Why States Are Using Welfare to Pay for Housing

A program to lift people out of homelessness under President Obama's stimulus package yielded some encouraging early results, but lacks a long-term funding source. Some states are turning to welfare.
by | April 29, 2013

For the past three years, states used one-time stimulus funds to supercharge a promising anti-homelessness initiative. Now that the money is gone, at least nine states are leveraging welfare cash assistance to keep the program alive, and the federal government hopes more states will follow.

The American Recovery and Reinvestment Act (ARRA) of 2009, also known as the economic stimulus, set aside $1.5 billion for the Homelessness Prevention and Rapid Rehousing Program (HPRP) over three years. But in 2013, states are faced with a question of how to cover the loss of that one-time investment. “We’re all having an ARRA hangover,” said Karla Aguirre, director of workforce development at Utah’s Department of Workforce Services.

The basic concept of HPRP was to provide short-term assistance to individuals and families who were in danger of becoming homeless or who were already homeless. The program targeted people experiencing some kind of temporary crisis, such as job loss, that made housing unaffordable. Assistance could mean as many as 18 months of rental subsidies, covering the security deposit, paying off outstanding utility bills and even providing hotel vouchers. The program also covered the cost of support services, such as landlord negotiations, legal assistance and credit counseling.

Early results from HPRP were promising. In the second year, the program served about 670,000 people, of which 87 percent exited the program and moved into a permanent home (as opposed to living in a shelter, on the streets or doubling up in someone else’s home). Local communities in states such as Idaho and Minnesota reported similar success. There's even some evidence that stable housing correlates with better employment outcomes: In Mercer County, New Jersey, 57 families exited the county's rapid rehousing program between 2010 and 2012, with about 91 percent placed in permanent housing and about 75 percent reporting an uptick in employment income by an average of $1,100 a month.

“We credit [HPRP funding] with keeping family homelessness about flat for the past few years,” says Katharine Gale, a policy director with the U.S. Interagency Council on Homelessness. “That source is now gone.” The number of homeless families with children, according to aggregated point-in-time counts across the country, was roughly the same between 2009 and 2012, with 77,157 homeless family households -- totalling 239,403 people in homeless families -- last year.)

“If communities want to continue this good work that they did with HPRP, then how are they going to manage to do that? I think one of the answers is TANF,” says Steve Berg, vice president for programs and policy at the National Alliance to End Homelessness.

Temporary Assistance for Needy Families (TANF) is a federal cash-assistance program for low-income families with children. State agencies in charge of TANF should consider coordinating with local rapid rehousing programs, said the federal Administration for Children and Families in a February memo. Afterall, about a third of homeless families are “extremely poor,” the memo said, with an annual median income below $7,500. Roughly 41 percent of homeless families already receive TANF cash assistance, but many more might be eligible, according to an ongoing multi-city study by the U.S. Department of Housing and Urban Development.

Berg called the pairing of welfare cash assistance and rapid rehousing a “philosophical good match” because “the whole idea behind TANF and welfare reform is people should get short-term help getting back on their feet and then let them take care of themselves.”

In combining TANF with rapid rehousing, two silos in human services are coming together, says Alexandra Cawthorne, a senior policy analyst with the National Governors Association. That’s important because after people find a permanent dwelling, they still need help stabilizing their lives, which might include finding a job, opening a savings account, enrolling children in school or building good credit. TANF agencies can connect families with case managers trained in coaching people through those latter stages of self-sufficiency, Cawthorne said.

Likewise, TANF agencies can benefit from the rapid rehousing model, Gale said, because once families have a permanent home, they’re better positioned to tackle other barriers to leaving public assistance, such as unemployment and lack of childcare.

TANF might appeal to housing agencies as a funding source because it’s an ongoing program in all states, but as a short-term benefit it does have the drawback of being limited to four months of assistance, Gale said.*

Colorado, Idaho, Massachusetts, Minnesota, New Jersey, New York, Ohio, Utah, Vermont and the District of Columbia already use TANF in tandem with rapid rehousing, according to a tally by the National Alliance to End Homelessness.

One of the states being touted by federal agencies as a potential model for coupling TANF and rapid rehousing is Utah. The state’s largest homeless shelter provider, The Road Home, partnered with the Utah’s Department of Workforce Services to implement a rapid rehousing program using TANF funds as well as HPRP money.

The Road Home rehoused 1,237 families between 2009 and February of this year, of which 87 percent did not return to homelessness. The nonprofit also reported a shortening of average shelter stays by homeless families (71 days in 2007 vs. 35 days in 2012). Through 2012, funding came from roughly $1 million in annual stimulus dollars and $950,000 from TANF to pay for its rapid rehousing program.

Although the stimulus-backed HPRP no longer exists, HUD’s Emergency Solutions Grant Program serves a similar purpose, albeit at a diminished level of support. Last year HUD’s budget included $314 million in Emergency Solutions grants. The president’s budget for 2014 asks for a slight increase, for an annual total of $356 million, with $60 million set aside for rapid rehousing. By comparison, HPRP offered about $500 million per year explicitly for homelessness prevention and rapid rehousing.

A few other options exist for replacing HPRP dollars. In Utah, The Road Home is trying to fill the void of stimulus money with two smaller HUD programs: $225,000 in from Emergency Solutions and $400,000 from the HOME Investment Partnerships Program. Other communities are using money from HUD’s Continuum of Care competitive grant program, Gale said, to shore up the loss of the stimulus funds.

*The story has been updated to clarify that TANF short-term benefits have a four-month limit. Longer term assistance would trigger reporting requirements and administrative oversight that states might prefer to avoid.

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