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Tuesday, May 10, 2011

The HUD Homeless Assistance Grants: Distribution of Funds

Libby Perl
Specialist in Housing Policy

Currently, the U.S. Department of Housing and Urban Development (HUD) distributes four Homeless Assistance Grants, each of which provides funds to local communities to finance a range of housing and supportive services options for homeless persons. These four grants—the Emergency Shelter Grants (ESG) program, the Supportive Housing Program (SHP), the Shelter Plus Care (S+C) program, and the Section 8 Moderate Rehabilitation for Single Room Occupancy Dwellings (SRO) program—were enacted as part of the McKinney-Vento Homeless Assistance Act (P.L. 100-77).

The way in which the Homeless Assistance Grants are distributed will change, either in FY2011 or FY2012, as the result of legislation enacted in the 111
th Congress. The Homeless Assistance Grants were reauthorized as part of the Helping Families Save Their Homes Act (P.L. 111-22). The changes in P.L. 111-22 will have repercussions for the makeup of the Homeless Assistance Grants, the way in which funds are distributed to grantees, and the purposes for which grantees may use funds. P.L. 111-22 specifies that the provisions in the law are effective on the earlier of 18 months from the law’s enactment (on or about November 20, 2010) or three months from the date on which HUD publishes final regulations. Because HUD has not published final regulations, the changes in the law technically took effect 18 months after enactment. However, HUD has stated that current regulations apply until new regulations become effective. Because the changes in P.L. 111-22 will not take place immediately, this report describes the way in which HUD currently distributes the Homeless Assistance Grants.

HUD distributes the four Homeless Assistance Grants annually to eligible applicants, which include states, metropolitan areas, counties, nonprofit organizations, and public housing authorities. Funds for the ESG program are used primarily for the short-term needs of homeless persons, such as emergency shelter, while the SHP, S+C, and SRO programs address longer-term transitional and permanent housing needs. HUD uses one method to distribute funds for the ESG program and another method to distribute funds for the SHP, S+C, and SRO programs.

The ESG program distributes funds to states, counties, and metropolitan areas using the Community Development Block Grant (CDBG) program formula. In general, states and communities receive the same proportion of ESG funds that they received in CDBG funds the previous fiscal year. After they receive funds, states and communities then distribute them to homeless service providers, including nonprofit organizations and local government entities.

The SHP, S+C, and SRO grants are distributed through a competitive process called the Continuum of Care (CoC) application system (these three grants are sometimes referred to as the “competitive grants”). Through the CoC process, representatives from local community organizations work collaboratively to develop a plan for addressing homelessness in their area. They then determine which homeless services providers in the community should receive funding and submit a unified application to HUD. HUD then uses a multi-step process to award the grants. This involves both a formula aspect, through which HUD determines community need using the CDBG formula, and a competitive aspect, through which HUD assigns points for various elements included in the CoC application. This report describes the allocation of the Homeless Assistance Grants, as well as separate HUD funding for homelessness activities—the Homelessness Prevention and Rapid Re-Housing Program and Section 8 vouchers for homeless individuals and families proposed in the President’s FY2011 and FY2012 budgets.

Date of Report: April 25, 2011
Number of Pages: 32
Order Number: RL33764
Price: $29.95

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