SUPPORTIVE HOUSING Ends Homelessness, Reduces Use of Institutional Care and Saves Taxpayer Dollars An Integral Part of Governor Cuomo’s New Agenda Core Principle Supportive housing – permanent, affordable, nonprofit-operated rental housing linked to services – is the most humane housing option for homeless and ill-housed people with special needs. It is also the most cost- effective. Faced with an extraordinary structural budget deficit, the State must transform the way it cares for its most vulnerable (and expensive) citizens: chronically homeless individuals and families living with HIV/AIDS, mental illness and/or substance abuse; individuals leaving prison or other institutions; youth aging out of foster care; and now, veterans returning from combat. Supportive housing has had consistent success serving these diverse populations, while reducing both immediate and long-term public expenditures on them. It offers the best, most viable strategy for maintaining New York’s safety net for vulnerable people in face of the State’s new budgetary limitations. In his recent “Urban Agenda,” Governor-elect Andrew Cuomo proposes to transform New York’s response to prisoner reentry, recidivism and juvenile justice using many of the community-based strategies pioneered by supportive housing providers. Other pillars of Governor Cuomo’s agenda – relying on primary care over emergency treatment, maximizing federal Low Income Housing Tax Credits, using nonprofit community groups to drive neighborhood development, to name a few – are hallmarks of the supportive housing approach. Supportive housing can help the new administration achieve its ambitious goals for New York, while reducing Medicaid and State general fund spending on expensive emergency services for individuals and families with high service needs. This brief provides some background information on supportive housing, as well as specific policy recommendations to improve coordination and targeting of supportive housing to: 1. Devote more of the State’s permanent housing resources to supportive housing 2. Break generational cycles of homelessness and institutionalization 3. Reduce dependence on institutional care 4. Maximize federal resources by coordinating local homeless efforts 5. Make New York a leader in ending veteran homelessness. Supportive Housing Network of New York - 2 - Background Executive leadership and broad, bipartisan support for the model has allowed New York to lead the nation in the development of supportive housing, creating over 42,000 units of permanent, nonprofit-operated supportive housing statewide since 1980. As a result of these efforts, tens of thousands of formerly homeless and at-risk individuals and families now receive the modest social services they need to transform their lives, remain stably housed, and, for about a quarter of the population, become employed. However, as many as 200,000 people become homeless across the state each year. Over ten thousand more leave incarceration, psychiatric hospitals or recovery programs, age out of foster care or flee violent domestic situations on an annual basis. Tens of thousands of others are ill-housed or languish in institutionalized settings that greatly increase healthcare and social services costs to the State. Not all of these New Yorkers require, or would prosper, in supportive housing. But the model can safely and successfully house a substantial percentage of each of these groups, providing a better quality of life to the individuals served, while reducing costs to the public. Specifically, supportive housing is the answer for the neediest homeless individuals and families (about 40% of all homeless single adults, and 15-20% of homeless families), as well as about 20% of the reentry population at highest risk for homelessness and re-incarceration. Supportive housing is also the answer for the most independent residents currently stuck in unnecessarily service-rich and institutional settings like nursing homes, psychiatric centers and proprietary adult homes. New York State can achieve immediate savings by transferring people and State resources from these expensive systems to safe, healthy and less costly supportive housing. What is more, this shift makes sound State economic development strategy. The building of supportive housing is one of the most efficient job creation tools available to the State; its operation provides numerous job opportunities for formerly homeless and other people facing employment challenges. And because almost all supportive housing development is now green, supportive housing can also help the new administration achieve important energy efficiency goals. A Proven Record of Success Consistent research results have gained supportive housing a broad, bipartisan consensus of support. In 2002, a University of Pennsylvania study measured the fiscal impact of housing more than 4,600 homeless mentally ill individuals under the groundbreaking 1990 New York/New York Agreement, an initiative led by Governor Mario Cuomo and Mayor David Dinkins that created 3,314 units of supportive housing. The results were startling and led to a sea-change in the way we respond to homelessness. The study found that the average homeless person with mental illness cost New York taxpayers $40,449 a year – just to remain homeless. Placing that same individual into supportive housing achieved a dramatic decrease in his/her use of shelters, hospitals, prisons and psychiatric centers. Even though placement into supportive housing increased use of outpatient Medicaid to treat substance abuse and long-deferred medical conditions, the average annual cost to the public of caring for this most challenging population dropped significantly, to $28,303 per person. The $12,146 annual savings realized by each placement covered all but $743 of the annual cost of building, operating and providing services in the housing. Supportive Housing Network of New York - 3 - Subsequent studies have shown that by further targeting the most vulnerable members of the homeless population, supportive housing achieves actual savings. New York City has acted on this research by reserving NY/NY supportive housing placements for its most costly, chronically homeless individuals and families. The savings can be considerable: • A supportive housing program operated by Harlem United serves critically-ill persons with AIDS who are certified for nursing home care with a combination of affordable apartments and intensive on-site and off-site supports. It saves the public $103,000 per tenant per year, by keeping them out of expensive nursing homes and reducing the frequency and length of their hospital stays. • Another pilot program, the FUSE Initiative, provided permanent supportive housing to frequent users of shelters and jails, reducing shelter use by 92% and days in jail by 53%. Over 90% of the participants remained housed one year later, at a savings of $20,000 to $24,000 per supportive housing unit created. • Evaluations of families in supportive housing for high-need families provided by Albany Catholic Charities Housing Office showed dramatic annual cost savings as high as $34,000 per family from reductions in both shelter and child welfare costs. The 2005 NY/NY III Supportive Housing Agreement builds on the successes of the original initiative. Under this 10-year pact, ten City and State agencies will create 9,000 units of housing for nine different vulnerable populations. While this latest agreement’s capital development is lagging behind schedule, the initiative has already created 3,565 units. The initiative’s focus on chronic homelessness allowed New York City to reduce its long-term shelter stayers by half in just three years. The NY/NY III Agreement requires a high level of interagency cooperation that can provide a foundation for consolidating other, similar operations and programs across agencies. It points to a number of strategies for speeding development and lowering the cost of creating supportive housing. There are also opportunities to streamline government management of the ongoing operation of these housing programs. Today’s Challenge, and Opportunity Reducing unnecessary Medicaid and State general fund expenditures on high-need, frequent user populations must be a primary focus of the new Cuomo administration. But this can only be done by reshaping incentives and redirecting pathways in the systems through which New York’s neediest citizens cycle – from streets to shelters, hospitals to prisons in an endless circuit, at tremendous human and economic cost. Other forces are already doing this: for example, federal health care reform will impose additional disincentives for repeated acute care hospital re-admissions. Supportive housing’s proven capacity to reduce frequent readmissions can help the State to avoid negative fiscal impacts from these changes. Access to supportive housing can be the ‘game changer’ for people stuck in many of these systems. By coordinating many disparate local efforts, and targeting supportive housing to the most vulnerable populations, the next governor can make a significant, positive impact in short order – both on the State budget, and on people’s lives. The following policy recommendations represent policy shifts and “quick wins” that can be accomplished over the next four years to help end homelessness, reduce institutional care, and save taxpayer dollars. Supportive Housing Network of New York - 4 - POLICY RECOMMENDATIONS 1. Devote more of the State’s permanent housing resources