Mental Disorder: The Failure of Reform

Persons with disabilities have the biggest housing crisis in terms of income, accessibility, and access to services.  In 2001, state legislators and Gov. Mike Easley's administration set out to reform the public mental health system.

The plan was rooted in the premise that the private sector could do the job better while saving taxpayers money through increased efficiency. The state would pay businesses to care for the mentally ill, and the free market would ensure more choices for consumers.

In a five-part series, The News & Observer has chronicled how badly that effort was bungled, wasting more than $400 million in public money and costing lives.  This series blows the lid off a problem that has been ignored for some time now – that services for people with mental health issues are failing, the system is flawed and that people with disabilities in general have little hope of finding accessible independent living options they can afford and the community-based services they need – not to mention transportation difficulties.

Our hope is that this series will force the Governor and General Assembly to focus on the needs of people with disabilities and invest the tens of millions that are needed along with reforming the service delivery system. 

Click here to read this News & Observer series.

Introduction

People with disabilities strive for opportunities to express their capabilities, pursue interests and achieve goals while accepting their limitations. Safe, decent, affordable housing, either rented or owned, is essential for all people to pursue a life with purpose. With decent housing comes the opportunity to participate in the community through such simple things as going to the grocery store, stopping at the post office, belonging to a church, participating in a class. However, for many people with disabilities, the greatest obstacle to personal achievement and true community participation is the lack of a suitable housing situation.

It is important to consider that people with a disability frequently have a housing problem not because of their disability but because of their low incomes. Many people with disabilities severe enough to preclude full time employment (mental health problems, mental retardation, cerebral palsy, or other problems) receive Supplemental Security Income (SSI) payments from the federal government. People receiving SSI have some of the lowest incomes in the nation. The amount received in 2007 by an SSI recipient is $623 per month, or $7,236 per year. This translates to a housing wage of $3.89 per hour for a forty-hour week. [1]

The majority of housing assistance available for people with disabilities is administered by the US Department of Housing and Urban Development (HUD). These programs target people at various income levels based on the Area Median Income (AMI). The lowest income level that HUD targets is below 30%; people at this level are designated as extremely low income (ELI). In 2007, monthly SSI payments were $623 per month, placing a recipient at 19% of the one-person median household income. [2]

HUD further uses a guideline that no more than 30% of a person's income should be used for housing. For an SSI recipient, that comes to only $187 per month to be used for housing costs, yet the national average Fair Market Rent (FMR) for a one-bedroom apartment, as set by HUD, is $573. Clearly, most SSI recipients cannot afford market rate housing.

The SSI recipient is confronted with a desperate situation. While sometimes it is possible to live with family, friends or make other personal arrangements, all too frequently it is to HUD programs that they must turn. HUD programs can be difficult to access and many require the assistance of members of the disability community (family, friends, advocates or service providers). The problem faced is the availability and accessibility of HUD programs that apply to people with disabilities.

The question of homelessness must be addressed before proceeding. Homelessness is a price our society pays for lack of sufficient housing. We must be aware that the subsidy for a person on disability may only be a thin reed keeping them from being homeless. In a sense, we must move to resolve the housing dilemma of homelessness and those on disability simultaneously. We can look at several programs, both state and federal, that play a key role in developing housing and making housing policy.

Consolidated Plan

HUD housing programs have changed in many ways over the years as programs have been revised, expanded or even deleted. This has created a complex situation as access to one program may be at variance to access to another. In recent years, control for programs such as the Community Development Block Grant (CDBG) and HOME has shifted to some degree from HUD to the state and local level. This has created a new dynamic in accessing programs.

CDBG and HOME provide for the infrastructure and financing of low-income housing in designated areas within communities, and assist with rental production and homeownership. Income targeting is a large factor in appropriation of funds. Units developed with these programs tend to target members of the community earning at or below 80% of the AMI, or at or below 50%, with some units targeted to people earning 30% or less of the AMI. We need to bear in mind that even though a person with an income below 30% should qualify for units designated "at or below 50%", in fact, most people accepted into those units will have incomes close to the 50% level so that the return to the developer is higher. Extremely low-income people, though seemingly eligible, are often effectively excluded.

The following quote highlights the dilemma of the person with disabilities.

Long-standing HUD programs that provided "deeply" subsidized housing for the lowest income groups (i.e., Section 8 project-based assistance, public housing development, Section 811, etc.) have been reduced or eliminated from the federal budget. Replacing them are housing programs and financing mechanisms more easily targeted to higher income households, including the HOME and CDBG programs, the federal Low Income Housing Tax Credit program, and bond financing. State and local government housing agencies are producing thousands of units of affordable housing' with these programs. However in most instances, this new supply of housing is not affordable to people with SSI incomes of approximately $600 per month. [3]

How can the disability community affect the number of units built for those with extremely low incomes? The use of federal housing funds that are administered by the state are required to be outlined in detail in a Consolidated Plan, which is a five year plan with annual updates. These plans require public hearings. For the disability community to affect housing policy, they must appear at these hearings and speak out for the type of housing that they want and need in their community. Even though this effort may take more than one year to bear fruit, it can be effective in the long run.

The Housing Choice Voucher Program (Section 8)

Section 8 was enacted into law in 1974 and has become HUD's largest and most effective housing program. The 2007 HUD budget was more than $33 billion and Section 8 accounted for more than $16 billion (it should be noted that the overall HUD budget has declined more than 50% since the mid-1980's). However, although it is effective and houses more than 2 million households nationwide, it is also annoyingly complex and many find it too difficult to access.

How does a voucher system work? Vouchers are documents of value. In this instance, they ensure future payment of a tenant's rent. The prospective renter gets on a Public Housing Authority's waiting list and, after rising to the top after perhaps several years, becomes eligible for a voucher. This is the real beginning of the process. A person seeking a tenant rental voucher must then find an apartment on his own that meets the PHA guidelines. This may be a difficult process for a person with disabilities.

It would seem that this system ought to work well for a person with disabilities, but all too often it doesn't. The system is fraught with complex regulation and guidelines, but frequently, the PHA is reluctant to work with a person on SSI because it is more time consuming. In the end, Section 8 has not proven to be a very successful program for those on SSI.

Like other state agencies that use federal housing funds, PHAs are required to hold public hearings prior to the filing of five year and annual plans. Here is another opportunity for disability advocates to express their concerns.

Supportive Housing for Persons with Disabilities Program (Section 811)

Another HUD program, Section 811, is specifically earmarked for persons with disabilities. In years past, it held high promise and was the cornerstone of the disability housing policy. However, since the end of the first Bush Administration, the program has declined from $346 million to $118 million today. The program provides for capital grants, operating subsidies as well as tenant-based rental assistance (vouchers), but advocates say the program is encrusted with bureaucracy and red tape. In additions, the vouchers are frequently transferred to Section 8 and lose their disability tag. Nonprofits who depended on Section 811 to expand their housing opportunity no longer look to it for a high level of assistance. There is substantial feeling among housing advocates that Section 811 needs to be reconfigured through new legislation, including $100 million in new funding; however, Section 811 is administered by HUD, headquartered in Washington, DC, and there is no opportunity for consumer input.

Low Income Housing Tax Credit

Low Income Housing Tax Credits are issued by the federal government to all states, and some states, including North Carolina, issue their own state housing tax credits. Tax credits are administered by the North Carolina Housing Finance Agency and awarded to developers of low-income housing, who may be nonprofit organizations. The developers pass the tax credits on to investors in their projects, who then receive a tax break at the federal and possibly state level. Tax credits are a financial incentive to attract equity to low-income housing developments.

Low Income Housing Tax Credits now generate about $4 billion of investment in affordable housing annually nationwide. Since its creation in 1986, the housing tax credit has produced over one million affordable units for low-income renters. So far in North Carolina, 58,007 affordable rental units have been established with Low Income Housing Tax Credit dollars.

Each state allocates credits according to a "Qualified Allocation Plan" (QAP). The selection process is a very competitive one, and applications are scored according to a number of varied criteria. For North Carolina, 15 selection criteria for eligible developments are listed in the QAP, of which three are particularly pertinent to this discussion:

• Serving the lowest income tenants;
• Use of project-based rental assistance (which increases the subsidy and thus enables the development to house extremely low-income tenants);
• Serving tenant populations with special housing needs. [4]

How points are assigned in the QAP can encourage or discourage builders from developing units available to people with extremely low incomes. North Carolina's QAP is updated and amended every year, followed by a public hearing where developers, housing advocates and the public can state their views on the new QAP and make suggestions for other changes.

A Supreme Court Decision

In 1999, the Supreme Court ruled in the case of Olmstead v. L.C., commonly known as Olmstead v. the State of Georgia or Olmstead. In this case, two individuals who had been institutionalized in Georgia were determined by their doctors to be able to leave the institution and live on their own, but were not released because county placements were not available. The Court, basing its decision on the Americans with Disabilities Act (ADA), found that the individuals were held in "unjustified isolation." This decision served to strengthen the ADA Act. [5]

While the findings of the court were that the individuals were held in "unjustified isolation," the remedy that the Court required was that states "need a comprehensive and effective working plan for placing qualified persons with mental disabilities in less restrictive settings and a waiting list that moves at a reasonable pace" (Olmstead v L.C.). [6]

So what does this have to do with people on disability? It has a great deal to do with them because it will accelerate the shift from institutional care to living in the local community. While it is not part of the remedy, the Olmstead ruling effectively requires supportive housing interspersed throughout the community to meet the needs of those once in institutions. North Carolina's Legislature has begun to develop a plan for moving services and housing to the local level, but funds to enact such a plan do not currently exist.

Conclusion

Once again, we return to the observation that it tends to be lack of income, rather than the disability itself, that makes the search for affordable housing so difficult for the person on SSI. Current housing policy increasingly seeks to place persons with disabilities interspersed throughout the community rather than concentrated with others who are disabled, yet diverse housing options do not currently exist in North Carolina. We have looked at several federal housing programs that affect people with a disability; some are more effective than others, but all could be improved through more public participation by those in the disability community. These are not easy times and funds must be split among many interests, but those on disability deserve and should get their share.

Recommendations

* Provide information to the disability community on how to be more effective in influencing housing policy by participating regularly as housing consumers at the hearing processes for the Consolidated Plan, QAP and other housing plans.

* Develop a simple one-page flier on available options for those seeking special needs housing.

* Develop a database of agencies working with those on SSI to alert the disability community to vital hearings.

* Advocate for an increase in the supply of rental assistance (Section 8) and for the restructuring and increase of Section 811.

* Target Block Grant resources to those most in need.

* Educate government (local, state, federal) on the housing needs of the disabled.

Additional information for this report came from a variety of sources:

"PHA Plans: Five Year Plan for Fiscal Years 2003 Ð 2007; Annual Plan for Fiscal Year 2003." US Department of Housing and Urban Development, Washington, DC.

North Carolina Consolidated Plan 2001-2005. Division of Community Assistance, Raleigh, NC, 2000.

North Carolina Consolidated Action Plan for 2003. Division of Community Assistance, Raleigh, NC, 2002.

The One-Year Action Plan, FY 2002 Ð 03. City of Raleigh, NC, 2002.

Ann O' Hara and Emily Cooper, "Section 8 Made Simple," Technical Assistance Collaborative, Boston, MA, 2002.

"Piecing it all Together in your Community," Technical Assistance Collaborative, Boston, MA, 1999.

The ARC of Wake County, "Information for Candidates," October 2002.

Thanks to Nathaniel Smith for researching and writing this report.

[1] National Low Income Housing Coalition, "Out of Reach 2006," Washington, DC, 2006.

[2] National Low Income Housing Coalition, "Advocates' Guide to Housing and Community Development Policy," Washington, DC, 2002.

[3] Ann O'Hara and Emily Miller, "Going it Alone: The Struggle to Expand Housing Opportunities for People with Disabilities." Technical Assistance Collaborative and The Consortium for Citizens with Disabilities Housing Task Force, Boston, MA, 2000.

[4] The 2003 Low Income Housing Tax Credit Qualified Allocation Plan for the State of North Carolina.

[5] Ann O'Hara and Stephen Day, "Olmstead and Supportive Housing: A Vision for the Future." Technical Assistance Collaborative, Boston, MA, December 2001.

[6] Ibid.