oversight

Homelessness: Access to McKinney Act Programs Improved but Better Oversight Needed

Published by the Government Accountability Office on 1990-12-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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                                                 Report, to the Chairman Subcornrnittee
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                                                 lirban Af‘fairs, U.S. Senate
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                                                 HOMELESSNESS
                                                 Access to McKinney
                                                 Act Programs
                                                 Improved but Better
                                                 Oversight Needed


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                   United States
GAO                General Accounting Office
                   Washington, D.C. 20548

                   Resources, Community, and
                   Economic Development Division

                   B-229004.9

                   December 28,199O

                   The Honorable Alan Cranston
                   Chairman, Subcommittee on Housing
                     and Urban Affairs
                   Committee on Banking, Housing and
                   Urban Affairs
                   United States Senate

                   Dear Mr. Chairman:

                   As requested, this report discusses actions taken by federal agencies to
                   eliminate or reduce barriers to obtaining and using funds for programs
                   established by the Stewart B. McKinney Homeless Assistance Act (P.L.
                   lOO-77), These barriers were identified by assistance providers, advo-
                   cacy groups, and organizations representing state and local government
                   officials. The programs we reviewed are administered by the Depart-
                   ments of Housing and Urban Development (HUD), Health and Human
                   Services (HHS), Education, and Labor. In addition, this report discusses
                   federal oversight-monitoring     and program evaluation-of      14
                   McKinney Act programs and the status of expenditures by program
                   recipients for some of these programs. (See app. I for a list of the 14
                   programs.) Although assistance providers and others generally have not
                   recently identified barriers to obtaining and using funds for the Federal
                   Emergency Management Agency’s (FEMA) Emergency Food and Shelter
                   Program (ES), we reviewed FEMA'Smonitoring and evaluation efforts
                   because EFSis the largest McKinney Act program.


                   HUD,HHS,Labor, and Education have eased barriers that assistance prov-
Results in Brief   iders and others claimed hindered their efforts to assist the homeless
                   through McKinney Act program funds. These barriers included require-
                   ments for matching funds, environmental reviews, and a time limit for
                   program expenditures.

                   While all federal agencies have made it easier to obtain McKinney Act
                   funds, monitoring efforts vary. FEMAand Labor monitor their programs,
                   and HHSmonitors three of its five programs, HHSrelies on states to mon-
                   itor its two programs that receive block grant funds. HUDand Education
                   only recently have taken steps to implement monitoring procedures for
                   their McKinney Act programs by developing monitoring guidelines and
                   increasing the number of project visits. In addition, the five agencies
                   have either completed or started, or plan to evaluate the effectiveness of


                   Page1                                    GAO/RCED91-29
                                                                       McKinneyAct prOgrams
             B22fNO4.9




             most of their programs; however, the lack of consistent data on each
             program’s operations makes these evaluations difficult. In general, these
             agencies do not know how effective their McKinney Act programs are in
             assisting the homeless.

             Although agency officials believe the reduction in barriers will make it
             easier for grantees to obtain McKinney Act funds, they expressed con-
             cern about how slowly some grantees are spending the funds for home-
             less programs. Specifically, for HUD’SEmergency Shelter Grants (ESG)
             and Supplemental Assistance for Facilities to Assist the Homeless
             @FAA) programs, HHS’Mental Health Services program, and Education’s
             Adult Education for the Homeless and Education for Homeless Children
             and Youth programs, almost $29 million, or about 20 percent, of the
             fiscal years 1987-88 funds awarded remain unspent by assistance prov-
             iders. In response to this concern, HUD, HHS,and Education officials have
             modified their program regulations, issued guidance, and proposed legis-
             lative changes to ensure that program funds are spent in a more timely
             manner.


             The McKinney Act was enacted in response to concerns about both the
Background   urgency of the homelessness crisis and the diverse needs of the home-
             less. The McKinney Act programs provide a variety of services,
             including emergency food and shelter, transitional and permanent
             housing, primary health care, mental health care, alcohol and drug
             abuse treatment, education, and job training. The programs are funded
             through formula grants, block grants, or a competitive process. For
             fiscal years 1987-90, the Congress authorized about $2.4 billion and
             appropriated about $1.7 billion.

             Since passage of the McKinney Act, assistance providers and advocate
             organizations have cited administrative, legislative, and regulatory bar-
             riers that they believed impaired service delivery to the homeless. In
             November 1988, the Congress amended the McKinney Act (P.L. lOO-
             628), in part, to address these concerns. However, these groups have
             continued to cite the need for additional changes to ease access to
             McKinney Act program funds.              .




             Page2                                    GAO/RCED-91-29
                                                                  McKinneyAct Program
                               E22eoo4.e




                               Advocacy groups for the homeless, assistance providers, and other orga-
Actions Taken to Ease          nizations have criticized matching fund requirements, application dates,
Restrictions to                and restrictions on allowed uses for program funds. In response, HUD,
McKinney Act                   HHS,Education, and Labor have eased the eligibility and operational
                               requirements of their McKinney Act programs and have taken measures
Programs                       to better coordinate these programs. (See app. II.)

                               HUD’SMcKinney Act programs required the most changes, and HUDoffi-
                               cials recognized the need to improve program operations. In October
                               1989, HUDconsolidated the management of three of its four McKinney
                               Act programs under the Office of Special Needs Assistance Programs
                               (SNAP) and made additional program changes. For example, with
                               respect to the Supportive Housing Demonstration Program, SNAP offi-
                               cials have

                           l lifted the requirement for environmental reviews for housing projects
                             receiving operational funds only,
                           l allowed transitional housing grant recipients to change their project
                             location from the one specified in their application, and
                           . permitted the use of HUD'SCommunity Development Block Grant and
                             HHS’Community Services Block Grant funds to meet the local matching
                             requirement.


HHS’ IG Review Indicates       Despite efforts to improve access to funds, some assistance providers
SomeProblems May Still         believe that problems still exist. In May 1990, the HHSInspector General
                               (IG) completed a review of all 60 states and selected local service organi-
Exist                          zations. The IG found that assistance providers still have concerns
                               regarding program fragmentation, complex application processes, and
                               the uncertainty of program funding. Officials of the Interagency Council
                               on the Homeless, who requested this study, told us they intend to review
                               the final IG report and recommend appropriate corrective actions.


                               HUD and Education are not adequately monitoring their programs. They
Better Federal                 have not established monitoring procedures such as specific guidelines
Monitoring of                  nor required audited financial statements to verify recipient’s expendi-
McKinney Act                   tures. In addition, the two agencies have not consistently performed on-
                               site visits to grantees. Officials from the two agencies told us that little
Programs Is Needed             monitoring occurs because of limited staff and funds for travel and staff
              v                training. HHSmonitors three of its programs and relies on state moni-
                               toring efforts for two programs that are structured as block grants. Both



                               Page3                                     GAO/lWED-@l-2@
                                                                                     McKlnneyAct Programs
                        B22BO04.9




                            and Labor monitor their assistance providers to ensure compliance
                        F+EMA
                        with program rules and regulations.


Program Monitoring by   HUDpolicy requires its field offices to monitor McKinney Act program
HUD and Education Is    operations. However, a recent nationwide HUDIG audit of EN+,the Sup-
                        portive Housing Demonstration Program (SHDP),and Section 8 Moderate
Inadequate              Rehabilitation Program for Single Room Occupancy Dwellings for Home-
                        less Individuals (SRO),found that monitoring was inadequate at most of
                        the 26 HUDfield offices visited. The IG found many instances of unap-
                        proved uses of funds and unsupported expenditures. For example, one
                        emergency shelter expended $16,000 in ESGfunds for staff salaries,
                        which is an ineligible activity. IG officials told us that HUDcannot be
                        assured that McKinney Act funds are being used as intended.

                        HUD has not monitored its remaining McKinney Act prOgI%In-SAFAH.
                        According to a HUDprogram official, prior to September 1989, HUD had
                        not monitored any of the 45 ~AFAHprojects funded in fiscal year 1987.
                        Starting in September 1989, HUDfield offices were responsible for moni-
                        toring the OAF.. projects, but as of September 1990, a HUDofficial did
                        not know whether the field offices were conducting on-site visits to the
                        projects.

                        HUDofficials cite staff shortages-  for example, the SAFAHprogram was
                        staffed by one headquarters person- and limited travel and training
                        funds as reasons for the lack of monitoring of HUD’Sfour McKinney Act
                        programs. HUDofficials told us they plan to develop specific monitoring
                        guidelines for three McKinney Act programs and also increase the
                        number of on-site visits, though the lack of staff will continue to hinder
                        the monitoring effort.

                        Education, in a January 1990 report to the President and the Congress,
                        stated that because of cutbacks in personnel and funds, program moni-
                        toring had been curtailed. It further stated that monitoring of its grant
                        programs, including its two McKinney Act programs, was insufficient to
                        ensure that recipients use federal funds in compliance with their grants.

                        Education did not have adequate monitoring practices in place for the
                        Adult Education for the Homeless Program. According to program offi-
                        cials, as of September 1990, Education had made no on-site visits to
                        projects funded with fiscal years 1987-88 appropriations, and agency
                        personnel visited only 5 of 30 fiscal year 1989 funded projects. Educa-
                        tion officials told us they are currently designing monitoring guidelines


                        Page4                                     GAO/RCED-@l-29
                                                                             McKinneyAct Program8
                       sb229304.e




                       for the program that will be ready for use in February 1991. In addition,
                       Education is developing a 2-year compliance review plan that will
                       require program personnel to make on-site visits to all homeless adult
                       education projects funded with fiscal years 1989-90 appropriations.
                       Education expects to implement the review plan in fiscal year 1991;
                       however, this depends on the availability of funds to pay for staff and
                       travel.

                       Similarly, up until May 1990, Education had not monitored the states
                       that received Homeless Children and Youth Program funds since fiscal
                       year 1987. Program officials have developed specific monitoring guide-
                       lines and have started making on-site visits to the states. As of October
                       1990, program personnel had visited 3 states, and they plan to make on-
                       site visits to an additional 30 to 36 states during fiscal year 1991. How-
                       ever, program officials told us that this number may be lower if staff
                       levels are not increased.


FEMA, Labor, and HHS   Both FEMAand Labor have implemented monitoring procedures to
Have Monitoring        ensure compliance with program regulations. FEMA’S EFS program, cre-
                       ated under separate legislation in 1983 and subsequently authorized
Procedures in Place    under the McKinney Act, has delegated much of the monitoring respon-
                       sibilities to the El% National Board’ and over 2,300 local EFS boards.
                       FEMA,through the National Board, issues detailed monitoring guidelines,
                       tracks administrative expenses, and requires independent audits of
                       assistance providers. According to FEMA officials, desk audits are per-
                       formed for each of the over 9,000 EF’Sassistance providers once every 3
                       years. This is supplemented annually by about 60 on-site visits con-
                       ducted by FEMA’SEFS and IG personnel, plus staff from the National
                       Board. In addition, the local boards are required to make on-site visits to
                       assistance providers in their jurisdiction, although FEMA officials do not
                       know the extent to which this is being done.

                       Labor has also established monitoring procedures and visited about
                       three-fourths of the projects funded by its two programs in fiscal years
                       1988-89. Labor personnel made on-site visits to all 16 of its homeless
                       veterans’ assistance providers. As of September 1990, agency personnel
                       had visited 26 of 33 job training assistance providers funded in fiscal
                       year 1988 and 4 of 12 projects funded in fiscal year 1989. According to
                       program officials, they plan to make on-site visits to the remaining 8

                       IThe Boardconsistsof representativesfrom six national charitableorganizationsresponsiblefor pro-
                       gram funding decisions.



                       Page5                                                GAO/WED-@l-2@
                                                                                       McKlnneyAct Programs
                   5229004.9




                   projects, plus all 19 projects funded in fiscal year 1990 during fiscal
                   year 1991.

                   HHShas implemented monitoring procedures for three of its five
                   McKinney Act programs, but it does not independently monitor its two
                   McKinney Act block grant programs. Rather, consistent with HHS'policy
                   and regulations on the administration of block grants, it relies on state
                   assurances that program funds are being used for purposes consistent
                   with the statute and not for other services, and that the program goals
                   are being met. According to HHSofficials, annual reports are reviewed by
                   program staff to ensure that funds have been expended appropriately.
                   For example, HHSreviews annual reports for the Community Mental
                   Health Services for the Homeless Block Grant Program submitted by
                   grant recipients. However, a report prepared for HHS'National Institute
                   of Mental Health in April 1990 summarized the fiscal years 1987-88
                   reports and stated that the quality varied tremendously in terms of
                   detail, time periods covered, and data on number of persons served. For
                   five states, it was not clear in their annual reports whether or not their
                   programs were operational.


                   Overall, HUD, Labor, HHS,FEMA,and Education do not know how effec-
Effectiveness of   tive their programs are in assisting the homeless. Agency officials told
McKinney Act       us that their main concern since the passage of the McKinney Act has
Programs Not Yet   been to establish their respective programs and award money to assis-
                   tance providers for delivery of services to the homeless. Currently,
Determined         efforts are underway by the five agencies to assess most of their pro-
                   grams. However, according to both HUD and HHSIG officials, the agencies
                   generally have not provided guidance to assistance providers on the
                   type of data needed to be collected for evaluation purposes. Thus, the
                   lack of consistent data will make it difficult to determine overall pro-
                   gram effectiveness.

                   Except for a congressionally mandated assessment of the SROprogram,
                   HUDhas not evaluated the effectiveness of its four programs. In a March
                   1990 report to the Congress on the effectiveness of its first year’s SRO
                   program, HUDconcluded that the program appeared to operate effec-
                   tively. The report also concluded that the ultimate effectiveness of the
                   program must await more data on projects and residents. This conclu-
                   sion was based on data from the 30 projects funded in fiscal year 1988.
                   HUD has not assessed the additional 28 projects funded in fiscal year
                   1989. In addition, according to a HUDIG official, the IG'S audit of the ESG



                   Page6                                     GAO/WED-9139M&hey Act Programa
B-229094.9




and SHDPprograms indicates that not enough data are currently avail-
able to assess the effectiveness of these programs. HUDofficials told us
that they plan to contract for evaluations of both the FSGand SHDPpro-
grams and expect to receive the results of the evaluations in 1992.

Labor contracted for an independent evaluation of its Homeless Vet-
erans Reintegration Project’s first year of operation. A May 1990 draft
of the evaluation report stated that the program was successful in its
mission of veteran reintegration by exceeding the numeric goal for vet-
erans served and total placements. However, the contractor was unable
to determine the overall effectiveness of the program to deliver services
to homeless veterans because uniform data have not been collected at
the project level. Labor also has started an evaluation of its Job Training
for the Homeless Demonstration Program, but the final results will not
be reported until April 1992. Labor did, however, testify in May 1990
before the Congress on the results of the first year’s operation.

HHScontracted for an evaluation of 10 of the 109 Health Care for the
Homeless Program projects funded in fiscal year 1987. In a March 1989
report, the contractor concluded that several of the projects could be
used as models for replication elsewhere in the country. HHSalso has
contracted with two firms for national evaluations of its two demonstra-
tion projects for alcohol and drug abuse and mental health services. In
addition, the two demonstration projects have built-in evaluation com-
ponents. According to HHSofficials, one-third of the annual appropria-
tions for the alcohol and drug abuse demonstration projects have been
used for evaluations. The officials stated that in accordance with HH!3
block grant policy, they do not plan to assess the effectiveness of their
two block grant programs. Beyond reviewing the reports prepared annu-
ally by the states, it is HHS'policy that the states are responsible for
evaluating the effectiveness of block grant programs.

Neither FEMAnor Education has evaluated its McKinney Act programs,
although both agencies plan to do so in fiscal year 1991. FEMAis cur-
rently accumulating program data from the local EFSboards and assis-
tance providers that will be used in an evaluation of the Em program.
According to Education officials, the agency also is collecting program
data and plans to award a contract for an evaluation of the effective-
ness of its Adult Education for the Homeless programs operating in
1990. However, according to these officials, it may be difficult to reach
an overall assessment because of the inconsistent data collected by the
projects. Education has no plan to evaluate its Homeless Children and
Youth program,


Page7                                     GAO/RCEB91-29
                                                      M&hey Act Programa
                      B-229094.9




                      Program officials told us they are concerned that funds for some
Officials Concerned   McKinney Act programs are not being spent in a timely manner by some
About Spending Rate   recipients, We reviewed expenditure rates for these programs for fiscal
for SomeMcKinney      years 1987-88 and, given the emergency nature of the McKinney Act,
                      expected that most of these funds would be spent by 1990. Specifically,
Act Programs          for HUD'SESGand SAFAHprograms, HI-B' Mental Health Services program,
                      and Education’s Adult Education for the Homeless and Education for
                      Homeless Children and Youth programs we found that almost $29 mil-
                      lion, or about 20 percent, of the fiscal years 1987-88 funds awarded
                      remain unspent by assistance providers. (See app. III for the amounts of
                      fiscal years 1987-88 funds that remain unspent.)

                      Although about 93 percent of HUD'SIBG fiscal years 1987-88 funds have
                      been spent, several large recipients have not spent significant portions
                      of their grants according to our analysis of March 26,1990, expenditure
                      data, For example, about 27 percent ($460,000) of California’s ESCgrant
                      is unspent, and over 84 percent ($282,000) of Washington, D.C.‘s fiscal
                      years 1987-88 IBG grant awards remain unspent. To help spend the
                      funds more rapidly, HUDestablished a program policy, effective with the
                      fiscal year 1990 funds, that all IBG funds must be spent within 2 years
                      of receipt. About 33 percent ($4.9 million) of SAFAH’Sfiscal year 1987
                      funds (this program was not funded in fiscal year 1988) remained
                      unspent as of January 31,199O. A number of ~AFAHrecipients have not
                      spent substantial portions of their funds: for example, Dade County,
                      Florida, has about $310,000 unspent, or 90 percent of the $346,000 it
                      received, while Newark, New Jersey, has about $803,000 unspent, or 91
                      percent of the $881,000 it received.

                      Several recipients of HIS' mental health block grant program also have
                      large amounts of funds unspent since fiscal years 1987-88. For example,
                      as of March 31, 1990, over 96 percent ($862,000 of nearly $896,000) of
                      Maryland’s fiscal years 1987-88 grant remains unspent, while Florida
                      has about 30 percent, or over $700,000 remaining. Current law allows,
                      but does not require, states to turn in their unspent mental health block
                      grants for redistribution in the state by the Secretary of HHSin the form
                      of categorical grants. HHShas drafted a legislative proposal to require
                      mental health block grant recipients tospend their money within 2
                      years of receipt. In addition, according to HHSofficials, program staff
                      monitor spending rates to identify those states with large unspent bal-
                      ances, to identify any technical assistance needs to overcome impedi-
                      ments, and to encourage those states to spend their grants more quickly.




                      Page8
              5229004.9




              Education’s two McKinney Act programs are experiencing similar
              problems. Officials told us they are concerned about the slow spending
              rate and have made program changes to expand the allowable uses of
              the Education for Homeless Children and Youth Program funds. For
              example, as of December 31, 1989, Florida had not spent 96 percent, or
              $321,388, of its $337,621. In addition, New York State, as of March 30,
              1990, had not spent over 86 percent, or $708,807, of its $828,772 fiscal
              years 1987-88 funds.

              According to studies on expenditure rates conducted by HUD and HHSand
              our discussions with recipients, reasons for nonexpenditure include pro-
              gram start-up problems, time needed to award contracts for major
              building renovations, the uncertainty of federal funding for these pro-
              grams from year to year, and community resistance to the proposed
              location of homeless projects.


              HUD,HHS,Education, and Labor have made progress in easing barriers
Conclusions   identified as impediments to providers obtaining and using McKinney
              Act funds.

              HUD and Education have not adequately monitored their McKinney Act
              programs and therefore cannot be assured that the programs comply
              with the McKinney Act and federal rules and regulations. Without ade-
              quate monitoring, we believe the potential for the misuse of funds and
              inefficient program operations is increased. Further, the lack of federal
              guidance to assistance providers on the type of data they should be col-
              lecting for evaluation and the lack of program effectiveness evaluations
              hinder the government’s ability to know whether the McKinney Act pro-
              grams are working and what changes might be needed to improve the
              delivery of services to the homeless. However, at HUD, Education, Labor,
              and FEMA,efforts are underway to improve monitoring and/or conduct
              program evaluations, HHSofficials told us that they will continue to rely
              on states to monitor and evaluate the two McKinney Act block grant
              programs.

              In addition, HUD, HHS,and Education officials are aware that some pro-
              gram recipients have not spent large portions of their fiscal year 1987-
              88 funds. We expected that, given the emergency nature of the
              McKinney Act, most program funds for fiscal years 1987-88 would have
              been spent by 1990. For some programs, agency officials are taking
              actions to ensure that funds are being spent in a timely fashion, and we



              Page9                                    GAO/RCED9l-29McKi~1eyActPrograma
                                 E222004.B




                                 believe that HUD,HHS,and Education officials should monitor all pro-
                                 gram expenditure rates.


                      We recommend that the Secretaries of HUD and Education develop spe-
Recommendationsto     cific guidelines, conduct regular on-site visits, and require financial
the Secretaries of    audits for all their McKinney Act programs. The Secretary of HHSshould
HUD, Education, HHS, dforetermine  whether it is appropriate to increase the level of monitoring
                           the Department’s two McKinney Act block grant programs.
and Labor, and the
Director of FEMA     We also recommend that the Secretaries of HUD, Education, HHS,and
                                 Labor; and the Director of FEMAevaluate the effectiveness of all their
                                 McKinney Act programs to assess whether they are working as intended
                                 and to identify needed changes, In line with this, the Secretaries and the
                                 Director of FEMAshould develop evaluation guidelines to help assistance
                                 providers develop, document, and report consistent and comprehensive
                                 program data that can be used to evaluate the effectiveness of the
                                 programs


                                Our objectives were to determine (1) what actions federal agencies have
                                taken to reduce or eliminate barriers to obtaining and using McKinney
                                Act funds, (2) the adequacy of federal program oversight, and (3) the
                                status of program expenditure rates. We interviewed headquarters offi-
                                cials from the five federal agencies that administer the 14 programs. We
                                reviewed and examined program documentation-including          IG reports
                                and reports issued by advocacy groups and public interest organiza-
                                tions-on program implementation and administration. We did not
                                review three of the McKinney Act programs-the       federal surplus prop-
                                erty program and two Department of Veterans Affairs programs
                                because we had other ongoing reviews of these programs. For the pro-
                                grams we reviewed, we focused on program changes made by federal
                                agencies since the 1988 reauthorization of the McKinney Act.

                                We also interviewed agency officials and 36 state and local program
                                recipients in 16 states to obtain information on their expenditure rates
                                for specific McKinney Act programs funded in fiscal years 1987-88. We
                                reviewed fiscal year 1987-88 expenditures because we expected that
                                most funds for these program years would have been spent by 1990.

                                We discussed the information presented in this report with agency offi-
                                cials responsible for each of the 14 McKinney Act programs and incorpo-
                                rated their comments where appropriate. As agreed, we did not obtain


                                Page10                                    GAO/RCED-91-29
                                                                                      McKinneyAct Programa
B229004.9




written comments on this report. We conducted our review from Sep-
tember 1989 to October 1990 at the responsible agencies’ headquarters
in Washington, D.C. and performed our work in accordance with gener-
ally accepted government auditing standards.

Copies of this report will be sent to the Secretaries of HUD, HHS,Educa-
tion, and Labor, the Director of FEMA;the Director, Office of Manage-
ment and Budget; and other interested parties upon request. Our work
was performed under the direction of John M. Ols, Jr., Director, Housing
and Community Development Issues (202) 276-6626. Major contributors
are listed in appendix IV.

Sincerely yours,




fDFQ
Assistant Comptroller General




Page11                                  GAO/WED-91-29
                                                    McKinneyAct Programs
Contents


Letter
Appendix I                                                                               14
McKinney Act
Programs Reviewed
and Fiscal Year 1990
Funding Levels
Appendix II                                                                              16
Actions Taken to         HUD Programs
                         HHS, Education, and Labor Programs
                                                                                         16
                                                                                         16
ReduceBarriers to
McKinney Act
Programs
Appendix III                                                                             18
Status of Fiscal Years
1987-88 Program
Expenditures for Five
McKinney Act
Program
Appendix Iv
Major Contributors to
This Report




                         Page12                               GAO/RCED91-29
                                                                         &Kinney Act Program
Abbreviations

EFS       Emergency Food and Shelter (Program)
JB.3      Emergency Shelter Grants (Program)
FEMA      Federal Emergency Management Agency
GAO       General Accounting Office
HHS       Health and Human Services
HUD       Housing and Urban Development
IG        Inspector General
NIMH      National Institute of Mental Health
SAFAH     Supplemental Assistance for Facilities to Assist the Homeless
              (Program)
SHDP      Supportive Housing Demonstration Program
SRO       Section 8 Moderate Rehabilitation Program for Single-Room
              Occupancy Dwellings for Homeless Individuals


Page 13                                 GAO/RCEB91-29
                                                    McIUnneyAct Programs
Appendix       I

McKinneyAct ProgramsReview4 and Fkxil
Year 1990FundingLevels

Departmant of Housing and Urban
DOVOlOpllOti                      Dollars in millions
                                                                                                              Fundina
                                  Levels
                                  Emergency Shelter Grants Program                                               $73.2
                                  Supportive Housing Demonstration Program                                       126.8
                                  Section 8 SRO Proaram                                                           73.2
                                  Supplemental Assistance for Facilities to Assist the Homeless                   10.8

                                  Federal Emergency Management Agency
                                  Emergency Food and Shelter Program                                             130.1

                                  Deoartment of Health and Human Services
                                  Mental Health Services Block Grant                                              27.7
                                  Demonstration Projects for,Alcohol and Drug Abuse                               16.3
                                  Mental Health Services Demonstration Projects                                    6.0
                                  Emergency Community Services Homeless Grant Program                             21.9
                                  Health Care for the Homeless Program                                            32.4

                                  Deoartment of Education
                                  Adult Education for the Homeless                                                 7.4
                                  Education for Homeless Children and Youth                                        4.9

                                  Deoartment of Labor
                                  Homeless Veterans Reintegration Program                                          1.9
                                  Job Training Demonstration Program                                               9.4




                                  Page14                                             GAO/RCEIbBl-99
                                                                                                  McKlnney Act Programs
Appendix II

ActionsTakento ReduceBarriersto MeKinney
Act Programs

              This appendix describes the changes made by HUD, HHS,Education and
              Labor to their McKinney Act programs to reduce barriers for assistance
              providers in obtaining and using program funds.


              In October 1989, HUD consolidated the management of three of its four
HUDPrograms   McKinney Act programs under one office-the Office of Special Needs
              Assistance Programs- to better coordinate its efforts and assist prov-
              iders in the delivery of services to the homeless. Since November 1989,
              HUDhas made changes to all of its McKinney Act programs to ease
              problems with access and use of funds for the Supportive Housing Dem-
              onstration Program (SHDP),Emergency Shelter Grant Program @so),
              Supplemental Assistance to Facilities to Assist the Homeless (SAFAH),
              and the Section 8 Moderate Rehabilitation Program for Single-Room
              Occupancy for Homeless Individuals (SRO).

              SHDPprovides funds to acquire and renovate properties for transitional
              housing for the homeless and permanent housing for the handicapped
              homeless. Because providers had difficulty meeting the SO-percent
              matching requirement from nonfederal sources, HUDnow allows its Com-
              munity Development Block Grant and HHS'Community Services Block
              Grant funds to serve as the nonfederal match for supportive services. In
              addition, HUDhad required providers to have control of property
              through lease or ownership when they applied. Faced with neighbor-
              hood resistance to homeless facilities and other problems, assistance
              providers had difficulty in obtaining site control within the allowed
              time. HUDnow allows grantees to substitute a different property than
              that listed in their application for up to 1 year after the award. HUD also
              lifted the lo- to 20-year building use restriction that had previously
              affected landlords whose buildings were leased to SHDPfunding recipi-
              ents. In addition, comprehensive environmental reviews, which were
              costly and caused unnecessary delays according to grant recipients, are
              no longer required if HUDfunds are used solely for operating transitional
              housing or permanent housing for the handicapped projects. As a result
              of the changes to the permanent housing for the handicapped program,
              HUDofficials expect that the entire $15 million allocation for fiscal year
               1990 will be awarded to recipients, compared with only about 28 per-
              cent from fiscal years 1987-89. Finally, HUDis now providing grants of
              up to 76 percent, the maximum allowed by law, of operating costs for
              transitional housing for the first 2 years and up to 50 percent for the
              remaining 3 years. Previously, HUD had funded only up to 50 percent of
              the operating costs for 5 years.



              Page16                                   GAO/RCEDBl-29
                                                                   McKinneyAct Program8
                      ActloneTakento ReduceBarrierato
                      lb&Kinney ActmanuJ




                      ESGprovides grants to states, territories, and localities to rehabilitate,
                      renovate and operate shelters and provide essential services involving
                      health, employment, drug abuse, and education. Providers are limited to
                      using 20 percent of their grants for essential services; however, HUDis
                      authorized to grant waivers to allow assistance providers to exceed the
                      20-percent limit in certain circumstances. According to HUDofficials, the
                      first 17 waivers issued were granted in fiscal year 1990, and these allow
                      shelters to provide more comprehensive services to the homeless, such
                      as employment or educational assistance and homelessness prevention
                      activities. In addition, as with SHDP,HUD also eased the requirement for
                      comprehensive environmental reviews for grants used solely for oper-
                      ating shelters, The changes HUDmade to SHDPand ESGalso apply to the
                      ~AFAHprogram because SAFAHfunds are used to supplement both SHDP
                      and ESGprograms.

                      In addition, HUDeased the eligibility requirement for its SROprogram,
                      which is designed to provide funds for moderate rehabilitation to
                      owners of rehabilitated SROhousing through rental assistance to home-
                      less persons residing in these buildings. HUDnow allows all public
                      housing agencies to apply for SROfunds; previously, only housing agen-
                      cies with experience administering HUD'SSection 8 Moderate Rehabilita-
                      tion Program were eligible.


                      HHSmade one change to its Community Mental Health Services for the
HHS, Education, and   Homeless Block Grant program. This program provides funding to states
Labor Programs        and territories for a variety of mental health services, including out-
                      reach, community mental health services, referrals to primary health
                      and substance abuse services, staff training, case management, and sup-
                      port services in residential settings. Starting with the fiscal year 1990
                      program, HI-B recommended a March 31,1990, due date for applications
                      for its mental health block grant funds. According to HHSofficials, the
                      absence of a due date delayed the use of these funds because states,
                      which apply for funds on behalf of assistance providers, were applying
                      for program funds late in the fiscal year. These late applications delayed
                      getting the funds to the assistance providers. In fiscal year 1989, HHS
                      received only 20 of 66 applications by March 31, compared with 38 out
                      of 66 by that date in 1990.

                      Education’s Education for Homeless Children and Youth Program ini-
                      tially did not allow direct services to the homeless, but rather funded
                      state efforts to plan and organize educational programs for homeless
                      children and youth. An advocacy group complained that the program


                      Page16                                   GAO/WED-91-29
                                                                           McKinneyAct Programa
AppendixII
ActionaTakento ReduceBnrriemto
McKlnneyAct Program




should directly pay for educational services for homeless children and
youth. In June 1989, Education informed states that they could use any
prior years unspent funds to start pilot projects for educational pro-
grams for homeless children and youth. As of October 1990, according
to an Education official, 37 states have started these pilot projects.

Labor’s Job Training for the Homeless Demonstration Program provides
funds to demonstration projects for such activities as job counseling and
training for the homeless. Labor asked the Congress to change the
McKinney Act to remove the 2-year limit on the expenditure of program
funds. The Congress made this change in November 1989 after Labor
supplied information showing as of September 30, 1989,19 of 33
projects had significant amounts of unexpended funds. According to a
Labor official, some of the 19 either stopped or curtailed services when
the 2-year funding period expired. According to the Labor official, the
removal of the 2-year spending limit permitted all 19 projects to con-
tinue serving the homeless and be evaluated for possible replication.




Page17                                   GAO/RCED-91-29
                                                     McKinneyAct Programa
Appendix   III

Status of l?iscdYears1987-88Program
Expendituresfor Five McKinneyAct Program

                 Dollars in millions
                                                             Funds    Funds      Funds    Percent
                 Agency/Program                            awarded    spent    unspent      spent

                 Emergency Shelter Grant (as of Mar.
                 1990)                                        $58.0    $54.0      $4.0         93
                 Supplemental Assistance for Facilities
                 to Assist the Homeless (as of Jan 1990)       15.0     10.0        5.0        67

                 HHS
                 Mental Health Services Block Grant (as
                 of Mar. 1990)                                 43.7     36.0        7.7        82

                 Education
                 Adult Education for the Homeless (as of
                 Mar. 1990)                                    14.0      7.3        6.7        52
                 Education for Homeless Children and
                 Youth las of Dec. 19891                        9.0      3.8        5.2        41
                 Total ’                                     $139.7   $111.1        ---
                                                                                 $28.6         80




                 Page18                                        GAO/RCEIbBl-29
                                                                            McKinneyAct Programs
Appendix IV

Major Contributorsto This Report


                        Marnie Shaul, Assistant Director
Resources,              Eugene E. Aloise, Assignment Manager
Community, and          Michelle A. Gambone, Social Science Analyst
                        Carol Herrnstadt Shulman, Reports Analyst
Economic
Development Division,
Washington, D.C.

                        Margaret Armen, Senior Attorney
Office of the General
Counsel, Washington,
D.C.

                        Robert A. Barbieri, Audit Manager
New York Regional       Norman A. Krieger, Evaluator-in-Charge
Office                  Erin Beckles-Young, Evaluator
                        William T. Cronin, Evaluator
                        Bryon S. Gordon, Evaluator




(YHBISR)                Page19                                   GAO/RCED-91-29
                                                                             MeKinneyAct Programs
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