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Blueprint for Change: Ending Chronic
Homelessness for Persons with Serious
Mental Illnesses and Co-Occurring Substance Use Disorders
Chapter 5: Finance a Comprehensive System of Care
Financing housing and support services for people with serious mental
illnesses and/or co-occurring substance use disorders who are homeless is a
challenge for local providers. The public mental health and substance abuse
treatment systems, as well as the system of services for people who are
homeless, have multiple players. These include public and private mental
health and substance abuse treatment providers, and general and specialty
health care providers, as well as the social welfare, housing, criminal
justice, employment, and education systems, among others. The funding
streams that finance these systems and services are complex and sometimes
contradictory, with competing incentives among funding sources.
As a result, providers of services to people who are homeless rely on a
myriad of often tenuous funding sources that they describe with terms like
"house of cards" and "patchwork quilt."(HRSA, 1998b). Generally, these sources include funds from the Federal government, as well as from private funders, and state and local governments (Burt et al., 1999).
To help address homelessness over the long-term, communities need to know
the various sources of funding that exist and how to use them effectively.
This chapter provides (1) principles for accessing and using resources to
provide housing and supportive services in the community, and (2) an
overview of public and private funding sources available for this purpose.
Access and Use Community Resources
The fragmented nature of programs and funding makes it difficult for
communities to meet the needs of people with serious mental illnesses and/or
substance use disorders in an efficient and cost-effective manner (NAEH, 2000).
Frequently, these individuals make use of high-cost services such as emergency
rooms and inpatient care. They may be discharged to the community with no
after-care plan. Further, resources for housing and support services
increasingly are limited. In light of these realities, communities continually
must look for new ways to use scarce resources more effectively through better
integration and coordination (Glover and Gustafson, 1999), while seeking further
resources to fill known service gaps.
Identify System/Service Gaps
A plan to finance housing and services should flow naturally from, and
perhaps be a part of, an agency’s strategic plan (McMurray-Avila, 2001). Once a
community has identified its needs for housing and services and has specified
the goals and strategies it will use to meet those needs, it must examine how
existing housing and services resources are being used. By identifying service
system gaps and the costs imposed by these gaps, communities can begin to see
where existing resources can be used more effectively and where new funding may
be needed.
Integrate, Coordinate, and Streamline Existing Funding
The first step to make better use of existing resources is to find ways to
integrate, coordinate, and streamline existing funding (Wilkins, 2002).
Top-level management of agencies that fund housing and services must commit
their organizations to interagency partnerships or agreements that promote more
efficient use of existing resources.
For example, two or more agencies may decide to submit joint funding
applications, or to commit funds to support the creation of new services or help
leverage additional resources. They also may choose to aggregate funds from
multiple sources where they can do so and still meet statutory and reporting
requirements attached to these funds. When communities have more effectively
combined and used existing resources for housing and services, they will have a
better sense of where new investment is needed to fill the remaining gaps in the
service systems (McMurray-Avila, 2001).
Identify New Resources
Often, new program resources will consist of existing Federal, state, or
local funds that can be targeted to better respond to locally identified needs
for housing and services for people who are homeless. Categorical programs,
restricted to serving only certain target populations, often can be tapped as a
resource. For example, monies designated for individuals with HIV/AIDS may serve
individuals who are homeless, many of whom are at risk of, or infected with,
HIV. Funds from such programs may be used to serve some but not all of those in
need.
The current array of targeted homeless assistance programs is not large
enough or well-funded enough to meet long-term housing and support needs of
people who are homeless (NAEH, 2000). Therefore, mainstream resources—including
such Federal and state resources as Medicaid, Temporary Assistance to Needy
Families (TANF), the mental health and substance abuse block grants, and the
Home Investment Partnerships (HOME) program—represent a critical potential
source of funding for people with serious mental illnesses and/or co-occurring
substance use disorders who are homeless. While many people who are homeless
qualify for these programs, they often are unable to access the services that
these programs offer (GAO, 2000a).
Funds from mainstream programs can be used to provide income support, housing
assistance, and supportive services, including outreach, case management, and
Assertive Community Treatment. Broadening eligibility criteria for a program or
targeting a portion of program funds to meet the needs of people who are
homeless can provide additional sources of support.
For example, a state may seek a waiver under the Medicaid program to increase
the number of individuals it serves or to provide additional services targeted
to vulnerable individuals. Frequently, this means creating a managed health care
system that may, or may not, serve homeless people well. Coordinating mainstream
resources with discretionary funds such as tax revenues, which provide support
for individuals not eligible under categorical programs, can be an effective
strategy to meet a community’s overall housing and service needs.
Communities should explore other sources for new funding, as well. For
example, a housing trust fund, established at the state or local level, can
provide a dependable, flexible, and ongoing source of dedicated funding to meet
the housing needs of low-income people, including those who are homeless
(Brooks, 1999; AIDS Housing of Washington, 2000). Private sector resources,
including foundations and businesses, also should be considered as potential
sources of funding for programs and services.
Leverage Funds
Frequently, existing resources can be used to leverage new sources of
funding. For example, communities may "use funds provided through existing
and/or new grant programs that are targeted to homeless people to leverage
matching allocations from mainstream funding and greater access to mainstream
service systems" (Corporation for Supportive Housing [CSH], 2002a, p. 36). In
particular, funds for supportive services may be used to leverage funds for
housing, and vice versa. Forming partnerships between state and local
governments, and with the private sector, can be an effective way of leveraging
available funds from all sources.
Funding Sources
The balance of this chapter provides examples of public sources of
funding—such as those available through the Federal government and state and
local governments—as well as private sources, including business and
foundations. This listing is not exhaustive; rather it provides a sampling of
the major kinds of resources available. Each varies in terms of its use and
requirements. Many can be combined creatively to offer a full range of housing
and supports needed to end homelessness among people with serious mental
illnesses and/or co-occurring substance use disorders (HRSA BPHC, 1997; Siemon,
1990).
In seeking resources to implement and sustain plans to address homelessness,
communities need to consider all possible sources of funding, not just those
mentioned here. While getting started often requires piecing together funds
available from time-limited sources, communities should strive to find sources
that are both reliable and predictable, if they are to sustain housing and
supports over the long-term. Often, this means securing mainstream housing and
service dollars for individuals who have been relying on categorical or
time-limited funds.
Public Funding
Public funding sources for services and housing include resources
specifically targeted to meet the needs of people who are homeless, as well as
nontargeted, mainstream resources that may or may not include people who are
homeless as a priority population. Such nontargeted programs typically are
designed to serve low-income people or people with special needs more generally.
Potential sources of public funding are described briefly in this section. Web
sites that provide further detail on public funding sources are listed at the
end of the chapter.
Targeted Homeless Assistance
Programs specifically targeted to meet the needs of people who are homeless
include those originally created under the Stewart B. McKinney Homeless
Assistance Act and its amendments. While many such programs were established
under this Act, those most relevant to meeting the housing and support service
needs of people with serious mental illnesses and/or co-occurring substance use
disorders who are homeless are discussed below. These include programs
administered by the Departments of Health and Human Services, Housing and Urban
Development, and the Veterans Administration (GAO, 1999a).
HHS Programs. HHS administers three programs specifically designed to
meet the needs of people who are homeless and who may have serious mental health
and/or substance use disorders.
- The Health Care for the Homeless (HCH) program, administered by the
Health Resources and Services Administration, awards grants to community-based
organizations—including community health centers, local health departments,
hospitals, and nonprofit community coalitions—to improve access to primary
health care, mental health services, and substance abuse treatment. HCH funds
support the provision of primary health care, substance abuse treatment,
outreach, case management, provision of or referral to mental health services,
and assistance in obtaining housing and entitlements (HRSA BPHC, 2001).
- The Projects for Assistance in Transition from Homelessness (PATH) program,
administered by SAMHSA’s CMHS, awards formula grants to states and
territories to support community-based services for people with serious mental
illnesses and/or substance use disorders who are homeless or at-risk of
homelessness. PATH funds can be used to support a range of services, including
outreach, screening and assessment, case management, mental health services,
and substance abuse treatment, provision of or linkage to supportive services,
and a limited set of housing services (CMHS, 2001c).
- The Grants for the Benefit of Homeless Individuals (GBHI) program, administered by SAMHSA’s Center for Substance Abuse Treatment, provides funds
to develop and expand mental health and substance abuse treatment services for
people who are homeless. Grants are awarded to local public and nonprofit
agencies to provide either substance abuse services, mental health services,
or both, allowing communities the flexibility to provide the services they
believe to be the most urgent (SAMHSA, 2002a).
HUD Homeless Assistance Programs. HUD administers four key targeted
programs that can be used to fund the development, operation, and supportive
services of emergency, transitional, and permanent housing for people who are
homeless.
- Emergency Shelter Grants are formula grants to states and local
governments for the purpose of providing emergency and transitional housing,
and are coordinated through the Consolidated Plan, a 5-year comprehensive
housing plan required of communities to access HUD housing resources.
- Supportive Housing Program (SHP), Shelter Plus Care (S+C), and Section 8
Moderate Rehabilitation Single Room Occupancy (SRO) program funds are awarded
through an annual competition that requires communities to engage in a
coordinated strategic planning process and to submit a comprehensive Continuum
of Care plan to address homelessness. SHP funds may be used for the
development and operation of transitional and permanent housing, and for
supportive services. S+C funds may be used to provide rental assistance for
permanent housing, with required matching funds for supportive services.
Section 8 SRO funds can be used for rental assistance in single-room-occupancy
dwellings.
VA Programs. The VA administers several programs that specifically meet
the needs of veterans with mental illnesses and/or substance use disorders who
are homeless (Department of Veterans Affairs, 2002).
- The Domiciliary Care for Homeless Veterans program provides funds to VA
medical centers to support the delivery of health, mental health, substance
abuse, and other social services in residential treatment settings for
veterans who are homeless.
- The Homeless Chronically Mentally Ill Veterans program supports mental
health services, substance abuse treatment, case management, and other
rehabilitative services in community-based residential treatment settings for
veterans with chronic mental illnesses who are homeless.
- The Health Care for Homeless Veterans program supports outreach and
assessment, treatment, case management, and referral to community-based
residential care for veterans with serious mental illnesses and substance use
disorders who are homeless.
- The HUD-VA Supported Housing program, administered jointly with HUD,
provides permanent supportive housing and treatment for veterans with serious
mental illnesses and substance use disorders who are homeless.
Mainstream Resources
A number of nontargeted or mainstream programs serving low-income people and
people with disabilities also may provide eligible individuals who are homeless
with housing, services, and supports. This includes an array of health, welfare,
mental health, substance use, housing, and veterans’ assistance programs.
Efforts to increase access to these programs for people who are homeless are
essential.
HHS Programs. HHS administers a number of mainstream programs, for which
homeless people may be eligible, that also can be used to provide services and
supports (GAO, 1999a).
- Medicaid is the largest Federal entitlement program providing health
care for certain low-income and medically needy people, including people who
are elderly, blind and disabled, and other special groups. The program is
funded jointly through a Federal-state partnership. Within Federal guidelines,
each state administers its own program and sets its own criteria for
eligibility, type, amount, duration and scope of services, and payment as
outlined in the State Medicaid Plan. Optional services, such as the
rehabilitation option and the targeted case management option, can be used to
provide many of the supportive services needed to help maintain people with
serious mental illnesses or co-occurring disorders in housing (CSH, 2002a).
- Temporary Assistance to Needy Families funds are provided to states
through block grants to help low-income families become self-sufficient.
States have flexibility to design programs that meet the needs of eligible
populations, including homeless families with children. Cash assistance,
work-related assistance, and other supportive services are included. In
addition, several states and localities have recently begun innovative
programs using TANF or state maintenance-of-effort funds to provide housing
assistance to families making the transition from welfare to work (Straka et
al., 2001; Sard and Lubell 2000).
- Community Mental Health Services Block Grant funds are formula grants
to states and territories to create comprehensive, community-based systems of
care for adults with serious mental illnesses and children with severe
emotional disturbances. Funds are used at the discretion of states to provide
services such as health, mental health, rehabilitation, employment, housing,
and other supportive services. Most states provide services specific to adults
with serious mental illnesses who are homeless. In some cases, states have
used block grant funds to provide services in supportive housing (Emery,
2001). Mental health block grant funds also may be used to provide services
for individuals with substance use disorders within certain guidelines (SAMHSA,
2002a).
- Substance Abuse Prevention and Treatment Block Grants also are formula
grants to states and territories, in this case, to fund alcohol prevention and
treatment activities, prevention and treatment related to other drugs, and
primary prevention programs. All individuals who have alcohol or substance use
problems are eligible for services, including people who are homeless, or
persons with co-occurring substance use disorders.
- Community Health Centers, supported by discretionary project grants,
provide preventive and primary care services to medically underserved
populations; many have specific programs designed to serve individuals who are
homeless.
- Community Services Block Grants are formula grants to states to support
a range of services designed to address poverty and to promote
self-sufficiency among low-income members of communities, including those who
are homeless.
- Social Services Block Grants, also formula grants to states, can be
used to support a range of services to prevent, reduce, and eliminate
dependency and increase self-sufficiency among community residents.
Using Medicaid to Finance Supportive Services in Housing. Medicaid
represents a potentially reliable source of mainstream funding to support many
of the health-related services provided in supportive housing. Further, it
provides opportunities for states and local communities to leverage additional
Federal matching funds for services, permitting a greater portion of HUD
resources to go toward permanent housing.
The Corporation for Supportive Housing (CSH) recently examined opportunities
to fund services in supportive housing using Medicaid (CSH, 2002a). CSH found
that while major challenges still exist, many governments and supportive housing
providers have succeeded in using Medicaid to finance supportive services in
housing.
For example, under Medicaid’s rehabilitation option, providers can be
reimbursed for services aimed at improving skills and functioning impaired by
mental illnesses and, in some states, substance use disorders. The targeted case
management option can be used to support goal setting and linkage to health and
other social services. Through partnerships with Federally Qualified Health
Centers, providers can deliver health, mental health, and substance abuse
treatment services to people living in supportive housing.
Additionally, states may use Medicaid waivers to allow funds to be used in
more flexible and creative ways to fund supportive services in community-based
settings. While these strategies and their implementation vary from one state or
community to the next, they offer promise for expanding the use of Medicaid to
fund supportive services in housing.
HUD Programs. A number of HUD programs are designed to expand
affordable housing opportunities for low-income people or people with
disabilities, including those who are homeless (TAC, 1999).
- Public Housing is developed, owned, and managed by public
housing agencies (PHAs) under contract with HUD. HUD provides a subsidy to
cover operating and management costs of the units, and tenants generally pay
30 percent of their incomes toward rent. PHAs are allowed to establish local
preferences for income targets and tenant selection and must submit a 5-year
plan that outlines these preferences and demonstrates their consistency with
the local needs and strategies identified in the consolidated plan.
- The Housing Choice Voucher Program, formerly referred to as the Section
8 program, is the largest Federal program targeted to very low-income
households, including people with disabilities (TAC, 2002). Administered
through state or local PHAs, the program offers four types of assistance:
tenant-based rental assistance; project-based rental assistance; homeownership
assistance; and down payment assistance. Tenant-based assistance is the most
common form, offering subsidies that allow tenants to pay 30 percent of their
income toward housing costs in a unit of their choice.
- The Home Investment Partnerships program (HOME) is specifically
designed to expand the supply of affordable housing for low and very
low-income people. Program funds are controlled through the consolidated plan
and awarded via formula grant to states and local jurisdictions. Partnerships
among government and nonprofit organizations and private industry are required
to develop and manage safe, decent, affordable housing. Funds may be used for
homeownership, rental housing production, and tenant-based rental assistance,
and are easily combined with funds from HUD’s Homeless Assistance Programs.
- Housing Opportunities for Persons with AIDS (HOPWA) supports the
provision of both housing and services for people with Acquired Immune
Deficiency Syndrome (AIDS). Funds are awarded by block grant to states and
large metropolitan areas and can be used for a variety of activities,
including housing information and coordination assistance; acquisition,
rehabilitation, and leasing of property; rental assistance; operating costs;
supportive services; and technical assistance (TAC, 1999).
- Community Development Block Grants (CDBG) are formula grants to states
and to "entitlement communities" (as defined by HUD) to provide decent housing
and suitable living environments for moderate and low-income people. CDBG
funds also are controlled through the consolidated plan and can be used for
housing rehabilitation or construction, including shelters and transitional
housing facilities, and for supportive services such as counseling,
employment, and health care.
- The Section 811 Supportive Housing for Persons with Disabilities Program
awards funds competitively to community based nonprofit organizations to
develop and operate supportive housing for people with disabilities. Funds may
be used for new construction, rehabilitation, or acquisition; for
project-based rental assistance; and for supportive services to address the
health, mental health, or other needs of people with disabilities.
Other Mainstream Federal Programs. Several other nontargeted Federal
programs can be used to provide services and supports to people who are homeless
and have serious mental illnesses and/or co-occurring substance use disorders
(National Abandoned Infants Assistance Resource Center, 1997). For example, the
Social Security Administration’s SSI program provides income support to
low-income individuals and those with disabilities, including people with
serious mental illnesses and/or co-occurring substance use disorders who are
homeless. Individuals with a substance use disorder as their primary disability
are not eligible for SSI or the Medicaid benefits that accompany it.
Programs administered by the U.S. Department of Labor (DOL) can be used to
support job training and employment services. The VA offers various types of
assistance to veterans and their dependents. The U.S. Department of Treasury’s
Low-Income Housing Tax Credit (LIHTC) program can be used to fund the
development of new supportive housing. These and other sources of Federal funds
offer possibilities for creating housing and supports in an overall system of
care and should be examined by communities, as well.
State and Local Resources. State and local governments administer many of
the Federal programs mentioned earlier. They can either provide services
themselves or can contract with local providers to offer services with these
funds.
In addition, many states and localities use their own resources for programs
specifically designed to meet the housing and support service needs of people
with serious mental illnesses and/or co-occurring substance use disorders who
are homeless. Examples include programs, such as state tax credits, that can
fund housing development, as well as programs that fund operation costs and/or
supportive services.
Private Funding
Though public funding is crucial to providing the housing and supports needed
to end homelessness, it only can go so far. Private-sector contributions, such
as those from local businesses, corporations, private donors, and foundations,
can be critical sources of funding, as well (The Foundation Center, 2000;
McCambridge et al., 1992). Most private funding, however, is time-limited. While
it cannot substitute for more secure, long-term commitments, it can be used to
leverage or match other resources.
Often, foundations invest in new and untested, but promising, practices.
These funds may be used to leverage public funding to help sustain programs over
the long-term. In addition, some private funders are willing to invest in
building the capacity of organizations, to help them diversify funding and tap
into sources to sustain the funder’s initial investment.
Competition for private funds is growing as more and more organizations
recognize the need to fundraise from private sources, particularly for
affordable housing development. Finding donors whose mission is compatible with
the goal of addressing homelessness; building relationships with representatives
of corporations, foundations, and other potential donors; and being able to
market and submit a strong proposal for funding are all essential to obtaining
private support.
For More Information
As noted, the public sources of funding listed in this chapter represent a
sampling of the major kinds of resources that are available to fund services and
housing for people who are homeless and have serious mental illnesses and/or
co-occurring substance use disorders. The following web sites include more
information on Federal funding opportunities, including discretionary funding
for homeless services available through SAMHSA:
U.S. Department of Health and Human Services (HHS)
www.hhs.gov
Substance Abuse and Mental Health Services Administration (SAMHSA)
www.samhsa.gov
Health Resources and Services Administration
www.hrsa.gov
Centers for Medicaid and Medicare Services
www.cms.gov
U.S. Department of Housing and Urban Development (HUD)
www.hud.gov
U.S. Department of Veteran’s Affairs (VA)
www.va.gov
U.S. Social Security Administration
www.ssa.gov
Putting the Pieces Together
An integrated, well-financed system of care for people with serious mental
illnesses and/or co-occurring substance use disorders who are homeless is only
as good as the services it offers. Further, the services will be of little use
if they are not accessible, acceptable and of personal value to the people they
are designed to serve.
The next chapter comprises Section III: Organize Services. It features an
in-depth discussion of evidence-based and promising practices for people with
serious mental illnesses and/or co-occurring substance use disorders who are
homeless.
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