Appropriations for FY2003: VA, HUD, and Independent Agencies

Appropriations for FY2003: VA, HUD, and Independent Agencies

Order Code RL31304
Report for Congress
Received through the CRS Web
Appropriations for FY2003:
VA, HUD, and Independent Agencies
Updated April 9, 2003
Dennis W. Snook and E. Richard Bourdon, Coordinators
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

Appropriations are one part of a complex federal budget process that includes budget
resolutions, appropriations (regular, supplemental, and continuing) bills, rescissions, and
budget reconciliation bills. The process begins with the President’s budget request and is
bounded by the rules of the House and Senate, the Congressional Budget and Impoundment
Control Act of 1974 (as amended), the Budget Enforcement Act of 1990 (scheduled to
expire at the end of FY2002), and current program authorizations.
This Report is a guide to one of the 13 regular appropriations bills that Congress passes each
year. It is designed to supplement the information provided by the House and Senate
Appropriations Subcommittee on VA, HUD, and Independent Agencies. It summarizes the
current legislative status of the bill, its scope, major issues, funding levels, and related
legislative activity. The Report lists the key CRS staff relevant to the issues covered and
related CRS products.
NOTE: A Web version of this document with active links is
available to congressional staff at:
[http://www.crs.gov/products/appropriations/apppage.shtml].

Appropriations for FY2003:
VA, HUD, and Independent Agencies
Summary
FY2003 Appropriations. The signing of P.L. 108-7 completed action on
FY2003 appropriations, including funding for the Departments of Veterans Affairs
(VA), Housing and Urban Development (HUD), and Independent Agencies,
including the Environmental Protection Agency (EPA), the Federal Emergency
Management Agency (FEMA), the National Aeronautics and Space Administration
(NASA), and the National Science Foundation (NSF).

Key Policy Staff
CRS
Name
Area of Expertise
Telephone and E-Mail
Division
Disaster Assistance;
7-8672
Keith Bea
G&F
Emergency Mgmt.
kbea@crs.loc.gov
7-7806
Richard Bourdon
Housing
DSP
rbourdon@crs.loc.gov
Community
7-8689
Eugene Boyd
G&F
Development
eboyd@crs.loc.gov
7-7805
Bruce Foote
Housing
DSP
bfoote@crs.loc.gov
Environmental
7-7260
Martin Lee
RSI
Policy
mlee@crs.loc.gov
National and
7-2323
Ann Lordeman
DSP
Community Service
alordeman@crs.loc.gov
National Science
7-7055
Christine Matthews
RSI
Foundation
cmatthews@crs.loc.gov
7-2163
Margaret M. McCarty
Housing
DSP
mmccarty@crs.loc.gov
Consumer
7-7775
Bruce Mulock
G&F
Affairs
bmulock@crs.loc.gov
7-7832
Pauline Smale
Banking
G&F
psmale@crs.loc.gov
National Aeronautics
7-7076
Marcia Smith
RSI
and Space Admin.
mssmith@crs.loc.gov
Veterans Affairs
7-7314
Dennis Snook
DSP
dsnook@crs.loc.gov
Division abbreviations: DSP=Domestic Social Policy; G&F=Government and Finance;
RSI=Resources, Science and Industry.

Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
President signs omnibus appropriations act (P.L. 108-7) . . . . . . . . . . . 1
Congress completes work on FY2003 appropriations . . . . . . . . . . . . . . 1
House Committee on Appropriations reports H.R. 5605 . . . . . . . . . . . . 1
Senate Committee on Appropriations reports S. 2797 . . . . . . . . . . . . . . 1
President submits FY2003 budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Total Appropriations Enacted for FY2002 and Requested for FY2003 for VA,
HUD, and Independent Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Accrual accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Title I: Department of Veterans Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Spending for VA Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FY2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FY2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
VA Cash Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Medical Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Medical Care Cost Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Medical research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Housing benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
VA construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Burial and cemetery benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Department administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Title II: Department of Housing and Urban Development . . . . . . . . . . . . . . . . . 12
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Highlights of HUD Budget for FY2003- P.L. 108-7 . . . . . . . . . . . . . . . . . . 12
Summary: FY2003 Appropriations for HUD Programs . . . . . . . . . . . . . . . 12
Policy Issue: The Shortage of Affordable Rental Housing . . . . . . . . . . . . . 15
A brief history of federal housing assistance . . . . . . . . . . . . . . . . . . . . 17
Is housing available at an affordable price? . . . . . . . . . . . . . . . . . . . . . 18
Increasing the supply of affordable housing . . . . . . . . . . . . . . . . . . . . 20
Public and Indian Housing Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Housing Certificate Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Public housing programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Public Housing Operating Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Public Housing Capital Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
HOPE VI Revitalization of Distressed Public Housing . . . . . . . . . . . . 33
Native American Block Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Community Planning and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Housing for Persons with AIDS (HOPWA . . . . . . . . . . . . . . . . . . . . . 34
Rural Housing and Economic Development . . . . . . . . . . . . . . . . . . . . 35
Empowerment Zones and Enterprise Communities . . . . . . . . . . . . . . 35
Community Development Block Grants . . . . . . . . . . . . . . . . . . . . . . . 36
Brownfields Redevelopment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

The HOME Investment Partnership Program . . . . . . . . . . . . . . . . . . . 41
Homeless Assistance Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Housing Program Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Housing for the Elderly and Disabled . . . . . . . . . . . . . . . . . . . . . . . . . 44
Federal Housing Administration (FHA) . . . . . . . . . . . . . . . . . . . . . . . 46
Office of Federal Housing Enterprise Oversight (OFHEO) . . . . . . . . . 49
Fair Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Lead-Based Paint Hazard Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Title III: Independent Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Environmental Protection Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
State and Tribal Assistance Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Superfund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Federal Emergency Management Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 53
National Aeronautics and Space Administration . . . . . . . . . . . . . . . . . . . . . 55
International Space Station (ISS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Space Shuttle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Space Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Biological and Physical Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Earth Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Aero-Space Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Academic Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
National Science Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Research and Related Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Major Research Equipment; Facilities Construction . . . . . . . . . . . . . . 61
Education and Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Other Independent Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Agency for Toxic Substances and Disease Registry . . . . . . . . . . . . . . 63
American Battle Monuments Commission . . . . . . . . . . . . . . . . . . . . . 63
Cemeterial Expenses, Army . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Chemical Safety and Hazard Investigation Board . . . . . . . . . . . . . . . . 63
Community Development Financial Institutions fund . . . . . . . . . . . . . 64
Consumer Product Safety Commission (CPSC) . . . . . . . . . . . . . . . . . 64
Corporation for National and Community Service (CNCS) . . . . . . . . 64
Council on Environmental Quality; Office of Environmental Quality 64
U.S. Court of Appeals for Veterans Claims . . . . . . . . . . . . . . . . . . . . . 65
Federal Consumer Information Center (FCIC) . . . . . . . . . . . . . . . . . . 65
Federal Deposit Insurance Corporation . . . . . . . . . . . . . . . . . . . . . . . . 65
Interagency Council on the Homeless . . . . . . . . . . . . . . . . . . . . . . . . . 65
National Credit Union Administration (NCUA) . . . . . . . . . . . . . . . . . 65
National Institute of Environmental Health Sciences . . . . . . . . . . . . . 66
Neighborhood Reinvestment Corporation (NRC) . . . . . . . . . . . . . . . . 67
Office of Science and Technology Policy . . . . . . . . . . . . . . . . . . . . . . 67
Selective Service System (SSS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Selected World Wide Web Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

List of Tables
Table 1. Status of VA, HUD and Independent Agencies Appropriations,
FY2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Table 2. Summary of VA, HUD, and Independent Agencies
Appropriations, FY2002-FY2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table 3. Department of Veterans Affairs Appropriations, FY1998-FY2002 . . . . 4
Table 4. Appropriations: Department of Veterans Affairs, FY2002-FY2003 . . 10
Table 5. Department of Housing and Urban Development Appropriations,
FY1998 to FY2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 6. Appropriations: Housing and Urban Development, FY2002-FY2003 . 22
Table 7. FY2003 Appropriation Levels for the Housing Certificate Fund
(HCF), Administration and Congressional Estimates . . . . . . . . . . . . . . . . . 29
Table 8. Community Development Block Grants (CDBG): Entitlement
Communities with Per Capita Income At Least Twice the National
Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Table 9. Community Development Block Grants, FY2002-FY2003 . . . . . . . . . 39
Table 10. Environmental Protection Agency Appropriations,
FY1998-FY2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Table 11. Appropriations: Environmental Protection Agency,
FY2002-FY2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Table 12. Appropriations: Federal Emergency Management Agency,
FY2002-FY2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Table 13. National Aeronautics and Space Administration Appropriations,
FY1998-FY2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Table 14. Appropriations: National Aeronautics and Space
Administration, FY2002-FY2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Table 15. National Science Foundation Appropriations, FY1998 to FY2002 . . 60
Table 16. Appropriations: National Science Foundation, FY2002-FY2003 . . . 61
Table 17. Appropriations: Other Independent Agencies, FY2002-FY2003 . . . 66

Appropriations for FY2003:
VA, HUD, and Independent Agencies
Most Recent Developments
President signs omnibus appropriations act (P.L. 108-7). On
February 20, 2003, President Bush signed the omnibus appropriations bill (H.J.Res.
2), thereby bringing to a close appropriations actions to fund agencies whose funding
had been dependent on resolutions to continue spending at FY2002 levels.
Congress completes work on FY2003 appropriations. With adoption
of the Conference Report (H.Rept. 108-10) to H.J.Res. 2 on February 13, 2003,
Congress finished work on FY2003 appropriations.

House Committee on Appropriations reports H.R. 5605. On October
10, 2002, the House Committee on Appropriations reported (H.Rept. 107-740) a bill
to provide FY2003 appropriations for the Departments of Veterans Affairs (VA),
Housing and Urban Development (HUD), and various other independent agencies.
H.R. 5605 recommends a total of $122.6 billion (net, after rescissions) in budget
authority for the activities of the departments and agencies covered by the bill.
Senate Committee on Appropriations reports S. 2797. The Senate
Committee on Appropriations had reported (S.Rept. 107-222) its version of an
appropriations bill for VA, HUD, Independent Agencies for FY2003 on July 25. S.
2797 recommends $124.5 billion (net, after rescissions).
President submits FY2003 budget. On February 4, 2002, the President
submitted a proposed budget for FY2003. According to S.Rept. 107-222, the
President’s budget requests would require $121.4 billion (net, after rescissions) in
appropriations for programs provided through the VA-HUD bill.
Status
Table 1. Status of VA, HUD and Independent Agencies
Appropriations, FY2003
Conference
Subcommittee
Report
markup
H.J.Res. 2
Signed
H.Rept. Passed
S.Rept.
Passed Conference
P.L.
House Senate 107-740

House
107-222
Senate
Report
House
Senate
108-7
H.Rept.
10-7-02 7-23-02 10-9-02
–
7-25-02
–
108-10
2-13-03 2-13-03 2-20-03

CRS-2
Total Appropriations Enacted for FY2002 and
Requested for FY2003 for VA, HUD, and
Independent Agencies
Table 2. Summary of VA, HUD, and
Independent Agencies Appropriations, FY2002-FY2003
(budget authority in billions)
FY2002 FY2003
FY2003
FY2003 FY2003
Department or Agency
enacted
request
House
Senate
Confer.
Department of Veterans Affairs
52.379
56.939
58.131
58.090
58.017
Department of Housing and
Urban Development
32.193
31.349
31.346
32.083
31.245
Environmental Protection
Agency 8.079
7.621
8.204
8.299
8.132
Federal Emergency
Management Agency
10.536
6.704
3.612
4.435
2.851
National Aeronautics and Space
Administration
14.902
15.000
15.300
15.200
15.414
National Science Foundation
4.809
5.028
5.423
5.353
5.345
Other Independent Agencies
0.926
1.144
0.557
1.047
.923
Grand Total: Appropriations
123.824
123.785
122.573 124.507 121.927
Source: For House, H.Rept. 107-740; for Senate and Conference, Congressional Record, February
13, 2003.
Note: Totals will not add due to rounding at agency level. Totals for FY2002 include emergency
supplementals. The enacted levels for FY2003 are for reported levels, and do not reflect the varied
effects at the account level of an across-the-board cut to discretionary spending included before final
passage of H.J.Res. 2.
Accrual accounting. In its budget, the Administration proposed that the
future costs of retirement benefits and retiree health insurance for current federal
employees should be shown as an accrued cost for each fiscal year. Because this
change would require legislation, the effects upon annual appropriations are not
shown in this report, which is based on Congressional Budget Office (CBO)
estimates of program costs under current law. Both Committee reports
accompanying the respective VA-HUD bills are critical of the Administration’s
inclusion of the effects of accrual accounting within the request levels for
appropriations, and asks that future legislative proposals be sent to Congress without
assuming their enactment for purposes of budget estimates.

CRS-3
Title I: Department of Veterans Affairs
Spending for VA Programs
FY2003. The President requested $56.94 billion for the Department of
Veterans Affairs (VA) for FY2003, according to the latest Congressional estimates
contained in the Conference Report (H.Rept 108-10) to H.J.Res. 2, the omnibus
appropriations bill for FY2003 (P.L. 107-7). P.L. 107-7 provides $58.02 billion for
VA programs for the fiscal year ending September 30,2003, including $31.58 billion
in mandatory spending for VA entitlements, and $26.44 billion for discretionary
programs, $23.9 billion of which is for medical care for veterans. In action leading
to the conference, the Senate had proposed a total of $58.04 billion for VA, and the
House had used the amount it had approved during the latter stages of the 107th
Congress, $58.1 billion.
Table 3. Department of Veterans Affairs Appropriations,
FY1998-FY2002
(budget authority in billions)
FY1998
FY1999
FY2000
FY2001
FY2002
$42.41
$44.25
$46.04
$47.95
$52.38
Source: Figures for FY1998-FY2001 are from administration budget submissions of subsequent
years; the figure for FY2002 is from H.Rept. 108-10, and is the latest available estimate for that fiscal
year. Final spending levels remain uncertain until all program experience has been recorded, and any
supplemental appropriations or rescissions have been included.
S. 2797 (107th Congress). The Senate Committee on Appropriations had
reported S. 2797 (S.Rept. 107-222), FY2003 appropriations for VA, HUD, and
Independent Agencies. The Committee’s bill included $58.09 billion for VA, an
increase of almost $7 billion over projected FY2002 expenditures for VA programs,
and $3.6 billion more than the President’s request, as estimated at the time of the
bill’s report. (Since that time, estimates of the request have risen by over $2.4 billion
for FY2003, and spending for FY2002 is now projected to be $1.3 billion higher than
in estimates taken at the time S. 2797 was reported).
Discretionary funds would have been $2.7 billion under S. 2797, as the
Committee “...once again has made VA its top priority...” in the FY2003 bill. The
VA medical care program was to receive about $23.9 billion in appropriated funds,
and $1.4 billion in recovered medical costs available for reuse by the medical
program. The combined total of $25.3 billion in spending authority is $3.3 billion
above FY2002 levels, and $1.8 billion above the Administration’s FY2003 request.
H.R. 5605 (107th Congress). On October 10, the House Committee on
Appropriations submitted its report for H.R. 5605. The House bill provided a total
of $58.1 billion for VA, including $26.6 billion in discretionary funds. The bill
provided the same in medical funds as included in the Senate bill.

CRS-4
FY2002. After including updated spending for increased mandatory spending
for VA entitlements, projected FY2002 final appropriations for VA will total $51.1
billion. According to the Conference Report accompanying P.L. 107-73 (H.Rept.
107-272), the VA-HUD appropriation bill (as the bill containing annual
appropriations for VA is popularly known), the Administration requested $50.7
billion for VA programs for FY2002.
VA Cash Benefits. Spending for the VA cash benefit programs is mandatory,
and the amounts requested in the budget are based on projected caseloads. Eligibility
requirements and benefit levels are specified in law. While the number of veterans
is declining, VA entitlement spending, mostly service-connected compensation,
pensions, and readjustment (primarily education) payments, reached $23.4 billion in
FY2000, $25.7 billion in FY2001, $28.4 billion in FY2002, and is projected to reach
$31.6 billion in FY2003. Much of the projected increases in FY2001-FY2003 result
from cost-of-living adjustments for compensation benefits, and from liberalizations
to the Montgomery GI Bill, the primary education program.
Compensation and pensions. The compensation program pays benefits
to living veterans who have suffered a loss or reduction in earning capacity as a result
of a condition traceable to a period of military service, and to the dependent survivors
of certain veterans. The VA pension program is a means-tested benefit for
permanently disabled (from a condition unrelated to their military service) veterans
of war-time service, whose incomes and assets fall below certain levels. After taking
into consideration the financial circumstances and dependents of eligible veterans,
the pension payments, along with countable income, are intended to bring their total
incomes to the basic targeted amounts.1 Given the broad availability of other sources
of income, including social security, program caseload is diminishing, as fewer
veterans have incomes below the categorical levels.
During FY2002, about 2.4 million veterans drew an average of $662 in monthly
compensation for service-connected disabilities; about 308,000 of their surviving
dependent spouses averaged about $1,046 in monthly payments. Pensions for
347,000 veterans averaged about $623 monthly; 235,000 survivors of veterans
pensioners averaged about $261 monthly.
Readjustment. Following a tradition going back to the beginnings of the
Republic, near the end of World War II Congress enacted a series of programs to
assist veterans in their readjustment to civilian life, and to help the national economy
adapt to the influx of demobilizing armed forces. The GI Bill has entered the
national lexicon as an example of federal responsibility for this readjustment
responsibility, and many citizens continue to refer to the current array of programs
by that historical name. Indeed, the largest current program providing readjustment
education benefits is named the Montgomery GI Bill program, after its congressional
sponsor and the heritage it brought into the age of an all-volunteer military service.
1 For 2003 the annual basic level for an eligible single veteran is $9,690; with 1 dependent,
$12,692; and each additional dependent, $1,653. Additional amounts are available for
eligible veterans who are housebound, or in need of aid and attendance.

CRS-5
Without conscription to fill the ranks of active duty armed services, the
inducements to potential recruits must be sufficient to attract them to enlist. The
Montgomery GI Bill provides recruits with the promise of educational assistance
when they separate, and the amounts that eligible participants receive has climbed
significantly over the last few years. The previous payment of $800 per month for
36 months for a participant completing a 3-year enlistment rose to $900 per month
on October 1, 2002, and will rise to $985 per month on October 1, 2003.
During FY2003, about $2.3 billion in total payments for education payments
will go to 326,000 active duty personnel and veterans, 82,000 reservists, and 52,000
dependents. About 160,000 veterans will receive other forms of tuition assistance,
65,000 will receive vocational assistance, and 81,000 will receive assistance with
preparing for and taking licensing and certification tests.
Medical Care. VA operates the nation’s largest health care system, with 172
hospitals, 137 nursing homes, 43 domiciliaries, 206 readjustment counseling centers,
73 home health-care programs, and almost 900 outpatient clinics. About 88% of
VA’s 207,000 employees provided medical services to an estimated 4.7 million
veterans during FY2002, a caseload expected to reach 4.9 million by the end of
FY2003. The FY2001 caseload was about 4.2 million unique patients. Almost 2,000
medical care employment slots were predicted to shift from inpatient programs to
outpatient care during FY2002.
Outpatient visits are rapidly increasing. The total number of such visits reached
43.8 million during FY2001, and was projected to increase by 2.3 million over
FY2002-FY2003, from slightly less than 47 million to 49.2 million. Veterans who
are provided outpatient care average around 12 visits per year.
According to VA data accompanying the FY2003 Budget, the daily inpatient
caseload for FY2002 was projected to be 57,522 rising to 58,361 patients by the end
of FY2003. There is a decline in all service units except for two categories, acute
care and nursing homes. Acute care patients have increased because of the larger
number of total numbers of veterans who are seeking VA medical services, and while
the total number of acute care cases has increased by 2,700 over the last year, the
average daily census for acute care has declined by 20 patients, the result of a decline
in the average length of stay. The aging of the veteran population, and the
congressional commitment to increase the capacity of VA to serve this population,
means that the number of patients receiving convalescent care will increase by over
7,000 during FY2003, with the average daily nursing home census rising by 1,205
patients.
The FY2003 Budget request for VA medical care. The Administration
asked Congress to provide $22.7 billion for VA medical care for FY2003, continuing
the annual increases in funds as the program continues to serve a larger number of
veterans each year. FY2002 congressional appropriations for VA medical care were
$21.3 billion, $1 billion above the $20.3 provided for FY2001. Congress approved
$19 billion for FY2000.
P.L. 108-7. Congress provided $23.9 billion for VA medical care for FY2003,
the same amount previously approved by both the House and Senate Committees on

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Appropriations, $2.6 billion over FY2002, and $1.1 billion above the amount
requested. In its report to accompany the draft bill (S.Rept. 107-222), the Senate
Committee states that it is “...deeply concerned about overwhelming evidence that
the VA medical system is failing its core constituency–service-connected, lower
income, and special needs veterans... [from] numerous anecdotal examples where
VA’s core constituency does not have access to timely, quality medical care because
the networks that serve them are operating with long waiting lists.”
The report cites VA data claiming that 310,000 veterans are on waiting lists for
medical care, and that many veterans are waiting as much as 6 months for an
appointment to see medical staff, a waiting time expected to grow “if current
guidelines and expectations do not change.” However, in spite of the evidence
supporting the perception of expanding waiting lists and longer appointment times,
there does not appear to be evidence that VA is denying care to veterans who need
it, and it appears that VA is making decisions about the order of treatment given to
veterans entirely on a medical basis.
The report suggests that there are 3 reasons for the growth in demands on the
VA medical care system:
! Increased access to a system with generous health benefits has
encouraged veterans to seek care at VA.
! Eligibility reform in 1996 made more veterans eligible for care.
(Veterans were eligible for outpatient care before 1996 if a VA
physician prescribed it, but were widely perceived as not eligible.)
! The lack of an alternative national prescription drug program has
encouraged veterans, an aging population with an increasing demand
for drugs, to seek drug benefits from VA, especially given that VA
is limited in the extent to which it pursues copayment obligations.
The report supports a view shared by those who believe that VA should
primarily serve a “core constituency” seeking care because they have been
adjudicated as having a service-connected basis for care, or because they have been
determined as meeting the income/asset tests that indicate limited ability to pay for
care elsewhere. If that view were to become the basis for determining who does not
receive care at any time, then a medical triage judgement about the priority by which
limited medical resources are used to provide needed care would give way to a
categorical priority system that prejudges eligibility for health care independent of
judgements by medical staff about the urgency of any particular medical service.

At the present time, veterans presenting themselves at a health care intake desk
and stating a medical symptom are screened and treated by medical professionals
who do not evaluate administrative criteria before providing the medically indicated
services. There is no evidence that any such applicants for immediate medical
evaluation and care are being turned away, and VA data suggest that the medical
system is improving the delivery of care by decreased waiting times for appointments
and diminished times in the facility waiting rooms. As VA staff see more walk-in
patients while reducing waiting room times, it is possible that appointment delays
will increase, unless additional staff slots are provided to handle the increased load.

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Thus, the increases in appropriations to VA medical care over the last few fiscal
years, and the growth in capacity supported by those increases have encouraged even
more veterans to seek care from VA. The growth in the number of veterans served
will likely continue to increase, as veterans recognize the advantages to them of
seeking care from VA facilities. P.L. 108-7 gives VA the authority to require VA
medical facilities to provide care according to statutory priorities. Whether such
authority would result in VA limiting medical services according to administrative
criteria rather than medical judgements is not stated.
Medical Care Cost Collections. In addition to the funds provided by
Congress, VA medical care is also authorized to “recycle” budget authority from
amounts VA facilities collect from various sources with an obligation to help defray
the cost of VA care for certain patients. The Balanced Budget Act of 1997 (P.L. 105-
33) gave VA authority to retain net receipts of the Medical Care Collections Fund
(MCCF), allowing the funds to be spent for medical services to veterans rather than
be transferred to the Treasury as under previous law. Congress also created a new
fund for FY2002, the Health Services Improvement Fund (HSIF), which collects
increases in pharmacy copayments that went in to effect on February 4, 2002. This
new fund also receives income from “enhanced use leases,” which are arrangements
for sharing VA medical assets with paying customers from outside of VA. These
leases can include the revenue from liquidation or leasing of VA capital assets, as
well as income from VA services for which users have contracted.
The Congressional Budget Office (CBO) estimated that collection receipts
added $691 million in recycled spending authority in FY2002 and a projected
combined MCCF/HSIF yield of $1.386 billion for FY2003.
Medical research. The VA engages in research as an ancillary function of
the treatment of veterans, and conducts independent research projects intended to
advance medical science. Almost one-half of VA’s research funding comes from
conventional medical research funding sources, the bulk of which is provided
through grants from the National Institutes of Health (NIH). The remaining funds
supporting VA research are split almost evenly between appropriations from
Congress specifically for such research, and salaries and expenses from the VA
medical care budget for the VA medical staff who are producing the studies that
exhibit VA’s research findings. About two-thirds of the research projects are
initiated by the medical staff reporting their findings. These projects are giving
greater attention to the diseases associated with an aging population, especially in
conjunction with the management of those chronic conditions that are a growing part
of the outpatient workload.
P.L. 108-7 provided $400 million for VA medical research. The Administration
requested $394 million. Congress provided $371 million for VA research in
FY2002, $350 million for FY2001, and $321 million for FY2000.
Response to Hepatitis C virus (HCV). The Centers for Disease Control
and Prevention (CDC) estimates that over 4 million Americans are infected with
Hepatitis C, and some data exist that the disease is even more prevalent among
veterans compared to the general population. A VA study in 1999 found that the
veterans it surveyed had a prevalence rate of 6.6%, compared to an estimated 1.8%

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in the general population. Upon release of the study, leading veterans groups and
some health care professionals advocated an aggressive response by VA to combat
the contagious threat.
However, VA analysts have been concerned that “. . . no comprehensive system
was in place to collect information about actual workloads and costs” for the
Hepatitis C program because the projections for them “were based on formulas that
relied on untested assumptions” and “actual performance (particularly for FY2000)
did not bear out projections.” While Hepatitis C continues to be a serious health
issue in need of dedicated attention to its causes, prevalence, diagnosis, treatment,
management and possible cure, it does not appear that the dire predictions about its
effect on the veteran population have been borne out. However, the costs of
diagnosis and treatment have risen considerably from their FY1999 levels. Actual
costs for HCV related medical services during FY2001 are estimated to have been
$98 million, and for FY2002 were projected to reach $105 million, with $111 million
expected to support diagnosis and treatment during FY2003.
Housing benefits. The VA program to guarantee home loans for veterans
has made a significant contribution to the national goal of increasing the number of
families who own their own homes. Because of the guarantees, lenders are protected
against losses up to the amount of the guarantee, thereby permitting veterans to
obtain mortgages with little or no down payment, and with competitive interest rates.
These guarantees, and certain direct loans to specific categories of veterans were
obligations of the federal government that constituted mandatory spending;
administrative expenses are discretionary appropriations transferred from the home
loan programs to the General Operating Expenses account.
VA construction. P.L. 108-7 provides $100 million for major construction,
and $226 million for minor construction projects. The Administration had requested
$194 million for major construction projects for FY2003, and $211 million in minor
construction (projects with an estimated cost under $4 million) for FY2003, the
amount for minor construction as was appropriated for FY2002. “Major
construction” projects have an estimated cost over $4 million. Many of the
construction projects will continue VA’s overall strategy of expanding outpatient
access for medical care.
Congress provided $183 million in major construction for FY2002, and $211
million in minor construction. Congress provided $66 million for major
construction, and a total of $171 million for minor construction for FY2001. P.L.
106-74 included $65 million for major construction, and $160 million for minor
construction for FY2000.
The following table shows appropriations to VA for FY2002, the
Administration’s request for FY2003, amounts recommended by each House for
FY2003, and the amounts ultimately enacted by Congress and signed by the
President.

CRS-9
Table 4. Appropriations: Department of Veterans Affairs,
FY2002-FY2003
(budget authority in billions)
FY2002
FY2003
FY2003
FY2003
FY2003
Program
enacted
request
House
Senate
Confer.
Comp., pension, buriala
26.044
28.949
28.949
28.949
28.949
Insurance/indemnities
.026
.028
.028
.028
.028
Housing programs
.204
.339
.339
.339
.339
Readjustment benefits
2.135
2.265
2.265
2.265
2.265
Subtotal: Mandatory 28.409
31.581
31.580
31.580
31.580
Medical carea,b
21.473
22.744
23.889
23.889
23.889
Med., prosthetic research
.371
.394
.405
.400
.400
Medical administration
.067
.070
.075
.070
.075
General operating exp.
1.198
1.256
1.251
1.256
1.254
Admin. expense (hsng.)
.166
.169
.169
.169
.169
Nat’l Cemetery Admin.
.121
.133
.133
.133
.133
Inspector General
.052
.055
.061
.055
.058
Construction, major
.183
.194
.194
.145
.100
Construction, minor
.211
.211
.241
.211
.226
Grants; state facilities
.100
.100
.100
.100
.100
Parking, revolving fund
.004
.000
.000
.000
.000
State veteran cemeteries
.025
.032
.032
.032
.032
Subtotal: Discretionary
23.971
25.358
26.550
26.460
26.436
Subtotal: (VA)
52.379
56.939
58.131
58.090
58.017
Source: H.Rept. 108-10.
Note: Totals for FY2002 include supplementals. The FY2003 levels shown for the Senate and
enacted versions of the bill do not reflect required cuts to most discretionary programs that were
adopted to hold the bill’s total cost within specified limits.
a Includes supplemental appropriations provided by P.L. 107-206.
b Medical Care Collections Fund (MCCF) receipts are restored to the Medical Care account as an
offset equal to the revenue collected, estimated to be $691 million in FY2002; the amount
projected for FY2003 has been reestimated upward from $752 million to $1.386 billion.

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Capital asset realignment. VA has developed a comprehensive planning
approach to constructing, altering, extending, or otherwise improving facilities. In
part, this new planning approach, called Capital Asset Realignment for Enhanced
Services (CARES), is the Department’s reaction to the criticism it has received from
areas of the country in which hospital resources have been cut back, in order to
redirect those resources to outpatient care, usually in other geographical areas. While
VA has been successful in expanding the number of patients it serves, conflict
continues between advocates of a more efficient use of resources (who advocate
reducing hospital space and closing or selling superfluous inpatient facilities), and
veterans groups (who see any reduction in inpatient care as a threat to the medical
care needs of the veteran population).
The CARES effort is an attempt to make the planning process by which the
capital assets are developed, used, modified, or relinquished, open to veterans groups.
Often, the fears about reductions in health care to veterans are based on an inadequate
understanding of the improvements in care for more veterans that such realignment
of resources makes possible, and the CARES approach may lessen those
misunderstandings.
Some veterans have expressed the belief that, over time, moving resources from
an inpatient facility in one area to outpatient access in another yields an unacceptable
rate of deterioration in the former facility, as the commitment to maintain the
building is diminished as the Department moves toward its eventual abandonment.
Burial and cemetery benefits. Payments to honor and help defray the cost
of veterans’ burials will total about $155 million in FY2003, and cover about 84
thousand burials, 69 thousand burial plots, 9 thousand service-connected deaths, 528
thousand flags, and 354 thousand headstones and markers.
Department administration. P.L. 108-7 provides $1.254 billion for General
Operating Expenses (GOE) for FY2003, and $75 million for medical administration.
The Administration had requested $1.256 billion, and $70 million for medical
administration. Congress approved the Administration’s request for funds for
administration for FY2002, providing $1.2 billion for GOE and $67 million for
medical administration.
VA employment estimates. The Bush Administration project an overall
VA employment decline to an average of 204,670 in FY2002, down from an average
205,896 during FY2001, which was up from an average of 202,621 during FY2000,
and 205,547 in FY1999. Much of the decline was in medical staff, which VA
projected would average 179,300 during FY2002.
Accrual Accounting. Part of the Administration’s budget estimate of a $4.4
billion increase in total VA spending for FY2003 did not reflect expanded program
costs for additional benefits or medical services to veterans, but a change in methods
by which future compensation for VA employees who will eventually retire is
attributed to current service those employees perform. This new accounting method
would have resulted in the transfer of $892 million to central accounts in the
Treasury to fund the accruing future cost of retirement and retiree health benefits for
VA employees. Because the accrued funds would be retained in a government fund,

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this new accounting practice would not affect employees’ benefits in any way, nor
would it have a direct impact on taxpayers. These changes in accounting require
legislation, and Congress did not include them in P.L. 108-7.
Title II: Department of Housing and
Urban Development
Introduction
Most of the appropriations for the Department of Housing and Urban
Development (HUD) address the housing problems faced by households with very-
low incomes or other special housing needs. Programs of rental assistance for the
poor, elderly or handicapped, housing assistance for persons with AIDS, varying
types of shelter for those who are homeless – all deal with the issue of the availability
of affordable housing. The two large HUD block grant programs also help
communities finance various efforts to address these housing issues. In the last half
dozen years, HUD has focused more attention than previously on efforts to increase
homeownership opportunities for lower-income and minority households.
Highlights of HUD Budget for FY2003- P.L. 108-7
! FY2003 budget of $31.2 billion, up $1.1 billion from FY2002 (but
this does not include an across-the-board rescission of 0.65%) ;
! Housing Certificate Fund increased $1.6 billion to $17.2 billion –
renewal of all expiring Section 8 rental contracts;
! No incremental housing choice vouchers;
! Public Housing Operating Fund increased by $105 million to $3.6
billion, but includes use of $250 million to cover FY2002 shortfall;
! Administration’s Initiative to convert public housing units to Section
8 project-based assistance rejected;
! HOME up by $154 million to $2.0 billion, with $75 million set-
aside for Administration’s downpayment assistance initiative;
! Homeless assistance up by $102 million to $1.23 billion; and
! Lead Hazard Control program increased 60% to $176 million.
Summary: FY2003 Appropriations for HUD Programs
P.L. 108-7 provides HUD with $31.2 billion, an increase of $1.1 billion over the
FY2002 level (if $2 billion for New York City recovery efforts provided through the
Community Development Block Grant program in FY2002 are not included in the
FY2002 base). The conferees agreed to $17.2 billion for the Housing Certificate
Fund, HUD’s largest program (frequently referred to as “Section 8"), about $1.6
billion more than enacted in FY2002. While this is a 10% increase in HUD’s largest
program, it includes no “incremental vouchers” (that is, no increase in the number
of renters assisted). This is largely because of significant increases in rent levels
across the county - it takes more funding simply to assisted the same number of
renters. Neither the Administration’s proposed budget, nor the final version of

CRS-12
H.J.Res. 2, included funds for the 4.9 million very low-income renter households that
pay more than 50% of their income for shelter or who live in substandard housing,
but who receive no federal assistance. These households are often referred to as
“worst case” renters.
The Section 8 formula funding change recommended by the House
Appropriations Committee that some housing advocacy groups feared would result
in up to 125,000 fewer vouchers being funded than currently, was not included in the
adopted budget. In addition, while H.R. 5605 contained provisions to slow increases
in Section 8 administrative costs and to limit the amount of unspent Section 8
administrative fees that Public Housing Authorities (PHAs) have accumulated, these
were not adopted by the conferees. Some Section 8 formula funding changes and
restrictions on administrative fees were included in the enacted budget - and are
discussed below.
The conferees approved $2.7 billion for the Public Housing Capital Fund, about
$300 million more than the Administration request, but $113 million below the
FY2002 funding level. The Administration’s controversial Public Housing
Reinvestment Initiative to encourage PHAs to convert some public housing units to
Section 8 project-based assistance was rejected. Under this initiative, PHAs would
pledge the project-based revenue as collateral for rehabilitation loans. But the
conferees rejected the reinvestment initiative, and directed HUD to report to the
Appropriations Committees about PHAs that have already obtained private financing
for their capital needs.
The conferees increased the Public Housing Operating Fund $105 million above
the FY2002 level to $3.6 billion. However, HUD would be allowed to use this
appropriation to cover a controversial $250 million shortfall for FY2002 that the
agency blames on flaws in its accounting system. Some in Congress have expressed
concern that taking FY2003 funds to pay for the FY2002 shortfall, rather than HUD
requesting a supplemental appropriation, means, in effect, $250 million less for the
program in FY2003 than the Administration’s initial request. This, they say, comes
on top of other recent cuts to the Public Housing program, including the end of the
$310 million a year Drug Elimination program.
The HOPE VI program, that is used to rehabilitate or tear down the worst public
housing units, received $574 million for FY2003, the same as the Administration
request, the House and Senate recommendations, and the same as provided for
FY2002. (The Administration’s FY2004 proposal calls for the elimination the HOPE
VI program.)
The conferees provided the Community Development Block Grant (CDBG)
program with appropriations of $4.94 billion, about $60 million less than the $5
billion enacted for FY2002. This included $4.4 billion for block grants and $261
million for individual earmarks under the Economic Development Initiative (despite
opposition again to these earmarks by the Administration). The conferees rejected
the Administration’s Colonia Gateway Initiative to reduce grants to the wealthiest 1%
of communities and use the savings to fund a program of affordable housing and
economic opportunity in “colonias” - communities within 150 miles of the U.S.
Mexican boarder that are often described as having “third world” living conditions.

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P.L. 108-7 provides $2 billion for the HOME block grant program, an increase
of about $154 million than the funding in FY2002. There is a $75 million set-aside
for the Administration’s Downpayment Assistance Initiative, although less than the
$200 million requested. The $40 million set-aside for housing counseling is double
the amount approved for FY2002.
HUD has a number of programs to protect vulnerable populations - the elderly,
persons with physical and mental disabilities, individuals with HIV/AIDS, and the
homeless. The conferees agreed to $783 million for housing for the elderly, equal to
last year’s appropriation. Housing for the disabled received $250.5 million, up by
nearly $10 million. Housing opportunities for persons with AIDs was funded at $292
million, and increase of about $15 million from the previous year.
HUD proposed to spend $1.13 billion on programs for the homeless, about level
with funding during the previous 2 years. Secretary Martinez has made ending
chronic homelessness in the next 10 years a top priority. The conferees agreed to
$1.23 billion, $102 million more than enacted in FY2002 and $95 million more than
the Administration’s request.
The conferees rejected the Administration’s request to eliminate funding for the
Office of Rural and Economic Development, funding it at $25 million, the same as
in FY2002.
The House recommended $126 million for the control and removal of lead-
based paint, and the Senate, $201 million. The conferees agreed on $176 million,
$66 million more than enacted in FY2002. To address continuing discrimination in
the rental and sale of housing and associated financing, the conferees approved $45.9
million for Fair Housing programs, the same as recommended by the House and
Senate, and level with FY2002 funding.
HUD’s Federal Housing Administration (FHA) mortgage insurance program
continues to operate with very high delinquency rates (a record 11.81% of borrowers
were at least 30 days past due and 2.79% were in the foreclosure process as of the
2nd quarter of 2002). The conferees agreed with the Senate regarding submission of
a report to the Committees on Appropriations on further actions which could be taken
to protect homeowners and communities experiencing high rates of defaults and
foreclosures on FHA-insured loans, and directs that this report be provided to the
appropriators by June 2, 2003.
FY2002 Appropriations. The President signed P.L. 107-73 on November
26, 2001 providing HUD with $30.15 billion for FY2002 (H.Rept. 107-272). This
was $1.67 billion more than FY2001 appropriation of $28.48 billion, an increase of
about 6%. Of the $30.15 billion approved, $16.28 billion, more than half of the
HUD budget, went to renew all Section 8 expiring contracts, add an additional
25,900 vouchers, and pay for contract administration and various tenant protection
assistance. The approved $30.15 billion is in addition to $2 billion in emergency
supplemental funds made available to HUD’s Community Development Fund to be
used for assistance and economic revitalization related to the terrorist attacks in New
York City (H.R. 2888, P.L. 107-38, was signed by the President on September 18,
2001).

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On August 2, 2002, the President signed H.R. 4775 as P.L. 107-206 (Conference
Report, H.Rept. 107-593), the FY2002 Supplemental Appropriations Act for Further
Recovery From and Response to Terrorist Attacks on the United States. This Act
provides an additional $783 million for the Community Development Fund for
further recovery efforts in New York City. The Act also rescinds $738.5 million in
HUD funds, including $388.5 million of unobligated balances from the Section 8
voucher program, $300 million realized from the prepayment of Section 236
subsidized mortgages, and $50 million from the Administration’s HOME
downpayment assistance initiative. The Section 236 money had been intended for
the rehabilitation of assisted multifamily housing, and some housing organizations
have criticized HUD for the delay in the spending of these funds, thus leaving them
open for rescission. For more details, see CRS Report RL31406, Supplemental
Appropriations for FY2002: Combating Terrorism and other Issues.
Table 5. Department of Housing and Urban Development
Appropriations, FY1998 to FY2002
(Net budget authority in billions)
FY1998
FY1999
FY2000
FY2001
FY2002
$21.44
$24.08
$25.92
$28.48a
$32.19a
Source: Figures for FY1998-FY2001 are from administration budget submissions of subsequent
years; the figure for FY2002 is from H.Rept. 108-10, and is the latest available estimate for that fiscal
year. Final spending levels remain uncertain until all program experience has been recorded, and any
supplemental appropriations or rescissions have been included.
a Includes net effect of treating “excess” FHA mortgage insurance premiums as an offset against
discretionary spending within the Federal Housing Administration. The offsets are an estimated
-$2.246 billion for FY2001, and -$2.323 billion for FY2002. Because of the scoring change,
the figures for FY2001 and FY2002 are not comparable to figures shown for previous fiscal
years. The FY2002 figure includes $2 billion in emergency supplemental funds for the
Community Development Fund for assistance to New York City following the terrorist attacks
of September 11, 2001.
Policy Issue: The Shortage of Affordable Rental Housing
A budget is a statement of spending priorities. Despite the fact that HUD now
spends most of its budget – an average of about $28 billion in recent years – to help
low-income families with their housing costs, the shortage of affordable rental
housing for lower-income households continues to be the most important housing
issue before the Congress. (Housing that costs more than 30% of one’s income is
considered by the government to be burdensome or “unaffordable”.) In a February
5, 2002 conference held by the Urban Institute, Preventing Homelessness: Meeting
the Challenge, researchers found that the number of homeless people in a number
of large cities was increasing, and all attributed this to a growing shortage of
affordable housing. Others believe this shortage is reducing the chances that welfare
recipients will be able to achieve economic self-sufficiency. Many mayors and
governors and other elected officials believe the problem has become serious.

CRS-15
Including the effect upon federal revenues of residential real estate-related tax
provisions, and housing programs through HUD and the Department of Agriculture,
the federal government now spends more than $140 billion on housing assistance.
The Congressional Budget Office estimates that nearly $55 billion of the mortgage
interest and property tax deductions or “tax expenditures” (spending through the tax
code) in FY2002 will be made for housing assistance to homeowners with annual
incomes above $100,000. In comparison, the requested budget for HUD for FY2003,
at $31.35 billion, which largely serves households with incomes below $25,000, is
substantially less in real terms than was spent two decades ago.2
The shortage of affordable rental housing is a complex matter with many
dimensions, including the often overlooked but important role that local governments
play, too often some say, as part of the problem. There are many statistics available
for advocates who argue that more federal assistance is needed. Data from HUD’s
1999 American Housing Survey show 4.9 million “worst case” households, those
with incomes below 50% of the local area median (“very-low incomes”) who pay
more than 50% of their income for housing or live in substandard housing, but who
receive no assistance.3 These same data showed 44% of extremely low-income
renters (those with incomes below 30% of the local area median), about 3.75 million
households, in the “worst case” category. To put these median incomes into more
meaningful perspective, on a national basis, those with very-low incomes would be
households with recent incomes below about $21,000. Those with extremely low-
incomes had incomes below $13,000.
Those who support more federal efforts to help low-income households with
their housing costs generally want either more funds for housing vouchers or more
funds to encourage the construction of affordable rental housing, or both. HUD
Secretary Martinez says he favors housing vouchers over subsidized housing
production to address the affordability issue and does not support another rental
housing production program. He points out that there are already government
programs that are being used to produce affordable rental housing (the Low Income
Housing Tax Credit, tax-exempt bonds, the HOME and HOPE VI programs, and
other smaller efforts.)
Yet, the agency does not have a long-term goal of helping more worst-case
families with their high housing cost burdens. In fact, some critics of HUD programs
say that because there is generally no shortage of rental units available in most
communities, the affordability issue is not a housing issue at all, but an income issue.
(However, others say that regulations and barriers prevent the private market from
increasing the supply of less expensive apartments). They argue that a better way to
respond to worse-case renters is through government efforts to help low-income
households become more productive, making it possible for them to earn higher
2 The HUD budget peaked at $33.5 billion in FY1981 (about $67.6 billion in 2002 dollars)
and declined to $14 billion in 1987.
3 Report On Worst Case Housing Needs In 1999: New Opportunity Amid Continuing
Challenges. Executive Summary. January 2001. U.S. Department of Housing and Urban
Development. Office of Policy Development and Research.

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incomes. Presumably this would mean they would not need federal rental housing
assistance, or not as much of it.
The Administration seems to favor this approach. The FY2003 budget says
“....HUD would fail in its mission if families were not moving towards eventual self-
sufficiency. An important measure of HUD’s success should be the number of
families that no longer need to reside in assisted housing because they have moved
to safe, decent, and affordable private housing.” However, this raises serious
contradictions in federal housing policy since over 32 million homeowners, including
11 million with incomes above $100,000, receive large amounts of housing
assistance. Many of these households no longer need housing assistance.
A brief history of federal housing assistance. In the Housing Act of
1949, Congress established a national goal of providing: “a decent home and suitable
living environment for every American family.” Much progress was made in the
next two decades in eliminating substandard housing as many of the nation’s worst
slums were torn down. But against the backdrop of the inner city riots of the 1960s
and the recommendations of the 1967 Douglas Commission, the 1968 Kaiser
Committee, and the 1968 Kerner Commission on Civil Disorders, Congress adopted
the Housing Act of 1968 which set a specific 10-year goal of building 6 million
housing units for low- and moderate-income families.
Federally-subsidized housing production increased from 91,000 in 1967 to
166,000 in 1968; 200,000 in 1969, 430,000 in each of 1970 and 1971, and 339,000
in 1972. During the 4 years from 1968-1972, there was also a total of about 200,000
units rehabilitated with federal subsidies and 2,200,000 mobile homes built, the latter
considered an important source of affordable housing for lower-income households.4
During the 1970s, attention on housing issues changed from its previous focus
on the problem of too many substandard housing units, to the problem of housing
being too expensive for lower-income families to afford. In effect, the 1949 Housing
Act paved the way for the more elusive goal of making it possible for all families to
have a decent and affordable home, and a suitable living environment.
The problem of substandard housing has not been entirely eliminated. Data
from HUD’s just released American Housing Survey for 2001 shows that 706,000
occupied rental units lack some or all plumbing facilities, 157,000 have no hot piped
water, 171,000 are without a flush toilet, 235,000 have exposed electrical wiring, 2
million have broken windows, and 598,000 have holes in the floor (there are similar
numbers for homeowners). Yet, the quality of the housing built in the past 25 years
and the level of amenities provided or required, such as off-street parking, wide
sidewalks and roads, air conditioning, landscaping, health and safety standards,
requirements for the handicapped, and environmental protections, have so upgraded
housing and neighborhoods that many lower income families can not afford it. The
policy objective of improving the minimum standard for housing began to conflict
with the availability of affordable housing. An increasing number of lower income
4 U.S. Department of Housing and Urban Development. Housing in the Seventies. A Report
of the National Housing Policy Review, 1974.

CRS-17
households must now cope with high housing costs by sharing a single-family home
or apartment, sometimes two or three households in a unit meant for one.
During the latter half of the 1970s, HUD began phasing out its involvement in
subsidizing new housing construction. By the early 1980s, this withdrawal was
nearly complete and the shift towards subsidizing existing units with housing
vouchers was well underway.
Since the 1980s, there has been no obvious consensus as to what should be done
to improve housing opportunities for those with difficulties finding affordable
housing. Beginning in 1982, the number of additional rental units receiving
assistance under HUD dropped sharply. In 1986, Congress replaced a number of
existing rental housing tax provisions that were thought to be poorly targeted, with
the Low Income Housing Tax Credit program, a tax incentive to encourage
developers to build apartments affordable to households with incomes no greater than
60% of the local area median. After a slow start, the number of subsidized units
built or rehabilitated averaged about 50,000 to 60,000 a year during most of the
1990s. According to some estimates, there are now as many as one million rental
units that have been subsidized under this program. (While this program can help
low-income households, it cannot help the poorest of the poor without additional
subsidies, such as Section 8 vouchers for the tenants.)
During the 1990s (and continuing), there was also a small number of apartments
built or rehabilitated under HUD’s Section 202 program for the elderly and under the
HOME and Community Development Block Grant programs. But it is also
important to remember that during each of the last three decades, hundreds of
thousands of older or obsolete rentals (many shabby but affordable), including
“trailer parks” in urban areas, and most of the remaining inner-city “single-room-
occupancy hotel” units (including many YMCA/YWCA facilities that provided
shelter to the near-homeless), were torn down.
After a number of years in which no new housing vouchers were added,
Congress appropriated money for 50,000 additional vouchers in FY1999 and 60,000
in FY2000. The Clinton Administration recommended 120,000 additional vouchers
for FY2001, with 79,000 approved. The Bush Administration requested 34,000
additional vouchers for FY2002; 25,900 were funded. As noted earlier, HUD is now
recommending 33,400 additional vouchers for FY2003. Under H.R. 5605, the House
Appropriations Committee bill for FY2003, there would be about 6,000 new
vouchers targeted to the non-elderly disabled. Under S. 2797, there would be 15,000
additional vouchers.
Is housing available at an affordable price? With the exception of some
cities in the Northeast, West Coast, and a few other places, most areas have an
adequate supply of modern apartments. But restrictive zoning, building codes,
requirements for the handicapped, health, safety and environmental regulations, and
local opposition have made it very difficult to construct basic no-frills rental housing
affordable to lower-income households. The smaller apartment units built in the
1940s and 1950s with 500 square feet or less, with no walk-in closets, in-unit
washer-dryers, with small kitchens and baths, and with no on-site parking, are much
sought after in older cites because of their low rents, but they cannot be built today

CRS-18
under current laws. (New HUD data show the average apartment in 2001 had 1,296
square feet.)
A significant number of apartment owners decided not to renew their expiring
Section 8 rental contracts as more profitable alternatives presented themselves during
the prosperous 1990s, Older apartment buildings, with their lower rents, continue to
be torn down or renovated for a more upscale and profitable market. Mobile home
parks that provide relatively affordable housing have largely disappeared from most
large metropolitan areas.
There is no shortage of reports, studies, and commissions documenting the
difficulties that lower-income people have in finding affordable housing. The
bipartisan Millennial Housing Commission released its report, Meeting Our Nation’s
Housing Challenges on May 30, 2002. It said “there is simply not enough affordable
housing” and recommended a substantial increase in the number of vouchers and
substantially increased appropriations for the HOME program. The National Low
Income Housing Coalition’s research shows that in most major cities and counties,
it is highly unlikely that households earning near the minimum wage of $5.15 an hour
or even $6, $8, or $10 an hour, can find an affordable apartment. Waiting lists for
rental assistance in most major cities are so long that no others are allowed to be
added.
The National Housing Conference (NHC) examined recent American Housing
Survey data, and concluded that affordable housing problems had moved up the
income ladder. Police, teachers, fire fighters, and other public municipal employees
have been increasingly cited in the media as having problems affording housing.
(Although two-earner families, for example, a police officer and teacher, can often
reach securely into the middle-class.) The NHC concluded that simply having a full-
time job does not guarantee a family a decent place to live at an affordable cost.
Among its findings: “More than 220,000 teachers, police, and public safety officers
across the country spend more than half their income for housing, and the problem
is growing worse.”5
Local governments are often reluctant to adopt policy approaches that may
attract low-income households, the mentally and physically handicapped, ex-felons,
many of the estimated 8 million illegal aliens, and others – partly, some say, because
of their negative fiscal impact. Many of these households would pay much less in
local taxes than the cost of providing schools, police, fire and rescue, trash collection,
and other social services. A few communities (in California) now pay lower-income
households to move to another state where there is thought to be better employment
opportunities (such as Las Vegas, Nevada).
Many homeowners believe that affordable rental units built near their homes
would lower their property values, and resist even minor efforts by local government
to increase the supply of low-income housing in their neighborhoods. The result is
5 The Center for Housing Policy (a research affiliate of the National Housing Conference),
Housing America’s Working Families, New Century Housing, Washington, D.C., June 2000.
p. 2.

CRS-19
that very-low-income households or even those not quite so poor, are heavily
concentrated in particular neighborhoods, and local officials in these areas often find
it necessary to look the other way as many apartments are shared by two or three
families in violation of local laws.
Increasing the supply of affordable housing. Housing analysts inside
and outside of HUD, elected officials, and others have been debating for decades the
relative advantages and disadvantages of using housing vouchers or subsidizing the
construction or rehabilitation of rental buildings. Knowing when each type of
assistance is most appropriate requires a knowledge of local housing market
conditions. The discussion that follows reviews this on-going debate.
Voucher utilization rates. In the past few years, there has been growing
concern that not all of the housing vouchers awarded to local public housing
authorities have been put to use. Some households with vouchers have found it
difficult or impossible to find an apartment within the time limits allowed. An
increasing number of vouchers have been returned unused (although these vouchers
are sometimes given to someone else who does succeed in finding appropriate
housing). In recent years, arguments have surfaced in Congress that because not all
vouchers are used, there is less reason to appropriate funds for more vouchers. As
discussed earlier, there has been frustration in the VA-HUD appropriation
committees over the amounts of unspent Section 8 voucher funds that have
accumulated in reserve accounts.
Both HUD and the appropriation committees are now trying to address the
matter of unspent funds by directing new money for vouchers only to public housing
authorities with a voucher utilization rate of 97% or greater. Some PHAs who have
tried to increase their voucher utilization have had noted success by better informing
landlords about the voucher program and encouraging more to participate in it by
offering various incentives.6 Some voucher holders have been provided
transportation to assist them with their search, and help with security deposits.
Nevertheless, where vacancy rates are very low or rent levels very high, it may have
become prohibitively expensive on a per-unit basis for PHAs to try to locate
additional units for voucher holders.
Some landlords are unwilling to accept vouchers because they want to avoid the
bureaucratic “red tape” of the program, or because they believe, rightly or not, that
low-income families will cause problems. A few local governments have recently
adopted laws requiring landlords to accept renters with vouchers, although landlords
may be able to reject a voucher holder because of bad credit, lack of references, and
for other reasons. Reports also continue to show that discrimination in rental housing
on the basis of race and against households with children is still common, which
makes the use of vouchers more difficult.
Increasing the number receiving assistance by adding vouchers.
The HUD Secretary is on record as not being in support of current bills that would
6 Slavin, Peter. Getting Section 8 Programs Leased Up. Journal of Housing & Community
Development, July/August 2001. Pps. 39-44, 48.

CRS-20
create a new national affordable housing trust fund to subsidize the construction of
affordable rental housing. He says he instead favors housing vouchers because of the
freedom of mobility they offer to low-income renters. In theory at least, a family
with a voucher can move out of a poorly maintained building or a dangerous
neighborhood and go to a safer one with better schools and more job opportunities.
However, the HUD Secretary has not proposed any significant increase in the number
of vouchers and, as the above discussion has indicated, his stated goal is to reduce
the number of those households needing, or receiving rental assistance. It is not clear
how this would be accomplished. He supports helping more lower-income
households become homeowners, but some housing analysts doubt the financial
ability of households with incomes below a certain (realistic) level to maintain, and
benefit from, homeownership. It is unclear what the HUD goals are for many of the
“worst case” renters who are unrealistic candidates for homeownership,
At a recent congressional hearing on the FY2003 budget, concern was expressed
at the increasing cost of the Section 8 program. As the cost of housing low-income
families in Section 8 units increases, either fewer households can be assisted with a
level budget or a larger budget is needed just to maintain the same number of assisted
units. The proposed $17.5 billion for the Section 8 will account for over half of the
total HUD budget. The main reason why Section 8 costs continue to increase rapidly
is that market rents have increased significantly. The cost of an average voucher (the
government’s share of the rent) is now about $500 a month or $6,000 per year. One
million additional vouchers would cost $6 billion a year.
Increasing rental housing production. The difficulty of using vouchers
in some areas has led to legislative proposals for a new HUD program devoted
largely to the development of rental housing for extremely low-income households.
Referring to the limited value of vouchers in many tight rental markets, the Senate
Appropriations Committee expressed its concerns in 2001 that “families with
vouchers often have little choice in their rental decisions, leaving them often in low-
income and very low-income neighborhoods and living in substandard housing.”
Several bills (H.R. 2349; S. 1248; S. 652) introduced in the 107th Congress seek
to influence the production of affordable rental housing, by stimulating construction
through a “national trust fund” financed by what some believe to be “excess”
reserves in the FHA mortgage insurance premium pool. Another housing bill, H.R.
3995, marked up by the House Financial Services Committee on July 10, 2002,
would authorize a new program of matching grants to state and local “housing trust
funds,” subject to appropriations. Details on these legislative proposals can be found
in CRS Report RL30916, Housing Issues in the 107th Congress.
Are there other options for funding more affordable rental housing? Some point
to the Congressional Budget Office report of February 2001, Budget Options:
Restrict Itemized Deductions, Credits and Exclusions Under the Income Tax. One
of the options identified by CBO to increase federal revenues is: limit the mortgage
principal on which interest can be deducted to $300,000. Taxpayers may now deduct
interest on up to $1 million of mortgage debt used to buy and improve a first and
second home. CBO says that reducing the eligible amount of debt for the mortgage
interest deduction from $1 million to $300,000 would trim deductions for 1.2 million
taxpayers with large mortgages and increase revenues by $55.8 billion over the 2002-

CRS-21
2011 period. Some argue that this would be a less regressive option (the cost would
be born by higher-income taxpayers) to fund a rental housing production program for
extremely low-income families. Limiting deductions to the interest on not more than
$300,000 of mortgage debt would affect high-cost areas such as San Francisco, Los
Angeles, New York, and Boston. However, it is probably no coincidence that these
are the areas that have some of the lowest rental vacancy rates in the country, and the
most severe shortages of affordable rental housing.
Another option for addressing the shortage of affordable rental housing is to
encourage more local governments to use “inclusionary zoning,” which requires
home builders to construct and set-aside a minimum percentage of new units in a
specific residential development that are affordable to a lower-income households.
(See Inclusionary Zoning: A Viable Solution to the Affordable Housing Crisis? The
Center for Housing Policy. October 2000, for the pros and cons of this approach and
how it has worked in Montgomery County, Maryland.
With the increasing recognition of the impact of restrictions and barriers
(inadvertent and deliberate) to increasing the supply of affordable housing at the local
level of government has come the view that unless or until local governments accept
more responsibility for the problem, little progress will be made. Some analysts
believe that metropolitan wide regional housing authorities (similar to existing
regional transportation authorities) are needed both because some local jurisdictions
are less financially able to address the issue than others, and to assure that all
jurisdictions accept a fair share of affordable housing to avoid concentrations of
lower-income households.
Table 6. Appropriations: Housing and Urban Development,
FY2002-FY2003
(budget authority in billions)
FY2002
FY2003
FY2003
FY2003
FY2003
Program
Enacted
Request
House
Senate
Confer.
Housing certificate fund
15.641
17.527
16.587
16.929
17.224
Appropriation
11.441
13.327
12.387
12.729
13.024
Advance appropriation
4.200
4.200
4.200
4.200
4.200
Sect. 8 recapt. (rescission)
-1.200
-1.100
-1.300
-1.400
-1.600
P.L. 107-206 rescission
-.389
–
–
–
–
Public housing capital fund
2.843
2.426
2.843
2.683
2.730
Public hsng. operating fund
3.495
3.530
3.600
3.530
3.600
Revitalization of distressed
.574
.574
.574
.574
.574
public housing (HOPE VI)
Native American housing
.649
.657
.649
.649
.649
block grants
Indian housing loan guar.
.006
.005
.005
.005
.005
Native Hawaiian loan guar.
.001
.001
.001
.001
.001
Hsng., persons with AIDS
.277
.292
.292
.292
.292

CRS-22
FY2002
FY2003
FY2003
FY2003
FY2003
Program
Enacted
Request
House
Senate
Confer.
Rural Hsng; Econ. Devel.
.025
.000
.025
.025
.025
Empowerment zones;
enterprise communities
.045
.000
.030
.030
.030
Comm. Develop. Blk.Grant
5.000
4.716
5.000
5.000
4.937
Comm. Develop. Fund
(emergency supplement.)a
2.783
.000
.000
.000
.000
Sec.108 loan guar.; subsidy
.015
.007
.007
.015
.007
Brownfields redevelop.
.025
.025
.025
.025
.025
HOME Invest. Partnerships
1.846
2.084
2.221
1.950
2.000
P.L. 107-206 rescission
-.050
.000
.000
.000
.000
Homeless Assist. Grants
1.123
1.130
1.250
1.215
1.225
Hsng, special populations
1.024
1.024
1.100
1.034
1.034
Housing for the elderly
.783
.774
.841
.783
.783
Housing for the disabled
.241
.251
.259
.251
.251
Hsg. counseling assistance
.000
.035
.000
.000
.000
Rental housing assistance
-.300
-.100
-.100
-.100
-.100
(rescissions)
Fed. Housing Admin.(net)b
-1.671
-2.207
-2.207
-2.207
-.2.207
GNMA (net)c
-.373
-.348
-.348
-.348
-.348
Research and technology
.050
.047
.047
.047
.047
Fair housing activities
.046
.046
.046
.046
.046
Office, lead hazard control
.110
.126
.126
.201
.176
Salaries and expenses
.556
.510
.530
.510
.530
Inspector General
.067
.074
.073
.074
.074
Working capital fund
.000
.276
.276
.277
.277
Rescissions; legislative
-.025
-.008
-.008
-.008
-.008
savings; supplemental
Totals: HUD
appropriations
27.165
28.357
28.554
28.457
28.753
emerg. supplement.; total
2.784
–
–
–
rescissions; total
-1.956
-1.208
-1.408
-1.508
-1.708
advance appropriations
4.200
4.200
4.200
4.200
4.200
Subtotal (HUD); net
32.193
31.349
31.346
31.149
31.245
Source: H.Rept. 108-10.
Note: Totals for FY2002 include supplementals. The FY2003 levels shown for the Senate and
enacted versions of the bill do not reflect required cuts to most discretionary programs that were
adopted to hold the bill’s total cost within specified limits.

CRS-23
a Emergency supplemental for assistance to the City of New York, following terrorist attacks on
September 11, 2001.
b Net, interagency transfers and offsetting receipts against appropriations of the current year; included
in the totals are projected experience gains greater than premiums to the mortgage insurance
fund, which are now treated as offsetting receipts against discretionary funds. The effect is
estimated to be $-2.323 billion for FY2002, and -$2.753 for FY2003.
c Net, interagency transfers and offsetting receipts against appropriations of the current year.
Public and Indian Housing Programs
Housing Certificate Fund. The Housing Certificate Fund (HCF) is the
major disbursing mechanism through which HUD provides funding to local entities
responsible for administering project-based and tenant-based (vouchers) low-income
rental housing subsidies. Each year, the HCF total budget is comprised of a direct
appropriation from Congress as well as any recaptured funds from previous years.
The Administration requested $17.5 billion in direct appropriation for the
Housing Certificate Fund in FY2003, an almost $2 billion increase over the FY2002
direct appropriation of $15.6 billion. In addition, the HUD FY2003 budget
justification estimated an available carry-over balance of $640 million in Section 8
reserve funds from previous years, which would bring the HCF budget total,
including the HUD estimate of carry-over funds and the direct appropriation, to $18.1
billion.
H.R. 5605, the committee-passed version of the FY2003 HUD appropriations
bill from the 107th Congress, recommended a direct appropriation of $16.6 billion for
the HCF for FY2003, $900 million less than the Administration’s request. The
committee estimated HUD’s carry-over balances at $1.8 billion, almost $1.2 billion
higher than HUD’s estimate. The reduced direct appropriation, added to the
increased estimate in carry-over balances would have brought the total HCF budget
level to $18.4 billion in FY2003, $200 million higher than the HUD estimate.
The Senate-passed version of H.J.Res. 2, the FY2003 consolidated omnibus
appropriations legislation, recommended a direct appropriation of $16.9 billion for
the Housing Certificate Fund in FY2003, approximately $600 million less than the
Administration’s request. The bill did not specify an amount of carry-over balances
available to HUD for the HCF; however, the FY2004 HUD budget appendix
indicates that HUD has approximately $1.738 billion available in carry-over funds
from previous years, in addition to the $1.1 billion HUD estimated that it had
available for rescission in FY2003. In addition to the provision of a direct
appropriation, the Senate-passed version of H.J.Res. 2 included language specifying
that the Secretary of HUD would have the authority to draw down “such sums as
necessary” from the Treasury to fully renew all authorized vouchers, if reserved and
recaptured funds have been exhausted. CBO scored this provision as having no cost
because, given the direct appropriation as well as the higher-than-expected amount
in carry-over balances, under the Senate-passed version of H.J.Res. 2, HUD would
have more than sufficient funds to meet its obligations.
The final version of H.J.Res. 2, the Consolidated Appropriations Resolution of
2003 (P.L. 108-7), provided HUD with $17.2 billion in direct appropriations for the
HCF. This amount is over $300 million less than the administration requested for
the HCF in FY2003. Again, in addition to this amount, HUD has access to carry-

CRS-24
over balances available from previous years, now estimated at $1.738 billion. P.L.
108-7 did not provide the Secretary with the authority to draw down additional funds
from the Treasury.
A note about advance appropriations. For the past several years, the
HCF appropriation has consisted of two parts; an appropriation available in the
named fiscal year and an advance appropriation of $4.2 billion which is not available
until the next fiscal year. For example, in FY2003, P.L. 108-7 provides $17.2 billion
for the HCF. Of that amount, $13 billion is available in FY2003 and $4.2 billion does
not become available until FY2004. However, the total for the HCF in FY2003
includes $4.2 billion in advance appropriation that was provided in the FY2002
appropriation, but did not become available until the beginning of FY2003. Thus,
the total HCF budget (not including recaptured funds) is comprised of the $13 billion
in appropriations for FY2003 that is available in FY2003, added to the $4.2 billion
from FY2002 that was not available until FY2003, totaling $17.2 billion, but does
not include the $4.2 billion that was appropriated in FY2003 but will not become
available until FY2004.
Section 8 Expiring Contract Renewals. The HCF finances provisions of
Section 8 of the Housing Act of 1937 (as amended). Broadly referred to as Section
8 programs, these HUD programs subsidize rental housing for low-income families,
using several avenues for administering such assistance. The two main forms of
Section 8 assistance are: tenant-based rental assistance, or vouchers, which are
portable subsidies that are tied to families; and project-based rental assistance, which
is a form of rental subsidies tied to specific housing units. Approximately 3 million
families will be assisted under Section 8 in FY2003.
The largest portion of the Administration’s request for the HCF was $16.9
billion in new budget authority for funds to renew expiring Section 8 rental contracts
in FY2003. This amount would be used for the renewal of approximately 817,000
existing project-based units and the renewal and associated administrative costs of
2.1 million existing tenant-based units in FY2003, a total of almost 3 million
vouchers that have been authorized over the years.
In addition to these contract renewals, $52 million of the $16.9 billion
appropriated under this heading would be used to fund Family Self-Sufficiency
Coordinators for a renewal term of 1 year.
The House bill from the 107th recommended $14.615 billion for Section 8
contract renewals in FY2003. Of this amount, $10.278 billion was to be used for the
renewal of Section 8 tenant-based vouchers and moderate rehabilitation renewals
(including Moving-to-Work vouchers), and the remaining $4.337 billion was to be
used for the renewals of project-based units. This estimate was based on the cost of
fully funding all authorized project-based units, but only funding the percentage of
authorized tenant-based vouchers that were under lease as of local public housing
authorities’ (PHA) last financial statement. This amount does not include the
administrative costs of the tenant-based rental assistance program.
Since a PHA’s budget for renewal costs, under the House proposal, would have
been based on the number of units the PHA was leasing as of its last year end
financial statement (which can be 1-1.5 years old), it is possible that if the PHA’s

CRS-25
leasing rate had improved since that statement, the funds provided would be
insufficient to meet actual renewal costs. In such a case, the House proposal assumed
that PHAs could use Section 8 program reserves (which the committee estimated at
$938 million) to cover the renewal costs of any additional vouchers not reflected on
their most recent financial statements. Should a PHA’s reserve be inadequate to
cover these additional voucher renewals, a new central reserve fund was authorized
in the bill which could have provided funding to PHAs at the discretion of the
Secretary of HUD. The bill would have provided $280 million for the central reserve
fund.
In addition, the House bill, H.R. 5605, would have provided $46 million for
Family Self-Sufficiency Coordinators. This is a separate funding, and is not a part
of funding under contract renewals.
The Senate-passed version of H.J.Res. 2 proposed to fully fund the renewal of
all reserved vouchers, both project-based and tenant-based. The bill specified
$11.676 billion for the renewal and associated administrative costs of tenant-based
vouchers and authorized a central fund of $400 million, similar to the central fund
proposed by the House, to be used by the Secretary for voucher contract renewals and
changes. The Senate bill also provided the Secretary with the authority to draw down
“such sums as necessary” from the Treasury to renew all expiring voucher contracts.
The Senate proposal directed HUD to fully fund all vouchers a PHA is authorized
to lease, but to contract with PHAs only for the amount of vouchers that they can
reasonably be expected to use in the next year, based on current utilization and
administrative practices (rather than on prior year’s utilization, as in the House bill).
In order to prevent a building up into unobligated balances of the difference between
the amount needed to fully fund all vouchers a PHA is authorized to lease and the
amount the PHA is actually using, the Senate bill included language directing the
Secretary to fully implement an existing process for recapturing unused vouchers
from PHAs with low utilization rates and reallocating those vouchers to PHAs with
high utilization rates; the bill sets out statutory guidance for doing so.
The Senate-passed version of H.J.Res. 2 did not provide separate funding for
Family Self-Sufficiency Coordinators. Funding for FSS Coordinators, under this bill,
is considered a part of funding under contract renewals.
The final version of H.J.Res. 2, P.L. 108-7, provided $15.3 billion in direct
appropriations for the HCF. Of this amount, $10.9 billion is to be used for the
renewal costs (but not administrative costs, which are provided separately) of
expiring tenant-based vouchers and the remainder is to be used for project-based
vouchers. In addition, the law provides a $392 million central reserve. This
combined amount is sufficient, according to the Conference Report, to fund all
authorized vouchers. As in the House bill, PHA budgets will be determined based
on their last financial statement, however, in this proposal, that number is to be
adjusted to reflect any pertinent information that would indicate an increase in
utilization. In addition, PHAs will still have the authority to lease up to their
authorized number of vouchers.
Under P.L. 108-7, funding for Family Self Sufficiency coordinators is set at $48
million and is provided separately from contract renewals.

CRS-26
Section 8 Incremental Vouchers. The term “incremental” is used to
describe new vouchers. The President’s budget request included $204 million to
fund approximately 34,000 incremental vouchers in FY2003. These vouchers were
to be provided to PHAs that have demonstrated their ability to use their existing
vouchers (having a utilization rate of at least 97%). Of the requested amount for
incremental vouchers, $164 million was targeted for specific use vouchers such as
assistance for homeless veterans, assistance for families on the road to self-
sufficiency and as down payment assistance for homeownership. The Bush
Administration strongly supports the use of Section 8 vouchers as down payment
assistance for homeownership by low-income families, and encourages PHAs to
strengthen their ability to assist such families in becoming homeowners.
The President’s budget request earmarked $6 million of the $164 million for
incremental vouchers to fund 1,000 vouchers to be used for persons with mental
disabilities to assist states in meeting a federal court requirement that mentally
disabled individuals be housed in community settings with services whenever
possible.
The remaining $40 million was to be used to provide rental vouchers for non-
elderly disabled individuals who are now residing in public housing projects that
have been designated for occupancy by the elderly. The amount was expected to
fund approximately 6,000 vouchers which would help integrate non-elderly disabled
individuals into mainstream privately-owned housing.
The House bill, H.R. 5605, provided $36 million for incremental rental vouchers
to be used for non-elderly disabled individuals who are now residing in public
housing projects that are being designated as “elderly only” developments. The
House Committee believes that the Section 8 vouchers are necessary to integrate
disabled individuals into the community. In addition to the $36 million provided,
under H.R. 5605, the Secretary could also use funds from the central reserve account
to provide PHAs who have a 97% utilization rate or above with additional assistance
for Section 8 vouchers, if the PHA can demonstrate that the funds could be used for
an assistance payment contract within 90 days of their being received. If additional
funds were given to a PHA and additional vouchers were not put under lease within
180 days, the Secretary would recapture the unused vouchers for reallocation to other
eligible PHAs. Language in the bill would have limited the additional voucher
assistance provided to an individual PHA to not more than 10% of the total funds
available.
Neither the Senate-passed version of H.J.Res. 2 or the final version, P.L. 108-7,
provided any new incremental vouchers.
Tenant Protection Vouchers. The President’s budget requested $260
million for tenant protection vouchers and their associated administrative costs in
FY2003. HUD estimated that this amount would finance approximately 43,000
vouchers for individuals who are currently receiving rental assistance, but who are
in danger of losing the subsidy because their units are being demolished, the owner
of their development is “opting out” of the program, or for some other reason.
The House bill, H.R. 5605, provided $234 million for tenant protection
vouchers. Funds provided under this account were only to be used for rental subsidies

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and not for administrative expenses associated with the vouchers. These vouchers
were designated to be used to replace project-based assistance with tenant-based
assistance; for the conversion of Section 202 and Section 23 projects to Section 8
assistance; and for the family unification and witness protection program. The tenant
protection vouchers were not to be used to provide vouchers under the HOPE VI
program, as funds for this purpose are provided within the HOPE VI account.
The Senate-passed version of H.J.Res. 2 did not provide a specific amount for
tenant protection vouchers.
The final version of H.J.Res. 2, P.L. 108-7, provides $234 million for the
relocation and replacement of housing units that have been demolished or disposed
of, the conversion of Section 23 projects, the family unification program, the
relocation of witnesses in the witness protection program, enhanced vouchers and
tenant protection assistance including replacement and relocation assistance. This
amount does not include associated administrative costs, which are provided for
elsewhere in the bill.
Section 8 Administrative Costs. The Administration’s budget request
provided $196 million for Section 8 contract administration. These contract
administration funds would be provided to the many state and local housing agencies
that act as HUD’s agent in administering the Section 8 project-based program. These
agencies are responsible for the oversight of the physical and financial condition of
projects funded under nearly 20,000 contracts between HUD and individual project
owners. Funding to cover administrative costs for tenant-based rental assistance,
incremental vouchers and tenant protection vouchers was included in the funding
requests for those programs.
The House bill, H.R. 5605, provided $196 million for administrative costs
associated with the Section 8 project-based program and $1.177 billion for
administrative costs associated with the Section 8 tenant-based voucher program. Of
that $1.177 billion, the bill states that $50 million is for the administrative costs of
incremental vouchers for the disabled, new tenant protection vouchers, and vouchers
funded from the newly-established central reserve fund.
For the last several years the House Appropriations Committee has attempted
to limit the increase in administrative costs and other expenses of the Section 8
tenant-based voucher program. It has been estimated that administrative costs now
account for almost 10% of the cost of a voucher. Furthermore, concern has been
raised over the amount of unspent administrative fees that PHAs have accumulated
in reserves. In order to curb rising administrative costs as well as prevent the build-
up of unspent administrative fee reserves by PHAs, the Committee included
language in the bill which would have limited administrative fees and other expenses
associated with the Section 8 voucher program to no more than 10% of the rental
subsidy paid, and also restricted the use of funds in the reserve to activities related
to the provision of rental assistance under the Section 8 program. The Committee
also included language in the bill requiring HUD to provide a report to the House
Appropriations Committee no later than March 1, 2003 on the administrative costs
and other expenses associated with the Section 8 program.

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Table 7 shows a breakdown of the HCF based on figures from the HUD budget
justification, H.Rept. 107-140, the Congressional Record, 1/28/2003 S1512-1642 (for
the Senate-passed version of H.J.Res. 2) and the Conference Report, H.Rept. 108-10
for P.L. 108-7.
Table 7. FY2003 Appropriation Levels for the Housing
Certificate Fund (HCF), Administration
and Congressional Estimates
($ in billions)
FY2003
FY2003
FY2003
FY2003
request
H.J.Res. 2
H.J.Res. 2
request
(Cong.
FY2003
(Senate
(Final version)
Housing Certificate Fund
(HUD Est.)
Est.)
H.R. 5605
version)
P.L. 108-7a
Appropriationb:
Housing Certificate Fund
17.527c
17.527c
16.587c
16.929cd
17.224c
HCF Break Downe

Tenant-Based Renewals:

Voucher Costs
-
-
10.278
11.676
10.941
Central Reserve
-
-
0.280
0.400
0.392
Administrative Fees
-
-
1.147f
-
1.046f
Subtotal
12.474
-
11.705
12.076
12.379
Incremental Vouchers:

Fair-Share
0.158
-
0
0
0
Olmstead Decision
0.006
-
0
0
0
Non-Elderly Disabled
0.040
-
0.036
0
0
Administrative Fees
-
-
0.004f
0
0
Subtotal
0.204
-
0.040
0
0
Tenant Protection Vouchers:

Tenant Protection Vouchers
-
-
0.234
-
0.234
Administrative Fees
-
-
0.025f
-
0.026f
Subtotal
0.260
-
0.259
-
0.260
Project-Based Renewals
4.337
-
4.337
4.337
4.337
Contract Administration
0.196
-
0.196
0.196
0.196
FSS Coordinators
0.052
-
0.046
-
0.048
Working Capital Fund
0.003
-
0.003
0.003
0.003
Source: Fiscal Year 2003 Budget Summary, Department of Housing and Urban Development;
H.Rept. 107-740; S.Rept. 107-222, the Congressional Record, 1/28/2003 S1512-1642, Conference
Report, H.Rept. 108-10.
a These figures do not reflect a .65% across the board rescission also passed in this bill.
b The appropriated level does not include all funds available for the HCF in a year. Carry over and
recaptured funds are also available. For FY2003, the Administration estimated that $640
million would be available in recaptured funds for the HCF, the House estimated that $938
million would be available for recapture from program reserves and $830 million would be
available from unobligated administrative fee reserves. The FY2004 Budget Appendix indicates

CRS-29
that HUD in fact has $1.738 billion available in recaptured funds in addition to the $1.1 billion
it estimated to have available for rescission.
c Each of these amounts include an advance appropriation of $4.2 billion which will remain
unavailable until FY2004, beginning on October 1, 2003. This advance appropriation has been
standard for several years and, as $4.2 billion from the FY2002 appropriation became available
in FY2003 on October 1, 2002, the net budget authority available for the HCF is as stated.
d Because the Senate-passed version of H.J.Res. 2 did not specify amounts for tenant protection
vouchers or FSS coordinators, the category subtotals will not add to the HCF total.
e A dash denotes that funding levels were not specified for a category; a zero indicates that no funds
are available for a category.
f The House bill provided a total of $1.177 billion for administrative fees for Section 8 tenant-based
assistance, $50 million of which is to be used for the administrative expenses associated with
new incremental assistance, tenant protection vouchers and fees associated with vouchers
supported from the central reserve. The breakdown is calculated based on page 181 of H.Rept.
107-740. The final version of H.J.Res. 2, P.L. 108-7, provided $1.072 billion for administrative
fees for Section 8 tenant-based rental assistance, $69.5 million of which is to be used for new
tenant protection vouchers and additional vouchers supported from the central fund. The
breakdown is calculated based on the Administration’s estimated cost of tenant protection
vouchers from the FY2003 budget justification.
The Senate-passed version of H.J.Res. 2 also provided $196 million for Section
8 project-based contract administration. Funding to cover the administrative costs of
the Section 8 voucher program was included within the amount provided for contract
renewals.
P.L. 108-7, the final version of H.J.Res. 2, provided $196 million for Section
8 project-based contract administration and $1.072 billion for administrative fees
associated with tenant-based Section 8, tenant protection vouchers and the costs
associated with supporting vouchers from the central reserve fund. While this bill
did not adopt a new formula for calculating administrative fees for tenant-based
Section 8, as proposed in the House bill, it did adopt a new policy regarding fee
reserves. If, as of January 31, 2003, a local public housing authority has more than
105% of the amount it earned in administrative fees for 2002 in its administrative fee
reserves, it will have to apply that excess to pay for its 2003 administrative fee, thus
reducing the amount it receives from HUD. Furthermore, the bill states that from
FY2003 on, the Secretary must recapture any administrative fees which are in excess
of the amount spent by the agency on Section 8 tenant-based rental assistance and not
needed to maintain an administrative fee reserve account balance of up to 5%.
Agencies with less than $100,000 in earned administrative fees for 2003 were
exempted from these provisions.
Rescissions. The Administration’s request assumed a rescission of $1.1 billion
from the Section 8 fund in FY2003. The House Committee recommended a
rescission of $1.3 billion. The Senate-passed version of H.J.Res. 2 included a
rescission of $1.4 billion, but the final rescission level, from P.L. 108-7 totaled $1.6
billion for FY2003.
Public housing programs. There are about 3,050 public housing authorities
(PHAs) that manage 1.25 million public housing units across the nation. Public
housing has a history of public skepticism regarding its effectiveness; many envision
public housing as mismanaged, dilapidated projects housing very poor single-parent
households with few marketable skills and youth gangs characterized by high crime

CRS-30
rates and drug use. This perception of public housing has been accurate for a small
number of the largest inner city projects where the worst problems have been
concentrated; however, many projects are well run and in relatively good condition.
Legislation passed during the past half dozen years has begun to target problems
in the worst public housing sites. The HOPE VI program has been somewhat
successful in achieving its goal of tearing down the worst 100,000 units, largely high-
rise complexes in inner city areas, and replacing them with lower density garden
apartments and townhouses (see HOPE VI below). Recent legislation has also made
it easier to evict those involved in criminal activity under the “one-strike-and-you’re-
out” rule (Anti-Drug Abuse Act of 1988). On March 26, 2002, the Supreme Court
(HUD v. Rucker), unanimously upheld the one-strike rule, affirming that a PHA can
evict a tenant who may have no knowledge of drug-related activities committed by
another occupant or guest of the housing unit on or off the public housing premises.
Public Housing Operating Fund. HUD requested $3.53 billion for the
FY2003 Public Housing Operating Fund, $35 million more than the $3.495 billion
enacted for FY2002. The Public Housing Operating Fund provides operating
subsidies for 3,050 local Public Housing Authorities (PHAs). These subsidies, which
cover a variety of expenses including maintenance, utilities and tenant and protective
services, supplement the rent collected by PHAs and enable them to maintain the
property while keeping rents affordable for low-income families in 1.2 million units.
The House Appropriations Committee approved $3.6 billion for the FY2003
Public Housing Operating Fund. The bill, passed on October 10, 2002, provides $70
million above the Administration’s request, $10 million of which is to be transferred
to the Department of Justice to supplement federal, state and local efforts to fight
crime and drugs in public housing.
The Senate-passed version of H.J.Res. 2 agreed with the HUD budget request
and approved $3.53 billion for the FY2003 Public Housing Operating Fund, equal
to the Administration’s request. Ten million of the appropriation was to be
transferred to the Justice Department for the investigation, prosecution, and
prevention of violent crime and drug offenses in public housing. The bill also
provided that $250 million of the $3.6 billion for FY2003 can be used by HUD to
meet a FY2002 funding shortfall, reducing the available operating subsidy funding
available for FY2003 to $3.28 billion, less than what was available for FY2002 (see
discussion of shortfall below).
The final version of H.J.Res. 2 provided $3.6 billion for the Public Housing
Operating Fund. Ten million of the appropriation will be transferred to the Justice
Department for the investigation, prosecution, and prevention of violent crimes and
drug offenses in public housing. Like the Senate-passed version of H.J.Res. 2, the
final bill allows HUD to use $250 million of the $3.53 billion for FY2003 to meet
a FY2002 funding shortfall, reducing the available operating subsidy funding
available for FY2003 to $3.35 billion, less than what was available for FY2002.
A note about the Operating Fund shortfall from FY2002. In FY2002,
HUD did not have sufficient operating funds to provide full subsidies to all public
housing authorities. This shortfall, of $250 million, resulted from an ongoing

CRS-31
miscalculation on HUD’s part of the Operating Fund needs; HUD’s practice for
dealing with these miscalculations had been to automatically dip into future years’
appropriations to compensate for any shortfalls. This year, HUD was unable to dip
into its FY2003 appropriation to cover its FY2002 shortfall because of a continuing
resolution. In order to cover the shortfall, HUD asked permission (and was granted
that permission) to use $250 million from the FY2003 Operating Fund appropriation
to fully fund all PHAs for FY2002. In order to deal with the reduced funds available
for FY2003, HUD issued a notice, Notice PIH 2003-1, instructing PHAs to reduce
their budget requests by 30%, therefore lowering PHA subsidies to 70% of their
expected subsidy level. It is expected that PHAs’ budgets will then be adjusted
upwards to approximately 90% (a final cut of approximately 10%) by May.
A note about calculating operating subsidies. The Quality Housing and
Work Responsibility Act of 1998 directed HUD to develop a new formula for
allocating operating funds to the Public Housing Authorities. However, developing
this new formula is proving difficult and controversial. An interim formula-based
approach for allocating operating funds was implemented in FY2001 following
regulatory negotiations as required by the 1998 Act. The current formula takes into
account size, location, age of housing stock, occupancy and other factors intended to
reflect the cost of operating a well-managed public housing development. HUD
hopes to complete action on a permanent formula in FY2003.
Public Housing Capital Fund. The HUD budget for FY2003 proposed to
cut the capital fund by $417 million, from $2.843 billion in FY2002 to $2.426
billion. This fund provides annual formula grants to PHAs for capital and
management activities including modernization and development of public housing.
HUD estimates that capital needs accrue at $2.2 billion annually, additionally, there
is an estimated $20 billion backlog of rehabilitation and modernization needs faced
by PHAs. The rehabilitation of this housing is important to help ensure that these
developments are not unsafe for residents and do not become so obsolete that they
must be demolished.
The justification for this cut in the face of a large backlog is the introduction of
what the Administration terms, the Public Housing Investment and Financial Reform
Initiative. This proposal would have allowed up to $120 million of public housing
capital funds and $130 million of operating funds to be used to convert some public
housing units to Section 8 project-based assistance. On a property-by-property basis,
HUD would consider requests from Public Housing Authorities to participate in this
initiative. HUD proposes that this change would allow PHAs to secure private
financing to rehabilitate or replace aging properties by pledging project-based
revenue (Section 8 rents are often higher than public housing rents) as collateral for
private loans for capital improvements. The agency believes that lenders will view
the stream of Section 8 renewals as more predictable than capital fund
appropriations, therefore making PHAs seem more credit-worthy. The
Administration hoped that at least some of the proposed cut of $417 million in capital
funding could be replaced by private sector loans.
Some housing organizations expressed concern about this proposed experiment,
asking that HUD wait for evidence on how well this new idea might work before
cutting capital funds. In response to this concern, HUD Secretary Martinez told the

CRS-32
Senate Banking Committee on February 13, 2002 that if this program did not
generate at least $400 million worth of capital improvements, HUD would seek to
restore the reduction of capital funds to the previous year’s level in FY2004.
The House Appropriations Committee bill proposed to fund the Public Housing
Capital Fund at the FY2002 appropriation level, $2.843 billion, over $400 million
above the Administration’s request. The Committee chose not to authorize the
Administration’s Public Housing Reinvestment Initiative. Instead, they directed the
Department to submit a report to the Committee by March 1, 2003 on those PHAs
that have entered into private financing partnerships for capital modernization and
the results of those partnerships.
Further, the House Appropriation Committee’s bill included language requiring
the Secretary to issue regulations required under the Quality Housing and Work
Reconciliation Act of 1998 by May 1, 2003. These regulations would provide
procedures for recapturing funds from PHAs who have been unable to obligate their
funds within 24 months or spend them within 48 months, and would reallocate them
to PHAs who have demonstrated an ability to spend funds in a timely manner.
The Senate-passed version of H.J.Res. 2 proposed to fund the Public Housing
Capital Fund at $2.683 billion, which is more than $257 million above the
Administration’s request. The bill also directed HUD to implement the Quality
Housing and Work Reconciliation Act of 1998 regulations. The Senate bill did not
adopt the Administration’s Public Housing Reinvestment Initiative proposal,
although it did include an administrative provision to allow public housing
authorities the flexibility to use public housing funds to leverage private capital to
rehabilitate distressed units and develop public housing units in mixed-income
housing developments.
The final version of H.J.Res. 2, P.L. 108-7, appropriated $2.73 billion for the
Public Housing Capital Fund, over $300 million more than the Administration’s
proposal. The bill includes language requiring the Secretary to issue regulations
required under the Quality Housing and Work Reconciliation Act of 1998 by August
1, 2003. While the conferees did not adopt the Administration’s Public Housing
Reinvestment Initiative proposal, they did direct the Department to provide a report
on those PHAs that have entered into private financing partnerships for capital
modernization needs and the results of those partnerships.
HOPE VI Revitalization of Distressed Public Housing. As noted above,
HUD is transforming public housing through the use of HOPE VI grants by
rehabilitating or demolishing severely distressed public housing units and replacing
them with low-density, garden-style apartments or townhouses. Since the inception
of the HOPE VI program, HUD has approved the demolition of approximately
140,000 units. Rather than filling new units with only the poorest of the poor, as had
usually been the case with public housing, the new housing has a more mixed-income
tenancy – the poor, the not quite so poor, and some moderate-income households –
in an effort to change the culture and eliminate the stigma of public housing.
The Administration requested $574 million for HOPE VI grants in FY2003, the
same amount enacted for FY2002. Of this total, $5 million is designated for the

CRS-33
Neighborhood Networks Initiative. Under this initiative, competitive grants are
awarded to Public Housing Authorities for the establishment and initial operations
of computer centers to increase resident self-sufficiency, employability, and
economic self-reliance. Authority for the HOPE VI program ended on September 30,
2002. An omnibus housing bill, H.R. 3995, passed by the Financial Services
Committee on July 10, 2002, would have reauthorized the program through FY2004.
The House Appropriations Committee recommended an appropriation of $574
million for the HOPE VI program in FY2003, the same level as enacted in FY2002,
and as requested by the Administration. The Committee also designates $5 million
of this amount for the Neighborhood Networks Initiative. The House bill does not
include explicit reauthorization language.
The Senate-passed version of H.J.Res. 2 also recommends an appropriation of
$574 million for the HOPE VI program in FY2003, including $5 million for the
Neighborhood Networks Initiative. The Senate bill contained language to reauthorize
the program through September 30, 2004.
The final version of H.J.Res. 2, P.L. 108-7, appropriated $574 million for
FY2003. $5 million of that amount is directed to be used for the Neighborhood
Networks initiative and $6.25 million of the amount can be used for technical
assistance. The bill did not include explicit language to reauthorize the program.
Native American Block Grants. This block grant provides tribes or tribally
designated housing entities with a flexible source of funding for affordable housing
and related activities. As provided in the Native American Housing Assistance and
Self-Determination Act, block grant funds may be used for a wide range of
homeownership and rental activities. The Administration’s FY2003 budget
requested $647 million, plus a separate line account of $10 million for a Native
Hawaiian housing block grant. Both the House and Senate Appropriations
Committees recommended $649 million, the same as enacted in FY2002, about $2
million more than the budget request. Neither Committee recommended a separate
account for a Native Hawaiian housing block grant, but instead, continued funding
for this program under the Community Development Fund (See Table 9). With
unemployment that often exceeds 80% in many Indian and Native communities, the
Senate Appropriations Committee directed HUD and its grantees to give primary
consideration to qualified Native owned firms in the design and construction of
Indian housing.
The final version of H.J.Res. 2 (P.L. 108-7) provided $649 million for FY2003,
of which $4 million is for inspections, training, and technical assistance. They
support the direction included in the Senate report regarding the use of qualified
Native-owned firms in the design and construction of Indian housing.
Community Planning and Development
Housing for Persons with AIDS (HOPWA.) President Bush
requested $292 million for the HOPWA program for FY2003, up $15 million from
the $277 million enacted in FY2002. The House bill from the 107th Congress (H.R.
5605), the Senate-passed version of H.J.Res. 2 and the final version of H.J.Res. 2

CRS-34
(P.L. 108-7) all concurred with the President’s recommendation and provided $292
million for the HOPWA program in FY2003.
HOPWA provides housing assistance and related supportive services for low-
income persons with HIV/AIDS and their families. Funding is distributed both by
formula allocation and competitive grants to states, localities and nonprofit
organizations. HOPWA funds may be used for housing information services,
resource identification to establish and coordinate housing assistance resources, to
acquire, rehabilitate or lease housing and services, to construct single room
occupancy dwelling and community residences, for rental assistance and for short
term rent. Funds may also be used for mortgage or utility payments to prevent
homelessness of a tenant or mortgagor and for supportive services including health,
mental health, drug and alcohol abuse treatment and counseling, day care, nutritional
services and assistance in gaining access to local, state and federal government
benefits.
In an evaluation released by HUD in December 2000, it was reported that the
HOPWA program predominately serves extremely low-income (54%) and very low-
income (27%) persons living with HIV/AIDS, and that in 1999 the HOPWA program
was providing housing assistance to approximately 49,000 low-income persons living
with HIV or AIDS. This is approximately one-sixth of the estimated 311,701 persons
living with AIDS in the United States as of June, 2000 as reported by the Centers for
Disease Control and Prevention (CDC). The CDC reported that through June 2001,
the number of HIV infections reported in states with confidential HIV reporting (34
states and two territories) was 134,505 for a cumulative total of 466,023 persons
identified as being HIV positive or of having AIDS. Since many states are not yet
reporting on HIV, the CDC estimates that 800,000 to 900,000 Americans are actually
living with HIV or AIDS.
For more information on HOPWA, see CRS Report RS20704, Housing
Opportunities for Persons with AIDS (HOPWA) by M. Ann Wolfe.
Rural Housing and Economic Development. The FY1999 HUD
Appropriations Act (P.L. 105-276) established within HUD an Office of Rural
Housing and Economic Development to support housing and economic development
in rural areas. It received $25 million in both FY2001 and FY2002. The
Administration did not request funds for this program for FY2003 (nor did it ask for
funds for FY2002), arguing that many of the agency’s core programs, such as CDBG,
already serve rural communities, and because other Departments like the U.S.
Department of Agriculture have very large and effective programs already in place
to address rural housing and economic development issues. However, both the
House and Senate Appropriations Committees recommended $25 million for
FY2003, believing that this housing program is sufficiently different from
Department of Agriculture programs to merit separate appropriations. The conferees
agreed to $25 million.
Empowerment Zones and Enterprise Communities. This initiative is
an interagency effort to promote economic development and community
revitalization in distressed areas, by directing tax relief and federal funds to
designated Empowerment Zones (EZs) and Enterprise Communities (ECs). EZs and

CRS-35
ECs are eligible for a variety of tax credits and other incentives intended to stimulate
investment, economic growth, and revitalization activities. Grants are used for
activities that assist residents and businesses, including workforce preparation and
job creation efforts linked to welfare reform; neighborhood development; support for
financing capital projects; financing of projects in conjunction with Section 108 loans
or other economic development projects. Funds are also used for rental assistance
and other housing assistance.
To date, there have been three rounds of EZ/EC designations. In the first round,
nine communities (six urban and three rural) were designated as Empowerment
Zones and 95 communities were named as Enterprise Communities. Twenty new
Empowerment Zones – 15 urban and 5 rural – were designated in the Round II
competition, along with 20 new Enterprise Communities, all rural. The 2000
Community Renewal Tax Relief Act authorized the designation of 40 renewal
communities (28 urban and 12 rural) and nine new Round III Empowerment Zones
(seven urban, two rural) designated on December 21, 2001, which utilize only tax
incentive provisions.
In FY2002, $45 million was approved for urban EZs - $3 million each for the
15 Round II zones designated by HUD. The Administration’s FY2003 budget
proposed no funding for Round II Empowerment Zones because after 4 years of
funding, major balances of unused funds had been built up. To help develop the
economies of distressed urban and rural areas, HUD has recently designated 40
Renewal Communities (RZs) and seven additional Round II urban Empowerment
Zones. Private investors in both RZ and EZ areas are eligible for tax benefits over
the next 10 years tied to the expansion of job opportunities in these locations.
P.L. 108-7 includes $30 million for Round II EZ-designated communities with
$2 million allocated to each of the 15 empowerment zone communities. Both the
Senate and House bills considered during the 107th Congress recommended an
appropriation of $30 million for this program for FY2003, $15 million less than
enacted for FY2002 and $30 million more than the President’s budget requested.
The Conference Report argued that, consistent with Round I empowerment zone
funding, this program should be funded as a mandatory rather than an obligation of
under the VA-HUD appropriations bill. During its consideration of the bill the
Senate Appropriations Committee also expressed concerned over accountability in
this program and noted that the HUD Inspector General has been critical about how
communities have implemented this program and used EZ funds.
Community Development Block Grants. The Bush Administration’s
FY2003 budget recommended $4.716 billion for CDBG, including $279.5 million
for program set-asides, and $4.436 billion in formula-based grants to entitlement
communities, states, and insular areas. The Administration’s budget request would
have increased the formula-based portion of the program by $95 million for FY2003
and it proposed converting Section 107 funding for insular areas into a formula-
based allocation. Both the House and Senate recommended an appropriation of $5
billion for FY2003, an increase of $317 million above the budget request and $50
million more than enacted for FY2002. .

CRS-36
P.L. 108-7, appropriated $4.937 billion for the various activities funded under
this account, including $4.368 billion for the CDBG formula-based grants allocated
to entitlement communities and the states, and $569.1 billion for CDBG-related set
aside programs. The House version of the bill, H.R. 5605, recommended an
appropriations of $5 billion, an increase of $284.5 million more than requested by the
President, but no increase above the amount appropriated for FY2002. The House
bill would have increased the amount appropriated to the formula grant portion of the
CDBG program by $236 million, from $4.341 billion to $4.577 billion. The Senate
bill also would have increased Senate funding for CDBG formula grants by $269.2
million above the $4.341 billion appropriated for FY2002.
Table 8. Community Development Block Grants (CDBG):
Entitlement Communities with Per Capita Income At Least
Twice the National Average
Per capita income as a multiple of
Community
the national average
Newport Beach, California
3.2
Palo Alto, California
2.3
Santa Monica, California
2.0
Colorado Springs, Colorado
3.1
Greenwich, Connecticut
3.2
Naples, Florida
2.9
Brookline, Massachusetts
2.0
Malden, Massachusetts
2.2
Newton, Massachusetts
2.0
Westchester County, New York
2.1
Lower Merion, Pennsylvania
2.9
Penn Hills, Pennsylvania
2.8
Virginia Beach, Virginia
2.6
Source: HUD Budget Submission, FY2003
P.L. 108-7 did not included funding the Administration’s proposed Colonias
Gateway Initiative. This regional initiative would have targeted additional CDBG
assistance to communities in Texas, New Mexico, Arizona, and California within
150 miles of the border with Mexico. Funds would have been used for housing,
infrastructure, and economic development projects in these distressed areas. The
Administration initially proposed funding this $16 million initiative with the savings
achieved from a proposed legislative change that would have reduced funding for
CDBG entitlement communities with per capita incomes that are twice the national
average or higher.
During congressional consideration of the proposal HUD estimated that there
were 13 communities with per capita incomes that met or exceeded the proposed

CRS-37
threshold, but noted the number of such communities could change when figures
from the 2000 Census became available (see Table 8). The Senate Committee
rejected the Administration’s request for the Colonias Initiative, but encouraged
HUD to seek authorization of legislation required for this proposal and to perform
a thorough review of the CDBG formula before proposing adjustments. The House
bill, which did not include funding for the proposal, included similar language,
noting in the report accompanying the bill (H.Rept. 107-740), that “this initiative is
not currently authorized and the Department has not yet transmitted its proposal to
the Congress for consideration.” HUD does not plan to pursue this initiative during
the 108th Congress. HUD officials noted substantial opposition to the proposal
during congressional consideration of the Department’s FY2003 budget proposal.
The CDBG is the largest source of federal financial assistance in support of
housing, neighborhood revitalization, and community and economic development
efforts of state and local governments. After funds are allocated for the various set
asides under CDBG, 70% of the remaining appropriated funds are allocated by
formula to entitlement communities. These include metropolitan cities with
populations of 50,000 or more, central cities, and urban counties. Currently, 1,023
communities (865 cities and 158 urban counties) meet the definition of entitlement
community. The remaining 30% of appropriated funds are allocated by formula to
states for distribution to nonentitlement communities.
These and other Community Development initiatives were to be offset by
eliminating funding for two community development fund-related set asides, notably,
the Neighborhood Initiative, which received $42 million for FY2002, and the
Economic Development Initiative, which received $294 million in FY2002. In past
years the Economic Development Initiative (EDI) has routinely been used by
Members of Congress to earmark funding specific projects. P.L. 108-7, includes
Entitlement communities, states, and previous Administrations have objected to these
earmarks on the grounds that they are noncompetitive, and reduce the amount of
funds available under the core CDBG program for distribution to entitlement
communities and states.
For FY2003, $261 million was earmarked for 854 specific EDI projects. This
is $33 million less than the $294 million made available for FY2002, but
significantly more projects than the estimated 300 specific projects identified in the
Conference Report (H.Rept. 107-272) accompanying the VA-HUD-Independent
Agencies Appropriations Act for FY2002, P.L. 107-73. The Neighborhood Initiative
supports projects intended to stimulate economic diversification and investment in
areas experiencing population out-migration, improve conditions in blighted and
distressed neighborhoods, or facilitate the integration of housing assistance with
welfare reform initiatives. For FY2003, Congress appropriated $42.1 million for the
program with all of the funds earmarked for 39 specific projects identified in the
Conference Report. This is $100,000 more that earmarked in FY2002.
CDBG-related set-asides included in the FY2003 appropriations act include the
following: $71 million for Native Americans instead of the FY2002 appropriation of
$72.5 million; $49.1 million for section 107 grants, rather than $45.3 appropriated
in FY2003; and $261 million for Economic Development Initiatives rather than the
$294 million in FY2003. Additional set asides included in the appropriations act

CRS-38
are $32.5 million for university- based community development programs, $60
million for Youthbuild ($5 million less than appropriated in FY2002), $32.5 million
for community development capacity building activities administered by the Local
Initiative Support Corporation, the Enterprise Foundation, and Habitat for Humanity.
P.L 108-7, does not included funding for the Resident Opportunities and Self
Sufficiency program, which received an appropriation of $55 million in FY2002.
Table 9. Community Development Block Grants,
FY2002-FY2003
(funding in millions)
FY2002
FY2003
FY2003
FY2003
FY2003
Programs and set-asides
enacted
request
House
Senate
Confer.
Subtotals:
set-asides (see below for
details)
659.0
279.5
423.0
439.8
569.1
formula-based (entitlement
communities
3,038.7
3,100.3a
3203.9
3,227.1
3,057.5
insular areas
–
7.0
–
–
–
formula-based state allocation
1,302.3
1,328.7
1373.1
1,383.1
1,310.4
Set-asides:
Indian Tribes
70.0
72.5
70.0
72.5
71.0
Econ. Develop. Access Center
(1.0)
(1.5)
–
–
–
Housing Assistance Council
3.3
3.0
3.3
3.3
3.3
National American Indian
Housing Council
2.6
2.2
2.2
2.6
2.4
Nat’l Council of La Raza HOPE
5.0
0.0
5.0
–
5.0
technical assistance
(0.5)
0.0
0.5
–
(0.5)
HOPE Fund; other activities
(4.5)
0.0
4.5
–
(4.5)
Section 107
45.3
38.9
33.5
45.5
49.1
technical assistance
–
(3.0)
–
0.0
insular areas
(7.0)
0.0b
(7.0)
(7.0)
(7.0)
university programs
(34.3)
(31.9)
(26.0)
(28.5)
(32.5)

Historically Black

Colleges and Universities
(10.0)
(10.0)
(10.5)
(11.0)
(10.0)h

Hispanic Serving
Institutions
(6.5)
(5.5)
(5.5)
(7.5)
(6.5)

Community Dev. Work
Study
(3.0)
(3.0)
(3.0)
(3.0)
(3.0)

Alaskan Native and Native
Hawaiian Serving
Institutions
(4.0)
(2.4)
–
(4.0)
(3.0)

Tribal Colleges and Univ.
(3.0)
(3.0)
–
(3.0)
(3.0)

Comm. Outreach
Partnership Centers
(7.9)
(8.0)
(7.5)
–
(7.0)
management info. systems
(4.0)
(4.0)
–
–
–
Hawaiian Homelands
9.6
0.0
9.6
(10.0)c
(9.6)

CRS-39
FY2002
FY2003
FY2003
FY2003
FY2003
Programs and set-asides
enacted
request
House
Senate
Confer.
Wellstone Center for Community
Building
–
–
–
–
9.0
Girl Scouts of the USA
–
–
–
2.0
–i
Boys & Girls Clubs of America
–
–
–
2.0
–i
Community Technology Center
0.0
0.0
–
–
–
Improving Access Initiative
0.0
0.0
–
–
–
Self-Help Housing Opportunity
22.0
65.0
28.5
22.0
25.2
National Housing Dev. Corp.
5.0
0.0
5.0
–
5.0
operating expenses
(2.0)
0.0
(2.0)
–
(2.0)
Capacity Build. for Community
Develop. & Affordable Housing
29.0d
29.5d
29.5
35.5
32.5
National Com. Dev. Initiative
(25.0)e
(25.0)e
(25.0)e
(31.5)e
(28.2)e
Habitat for Humanity
(4.0)
(4.5)
(4.5)
(4.0)
(4.2)
Resident Opportunities and Self
Sufficiency (supportive services)
55.0
0.0f
–
–
–
Neigh. Initiative Demonstration
42.0
0.0
23.4
46.0g
42.1
Working Capital Fund for the
development of info. tech.
systems
13.8
3.4
3.4
3.4
3.4
Youthbuild
65.0
65.0
65.0
65.0
60.0
- in rural and underserved
areas
(10.0)
(10.0)
(10.0)
(10.0)
(10.0)
-USA capacity bldg.
(2.0)
(2.0)
(2.0)
(2.0)
(2.0)
Economic Develop. Initiative:
294.2
0.0
144.6
140.0
261.0
Total: CDBG
5,000.0
4,715.5
5,000.0
5,050.0
4,937.0
Source: Dept. of Housing and Urban Development; S.Rept. 107-222; H.Rept. 107-740.
Note: Totals may not add due to rounding. Italics indicates entries subsumed under CDBG line in
Table 6; parenthesis indicates entry subsumed in this table under line immediately above.
a The Administration’s $16 million Colonias Gateway Initiative is included in this amount since it
would be funded by a formula change for CDBG entitlement communities.
b Insular areas would be included in formula portion of the CDBG program and would not be included
as a set aside under Section 107 (Special Purpose Grants).
c The Senate Committee recommends this be funded as part of the Section 107 account; the
Administration had recommended it be funded as a separate account.
d FY2002 appropriations included $5 million for rural and tribal areas. The Administration’s FY2003
budget also recommends $5 million for rural and tribal areas.
e Includes funding for the Enterprise Foundation and the Local Initiative Support Corporation in
support of local community development corporations. The conference bill directs HUD to
allocate at least $5 million for rural and tribal areas.
f Appropriations for this program would be transferred to Public Housing Capital Fund. The
Administration is requesting $55 million.
g Includes two earmarks: $1 million grant to National Housing Trust/Enterprise Preservation Corp.,
and $5 million to the Housing Partnership Network.
h Directs $2 million of this amount be used for technical assistance.
i These activities are among 39 earmarks under the Neighborhood Initiative set aside. $1.8 million for
Girl Scouts USA and $1.8 million for Boys and Girls Clubs of America.

CRS-40
Brownfields Redevelopment. The Administration requests $25 million for
brownfields redevelopment projects for FY2003, the same amount appropriated in
both FY2001 and FY2002. Brownfields redevelopment funds are used to reclaim
abandoned and contaminated commercial and industrial sites. Administration
estimates place the number of eligible brownfield sites at 450,000 nationwide. Funds
are used to finance job creation activities that benefit low and moderate income
persons, and the Administration estimates that the $25 million requested could
support the cleanup of 25 brownfield sites and create approximately 5,400 jobs.
Funds have been used in conjunction with Section 108 loan guarantees and with EPA
brownfields cleanup efforts, but HUD supported decoupling the brownfields program
from the Section 108 loan guarantee program, believing this will attract more
participants.
During consideration of the Senate version of the bill in the 107th Congress, the
Senate Appropriation Committee recommended $25 million for FY2003 and
supported HUD’s proposed decoupling. The House bill also supported continued
funding of the program and recommended an appropriation of $25 million for
FY2003. Unlike the Senate bill, the House bill did not endorse de-linking HUD
brownfield funds and CDBG 108 guarantees. However, on June 4, 2002 the House
did approve legislation, the Brownfield Development Enhancement Act (H.R. 2941),
that would no longer require communities receive Section 108 loan guarantees as a
condition for receipt of Brownfield Economic Development Funds, authorized under
Sec. 108(q) of the Title I of the Housing and Community Development Act of 1974,
as amended (42 USC 5308). The change was sought as a means of providing small
communities with easier access to brownfield funding.
P.L. 108-7, includes $25 million appropriation for brownfield projects, but
maintains the program’s present structure which requires that funds must be used in
coordination with CDBG Section 108 loan guarantees. In addition, the act requires
that HUD award such funds on a competitive basis.
The HOME Investment Partnership Program. The Administration
requested $2.084 billion for FY2003, $238 million more than the $1.846 billion
enacted in FY2002. H.R. 5605, the House-passed bill, recommended $2.221 billion,
which is $375 million more than the FY2002 appropriation and about $137 million
more than the budget request. The Senate-passed bill recommended $1.95 billion,
about $104 million less than the amount enacted in FY2002 and $134 million less
than the budget request. The Conference Agreement appropriates $2.0 billion for the
program, $154 million more than enacted in the previous year..
The HOME block grant program makes funds available to participating
jurisdictions to increase the supply of affordable rental housing and homeownership
opportunities for low-income families. Jurisdictions have considerable flexibility in
the use of these funds, but all households assisted must have incomes below 80% of
the area median and 90% of renters receiving assistance must have incomes below
60% of median. Funds can be used to help new homebuyers. Both homebuyers and
renters can be helped through the rehabilitation of substandard housing and new
construction. Funds may also be used for tenant-based rental vouchers. Some
HOME funds are used with the HOPE VI program and with the Low-Income
Housing Tax Credit. According to HUD budget documents, since its beginning in

CRS-41
1992, HOME funds have been used to construct or rehabilitate more than 250,000
rental units, and have provided direct rental assistance (vouchers) to more than
73,000 households.
The Administration and H.R. 5605 requested a $200 million set-aside for a
“Downpayment Assistance Initiative” to assist first-time low-income homebuyers,
up from the $50 million enacted for FY2002. Funds would be provided on a
competitive basis and would be administered by state housing finance agencies, and
be expected to assist 40,000 first-time buyers each year. Funds would be matched
on a 3 to 1 basis up to $1,500 per family. HUD made the same $200 million request
last year, and some organizations, including those representing the National
Association of Counties and the U.S. Conference of Mayors, testified before the
House Subcommittee on Housing and Community Opportunity last year (May 22,
2001), in opposition to the $200 million set-aside, arguing that HOME funds can
already be used for downpayment and/or closing cost assistance. Further, they
oppose it because “it chooses one delivery system – state housing finance agencies
– for no proven programmatic purpose.” They argued that some communities already
have a high homeownership rate and that affordable rental housing is the critical
need.
The Senate bill did not include any funds for the Downpayment Assistance
Initiative. The Senate Appropriations Committee said that it supports the expansion
of homeownership opportunities, but noted its continued concern that the program
would constrain the ability of local communities to determine the best use of HOME
funds. The Committee noted its support of any HUD efforts to educate communities
on how to use HOME funds to expand homeownership. Last year’s Senate bill also
did not include any funding for this downpayment assistance fund; the House
recommended the full $200 million. H.Rept. 107-43 noted that “downpayment
assistance is already permissible under the HOME program and therefore does not
require new or additional authorization.” The conferees provided $50 million for
FY2002, subject to enactment of authorization legislation by June 30, 2002.
Otherwise, the $50 million would be made available for any authorized purpose. No
authorization occurred and H.R. 4775, a fiscal 2002 supplemental appropriations bill,
signed by the President on August 2, 2002, (P.L. 107-206) rescinded the $50 million.
The Administration recommended that, instead of being funded within the
HOME program, Housing Counseling Assistance be funded at $35 million in a new
free-standing appropriation account under the Housing Programs section of the HUD
budget. The Administration made several points as justification for the increased
funding level: (1) new research demonstrates that housing counseling can be effective
in reducing mortgage delinquencies, (2) the demand for housing counseling services
exceeds the funding availability, (3) it would complement the Administrations
homeownership initiative, (4) the availability of counseling is central to meeting the
goal of increasing minority homeownership rates, (5) counseling is an element of
community-based efforts to combat predatory lending, (6) it would further the goal
of developing a certificate program for housing counseling, and (7) it would enable
the more efficient use of HUD staff.
Both H.R. 5605 and the Senate omnibus bill, rejected the Administration’s
request for separate funding of housing counseling assistance outside of HOME,

CRS-42
recommending that housing counseling remain within HOME. H.R. 5605 would
have funded the program at $25 million, a $5 million increase over the FY2002
appropriation. The Senate bill would have funded the program at $40 million, a 50%
increase over the amount enacted in FY2002. In addition to using the program to
expand homeownership opportunities, the Senate Appropriations Committee urged
HUD to use the program as a means of educating homebuyers on the dangers of
predatory lending. The Conference Agreement funded the program at $40 million.
Homeless Assistance Grants. Homeless Assistance Grants is the blanket
title given to the four homeless programs authorized by the McKinney-Vento Act and
funded under the Department of Housing and Urban Development. Three of the four
programs are competitive grant programs: the Supportive Housing Program (SHP),
the Shelter Plus Care program (S+C) and the Single Room Occupancy program
(SRO). Funding for the fourth HUD program, the Emergency Shelter Grants
Program, is distributed via a formula allocation.
The Administration’s FY2003 budget requested $1.130 billion for homeless
assistance, an increase of $7 million over the $1.123 billion enacted for FY2002.
This includes funding of $1.109 billion for Homeless Assistance Grants, $11 million
for homeless management information systems (HMIS), and $6.6 million for
technical assistance.
The House Appropriations Committee, in a bill from the 107th Congress, H.R.
5605, recommended $1.250 billion for the Homeless Assistance Grants in FY2003,
an increase of $127 million over FY2002. This amount would have included full
funding for the costs of renewing all expiring Shelter Plus Care contracts, $11 million
for HMIS, $6.6 million for technical assistance, and $10 million for a two-year
demonstration program to test innovative approaches and document best practices to
address the needs of the homeless.
The Senate-passed version of H.J.Res. 2 recommended $1.215 billion for the
Homeless Assistance Grants in FY2003, an increase of $92 million over the FY2002
level. The Senate bill specified that of the $1.215 billion recommended, $193
million was to fund Shelter Plus Care renewals on an annual basis, while $17.6
million was for technical assistance and HMIS. This would have left approximately
$1 billion to fund the remaining three homeless programs (SHP, SRO, ESG).
The final version of H.J.Res. 2, P.L. 108-7, provided $1.225 for homeless
assistance grants in FY2003. The bill included language renewing all Shelter Plus
Care contracts, designating $11 million for the HMIS initiative and $6.6 million for
technical assistance. P.L. 108-7 also set aside $10 million of the $1.225 billion for
a two-year demonstration program to test innovative approaches and document best
practices to address the needs of the homeless. The Conference Report notes that
these funds can only be used for the housing portion of these innovative programs.
For FY2003, the Administration proposed that the Emergency Food and Shelter
program (EFSP), which is currently administered by the Federal Emergency
Management Agency (FEMA), be transferred to HUD. This proposal was not
adopted by the House, Senate, or the final bill.

CRS-43
The homeless assistance programs are intended to help homeless persons and
families break the cycle of homelessness and to move to permanent housing and self-
sufficiency. HUD’s Continuum of Care (CoC) process encourages the creation of
linkages to other housing and community development programs including public
housing, Section 8, Community Development Block Grants, HOME, Housing
Opportunities for Persons with AIDS and state and local programs. In addition, the
strategy promotes direct links to mainstream social service programs critical to the
success of homeless assistance efforts, such as Medicaid, State Children’s Health
Insurance Program, Food Stamps, Temporary Assistance for Needy Families (TANF)
and services funded through the Mental Health and Substance Abuse Block Grant,
Workforce Investment Act, and the Welfare-to-Work grant program.
The FY2003 HUD justification included preliminary measurable performance
indicators which concentrate on the number of homeless persons who have attained
permanent housing. One of HUD’s strategic objectives is to end chronic
homelessness (20% of the homeless) in 10 years; one of the indicators of progress to
this goal is that at least 25,000 formerly homeless persons move into HUD
McKinney-Vento funded permanent housing through FY2003.
Another strategic objective is to help homeless individuals and families move
to permanent housing. Some of the indicators of successfully moving toward that
goal is that through FY2003, at least 29,000 homeless persons move from HUD
transitional housing to permanent housing; that at least 115,000 homeless people
move into HUD-funded transitional housing and that at least 19,000 homeless
persons become employed while in HUD’s homeless assistance project. Another
indicator of moving toward that goal is that the number of communities with
Homeless Management Information Systems increase from 12 in FY2001, to 25 in
FY2002, to 75 in FY2003; HUD has been charged by Congress to assist communities
in developing unduplicated counts of homeless persons and generating client-level
data nationally by 2004.
For more information on federal programs for the homeless, see CRS Report
RL30442, Homelessness: Recent Statistics, Targeted Federal Programs and Recent
Legislation, by M. Ann Wolfe.
Housing Program Administration
Housing for the Elderly and Disabled. These programs, referred to as the
Section 202 program for the elderly and the Section 811 program for the disabled,
provide capital grants for the development of additional new subsidized housing for
these populations. The President proposed new funding of $774 million (for a total
of $783 million, including the reprogramming of $9.7 million in unobligated funds
from previous years) for housing assistance for the elderly in FY2003, the same
amount as provided in the previous year. HUD points out that an increasing number
of the elderly living in Section 202 apartments have become frail and less able to live
in rental facilities without some additional services. Therefore, the administration
proposed that $30 million of the appropriated amount be made available for
construction grants to convert existing Section 202 units to assisted living facilities.
This would allow individual elderly residents to remain in their units and maintain
their independence as they age. The President proposed that another $53 million of

CRS-44
the appropriation be used to fund service coordinators who help elderly residents
obtain needed supportive services from the community.
The House Appropriations Committee recommended a direct appropriation of
$841 million for the Section 202 program (in addition to the assumed $9.7 million
in recaptured funds) for FY2003. This figure was $67 million above the
Administration’s request and included $50 million for service coordinators and $30
million for the conversion of Section 202 housing to assisted living. The House also
proposed to make $50 million of the requested amount available for a demonstration
grant program to facilitate planning, design and development activities for Section
202 projects, in the hope of finding ways to shorten the time between the award of
grants to communities and the completion of projects.
The Senate-passed version of H.J.Res. 2 recommended $783 million for Section
202 (in addition to recaptured funds), $53 million of which was to be set aside for
service coordinators and $50 million of which was to be set aside for the conversion
of units to assisted living.
The final version of H.J.Res. 2, P.L. 108-7, approved $783 million for Section
202 (in addition to recaptured funds), $50 million of which was set aside for service
coordinators and $25 million of which was set aside for the conversion of units to
assisted living. The final bill, like the House bill, set aside funds for a demonstration
grant program to facilitate planning, design and development activities for Section
202 projects; the final bill set aside $25 million for this activity rather than $50
million as proposed by the House.
The Administration also requested $251 million for housing for the disabled
(Section 811), a $10 million increase over the $241 million provided in FY2002.
Like last year, up to 25% of the funds for the disabled could be used for vouchers to
give disabled individuals more flexibility and choice so they could live in mainstream
rental housing. However, these vouchers must then be renewed each year, and, in
FY2003, $32 million of the $251 million Section 811 budget would be required to
renew vouchers. In addition, $40 million from the Housing Certificate Fund would
be allocated, under the Administration’s proposal, for approximately 6,000 vouchers
for non-elderly disabled individuals who are currently living in public housing units
that are now being converted to “elderly only” projects.
The House Appropriations Committee approved $259 million for the Section
811 program for FY 2003, over $8 million more than the Administration’s request,
including an allowance for up to 25% to be spent on tenant-based rental assistance
for the disabled. In addition, H.R. 5605 provided $36 million for incremental rental
vouchers to be used for non-elderly disabled individuals who are now residing in
public housing projects that are being designated as “elderly only” developments.
The Senate-passed version of H.J.Res. 2 recommended $251 million for the
Section 811 program in FY2003. Of this amount, 25% would be available for tenant-
based rental assistance for the non-elderly disabled under this proposal.

CRS-45
The final version of H.J.Res. 2, P.L. 108-7, approved $251 million for the
Section 811 program in FY2003. Again, 25% of this amount is available for tenant-
based rental assistance for the non-elderly disabled under this law.
Federal Housing Administration (FHA). For FY2003, the Administration
requested and the Senate-passed version of H.J.Res. 2 recommended an insurance
commitment limitation of $160 billion for the FHA Mutual Mortgage Insurance and
Cooperative Housing Mortgage Insurance (MMI/CHMI) fund, the same level as
appropriated for FY2002. H.R. 5605 recommended a commitment level of $165
billion. The Conference Agreement authorized a commitment limitation of $165
billion.
Both the Administration and the Senate bill requested a $21 billion insurance
commitment limitation for the General Insurance and Special Risk Insurance
(GI/SRI) fund, the same level as approved for FY2002. H.R. 5605 recommended a
commitment limitation of $23 billion. The Conference Agreement authorized a
commitment limitation of $23 billion.
Since FY2002, the Office of Management and Budget (OMB) and the
Congressional Budget Office (CBO) have determined that FHA receipts under the
MMI account should be classified within the discretionary rather than the mandatory
part of HUD’s budget. According to CBO, the reclassification has no effect on the
amount of budgetary resources available to HUD, and the MMI program will
continue operating as it did prior to the reclassification. Mandatory spending must
comply with the pay-as-you-go rules of the Budget Enforcement Act (BEA) while
discretionary spending must comply with the BEA’s discretionary spending caps.
Spending for the MMI program is determined by annual appropriations acts.
The Budget and H.R. 5605 requested a loan limitation of $50 million for direct
loans under the MMI/CHHI fund, a $200 million reduction from the FY2002 level.
The Budget states that the $250 million limitation in FY2002 was in anticipation of
increased demand for disposition of single family properties and the demand did not
materialize because of the availability of alternative financing. The Senate bill
recommended a direct loan limitation of $250 million, the same as enacted in
FY2002. The Conference Agreement authorized a loan limitation of $100 million.
The Administration, H.R. 5605, and the Senate-passed omnibus bill proposed
a direct loan limitation of $50 million for the GI/SRI fund, the same limit as in
FY2002. The Conference Agreement authorized $50 million for the program. The
direct loans are used to facilitate the sale to municipalities and nonprofit corporations
of single family and multifamily properties that have been acquired by the FHA
insurance funds through defaults and foreclosures by borrowers.
The Budget and the Senate bill requested administration expenses of $336.7
million for the MMI/CHMI accounts. The Senate would have provided that, to the
extent guaranteed loan commitments exceed $65.5 billion on or before April 1, 2003,
an additional $1,400 in administrative contract expenses would be available for each
additional $1 million in loan commitments, but the additional funds could total no
more than $16 million. H.R. 5605 requested $347.8 million for administrative
expenses. The Conference Agreement authorized $347.8 million for administrative

CRS-46
expenses, and adopted the Senate language regarding loan commitments exceeding
$65.5 billion on or before April 1, 2003.
As in FY2002, the FY2003 Budget, H.R. 5605, and the Senate omnibus bill
requested an appropriation of $15 million for credit subsidies to support loan
guarantees under the GI/SRI programs. The Conference Agreement appropriated $15
million, as requested. The credit subsidy is based on the net cost to the government,
exclusive of administrative expenses, of a direct loan or loan guarantee over its full
term, discounted to the present value at the Treasury’s borrowing cost. FHA
proposed to reduce the annual mortgage insurance premium from 80 basis points to
57 basis points on new construction loans insured under the Section 221(d)(4)
program. That program is the largest multifamily insurance program in the GI/SRI
fund. Interestingly, the insurance premiums were raised from 50 to 80 basis points
in FY2002, and that was used as partial justification for the need of only $15 million
in credit subsidies instead of $101 million that had been appropriated in the prior
year.
The proposed FY2003 budget noted, however, that prior estimates were based
on historic performance over the past 40 years, including tax law changes in the
1980s that adversely affected the performance of loans in the portfolio at the time.
The Budget argued that the new credit subsidy estimates are based on econometric
models that incorporate the improvements in recent years in underwriting, program
monitoring, and asset management.
The Senate Committee noted that it remains concerned that HUD has failed to
calculate adequately the amount of credit subsidy needed to support its multifamily
mortgage insurance programs. The Committee said that it expects HUD to institute
a computer program that accurately identifies the risk of default and financial risk to
the insurance fund. The Committee also directed HUD to issue any changes in
insurance premiums through notice and comment rule making, as required by law.
Section 601 of P.L. 105-276, the FY1999 HUD Appropriations Act, amended
Section 204 of the National Housing Act to give HUD more flexibility in choosing
the most cost-effective way of paying insurance claims and disposing of acquired
notes or homes under the FHA single family programs. The amendment provided
a new claims payment procedure that permits HUD to pay a claim upon assignment
of the mortgage rather than upon conveyance of the property; authorized HUD to take
assignment of the notes and transfer them to private parties for servicing, foreclosure
avoidance, foreclosure, property management, and asset disposition; allowed FHA
to be an equity participant in private entities; and allowed a structured financing for
asset disposition in which FHA retains an equity interest, thereby increasing the
value of the asset over simple asset sales.
In FY2003, HUD proposed to use its Section 601 authority to transfer defaulted
notes to joint venture partners in the private sector. The partners would make upfront
payments to FHA at the time of transfer, FHA would retain an equity interest in the
notes until their disposition, and FHA would receive additional payments for that
interest. The proposal was expected to reduce foreclosures, eliminate much of the
acquisition of property by FHA, and increase net recoveries to FHA. This is regarded

CRS-47
as a big step towards getting FHA out of the property management business
altogether.
The Senate Committee noted its concern about the accelerated claims
disposition demonstration program under which HUD bundles delinquent loans and
partners with a private bank to mitigate, or foreclose on, delinquent loans. The
Committee pointed out that HUD has not demonstrated how this program would
benefit very low-income communities, especially those with high incidences of
predatory lending. The Committee noted its concern that, in those communities,
foreclosures would occur more frequently than they do under the current system, and
this would contribute to the deterioration of those communities. The Committee
directed HUD to implement a system by which revitalization areas can be exempted
from the accelerated claims disposition process should they choose to be.
The FY2002 VA/HUD Appropriations Act included language authorizing
HUD’s Credit Watch program. This program allows HUD to identify FHA lenders
that originate a large number of loans that default quickly, which can be a key
indicator of underwriting problems or fraud, and take corrective actions. By
eliminating unqualified or unscrupulous lenders, the conferees hoped that HUD
would reduce the number of foreclosed properties.
The Senate Committee noted that Credit Watch is an excellent tool for
uncovering lenders after they have originated bad loans. By eliminating fraudulent
or unqualified lenders, the Committee and HUD hoped to reduce the number of
foreclosed properties in the future. The Committee noted, however, that the Credit
Watch model is only effective after problem loans default.
The Senate Committee noted that though FHA continues to contribute to
homeownership by low income, minority, and first time homebuyers, in some cases
and in certain neighborhoods, FHA has been misused to underwrite bad loans that
have led to defaults and foreclosed homes, and that this has contributed to
neighborhood decline and destabilization. The Committee concluded that faulty
appraisals have contributed to this problem, that HUD cancelled its appraisal
oversight program, and that HUD has yet to implement its proposed alternative,
which is based on the Credit Watch model.
Thus, the Senate Committee directed HUD to report to the appropriate
Congressional Committees on further actions that could be taken to protect
homebuyers and communities in census tracts that experience high rates of FHA
defaults and foreclosures. The Committee directed HUD to consider making FHA
lenders responsible for the appraisals on loans in these census tracts. The Committee
further directed that HUD consider several other options: (1) requiring first time
homebuyers to receive counseling prior to the closing of an FHA loan; (2) requiring
home inspections on FHA-insured homes bought by first time homebuyers; and (3)
requiring the use of specially certified FHA appraisers for the purchase of homes.
The Committee urged HUD to consider these and other options while avoiding
proposals that create additional burdens for the FHA program or FHA homebuyers
as a whole.

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The Senate Committee noted the receipt of complaints that, in areas affected by
large numbers of FHA foreclosures and property flipping, some investors are
repeatedly involved in buying FHA foreclosed properties, making superficial repairs,
and then reselling, or flipping them at inflated prices. The Committee asked HUD
to explore strategies to identify investors who are involved in such schemes and
prevent their purchasing FHA properties. While recognizing that HUD continues to
address the problems created by FHA property flipping, the Committee suggested
that HUD must become more aggressive in adopting the kind of preventive measures
suggested by the Committee. HUD was directed to submit a report that responds
directly to the issues raised by the Committee.
The Budget reiterates HUD’s commitment to eliminating predatory lending and
comprehensively reforming and simplifying the home-buying process. The Budget
stated that new regulations under the Real Estate Settlement Procedures Act will
require full disclosure of all fees that borrowers will pay at settlement, and make it
clear to borrowers that other finance options are available. A proposed rule on the
subject was published in the Federal Register on July 29, 2002.
A proposed rule was published in 2001 which would prevent the issuance of
FHA insurance on properties that have been transferred by a previous sale within 6
months. The Budget noted that the rule will be implemented in 2003. FHA also
proposed to publish a rule in 2003 which would restrict excessive points and fees on
FHA-insured loans. A rule will be proposed in 2002 and, if implemented, would
hold lenders accountable for the selection and performance of appraisers for FHA-
insured mortgages.
Office of Federal Housing Enterprise Oversight (OFHEO). OFHEO
is the safety and soundness regulator for Fannie Mae and Freddie Mac. The FY2003
Budget proposes $30 million in budget authority compared to $27 million in
FY2002. Legislation was proposed to remove OFHEO from the annual
appropriations process, and fund the organization directly. That would place OFHEO
on a par with other safety and soundness regulators such as the Federal Reserve
Board, the Office of Thrift Supervision, and the Federal Housing Finance Board.
Both the Housing and Senate Appropriations Committees recommend ed$30 million
for FY2003. The conferees agreed to $30 million, to be funded by fees from Fannie
Mae and Freddie Mac. OFHEO is to provide a detailed report to the Committee on
Appropriations by August 15, 2003, detailing its current staffing levels and
corresponding responsibilities, and whether this is adequate to fully meet its
regulatory mission.
Fair Housing. The Fair Housing Act makes it illegal to discriminate in the
sale, rental, or financing of housing based on race, color, religion, sex, national
origin, disability, or family status. HUD’s FY2002 budget promises vigorous
enforcement of fair housing laws and increased educational activities to combat
discrimination in housing. For FY2003, HUD requested $46 million, level with
FY2002 appropriations.
Two programs comprise HUD’s fair housing efforts: the Fair Housing
Assistance Program (FHAP) and the Fair Housing Initiatives Program (FHIP).
FHAP strengthens nationwide enforcement efforts by providing grants to state and
local agencies to enforce laws that are substantially equivalent to the federal Fair

CRS-49
Housing Act. For FY2003, HUD is requesting $25.7 million for FHAP. FHIP
provides funds for public and private fair housing groups, as well as state and local
agencies, for activities that educate the public and housing industry about the fair
housing laws, including accessibility requirements; investigate allegations of
discrimination; help to combat predatory lending practices, and reduce barriers to
minority homeownership. FHIP would be funded at $20.3 million in FY2003.
In its FY2002 budget for Fair Housing, HUD pledged to continue its efforts to
combat predatory lending by working closely with interested parties, including
consumer groups, federal, state and local regulators, and the industry to put an end
to predatory lending. As part of this effort, it supports programs to increase financial
literacy. Its proposed budget for FY2003 promised to continue these efforts.
Both the House and Senate Appropriations Committees recommended $46
million for HUD’s fair housing programs for FY2003, level with FY2002 funding
and the same as the budget request. The conferees also agreed with $46 million for
FY2003.
Lead-Based Paint Hazard Reduction. Title X of the Housing and
Community Development Act of 1992 (P.L. 102-550), authorized HUD to establish
the Lead-Based Paint Hazard Control Grant program. Before 1997, funding for the
lead hazard control grant program was provided under the Annual Contributions for
Assisted Housing Account. In 1997 and 1998, the program was funded as a set-aside
under the Community Development Block Grant account. Starting in 1999, the
program has received appropriations as a separate, stand-alone program.
Over the past decade, HUD has worked with local governments and agencies
to increase the number of lead hazard control programs, and measurable lead levels
in children have declined. However, millions of housing units occupied by lower
income households remain contaminated with lead-based paint. To further reduce
lead paint health hazards, the FY2003 HUD budget requested a $16 million increase
over FY2002, for a total of $126 million. Funds are distributed through competitive
grants to entities that agree to match those federal grants. The $126 million supports
a 10-year strategy to eliminate lead paint hazards, with funds targeted to the 1.8
million homes that are at risk of not being modified through normal renovation or
demolition activities.
The House Committee recommended $126 million for the program in FY2003,
the same $16 million increase requested by the Administration. Citing lead
poisoning from lead-based paint as the highest public health threat to children under
the age of 6, the Senate Committee recommended $201 million for the program for
FY2003, $75 million more than requested by the Administration and $91 million
more than enacted for FY2002. While the Committee reported dramatic reductions
in lead hazzards in low-income public housing, it says progress has not been as great
in privately-owned unsubsidized low-income units, and thus recommended $75
million to establish a new lead hazard reduction demonstration program focused on
major urban areas where children are disproportionately at risk. The conferees
agreed to $176 million, $66 million above the FY2002 enacted level. The $176
million is to be allocated as follows: $10 million for Operation LEAP; $96 million
for the lead-based paint hazard control grant program; $10 million for technical

CRS-50
assistance and support to State and local agencies and private property owners; $10
million to the Healthy Homes Initiative; and $50 million for an initiative to target
lead abatement funds to areas with the highest lead paint abatement needs.
Title III: Independent Agencies
Environmental Protection Agency
The President’s FY2003 request for the Environmental Protection Agency
(EPA) was $7.621 billion in budget authority or 6% less than the $8.079 billion
appropriated for FY2002. In the 107th Congress, the Senate Committee on
Appropriations recommended $8.299 billion; the House Committee recommended
$8.205 billion. In the 108th Congress, the Senate passed $8.2 billion and the
conferees included $8.132 billion P.L. 108-7 (H.J.Res. 2).
Accounting for the proposed decrease is the Administration’s decision not to
seek continued funding for about $500 million earmarked for numerous activities in
the FY2002 Conference Report. This includes some $300 million for specific
wastewater grants, numerous research grants, and other special grants. Other prime
issues include the adequacy of funds to capitalize wastewater needs; funding of state
programs including the shifting of enforcement responsibility to the states; and future
funding of the Superfund program.
Table 10. Environmental Protection Agency Appropriations,
FY1998-FY2002
(budget authority in billions)
FY1998
FY1999
FY2000
FY2001
FY2002
$7.4
$7.6
$7.4
$7.8
$8.08
Source: Figures for FY1998-FY2001 are from administration budget submissions of subsequent
years; the figure for FY2002 is from H.Rept. 108-10, and is the latest available estimate for that fiscal
year. Final spending levels remain uncertain until all program experience has been recorded, and any
supplemental appropriations or rescissions have been included.
State and Tribal Assistance Grants. How to meet the Nation’s water
infrastructure capital needs remains a primary appropriations issue for EPA. The
Administration’s proposed FY2003 level of $3.464 billion for the State and Tribal
Assistance Grants account (STAG) is $269 million, or 7% less than the $3.733
billion allocated in FY2002. The major reason for the proposed decrease is the
Administration’s decision not to seek continued funding for over $300 million that
had been designated for specific water grants in FY2002. In the 107th Congress, S.
2797 recommended $4.01 billion; H.R. 5605 recommended $3.8 billion. The 108th
Congress included $3.86 billion, less than the $3.92 approved by the full Senate.. The
bills added funds to the request to partially reinstate water grant funding.
Within the STAG account, the budget proposes $1.2 billion for wastewater
funding, $150 million less than the $1.35 billion for FY2002. The Senate committee

CRS-51
recommended $1.5 billion; the House committee $1.3 billion. P.L. 108-7 included
$1.35 billion. Another major account activity, drinking water state revolving funds,
is projected to receive $850 million, the same as funding for FY2002 and as
recommended by the House Committee on Appropriations. The Senate Committee
bill proposes an additional $25 million. The final amount approved was $850 million.
Table 11. Appropriations: Environmental Protection Agency,
FY2002-FY2003
(budget authority in billions)
FY2002
FY2003
FY2003
FY2003 FY2003
Program
enacted
request
House
Senate
Conf.
Science and Technology
.735
.781
.801
.793
.806
transfer in from Superfund
.037
.111
.086
.086
.086
Emergency supplemental
.090
–
–
–
–
Environmental programs,
compliance (management)
2.055
2.048
2.112
2.137
2.112
Emergency supplemental
.039
–
–
–
Office of Inspector General
.046
.048
.048
.050
.049
transfer in from Superfund
.012
.013
.013
.013
.013
Buildings and facilities
.025
.043
.043
.043
.043
Superfund (net, after transfers)
1.221
1.149
1.324
1.174
1.174
direct appropriations
1.270
1.273
1.423
1.273
1.273
transfers out from Superfund
-.049
-.124
-.099
-.099
-.099
Emergency supplemental
.041
–
–
–
–-
Leaking Underground Storage
Tank Trust Fund
.073
.072
.072
.072
.072
Oil spill response
.015
.016
.016
.016
.016
State and tribal assistance 3.733
3.464
3.789
3.921
3.860
Emergency supplemental
.005
–-
–
–
Subtotal (EPA)
8.079
7.621
8.204
8.205
8.132
Source: H.Rept. 108-10.
Note: Totals for FY2002 include supplementals. The FY2003 levels shown for the Senate and
enacted versions of the bill do not reflect required cuts to most discretionary programs that were
adopted to hold the bill’s total cost within specified limits.
For state and tribal administrative grants, the budget sought $1.2 billion, $84
million more than current funding; most state administrative grants would remain the
same as in the current year. One new grant program would provide $15 million in
grants to assist states in enforcing environmental laws and regulations. This
represents a shift in policy, moving more enforcement to the states, and is

CRS-52
accompanied by a related $15 million decrease in EPA’s own enforcement efforts.
A similar proposal in the FY2002 proposal was not agreed to by the appropriators.
The Senate Committee on Appropriations continues to disagree with the limitations,
and added $15 million to the agency’s enforcement budget; the House Committee
concurs. Also part of the proposal, and recommended under both bills, is $170
million in Brownfields Grants for contaminated sites with development potential.
P.L. 108-7 allotted $130 million for these grants.
Superfund. The future of the Superfund, and its purpose of cleaning up toxic
waste sites remains an issue. The FY2003 budget request of $1.149 billion proposed
a $72 million decrease compared to FY2002. S. 2797 recommended $1.174 billion;
the H.R. 5605 recommended $1.324 billion. P.L. 108-7 (H.J.Res.2) included $1.174
billion, also the level approved by the full Senate. There was concern over the ability
of the declining trust fund, which is financed by chemical fees and other taxes, to
finance the program beyond FY2003. The available balance of the fund has been
declining since its taxing authority expired on December 31, 1995. The President’s
FY2003 budget does not propose renewing the taxes that support Superfund, and its
balance at the beginning of FY2003 was projected to be $427 million, a level
sufficient to accommodate the fund’s share of the projected spending authority of
$1.2 billion needed for FY2002, 46% of which would come from the fund and 54%
from general appropriations.
Historically, the share paid by the trust fund has been declining. In the past, the
trust fund paid for the majority of Superfund activities; in the current year, the fund
supports 50% of the program costs, in future years, general appropriations may have
to pay the majority of costs. Some have criticized this fundamental change in policy,
which lessens the responsibility of polluters, under the principle that the “polluter
pays,” and instead socializes pollution costs across the economy, by funding them as
costs to the general Treasury.
For more detailed information on the Superfund, see: CRS Issue Brief
IB10078, Superfund and the Brownfields Issue in the 107th Congress. For
information on wastewater treatment issues, see CRS Report 98-323, Wastewater
Treatment: Overview and Background. For an in-depth discussion of the EPA
budget proposal, see CRS Issue Brief IB10101, The Environmental Protection
Agency’s FY2003 Budget.
Federal Emergency Management Agency
The Federal Emergency Management Agency (FEMA), established in 1979 to
administer federal policies related to emergency management, has been transferred
into the Department of Homeland Security (DHS) effective March 1, 2003. For the
remainder of FY2003, FEMA personnel now included in DHS will continue to
administer policies that coordinate federal activities and help state and local
governments prepare for, respond to, and recover from catastrophes, including
terrorist attacks. For information on these policies see CRS Report RL31670,
Transfer of FEMA to the Department of Homeland Security: Issues for
Congressional Oversight.

CRS-53
Table 12. Appropriations: Federal Emergency Management
Agency, FY2002-FY2003
(budget authority in billions)
FY2002
FY2003
FY2003
FY2003
FY2003
Program
enacted
request
House
Senate
Conf.
Disaster relief a
9.172
1.843
1.820
.843
.800
Direct appropriations
.664
1.843
1.820
.843
.800
Contingent emergency funds
1.500
.000
.000
.000
.000
Emergency Response Fund
4.357
.000
.000
.000
.000
Emergency supplemental
(P.L. 107-206)
2.651
.000
.000
.000
.000
Nat’l pre-disaster mitigation
.000
.300
.250
.025
.150
Disaster assist. loan; admin.
.001
.001
.001
.001
.001
Radiologic. emergency prep.
-.001
-.001
-.001
-.001
-.001
Salaries and expenses
.259
.240
.251
.240
.246
Inspector Generalb
.010
.012
.012
.018
.014
Emergency management,
planning assistancea
.405
3.747
.367
.715
.388
Emergency supplemental
.445
.000
.000
.000
.000
Emergency food, shelter
.140
.153
.153
.153
.153
Fire Act
.000
.000
.450
.900
.750
Cerro Grande fire claims
.000
.000
.000
.100
.090
Flood map modernization
.000
.300
.200
.100
.150
Nat’l Flood Insurance Fundc
.105
.110
.110
.110
.110
Subtotal (FEMA)
10.536
6.704
3.612
3.204
2.851
Source: H.Rept. 108-10.
Note: Totals for FY2002 include supplementals. The FY2003 levels shown for the Senate and
enacted versions of the bill do not reflect required cuts to most discretionary programs that were
adopted to hold the bill’s total cost within specified limits.
a During FY2002, and additional supplemental amount, totaling $5.8 billion in budget authority, was
available to FEMA through the Emergency Response Fund, as follows: $5.6 billion for disaster
relief, $30 million for salaries and expenses, and $215 million for emergency management
planning and assistance.
b Both the House and Senate bills authorize the transfer of up to $21.6 million from the disaster relief
fund to the Office of Inspector General.
c National Flood Insurance Fund data includes salaries and expenses and flood mitigation funding.
Perhaps the most prominent emergency management activity now administered
by DHS involves the administration of the disaster relief fund (DRF). The Robert
T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et
seq.),which authorizes the President to declare major disasters or emergencies (the
latter provide considerably less federal assistance than the former), sets out eligibility
criteria for federal aid, and specifies the types of assistance that may be provided by

CRS-54
FEMA and other federal agencies. Appropriations made to the (DRF) are used to
carry out the provisions of the Stafford Act and remain available until expended.
Disaster assistance funding varies from year-to-year by the severity and frequency of
declared catastrophes. In recent years, billions have been appropriated to help
communities recover from tornados, hurricanes, floods, earthquakes, and other
incidents. Over the past decade roughly $3.5 billion annually (in constant dollars)
has been provided from the DRF.
The budget requests for FEMA each year have included funds for normal agency
operations and grant-in-aid assistance to nonfederal entities, in addition to disaster
relief. Should funds appropriated in annual legislation for disaster relief prove
insufficient, supplemental funds have been requested, as illustrated in Table 12.
Grants for fire departments and public safety agencies have been appropriated for
FY2004 to enhance the ability of state and local agencies to prepare for and respond
to terrorist attacks and other disasters. (For information on the grants to fire
departments see CRS Report RS21302, Assistance to Firefighters Program; for an
overview of assistance for public safety agencies see CRS Report RS21400, FY2003
Appropriations for First Responders: Fact Sheet.
National Aeronautics and Space Administration
For FY2003, Congress appropriated $15.335 billion for the National
Aeronautics and Space Administration (NASA), when adjusted for a 0.65%
rescission that applied to all NASA activities except the space shuttle. NASA’s
FY2003 request was $15.000 billion, compared to $14.902 billion appropriated in
FY2002 ($14.793 billion in the FY2002 VA-HUD-IA Appropriations Act, and
$108.5 million in the FY2002 DOD and Supplemental Appropriations Act). More
details on NASA’s FY2003 budget are available in CRS Report RL31347.
The NASA appropriations were separated into two accounts: Human Space
Flight (HSF); and Science, Aeronautics and Technology (SAT). Funding for the
Office of Inspector General is identified separately. The budget categories used in
FY2003 have been changed in the FY2004 request, but this report follows the format
of the FY2003 NASA budget. In the FY2003 budget, the HSF account included
funding for the International Space Station; Space Shuttle; Payload and Expendable
Launch Vehicle Support; Investments and Support; Space Communications and Data
Systems; and Safety, Mission Assurance, and Engineering. The SAT account
contained the bulk of NASA’s research and development activities, including Space
Science; Biological and Physical Research; Earth Sciences; Aero-Space
Technologies; and Academic Programs.
On February 1, 2003, the space shuttle Columbia broke apart as it returned to
Earth following a 16-day scientific mission in orbit. All seven astronauts aboard
were killed. An investigation is underway (see CRS Report RS21408). The shuttle
fleet is grounded. The Columbia tragedy is expected to affect FY2003 funding for
the shuttle program, the space station program, and the funding for space station
research in the Office of Biological and Physical Research. It may also affect
NASA’s plans to build an Orbital Space Plane (part of the Office of Aero-Space
Technology). Thus, NASA may modify how it spends its FY2003 appropriations.

CRS-55
Table 13. National Aeronautics and Space Administration
Appropriations, FY1998-FY2002
(budget authority in billions)
FY1998
FY1999
FY2000
FY2001
FY2002
$13.65
$13.67
$13.60
$14.29
$14.90
Source: Figures for FY1998-FY2001 are from administration budget submissions of subsequent years;
the figure for FY2002 is from H.Rept. 107-740, and is the latest available estimate for that fiscal year.
Final spending levels remain uncertain until all program experience has been recorded, and any
supplemental appropriations or rescissions have been included.
International Space Station (ISS). For FY2003, NASA requested $1.839
billion for the ISS program: $1.492 billion in the HSF account; and $347 million in
the Office of Biological and Physical Research (OBPR) budget, part of the SAT
account. The HSF funding is for building and operating the space station. The
OBPR funding is for the scientific facilities to enable research to be conducted
aboard it (often called the “space station research” or “space station science” budget).
Congress approved the requested amount, and added $8 million for plant and animal
habitats for the space station. When adjusted for the 0.65% rescission, the FY2003
space station budget is $1.835 billion ($1.482 billion for construction and operations,
and $353 million for scientific research). As noted, FY2003 funding for the space
station may be affected by the space shuttle Columbia tragedy because space station
construction is suspended while the shuttle fleet is grounded.
The space station is under construction in orbit and the facility has been
permanently occupied by successive crews on 4-6 month shifts since November
2000. Much remains to be built, however, and in early 2001, NASA revealed
significant cost growth for completing the station. The new estimate would exceed
a congressionally imposed cap of $25 billion. In response, the Bush Administration
directed NASA to stop construction at a phase it calls “core complete” in FY2004.
At that point, the U.S. hardware now awaiting launch would be in orbit. The Bush
Administration then plans to proceed with launch of European and Japanese
laboratory modules now under construction, and another scientific module being built
by Japan for NASA as part of a barter agreement (the Centrifuge Accommodation
Module).
The Bush Administration cancelled plans to build a Propulsion Module, and
indefinitely deferred two other U.S. ISS elements: the Habitation Module and the
Crew Return Vehicle (CRV). Without the CRV, ISS crew size may be limited to
three astronauts, which could severely restrict the amount of scientific research
conducted there. The Bush Administration left open the possibility of adding
“enhancements” such as a CRV to the space station if NASA demonstrates improved
cost estimating and program management.
Europe, Japan, Canada, and Russia are all partners with the United States in
building the space station, and all have expressed deep concern with the revised U.S.
plan. They point out that the term “core complete” does not appear in the

CRS-56
international agreements that govern the station program and hence are not formally
recognized. The Intergovernmental Agreement (IGA) is considered a treaty in all the
countries that are partners in the ISS program, except the United States where it is an
Executive Agreement. The international partners want the Bush Administration to
commit to building the space station as agreed in the IGA and associated Memoranda
of Understanding (MOUs) between NASA and its counterpart agencies, but the
Administration is not willing to make that commitment. See CRS Issue Brief
IB93017 for more on the space station program.
Table 14. Appropriations: National Aeronautics and Space
Administration, FY2002-FY2003
(budget authority in billions)
FY2002 FY2003 FY2003 FY2003 FY2003 FY2003
enacted enacted
(w/o
(with
Program
enacted request
House
Senate resciss.) resciss.)
Human space flight
6.912
6.131
6.131
6.096
6.181
6.162
Emergency
.076
.000
.000
.000
.000
.000
supplemental
Science, aeronaut., tech.
7.857
8.845
9.145
9.003
9.208
9.148
Emergency
.033
.000
.000
.000
.000
.000
supplemental
Inspector General
.024
.025
.025
.027
.026
.026
Subtotal (NASA)
14.902
15.000
15.300
15.126
15.414
15.335
Source: H.Rept. 108-10, P.L. 108-7.
Note: Columns may not add due to rounding. The FY2003 level for the Senate does not reflect
Senate-passed rescissions. The enacted version included a 0.65% rescission that applied to all NASA
programs except the space shuttle.
Space Shuttle. For FY2003, NASA requested $3.208 billion for the shuttle
program, slightly less than the $3.273 billion it received in FY2002. Congress
completed action on the FY2003 appropriations after the February 1, 2003 Columbia
tragedy. It approved the full request for the shuttle program, added $50 million for
the Columbia investigation and required remedial actions, and exempted the space
shuttle program from the 0.65% rescission that applied to all other NASA programs.
NASA insists that shuttle safety is a top NASA priority, but the aging of the
shuttle systems, and concern about the skill mix of the shuttle workforce as the
shuttle program transitions to a “single prime contractor,” has made safety an
ongoing issue. In the wake of the Columbia tragedy, these issues are receiving
heightened attention (see CRS Report RS21408 and CRS Issue Brief IB93062).
Space Science. For FY2003, NASA requested $3.414 billion for the Office
of Space Science (OSS), compared with $2.867 billion in FY2002. Congress

CRS-57
approved $3.524 billion (or $3.501 billion when adjusted for the rescission). Among
the changes was an addition of $95 million to continue a program to send a spacecraft
to Pluto and the Kuiper Belt (thought to be the home of some comets). NASA
wanted to terminate that program, but Congress wanted it to continue. The $95
million is added to $15 million NASA requested in a separate account (the New
Frontiers program), making $110 million available for the Pluto-Kuiper Belt mission
(PKB) in FY2003.
Congress also added $20 million for a Jupiter Icy Moons Orbiter (JIMO)
mission. Although NASA has not requested any funding for this in FY2003, it was
part of the FY2004 budget request that was submitted to Congress before action on
the FY2003 budget was complete. In the FY2004 request, JIMO is combined with
NASA’s Nuclear Systems Initiative (NSI), which Congress approved in the FY2003
budget (although it cut $19 million from the $125.5 million requested). The
combination of JIMO and NSI is called Project Prometheus by NASA. JIMO would
utilize the nuclear systems being developed through the NSI that will provide
electrical power and propulsion for spacecraft. The JIMO spacecraft would make
detailed studies of moons of Jupiter: Europa, Ganymede, and Callisto. Congress had
approved a mission to Europa in the FY2002 budget, capping its cost at $1 billion.
In FY2003, NASA cancelled the Europa mission because it was too expensive. The
House Appropriations Committee added $40 million to restore the Europa mission
in its markup of the original legislation to fund NASA for FY2003 (H.R. 5605 ,
H.Rept. 107-740). In the final FY2003 appropriations (H.J.Res. 2, P.L. 108-7),
conferees agreed to provide $20 million for JIMO instead.
Biological and Physical Research. For FY2003, NASA requested $842.4
million for the Office of Biological and Physical Research (OBPR). Congress
approved $868.8 million (or $863.2 million if adjusted for the rescission). As noted,
funding responsibility for scientific research aboard the International Space Station
(ISS) shifted from HSF to this office in FY2002. Congress approved most of
OBPR’s request, but denied a request to begin a “Generations Initiative” to learn
how organisms evolve in space. It approved the request for a new “Space Radiation
Initiative” to better understand the effects of radiation on humans in space. Congress
also added $8 million for plant and animal habitats for the space station to OBPR’s
$347 million request for ISS research, for a total of $355 million. With the
rescission, the amount available for space station research is $353 million.
OBPR conducts most of its research on the space shuttle and the space station.
The space shuttle Columbia tragedy is expected to affect OBPR’s FY2003 budget,
and may affect those for future years as well depending on how long the shuttle fleet
is grounded and space station construction is suspended.
Earth Science. For FY2003, NASA requested $1.629 billion for the Office
of Earth Science (OES), virtually identical to its FY2002 funding level of $1.626
billion. Congress appropriated $1.719 billion (or $1.708 billion when adjusted for
the rescission).
NASA has been reformulating its Earth Science program to align with President
Bush’s approach to the study of global climate change. During the debate on the

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FY2003 budget, program plans were uncertain. More details about how NASA will
proceed are in the FY2004 budget request.
Aero-Space Technology. For FY2003, NASA requested $2.816 billion for
Aero-Space Technology, compared with $2.508 billion in FY2002. Congress
approved $2.892 billion for FY2003 (or $2.873 billion when adjusted for the
rescission). In November 2002, NASA submitted an amended budget request for
FY2003 that significantly changed plans for the Space Launch Initiative, which is
part of this account. Congress generally approved that restructuring.
The total requested funding for Aeronautics R&D was $541.4 million. In
February 2002, NASA presented its technology vision for aviation in the report The
NASA Aeronautics Blueprint [http://www.aerospace.nasa.gov/aero_blueprint/]. The
report identifies a variety of challenges that could be addressed by advances in
aeronautics technology, but it does not address funding for R&D. Congress provided
the full requested amount, plus increases of $16 million in vehicle systems and $6.3
million in airspace systems. Among the more controversial issues were funding for
the rotorcraft program and the Small Aircraft Transportation System (SATS). For
FY2003, NASA requested no funding for the rotorcraft program, which was funded
at congressional direction in FY2002 ($12.5 million). Congress did not add funding
for it in FY2003, but encouraged NASA to look at funding options and present them
to the appropriations committees as part of the FY2003 operating plan. NASA
requested a 29% increase for SATS, to $20 million. A review of SATS by the
National Academy of Sciences was completed in March 2002, after release of the
President’s budget. The report endorsed NASA R&D on small aircraft and small
airports, but it was skeptical about NASA’s long-range vision for the SATS concept
in particular. Congress added $6.3 million to the requested level.
Prior to the November 2002 budget amendment, the Space Launch Initiative
(SLI) was focused on developing technologies for a new Reusable Launch Vehicle
(RLV) to replace the space shuttle. SLI replaced the unsuccessful X-33 and X-34
programs, and was intended to reduce the technical risk involved in building a 2nd
generation RLV (the shuttle is the 1st generation RLV), and provide the necessary
technical and cost information to enable a decision in 2006 as to what RLV to build.
In the budget amendment, NASA announced that it had reached the conclusion that
development of a 2nd generation RLV lacked economic justification at this time.
NASA has now reoriented the SLI program to build an Orbital Space Plane, and to
invest in long term technological research to enable a decision in 2009 on what new
launch vehicle to build. The Orbital Space Plane is not a launch vehicle, but is a
spacecraft intended to take crews to and from the space station. NASA’s decision
to account for the program under the Space Launch Initiative instead of as part of the
space station program may be controversial.
Academic Programs. For FY2003, NASA requested $143.7 million for
Academic Programs. Congress appropriated $203.5 million (or $202.2 million
when adjusted for the rescission). These programs include a broad array of activities
designed to improve science education at all levels — kindergarten through 12th
grade (K-12) and higher education, and include the National Space Grant and
Fellowship program.

CRS-59
National Science Foundation
The FY2003 request for the National Science Foundation (NSF) is $5.029
billion, a 5% increase ($240 million) over the FY2002 estimate of $4.789 billion.
The FY2003 request provides support for several interdependent priority areas:
biocomplexity in the environment ($79 million, 36% above FY2002), information
technology research ($286 million, 3% above FY2002), learning for the 21st century
($185 million, 27.5% above FY2002), nanoscale science and engineering ($221
million, 11% above FY2002), mathematical sciences ($60 million, 100% increase
above FY2002), and social, behavioral and economic sciences ($10 million, new in
the FY2003 request).
The request provides a second installment of $200 million for the President’s
Math and Science Partnerships program (MSP). Additional FY2003 highlights
include increased funding for graduate students ($26 million), continued support of
plant genome research ($75 million), increased investment in NSF’s administration
and management portfolio ($268 million), and funding for the Partnerships for
Innovation program ($5 million). As part of the Administration’s new multi-agency
Climate Change Research Initiative, the NSF will provide $15 million for research
to advance understanding in the highly focused areas of climate science and to
facilitate policy-decision making in climate research.
In FY2003, the Administration proposes the transfer of three programs from
other agencies to the NSF. The proposed transfers include the National Sea Grant
program, currently at the National Oceanic and Atmospheric Administration ($57
million), Environmental Education, currently at the Environmental Protection
Agency ($9 million), and Hydrology of Toxic Substances, currently at the United
States Geological Survey ($10 million).
Table 15. National Science Foundation Appropriations,
FY1998 to FY2002
(budget authority in billions)
FY1998
FY1999
FY2000
FY2001
FY2002
$3.67
$3.90
$4.43
$4.79
$4.81
Source: Figures for FY1998-FY2001 are from administration budget submissions of subsequent
years; the figure for FY2002 is from H.Rept. 108-10, and is the latest available estimate for that fiscal
year. Final spending levels remain uncertain until all program experience has been recorded, and any
supplemental appropriations or rescissions have been included.
Research and Related Activities. Included in the FY2003 request is
$3.783 billion for Research and Related Activities (R&RA), a 5% increase ($185
million) over the FY2002 estimate of $3.599 billion. R&RA funds research projects,
research facilities, and education and training activities. In the FY2003 request, the
NSF has placed an emphasis on funding rates for new investigators and on increasing
grant size and duration. The R&RA includes Integrative Activities (IA), created in
FY1999. IA funds major research instrumentation, Science and Technology Centers,
Science of Learning Centers, Partnerships for Innovation, disaster response research

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teams, and the Science and Technology Policy Institute. The FY2003 request for IA
is $111 million, an increase of $4 million over FY2002.
The FY2003 request totals $2.560 billion for research projects, an increase of
5% over FY2002. Support is provided to individuals and small groups conducting
disciplinary and cross-disciplinary research. Included in the total is support for
centers, proposed at $380 million. NSF supports a variety of individual centers and
center programs. The request provides $45 million for Science and Technology
Centers, $53 million for Materials Centers, $62 million for Engineering Research
Centers, and $13 million for Physics Frontiers Centers. Research facility support in
FY2003 is $1.122 billion, a 2% decrease from the FY2002 estimate.
Table 16. Appropriations: National Science Foundation,
FY2002-FY2003
(budget authority in billions)
FY2002 FY2003
FY2003
FY2003
FY2003
Program
enacted request
Senate
House
Conf.
Research, related activities
3.598
3.783
4.150
4.082
4.083
Major research equipment
.139
.126
.160
.059
.150
Education, human resources
.894
.908
.911
.933
.909
(emergency supplemental,
.019
.000
.000
.000
.000
P.L. 107-206)
Salaries and expenses
.170
.203
.194
.182
.190
National Science Board
–
–
.000
.004
.004
Office of Inspector General
.007
.008
.009
.009
.009
Subtotal (NSF)
4.809
5.028
5.423
5.269
5.345
Source: H.Rept. 108-10.
Note: Totals for FY2002 include supplementals. The FY2003 levels shown for the Senate and
enacted versions of the bill do not reflect required cuts to most discretionary programs that were
adopted to hold the bill’s total cost within specified limits.
Major Research Equipment; Facilities Construction. The Major
Research Equipment and Facilities Construction (MREFC) account is funded at
$126.3 million in FY2003, a 9% decrease ($12.5 million) from the FY2002 level.
The MREFC, established in FY1995, supports the acquisition and construction of
major research facilities and equipment that extend the boundaries of science,
engineering, and technology. Seven projects are supported in this account for
FY2003, five ongoing projects and two new projects – construction of the Atacama
Large Millimeter Array ($30 million), the Large Hadron Collider ($9.7 million), the
Network for Earthquake Engineering Simulation ($13.6 million), the South Pole
Modernization Project ($6 million), Terascale Computing Systems ($20 million),
Earthscope ($35 million), and the National Ecological Observatory Network, Phase
I ($12 million). No funds are requested in FY2003 for the High-Performance

CRS-61
Instrumented Airborne Platform for Environmental Research (HIAPER) or the
IceCube R&D project because they have been determined to be of lower priority.
Education and Human Resources. The FY2003 request for the Education
and Human Resources Directorate (EHR) is $908.1 million, a 3.8% increase ($33.1
million) over FY2002. Support at the various educational levels in the FY2003
request is as follows: precollege, $359.6 million; undergraduate, $157.4 million; and
graduate, $136.9 million. Support at the precollege level includes $200 million for
the Math and Science Partnership (MSP), a cornerstone of the President’s education
reform agenda. The MSP will provide funding for states and local school districts
to join with colleges and universities to strengthen K-12 science and mathematics
education.
Funding increases to $27 million for Centers for Learning and Teaching (CLT).
The focus of the CLTs will be on developing the next generation of professionals to
manage and direct the development of instructional materials, large scale
assessments, and education research and evaluation. Support will continue for
Systemic Reform Initiatives and Instructional Materials Development. Selected
programs at the undergraduate level are Advanced Technological Education, Louis
Stokes Alliances for Minority Participation, Scholarship for Service, Historically
Black Colleges and Universities-Undergraduate Program, and Tribal Colleges and
Universities Program.
An increase of 21.7% in FY2003 for graduate level programs will allow NSF
to raise the stipend of graduate fellows and to increase the number of offers to new
fellowships. Support at this level is directed at the Graduate Research Fellowship,
Graduate Teaching Fellows in K-12 Education, Integrative Graduate Education and
Research Traineeships, and Alliances for Graduate Education and the Professoriate.
Funding for the Experimental Program to Stimulate Competitive Research (EPSCoR)
is $75 million. (An additional $30 million from R&RA will support EPSCoR
activities.)
It is anticipated that the H-1B nonimmigrant petitioner fees collected in FY2003
will approximate $92.5 million, $2.5 million above the FY2002 estimate. (P.L. 106-
313, The American Competitiveness in the 21st Century Act, stipulates that H-1B
receipts be used for computer science, engineering, and mathematics scholarships for
disadvantaged students and precollege private and public sector partnerships).
On June 5, 2002, the House passed H.R. 4664 (H.Rept. 107-488), the National
Science Foundation Authorization Act of 2002. The bill authorizes appropriations
for NSF in FY2003, FY2004, and FY2005. For the R&RA, H.R. 4664 provides
$4.138 billion in FY2003, $4.736 billion in FY2004, and $5.446 billion in FY2005.
The bill was referred to the Senate Committee on Health, Education, Labor, and
Pensions. The Senate version of the NSF authorization was introduced on July 29,
2002. S. 2817, the National Science Foundation Doubling Act, attempts to double
the NSF budget over the next five years by authorizing the following appropriations:
FY2003, $5.536 billion; FY2003, $6.391 billion; FY2005, $7.378 billion; FY2006,
$8.520 billion; and FY2007, $9.839 billion. For the R&RA, S. 2817 provides $4.175
billion in FY2003, $4. 843 billion in FY2004, $5.618 billion in FY2005, $6.517
billion in FY2006, and $7. 559 billion in FY2007.

CRS-62
On July 25, the Senate Appropriations Committee reported S. 2797 (S.Rept.
107-222), VA/HUD and Independent Agencies Appropriations Bill, FY2003. The
bill provides a total of $5.353 billion for NSF in FY2003, a 6.3% increase ($317.6
million) above the request and an 11.3% increase ($ 544.9 million) above the
FY2002 estimate. S. 2797 funds R&RA at $4.132 billion, $348.4 million above the
request and $533.3 million above the FY2002 level. The EHR is provided $947.8
million in FY2003, $39.7 million above the Administration’s request and $72.8
million above the FY2002 estimate.
On October 10, 20002, the House Committee on Appropriations reported H.R.
5605 (H.Rept. 107-740), VA/HUD and Independent Agencies Appropriations Bill,
FY2003. The bill provides a total of $5.423 billion for NSF in FY2003, a 7.7%
increase ($387.1 million) above the Administration’s request and a 12.8% increase
($614.4 million) over the FY2002 level. Included in the total support is $4.150
billion for the R&RA and $910.6 million for the EHR.
For additional information on NSF, see: CRS Report 95-307, U.S. National
Science Foundation: An Overview.
Other Independent Agencies
In addition to funding for VA, HUD, EPA, FEMA, NASA and NSF, several
other smaller “sundry independent agencies, boards, commissions, corporations, and
offices” will receive their funding through the bill providing appropriations for VA,
HUD, and Independent Agencies for the fiscal year that began October 1, 2002.
Agency for Toxic Substances and Disease Registry. This agency,
which is placed in the Department of Health and Human Services (HHS), manages
the Toxic Substances and Environmental Public Health program, which issues
toxicological profiles of possible toxic substances. The Agency conducts health
studies, evaluations, or other activities, using biomedical testing, clinical evaluations,
and medical monitoring.
American Battle Monuments Commission. The Commission is
responsible for the construction and maintenance of memorials honoring Armed
Forces battle achievements since 1917. Included among the Commission’s functions
are the maintenance of 24 American military cemeteries and 31 memorializations in
15 foreign countries, as well as three large memorials in the United States.
Cemeterial Expenses, Army. Arlington National Cemetery and the
Soldiers’ and Airmen’s Home National Cemetery are administered by the U.S. Army.
By FY2002, 289,494 persons were interred/inurned in these cemeteries. In addition
to 6,625 interments and inurnments estimated for FY2003, Arlington is the site of
approximately 3,000 other ceremonies, and 4 million visitors, annually.
Chemical Safety and Hazard Investigation Board. The Board, which
was authorized by the Clean Air Act Amendments of 1990, investigates hazardous
substance spills or releases.

CRS-63
Community Development Financial Institutions fund. The Community
Development Financial Institutions (CDFI) Fund was created by P.L. 103-325. The
purpose of the Fund is to provide credit and investment capital to distressed urban
and rural areas by investing in and supporting community based organizations. The
Fund’s programs also encourage banks and thrifts to expand their activities in
distressed communities. The programs provide training and technical assistance to
qualifying financial institutions. In addition, the Fund administers the New Markets
Tax Credit program created by P.L. 106-554. Through this program the Fund
allocates tax credits as part of an effort to expand incentives for business investment
in low-income communities. P.L. 104-19 modified the original Act by giving the
Department of the Treasury the authority to manage the CDFI Fund, although the
Fund’s programs continue to be funded through the VA/HUD bill. The CDFI Fund
has survived despite attempts to eliminate it.
Consumer Product Safety Commission (CPSC). S. 2797 recommends
$56.767 million for the CPSC for FY2003, the same as the Administration requested.
H.R. 5605 recommends $57.117 million, taking into consideration salary increases.
The Commission is an independent regulatory agency charged with protecting the
public from unreasonable product risk and to research and develop uniform safety
standards for consumer products. P.L. 107-73 provided $55.2 million to the
Commission for FY2002.
Corporation for National and Community Service (CNCS). The
Corporation administers programs authorized under the National and Community
Service Act of 1990 (NCSA) and the Domestic Volunteer Service Act of 1973
(DVSA). The DVSA programs — e.g., Foster Grandparents Program and Senior
Companion Program — are funded under the Labor/HHS Appropriation bill.
Authorization for CNCS, and programs and activities authorized by NCSA, expired
at the end of FY1996. Since then, continued program authority has occurred through
the appropriations process.
In past Congresses, the key issue concerning the Corporation and the NCSA
programs has been budgetary survival. Concerns expressed by some Members have
included the issues of partisan activities, program costs, and federally funding a “paid
volunteer” program. In recent years, concerns were specifically expressed about
whether CNCS could be audited and whether the audits were “clean.” The
Corporation has now received its second consecutive unqualified or “clean” opinion
on its financial statements audit.
For further information on the Corporation and its programs see: CRS Report
RL30186, Community Service: A Description of AmeriCorps, Foster Grandparents,
and Other Federally Funded Programs, and CRS Report RS21246, National and
Community Service: Reauthorization rf the National and Community Service Act of
1990 and the Domestic Volunteer Service Act of 1973.
Council on Environmental Quality; Office of Environmental Quality.
These two entities are within the Executive Office of the President. The Council
oversees and coordinates interagency decisions in matters affecting the environment;
the Office provides the professional and administrative staff for the Council.

CRS-64
U.S. Court of Appeals for Veterans Claims. The U.S. Court Appeals for
Veterans Claims has exclusive jurisdiction to review decisions of the Board of
Veterans’ Appeals, and has the authority to decide relevant conflicts in the
interpretation of law by VA and the Board of Veterans’ Appeals. The Court’s
decisions constitute precedent to guide subsequent decisions by that Board.
Federal Consumer Information Center (FCIC). The Center, administered
through the General Services Administration (GSA), helps federal agencies distribute
consumer information and promotes public awareness of existing federal publications
through publication of the quarterly Consumer Information Catalogue, and the
Consumer’s Action Handbook.
Federal Deposit Insurance Corporation. The FDIC’s Office of the
Inspector General is funded from deposit insurance funds, and has no direct support
from federal taxpayers. Before FY1998, the amount was approved by the FDIC
Board of Directors; the amount is now directly appropriated to ensure the
independence of the IG office.
Interagency Council on the Homeless. The Interagency Council on the
Homeless (ICH) is an independent agency established by the McKinney-Vento
Homeless Assistance Act of 1987, to oversee the efforts of federal agencies and
others involved in addressing the issues of homelessness. The Council has been
funded through HUD’s Homeless Assistance Grants, but the Committee contends
that a separate account would achieve the independence entailed by the law creating
the Council. The Committee asserts that the Council should develop and lead the
effort to end homelessness, and “[i]n order for the ICH to be successful in this
endeavor relevant Federal departments and agencies should defer to the ICH on
policy and funding proposals that affect homelessness.”
National Credit Union Administration (NCUA). The NCUA regulates
credit unions, administering two primary programs. The Central Liquidity Facility
(CLF) is a mixed ownership government corporation established by P.L. 95-630 to
improve the general financial stability of credit unions by serving as a lender of last
resort to credit unions experiencing unusual or unexpected liquidity shortfalls. The
Community Development Revolving Loan Fund (CDRLF) was established in 1979
by P.L. 96-123, and provides support to low-income credit unions.
Central Liquidity Facility. The CLF is owned by its member credit unions and
it is managed by the National Credit Union Administration. The CLF can finance
loans using its assets and it can also borrow from the Federal Financing Bank to meet
liquidity demands. The borrowing limit is specified by language in the VA-HUD
appropriation bill. Congress also determines the level of CLF operating expenses,
which are not funded through appropriations but by earned income.
Community Development Revolving Loan Fund. The CDRLF has been
administered by the National Credit Union Administration since 1987. The Fund
makes low-interest loans and technical assistance grants to low-income credit unions.

CRS-65
National Institute of Environmental Health Sciences. This Institute is
within the National Institutes of Health, administered by the Department of Health
and Human Services (HHS).
Table 17. Appropriations: Other Independent Agencies,
FY2002-FY2003
(budget authority in billions)
FY2002 FY2003 FY2003 FY2003 FY2003
Program
enacted request
House
Senate
Conf.
Agency for Toxic Substances and
Disease Registry
.078
.078
.089
.081
.083
American Battle Monuments
Commission
.035
.030
.035
.030
.035
Chem. Safety and Hazard
Investigations Board
.008
.008
.007
.008
.006
Cemetery Expenses, Army
.023
.024
.032
.024
.032
Community Development Financial
Institutions .080
.068
.080
.073
.075
Consumer Product Safety Comm.
.055
.057
.057
.057
.057
Corporation for National and
Community Servicea
.407
.636
.005
.413
.387
Council, Environ. Quality; Office,
Environ. Quality
.003
.003
.003
.003
.003
Court of Appeals, Veterans Claims
.013
.015
.014
.015
.014
Fed. Consumer Inform. Center
.007
.013
.012
.013
.012
Federal Deposit Insurance
Corporation (transfer)
(.034)
(.031)
(.031)
(.031)
(.031)
Interagency Council on Homeless
.000
.000
.000
.002
.002
National Credit Union Admin.
.001
.001
.001
.001
.001
National Institute, Environmental
Health Sciences
.081
.074
.084
.076
.084
Neighborhood Reinvestment Corp.
.105
.105
.105
.110
.105
Office, Science &Tech.
.005
.005
.006
.005
.005
Selective Service System
.025
.026
.026
.026
.026
Subtotal: Other agencies
0.926
1.144
0.557
1.047
0.923
Source: H.Rept. 108-10.
Note: Totals for FY2002 include supplementals. The FY2003 levels shown for the Senate and
enacted versions of the bill do not reflect required cuts to most discretionary programs that were
adopted to hold the bill’s total cost within specified limits.

CRS-66
Neighborhood Reinvestment Corporation (NRC). The NRC leverages
funds for reinvestment in older neighborhoods through community-based
organizations called Neighbor Works. Among projects supported by NRC financing
are lending activities for home ownership of low-income families. Nationwide, there
are 184 of these organizations, serving 825 communities in 45 states, with 70% of
the people served living in very low and low-income brackets.
Office of Science and Technology Policy. The Office of Science and
Technology Policy coordinates science and technology policy for the White House.
The Office provides scientific and technological information, analysis and advice to
the President and the executive branch, and reviews and participates in the
formulation of national policies affecting those areas.
Selective Service System (SSS). The SSS was created to supply
manpower to the U.S. Armed Forces during time of national emergency. Although
since 1973, the Armed Forces have recruited personnel through voluntary enlistment
incentives, the SSS remains the primary vehicle for conscription should it become
necessary. In 1987, the SSS was given the task of developing a post-mobilization
health care system that would assist with providing the Armed Forces with health
care personnel in time of emergency.
Selected World Wide Web Sites
Federal Consumer Information Center (FCIC) [http://www.pueblo.gsa.gov] and
[http://www.info.gov/]
Environmental Protection Agency (EPA), Summary and Justification of Budget.
[http://www.epa.gov/ocfopage]
Corporation for National and Community Service
[http://www.cns.gov/]
Department of Housing and Urban Development (HUD).
[http://www.hud.gov]
Federal Emergency Management Agency (FEMA)
[http://www.fema.gov]
National Aeronautics and Space Administration (NASA).
[http://www.hq.nasa.gov]
National Science Foundation (NSF).
[http://www.nsf.gov]
Office of Management and Budget (OMB).
[http://www.whitehouse.gov/omb/]
Department of Veterans Affairs (VA).
[http://www.va.gov]

CRS-67
Additional Reading
CRS Report RL30803, Veterans Issues in the 107th Congress, by Dennis Snook.
CRS Report RL30916, Housing Issues in the 107th Congress, by Richard Bourdon.

CRS Report RL30486, Housing the Poor: Federal Programs for Low-Income
Families, Morton J. Schussheim.
CRS Report RL30589, HOPE VI: The Revitalization of Severely Distressed Public
Housing, by Susan M. Vanhorenbeck.
CRS Report RS20704, Housing Opportunities for Persons with AIDS(HOPWA) by
M. Ann Wolfe.
CRS Report RL30442, Homelessness: Recent Statistics and Targeted Federal
Programs, by M. Ann Wolfe.
CRS Report RS20670, Temporary Suspension of New Mortgages under the FHA
General and Special Risk Insurance Funds, Bruce E Foote.
CRS Report 98-323, Wastewater Treatment: Overview and Background, by Claudia
Copeland.
CRS Issue Brief IB10101, The Environmental Protection Agency’s FY2003 Budget,
by Martin R. Lee.
CRS Report RS20736, Disaster Mitigation Act of 2000 (P.L. 106-390): Summary of
New and Amended Provisions of the Stafford Disaster Relief Act, by Keith Alan
Bea.
CRS Report 95-307, U.S. National Science Foundation: An Overview, by Christine
M. Matthews R. Lee.
CRS Report RL30186, Community Service: A Description of AmeriCorps, Foster
Grandparents, and Other Federally Funded Programs, by Ann M. Lordeman.
CRS Issue Brief IB10114, Brownfields and Superfund Issues in the 108th Congress,
by Mark Reisch.
CRS Report RS21367, Emergency Preparedness and Response Directorate of the
Department of Homeland Security, by Keith Bea, William Krouse, Daniel
Morgan, Wayne Morrissey, and C. Stephen Redhead.
CRS Report RL31347, The National Aeronautics and Space Administration's
FY2003 Budget Request: Description, Analysis, and Issues for Congress, by
Marcia S. Smith and Daniel Morgan.

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CRS Report RL31821, The National Aeronautics and Space Administration's
FY2004 Budget Request: Description, Analysis, and Issues for Congress, by
Marcia S. Smith, Daniel Morgan, and Wendy H. Schacht.
CRS Report RS21430: The National Aeronautics and Space Administration:
Overview, FY2004 Budget in Brief, and Issues for Congress, by Marcia S.
Smith.