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SR-101408-13E13-E October 14, 2008 Council Meeting: October 14, 2008 Santa Monica, California CITY CLERK'S OFFICE -MEMORANDUM To: City Council From: Mayor Pro Tempore Bloom Date: October 14, 2008 13-E: Request of Mayor Pro Tem Bloom that the City Council urge the State Legislature and Governor Arnold Schwarzenegger to restore full funding for the Emergency Housing and Assistance Program (EHAP) to the 2009- 2010 state budget. Without this funding, which was vetoed by Governor Schwarzenegger, armories in Culver City and West Los Angeles (and elsewhere in the region and throughout California) may not be able to operate, thus creating a health crisis among the homeless population. The Council is also requested to communicate and request similar resolutions from each of the 88 cities of Los Angeles County and each of its Councils of Government, particularly the Westside Cities Council of Governments. 13-E October 14, 2008 ~ ,o\~~~ ~~ SHAW~YODER,rn~. LE61SLAiIVE AOVOC ACY ASSOCIATION MANAGEMENT --~ I ~ - ~ OCT 14 2008 To: P. Lamont Ewell, City Manager Kate Vernez, Assistant to the City Manager for Community and Government Relations City of Santa Monica From: Andrew Antwih, Tressa Wallace Shaw 1 Yoder, Inc. Re: State Funding in the 2008.09 State Budget Act for Homeless Assistance Date: October 9, 2008 There are two primary types of funding programs in the state budget that provide assistance to the homeless: capital development funding for temporary and supportive housing and operations funding for services: This memo will discuss the Governor's recent action to eliminate funding for the Emergency Housing Assistance Program (EHAP), one critical source of flexible funding used by local agencies to fund the operating costs associated with providing shelter and other assistance for the homeless. We will also identify other sources of state funding (and federal funds that are distributed by state agencies) that may be used for homeless assistance. EHAP The Emergency Housing Assistance Program (EHAP) receives funding from multiple sources and is placed into two accounts for grant distribution. The EHAP is administered by staff at the state Department of Housing and Community Development (HCD) for a program that allocates grant funds to assist in providing direct client housing, including facility operations and administration, residential rent assistance, leasing or renting rooms for provision of temporary shelter, capital development activities of up to $30,000 per site, and administration of the award (limited to 5 percent). This account is usually fully funded by the state's General Fund, proposed this year in the Legislature's Budget at $4 million, and was subject to the Governor's line-item veto. Governor's Line Item Veto The Governor used his line item veto authority to eliminate all state support for the EHAP, The Governor had originally proposed in May of 2008 to reduce EHAP funding by 10% ($401,000). This would have left $3.599 million. We have not been able to ascertain the Governor's motive for making this cut other than what's in his veto message. All of the legislative budget staff we have spoken to were very surprised that the full amount of funding for this program was vetoed. EHAP has been fully funded at the $4 million level for 15 years, and this is apparently the first year it has received any cuts. In speaking with staff at HCD, we learned they may look for ways within their existing budget to provide the grant money removed from this program. We will continue to monitor this and report any resolutions made by the department. Tel: 916.446.4656 Fax: 916.446.4318 1415 L Street, Suite 200 Sacramento, CA 95814 ~~I - ~' t ;3-~ Legislative Background on EHAP Cuts When this item was heard in the Assembly Budget Subcommittee #4 on May 21, 2008, legislative staff reported that the Emergency Housing Assistance Program (EHAP) currently helps to fund local homeless shelters, providing a portion of the funding for about 19,000 shelter spaces each year. This 10 percent cut will, in essence, eliminate the state's portion of"funding for 10 percent of those spaces. Assembly Budget Committee staff further commented that "the State currently provides about 10 percent of the overall funding for local homeless shelters. This cut could have a detrimental impact on HCD's ability to support homeless shelters. During tough economic times, these facilities often see an increase in usage, making this a bad time for such reductions." Both the Assembly and the Senate Budget Subcommittees #4 voted to restore full funding to the EHAP program. As a result, the Budget Act that was submitted by the Legislature to the Governor's desk that would have fully funded the program at $4 million: Here is the Governor's veto message (emphasis added): Item 2240-105-0001-For transfer, as an expenditure, upon order of the Director of Finance, to the Emergency Housing and Assistance Fund. 1 delete this item. I am reducing this item by $401,000 fo reinstate the budget-balancing reduction to the state grant program for local emergency shelters that 1 proposed. I am further reducinp this item by $3,599,000. While the budget bill provides for a modest reserve in 2008-09, it fails to make the necessary statutory spending reductions and revenue increases needed to eliminate the state's structural budget deficit going forward. At the same time, constitutional requirements, federal law and court required payments drive the majority of the spending in any budget, and limit my ability to reduce spending. As a result, 1 have an obligation to reduce spending when my veto power is adequate to do so. Consequently -- and in order to further ensure that this budget remains in balance -- I am taking the difficult but necessary action reflected in this veto to further control state spending. EHAP Capital Development The EHAPCD (for Capital Development) provides grant funds for capital development activities for emergency shelters, transitional housing, and safe havens that provide shelter and supportive services for homeless individuals and families. This account is normally funded by annual appropriations in the budget act from state housing bond sources: Proposition 46 (Housing and Emergency Shelter Trust Fund Act of 2002) and / or Proposition 1 C (Housing and Emergency Shelter Trust Fund Act of 2006). The recently enacted 2008-09 State Budget contained an appropriation of $200 million in Proposition 46 bond funds for a variety of housing related programs. However, there was no specific "sub-allocation" to the EHAPCD. Proposition 1 C requires no annual appropriations through the budget; rather, the HCD can access funds on a "continuing" basis. At this point, the final allocation of all available Prop 1 C and Prop 46 funds has not been determined by HCD. However, the Department of Finance advises us that they anticipate $24 million of Prop 1 C money will be dedicated to EHAPCD. Previous EHAPCD Notices of Funding Availability (NOFA's) have generally been for $31 million annually of Prop 1C and Prop 46 funds and HCD apparently has no current plans to change that amount. We presume HCD will draw the remaining NOFA balance of approximately $7 million from Prop 46 funds. Applications are generally accepted until the end of January. The next NOFA will be sent to the Director of HCD by October 10, 2008, and should be posted on the website by the end of the October. We will continue to monitor this to determine funding availability. The HCD staff anticipates that this will be the final year with Prop 46 funding the EHAPCD and possibly only two additional rounds in the future, containing Prop 1 C funds (2009-10 and 2010-11, depending on potential unencumbered funds available for reallocation). After that there will be no more EHAP Capital Development funds unless another bond is passed. The following are additional programs that provide resources for homeless assistance.. Multifamily Housing Program -Facilities for Homeless Youth The state Department of Housing and Community Development (HCD) also administers grants under the Multifamily Housing Program (MHP) for Homeless Youth. These funds flow to HCD from Proposition 46 and Proposition 1C and are used for construction of new facilities, rehabilitation of existing facilities, or the acquisition and rehabilitation of permanent rental housing, and the conversion of nonresidential structures to rental housing. Eligible Projects must have commitments of Mental Health Services Act (Proposition 63) funds for supportive services, and typically require rent subsidies as well. HCD staff reports that there is currently $20 million available for statewide grants. Federal Emergency Shelter Grant Program We also learned from staff at the Los Angeles County Emergency Food and Shelter Program that there is a federal program called the Federal Emergency Shelter Fund which provides Los Angeles County with approximately $5.5 million that can be used for operational needs, and may bean additional resource to receive grants previously provided by EHAP. The Federal Emergency Shelter Grant offers grants that are eligible for the following expenses: 1. Operations (OPS) 2. Essential Services (ES) 3. Homeless Prevention Activities (HP) 4. Renovation/Rehabilitation/Conversion (RR) 5. Supervisory Shelter Administration (SSA) 6. Grant Administration (GA) OPERATIONS (OPS): FESG funds can cover a broad array of emergency shelter and transitional housing costs. Eligible Expenses: a. Staff shelter Maintenance/Repairs (Staff salaries including benefits; maintenance supplies, repairs and maintenance service conducted by outside service providers; and ground maintenance service). b. Personnel performing basic crowd control and activities insuring facility operations are running safely, such as: security personnel, intake/greeters staff. "Facility Monitors" (Staff salaries and benefits). c. Security services and equipment. d. Shelter rent or lease payments (Facility mortgage payments are not eligible). e. Fuel, oil, and wood for heating or cooking. f. Shelter facility insurance (property/liability). g. Utilities. h. Food for meals provided on site to shelter residents. i. Shelter furnishings, (beds, tables etc,). j. Shelter Vouchers (evidence of site control required). Proposition 63 The Budget includes $1.49 billion in Mental Health Services Act (MHSA) funds for Proposition 63, of which $100 million is committed by counties to the MHSA Housing Program. This funding is in addition to $300 million identified by counties in 2007-08. This program makes funding available through the California Housing Finance Agency (CaIHFA) to develop permanent supportive housing serving persons with serious mental illness who are homeless or at risk of homelessness. CalWorks Homeless Assistance Program The CaIWORKS Homeless Assistance Program did not receive any "cuts" however the funding is slightly less due to a smaller caseload. It is funded at approximately $17,000,000. California. Department of Education The California Department of Education receives federal funding under the McKinney Vento Homeless Children Education Program. These funds are available to school districts throughout the state on a competitive grant basis. The 2008-09 State Budget identifies roughly $8.5 million for this program. The purpose of the program is to (1) facilitate the enrollment, attendance, and success in school of homeless children and youth; and (2) ensure homeless children and youth have equal access to the same free, appropriate, public education as provided to all other students. Services provided cannot replace the regular academic program and must be designed to expand upon or improve services that are part of the school's regular academic program.