The HUD Homeless Assistance Grants: Distribution of Funds

Publication Date: December 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Social conditions

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Abstract:

The U.S. Department of Housing and Urban Development (HUD) distributes four homeless assistance grants, each of which provides funds to local communities so that they can finance a range of housing and supportive services options for the homeless. 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 -- are authorized in the McKinney-Vento Homeless Assistance Act (P.L. 100-77, as amended). Congress appropriates one lump sum for all four grants, and HUD then determines how the funds are allocated among the four programs.

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 the homeless, 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. States and communities receive the same proportion of ESG funds that they received in CDBG funds the previous fiscal year. However, if a community is projected to receive less than .05% of the total amount of ESG funds, its share goes to the state. 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 from the three competitive grants and submit a unified application to HUD. HUD then uses a multistep process to determine which homeless services providers should receive funding. 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. Proposed projects that receive a certain threshold number of points are funded.

Recently, both Congress and the Administration have discussed policy changes that could affect how the homeless assistance grants are distributed. These include HUD-proposed changes to the CDBG formula and two bills in the 109th Congress (S. 1801 and H.R. 5041) that would have consolidated the three competitive homeless assistance grants and refined the CoC application system.