Homelessness: Consolidating HUD's McKinney Programs (Testimony,
05/23/2000, GAO/T-RCED-00-187).

Pursuant to a congressional request, GAO discussed the potential need to
consolidate homeless assistance programs administered by the Department
of Housing and Urban Development (HUD), focusing on the: (1) different
program requirements for HUD's four Stewart B. McKinney Homeless
Assistance Act programs--The Emergency Shelter Grants Program, the
Supportive Housing Program, the Shelter Plus Care Program, and the
Section 8 Single-Room Occupancy Program; (2) coordination and
administrative challenges that the four programs pose; and (3) actions
that HUD has taken to overcome these challenges.

GAO noted that: (1) to each of HUD's four McKinney programs addresses a
distinct need of a specific segment of the homeless population; (2) each
of the four programs has its own set of eligibility and funding
requirements that are established by the authorizing legislation; (3)
these varying requirements have resulted in challenges for HUD in
ensuring that adequate coordination occurs among the programs and that
they are delivered efficiently without creating undue administrative
burdens for the states and communities; (4) HUD has taken actions to
overcome the coordination and administrative challenges that these
separate programs with varying requirements pose; (5) to improve
coordination, HUD developed a Continuum of Care model for homeless
assistance that requires communities to implement a coordinated process
for identifying the diverse needs of the homeless population in their
area and developing systems to respond these needs; (6) to address the
needs identified in their Continuum of Care plans, communities can
receive funds from all four of HUD's McKinney programs; (7) to help
reduce the administrative burden of applying for three separate
competitive grant programs, HUD streamlined the application process for
the three programs and combined them into a single national competition,
with a single application process, and similar timeframes and rating
criteria; (8) HUD's actions have improved the coordination of homeless
assistance programs within communities and have helped reduce some of
the administrative burdens that separate programs cause; (9) however,
additional efficiencies can only be achieved if the underlying
differences between these programs are addressed; and (10) consolidation
of HUD's McKinney programs can help further reduce the administrative
burdens on communities if program eligibility and funding requirements
are also streamlined and simplified.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-00-187
     TITLE:  Homelessness: Consolidating HUD's McKinney Programs
      DATE:  05/23/2000
   SUBJECT:  Redundancy
	     Homelessness
	     Housing programs
	     State-administered programs
	     Federal grants
	     Federal aid for housing
	     Interagency relations
	     Eligibility determinations
IDENTIFIER:  HUD Emergency Shelter Grant Program
	     HUD Supportive Housing Program
	     HUD Section 8 Single Room Occupancy Program
	     HUD Shelter Plus Care for the Homeless Program
	     Community Development Block Grant

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GAO/T-RCED-00-187

United States General Accounting Office

GAO

Testimony

FILLIN \o \* MERGEFORMAT Before the Subcommittee on Housing and
Transportation, Committee on Banking, Housing, and Urban Affairs,

U.S. Senate

FILLIN \o \* MERGEFORMAT HOMELESSNESS

For Release

on Delivery

Expected at

9:30 a.m.

Tuesday

FILLIN \* MERGEFORMAT May 23, 2000

FILLIN \o \* MERGEFORMAT Consolidating HUD's McKinney Programs

Statement of FILLIN \o \* MERGEFORMAT Stanley J. Czerwinski, Associate
Director, Housing and Community Development Issues, Resources, Community,
and Economic Development Division

EMBED Word.Picture.8 GAO/ FILLIN \* MERGEFORMAT T-RCED-00-187

Mr. Chairman and Members of the Subcommittee:

We are here today to discuss the potential need to consolidate homeless
assistance programs administered by the Department of Housing and Urban
Development (HUD). As you know, homelessness in America is a complex issue.
On any given night, approximately 600,000 people are homeless. This
population includes a variety of different subgroups, such as single adults
and families, with a diverse set of needs, such as mental health and
substance abuse problems as well as other disabilities. In 1987, the
Congress passed the Stewart B. McKinney Homeless Assistance Act (P.L.
100-77) to provide a comprehensive federal response to address the multiple
needs of homeless people. HUD is responsible for administering a number of
key McKinney Act programs, including the Emergency Shelter Grants program,
the Supportive Housing Program, the Shelter Plus Care program, and the
Section 8 Single-Room Occupancy program. For these four programs, HUD
provides federal funds to state and local organizations through either
formula or competitive grants so that communities can develop housing and
services for homeless people. Our comments today will focus on the (1)
different program requirements for these four programs and the coordination
and administrative challenges that they pose and (2) actions that HUD has
taken to overcome these challenges.

In summary:

   * Each of HUD's four McKinney programs addresses a distinct need of a
     specific segment of the homeless population. For example, the Emergency
     Shelter Grant program is designed to help improve the quality and
     increase the availability of emergency shelters for homeless people,
     while the Supportive Housing Program is designed to promote the
     development of supportive housing and services that will help homeless
     individuals and families transition from homelessness to living as
     independently as possible.
   * Each of the four programs has its own set of eligibility and funding
     requirements that are established by the authorizing legislation. For
     example, Emergency Shelter Grants are awarded to state and local
     governments through a formula, while the other three programs are
     competitive project-based grants that have different eligibility
     criteria. These varying requirements have resulted in challenges for
     HUD in ensuring that adequate coordination occurs among the programs
     and that they are delivered efficiently without creating undue
     administrative burdens for the states and communities.
   * HUD has taken actions to overcome the coordination and administrative
     challenges that these separate programs with varying requirements pose.
     To improve coordination, HUD developed a Continuum of Care model for
     homeless assistance that requires communities to implement a
     coordinated process for identifying the diverse needs of the homeless
     population in their area and developing systems to respond to these
     needs. To address the needs identified in their Continuum of Care
     plans, communities can receive funds from all four of HUD's McKinney
     programs. To help reduce the administrative burden of applying for the
     three separate competitive grant programs, HUD streamlined the
     application process for the three programs and combined them into a
     single national competition, with a single application process, and
     similar time frames and rating criteria.
   * HUD's actions have improved the coordination of homeless assistance
     programs within communities and have helped reduce some of the
     administrative burdens that separate programs cause. However,
     additional efficiencies can only be achieved if the underlying
     differences between these programs are addressed. We believe that
     consolidation of HUD's McKinney programs can help further reduce the
     administrative burdens on communities if program eligibility and
     funding requirements are also streamlined and simplified.

Background

Until the 1980s, the needs of the nation's homeless population were
primarily addressed by state and local efforts. However, as homelessness
continued to grow, the federal government realized that state and local
efforts alone were not adequate to respond to the needs of homeless people.
In 1987, the Congress passed the Stewart B. McKinney Homeless Assistance Act
to supplement existing state and local efforts. The McKinney legislation is
the federal government's primary response to homelessness and authorizes a
wide variety of homeless assistance programs that are administered by
several different agencies across the federal government. Since the
legislation was enacted, the Congress has appropriated over $11 billion for
McKinney Act programs.

HUD has responsibility for administering four key homeless assistance
programs created by the McKinney Act that are discussed below.

Emergency Shelter Grants program: This program improves the quality of
existing emergency shelters for homeless people and makes additional
shelters available for this population. In addition, the program is designed
to help grantees meet the costs of operating shelters, provide essential
social services to homeless people, and prevent homelessness. This program
provides formula grants to states, metropolitan cities, urban counties, and
territories in accordance with the distribution formula used for HUD's
Community Development Block Grant program. According to HUD, grantees are
generally notified of their annual Emergency Shelter Grant allocation before
the start of each calendar year.

Supportive Housing Program: This program promotes the development of
supportive housing and services, including innovative approaches to help
homeless people transition from homelessness and enable them to live as
independently as possible. States, local governments, other governmental
entities (such as public housing authorities), private nonprofit
organizations, and community mental health associations that are public
nonprofit organizations can annually compete for supportive housing grants
through a national competition. These grants may be used to provide (1)
transitional housing for up to 24 months and up to 6 months of follow-up
services for residents who move to permanent housing; (2) permanent housing
with appropriate supportive services for homeless people with disabilities
to enable them to live as independently as possible; (3) supportive services
only, with no housing; (4) safe havens for homeless individuals with serious
mental illness; and (5) innovative approaches to help develop supportive
housing that will meet the long-term needs of homeless people. The term for
initial grants made under this program is up to 3 years.

Shelter Plus Care program: This program provides rental assistance for
hard-to-serve homeless people with disabilities along with supportive
services that are funded from other sources. States, units of general
government, and public housing authorities are eligible to apply for project
grants through a national competition. Grants can be used to provide rental
assistance payments for either 5 or 10 years depending on the type of rental
assistance requested and the grantee's meeting other program requirements.

Section 8 Single-Room Occupancy Moderate Rehabilitation program: The Single
Room Occupancy program brings more standard single-room occupancy units into
the local housing supply and makes them available to homeless individuals.
These housing units are intended for occupancy by a single person and may or
may not contain food preparation or sanitary facilities or both. Under this
program, HUD enters into annual contracts with public housing authorities
for the moderate rehabilitation of residential properties, so that when the
work is done the properties will contain multiple single-room units. The
public housing authority is responsible for selecting properties that are
suitable for rehabilitation, and for identifying landlords who would like to
participate in the program. Under this program, public housing authorities
and private nonprofit organizations are eligible to compete for rental
subsidies through an annual national competition. Rental assistance payments
are provided for a period of 10 years.

Programs' Differing Requirements Cause Coordination and Administrative
Challenges

Collectively, HUD's McKinney programs provide a wide variety of housing and
services that meet the diverse needs of several segments of the homeless
population. However, while the differences in these programs help ensure
that the diverse needs of a broad spectrum of homeless people are met, they
also create coordination and administrative challenges because each program
must be implemented according to differing legislative requirements. Table
1.1 compares some of the requirements among HUD's four McKinney programs,
including (1) how funding is delivered to states and local organizations,
(2) the organizations eligible to apply for funding, (3) the types of
activities eligible for funding, (4) the types of services that can be
provided, (5) the types of homeless people each program can serve, (6) the
time period for which funds are available, and (7) the amount of matching
funds required.

Table 1.1: Requirements of Four HUD McKinney Programs

 Program     Emergency Shelter     Supportive        Shelter Plus Care Single-Room
 Requirement Grants Program        Housing Program   Program           Occupancy
                                                                       Program
 Type of                                                               Competitive
 funds       Formula grant         Competitive grant Competitive grant grant
                                   States

                                   Local governments

             States                Other
                                   governmental      States            Public housing
                                   agencies                            authorities
 Eligible    Metropolitan cities                     Local governments
 applicants                        Private nonprofit                   Private
             Urban counties
                                   organizations     Public housing    nonprofit
             Territories                             authorities       organizations
                                   Community mental
                                   health centers
                                   that are public
                                   nonprofit
                                   organizations
                                   Transitional
                                   housing
                                                     Tenant based
                                   Permanent housing rental assistance
                                   for people with
                                   disabilities      Sponsor based
 Eligible    Emergency shelter                       rental assistance Single-room
 program                           Supportive                          occupancy
 components  Essential social      services only     Project based     housing
             services
                                                     rental assistance
                                   Safe havens
                                                     SRO based rental
                                   Innovative        assistance
                                   supportive
                                   housing
                                   Acquisition

             Renovation/conversion Rehabilitation

             Major rehabilitation  New construction

 Eligible    Supportive service    Leasing                             Rental
 activities                                          Rental assistance assistance
             Operating costs       Operating and
                                   administrative
             Homelessness          costs
             prevention activities
                                   Supportive
                                   services
                                   Homeless
                                   individuals and
                                   families for
                                   transitional
                                   housing and
                                   supportive
             Homeless individuals  services
 Eligible    and families                            Disabled homeless Homeless
 population                        Disabled homeless individuals and   individuals
             People at risk of     individuals for   their families
             becoming homeless     permanent housing

                                   Hard-to-reach
                                   mentally ill
                                   homeless
                                   individuals for
                                   safe havens
 Initial term
 of          1 year                Up to 3 years     5 or 10 years     10 years
 assistance
                                   Dollar-for-dollar
                                   match for
                                   acquisition,
                                   rehabilitation,
                                   and new
                                   construction
             States: no match for  grants Operating
             first $100,000 and    costs must be
             dollar-for-dollar     shared by 25      Dollar-for-dollar
                                   percent in the    match of the
 Matching    match for rest of     first 2 years and federal shelter   No match
 funds       funds                 50 percent in the grant to pay for  required
             Local governments:    third year A 25   supportive
             dollar-for-dollar     percent match for services
             match for all funds   supportive
                                   service grants

                                   No match for
                                   grants used for
                                   leasing or
                                   administrative
                                   costs

Source: GAO presentation of information from HUD's programs.

Some of the differences between HUD's McKinney programs are essential for
providing the various services that the diverse subgroups within the
homeless population need. For example, differences in eligible activities
for each program result in the Emergency Shelter Grants program providing
funds for homelessness prevention activities and emergency shelters, the
Supportive Housing Program funding transitional housing and services, and
the Single-Room Occupancy and Shelter Plus Care programs funding permanent
housing. Similarly, differences among eligible populations for each program
help ensure that the needs of different homeless subgroups are met. For
example, special preference is given to homeless families through the
Supportive Housing Program; the housing needs of homeless individuals are
met through the Single-Room Occupancy program; and homeless people with
disabilities, especially those with severe mental illness, chronic substance
abuse, and/or AIDS are served through the Shelter Plus Care program.

At the same time, some of these program differences can cause coordination
difficulties. Coordinating services within communities can become difficult
when organizations are eligible to apply for some McKinney programs but not
others. For example, state governments can receive Emergency Shelter,
Supportive Housing Program, and Shelter Plus Care grants but not Single-Room
Occupancy grants. Similarly, private nonprofit organizations can apply for
Supportive Housing Program and Single-Room Occupancy grants but not
Emergency Shelter and Shelter Plus Care grants. Coordination can be further
complicated by the differences in eligible activities. For example, while
Emergency Shelter and Supportive Housing Program grants can be used to
provide supportive services, Shelter Plus Care and Single-Room Occupancy
grants cannot be used for supportive services. Our past work on homelessness
shows that coordination of federal programs is essential to ensuring that
the wide variety of federally funded programs are made available to the
different homeless sub-populations as cost-effectively as possible. In
addition, most experts on homelessness widely agree that, without well
coordinated and integrated programs, the multiple and diverse needs of the
homeless population cannot be effectively addressed.

Moreover, differences in McKinney program requirements can also cause
administrative difficulties. For example, while grants from the Emergency
Shelter Grant program are formula-based and funds are provided as block
grants to communities, the other three programs are competitively awarded
and communities have to prepare and submit separate applications to HUD for
each project. Moreover, each program's different set of matching fund
requirements can cause additional administrative difficulties. For example,
states that receive Emergency Shelter grants do not have to match the first
$100,000, but they have to provide a dollar-for-dollar match for the
remaining funds. If these states also receive Supportive Housing Program
grants, they have to match dollar-for-dollar all Supportive Housing Program
funds used for acquisition, rehabilitation, and new construction, but they
only have to provide a 25 percent match for Supportive Housing Program funds
used for supportive services. Our 1999 survey of applicants for Supportive
Housing Program funds found that many applicants felt that applying for
these grants was not easy. Currently, we are reviewing the administrative
difficulties that communities face in completing the application
requirements for the three competitive grants administered by HUD. The
results of our study will be available by the end of July 2000 and will
identify any changes that are needed to improve HUD's grant-making process.

In a January 1995 report to the Congress, HUD concluded that, while the
McKinney programs had enabled many types of assistance providers to offer a
wide variety of housing and services to a broad spectrum of the homeless
population, the number of programs and the differences among them created
barriers to their efficient use. In particular, HUD's report found that the
differences in target populations, eligible activities, application
requirements, and selection criteria made these federal funds difficult to
obtain and coordinate for communities. Furthermore, the report found that
overlapping regulations and reporting requirements, as well as the
unpredictability of the competitive grants, appropriation levels, and
varying lengths of the grant awards made it difficult to administer these
programs and develop long-term comprehensive strategies for eliminating
homelessness. HUD's report echoed the recommendation made by the Interagency
Council on the Homeless, in its March 1994 federal plan to break the cycle
of homelessness, for the need to reorganize, consolidate, and simplify the
McKinney programs.

For several years, HUD proposed legislation to consolidate its McKinney
programs into a single homeless assistance grant program and deliver these
funds to communities through block grants. HUD requested this legislation
because it believed that consolidation would create a simpler, less
paper-intensive system through which localities could develop coordinated
community-based efforts to address and prevent homelessness. Although
subsequent congressional action resulted in a single appropriation for HUD's
four McKinney homeless assistance programs, consolidating legislation has
not yet been enacted.

HUD's Actions to Address Coordination and Administrative Challenges

In the absence of consolidating legislation, HUD has taken steps to improve
coordination among its McKinney programs and reduce the administrative
burden caused by different program requirements. First, HUD implemented a
process called the "Continuum of Care" to encourage and enable localities to
develop a coordinated and comprehensive community-based approach for program
and service delivery for homeless people. The Continuum of Care process is
designed to build partnerships among localities, states, nonprofit
organizations and the federal government. Funding for the housing and
service needs identified by communities within their Continuum of Care plans
are available through HUD's McKinney programs. HUD also requires that the
planning and implementation of the Continuum of Care process take place
within the broader context of the community's 5-year Consolidated Plan. The
Consolidated Plan describes how resources from HUD's key community
development programs, such as the Community Development Block Grant, will be
used to create long-term development within a community. A 1996 evaluation
of the Continuum of Care process, completed at HUD's request, concluded,
that overall this process has had a positive effect on communities across
the nation.

Second, to support the coordination and planning inherent in the Continuum
of Care process and streamline and simplify the administration of the
McKinney competitive grant programs, HUD combined the separate competitions
for the Supportive Housing Program, Shelter Plus Care, and Single-Room
Occupancy programs into one competitive process. Before HUD combined the
application process, these three competitive grant programs had different
time frames, application processes, and selection criteria. Under the
current application process, communities are required to provide a Continuum
of Care plan and an individual application for each project in that plan
that is requesting funds from any of the three programs. In addition, HUD
now uses the same core rating criteria for making award decisions for all
three programs. By streamlining the application process, HUD's goal was to
lower the costs and problems of program administration for service and
housing providers, with the expectation that this would enable providers to
spend more of their resources on implementing the programs.

- - - - -

In conclusion, Mr. Chairman, although the wide array of assistance provided
by HUD's McKinney Act programs is critical to meeting the diverse needs of
homeless people, their complex and differing eligibility and funding
requirements cause coordination and administrative challenges for HUD and
the communities that rely on these funds. HUD has made a commendable effort
in trying to improve coordination and streamline the administrative burden
within the existing legislative framework for these programs. However, we
believe that the Department will be hard pressed to make additional
improvements unless modifications to the McKinney Act are made that would
help streamline and simplify these programs. To the extent that further
streamlining and simplification can be achieved by consolidating the
McKinney programs, it will not only help HUD more efficiently administer
these programs but will also help reduce the administrative burden placed on
communities that are applying for these funds.

Mr. Chairman, this completes my prepared statement. I would be happy to
respond to any questions.

(385858)
  
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