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House of Representatives,
Subcommittee on Housing and Community Opportunity,
Committee on Banking and Financial Services,
Washington, DC.

    The committee met, pursuant to notice, at 10:08 a.m., in room 2128, Rayburn House Office Building, Hon. Rick Lazio, [chairman of the subcommittee], presiding.

    Present: Chairman Lazio, Representatives Baker, Kelly, Metcalf, Kennedy, Gutierrez, Bentsen, Jackson and Carson.

    Chairman LAZIO. This hearing shall come to order.

    I am reminded that this city is built on a swamp considering the weather of the last couple of days.

    This is another hearing on H.R. 217, the Homeless Housing Programs Consolidation and Flexibility Act. I introduced this bill, as most will know, on January 7, 1997, the first day of this Congress.

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    Today's testimony will provide this subcommittee with an opportunity to hear from the Administration and outstanding representatives of State and local governments and homeless housing and service providers. H.R. 217 will consolidate seven McKinney Act programs through a block grant process and national competitive program for permanent housing. This is truly a bipartisan effort. In fact, Congressman Jim Moran, who I believe was then-Vice Chair of the League of Cities Legislative Committee in his capacity as Mayor of Alexandria, Virginia, supported consolidation of the McKinney Act housing programs several years ago. I also want to note that Secretary Cuomo has sent legislation to the House proposing consolidation of the housing programs of the McKinney Act.

    A review of HUD's legislative proposal indicates that it and H.R. 217 share many similarities. I suspect that we will continue to work with the Administration and with both Republican and Democratic Members to provide legislation that reflects the Federal goal of providing real and permanent solutions to end homelessness.

    House Resolution 217 stands on the shoulders of strong precedent across partisan lines and brings common sense Government approaches to some very fundamental problems that face our society. I would like to acknowledge Congressman Jack Metcalf, a Member of the subcommittee, who has introduced H.R. 1754, which focuses on concerns with homelessness and the veterans community.

    Just this past April, CBS' 60 Minutes highlighted an emergency shelter in New York City that received $3,000 a month per person. That is about $100 a night per homeless person at a facility called ''Angels By The Sea.'' The report focused on one tenant, Karen Granville, who had been living in the shelter for 9 months at a cost to the taxpayers of $27,000. Although Angels by the Sea does not reflect the majority of emergency shelters in the country, in fact, there are very few, I am confident, that fall into this category. Shelters like this lead to the perception that the Federal Government's homeless programs are wasteful, and we must do better.
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    House Resolution 217 will allow flexibility and creativity by State and local government recipients and their non-profit organizations while, at the same time, ensuring greater accountability. In that sense, we want to get value for our money, just as if we were spending our own dollars and we want to see results. We want to make sure we are helping people that have the capacity to transition back into society do that.

    Once again, I want to thank the Members and witnesses for participating in today's hearing. Many Members of this subcommittee may come in and out of the hearing due to other scheduled hearings and the debate on the House floor on the budget act. I also want to thank Mr. Metcalf and Mr. Vento who had asked to testify, for accommodating the subcommittee's schedule so that we can spend more time hearing from the witnesses today. Mr. Vento had some conflict himself and has asked to be able to address the subcommittee when he comes in and I will make a unanimous consent request that he do that.

    I want to remind the witnesses that your written testimony will be included in the record and if you can, summarize your comments. The subcommittee especially thanks the National Council of State Housing Agencies for their testimony that will be inserted in the record. I am going to ask that the summary comprise less than 5 minutes so that we have more time to engage in a Q&A session and I would ask, at this time, for a unanimous consent that Congressman Vento, when he appears, be permitted to make an opening statement.

    Without objection, so ordered.

    If any other Member wishes to make an opening statement?
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    Mr. METCALF. I had a statement on the bill. Would that be OK?

    Chairman LAZIO. Let me recognize the gentleman from Washington.


    Mr. METCALF. Thank you, Mr. Chairman.

    On June 3, 1997, I introduced legislation to provide funding for our nation's homeless veterans, H.R. 1754, which the Chairman mentioned. The Robert Stodola Homeless Veterans Assistance Act will require that at least 20 percent of the total HUD Stewart McKinney Assistance Act funds be used for programs designed to serve primarily homeless veterans.

    Robert Stodola was a homeless veteran who lived in his Pinto station wagon near the Nooksack River in my district. On February 1, 1992, two assailants severely beat him with a baseball bat and a tire iron. The two attackers then took a bank card, a checkbook, about $4 from his pocket, and the car. After being stabbed several times in the back and suffering a broken arm, the assailants dumped him in the Nooksack River where, according to an autopsy, he drowned.

    This is just one example of the plight that many homeless veterans face in our Nation. Statistics on the homeless population support creating a 20 percent set-aside and that is what my bill does, 20 percent will be spent on homeless veterans.

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    The National Coalition for Homeless Veterans estimates that 40 percent of homeless men are veterans. The International Union of Gospel Missions found that 34 percent of the men, and 7 percent of the women who seek refuge at America's Rescue missions are veterans. In a December 1996 survey of 29 major cities, the United States Conference of Mayors reported that 19 percent of the homeless population of these cities were veterans.

    Last, in its Third Annual Progress Report published in December 1996, the Department of Veterans Affairs reported that the greatest unmet need for homeless veterans was both long-term and transitional housing. Despite these statistics, the National Coalition for Homeless Veterans estimates that only 1 to 3 percent of HUD's Continuum of Care grant funds were awarded to veteran-specific programs over the past 2 years. As you know, HUD reorganized the distribution of competitively awarded McKinney Acts funds and created the ''Continuum of Care'' approach to focus on community-wide strategies.

    These statistics do not tell the complete story. Many, if not most veterans, have unique needs because they have conditions that are directly attributed to their military service. Substance and alcohol abuse, Post-Traumatic Stress Disorder and serious mental illness are prevalent among this population. Yet, we can't simply assume that the Department of Veterans Affairs has resources available to care for any veteran in need of assistance. At the same time, HUD needs to do more to ensure that State and local communities respond to the needs of homeless veterans.

    While Secretary Cuomo has made some progress in working with the veterans community, HUD needs to ensure that non-profit groups who want to assist homeless veterans have access to the funding process in local communities.
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    My bill does not simply mandate Federal homeless money for programs which provide nothing more than three hot meals and a cot. We can all agree that this type of assistance will not reintegrate these veterans into the mainstream of society and certainly will not improve their quality of life. By specifying that at least 20 percent of HUD's McKinney Act funds go to providers which give special attention to the unique needs of veterans, we can create programs which meet the holistic needs of this population. Additionally, my bill will provide technical assistance, and require integration and coordination, to the extent possible, with services provided by the Department of Veterans Affairs.

    Investing in comprehensive programs to assist homeless veterans to be reintegrated into society is a win-win proposition. These targeted programs have proven very effective in addressing the unique needs of homeless veterans and reducing recidivism. Our veterans have dedicated their lives to the security of our country and it is time for Congress and the American people to give back by helping homeless veterans find transitional and permanent housing. Without our help, the needs of homeless veterans will continue to be ignored.

    Thank you, Mr. Chairman, for this opportunity to present my statement.

    Chairman LAZIO. I thank the gentleman. I also would ask unanimous consent to include in the record the statement of Congresswoman Carson, who may not be able to make it because of a conflict but, as a matter of courtesy, I would like to introduce her statement into the record. She has also asked that a letter from the Indiana Coalition on Housing and Homeless Issues be inserted in the record and, as a courtesy, we will also make that unanimous consent request and, without objection, it is so ordered.
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    Chairman LAZIO. I want to welcome our first panel and thank you very much for coming, making the travel arrangements to come here, three out of the four of you anyway. I want to take some time, if I can, to introduce to the rest of the subcommittee the panel before us.

    First of all, Jacquie Lawing serves as General Deputy Assistant Secretary for the Office of Community Planning and Development and is Acting Assistant Secretary for CPD. Prior to her appointment as General Deputy Assistant Secretary, she served for 4 years as CPD's Deputy Assistant Secretary for Economic Development under Assistant Secretary Cuomo. Her primary responsibility within her department was homelessness and I want to thank you for attending.

    Jane Kenny currently serves as New Jersey Commissioner of Community Affairs in Governor Whitman's cabinet. She joined the staff of Governor Tom Kean in 1983, and helped to create the Office of Constituent Relations. At the end of Governor Kean's term, she joined Beneficial Management Corporation as Vice President of corporate and community affairs, charged with planning and coordinating support of public and private sector partnerships. Ms. Kenny was appointed to the cabinet position of Chief of Policy and Planning by Governor Whitman in 1994, where she served until 1996. Welcome.

    Julie Sandorf, no stranger to this subcommittee, is the Founder and President of the Corporation for Supportive Housing in New York City, established in 1991. CSH is a national intermediary organization dedicated to the expansion of supportive housing and employment opportunities for people who are homeless or at risk of homelessness and who have special needs, such as mental illness, HIV, AIDS or other chronic disabilities. Currently she is a member of the advisory board of the Center for Urban and Metropolitan Policy at the Brookings Institution, the editorial board of the Housing Policy Debate and she is a director of the National Housing Conference. Previously, she served as director of the New York program for the Local Initiative Support Corporation, LISK, and director for special projects for the mid-Bronx Desperados, a community development corporation based in the South Bronx.
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    Finally, Philip Mangano became the Executive Director of the Greater Boston Housing and Shelter Alliance in 1991. The Alliance is a regional coalition of providers, advocates and consumers which has grown to a statewide coalition of over 50 organizations serving homeless people. For his work with homeless people, Mr. Mangano has been named a City Light by the Boston Globe, a local hero by the Cambridge Chronicle, and Hero of the Week by the Boston Phoenix. Congratulations. Triple Crown.

    We want to welcome the outstanding panel. Thank you again for coming here and we look forward to hearing from you.

    We will begin with Ms. Lawing.


    Ms. LAWING. Mr. Chairman, Members of the subcommittee, thank you for the opportunity to represent Secretary Andrew Cuomo and the Department of Housing and Urban Development. I am particularly pleased to join my other panel members in addressing this critical issue. At HUD, we have benefited from the partnerships, the expertise, and the good work of non-profits from throughout the country; and advocacy groups including the folks who joined us today. It is an honor to work with these people.

    Before discussing HUD's homelessness assistance proposal, I wish to commend you, Chairman Lazio, for your efforts to propose new approaches to delivering homelessness assistance more effectively. We believe and are pleased that we are in agreement on much of the framework and many of the goals for consolidating the McKinney Act programs. I also wish to recognize Ranking Minority Member Joe Kennedy's work and other Members of the subcommittee, as well as Congressman Vento, who will join us today, for their longstanding national leadership in addressing the needs of homeless men, women and children.
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    Mr. Chairman, as you stated, the Clinton Administration has introduced the Homelessness Assistance and Management Reform Act of 1997 to Congress. Today, I would like to take the opportunity to discuss both that legislative proposal and H.R. 217.

    Let me just state for one moment where we have come in the last 4 years. Four years ago, President Clinton asked for a Federal plan to address homelessness. Federal agencies went throughout the Nation to more than 18 cities and States asking folks for input on what the homeless strategy should look like. As a result of those meetings, we developed the two major tenets of our Federal plan. One is increased resources. As you know, with the work of Congress and the Clinton Administration we have more than doubled the homeless assistance budget from $400 million in 1992 to about $823 million today, and we have introduced the Continuum of Care concept. What the Continuum of Care approach says is that the reasons for homelessness are varied, they are multiple. They are crisis poverty as well as chronic disability. Therefore, the solutions need to be appropriate for the causes.

    In order to do that, a community needs to come together and holistically respond to the needs of homeless persons in their communities, and develop a holistic approach which includes non-profit organizations and others. We have done that by reshaping our competitive programs and the way we run our competition to reward community-wide coordination and strategy rather than fragmented approaches. We believe that we have made great progress according to communities' feedback.

    However, Mr. Chairman, based on continued feedback from, and interaction with, community leaders, we believe there is some work left to be done in shaping the policy. Principally, communities indicate that they need a predictable flow of funding that assists local planning and undergirds local service delivery; increased flexibility; institutionalization of the policy; and enhanced local distribution.
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    The Administration's homelessness bill would restructure the Federal Government's role in assisting homeless families and individuals. Six separate programs, as well as many program subcomponents, would be consolidated into a single performance-based formula grant. The new approach would provide allocation levels of funding to 325 communities and 50 States for which the units of Government would submit an application. The distribution would be based on a 25/75 percent split, 25 percent to non-entitlement, 75 percent to entitlement, based on the current Emergency Shelter Grant formula. The allocation allows predictability in local planning, but only a quality, inclusive, application would be approved by the department.

    This approach offers enhanced flexibility and accountability, community participation and comprehensive approaches. The bill would require the community to establish a board. This local board then works with the community in developing a Continuum of Care strategy, which is an assessment of the needs, the numbers of the homeless persons in that community, the current inventory, what housing and services are provided and, finally, the remaining gaps. The Federal funds would be focused on the remaining gaps. The board would prepare the application, 5-year strategy and 1-year strategy.

    House Resolution 217 and the Administration's proposal have many similar elements. We share a common goal of consolidating the many disparate HUD-administered McKinney Act programs into one single, flexible resource for the community. Both proposals would allocate the funds by formula to help ensure an equitable distribution of funding across the Nation and to provide communities a consistent source of funding that they can plan toward each year.

    In addition, we share a similar goal regarding the importance of creating local planning boards to ensure the involvement of service providers, advocates, homeless persons and other impacted groups, including veterans. It is important that they help and craft local plans to address homelessness and that they both stress and ensure that non-profit providers would receive at least 50 percent of the funds.
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    Finally, Mr. Chairman, both proposals extend the reach of our limited Federal dollars by encouraging the use of other funds through a 50 percent match requirement.

    Let me share with you some additional features of the Administration's proposal.

    This proposal is built on the principle that communities best know their needs and are in the best position to craft solutions to meet those needs. Therefore, we have maximum flexibility on spending where possible. For example, communities oftentimes make the wisest choices. They want to focus the vast majority of their homelessness assistance resources to permanent housing solutions when possible, but may have competing demands. Experience also tells us that circumstances can be very different in one city or community compared to another, rural versus urban, for example. Therefore, we need to allow them the flexibility to use their funds to shape solutions unique to their community.

    Currently, there are several communities which have done very well under the competition, but will see a reduction of funding under the formula approach. In order to ease the impact of the change, the Administration's bill includes a hold-harmless provision which gradually transitions affected communities over a 4-year period from their current level of funding to their formula level. The Administration's bill also provides for a minimum grant for States, ensures funding for small States and provides ongoing funding at the minimum level for those communities who qualify under the formula in 1 year but do not qualify in ensuing years in order to minimize disruption and maintain housing and services.

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    The Continuum of Care plan is then submitted as part of the community or State's overall consolidated plan. This is the single planning document submitted by communities to access HUD's economic development, affordable housing, and community development dollars. Not only does this more integrated approach increase coordination, but it also ensures that homelessness is not addressed in isolation but, rather, in the context of the overall community's economic development and housing needs. A homeless person then would be able to access the jobs that are created by the economic development strategy, for example. This better insures that homeless persons are connected to jobs and to neighborhoods.

    Finally, as you are aware Mr. Chairman, one of Secretary Cuomo's priorities this year is management reform, to ensure that HUD's programs are run effectively and efficiently and represent a positive investment by our Nation's taxpayers, empowering communities and restoring public trust. Thus, our proposal is designed to specifically improve HUD's ability to manage our homelessness assistance efforts. Labor-intensive and time-consuming review of thousands of applications during the competition, made increasingly difficult by the staffing limitations in an era of downsizing, will be eliminated. The Administration's bill creates both national and project-specific performance standards to insure that our investment is accomplishing what we intend it to accomplish.

    Mr. Chairman, together, we have made great progress in creating tools for our nation's communities to address homelessness and to help homeless families and individuals move out of homelessness into self-sufficiency and permanent housing. While many of us here today may prefer different approaches to addressing homelessness in this country, it is gratifying to know that we have all come together to address homelessness in this country. We believe that it is time to take the next step in supporting local and State efforts to combat homelessness. The Homelessness Assistance and Management Reform Act will help us all move closer to the President's goal of breaking the cycle of homelessness. We look forward to working closely with you and other Members of Congress and this subcommittee in enacting new legislation which will help States and localities across the Nation to better address the housing and other needs of homeless persons. I would be happy to answer any questions at the conclusion of the panel. Thank you.
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    Chairman LAZIO. Thank you very much.

    Commissioner Kenny.


    Ms. KENNY. Thank you. Good morning, Mr. Chairman and distinguished Members of the subcommittee. Thank you for the opportunity to speak before you today, and thank you for your very kind introduction. My name is Jane Kenny. I am the Commissioner of the Department of Community Affairs, and also I am a member of the Board of Directors of the Council of State Community Development Agencies, or COSCDA, and I am here to testify on behalf of that agency on H.R. 217, the Homeless Housing Programs Consolidation and Flexibility Act.

    COSCDA's members are State executive branch agencies responsible for a variety of housing, community development and economic development programs—both State- and Federally-funded. We are interested in a broad spectrum of housing and community development issues ranging from affordable housing and homelessness issues to job creation and local public infrastructure. All of COSCDA's members administer the Community Development Block Grant program at the State level and many members also administer the HOME Investment Partnerships program, the Emergency Shelter Grants program and some of HUD's McKinney homeless programs, such as the Supportive Housing program and the Shelter Plus Care program.

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    COSCDA recognizes the leadership shown by the Chairman and other Members of the subcommittee on housing and community development issues. Mr. Chairman, we applaud your early introduction of H.R. 217 and your interest in improving the delivery of Federal homeless assistance.

    The McKinney Act programs have provided a much-needed resource to the States to provide homeless assistance within their jurisdictions. We have supported the consolidation of HUD's McKinney Act programs for many years and we hope that this year these programs are consolidated. My testimony this morning will focus primarily on suggested recommendations to changes in H.R. 217 that we think will make the legislation more flexible for the States.

    First, COSCDA advocates allocating by formula all the McKinney funds and does not support setting aside 20 percent of the block grants for national competition for permanent housing development. While we philosophically agree that providing permanent housing to homeless persons with special needs should be addressed, we also recognize that a national competition might not be the best approach for providing such assistance. A national competition is time-consuming for applicants to develop, wastes precious time in allocating funds to the homeless and does not ensure every applicant will be funded. States want to be provided with the flexibility to decide which homeless activities to fund, based on the most pressing homeless needs within their State and developed as part of their consolidated plan process. We recommend that the McKinney funds be allocated in the form of a single block grant without a national set-aside for permanent housing development, but that permanent housing development be an eligible activity under the block grant.

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    Second, allow States to use their allocations statewide. House Resolution 217 limits States to using their funds strictly within non-entitlement areas.

    States need the ability to allocate funds wherever the need exists, based on their own assessment of that need. Currently, human service dollars are allocated directly to States for use statewide. States oftentimes blend these human service resources with HUD's homeless assistance programs to serve the homeless on a statewide basis in both entitlement and non-entitlement areas. States need the ability to blend these resources to serve the homeless statewide. We urge you to modify H.R. 217 to permit States to spend their homeless funds in entitlement areas, as well as in non-entitlement areas, based on States' assessment of need. Such flexibility, which is permitted currently under the HOME program and the Emergency Shelter Grants program, is needed for all States to respond to yearly fluctuations in homeless needs throughout the State. In addition, many States work very closely with localities and non-profit providers to provide homeless assistance within entitled areas. Limiting the States to a ''balance of State'' role will disrupt these partnerships and the local delivery systems that are in place to serve the homeless.

    Third, we are opposed to the manner in which the match provision is structured in H.R. 217. While we do appreciate the fact that H.R. 217 does not require a one-for-one match, we would like to see the match remain similar to that required under the Emergency Shelter Grants program.

    Under ESG, a recipient may provide matching funds itself or through supplemental funds provided by any State recipient or non-profit recipient. Many States currently rely on subrecipient contributions to meet their match requirement. In addition, ESG also allows the use of time and services contributed by volunteers to carry out the program as eligible match. We ask that you allow the match requirement to continue in this manner.
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    Fourth, COSCDA is opposed to any caps on the use of funds for shelters and supportive services. Because of increases in shelter usage in some States and expected fluctuations from year to year, we don't support a cap on emergency shelter activities, nor do we support a cap on supportive services. While we are sympathetic to the Chairman's concern that Federally-provided homeless assistance not be directed to a great extent toward emergency shelter activities, we again ask that this decision be made at the State and local level, where the assessment of homelessness needs will occur.

    COSCDA supports a minimum allocation for small States. We suggest that it be modeled after the HOME program, which provides a $3 million allocation for small States.

    Mr. Chairman, we appreciate your recommendation that the McKinney program be funded at $1 billion. COSCDA would also like to mention its concern with the issues of renewal of existing projects. These projects have received funding through HUD's competitive programs. It is our understanding that the renewal needs of these projects are primarily supportive services but, over time, these renewal needs become increasingly dominated by rental assistance tied to SROs and other permanent housing for the homeless. For fiscal year 1997 alone, HUD has estimated that approximately $700 million is needed to fund expiring renewals. Clearly, there will be States and localities whose formula amounts would be entirely consumed by renewals and then some. If there is no solution to this problem, either through increased appropriations for McKinney funds to cover expiring renewals, or separating the renewals from the McKinney appropriation altogether or through some other measure, States and localities in some instances may not have adequate funding to continue these projects. This would be an important loss of housing and services to assist the homeless. We do ask the subcommittee to examine this issue.
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    Mr. Chairman, this completes COSCDA's statement. We urge the subcommittee and the Congress to enact legislation this year to consolidate HUD's McKinney Act programs.

    Thank you so much for the opportunity to speak before you today.

    Chairman LAZIO. Thank you, Commissioner.

    Julie Sandorf.


    Ms. SANDORF. Good morning, Mr. Chairman.

    Chairman LAZIO. Good morning, Julie.

    Ms. SANDORF. My name is Julie Sandorf and I am honored to have the opportunity to discuss H.R. 217 this morning. I first want to commend you, Mr. Chairman, for giving such prominence to and for tackling this very important issue.

    I am the President and Founder of the Corporation for Supportive Housing, a national non-profit intermediary dedicated to expanding the quantity and quality of service-enriched permanent housing and employment opportunities for individuals who are homeless or at risk of becoming so.
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    As an intermediary, we work with 150 non-profits as well as State and local policymakers, including Ms. Kenny, in our nine State site offices around the country.

    As you well know, America still has an enormous and costly homeless problem. In 1989, the Urban Institute put the number of homeless Americans conservatively at 600,000, the majority of whom struggle with additional problems including mental illness, histories of substance abuse and chronic illness problems that contribute to and often cause their homelessness. For this majority, housing alone, while critical, will not bring stability. Similarly, community-based services go unused by people with special needs who have no permanent place to live. As a result, those least able to negotiate the fragmented systems of care, cycle in and out of emergency rooms, acute care beds, psychiatric hospitals, jails and shelters, all at a tremendous human and economic cost.

    In response, community-based non-profits in the mid-1980's pioneered a new type of housing—supportive housing. It linked permanent, affordable housing that is both attractive and safe with a range of support services that give homeless and disabled people the stability and support they need to reclaim a stake in community life.

    Across America, it is working. A 4-year study by the Department of Health and Human Services of formerly homeless mentally ill adults now living in supportive housing found nearly an 84 percent retention rate and a nearly 50 percent decrease in inpatient hospitalizations, emergency room visits and incarcerations.

    The McKinney Homeless Assistance programs were created to bring these field-tested successes into more and more communities and eventually to scale. Those programs that support the development of permanent supportive housing have proved especially successful, not just in helping homeless and disabled people reconnect to society, but in leveraging private sector State and local resources to help end homelessness.
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    Despite the widely recognized success of permanent supportive housing, we have seen a shift in McKinney funding away from permanent supportive housing development. In 1994, housing development, including transitional housing, accounted for 59 percent of the total allocation. By 1996, it had slipped to 35 percent. We are concerned that if this trend continues, no new permanent supportive housing will be developed and our best hope for ending homelessness will die on the vine.

    House Resolution 217 is an excellent starting point for restructuring the McKinney programs. It, in many ways, builds upon the programs' strengths. Our primary interest is to ensure that any new homeless assistance program results in the development of permanent housing for homeless people. I will concentrate my oral remarks on this issue, although my written comments discuss a number of other important points.

    House Resolution 217 recognizes the importance of permanent housing as a solution to homelessness by proposing to preserve between 20 and 30 percent of the total funds for a national permanent housing development program. Representative Vento's bill, H.R. 1144, includes a similar structure, including Section 8 Moderate Rehabilitation SRO and Shelter Plus Care as separate competitive programs. Both of these proposals ensure steady funding streams to produce supportive housing. However, H.R. 217 is missing one crucial component necessary to ending homelessness—long-term rental subsidies.

    In typical affordable housing, low-income families pay enough rent to at least cover the building's operating costs, utilities, repairs, management, and so forth. Homeless people, however, have little or no income. So, supportive housing sponsors cannot cover their operating costs through rent payments alone.
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    Let's take a best case scenario. A sponsor is housing homeless disabled people in New York. Maximum Social Security benefits are $570 a month, which means each tenant can afford to pay only $170 in rent, 30 percent of his or her income. Meanwhile, operating costs average $315 per unit, not including debt service. The sponsor would be operating at a deficit of $145 per tenant per month from the get-go. Clearly, no sponsor would take on such a project, nor would the private sector, investing through the low-income housing tax credits, ever invest in such a losing proposition.

    We have developed a proposal to address this issue which we call the Capitalized Rent Subsidy Reserve. The basic concept is that sponsors of permanent supportive housing would apply for a one-time grant of Permanent Housing Development funds. The grant would be sufficient, with reinvestment of earned income, to fund the gap between tenants' rent income and the project's operating costs over a 15-year period. This approach has a number of advantages. Unlike Section 8 programs, the reserve requires only a one-time payment from HUD, the structure that would help avoid the complex Section 8 renewal problem that you and Mr. Lazio are grappling with right now.

    A second advantage is that a local entity would have the long-term administrative responsibilities, not HUD. The reserve would fund only the shortfall between actual operating costs and rents, ensuring that the projects receive only the funding needed, and the reserve would provide long-term rental subsidies that are essential to leveraging private sector investment through the syndication of low-income housing tax credits. By including the rent subsidy in the reserve as an eligible use under the permanent housing program, you would provide the single most critical ingredient to reducing permanent supportive housing. Without it, housing may be built, but homeless people will be shut out.
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    In conclusion, I would like to emphasize that the McKinney programs that support the development of permanent supportive housing have been a resounding success. In many ways, H.R. 217 promises to continue this success and with sufficient funding, a capitalized rent subsidy reserve and set-asides for permanent housing development, it can do so. It is the smart thing to do, it is the cost-effective thing to do and, most importantly, it is the right thing to do.

    This completes my testimony. I would be pleased to answer any questions you might have.

    Chairman LAZIO. Thank you. I am going to turn now to Mr. Kennedy to make some remarks.

    Mr. KENNEDY. First of all, I appreciate the Chairman holding this hearing this morning and also proposing some legislation that I think has a great deal of merit in terms of what we ought to be doing in terms of homeless policy issues in general. There are some issues that I think Mr. Mangano is going to speak to regarding some concerns but I think, generally, this is a positive legislation and I appreciate the testimony of the other witnesses.

    I just want to say briefly, Phil is one of the finest people that I know who has dedicated his life to helping homeless people around the City of Boston. He single-handedly put together the most successful fund raiser, certainly in our city, in terms of getting James Taylor and others to raise money years and years ago, when this was not the easiest thing in the world to do and Government support was not available. Since then, he has continued to work on trying to find ways of getting homeless people, not only into shelters, but really back into productive life.
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    All of us here want to welcome the spirit you bring and the efforts you are making and look forward to your testimony today.

    Please proceed.


    Mr. MANGANO. Thank you so much. Thank you, Mr. Chairman.

    I am proud, of course, to live in the Eighth Congressional District.

    Mr. KENNEDY. Keep talking, Phil. Keep talking.

    Mr. MANGANO. And hope for a broader geographic expanse in the near future, in terms of——

    Mr. KENNEDY. So does the Chairman.


    Mr. MANGANO. The reality is none of us really want to be here. Years ago when we rolled up our sleeves to face the national scandal of people on our streets, of Americans with no home, we thought our resolve and good intentions would carry the day. As modern abolitionists, we would address a national disgrace and work to end it.
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    But just as those original abolitionists, many of whom sat in Congress, learned that the struggle is not for a year, or even a decade, the work is until the job is done, so our work is not over. While the abolitionists called for immediate emancipation, they worked every day for decades to end slavery one by one. And while we would like to see the end of homelessness today, we work daily to abolish this scandal, one by one.

    The principal resource we have to accomplish this individual miracle is McKinney funding. I want to thank you again, Mr. Chairman, for your commitment, expressed in the bill, to flexibility and creativity and rethinking solutions to homelessness. And to you and your colleagues, thank you for your continuing commitment to provide Federal assistance to reduce homelessness. McKinney funding is working, making a difference. We want to assure you this is no boutique funding. Up in Boston and throughout New England, one thing we have learned over the years is that unless funds are targeted specifically to homeless people, their homelessness does not end, they are not served.

    Through their targeted nature, these McKinney funds are sacred. I mean that literally. They are meant for the most vulnerable, the poorest members of our national family. Every spiritual and moral tradition tells us that we have a preferential responsibility to the poorest. These McKinney funds respond to that moral imperative.

    Through McKinney programs, homeless people gain access to resources available in the mainstream. The mainstream doesn't move to homeless people, it is more likely to judge them. Homeless people move to the mainstream and McKinney funds have made that possible opening the doors to mental health, public health, employment and housing resources. McKinney funds create movement.
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    Homeless assistance is working, in Boston, in Massachusetts, in New England, the one by one miracles have added to the thousands and thousands of people whose homelessness has ended. We agree with the preamble of your bill, the results of Federal programs to assist homeless people have been positive.

    Formerly homeless people are now in housing, many with jobs and, most importantly, out of the despair of low self-esteem and into the hope of self-determination.

    How has this happened? Through targeted resources strategically invested to create movement and solutions. The Continuum of Care is working. This HUD-generated planning strategy has been adopted throughout New England with especially effective results in the greater Boston area. In requiring that all sectors, consumers, providers, advocates, Government, business and non-profits coalesce around a common coordinated plan, HUD has led the way. The resulting response has moved an ad hoc, uncoordinated, emergency-based reaction to a strategic, comprehensive, solution-directed plan. And more than a plan, HUD has backed its rhetoric with resources.

    As the point agency in the Federal Government for homelessness, HUD has taken the leadership in funding the Continuum. Given the lack of significant funding from other more service-oriented Federal agencies, HUD has invested in every element, outreach, assessment, emergency shelter transition programs and services and permanent housing to ensure a path out of homelessness.

    The emphasis of H.R. 217 on permanent housing targeted to specific homeless subpopulations reinforces the commitment to the essential antidote and strategy to remedy homelessness, housing and targeting.
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    Here are a few specific affirmations and recommendations regarding H.R. 217. Regarding permanent housing, we support both forms of housing assistance proposed. The continuation of a national competition for increasing permanent housing funds and the proposed funds in the Flexible Block Grant. We support the targeting of permanent housing funds to homeless persons with special needs. We support both tenant-based and project-based housing assistance. We also propose a shallow, short-term flexible rental assistance targeted to homeless people that are working. That initiative which has ended homelessness for hundreds of individuals in Boston, is described in the attachment to my written testimony.

    We support the provisions to make permanent housing funds accessible to non-profit organizations applying directly to HUD. In New England, non-profits have shown the way in housing homeless people.

    Regarding service funding, while we support the reduction in HUD homeless funds available for supportive services, we do so with the following caveats. One, if and only if, other Federal agencies increase their commitment to providing services. Minimally we support a concomitant increase in service funds from HHS and other agencies such as DOL and DOE to equal any HUD reduction in services. Such companion grants would not only provide needed service funds but would also be a means to link homeless people to mainstream programs of these Federal agencies.

    Second, with the provision of companion grants from other agencies, HUD funding levels should be maintained fully. Relieving the pressure on HUD funds for services, these resources would then be reinvested in residential options and permanent housing.

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    Finally, regarding renewals, which have been previously mentioned, programs begun in the last several years with 3-year McKinney grants are coming up for refunding. The current funding level does not allow the full, continued funding for these programs in many urban areas. In the next few years, this inability will extend to smaller States, to smaller cities and to rural areas. In New England, which combines all of these, the renewal funding issue is of concern to every State, large and small, urban and rural. For example, if Boston receives as much funding as it did last year, renewals would be funded at only 75 percent and no new programs would be possible. As a result, there would be a net loss in services and capacity in Boston's Continuum of Care. That decrease will undermine the current Continuum with its emphasis on next step programs.

    Fewer next step options would re-create an emergency system impeded by gridlock. The renewal issue threatens the gains of the past decade. Disinvestment from what has been created is counterproductive. No one wants to go back.

    I have other recommendations in my written testimony but I want to say finally that resources and responses to homeless initiatives, whether HUD's Continuum of Care, or H.R. 217, always include skepticism. Some say it is sending good money after bad, that it is all rhetoric or all politics. Some say the problem is intractable; no matter what you do it doesn't get better. Some say criminalize homelessness; be punitive.

    To all of them, the work of HUD over the years and the spirit of H.R. 217, offer a different vision, based on the promise of America. A promise of taking people with us, leaving no one behind. For the reaffirmation of that vision and that America, thank you.

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    Chairman LAZIO. Thank you very much.

    I am going to reserve my questions and turn to Mr. Kennedy who has got a conflict with another committee and is trying to balance both of those commitments and to allow him to ask some questions, I will recognize Mr. Kennedy.

    Mr. KENNEDY. Thank you very much, Mr. Chairman. I appreciate your consideration this morning.

    First of all, I again want to compliment you on the basic thrust of this legislation. I think that going back to when the McKinney Act was first formulated by this subcommittee, as well as a number of other subcommittees, we had more programs and ideas about how to combat homelessness than you could shake a stick at. The problem was we didn't have any money to put into all our programs, so we ended up with 47 programs and no money to fund any of them, so each one of them got a very little bit and we have tried to go through a process of consolidation over the course of the last several years, which has made some sense.

    The House passed this bill—or a similar bill to this a couple of years ago—which died in the Senate and I think that this is a demonstration of the kind of bipartisan effort that I think we can come to grips with in terms of what we want to see for basic policy.

    I do wonder if the witnesses would just—I wanted to just get a general sense, I know that, Phil, you have written about some of your concerns and there were concerns that we had in the past over the fact that, particularly on the SRO funding, that I think we have some issues that pertain to whether or not, with the lack of new Section 8's that are made available, that any particular city is going to be able to come up with—or any area around the country—is actually going to be able to come up with the funding that is necessary? And we end up with a situation where no city ends up actually providing for funding. The question was whether or not we really want to include that particular program within the overall block grant, or whether or not there isn't a rationale for having some bidding taking place and a competitive competition take place around the country in order to target specific areas where there is excessive homelessness where these programs could work?
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    We've had this argument before and I was actually convinced that this is one of the programs that should continue to be under the competitive sort of bid programs and go to where the areas of the country have the greatest need. So, I would like to hear from our witnesses about that.

    The second question I have is, I just wanted to get a sense from all of you as to where you think homelessness is in terms of a growing problem, whether you think there are more homeless people today, whether you think some of the policies we have recently voted on are going to end up exacerbating this problem, whether each one of you talked about the successes of homelessness in terms of the fight against homelessness, but I just wondered whether or not in fact, you believe the problem is now we have turned the corner? Are we starting to see less people that are homeless or do we see more and more people that are homeless?

    Phil, maybe you could start.

    Mr. MANGANO. Sure.

    In terms of your first question with regard to the continuation of competition around housing resources and the notion that those resources should be targeted to areas where the Continuum of Care has advanced to that level, I would certainly agree with that. I would think that without the provision of permanent housing, gridlock happens in all of the other systems in the Continuum of Care and it frustrates completely the notion of moving people beyond emergency response to permanent solutions. So, I would certainly agree with that.

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    In terms of your latter question, I think the irony that we are always faced with is that we make progress and we fall further behind and I think that is what we are always wrestling with. Literally in Massachusetts and in New England, thousands of peoples' homelessness has been ended. If the number had remained static from 1990, homelessness would be a thing of the past in New England. The difficulty is the continuing hemorrhaging into the front door fills up every bed that is vacated and in the last couple of years actually the increase in the number of homeless people has exceeded our expectations so we actually are seeing the overflow situation occur in emergency shelters in Massachusetts.

    Mr. KENNEDY. Thank you.

    Could the other three witnesses answer particularly the latter question as briefly as you can, because I've got to scoot anyway.

    Ms. SANDORF. Sure. I'll start with the second question first.

    New York City, for example, 1989, the City shelter system, single adult shelter system was at about 12,500 people. The City and State of New York put together an agreement called the New York Agreement to provide financing and services for housing homeless, mentally ill folks. By 1994, the single adult shelter system went down to 7,800 people.

    No scientist will tell me there is a correlation between the two, if you provide permanent housing for people who are homeless and with supports they need to stay in the community, they won't end up in the shelter system again.

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    As of 1996, the shelter system is at peak capacity. They are looking for new shelters to open. So, we are beginning to see the upsurge. That was also the end of the New York Agreement, the diminishing of Section 8 rent subsidies and diminishing of capital subsidies from the City to do more housing. So, we are seeing the increase.

    Just a brief comment on the need for the national competition. In my testimony, I give an example of Minnesota. If we went for a total block grant approach and very possibly Minnesota decides that 30 percent of their flexible block grant goes to permanent housing via rent subsidies, they will be able to house 44 people in St. Paul. There is a need in Minnesota for about 8,000 units of permanent supportive housing for people at risk.

    Mr. KENNEDY. Maybe you could answer for the record. I apologize, thank you.

    Chairman LAZIO. I will just say for Mr. Kennedy's purpose, if he has any other questions he would like to submit for the record, I hope the panel can respond to them if we get some written questions from him.

    Again, reserving my questions, I am going to just turn to Ms. Carson, if you have any questions.

    Ms. CARSON. No, I don't. You've been a wonderful panel.

    Chairman LAZIO. Thank you.

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    Congressman Jackson, who also has a conflict, and I apologize to all our Members, but it is just such a busy time right now, and I know you are busy as well, I would ask that I submit his statement for the record and on the unanimous consent request, without objection, that is so ordered.

    Chairman LAZIO. I would like to recognize myself and to ask a few questions about, first, philosophically and then as a matter of this initiative in particular, whether the blend of focusing on permanent solutions, but allowing for short-term initiatives including shelter, is the appropriate blend in your opinion?

    I am going to open it up to the whole panel because I think this is a very philosophical question about should we be focusing on permanent solutions, should we be allowing complete discretion to entitlement communities and to States in non-entitlement areas to do with the money whatever they want, or should we, in fact, be focusing, as I think 217 says, on resources, but not exclusively on permanent solutions?

    Let me start with Mr. Mangano and then ask any of you if you want to comment on that.

    Mr. MANGANO. I think there is no question that the focus on permanent solutions to homelessness is the critical element in reducing and ending homelessness and I think that is one of the advantages that we have seen in the Continuum of Care that HUD has supported.

    The whole notion of that Continuum is to create movement in the system toward the solutions and those solutions, of course, end in permanent housing. So, I think that blend that you speak of, it absolutely is critical for those permanent solutions. Without that, again, gridlock happens in the system and those homeless people who want to move on, which are all of them, are caught in a stagnated system which does not allow movement.
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    It was precisely a larger HUD investment at the far end of that Continuum that allowed movement through the Continuum, especially in New England, that ended homelessness literally for thousands of people.

    So, I say that the blend is the right blend. I would say some of the caps you suggest are probably at the right levels.

    Chairman LAZIO. I am going to ask you a follow-up question on this because it has to do with permanent solutions as well. And I think you mentioned this in your testimony and I know Julie Sandorf had mentioned it. The sense that perhaps we should consider focusing some of our resources or, some would argue, all of our homeless resources on people who have special needs, particularly addictive challenges or people who have mental illness.

    What is your opinion of that?

    Mr. MANGANO. I certainly think that there should be targeting to these populations. One of the things that we have discovered in Boston is that homeless people who don't have special needs also require some resource to move out of homelessness. One of the resources that we found that works real well is a housing search program that takes advantage of a very shallow rental subsidy that allows people who are working in shelters to move out of shelters. It gives them some discretionary income and allows both psychologically and really for them to move beyond the shelters that they have been in. So, we would certainly be supportive of that action.

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    Chairman LAZIO. Let me ask Commissioner Kenny.

    Ms. KENNY. Yes, we would be supportive. COSCDA, the national organization, would be supportive of the 20 percent set-aside for permanent housing.

    I have to say that certainly in New Jersey, and I know in other States, through speaking in and working with other States, that the goal always is the Continuum of Care. We start with people that are in some kind of an emergency assistance in New Jersey and they may move into transitional housing and then move into a rental situation with supportive services. I think that supportive services are the key, and a couple of our panelists have mentioned that.

    If you provide credit counseling, if you give transportation help or child care, and so forth, you are less likely to see people back into a homeless situation. We have actually moved people into home ownership when they are part of these supportive services programs, so we are absolutely committed to that independence and working with the other agencies in the State; having the flexibility to work with the other agencies as well as the non-profit agencies allows us to be very creative in our solutions.

    Obviously, everyone would like to see people independent and in permanent housing, but we have to be concerned for the people that we will not be able to get into that independence right away so we would always want to have the flexibility in a State to have funds to provide for the homeless.

    Ms. LAWING. Mr. Chairman, I would just echo what the two panelists have said. Permanent solutions manifest themselves in different ways. In some cases, an individual may need to be in transitional housing for 6 months with intensive job training, maybe child care, and then they are able to either access public assisted housing or other affordable housing and obtain independence.
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    In other cases, permanent housing with supportive services such as Ms. Sandorf spoke of, mental health assistance, substance abuse treatment may be needed.

    What the Administration supports strongly is an emphasis always on permanent solutions, and oftentimes on permanent housing supply being increased, but with the locality being able to make that determination.

    For example, some cities like Miami tell us that their most difficult need to meet are the single needs of families. Other cities, like Detroit, say their most difficult need is the single need.

    So, the needs vary significantly from community to community. We would support strongly that the communities have the flexibility in terms of how much they invest in the particular path to solution, in the particular program or the particular mode of housing. Having said that, we intend to hold them strictly to that formula, getting people into permanent housing and into permanent situations to the extent possible. Thank you.

    Ms. SANDORF. Mr. Chairman.

    Chairman LAZIO. Yes, Ms. Sandorf.

    Ms. SANDORF. I agree with much of what has been said before me. I believe this population is as diverse as the rest of the U.S. citizenry with folks who may not have diagnosable chronic illnesses but have had life experiences that have made it very difficult for them on their own to make it back into society.
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    So, there is really a fine line between folks who are homeless who have diagnosed special needs and those who are homeless who don't. I think we do need to be as flexible as possible in our approach to that.

    I believe that there should be a blend. There are certainly situations where folks will need support before they are able to live independently in the community. But there is no one way to do this.

    You don't have to be in a shelter, be in transitional housing and then be in permanent housing. It is not this direct path. Some people go from shelters into permanent housing. Some people need a 6-month kind of safe haven to get it together and then can go into permanent housing. So, there does not have to be a lock step program.

    I think that a combination of efforts is the best way to start this. Our concern is that if there is not a permanent housing set-aside, we will see the trend to not spending these resources in permanent housing continue. That is the trend it is going in.

    Chairman LAZIO. If I may ask one last question so the other Members can ask some questions? I want to direct this particularly to you, Ms. Lawing, but would invite anybody else who wants to chime in.

    One of the problems that we are facing, just as we are with the Section 8 portfolio, is the renewal of the McKinney housing contracts and I am wondering if you could comment on the Administration's rationale for providing renewals? Could you give us a sense of what the likely demands are going to be over the next 1, 2 or 3 years, what we are looking at and what the demand is relative to the resources that we have and how we might be able to meet that demand?
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    Ms. LAWING. Certainly. The renewals, first of all, have to be in the contract that we had three different programs, a supportive housing program, which is a transitional assistance program in which people can stay in up to 2 years and then no longer and then they move out of that program and go elsewhere. That is where we are going to see the majority of funding invested from the beginning—since these programs were created. So, that's where you see the majority of grants expiring. You then have the single room occupancy program that you are familiar with and the shelter plus care, which you are familiar with.

    The SRO program is included in our Section 8 account so to the extent that those certificates do expire, they are part of that renewal effort. And the supportive housing program, in particular, renewals have always been an interesting issue for the Department because renewal is one of many eligible activities. It has never been clear if renewal was intended to be in or not and, in fact, it has been the Department's policy, as well as an indication from Congress, to encourage non-profit and other organizations to obtain as many resources as possible to address homelessness, to obtain resources from throughout the community, from the private sector, from other Federal agencies, from the local and State governments.

    So, a big issue has been, and in all of our letters, approval. We encourage communities, knowing these are 3-year grants, to look for other resources as these grants expire.

    Chairman LAZIO. You have a proposal on the bill, though, you have a proposal on renewals directly in your legislation?

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    Ms. LAWING. Well, we don't address renewals directly in our legislation. Our legislation allows renewals as an eligible activity, as they are currently allowed under the supportive housing program.

    So, what communities would do, as these grants expire and you had asked about what level at which they are expiring, this year, the next 2 years, in 1997 and 1998, we are looking at programs that will expire if renewed at 100 percent, and it has always been the Department's policy to renew at 50 percent, but if renewed at 100 percent, would be around $230 million a year, if renewed at 100 percent. So, our policy has been to allow, because it is an eligible activity, to allow organizations to submit an application, we review the application and we approve the renewal at 50 percent.

    This year, in our Notice of Funding Availability, consistent with our thinking and local determination, we allow communities to include in their request for projects, also coming up for renewal. So, to the extent that they need Federal resources for that renewal, that supportive housing program, it can be included in that application and, again, consistent with local determination, rather than restrict them at 50 percent, if they need to, they can request it up to 100 percent.

    Chairman LAZIO. Is there a budget? Do you have a sense, a plan, as to how you are going to——

    Ms. LAWING. Sure. To the extent that they ask for 100 percent for 3 years, to the extent that they ask for 100 percent for 3 years, it will require all of our current funding. Therefore, you are not going to have new projects. I think the fundamental question for both of us to grapple with, as well as the non-profit organizations, is to what extent do we put new projects out there that we may, or may not, be able to sustain over time? So this year, communities will be making a choice. Do they sustain all the older projects and renew those at 100 percent, or do they take on new projects?
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    As you know, this Administration has made homelessness a number one priority. We have asked for vast increases in funding. But, at the same time, I think we all do have to ask ourselves the question, to what extent do we put out new projects, if indeed those projects are going to look again to HUD or the Federal McKinney funds for complete 100 percent renewal?

    Chairman LAZIO. OK, I want to thank the panel. I appreciate the effort you made to come here, appreciate the written testimony and what I think has been some very excellent oral testimony.

    We are very grateful.

    Ms. SANDORF. Thank you, Mr. Chairman.

    Ms. LAWING. Thank you, Mr. Chairman.

    Mr. MANGANO. Thank you, Mr. Chairman.

    Ms. KENNY. Thank you.

    Chairman LAZIO. I will ask the second panel, please, to come forward.

    Before the first panel leaves, Congressman Metcalf had a question he wanted to ask, and I was negligent in not recognizing him, so if he could just ask the question and perhaps one or more of you could respond in writing, that would be greatly appreciated.
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    Mr. METCALF. My question basically was for Jacquie Lawing and I am sorry that I had to be out for a while. I guess—do you want to do it right now?

    Chairman LAZIO. If you don't mind, I am just going to ask Ms. Lawing to come forward again, if I can. You all can sit there as well.

    Mr. METCALF. Thank you, Mr. Chairman, and thank you, Ms. Lawing.

    Have you sought and received an opinion from the Office of Solicitor and HUD's general counsel as to whether the current rulemaking process ensures veterans get a fair share of Stewart McKinney funds? Has that been done, do you know?

    Ms. LAWING. We have not done that. That has not been suggested and the way the program works is that veterans organizations, as non-profits, are eligible.

    Organizations, yourself and others, brought to our attention that there are veterans organizations which wish to take on veteran-specific projects and then there are other organizations that wish to take on other projects. We asked our Office of General Counsel if HUD has authority to provide technical assistance to include veterans specifically among that population that must be served. They certainly concur with that. So, as you mentioned in your testimony, and as we continue to work hard on, we are reaching out aggressively to veterans organizations, to encourage them to be part of the group of non-profits that are benefiting from HUD funding but also, more importantly, greatly benefiting persons who are homeless.
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    Mr. METCALF. OK. You stated that Congressional action is needed to ensure that veterans receive their fair share of funding. Does the Administration's proposal include such provision? I don't think it does.

    Ms. LAWING. Right, no. The Administration's proposal does not, but to ensure that funded communities are addressing veterans, we saw that more than $400 million of our funding awarded last year included projects that served veterans among the population they served. Our own proposal would emphasize that veterans be part of the process and that they be at the table, and certainly be among those served in the community. But we are relying on local flexibility and not setting aside reserves for any single population, such as persons with mental illness or persons who are veterans or persons who are victims of domestic violence.

    Mr. METCALF. OK. Would you please respond to my office in writing as soon as possible, and I am lobbying here, outlining the Administration's position on my 20 percent set-aside homeless veterans bill and legislation that would help the legislation, of course, if you could be supportive of it?

    Ms. LAWING. We will respond in writing. Thank you.

    Mr. METCALF. Thank you very much. Thank you, Mr. Chairman.

    Chairman LAZIO. Thank you, Mr. Metcalf. I appreciate that. And thank you very much.

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    All right, we will move on to panel two, please.

    I want to welcome the panel. I have expressed the gratitude of the subcommittee for you making travel arrangements to come here and for your written testimony, all of which has been included in the record, we are grateful for that and you can summarize your comments.

    I am going to introduce most of the panel, but I am going to turn to Mr. Bentsen to introduce Sally Shipman.

    George McDonald, first of all, thank you, is the Founder and President of the Doe Fund, Inc., located in New York City and Washington, DC. The Doe Fund was started in 1985 and its mission was to empower the homeless individual to return to the social and economic mainstream.

    In 1990, Mr. McDonald implemented Ready, Willing and Able, a residential work and training program for homeless men and one of the first revenue-generating homeless economic development projects in the nation. This program has twice been formally recognized by HUD, receiving the Community Service Excellence award from Secretary Kemp in 1992 and the Outstanding Community Partnership Award from Secretary Cisneros in 1994. Welcome.

    Richard McMillen currently serves as the President of the International Union of Gospel Missions, an association of Rescue ministries around the world, based in Kansas City, Missouri. He is also President and CEO of the Water Street Rescue Mission in Lancaster, Pennsylvania.
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    The international organization provides substantial homeless services and housing without receiving Federal funds and I want to welcome you here today as well.

    Shelly Sheehy; Jim Leach was here earlier, Congressman Leach. The Chairman wanted to make sure that I acknowledged the fact that he thinks the world of the work that you are doing and believes that you are truly making a mark on one of the most difficult issues that faces our society and that's homelessness. If it wasn't for the fact that he was called away and had a conflict with another subcommittee, as other Members have, he would have introduced you himself. But he wanted me to remark that he had personal appreciation for your work.

    Shelly Sheehy is currently a member of the State of Iowa Governor's Interagency Task Force on Homelessness, Secretary of the Iowa Coalition for Housing and Homelessness and the Quad Cities Shelter and Transitional Housing Council, the Quad Cities Welfare Reform Economic Development Group and the United Way Info-Link Data Services Committee.

    Now, I would like to turn, if I can, to my friend, the gentleman from Texas, Mr. Bentsen, to introduce Sally Shipman.

    Mr. BENTSEN. I thank the Chairman for yielding and also want to thank the Chairman for extending the invitation, not only to Ms. Shipman, but to the entire panel and bringing in folks who are out in the field, actually working on this problem. I think that is very appropriate.

    Sally Shipman comes from my home town of Houston, Texas. She serves as the Director of the Coalition for the Homeless of Houston, Harris County, Inc., a 500-member private non-profit organization whose goal is to prevent and reduce homelessness.
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    Ms. Shipman was educated at the University of Texas at Austin. She is currently a member of the faculty at the Houston Community College. She is the immediate past Chair of the Texas Interagency Council for the Homeless and, Mr. Chairman, prior to joining the Coalition in 1991, she served both as a member of the City of Austin City Council and as Mayor Pro Tem of the City of Austin, so she brings some experience that I know you respect.

    She was recently elected to the Board of Directors of the National Coalition for Homeless Veterans as well. She is an author of numerous publications, not only on homelessness issues, but also on Government issues as well, and I might just add that, in my opinion, she is perhaps the most vocal and successful advocate for the homeless in our Nation's fourth largest city. She is responsible for bringing Houston, which has not always been at the forefront of addressing this problem, to the forefront.

    I would just end with one experience that I had, which was after I was elected to Congress in 1994, before I had taken office or even had an office. She was in my private sector office, lobbying me on behalf of the homeless and that just shows how effective she really is, so I appreciate you having her on the panel.

    I apologize for having to leave for another commitment.

    Chairman LAZIO. I understand. Thank you very much. I am grateful that you could come here.

    The next panelist is Mr. Eric Butler. And I want also to mention that the Ranking Member, Mr. Kennedy, had wanted to actually make the introduction but, again, because of another conflict, he was not able to do so, but also was very complimentary of your work and reputation.
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    Eric Butler is President and Executive Director of the Pine Street Inn, New England's most comprehensive provider of services to the homeless, and formerly-homeless, men and women. He joined Pine Street in July of 1996 after 5 years as President and CEO of Bay State Skills Corporation. Eric Butler has also worked in Government, as the Executive Director of the Vice President's Task Force on Youth Employment during the Carter Administration.

    I want to welcome you here today. Thank you.

    The next panelist is Maria Foscarinis. She is the founder and executive director of the National Law Center on Homelessness and Poverty. She has represented homeless persons at the national level since 1985, when she arrived in Washington to coordinate the original campaign to secure a Federal response to homelessness. She is a primary architect of Federal legislation including the Stewart B. McKinney Homeless Assistance Act which is the foundation upon which we are building today, the first and only major legislation addressing homelessness.

    Mary Gleason is the Executive Director of the National Coalition for the Homeless, which provides public education, legislative advocacy, technical assistance and grassroots organization around issues related to homelessness and poverty. Ms. Gleason co-created the Colorado Coalition for the Homeless where she worked for 12 years developing and administrating programs for families, individuals, homeless in the Denver metropolitan area.


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    And Nan Roman, who is also known well to this Chairman and to the Committee. She has been Vice President of the National Alliance to End Homelessness since 1991. The Alliance is America's largest non-profit, non-partisan membership organization working on behalf of people who live in poverty and homelessness. She is an active and influential participant in the national policy debate on solutions to homelessness. She works closely with Members of Congress, like myself, and their staffs, like mine, as well as senior members of the Administration.

    I want to welcome you all today, and also just remarking, as I felt with the first panel, that your background speaks very much to your own character, your expertise and your professionalism. We are very fortunate to have you serving the public.

    Mr. McDonald.


    Mr. MCDONALD. Thank you, Mr. Chairman. Thank you for inviting us here today, and being interested in what we have to say.

    I started helping homeless folks in Grand Central Terminal in 1984. We fed 400 people a night at 10 o'clock and I did it for 700 nights in a row. I learned a great deal and I learned it from the people themselves. Here is what I found out. They appreciated the temporary assistance of the sandwich and the milk and the apple, but what they really wanted was a room and a job to pay for it.
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    Now, how do you go about doing that? For people who are indigent, they are indigent, they have no money. That is why they are out there getting the food or the emergency shelter or the emergency assistance. We created a program in New York City called Ready, Willing and Able that had the basic premise that you needed temporary housing, you needed paid work and you needed social services and, on those three legs, we have built an organization that serves 350 men—and some women—here in the Nation's Capital.

    We have done that through the concept that it takes more than 5 minutes for a person to get over the particular problems that led them to become indigent in the first place. Lack of education, lack of job skills, drugs, histories of incarceration. There are many barriers.

    Yet, in our program, we see after 12 to 18 months, well over 50 percent of the people who come in graduate from the program and go get—now listen to this—a private sector job and a non-subsidized market-rate apartment. Room. Now, how can we do that? We do that by mirroring what the societal outcome is expected.

    Our folks come in, we pay them $5.50 an hour to do street maintenance, that means sweep the streets. In Georgetown they call it ''butlering,'' to do construction work, light—not trade work, but rubbish removal, painting, plastering, taping, that kind of stuff. We do direct mail. We have commercial customers, Toyota, Citibank, and we do culinary arts.

    We teach people basically how to get up in the morning, how to go to work, how to be drug free, we do drug testing all the time.
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    Now, I know your reservation about spending money on drug treatment programs but, believe me, our program isn't a drug treatment program; our program is a work program and you should invest all of the money in work programs that get people independent and out of this system and into our system, the American system. I think that's critical.

    If there was a message that I could give you today, it is, don't limit these supportive services when the supportive services go to pay people to work, and get them the skills to get out of our system and not be dependent upon us.

    Now, I recognize the need for supportive, subsidized housing. We run a facility, a small facility for 28 folks who live with AIDS on East 86th Street in Manhattan. I know that people have chronic mental health problems. There are disabled folks that are going to be permanently in need of our assistance, but I will tell you that the vast majority of indigent homeless people in America can get out of it if we rely on those principles that made this country great. Give them an opportunity to work and they will prosper and be just like you and I.

    Now, the McKinney money has been very important for us in being able to launch these programs and illustrative is our experience here in the District. We came down here with McKinney money, won it competitively and started a Ready, Willing and Able program. We went to K Street and started sweeping up. They're in blue uniforms, you see the white bags with our name and telephone number on the side of it. Then we went to Georgetown and did the same thing.

    Guess what? The Georgetown Business Improvement District has hired us—the Golden Triangle they call it now—has hired us, North Capitol Street has hired us, and we are replacing with private sector dollars, the money that the Federal Government gave us to launch the program. And what does our program do? Our program gets people out of homelessness and I think that should be the goal of the funding that the Congress provides.
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    Thank you very much.

    Chairman LAZIO. Thank you very much. I am going to respond to some of those when I get a chance.

    Mr. McMillen.


    Mr. MCMILLEN. Thank you, Mr. Chairman. I appreciate the opportunity to testify before you and your colleagues today.

    As you stated, I am President of the International Union of Gospel Missions and the Executive Director of the Water Street Rescue Mission, Lancaster, Pennsylvania.

    Given the responsibilities of the Subcommittee, it may be of interest to you that I myself am a product of Government-subsidized housing. At two different times during my childhood, I lived in ''projects'' with my parents. Having been raised in public housing is nothing to brag about. Having a roof over our heads was nice, but there was nothing about the Government housing designed to help lift my alcoholic father, or my mom, or us kids out of homelessness or despair.

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    At the Water Street Rescue Mission and at Rescue missions nationwide, we try to instill hope in the hearts of the people we serve.

    Last year, the Water Street Rescue Mission provided more than 51,000 nights of lodging, 139,000 meals, $36,000 worth of furniture, and $20,000 worth of clothing. We also provided youth programs, medical care, transitional housing, job training, education and a Christian Life program, in which residents receive counseling and learn responsibilities through work assignments.

    We offer all of these services exclusively through private donations, gifts-in-kind, and volunteer support. We do not receive a dime of local, State or Federal dollars.

    The Water Street Rescue Mission is a relatively small organization but it is part of something much bigger. We are one of 250 Rescue missions that comprise the International Union of Gospel Missions, or IUGM. If you were to combine our annual revenues of about $350 million, we would be the sixth largest non-profit organization in America.

    Tonight, more than 27,000 people in America will be sleeping in Rescue missions. Each of them is being fed, sheltered, and assisted in some direct personal way. Last year, Rescue missions served more than 30 million meals to the poor and homeless. That is nearly enough to provide a meal to every resident in the entire State of California.

    Perhaps even more important than these statistics, however, is that 14,000 men and women graduated from Rescue mission programs involving drug treatment, job training, education, and spiritual growth. Today, these men and women are functioning, productive members of our society.
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    Several of these Rescue missions are located in the home States of the Members of this subcommittee, or actually right in your districts. In fact, there are two Rescue missions within a long walk, or a short cab ride, of this hearing room. They are the Gospel Rescue Ministries of Washington and Central Union Mission.

    I urge you and your staff to visit them.

    The reference to our organization as ''Rescue missions'' is quite intentional. We rescue lives. Rescue, as we define it, is more than rehabilitation. It is the transformation of lives. The transformation of drug users to drug counselors. The transformation of families taking food out of trash barrels to living lives of dignity. The transformation of tax recipients whose names are on welfare rolls, to taxpayers whose names are on weekly paychecks.

    Those of us involved in Rescue mission work believe that we are so successful at transforming lives because we treat the whole person—mind, body, and soul.

    Rescue missions offer some of the nation's most cost-effective drug treatment programs with success rates above 60 percent, innovative job training and eduction programs for the poor which have been successful in moving people from welfare to work. We offer youth and family services, jail ministry, services to the mentally ill, and assistance to the elderly poor and at-risk.

    Mr. Chairman, I would like to introduce to you a person who has turned his life around at a Rescue mission—James Washington. Would you stand?
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    He saw three of his brothers die in drug-related violence and nearly lost his own life. James went through one of our Rescue mission programs in 5 months. Today, believe it or not, he is an employee of the U.S. Senate. Thank you very much, James, for coming.

    Mr. Chairman, I respect and support your efforts to consolidate and provide greater flexibility under the seven existing McKinney Homeless Housing programs.

    I suggest to you the following:

    Skid Row is not a geographic location. Rather it is a ''heart'' condition. Unless the program changes a homeless individual's heart, not just his mind and body, he will remain homeless.

    In closing, I would like to quote a Member of Congress who recently gave the Republican response to President Clinton's weekly radio address. He said, ''Condemning the working poor to Federal poverty warehouses is to abdicate our responsibility as a society. The poor don't deserve to be brushed aside, forgotten. They deserve real help themselves, rather than treating them as helpless wards of the State.''

    Mr. Chairman, I suspect you recognize these words, because it was you who spoke them on May 17th.

    I agree with you, and my fellow Rescue mission directors agree with you. It's time to stop asking what we can do ''for'' the homeless, and begin to start asking what we can do ''with'' the homeless.
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    If H.R. 217 enables homeless individuals to seek supportive services that offer a faith-based component, then I think you will see even more dramatic and successful results.

    When I and my family were recipients of subsidized housing or welfare, it did not change our attitudes, or our pursuit of what we wanted for ourselves. The power of the Gospel of Jesus Christ is what accomplished that for us.

    What is referred to as being ''saved'' is not an absolute requirement. It should, however, be an option available to everyone, because it can transform the lives of the poor where Government programs at times have failed.

    Thank you very much.

    Chairman LAZIO. Thank you.

    Ms. Sheehy.


    Ms. SHEEHY. Good morning.

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    Chairman LAZIO. Good morning.
    Ms. SHEEHY. Thank you for the opportunity to speak before you today. I represent John Lewis Coffee Shop, Inc. We provide shelter for single men and women, transitional housing and support services, and development services in the Quad Cities area in Iowa.

    I am also the Secretary of the Iowa Coalition for Housing and the Homeless, a statewide advocacy group.

    Our recent accomplishments include passage of an Iowa housing funding bill that will provide an additional $21 million in the next 4 years for all types of housing development.

    This subcommittee has taken on the difficult task of proposing to consolidate the McKinney Homeless Housing programs and block grant these programs to States and localities. Some elements of H.R. 217 are attractive to a State like Iowa that historically has only been moderately successful in acquiring homeless funds through national competitions. On the surface, block granting may give underserved homeless populations a shot at funds that are geared toward development of housing units that State and local funds are not traditionally funding.

    Changes to the few dollars directly appropriated by the Iowa Legislature for housing came as a result of the hard work of the Iowa Coalition for Housing and the Homeless, leadership, members and the homeless themselves. There is some concern on the part of the Iowa Coalition though, that the State would balk at the match requirements of a block grant.

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    While we believe in a match requirement, we would like to see some assurances that the State could not refuse funds without consultation and approval by service providers.

    In 1994, agencies in Davenport applied for Continuum of Care Supportive Housing program funds. None were received. In 1995, a nine-agency collaborative process identified needs and gaps in service using the Continuum of Care model and a community process for planning. Three of nine projects were funded for $486,000, a victory for those agencies chosen by HUD, but feelings of confusion were felt by those who were not. Building on making a living, working Continuum of Care became the goal of all of the service agencies on both sides of the Mississippi River in Iowa and Illinois following the grant award.

    A 9-month process was undertaken by the Quad Cities Shelter and Transitional Housing Council to identify how services could be coordinated to make the most efficient use of funds, and more importantly, to better serve the individuals and families who come to us for help.

    Fourteen agencies, local government partners, local funders, and program participants themselves adopted the Service Coordination Through Collaboration model. This model was the basis for our 1996 Continuum of Care application that received a $2,191,854 award, full funding for a community plan that took into account all aspects of service and housing choices.

    While the Quad Cities area application was funded, other areas of the State were not, and frankly, some areas didn't bother to apply, seeing the process as difficult, time-consuming and without much chance for funding.
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    JLCS has worked with many of our colleagues in encouraging a statewide approach to the Continuum of Care model. Beginning in December of 1996, the Iowa Department of Economic Development and Iowa Coalition for Housing and the Homeless began to bring service providers and local governments together. This year, Iowa will submit an application based on a Continuum of Care taking in all areas of the State.

    The face of homelessness is different in Iowa than in other areas of the country. In 1996 the Drake Study on Homelessness in Iowa identified 53 percent of the homeless as children under the age of 17. Only 12 percent are single men with an identified substance abuse problem or chronic mental illness.

    We would ask that Iowa be given an equal consideration in determining the formula for need. Need for this program should not be based on previous years' participation in the national competition. We would also like to request that local input by non-profit groups be more clearly stated in the bill to include increased participation in a Consolidated Plan process and a commitment to follow through on the Continuum of Care strategies that communities have now invested considerable time and effort in.

    On Saturday, March 22, of this year, Congressman Jim Leach accompanied staff members of John Lewis Coffee Shop, Inc. on a tour of the neighborhood. Our tour included stopping during lunch at our men's shelter and community meal site. There we found the president of a local university and students serving a lunch they had prepared to about 75 men, women and children. These folks were from our shelter, other shelters in the area, and hungry people from our neighborhood.
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    We went on to walk through several blocks of what is thought of as a ''blighted neighborhood'', with some boarded-up houses, but with many other newly renovated homes, some used as transitional housing for single men and women and some for families.

    Our next stop was an historically restored 1850's Italianate brick home that is a six unit, single room occupancy property owned by JLCS and occupied by gentlemen who used to live at our shelter.

    We walked down by a park that was once a haven for crack dealers and not safe for anyone to walk through, but that now boasts new playground equipment where we found children and adults enjoying a chilly, but sunny March day.

    On the far side of the neighborhood, we peeked in through the boarded-up windows of the oldest known tavern west of the Mississippi River in Iowa, established in 1857. This winter, it will become the site of the JLCS Community Center and finally known as the Cafe John Lewis, a neighborhood gathering place and food service employment training site. Coffee will be served.

    I relate this experience with Congressman Leach, because I think that when policymakers are asked to examine complex social problems, such as what to do to help the homeless, they may find the discussions so removed from their own experience and frame of reference that they may come to rely on academics and bureaucrats to fill in the information gaps, rather than to look to their own backyards.

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    Our strong feeling locally is that our Congressman ''gets it.'' He understands that the new siding and paint, playground equipment, and community gardens are all strengthened by services that support the people in those houses.

    We are aware that the issue of block granting this program is not going to hinge on the wishes of JLCS staff, the Iowa Coalition for Housing and the Homeless, or the people we serve.

    I do appreciate and thank you on behalf of those folks for the opportunity to speak to you today, and welcome any questions you may have.

    Chairman LAZIO. Thank you very much.

    Ms. Shipman.


    Ms. SHIPMAN. Thank you.

    Mr. Chairman and Members of the subcommittee, is it indeed a privilege to testify today regarding H.R. 217. Thank you for this opportunity.

    I am speaking on behalf of the Coalition for the Homeless of Houston/Harris County, Inc., Board of Directors and member organizations. The Coalition supports consolidation of existing McKinney Homeless Housing programs into a block grant homeless assistance program to a metropolitan city or urban county.
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    Not unlike other metropolitan areas of the country, before HUD announced the 1997 Homeless NOFA, the local Continuum of Care process was well underway in Houston. In 1996, Harris County, the City of Houston, and the Department of Veterans Affairs, funded a study by the University of Houston and Texas Southern University which actually counted 9,216 literally homeless persons in Harris County.

    ''In the judgment of the study's research team, this total estimate of homeless persons is likely to be a conservative one. This is because some homeless persons, especially those residing in abandoned buildings, are likely to have been missed.''

    This baseline data coupled with information provided by the faith-based assistance programs formed the statistical foundation for the current Continuum of Care process.

    The Coalition's Homeless Services Coordinating Council identified service gaps and needs through an open, public process and the 1997 Continuum of Care priorities were adopted in December, 1996.

    In March, 1997, public notice was posted for proposals. Review teams from the city, county, and the Coalition scored all proposals on technical merit. Later, a volunteer steering committee scrutinized all proposals based on the adopted community needs.

    The Continuum of Care process and implementation is working. Today, there are fewer people on the streets of Houston than even 2 years ago. Moreover, for the first time ever, emergency assistance calls to the Coalition for the Homeless are actually down for the first 6 months of 1997.
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    The Coalition welcomes this opportunity to publicly applaud HUD for the homeless Continuum of Care process. Now the critical Continuum of Care link is program and budget monitoring. For the Continuum of Care to be both efficient and cost-effective, individual program budgets should be matched to the big picture.

    Continuum of Care evaluation and accountability are fragmented. Contracts are monitored incrementally. Some Harris County contracts are monitored locally by county staff. Others are monitored by Fort Worth HUD staff 200 miles away. Consolidated homeless block grants monitored by a city or county or a publicly-designated single entity could better evaluate individual agency programming and budgets in concert with community-adopted Continuum of Care needs.

    Community Development Block Grants present an appropriate model. With CDBG programming, improperly spent funds, or unspent funds within the stated time allotment, must be returned to HUD. The HUD auditing process requires careful attention to detail. Nothing sends a city or county department of housing and community development into damage-control quicker than public records showing lack of accountability. Before the actual HUD audit, questionable public records always reach the local daily newspaper front page.

    Finally, on behalf of homeless people and homeless advocates throughout Texas, let me say a word against the required 50 percent match referenced in Section 407. Like many Texas cities, Houston has a 100 year tradition of allocating no general fund money for social services. There are no public shelters for the homeless. For such a longstanding policy to change, a local tax increase would be required, pitting homeless needs against police and firefighter unions, as well as major sports stadiums. Homeless people deserve better odds.
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    Thank you.

    Chairman LAZIO. Thank you very much.

    Mr. Butler.

    Mr. BUTLER. Thank you.

    In your introduction of me, you noted that I started in this particular position about a year ago, so I am somewhat in awe of my colleagues, as well as honored by you, to be invited to offer some comments. Let me do that in a couple of informal ways and commend you to my written testimony for some of the particulars.

    It is about 11:15 a.m. Last night, about 1,000 ''guests'', as we call them, slept in 20 different facilities of Pine Street Inn in Boston, 450 of them in what we regard as an emergency shelter. Some, as I know you are aware from previous testimony you have heard, Mr. Chairman, have been with us a long time. Others transition through our care during shorter periods of homelessness. Three hundred people were with us last night in transitional programs, both in housing and other forms of supportive services. About 250 were living in what we call permanent housing. For some of our guests it is permanent probably, and for others it is transitional, moving them closer to a more permanent and unsubsidized situation.

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    Every night, we see about 150 people who are, as the British call it, ''sleeping rough.'' They are electing not to come into shelters, though in Boston we would find beds for them if they felt they could come in. Our ''outreach van'' goes out every night with the Boston Celtics logo on the side—the Celtics helped us purchase the van—with coffee, soup, sandwiches, encouraging words, advice about where to go to be and stay safe.

    At this hour on any weekday morning we have about 200 people who are either working or in our job-training programs or training run by others. There has been a lot of talk about ''Continuum.'' It is a word that works for me, and a working concept for which HUD and many local programs should be commended. The Continuum puts into practice Pine Street Inn's philosophy, shared by many people here, which is that we will meet you, whoever you are, in whatever condition you come to us, and we will try to help in any way we can to make the return journey to full community membership.

    When you become homeless, in effect, you lose all your community ''licenses.'' You lose all the symbols and all the trappings of actual citizenship. You are, in an odd way, declared no longer to be a community member. Well, that is wrong, first of all. But even so, there must be some ways to regain true community membership. For some, it requires, simply, a place to live. For some, it is money to pay for that place to live. For others, it is job skills. For others, it is some assistance on the road to recovery. And for many, it is all of the above.

    The statistics are well known. Of the 1,000 people that stayed with us last night, about 40 percent are struggling with substance-abuse issues; 40 percent are diagnosed as mentally ill; many are both. That is not so much a statement of their condition or their character as it is a statement of the challenges that lie before them.
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    For us, the McKinney funding that has come in through the SuperNOFA competition, gives us some tools that we otherwise do not have. Some are housing tools, some are supportive services. All are included in conjunction with each other. McKinney lets us innovate to create new services which combine housing with the other services that return people to community life.

    I want to say two things that pertain to the technical issues around H.R. 217. One is to emphasize that everybody is grappling in this work with the question of the complex or holistic challenges that people are dealing with. A single emphasis on creating housing, or single emphasis on creating services is sort of the wrong question. A lot of these questions get distorted in public policy by the lack of sufficient money. For example, a lot of the ways you would deal with the balance between permanent housing and supportive services would change if we would really put enough resources into this challenge to let us grapple with the issues in a straightforward and complete way.

    We live in terror, frankly, of the desire for HUD to focus on exclusively, housing. If I were sitting in HUD, I would probably want to really sharpen my focus, and I might think housing was the way to go. But, please do not do it before finding some way for HHS and Labor and Education to step up to the plate. Do not do what happened in Massachusetts, which has deinstitutionalized the mental health institutions without really putting into place the community response. Good idea, bad execution. And there is some risk here now, some technical risk, that you will so focus HUD on housing, that it will move out of supportive services too abruptly. It may be not a bad idea in the long run, but make sure it gets executed properly, with other agencies stepping up to the plate before HUD's support is scaled back.
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    Thank you.

    Chairman Lazio. Thank you very much.

    Ms. Foscarinis. Welcome.


    Ms. FOSCARINIS. Thank you, Chairman Lazio. I appreciate the opportunity to testify before this subcommittee on the important issues before you. I also want to say that I very much appreciate your interest, and this subcommittee's interest, in this important issue. We believe it is very important for the McKinney Act to be reauthorized. This is crucial, and we very much appreciate your taking up this issue, taking the time to look at the specific issues presented and giving it the attention that it deserves. So, thank you first for that.

    I want to start by putting these issues in a little bit of context. I do come before this subcommittee with a history of involvement in the McKinney Act. Ten years ago—it has been now 10 years that Congress first recognized that homelessness in America is a national crisis. Congress responded to the crisis by passing the Stewart B. McKinney Homeless Assistance Act. At the time it was a landmark piece of legislation. It was the first major Federal response to homelessness, first recognition the Federal Government had a responsibility to address this crisis. It had broad bipartisan support. It was intended to be a first step in addressing homelessness. It was supposed to be a first step in addressing the emergency needs of homeless persons. It was not supposed to be the only step. More permanent, longer-term solutions were envisioned at the time by all involved. Personally I never thought that I would be sitting here 10 years later on the McKinney Act.
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    The McKinney Act programs have provided very important relief. They have provided a very important safety net. They have provided funds for a large number of very successful, innovative, and good programs around this country, and I feel honored to have on my panel persons who can speak directly about the importance of these funds and the success of their work and their programs. I think it is impressive. It is something that we can all be proud of. But I think that that fact, which has to be recognized, the success of these programs must be recognized, because it tells us that these programs can work. Homelessness can be successfully addressed, and it can be successfully prevented and ended.

    But this fact then coexists with the other important fact that these programs are not enough. They are not enough in two senses. They are not enough even to do the emergency piece of the job. A recent survey by the Conference of Mayors looked at 29 of the largest cities. They found that approximately 20 percent of the need for emergency shelter was going unmet, just emergency shelter. And this is likely to be a conservative estimate, given that these are the larger cities that generally have provided more resources.

    So, the emergency need is not being met, but even more important, the longer-term need is not being met. The problem of homelessness is even more critical now. Changes in other Federal programs will likely affect it in the next few years to come. Most significantly, changes in the Federal welfare laws are likely to have an impact on homelessness. Studies done at the State level recently have shown that when State welfare programs were cut off, approximately 25 percent of previous recipients became homeless. So, I think this is a very good time as well for this subcommittee to be taking up this issue and addressing homelessness and the McKinney Act programs.
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    I do have some specific comments on the legislation, H.R. 217, and they are in the written testimony. I would like just to highlight a few key points in my oral presentation. Regarding block grants, we support local decisionmaking on these programs. We have two particular concerns which I will mention. One is that homeless persons and their representatives be included in the local decisionmaking process, and that they be included in a meaningful way, not as tokens, but with meaningful participation and decisionmaking ability. The second is that the funds actually be used for the purpose that Congress intends, and it will be crucial in any block-granting that adequate oversight and enforcement mechanisms be in place.

    The Interagency Council on Homelessness. We very much support reauthorization of the Council. The role of the Council should be strengthened, and it should be made accountable for ensuring that Federal agencies work together in a coordinated manner. A particularly important role for the Council is to make sure that these programs, programs for homeless people, are coordinated with so-called mainstream Federal programs, for example, the Job Training Partnership Act programs and the Mental Health Block Grant programs. By ensuring coordination, this subcommittee could leverage resources beyond its jurisdiction, beyond HUD's resources.

    A third crucial point for us is that this subcommittee use the reauthorization of the McKinney programs to address what has become a growing problem in providing these services, the so-called ''NIMBY'' problem, ''not in my back yard'' syndrome. This is becoming one of the largest hurdles that local groups have been calling us about as they try to meet the needs of homeless and poor persons. This is the use of primarily zoning laws at the local level to prevent programs serving poor and homeless people from operating or from being set up. Using the McKinney reauthorization to say that if you are getting these Federal funds, you cannot have policies that prevent groups from using them to serve the people that they are supposed to serve, that Congress intends to be served, would be a good step, good first step in addressing this problem.
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    Repeal of the HUD Homes program, we strongly oppose that. I understand that there have been concerns about the use of the programs, concerns about fraud, but the appropriate response is to put in some safeguards to prevent that, not to repeal the entire program. Using unused property, vacant buildings, to help people who are homeless makes a lot of sense. It is a very cost-effective response, and it should be encouraged, not taken away.

    The final point, maybe the most important, and that is the authorization level should be increased, and I understand that currently the proposed authorization represents an increase, and we appreciate that. I think that is very important. That is a step in the right direction. Let us make sure that the authorization level is raised sufficiently though. It should be tied to needs. It should be at a level that will meet the needs. Let us not set up a program to fail. Let us make sure that this Congress can really have a chance to be the Congress that stems the tide; that says that homelessness in America will not be tolerated. Let us make sure that the resources are there to make this happen. Let us give it a chance to happen.

    Thank you very much.

    Chairman LAZIO. Thank you very much.

    Ms. Gleason, welcome.

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    Ms. GLEASON. Thank you. I appreciate also the opportunity to address the subcommittee.

    I come with 12 years of experience developing and directing homeless transitional and mixed-income permanent housing, and supportive service programs having served on a metropolitan Continuum of Care Committee and now serving as director of a national coalition of homeless persons, providers and advocates.

    I will speak briefly only to a few specifics in the bill, since I address them in greater detail in my written testimony. Then I want to share deeper concerns about the leadership needed to truly address the resolution of homelessness in America.

    First, the national competition component of this bill. We are very grateful that you included this component when we asked you to do so, because the initial cost of developing transitional or permanent housing is higher than many States' entire formula allocation. Retaining the national competition allows communities to access needed capital to develop desperately needed housing. However, from our perspective, McKinney funds cannot and should not replace HUD permanent housing programs, since the occupants of this housing are no longer homeless. We, therefore, urge you to only allow these funds to be used for initial development of permanent housing, not for ongoing operational costs.

    We believe those costs should be transferred to other HUD permanent housing programs such as Section 8's, 811's, 202's, and in rural communities, 515's. However, we recognize that each of these programs need extensive additional support, since currently only 36 percent of disabled Americans who are eligible for subsidized housing live in it, and in 1996, of those folks who were receiving AFDC at the time, only 22.5 percent were able to access affordable subsidized housing, again, even though they were all eligible for it. What this speaks to us of is the dramatic severe shortage of affordable permanent housing in this country.
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    Number 2, regarding funding for supportive services, we believe; a: the focus of the HUD McKinney funding should be housing; b: supportive services for homeless families and individuals are fundamental to successful reintegration and long-term stability, and therefore, must be funded. To insure that both happen, we suggest that you support a consolidation of all McKinney funds, not simply HUD funds, at a total appropriations level of $2.5 billion, $1.6 billion of which would be authorized through this subcommittee and used by HUD for housing assistance, as opposed to supportive services.

    We propose that HHS would also receive an additional allocation of $600 million of the total McKinney allocation, approximately $89 million of which is already being distributed by HHS through both national competition and block grant distribution mechanisms. The Departments of Education and Labor would each receive $150 million, for reasons I assume you can imagine, since I do not have time to address, except that I want you to understand that one of the groups that I think has been missing from much of the testimony that you have heard, is families.

    The truth is, most of the homeless population at this point in history does not remain folks that are burdened by chronic disabilities, and even though they cost enormous amounts of money, as Dennis Culhane testified to you, he also helped you understand, I believe, that transitionally homeless folks desperately need the services as much, and it is to us extremely important that we not neglect that population, particularly because when welfare reform went into place, housing was not factored in as part of the equation, and we believe is absolutely fundamental to long-term familial stability.

    Transferring the obligation to fund homeless supportive services to other designated departments, we believe will go a long way to insuring appropriate integration in the mainstream programs of homeless individuals, as soon as they are ready and able to do so, since those programs are also within their authority. Programs for the chronically mentally ill, long-term mainstream programs, are not under the authority of HUD, so integrating folks into those mainstream programs seems to us less feasible as long as funding those supportive services remain within HUD. However, because we know they are desperately needed, you have to make sure they are in place at HHS first.
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    In order to model this collaboration and holistic approach at the Federal level, we suggest that the Interagency Council be charged with the responsibility for the effective consolidation of all the McKinney programs, not just the HUD McKinney programs, and we suggest doing so through the development of a joint RFP. However, I am very aware that the McKinney programs have been housed—the Interagency Council—has been housed in HUD for 10 years. Ten years later we still do not have collaboration at the Federal level of Health and Human Services and HUD programs. That is a serious problem. To ameliorate this problem, we are suggesting to you that actual membership on the Interagency Council be expanded to include national advocacy organizations who would work to make sure that timely and effective progress is made and, in fact, hold the Federal agencies accountable to doing so.

    Third, NCH believes that the current distribution system, which we identify as a ''modified block grant'', because it does insure local control and priority setting, should be retained. We have heard from many communities that, in fact, their plates are full. The current distribution system also has actually strengthened the collaboration and partnerships in their communities. So, we do not believe that block-granting it is fundamental to insuring that collaboration or the local control.

    Between changes brought about by welfare, and now potentially public housing reform, withdrawal of SSI support for those with addictions disorders, as well as pressures on their mainstream system for the increased provision of foster care, child care, education, and prison slots, States and localities have told us that they will be tempted to utilize McKinney funds for other than currently-defined homeless subpopulations. Redefining children who are in foster care as homeless people we believe takes it too far. This could occur at the very time when there is growth in homelessness in most communities. Retaining this system we believe is in the best interests of homeless persons because it insures that this funding is used to house the neediest Americans.
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    Further, we fear that block-granting HUD McKinney funds might serve to institutionalize homelessness. Doing so we suggest symbolizes that homelessness has become an acceptable and expected social condition that calls for funding entitlements to communities. This scares us to death. HUD's proposal that communities who can prove reduced homelessness be allowed to move the homeless funds to meet broader housing needs we also worry about, since one local community told us they had reduced homelessness by 50 percent, when in actuality all they had done was prohibit able-bodied men and women from utilizing their shelters and instead relegated them to a mat on a floor in what was now deemed a ''safe space,'' and no longer designated a ''shelter'' nor its occupants ''homeless.''

    Now to one minute of our underlying concerns.

    Chairman LAZIO. If I could just interrupt, we have less than 10 minutes to a vote, and so if you could just try and summarize in a few seconds.

    Ms. GLEASON. OK. I am sorry.

    Chairman LAZIO. And I will be happy to—.

    Ms. GLEASON. Excuse me. Essentially what we want you to understand is that because it has been 10 years, if we do not seriously address homelessness as a Nation, States, and localities by addressing the systemic causes of it, we will continue to leave people's lives wasted, and we will be here in the 15th and 20th anniversary. And we suggest to you that that would be a serious mistake. What we are asking is that there be a strategic plan developed by the Federal Government to address poverty and homelessness to the point that it now becomes a part of our past and not a part of our future.
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    One of the things that we worry about desperately with things like H.R. 2, is that the income targeting is going to further exclude the poorest, neediest Americans. We believe those folks, who are never going to be economically self-reliant, need to be excluded from that income-targeting in fairness to them and in trying to make America more responsible for the neediest Americans who are disabled and are not going to be able to become self-reliant.

    Thank you.

    Chairman Lazio. Thank you very much, and I apologize for you having to read quickly.

    We have a vote. I think we have two votes, as a matter of fact. What we will do when we come back is we will go to Nan, and then I want to be sure that I recognize Congressman Vento and Congressman Metcalf also. And I want to acknowledge that Congressman Baker was here earlier and had to leave. But we will try and come back at about 12:10.

    This hearing is adjourned until then.


    Chairman LAZIO. This hearing shall come back to order. Before we recessed, we heard from most of the panelists. I want to thank you all for your testimony. We come to the last panelist, but certainly not the least, someone who has been very important to this subcommittee and provided a lot of input into our bill, which I appreciate very much—Nan Roman.
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    Ms. ROMAN. Thank you so much, Mr. Chairman and I am so honored to have been asked to testify before you today, and we appreciate, as you know, so much the important work that you are doing to try to address homelessness.

    I think that HUD and the Administration under the leadership of Secretary Cisneros and Cuomo have really moved us well forward on this issue. They have been supported, and indeed led, by the Members of this subcommittee, particularly Mr. Vento, who has been a leader on this issue for so long and we appreciate that so very much.

    It is important that in this bill we build upon this commitment and the achievements we have made over the past few years if we are going to make progress to end homelessness. As other people have said, we are very grateful for your leadership in allowing us to try to find a way to move forward. As you have discovered, I'm sure, over the past few months—even longer than a few months—that's not such an easy thing to do.

    I realize that in designing a homeless assistance program you face a very difficult task, and you have heard powerful testimony from this panel and the previous panel about all the different kinds of things that need to happen and that people want to happen.

    Some people have said to you that homelessness is a housing problem and that you should deal with housing. Other people have said to you that it is a mental health or a substance abuse problem, that you should be funding programs that address those issues. Some have said, ''Give the money to State and local governments; they know what to do with it.'' Other people have said that ''It is the non-profit organizations that have carried the water on this issue over the years, and that State and local governments are more concerned to get homeless people out of their jurisdictions than to find a safe and independent place for them to live in those jurisdictions.''
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    Some people have told you that only disabled homeless people deserve our help. Others have said that we need to help families who are homeless primarily for economic reasons.

    So, what is the answer to all of these different demands that are being made of you?

    Well, the answer I think, is that you have to do all of these things. You have to fund housing and you have to fund services. You can give money to States and localities, but you have to make sure that they do the right thing with it. You have to help disabled people, but you also have to help people who are homeless for economic reasons.

    The real question is not what needs to be done with the money. All of these things need to be done with the money. It's how to take a billion dollars—which, no matter how we slice it and dice it, is not going to end homelessness for every person in America. How do we take that billion dollars and arrive at some equation that mixes everything together and works the best for the most people, both substantively, in terms of the programs they need, and mechanically, in terms of the delivery systems?

    I think the only way to arrive at that equation is to establish some principles that can guide us and that we can test the program initiatives against, and I would suggest the following for you to consider.

    First and foremost, I think we must try to end homelessness for as many people as we possibly can. To me, the bottom line is that we have to provide them with permanent housing.
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    Homeless people tend to have complex problems. Every homeless person's set of problems is different, but the one thing that everybody who is homeless has in common, is that they don't have a place to live. The bottom line is that they need to have housing.

    Second, though, having said that, we cannot practice triage with the homeless assistance money. Even people that we can't help with permanent housing have to have a roof over their heads. We can't just leave them out in the cold.

    Third, we do need to provide local solutions to local problems. I think you have heard that from the panelists loud and clear. But on issues of justice and equity, and this is such an issue, we have always had to look to the Federal Government for protection and we have to do so on this. Give us local flexibility but make sure there is also local accountability so that the funds are spent properly. This means rigorous Federal oversight and monitoring, not as an afterthought, but as an integral and well-designed role for the Federal Government.

    Finally, the bottom line is that any assistance that is delivered has to have a direct and measurable benefit to homeless people, and that benefit has to be their stability in permanent housing.

    In keeping with these principles, the Alliance is generally supportive of a structure of HUD homeless assistance that contains a national competition for permanent housing, a block grant to State and local governments which provides a reliable source of funding for emergency and transitional assistance, very strong local boards which decide how the money will be spent and monitor its effective spending, and strong monitoring and oversight by HUD.
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    We believe that H.R. 217 contains most of these elements. It is encouraging that H.R. 1144, the bill introduced by Mr. Vento, and the Administration's proposal, also contain many of these elements.

    Based on these principles, the Alliance strongly supports the following elements in 217.

    We are very supportive of the Permanent Housing Fund, with the inclusion of the rent subsidy proposal that the Corporation for Supportive Housing and the National Equity Fund have presented to you. This will ensure that homelessness will be ended, at least for some homeless people.

    We are supportive of the local boards, as this strengthens coordination. You have heard today about the importance of the Continuum of Care. I think local boards will help you to build upon the existing Continuum of Care.

    We are supportive of the non-profit set-aside, which ensures direct and measurable benefit to homeless people.

    We believe that the following parts of the bill should be modified:

    We would like to request that the authorization be increased to $1.25 billion in order to take into account the impacts of welfare reform and inflation. Even that, of course, won't meet the need, but we would like to see some increase over the 4-year authorization.
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    We would like to suggest that the local board do the homeless portion of the consolidated plan, not just respond to it. The decisions are made at the Consolidated Plan level. We would like to have the local board making those decisions.

    We would also request 100 percent targeting of this money to non-profit organizations. We are very concerned that budget pressures will lead local and State governments to use these funds for their own operations, operations that may have little direct or measurable impact on homeless people.

    There are a few things that aren't in the bill that we would like to suggest.

    One is a mechanism for distributing resources in jurisdictions where the Government does not apply for those resources. There is a suggestion in the HUD bill that would be acceptable. This is necessary to make sure that homeless people aren't penalized because their jurisdictions choose not to apply for the money.

    We would suggest that you deal directly with renewals and a hold-harmless in the bill. I don't think the bill needs to address all of the questions these problems raise. However, we would ask that the bill contain some affirmative responsibility to deal with renewals.

    Finally, I think there needs to be some stronger language on HUD's oversight role. Performance measures are a possibility. There are some in the Administration's bill. I don't think they are adequate.
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    Mr. Chairman, we very much appreciate your strong leadership and that of the subcommittee and Mr. Vento on this issue.

    We feel that you have taken a very complicated set of problems and in many areas you have found the correct equation for distributing an insufficient resource.

    Although we continue to have concerns about whether there are adequate protections in the block grant, we stand ready to work with you to ensure the money is used the way we all want it to be used, and that is to move us forward toward ending homelessness in America.

    Thank you.

    Chairman LAZIO. Thank you very much, Ms. Roman.

    I want to once again thank the panel.

    I would like to recognize Mr. Vento. I also want to acknowledge his work in this area for many years and his contributions to some of my thinking on homelessness and, of course, the introduction of his own bill.

    I know he would like to make a statement and I look forward to hearing from him.

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    Mr. VENTO. Thank you, Mr. Chairman, for your thoughtful and generous comments and for the testimony today of this panel.

    There are some familiar faces and some really great work that has been done by many of the panelists and I regret very much that my attendance at an earlier commitment at another hearing dealing with Hmong patriots didn't permit my presence throughout the hearing today, and you are gracious to permit me to make a statement at the conclusion of the hearing today.

    In any case, I especially appreciate, too, your willingness to draft legislation and to pursue it, and your interest in working with me and others that are interested in this particular subject and have been on it—it has actually been quite a while, Mr. Chairman. Much of it culminated with the 1987 law at that time, which was signed by President Reagan. But it was a priority in Congress that year, which I sponsored, but it first began in the early 1980's with Congressman Chalmers Wylie of Ohio and a small amendment that grew to this billion dollar program.

    In fact, it was one of the few social and new housing programs that was developed in the 1980's, and we have continued that bipartisan work in terms of naming it after our colleague from Connecticut, Stewart McKinney, the 1987 law.

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    Of course, the draft that I introduced really represented a work in progress, where we were at that time in 1994. Since the last major redraft there are some points of difference, but I think there are many similarities.

    In terms of the block granting and terms of a variety of other consolidations of the McKinney programs, which has picked up and I am very much interested in learning more about the specifics of your legislation when we sit down.

    Since the inception, of course, there has been efforts to simplify the HUD McKinney programs. Obviously, when there is a small pot of money, trying to block grant this would have been very small amounts to communities where there would have been a need for a categorical grant that would, in fact, provide the seeds and the nourishment to grow for a few years and then be picked up by the local community or the non-profits.

    I might say at the inception of this, without going further, that I think that this is a case where my experiences, like those of Congressman Leach, were in visiting sites in my district, and I am sure, Mr. Chairman, there are other Members who might go to their districts and visit sites and would have the same sort of experience.

    We have rather the 100 percent federally-funded types of programs in terms of public housing or assisted housing, but the fact is that the non-profits and local governments that were dealing with the problem of shelter were fundamentally in the early 1980's.

    This phenomena wasn't simply something of a substance abuse problem, but it had, in fact, spilled over to affect families, to affect veterans, to affect the unemployed, those with various types of disabilities. So, it was pretty clear that the myriad of housing programs we had, from ownership to assistance, were not meeting these very fundamental needs in terms of shelter at that time in history.
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    I think it is a phenomena that we are going to continue to face. The fact that we are here today, incidentally, and I see some that have worked very hard on trying to respond to this, does not necessarily mean that the effort is not effective. I think it is a very effective effort.

    I think what it really translates into is that the nature of our economy is that there are, in essence, more economic and social casualties than we are able to absorb with the existing programs. But you should not make the mistake and recognize that this is a dynamic group of individuals, that as we meet some of the needs of those that are without shelter, that are homeless, that there are others to take their place.

    But, I think that this program, the strength and the wisdom of this program, is that it is rooted in the non-profit and in the local communities.

    The fact is that up until the 1980's they were able to deal with and facilitate and help families and individuals, but that into the 1970's and into the 1980's, now these same non-profits and local governments are operating on overload.

    So, what we see is a national response, or a Federal response program that tries to deal with this. It isn't any one of the factors that—I always recall the discussion I had with a sociologist from New Mexico, Louisa Stark. In commenting about whether it was the fact that we deinstitutionalized in the 1960's and into the 1970's, and if that was not the problem. She pointed out that for anyone that lived on the street for a short matter of time, it was a sort of ''chicken-and-egg'' question. If they weren't mentally ill before they got there, they probably were after they had been there for awhile.
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    It is one of the saddest plights that can affect our fellow citizens in this country, in other words, to strip somebody or to, in fact, have their dignity stripped and not having personal security and shelter, and so forth, is a very difficult circumstance.

    In any case, Mr. Chairman, my written statement will be put in the record. I do want to point out though that there are some important elements that I think we should challenge, and that is the tenor in which I have introduced this, not necessarily to simply provide a competing vehicle for yours.

    I realize that there are reasons for some of the changes you have made, or some of the issues of difference.

    One of the fundamentals of the measure I have introduced is, of course, to try and reach beyond simply the HUD-authorized programs, to deal with the FEMA-authorized programs. We really have ownership over that program in this subcommittee. I would encourage you to do it.

    I think that, as someone who started out being very skeptical of the FEMA programs, I have become a big fan, especially if you look at how this operates on the local level in terms of the Council.

    It is an extraordinarily effective program in terms of participation and an efficient program and I would think that we would want to add that momentum and enthusiasm to the product that we work on.
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    You have other questions and I think it deals with the convergence of problems that the homeless are impacted by, in terms of education and other types of training and job-related programs that have become integrated into this program.

    One of the phenomena that affect housing—I think we have touched on it, because we can hardly begin to talk about housing without talking about jobs and about training and about health care and about education—is that housing, all of these sorts of problems, posit themselves onto the condition in terms of where someone resides.

    You know, we are dealing with health care with the elderly and that sort of issues. Here we end up with the frail elderly and housing.

    So, with homelessness, it is clearly one of the elements, and I think that we need to position the bill, and position the policy and such to, in fact, reach out and to lock in the various services that are held out from the Federal level in terms of whether it is food stamps or others, and at the State and local level, so that we should not—our position ought to be one in which we try to, as it were, tie down those programs so that they deliver on what the promise and commitment is to individuals that happen to be homeless.

    One of the insights into this was the fact that many homeless didn't have an address, and so many of the benefits were connected to addresses, so there were ways to solve that particular problem in terms of providing mailboxes and voice mail, and a lot of technical ways that we can deal with that today. Because in the absence of that, what happens is, of course, some of the dollars for bricks, mortar and other conventional, or typical type of housing or shelter needs, end up being utilized for that basis.
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    I understand that the Inter-Agency Council—it does not reinstate the Inter-Agency Council, and I think that initially, it is very, very important in terms of trying to raise these questions, if not tie down those benefits.

    We have had a continuing problem, which has been somewhat solved, with welfare hotels for example. We found that the Department of Health and Human Services spent as much on shelter as does HUD, and I think we need to make certain that that policy is rational and I think that we need to integrate that in the total response in terms of homelessness.

    So, I would—the Inter-Agency Council, if it has to perform that task and someone says it needs a shot in the arm, because we need some citizen or advocacy group representatives on it—probably is worth a try, in terms of trying to keep it in place.

    We need to do a better job in meeting the unique needs of rural homelessness, too, Mr. Chairman. I included reauthorization of the Rural Homelessness. This is generally an invisible problem to most of us.

    I come from mostly an urban area, as you do, but I think it is in these instances where we see a lot of stress and a lot of problems, a lot of poverty, a lot of doubling and tripling up. The problems here, if we don't deal with them in those instances, end up in our more urbanized areas, so I think it is, in fact, as the surveys have indicated, a serious problem, and I think it would again help build broad support if we had a mechanism.

    I think we might want to move to the Department of Agriculture, which has presence in these areas, to deal with an administrative role—simply because they are physically present.
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    One of the points we have a different view on is the caps on local allocations to supportive services and emergency shelter activities.

    I understand where you are coming from, because I have been there in terms of this particular issue, and I think I have spoken to that earlier and I have talked about the convergence of activities here, and I think it relates directly to this particular point, so I think these caps need to be reexamined.

    We have to also realize that if we want to make the money useful we have to look at who the recipients are, if it is a local government or a non-profit that has been performing those types of services, they are not going to be able to separate some of those from the purposes.

    In fact, I know some would like to convert all the money in the social service money, but I share your concern about that particular policy path.

    In terms of funds, I note that over the years we have tried to provide a soft match, because we thought the one-to-one match was a pretty high level of match, and I notice that you tried to firm that up. I think I would be interested in the reactions, and be led by the groups that are, in fact, using the dollars. I think they prefer the soft match, because it permits services, it permits volunteer work, and some of the small groups that you really want to have involved are the ones that will be most affected by that.

    As we look at creative new entries into this field, you probably want to move to a soft match to make certain that they are able to, in fact, receive the funds.
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    I think the McKinney programs have been born because localities were not as responsive to the needs of the homeless people as they should have been, not always as responsive, and so I think here we also want to look at what we are doing in terms of trying to steer more money to local governments, as opposed to non-profits.

    I think the non-profits are generally the folks that have been doing the job. I do agree, and did place into law, the role of the local governments as the fiscal agent in terms of responsibilities. But, I think that if we are concerned about accountability here, charging local governments with that responsibility, or the State, is entirely appropriate.

    Another difference of our bills, Mr. Chairman, is the amount of citizen participation. The H.R. 217 doesn't utilize the local advisory board, but in listening to the testimony, it is obvious that you have some local input.

    I thought the local advisory board tends to serve the same purpose in a sense that the Inter-Agency Council on Homeless does, in the sense that it delivers all of the concerns of the homeless at one particular locale and it eliminates the tunnel vision of local government. If they look at it just as another housing program, I think that is almost certain to result in a less effective program than if it is viewed in the context of the community.

    I might say that these non-profits have a pretty unique approach. I wouldn't think that the configuration of what they do in St. Paul, Minnesota, where I come from, would be the same, necessarily, as Long Island. I mean, the needs are quite different and I think the character of that really resides in the local non-profit groups that have facilitated that, so the advisory groups in these instances, with some guidelines, are important.
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    It does work efficiently. I know that there would be a concern about overloading this with too many requirements, but these are up and running, just as the Board of Charities is up and running with the FEMA group, and if you have had any contact with that you will find that they are very, very effective in terms of what they do.

    I also—I realize that I have gone on too long——

    Chairman LAZIO. No, no, that's fine. I just wanted to note——

    Mr. VENTO. I want to just point out that the Section 8 component of assistance is important. I know that you have permanent housing, but I know what is working right now, and one of the real phenomena in homelessness that occurred was because of the demise of single room occupancy type of facilities. Something along those lines—I guess we looked to Section 8 because that has been the ongoing program that has delivered the care for a period of years, and I think that there has to be that component in there.

    I am interested in exploring with you the permanent housing provisions that you have, but I know the budgetary problems and other aspects that are visited by that requirement. I understand, but if we are going to affect and deal with these sort of crisis problems, I think the SRO Section 8 type of link is important.

    Former Congressman—then Governor and now, I guess, retired—Congressman Lowry, one of my co-captains in this effort, was instrumental with that, and I have come to be a convert again of the importance of that particular aspect.
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    Well, I won't take any more time, but I just want to thank you and thank the panel members and wanted to get on the record for this group and for you and for others that are interested the legislation we have introduced and compliment you on the hearing, the initiative you put forth and your willingness to sit and listen to me this afternoon.

    Chairman LAZIO. Thank you very much.

    Mr. VENTO. Thank you.

    Chairman LAZIO. I appreciate the remarks of the gentleman. I just wanted to know if there are local advisory boards in the bill?

    I think there are some—this is a continuing dynamic process and although the hearing will soon end, we'll be working together and I hope all of you—the advocates, the panelists, will continue to provide input. We should not come to any point where we say that the bill is finished if we can find new ways to improve it and to make it stronger before it comes to the floor and I am committed to having it come to the floor this year, so I want to thank you for the suggestions, the comments, the advice and the counsel from my friend from Minnesota.

    And, if the panel would bear with me one moment, I just want to turn to Mr. Metcalf, because I know he also wanted to make a comment. I want to recognize him.

    Mr. METCALF. Thank you very much, Mr. Chairman. I have a comment and then a couple of questions afterwards.
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    Mr. Chairman, I have introduced legislation, H.R. 1754, which will require that 20 percent of HUD's McKinney Act funds be used for programs designed to serve primarily homeless veterans. As I stated in my testimony some time ago, many homeless veterans have unique needs beyond permanent or transitional housing. Substance abuse, Post-Traumatic Stress Disorder, and serious mental illnesses are common among this population. Additionally, many organizations have presented data showing that homeless veterans represent approximately 30 to 40 percent of the adult homeless population. Yet the Continuum of Care grant funds awarded the past 2 years to veteran-specific programs has been 1 to 3 percent.

    I would like to work with you, Mr. Chairman, to include the concepts in my legislation when we mark up this bill, and I believe we can work together to meet your legislative goal of consolidating the McKinney Act's funds and my legislative goal of ensuring that homeless veterans are provided for. And if you have any comment, that would be fine.

    Chairman LAZIO. If the gentleman would yield, I want to compliment the gentleman from Washington State for his commitment to this area. I recall it was less than a year after the conflict over in the Persian Gulf ended that we already had discovered that there were veterans of that conflict that were homeless, and it is a very significant problem among veterans. I also want to compliment your staff for working with our subcommittee staff in trying to confront this issue, and I am confident that we will be able to reflect the intent of your legislation in H.R. 217 as we report that out of this subcommittee.

    Mr. METCALF. Well, thank you very much. Do I have time for four questions?
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    Chairman LAZIO. Yes, I will reserve my questions. I will go right to you.

    Mr. METCALF. Oh, OK. Well, thank you very much.

    My question is for Ms. Sally Shipman, and do you note any specific or unique needs prevalent among homeless veterans, such as Post-Traumatic Stress Disorder, substance abuse, chronic mental illness, or medical problems? Would you just care to comment briefly on that?

    Ms. SHIPMAN. Yes, sir. The answer to your question is absolutely. The homeless veteran population in our community has very unique needs. Of the 9,286 homeless people that were actually counted, about one-third are homeless veterans. On the very night that point-in-time study was done, less than 200 were actually in shelters. The homeless veteran population tends to be out in encampments, hidden from public view, hidden, and in abandoned buildings with very unique needs. We are fortunate in Houston in that the veterans' private non-profit, as well as the local homeless programs from the Veterans Administration, are all very much part of the Continuum of Care, but one of the things I have learned in working with advocate groups in other parts of the country that is not the case, the working together.

    Mr. METCALF. Thank you. In our area it is not so much abandoned buildings as they are living out in the woods, so to speak.

    Does your program provide any services for the unique needs of veterans, and if so, what types of specialized services do you provide to veterans?
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    Ms. SHIPMAN. Well, the Coalition for the Homeless is not a direct service entity.

    Mr. METCALF. OK.

    Ms. SHIPMAN. But the non-profit groups that work with homeless veterans, as well as the local veterans groups, do provide unique services for those folks. In fact, the best-known is Camp Stand Down, which is for homeless veterans, and it is actually a non-profit—it is not an encampment like a traditional homeless encampment, but it is an encampment. It has basic needs, but because this is a very unique population, and in our locality, the homeless veterans tend to be older than the homeless population, mid-40's, overwhelmingly Vietnam-era veterans, and their needs are very unique.

    Mr. METCALF. So, you coordinate services with VA, veterans community, and so forth?

    Ms. SHIPMAN. Yes, sir.

    Mr. METCALF. OK. Last question. Are you aware of any projects in your geographic area that are veteran-specific homeless projects providing unique services to homeless veterans, and if so, do they receive any Federal grant funds for this purpose? Are they funds from HUD or VA or Department of Labor?

    Ms. SHIPMAN. Yes, sir, they scramble for everything they can get.
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    Mr. METCALF. OK.

    Ms. SHIPMAN. And it was only recently, only since 1994, has the Houston metropolitan area aggressively pursued public funding to match the private funds that are invested there.

    Mr. METCALF. OK. Thank you very much, and thank you for your work.

    Mr. MCMILLEN. May I respond to some of that?

    Chairman LAZIO. Yes, you may.

    Mr. MCMILLEN. As you quoted earlier today, Mr. Metcalf, it was an IUGM survey that found across the Nation about 34 percent of the homeless staying in Rescue missions were homeless veterans, and that 7 to 8 percent of the women staying there also were. And we too see the great need for continued services to them and have attempted to network with Veterans Administration. Our own mission has volunteered space to have a psychiatrist regularly come in and function from there so that he could meet some of those special needs. Also the mission in Saint Paul, Minnesota, I think is the only mission with an American Legion Post that established that, so that other veterans could come together with the veterans that were homeless to try to begin integrating them back into society, so that there are some unique things that we also see there too.

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    Mr. METCALF. Well, thank you very much.

    Mr. VENTO. Will the gentleman yield?

    Mr. METCALF. Yes.

    Mr. VENTO. I was just going to say that I think on this veterans issue that in our area, and I think in Massachusetts as well, they have a Stand Down, which is a specific program aimed at reaching out to veterans, and they have the various VA hospital personnel, other relief groups, veterans service organizations, at that Stand Down, that try to respond specifically to the veterans, the homeless veterans that are in the population. So, I would hope that maybe a provision in the bill, rather than a specific percentage, which would be administratively, I think, difficult and, you know, I think anyone here can correct me if they think differently, but that having a specific provision that would deal with an outreach effort, a special effort would in fact—and then integrating it into the VA services rather than putting the cost into HUD.

    So, the more we can do in terms of providing for individuals to utilize the benefits that they have, the more we can stretch these dollars, because I think if you look at whatever we have here, whatever the authorization ends up being and whatever the appropriation, $700 million, $800 million, $900 million, you could use a lot of that very quickly in terms of direct services that already should be, or at least we claim that they are, available through the VA or through other means. So, I would hope that you would think along those lines, and if anyone had any comment, since I was going to be recognized.

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    Chairman LAZIO. Yes, let me go to recognize you.

    Mr. VENTO. If anyone had any comment on that particular idea of a Stand Down or an outreach effort, rather than the specific percentages that are being discussed.


    Ms. FOSCARINIS. Yes, I would. Actually, I think Congressman Vento has made a very important point. I think the needs of homeless veterans are unique, but I think one of the most unique things about homeless veterans is that there is the Veterans Administration, which—Department of Veterans Affairs—which is an agency which is designed to meet the needs of all veterans, and the most important thing that could happen would be to bring in more resources from the VA, rather than a set-aside.

    I mean, the trouble with a set-aside is that all homeless persons have very desperate and dire needs, and it becomes difficult to say to, you know, compare the needs of homeless veterans to say, the needs of homeless children, and the resources are already inadequate, so the best thing to do would be to bring in, leverage some more resources in the form of outreach for benefits that are already there, but that homeless veterans are not able to get access to, and in the form of any additional resources that could be brought to bear.

    Mr. VENTO. I would be very interested, Congressman Metcalf, in sharing with you the Stand Down idea. I do not know that you do it in your area, but you may, in fact, want to try and sponsor something like that, or initiate it in your area, so that you have a working model. Some time this summer I would be happy to try and get the background information for you and try to promote that particular idea as a focus of resources.
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    I would be happy to yield.

    Mr. METCALF. We have used the Stand Down concept, but not specifically in this area. My bill requires coordination between VA and HUD, and the Department of Veterans Affairs does not provide assistance for all veterans, only those with service connected with Vietnam.

    Mr. VENTO. But just in reclaiming time, I think the service organizations certainly do.

    Mr. METCALF. Yes, yes.

    Mr. VENTO. And the VA in terms of housing, you know. So, I think certain veterans organizations specifically operate housing sites. So, I do not want to take a lot of time in questioning. I just think that, Mr. Chairman, you have been very good with the time, and I think we are all interested, if your intention is to try and mark some bill up in July when we get back after you have had a chance to sit down, is that the idea?

    Chairman LAZIO. Yes, if the gentleman would yield, I would like to have the opportunity to sit down informally with one or more small groups, including yourself obviously, to discuss the bill and then bring it to subcommittee for consideration, and hopefully have it on the floor. My goal would be to have it on the floor in September, if that is possible.

    Mr. VENTO. I thank the gentleman for the time.
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    Chairman LAZIO. Thank you, and I thank the gentleman from Washington as well.

    I just wanted to point out we have had some discussions about veteran homelessness in working with the VA, and one of the concerns that we have had, and we have had a discussion about the possibility of introducing the Veterans Administration into this Inter-Agency Coordinating Council, and the VA has taken a position, at least at the intermediate staff level, that they would like to have dollars that are currently in HUD's budget over there.


    Chairman LAZIO. This is exactly what we want to break down. We want to break down the barriers to getting the job done.

    Now, in the bill we have a cap on supportive services. It's not because I don't favor supportive services. As a matter of fact, I am enthusiastically in favor of supportive services. But, I know that we have a fixed pot of money and it does not meet all the need that's out there, and the only way to deal with that, particularly if we are looking for permanent solutions where people are able to go, as we say, from main-lining to Main Street, get back, transition back, into society. For those who can, who have the ability to adapt to independent living, will need supportive services. But we need the other agencies to contribute their fair share in order for us to have an efficient, flawless, seamless flow of money that gets to the providers so that we can really leverage those dollars and do the most that we can.

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    I want to ask a few questions if I can.

    My first question is to Mr. McMillen. In your testimony, I think you have indicated you have raised about $350 million. Is that sufficient money for the 250 Rescue missions that you have?

    Mr. MCMILLEN. [Nods affirmatively.]

    Chairman LAZIO. Which is really a remarkable amount of money. I am just wondering if you could explain briefly how you are able to fund that? If you could speak to this entire issue of matching commitment, and whether a not-for-profit advocacy group that facilitates services and shelter and permanent housing, whether or not it is important for them to get private dollars to augment, or enhance, the public dollars that they may receive through this program?

    Mr. MCMILLEN. I definitely feel that the private dollars need to be a part of it, and as you are trying to point back to that local community, the success of Rescue missions has really been based on being in that local community.

    While I represent the 250, each one is an autonomous organization within its community that has taken the base concern of people in that community and then began to build upon that.

    To work with them, allow them to contribute their dollars or their time to get excited about some of the results that they could see happening in working with individuals, realize that the people exist and are people that ''There, but for the grace of God, go I'', and begin to have one-to-one relationships with them, rather than seeing them as that person that might be off on a street corner, or down in that section of town or something of that sort, and then to get that involvement with them, to raise that overall awareness, and then they want to get involved, whether it be through those financial resources or gifts-in-kind, or that volunteer service.
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    Chairman LAZIO. Mr. McDonald, I would like to hear from you on that and your perspective.

    Mr. MCDONALD. Well, it's interesting, Mr. Chairman, because we started in 1990 with 100 percent Government financing and I can say today we are at 65 percent, and I, as the President and founder of the organization, for its long-term viability, would like to be 100 percent publicly-supported and not depend on Government for anything.

    I mean that's my goal and I'll tell you why——

    Chairman LAZIO. Did you say 100 percent private or 100 percent publicly?

    Mr. MCDONALD. I think the public is the people who write the checks and send them to us, so anyway——

    Chairman LAZIO. Non-governmentally?

    Mr. MCDONALD. Non-government funding, and I'll tell you why.

    You know, the changes that you go through and the political ramifications—there is no way to work Republican or Democratic, and we are obviously non-partisan.

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    But we started out with a concept that said that homeless people will benefit by work, so what work can they do that we can pay them for, and where can we get that money?

    The City of New York, in its infinite wisdom, had a program that started maybe 20 years ago, called Supportive Work, and the concept was for ex-offenders, for people getting out of jail, to have day work, and they would pay them at the end of the day for the work that they did renovating vacant city-owned apartments.

    We had an election in New York City and the priorities of that housing that provided the work changed. In other words, the new Administration didn't feel that the Government should own the housing, that the housing should be sold off, and who am I going to argue with that concept, because it is only in New York City that the Government actually does own the housing.

    So, philosophically you have no argument with it, but it affects the revenue that our program got, so we got cut back. Instead of going to City Hall, we had to come up with some unique concept of how are we doing to fund our program. So, we put the guys in uniform and we went out to where the streets were dirty and we started cleaning the upper East Side of Manhattan.

    Well, the community started supporting us and sending us money for that, but in the meantime, we had to pay for it. Where did we get the money from? HUD—Secretary Cuomo understood the concept of getting people out of homelessness permanently through paid work opportunities.
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    The response has been enormous—and you can to go Georgetown for it, because we do mailings to registered voters on the theory that they live there, they are interested, and the people who are sleeping on their street are now sweeping their street, and we got a fantastic response from Georgetown. We got a fantastic response from Manhattan.

    Chairman LAZIO. Why registered voters?

    Mr. MCDONALD. Well, because they have a commitment to their community. That was the reason.

    Now we have gone on, since when we started we were revenue-generating. We generated the revenue through work, but it was Government money and we worked for the Government. Why can't we work for the private sector?

    So, we went out and we got contracts. We set up a direct mail fulfillment.

    Time, Inc., is coming to our facility in Harlem in 2 weeks and there is a possibility that we can set up a fulfillment center in New York City in the Empowerment Zone using formerly homeless folks, so that when you subscribe to a magazine and you send in that card, that we do the data-entry for it.

    I mean, there are all kinds of exciting things like that that we can do that create economic opportunity and pay people and get them out of homelessness. That is what we want to do.
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    Now that is a long answer to your question. I don't want to depend on Government funding. I want us to depend on what made America great, and that is work and generating revenue.

    Chairman LAZIO. All right, thank you.

    I think both on the public housing bill, which has some fundamental differences, obviously in the population that is being served and what is intended, and this the goal is the same.

    We have limited dollars. For the limited dollars that we have, we want to make sure that we are not simply maintaining people, but that we are helping to transition people and giving them the ability to move through the system, get back onto Main Street and open up those beds for additional people that need them.

    Mr. MCDONALD. You couldn't be more correct, Mr. Chairman. The emergency system that we have had in this country for the 15 years that I have been associated with it is responsible for as many deaths as anything else that I can conceive of, because allowing people to smoke crack cocaine, drink alcohol, and lay around and it's their right to do that, and you don't have a right to impose any responsibility—any requirements—on them to take responsibility for themselves.

    Three-quarters of the homeless folks in America can benefit and get out of this system through paid work. It's got to be paid work. It can't be this sub-minimum wage stuff. You have to deal with it up on top. It's got to be real work. It's got to train them to do it, but they can get out of it.
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    They love it. The love to work. They don't like to do drugs and lay around. They just need the opportunity.

    Chairman LAZIO. Thank you. I want to ask you a question, if I can, that goes to a number of issues that a number of different panelists raised, and it has to do with the State-local match.

    Ms. Sheehy, in her written testimony, spoke to the fact that what are the incentives really to get other agencies—at the Federal level, other agency participation, other agencies to invest—or in the case of your State, Des Moines, I think you referenced—so the State itself, to invest in services and the programs themselves?

    While there has been some caution urged on the part of the so-called hard match, how do we get and is it important to have States and local communities, in addition to other agencies, invested in dealing with homelessness in their own back yard?

    Ms. SHEEHY. I can think of a lot of things I would like to address to that.

    Well, first of all, as the person who was responsible for writing a lot of the grants, Federal, State, local, every single application that I filled out for the services of the brick and mortar for our programs, ask you to look for other funding sources, be they Federal Government or locals.

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    I am with Mr. McDonald. I wish that all of our funds could come from the community that we serve, but that is not a realistic vision in our community.

    We are constantly told that we could receive funding from a Federal source for this program, but by this year you have got to have this replacement money. We're told by our private foundations that we have to do the same.

    As far as the match requirement for this particular program, and what I spoke to in my written testimony, was the fact that we have only come to this realization that funds should be spent on homeless shelters, supportive housing, transitional housing type—just in recent history with our State legislature in Iowa. Even through the pass-through dollars that HUD gives to the State in our entitlement cities the criteria for use of those funds has just changed in the last few years, so even people thinking on the community about use of those resources for brick and mortar service for the homeless have been fairly recent.

    Getting people in the frame of mind to put up more dollars for that, I mean, we can work toward that. I think we could come up with a match. I would be concerned about what our State government—our Iowa Legislature used our temporary assistance for needy family block grant—and this is my stinky opinion, but I really think that they used the Federal Government's increased share that they received to offset any State contribution to that program.

    In fact, 25 percent—there has been a 25 percent reduction in what the State of Iowa Legislature is putting into those programs because they received the block grant from the Federal Government, and, in fact, there was a large cut approved and folks in my corner of the world really feel like they used that block grant to offset, or to help pay for that tax cut.
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    So, there would be some concern with a block grant that somehow the Legislature would again get the message that the money is coming from the Federal Government—we don't have to put so much in locally. That is my concern.

    Chairman LAZIO. I am going to actually ask—I have several other questions, but for the sake of time, I am going to submit them to the panel and ask them to respond.

    I think one of my concerns with States that have been less than forthcoming is that we create the right incentives and disincentives for them to invest in correcting the problems in their own States, and if it is perceived as a non-local issue, a non-State issue, that the Feds use all their money, and even in some cases, as you pointed out, that money is commingled or becomes so fungible that it can be drained for other non-homeless issues.

    We are really shrinking the pot in the end, of the dollars that are necessary to deal with the core issues of homelessness, and so that we need to keep talking about this. This is very important.

    My last question I am going to address to Nan Roman. We have heard from many State and local officials who want complete flexibility when they receive this money, they do not really want a local grant and they do not want to deal with permanent solutions to homelessness. They would rather have complete flexibility to spend all their money on shelters, if that be the case. And I am wondering if you would respond to that?
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    Ms. ROMAN. Well, I think that the danger of giving the money to State and local governments is that there is so much pressure now, because of welfare reform and other fiscal constraints on State and local governments. It is less expensive often to just make the problem of homelessness disappear by putting people in shelters and getting them off the street so that you cannot see them. It is certainly more expensive and far more complicated to give them permanent housing. I think you have to design a bill that moves us in a direction toward ending homelessness, and not just toward warehousing homeless people, and I think your bill does. The construction of your bill has the potential to move us forward with the permanent housing portion. If we can strengthen some of the protections in the block grant and make sure that we do not invest too much in emergency solutions, but really end homelessness for people, we will have made real progress.

    Chairman LAZIO. Thank you. I also want to commit myself again, just to reemphasize this point, that this is a dynamic process, and although this has been a very constructive and important hearing, and I think some of the suggestions that I have heard today, we will be talking about with the Members and staff to see if there are ways that we can incorporate those into the bill, whether directly or by intent.

    I want to also urge you to please continue to work with the committee, with the committee staff in particular, if you can refine some of the concepts down to actual proposals, and if you could network among yourselves, that also is very helpful, because there are, obviously, some different perspectives and some conflicts, and to the extent that those can be resolved, it is very helpful for me personally.

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    I want to thank Congressman Vento and——

    Mr. VENTO. Mr. Chairman, just a technical point. I ask to put this Section-by-Section of H.R. 1144 in the record, since it has been mentioned in my testimony and others.

    Chairman LAZIO. Without objection.

    And again, I want to thank you on behalf of the subcommittee for your travel here, your preparation, and for some excellent testimony.

    Thank you very much, this hearing is adjourned.

    [Whereupon, at 1:08 p.m., the hearing was concluded.]