of local needs and delivery systems, would only serve to enhance the process.

State-Wide Use of Funding

In order to effectively administer the homeless programs and provide resources to the communities most in need, we believe strongly that any block of the McKinney programs should include the flexibility to allow states to use funds in entitlement areas, as well as non-entitlement areas. In many states, planning and coordination of services is no longer done strictly on jurisdictional lines. Consequently, providing for statewide use of funds encourages more regionalized planning and delivery of services. This flexibility will allow states to direct resources based on need, without excluding entitlement communities. Entitlement areas frequently have the highest incidence of homelessness and may require additional resources. States should be able to respond to these needs when appropriate.

Formula funding formula

COSCDA and its members ask the committee to fund any block grant of the McKinney Programs utilizing the formula established by the very successful HOME Program. Under the HOME Program, 60% of the funds are allocated to local entitlement cities and 40% to states. This formula provides the greatest degree of flexibility and will allow states to provide additional resources in communities with a demonstrated need for homeless services. This is particularly true in more rural states, where homelessness is a significant problem but frequently not as visible.

Local Match

States are supportive of a local match requirement that requires a commitment of one state or local dollar for every three federal dollars. However, we urge the committee to define the state or local match broadly, allowing a number of sources, including in-kind benefits, land, and other sources to qualify as matching funds.

Development of Performance Measures

States are supportive of the federal governmentís recent efforts to institute performance measures under the Government Performance and Results Act (GPRA), and we believe grantees of federal funds should be required to report on their progress. However, we ask the committee to allow state and local governments, working in consultation with sub-grantees to develop agreed upon performance measures. In our experience, developing realistic and valuable measures requires that measures be tailored to specific circumstances. Universal federal performance measures can provide limited information with a broad overview of impact, but cannot possibly evaluate the success or failure of any given program.

Hold Harmless Clause

Assuming the consolidation and block granting of McKinney program passes through Congress, states support the inclusion of a temporary hold harmless clause to assist cities and states that received substantial funding under the national competition for McKinney funds.

Eligible Activities

We support a wide range of eligible activities, including prevention, emergency shelter, transitional housing, permanent housing, single room occupancy, operating costs, supportive services, and other activities that aid in statesí efforts to reduce homelessness. Providing an array of eligible activities will enable state and local government to most effectively administer the program.

In addition, we believe that decisions on use of funds should be left up to state and local government, and not subject to set-asides or caps. While our members believe that permanent housing with supportive services is one effective approach to addressing homelessness, we believe the decision about what activities are funded should be based on specific needs, not federal mandates.

Administrative Costs

States request that Congress provide up to 10% of their annual formula allocation for administrative costs to administer and implement the programs and to coordinate a Continuum of Care process. We also support providing additional allowances for technical assistance to non-profits and other service providers.

Shifting Renewals of the Shelter Plus Care Program

Mr. Chairman, on a related note, we urge the committee to fund the renewals of the Shelter Plus Care program through the Housing Certificate Fund, this year. Shifting the renewal of these projects to the Section 8 account will have minimal financial impact on Section 8, and will provide statesí with an viable mechanism to continue funding deserving and needed projects through the Shelter Plus Care program. At present, many statesí renewal burdens are overwhelming and restrict their ability to fund new, innovative Shelter Plus Care projects. In the near future, many states will be forced to de-fund some projects, thus returning people back to homelessness, without this shift.

Need to Maintain Funding Levels

I would like to close my remarks by emphasizing that while states are very supportive of the block granting approach, we do so assuming that a block grant would not adversely impact the appropriations for homeless programs overall. In order to address homelessness more adequately, significant federal resources must be coupled with the creativity, flexibility, and resources of state and local government and their partners in service delivery. We believe that a strong federal commitment combined with state and local efforts can go a significant way towards ending homelessness.

Mr. Chairman, this concludes my remarks. We look forward to working with you and the committee as you move forward on this important legislation. I appreciate the opportunity to speak before the committee and will be happy to answer any questions you may have.



Full Text of Written Statement

Introduction

Good morning Mr. Chairman, and distinguished members of the subcommittee. Thank you very much for the opportunity to testify before you today. My name is Bill Shelton and I am the Director of the Department of Housing and Community Development for the Commonwealth of Virginia. I am also a Board member of the Council of State Community Development Agencies (COSCDA). I am here to speak on behalf of COSCDA regarding the potential consolidation and block grant of the McKinney Homeless Assistance Programs.

First of all, I want to thank the committee, and you Mr. Chairman, for holding this hearing on such an important issue. Unfortunately, homelessness is an issue that touches every city, state, and rural area in our country, and the problem requires the attention of federal, state, and local governments. While the estimates about numbers of homeless people in the country vary anywhere from 500,000 to 3 million, the unmistakable fact remains that homelessness continues to be a problem of crisis proportions in many parts of the country.

In addition Mr. Chairman, we want to thank you for your interest in and commitment to involving states in the administration and delivery of housing programs. It is our belief that state and local governments provide the best vehicle for planning and coordinating the delivery of services to the homeless and addressing their needs with a tailored, comprehensive strategy.

We believe the problem of homelessness in America is a persistent and complex issue requiring creative, flexible, and comprehensive strategies to successfully address the problem. For those reasons, we whole-heartedly support efforts to consolidate and block grant the McKinney Homeless Assistance programs to state and local government. Consolidating and block granting these programs has numerous benefits, many of which I will touch upon this morning.

Flexibility and Local Needs

From statesí perspective, the primary rationale for block granting these programs to the state and local level is to provide the flexibility required to effectively and comprehensively address the needs of homeless people in our communities. Block granting these programs will allow state and local governments to tailor the use of McKinney funds to the specific needs of the states and localities. We do not believe that homelessness can be solved with a one size fits all national competition.

In the state of Virginia, programs that address the needs of the homeless have long been predicated on the central belief of the McKinney Act: the belief that there is no single or simple solution to the problem of homelessness. Virginia has historically utilized significant state funding to provide the flexibility needed to address the diverse needs of our homeless population. In addition to state funded programs, Virginia is currently developing a strategy for blending federal TANF dollars with state resources to further deepen and strengthen the programs available to our homeless population. With the block granting of McKinney programs, Virginia will be able to further maximize our flexibility in designing comprehensive strategies.

A Coordinated and Comprehensive Approach

The consolidation and block granting of these programs allows state and local government to more effectively plan and coordinate services for the homeless. Under the current Super NOFA process, states and cities are uncertain what resources will be available to fund various projects, thereby decreasing the ability for states and local governments to effectively plan a comprehensive strategy.

In contrast, Virginia has a strong tradition of coordination among State agencies, housing and service providers and the homeless advocacy community. The Virginia Interagency Council for the Homeless, established in 1990 and modeled after the federal interagency council, is comprised of federal and state agencies, advocacy groups and coalitions and housing and service providers. The existence of VIACH has fostered communication, cooperation, coordination and collaboration among the participants. The block granting of McKinney funds will enhance this system of coordination and will allow state and local governments to effectively tailor programs and funding to respond to the needs identified through VIACHís collaborative process.

Lastly, the consolidation of these programs will replace a current system that is very difficult for many organizations to successfully navigate. The current Super NOFA process requires applicants to spend inordinate amounts of time and money preparing and producing applications, not to mention the inordinate amount of time HUD requires to make funding decisions. All of these factors adversely impact the ability of state and local governments, and their partners in service delivery, to plan effectively and act swiftly in addressing the pressing needs of their communities.

Having highlighted our strong support for block granting and outlined the rationale for doing so, I would like to speak briefly on a number of key components of consolidation.

Codification of the Continuum of Care

States are supportive of the Continuum of Care concept and would be open to codifying the planning process, assuming adequate resources are allocated to administer and coordinate the process on the state level. The Continuum of Care process currently in place provides an effective mechanism for involving service providers and advocates in the planning process. It brings together non-profits, service providers, advocates, and government to assess needs, coordinate activities, and prioritize projects. Block granting McKinney to the state and local level, where there is a greater understanding and appreciation of local needs and delivery systems, would only serve to enhance the process.

Under the current Continuum of Care, HUD reviews, scores, and funds Continuum of Care applications based on a set of criteria. HUD receives hundreds of applications and must carefully review each and judge its merits, weaknesses, and the overall strength of each application. While we applaud HUDís tremendous effort to review and rate each application, HUD cannot possibly fully understand the specific state or local needs, or appreciate the particular challenges of any given planning process or delivery system. In contrast, state and local governments are much more in tune with the particular needs of the homeless in their communities and are more aware of the challenges, strengths, and weaknesses of the delivery systems in their areas.

State-Wide Use of Funding

In order to effectively administer the homeless programs and provide resources to the communities most in need, we believe strongly that any block of the McKinney programs should include the flexibility to allow states to use funds in entitlement areas, as well as non-entitlement areas. In many states, planning and coordination of services is no longer done strictly on jurisdictional lines. Consequently, providing for statewide use of funds encourages more regionalized planning and delivery of services. This flexibility will allow states to direct resources based on need, without excluding entitlement communities. Entitlement areas frequently have the highest incidence of homelessness and may require additional resources. States should be able to respond to these needs when appropriate, and still have the flexibility to provide a greater proportion of funds to more rural, non-entitlement cities as need dictates.

Formula funding formula

COSCDA and its members ask the committee to fund any block grant of the McKinney Programs utilizing the formula established by the very successful HOME Program. Under the HOME Program, 60% of the funds are allocated to local entitlement cities and 40% to states. This formula provides the greatest degree of flexibility and will allow states to provide additional resources in communities with a demonstrated need for homeless services. This is particularly true in more rural states, where homelessness is a significant problem but frequently not as visible.

Local Match

States are supportive of a local match requirement that requires a commitment of one state or local dollar for every three federal dollars. We support the leveraging of funds, especially when the match is flexibly defined to include support services. In addition, we strongly urge the committee to define the state or local match broadly, allowing a number of sources, including in-kind benefits, land, supportive service funds, and other sources to qualify as matching funds.

While state and local resources are vital to the success of these programs, we believe the issue of leveraging resources should be viewed in terms of all available resources, federal, state, and local. Currently, a large portion of funding under HUDís Supportive Housing Programs is devoted to services not housing. Greater leveraging of resources with other funds, including those from Department of Health and Human Services programs, would allow more HUD funds to go directly into housing for the homeless, and increase the number of housing units developed with HUD funds.

Development of Performance Measures

States are supportive of the federal governmentís recent efforts to institute performance measures under the Government Performance and Results Act (GPRA), and we believe grantees of federal funds should be required to report on their progress. However, we ask the committee to allow state and local governments, working in consultation with sub-grantees to develop agreed upon performance measures. If state and local governments develop agreed upon performance measures with their partners in service delivery, the performance measures developed will be tailored and realistic.

In addition, state and local government as well as service providers can be held more accountable if they have agreed up front on performance measures for a given project. In our experience, developing realistic and valuable measures requires that measures be tailored to specific circumstances. Universal federal performance measures can provide limited information with a broad overview of impact, but cannot possibly evaluate the success or failure of any given program.

Hold Harmless Clause

Assuming the consolidation and block granting of McKinney program passes through Congress, states support the inclusion of a temporary hold harmless clause to assist cities and states that received substantial funding under the national competition for McKinney funds. States generally support minimum allocation levels of 90% of previous award amounts in the first year of enactment, 85% in year two, 80% in years three and four, and 75% in year five.

Eligible Activities

We support a wide range of eligible activities, including emergency assistance, outreach and assessment, prevention, emergency shelter, transitional housing, permanent housing, rehabilitation, new construction, single room occupancy, operating costs, supportive services, and other activities that aid in statesí efforts to reduce homelessness. Providing an array of eligible activities will enable state and local government to most effectively administer the program.

In addition, we believe that decisions on use of funds should be left up to state and local government, and not subject to set-asides or caps. While our members believe that permanent housing with supportive services is one effective approach to addressing homelessness, we believe the decision about what activities are funded should be based on specific needs, not federal mandates. Lastly, we do not support a cap on funds designated for emergency shelter. While emergency shelter does not provide a long-term solution for homelessness, it does serve a vital role in the continuum of care. For that reason, decisions on funding for emergency shelter should be made at the state and local level based on need, and not predetermined by HUD in the form of a mandate.

Administrative Costs

States request that Congress provide up to 10% of their annual formula allocation for administrative costs to administer and implement the programs and to coordinate a Continuum of Care process. We also support providing additional allowances for technical assistance to non-profits and other service providers. States are also supportive of efforts to provide funds for the development of databases and other information systems to more effectively and comprehensively tract the progress and success of programs and their clients.

Shifting Renewals of the Shelter Plus Care Program

Mr. Chairman, on a related note, we urge the committee to fund the renewals of the Shelter Plus Care program through the Housing Certificate Fund, this year. Shifting the renewal of these projects to the Section 8 account will have minimal financial impact on Section 8, and will provide statesí with an viable mechanism to continue funding deserving and needed projects through the Shelter Plus Care program. At present, many statesí renewal burdens are overwhelming and restrict their ability to fund new, innovative Shelter Plus Care projects. In the near future, many states will be forced to de-fund some projects, thus returning people back to homelessness, without this shift. The time to act is now. We urge you once again to shift these renewals in a timely manner in order to avert the problem of moving people out of federally assisted housing and back into emergency shelters or the streets.

Need to Maintain Funding Levels

I would like to close my remarks by emphasizing that while states are very supportive of the block granting approach, we do so assuming that a block grant would not adversely impact the appropriations for homeless programs overall. We ask the committee to support an Appropriation for McKinney programs greater than the current $1.02 billion. In order to address homelessness more adequately, significant federal resources must be coupled with the creativity, flexibility, and resources of state and local government and their partners in service delivery. We believe that a strong federal commitment combined with state and local efforts can go a significant way towards ending homelessness.

Mr. Chairman, this concludes my remarks. We look forward to working with you and the committee as you move forward on this important legislation. I appreciate the opportunity to speak before the committee and will be happy to answer any questions you may have.


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