HUD CoC Tier 2 Awards – What Happened?

Written by Steve Berg:

Last week, Continuums of Care (CoC) got word about how much money their communities’ programs would receive in the second of two “tiers” of funding from the federal government. For some it was cause for celebration, and for others, concern. We’ve heard many questions, from reporters, Congressional offices, local activists and providers. More information will be coming from the U.S. Department of Housing and Urban Development (HUD) and others, but so far, we at the National Alliance to End Homelessness have observed the following:

Overall, more people will be housed instead of homeless due to these results. More new projects than usual got funding, and more existing projects than usual lost funding. As a group, the newly funded projects will house more people than the projects that lost funding, because of more focus on exactly that outcome – housing people. The wellbeing of homeless people and the desire to solve the problem of homelessness are driving this change.

There was intense competition for Tier 2 funds. From the moment the Notice of Funding Availability (NOFA) came out, it was clear that this would be the most competitive funding process since the CoC was first created. HUD has been under strong pressure from Congress to make the CoC more competitive, and HUD did so.

Tight funding made it close to a zero-sum game. Because of overall tight caps on federal spending, Congress provided only a small increase to the CoCs for FY 2015. Homeless assistance did better than HUD overall, which was cut back, in part because members of Congress are impressed with the willingness of CoC grantees to be accountable for outcomes. Nonetheless, the growth in homeless assistance was not enough to even pay for the spiraling rent increases that many parts of the country are seeing. The only way for HUD to fund new evidence-based projects in communities with the best outcomes was to make reductions elsewhere.

The communities that did best in the competition received substantial new funding. In these communities, many more homeless people will be housed. Most of the new money will fund permanent supportive housing and rapid re-housing. Among communities with the largest increases are cities, suburban communities, and at least one balance of state. They are in all parts of the country.

Some communities are losing capacity. A number of communities (it’s too early to say how many, but we know of four large cities that had overall CoC funding reduced between 5 and 8 percent) will end up with fewer resources for homeless people. There is no easy way to deal with this. HUD will make technical assistance available to help communities be more competitive in the next round of funding, which will probably be less tight due to increases from Congress for FY 2016. A range of federal and other resources are available that can help ensure that people now housed in these programs can avoid a return to homelessness.

Tier 2 funding decisions were driven largely by CoC-wide performance. Much of the scoring for the competition depended on how the entire local system for addressing homelessness was operating. One example is Houston, TX, which has been working steadily for years to understand who is homeless, what interventions move people out of homelessness most quickly and cost-effectively, and how to arrange a local system that maximizes impact. Houston received a substantial increase in funding in Tier 2.

Through Tier 1 funding, all communities were able to protect the majority of their programs. Tier 1 funding, awarded in March, encompassed 85 percent of each community’s existing capacity. Communities chose which projects to put in Tier 1, and nearly all of the programs that communities put in Tier 1 got funded.

Some individual programs that were effective still lost funding.
There are definitely individual programs that do excellent work but lost funding, due to problems with their CoC application or idiosyncrasies of the program or the competition rules. The number was small, and HUD will be working to ensure that similar programs get the help they need to compete effectively in FY 2016.

The overall move is toward housing more people, faster.
Overall, programs that got new funding were those that, given a certain amount of money, are more effective at moving homeless people quickly into permanent housing. Those that lost funding were generally those that are less effective. Higher scores for permanent housing (permanent supportive housing or rapid re-housing) were built into the scoring criteria. But higher scores also had a lot to do with overall system performance.

The Alliance will be publishing additional information in the next couple weeks about what communities can do now to take advantage of new funding, to cope with loss of funding, and to prepare for the next NOFA. Sign up for our newsletter to get updates.