Summary

The Department of Health and Human Services (HUD) launched the "Continuum of Care" strategy in 1993 to encourage states and localities to develop coordinated and comprehensive community-based approaches for providing the homeless with housing and services. HUD set aside $750 million in 1999 to fund its homeless assistance programs under the Continuum of Care process. Under this process, HUD uses a national competition to distribute funding to community projects. In their applications, communities rank their projects according to the most important needs of their homeless populations. In recent competitions, some communities have contended that HUD was not considering the priorities that they had assigned to the projects in their applications. However, HUD uses a three-step process that is consistent with relevant law to select projects for funding. In 1999, for communities that had between four and 16 projects on their priority lists, HUD funded 92 percent of the projects that were ranked in the top 25 percent on the lists. For communities that listed three or fewer projects, the project identified as the top priority was funded between 34 and 70 percent of the time. In every case in which high-priority projects were not funded under the competition and low-priority projects were, the higher ranked projects did not meet the applicable program's eligibility requirements. However, more than one-third of the 1999 applicant communities had significant problems in understanding the application requirements or completing the paperwork.

GAO noted that: (1) HUD selects projects for funding on the basis of a three-step process that is consistent with the requirements in relevant statutes, and it does not distinguish between new or renewal projects; (2) under the selection process, HUD considers: (a) communities' overall strategies for addressing homelessness; (b) whether the projects meet the applicable program standards set in the McKinney Act; and (c) the relative need for homeless assistance funds for each community; (3) HUD ranks all eligible projects and awards grants to these projects in the order they are ranked nationally, until the funds available for the competition are depleted; (4) most projects that communities ranked as high priority were awarded funding in 1998 and 1999; (5) for example, in 1999, 92 percent of the projects that were ranked in the top 25 percent of each community's priority list were funded, for those communities that had between 4 and 16 projects on their list; (6) however, for those communities that had three or fewer projects on their priority list, the project identified as the top priority was funded between 34 to 70 percent of the time; (7) furthermore, in those instances in which high-priority projects were not funded under the competition and low-priority projects were funded, it was always because the higher-ranked projects did not meet the applicable program's eligibility requirements; (8) most applicants generally understand the application and paperwork requirements necessary to compete for HUD grants; (9) however, more than one third of the communities that applied for funds in 1999 had significant problems in understanding the application requirements or completing the paperwork; (10) representatives of these communities cited a variety of difficulties in completing the application requirements and in getting information from HUD field office staff about the program and these requirements; (11) for example, some communities reported difficulties caused by the time-consuming and resource-intensive paperwork requirements and the lack of clear instructions and definitions, as well as difficulty in understanding HUD's selection process; and (12) community representatives GAO spoke with suggested a number of actions that HUD could take to alleviate the problems they experienced, such as better training for applicants and field office staff, more use of technology to provide access to information, and a simpler application format.