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Why “More is Less” for Homeless Assistance: How Flat Funding Would Cut Program Capacity
Federal Policy Brief | October 10, 2013
Why “More is Less” for Homeless Assistance:
For FY 2014, “flat funding” HUD’s Homeless Assistance account at the FY 2013 (budget authority) level would mean even less money (outlays) for local programs to use. The Alliance estimates that Continuum of Care program capacity would be reduced by $115 million below the post-sequestration FY 2013 level, and $254 million below the FY 2012 level. This means 32,000 people homeless instead of housed compared with FY 2013, and 143,000 people homeless instead of housed compared with FY 2012 (including the impact of cuts to ESG).
The reason is that some of HUD’s CoC grants operate under multiyear contracts. By law, all the funding for a multiyear contract comes from the appropriation in the first year of the contract. HUD then releases money to the service provider over several years. After these initial funds are spent and the contract expires, Congress must replenish budget authority in HUD’s appropriation so that spending under the CoC grants may continue at the same level as in the previous year. In other words, these multiyear contracts are not fully incorporated into the appropriations baseline until they shift to annual renewals at the end of their initial multiyear term. It makes no difference whether the renewal grant is made to the same grantee or to some other grantee – this effect impacts the amount of money available for homeless services, whichever program receives the money.
For FY 2014, Congress will need to appropriate an additional $70,000 for HUD to continue to provide the rent subsidies. Thus, HUD will spend the same amount of money in FY 2014 as in FY 2013 ($70,000), but the amount appropriated by Congress will be greater than in FY 2013. All subsequent renewals are done through one-year contracts, so the amount appropriated by Congress and the amount spent by HUD would be the same in FY 2014 and all future years. The following chart summarizes how funding would be made available for this one project:
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014