Shallow Subsidy: Helping More Veterans Avoid Homelessness Caused by Ever-Rising Rents

Impact

Summary: The Alliance strongly supports the Administration’s request to increase FY23 funding for Supportive Services for Veterans Families (SSVF) to $730M, much of it to support the continued operation of the promising Shallow Subsidy initiative, which had largely been paid for in FY22 with one-time COVID relief funding. 

What is Shallow Subsidy: The affordable housing crisis has challenged the Department of Veterans Affairs (VA) to innovate to prevent more low-income Veteran households from becoming homeless.  The Department’s Shared Subsidy initiative extends rental support payments for longer periods of time than the SSVF’s Rapid Rehousing and Homelessness Prevention programs.  Instead of expecting Veterans to accommodate VA’s programs, VA is striving to design its programs around the needs of Veterans.

How Shallow Subsidy Got Started: Initially, back in 2019, Shallow Subsidy was available only in 13 high-cost, low-vacancy cities. Commendably, VA expanded its Shallow Subsidy initiative to include an additional 237 grantees in all parts of the nation—because high rents are a problem for all Veterans with the lowest incomes, not just those living in big cities. To support the FY22 national expansion of Shallow Subsidy, $350 million in supplemental funding, which includes $200 million in American Rescue Plan Act funding, was awarded to all SSVF grantees.

Where Shallow Subsidy Is Now: According to VA, through January 2022, 1,032 Veterans have been placed in permanent housing with the support of Shallow Subsidy.  According to VA, most of these placements have only recently begun: Shallow Subsidy funding was only released in November 2021 and grantees have just begun ramping up services.  The national average for renting a one-bedroom apartment is $1,621 per month or $19,452 annually.  Shallow Subsidy would pay $9,726 of that annual total.  If 15,000 Veterans received the Shallow Subsidy the annual cost for the rent subsidy would be $145,890,000, which is one-half of the cost of the program.  The costs of the other one-half of Shallow Subsidy are services (40 percent) and administration (10 percent), which add up to a potential base year cost of $291,780,000.

Incentivizing Work and Independence: During the period in which they are enrolled in Shallow Subsidy, Veteran households are encouraged to maximize their income and build up savings to smoothly transition off the rental assistance and into independence.  Veteran households with members who can work are connected with employment programs, including the Department of Labor’s Homeless Veterans Reintegration Program, Social Security’s Ticket to Work Program, as well as state, local, and philanthropic employment programs.  To incentivize the generation of extra income, whether through employment or benefits, the amount of the rental subsidy does not change for the duration of the household’s enrollment in Shallow Subsidy, even if income increases.

Veteran households remain responsible for a share of the rent throughout their participation in the program. In the event of a short-term inability to pay rent, grantees try to use local rental assistance programs to fill in the gap. If the inability lasts longer, Shallow Subsidy enrollees can be shifted to SSVF until the Veteran household is able to restore its income and pay its share of the rent.

What Happens After Shallow Subsidy: Towards the end of the two years, case workers will work with Veteran households to determine whether their income would allow them to maintain permanent housing after leaving the program.  Veteran households that appear unlikely to be able to cover the full rent, including many aging Veterans, can be assisted by case workers to access permanent rent subsidies through local housing authorities or otherwise.  And some Veteran households, particularly those who do not need high levels of service, may receive another two-year term of Shallow Subsidy.

Why the Alliance believes Shallow Subsidy is a homelessness initiative that deserve your office’s support:

The extra time afforded by Shallow Subsidies is key: Homelessness can be overwhelming and disorienting. It takes a toll on physical and mental health.  It has profound legal consequences. It can disrupt if not end employment and school arrangements.  It can leave Veterans estranged from families and friends.  Sometimes, SSVF doesn’t allow enough time to regain bearings, let alone navigate benefits bureaucracies and job markets, as well as find a place to live.  Sometimes, a longer option like Shallow Subsidy is needed to develop a strategy to maximize income and identify suitable rentals that will promote prospects for permanent housing.

Shallow Subsidies allows VA to use its finite homelessness resources more efficiently and more flexibly: In the past, we could not offer a certain type of Veteran the service they actually needed.  They lived in a high-cost area and needed more income support, but they didn’t need HUD-VASH, or forever care.  But they needed more than SSVF.  Consistent with the principles of progressive engagement, VA tries to err on the side of independence, i.e., steering Veterans who need more than SSVF towards Shallow Subsidy, rather than HUD-VASH.  This reduces the cost of VA homelessness programs generally and promotes the independence of Veteran households.

Shallow Subsidies is a natural extension of SSVF: By the time most Veteran households enter Shallow Subsidy, they are accustomed to working with case managers and have likely already developed at least a rough strategy for achieving permanent housing; and because of the steady and reliable payment of rent for two years, landlords are eager to participate in the program. Therefore, the program has less need of case workers and housing navigators than SSVF and HUD-VASH.

Shallow Subsidy is excellent preparation for Veteran households to attain independence: The requirement that Veteran households must contribute towards their rent while enrolled in Shallow Subsidy gives them skin in the game and makes them feel more invested in the program; and having to pay one-half of the rent every month for two years is good preparation for independence.

Shallow Subsidy helps Veteran households find accommodations where they want to live—within reason: The program requires enrolled Veteran households to identify neighborhoods that are suitable while they are paying one-half of their rent and afterwards when they will be paying all their rent.  It’s often therapeutic for Veterans who have experienced homelessness to live in familiar surroundings, where they know the people, perhaps including their family and friends, rather than start over somewhere new.  In many cases, these Veterans have contributed to the area’s economy, working and perhaps even owning property.  It’s not their fault that rents in their hometowns are rising faster than incomes.  Most Veterans in Shallow Subsidy do not own cars, so they are more likely to choose areas to live which feature comprehensive public transportation, which often means renting in higher-cost areas.

Summary

The Alliance strongly supports efforts to increase funding for the Department of Veterans Affairs (VA) Supportive Services for Veterans Families (SSVF) homelessness program in order to accommodate the continued nationwide operation of the promising Shallow Subsidy initiative.  This will require changes in VA’s authorization law and a significant increase for SSVF in the FY23 Military Construction-Veterans Affairs Appropriations Bill.  

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