Subcommittee on Housing and Transportation

Hearing on "Reauthorization of the HUD McKinney-Vento Homeless Assistance Act Programs."

Mr. Chairman, Mr. Allard and members of the Subcommittee, on behalf of our Board of Directors and partners, I am honored that you have invited the National Alliance to End Homelessness to testify before you today on reauthorization of the McKinney-Vento Homeless Assistance Act housing programs and on how these programs can be better used to make progress in the struggle to end homelessness in the nation. The National Alliance to End Homelessness is convinced that not only could our nation do a better job of helping homeless people, but also that ending homelessness is well within our reach. We very much appreciate the Subcommittee’s history of accomplishment toward this goal. We are particularly grateful for Chairman Reed’s recent work to draft a bill, provisionally entitled the "Community Homeless Assistance Act of 2002," that will take a critically important step in improving homeless assistance by simplifying and codifying the largest federal homeless program – the HUD Homeless Assistance Grant program.

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 Americans 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 such as 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. In the 1980s, they grew into homelessness. The absence of widespread 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 and our knowledge about it have changed. Once focused on food and shelter, today the Alliance and its nonprofit, public sector, and corporate partners in every state in the nation are focused on permanent solutions to homelessness.

I am grateful to you for holding this hearing today. It is time to look at the effectiveness of our homeless assistance programs and to make the necessary adjustments to ensure that they have the best possible outcomes. In doing this we must avoid the institutionalization of a system, which can manage but cannot eliminate homelessness. We must, instead, try to make progress toward an improved system that is results- and outcome-oriented. The decisions that you will make about reauthorization of the McKinney-Vento Act will affect which of these two paths we, as a nation, will travel.

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 infrastructure of assistance has largely been formed in the past fifteen years, stimulated and sustained in good part by federal funding. With an infrastructure of this size and complexity, one might expect the size of the homelessness population to have been reduced over this period of time. In fact, this is not the case. Despite the growing infrastructure of assistance, between 1987 and 1996 the size of the homeless population increased, from 2.5 to 3.5 million people per year.

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. Indeed, 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. For most individuals, the existing system does end homelessness.

Yet, the homeless assistance 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 the final analysis, the homeless assistance system 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, public housing, substance abuse treatment, foster care, 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? Given that the draft bill addresses only the HUD homelessness program, will it nevertheless help us make progress toward 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, those who are homeless 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. To do so will require four steps. The National Alliance to End Homelessness believes that by following this course, homelessness can be ended in ten years.

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 that brings homelessness experts, and mainstream programs and resources, to the table with a goal of ending 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, foster care and veterans programs, as well as corrections are among those mainstream programs whose clients often become homeless. Furthermore, these systems provide inadequate assistance to people while they are homeless. Ultimately, their performance must be improved if we are to make progress.

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. Approximately 20% of the homeless population (200,000 people) spends months, and even years, homeless. 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. A recent exhaustive and groundbreaking study by the University of Pennsylvania shows that a chronically homeless, mentally ill person living on the streets of New York City exacts an annual public cost of approximately $40,000. [This is because members of this group are high users of hospital emergency and intensive care facilities, jails and prisons, and mental health beds while homeless.] For nearly the same expenditure on the part of public systems of care (around $41,000/year) that person can be provided with permanent supportive housing and services.

So how can the back door be opened more widely?

The 80% of the homeless population who exit the system quickly (both families and single adults) initially entered the system because they experienced a housing crisis that 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 or transitional housing to an absolute minimum. Although people who become homeless certainly need services, such services are most effective when 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.) Affordable housing is ultimately the solution to homelessness for this group, and we encourage any and all efforts to increase the supply of such housing. In the meantime, everything possible should be done to minimize the duration of homelessness for families and individuals. .

For chronically homeless people, there is also an answer -- permanent supportive housing, usually preceded by outreach and sometimes by intermediate treatment or housing. Such housing is over 80% effective in achieving stability and is very cost effective. Approximately 200,000 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 supply of permanent supportive housing could be achieved by retaining the set-aside of 30% of the homeless funds for permanent supportive housing. Further, it requires that the renewal funding for these units (Shelter Plus Care and Supportive Housing – permanent housing program, or any permanent housing) be shifted to Section 8.

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 clients and wards are not vulnerable to housing crisis, ultimately this must be done in the context of addressing 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 extremely low-income people. Whatever is done must be done in the context of addressing these underlying needs.

In the view of the Alliance, any initiative to change federal homeless assistance programs should be measured against the goal of helping the nation to end homelessness. Does it facilitate better planning to end homelessness? Does it help prevent people from becoming homeless? Does it help create permanent housing? Does it encourage greater responsibility of mainstream programs?

The bill Senator Reed has drafted does not presume to be able to end homelessness. This is in its favor since it is unrealistic to expect homeless programs to end homelessness on their own. The bill does, however, tidy up the administration of the current system and maximize the use of federal resources to achieve positive outcomes. In addition, it takes steps to compel action in mainstream programs that will lead us down the road to ending homelessness. Following is an evaluation of this proposal relative to its impact on ending homelessness.

Local Planning. The draft bill creates a Community Homeless Assistance Planning Board (the Board) that is made up of those who deliver and receive homeless assistance, as well as the other significant sectors of the community. This Board is charged with devising an outcome-oriented plan to spend federal resources, with developing long-term plans for reducing and preventing homelessness in the jurisdiction, with examining causes of homelessness, and with assessing and reporting on the success of projects funded by the Act and also of the communities’ efforts to prevent and end homelessness. The goals of these planning Boards are admirable, and as they mirror the current system of planning and applying for Homeless Assistance Grants, they build upon existing capacity. They press further, however, by requiring a more rigorous outcome orientation and by requiring the community to look beyond the homeless system for both the causes and the solutions to homelessness.

Two improvements might be suggested in this area. First, without comprehensive administrative data systems that can examine how clients and tenants use the homeless system over time, from where they come, and to where they go, communities are unlikely to be able to achieve the level of planning or reporting anticipated in the draft bill. The achievements of cities like Columbus and Philadelphia demonstrate the impact such data systems can have upon results. This could be more explicitly addressed in the bill.

A second area to examine concerns the constitution and responsibilities of the Boards. The Boards are required to do a tremendous amount of reporting, much of it on the performance of public and private systems and institutions. They are asked to address discharge planning and prevention policy and practice in systems of care that are beyond their control. While this reporting would be useful, in and of itself it is not likely to change these systems. It will be costly, and unless there is representation from relevant public and private agencies on the Board, the information may be difficult to obtain. Frankly, the issues of discharge planning and the utilization of mainstream services might be more effectively addressed in companion legislation directed to the US Departments of Health and Human Services, Justice, Veterans Affairs, etc. Alternatively, the bill might include incentives to encourage key agencies to participate in local homeless planning. At a minimum, the bill could list key public sector agencies that must participate in local Boards if local applications are to be successfully funded.

Closing the Front Door. The draft bill includes numerous references to homelessness prevention and requires Boards to describe improvements in discharge from public institutions and other prevention efforts. These are welcome shifts in emphasis. Again, a reauthorization of homeless assistance programs at HUD cannot be expected to compel action in a full range of public systems of care. This will have to be more substantively addressed in future companion legislation.

Opening the Back Door. The bill draft clearly improves the outcome focus of the homeless assistance programs. It places the emphasis much more squarely on placement of people in permanent housing. The Alliance is particularly supportive of the set-aside of 30% of the funding for permanent housing for people with disabilities. In fact, you are encouraged to go even further and target these resources to people who experience chronic homelessness (and are also disabled) in order to make progress in helping this most difficult to serve population.

The Alliance is also extremely supportive of the provision in the draft that provides funds for the renewal of permanent housing subsidies from the Section 8 account. This will allow, over time (an estimated ten years), 200,000 chronically homeless people to be provided with permanent supportive housing – a key step toward ending homelessness.

The Administration commits, in its Fiscal Year 2003 budget request, to end chronic homelessness in ten years. The Alliance fully supports this goal, as part of its own goal of ending all homelessness in ten years. Authorizing the 30% set-aside for permanent supportive housing and shifting the renewal of this housing to the Section 8 account would have a significant positive impact on the nation’s ability to end chronic homelessness in ten years.

Finally, the Alliance applauds the bill’s focus on housing placement. Homelessness funding will never be adequate to end poverty for the millions of people who enter the homeless system every year. What can be expected is for the homeless system to end people’s homelessness. People should be moved into housing as quickly as possible, and the draft bill has many provisions to encourage this preferred approach.

Building the Infrastructure. Since this bill focuses only on the homeless programs, it does not have a major impact on the systemic changes needed, including improving the supply of affordable housing, providing adequate incomes, or adequately addressing service needs. It is important to note, however, that to the degree that new permanent supportive housing or housing for families is developed, the affordable housing supply can be increased.

Millions of people become homeless in our nation each year and thousands of nonprofit and public sector agencies spend billions of dollars to help them. This system functions fairly well to manage the problem. However, because it cannot stop people from becoming homeless, and does not create the housing that can end their homelessness, this homeless assistance system cannot reasonably be expected to end homelessness overall.

And homelessness can be ended. To make progress toward this goal, the federal government can do two things. First, it can adjust the existing homeless programs to improve their outcome orientation. It can distribute money more rapidly; focus resources more tightly on the goal of ending homelessness for individuals and families by moving them more quickly into permanent housing; create an adequate supply of permanent supportive housing for chronically homeless people; and be more attentive to emergency prevention measures such as rent assistance that can divert people from the homeless system altogether.

The second step, however, is beyond the purview of the homeless system. It involves making mainstream systems of care and custodial systems more responsive to the housing needs of those they serve, and preventing them from shifting these people and the cost of serving them into the homeless assistance system. It involves the creation of more affordable housing, the provision of adequate incomes, and the provision of services adequate to meet needs.

The draft bill Senator Reed and his wonderful staff have developed does a good job of addressing the first task. It builds upon a successful system of delivering resources. Communities are highly invested in this system, which is well embedded in communities. It makes sense to focus on improving the existing administrative infrastructure rather than replacing that infrastructure. Creating a whole new infrastructure is unlikely to have any significant impact on ending homelessness. The draft bill tightens up the existing system by codifying its procedures, including the allocation formula and the planning body. It focuses the program much more tightly on outcomes and outcome-based planning. It authorizes critical provisions necessary to end homelessness, including targeting a proportional amount of the resources to permanent supportive housing, and normalizing the renewal of housing for homeless people. Overall, it improves the administration of current programs, and shifts their focus to improve outcomes. The National Alliance to End Homelessness believes that this is a positive step.

As to the second part of the federal responsibility, the draft bill sets the stage for positive change. Mainstream systems of care and custodial systems such as prisons must be engaged to close the front door into homelessness and open the door out of homelessness. The Alliance looks forward to working with the members of the Committee on this critical task in the future.

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