Impact of “Sequestration” on Federal Homelessness Assistance

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National Alliance to End Homelessness

Federal Policy Brief | July 15, 2012

Files: PDF | 227 KB | 1 page

Deep cuts have been made recently to many federal affordable housing programs through the regular appropriations process. Outside of that process, much larger cuts to homelessness and affordable housing programs are scheduled to take place next year. Unless Congress changes current law, automatic, across-the-board cuts (known as sequestration) will go into effect in January 2013, as laid out in the Budget Control Act of 2011 (BCA). Although many important programs serving low-income people, including TANF, Medicaid, Supplemental Security Income (SSI), and SNAP (formerly Food Stamps), are exempt from sequestration, nearly every single homeless assistance and affordable housing program would be subject to these cuts.

Sequestration is expected to result in an estimated 8.4 percent across-the-board cut in January 2013 to non-defense discretionary programs. Discretionary spending (as opposed to mandatory spending like Medicaid) is determined each year through the congressional appropriations process. It includes virtually all targeted homelessness and affordable housing programs. The one significant exception is programs for veterans administered by VA, all of which are exempt. Whether or not the HUD-VASH program, jointly administered by VA and HUD, will be exempt is still unclear. It will be up to the Administration to make such a determination.

The chart below details the projected funding level for select federal programs and the impact of sequestration on those programs. It uses historical data on the average cost per person served for each program to provide an estimate of the number of people who will not be served by a program in fiscal year (FY) 2013 as a result of the sequester. This brief assumes that all programs will be funded at their FY 2012 level when the cuts go into effect and does not take into account the additional people impacted by further cuts mandated by the BCA in the coming years.

Program

Est. FY 2013 Funding Level (Millions)[1]

Est. FY 2013 Sequestration Cut (Millions)

Est. # People Not Served because of Cuts

HUD’s McKinney-Vento Homeless Assistance Grants

$1,901

$159.7

145,906

HUD’s Section 8 Tenant-Based Rental Assistance

$18,914

$1,588.8

186,915

HHS’ Runaway and Homeless Youth Act (RHYA) Basic Center and Transitional Living Programs

$98

$8.2

3,678

HHS’ Projects for Assistance in Transition from Homelessness

$65

$5.5

17,247

HHS’ Health Care for the Homeless (HCH) Program

$137

$2.7*

11,587



[1] Because the BCA has already set overall federal discretionary funding levels for FY 2013, this brief estimates that program funding levels for FY 2013 will be similar to program funding levels for FY 2012. Official FY 2013 funding levels are not yet finalized.

If Congress changes the BCA to protect some programs (such as defense) from the cuts, the amount that needs to be cut from domestic discretionary programs could increase, thus worsening the scenario for homeless assistance programs. Several proposals to replace or alter the BCA have already been introduced.

Recommendation
Congress should prevent further cuts in non-defense, discretionary spending for affordable housing and targeted homeless assistance programs. As outlined above, sequestration would have a devastating impact on efforts to end homelessness. Affordable housing and homeless assistance programs play a critical role in improving individuals’ and families’ outcomes and have already gone under- or un-funded for several years. Reversing or lessening non-defense, discretionary cuts mandated under the Budget Control Act would protect these key programs that prevent and end homelessness.