May 2001

From University of Pennsylvania

Housing the homeless mentally ill pays for itself, according to University of Pennsylvania study

PHILADELPHIA —Huge amounts of money are being spent in ways that keep the homeless mentally ill on the streets – even though the same amount of money could provide them with housing.

A study conducted by researchers from the University of Pennsylvania tracked the cost of nearly 5,000 mentally ill homeless people in New York City for two years and for two years after they were housed. The study’s results are being published in Housing Policy Debate, a journal of the Fannie Mae Foundation, the largest foundation dedicated to affordable housing.

The study by Penn’s Center for Mental Health Policy and Services Research concludes that, on average, the homeless mentally ill use $40,500 a year in public funds for shelter, jail and hospital services. But providing them with supportive housing would cost the same amount while also providing them with comprehensive health support and employment services.

"A considerable amount of public dollars is spent essentially maintaining people in a state of homelessness," said the study’s lead author, Dennis P. Culhane, associate professor of social welfare policy at the University of Pennsylvania. "What this study proves is that by putting those same dollars into supportive housing, the solution can pay for itself. States and the federal government should follow New York’s lead and do the right thing here. The public good demands it."

Culhane and fellow Penn researchers Stephen Metraux and Trevor Hadley tracked homeless people with severe mental illness through official records of their use of jails, prisons, hospitals and shelters in New York in a study facilitated by the Corporation for Supportive Housing in New York with the participation of 10 city and state agencies and five funding organizations.

"Policymakers could substantially reduce homelessness for a large and visible segment of the homeless population, often thought to be stubbornly beyond the reach of the social-welfare safety net, at no or marginal cost to the public," Culhane said.

Approximately half of the people studied were placed in supportive housing between 1993 and 1997 through a major public initiative of the State and City of New York, known as the NY/NY agreement. The Penn study looked at the impact of a housing placement on the use of hospitals, jails and shelters for two years following placement in housing.

Further, it is possible that, when other costs are factored in, providing supportive housing for the homeless mentally ill might actually save public money.

Had the study’s authors included savings associated with reduced use of federally funded homeless services; drop-in centers and street outreach programs; reduced costs to crime victims, the courts and the police; and reduced costs of maintaining public spaces associated with street homelessness, the cost of housing the homeless mentally ill could have proven to be a net savings for the public.

Further, the study did not account for the unquantifiable benefits of housing mentally ill people:

  • the positive economic and aesthetic impact the housing has on neighborhoods by rehabilitating dilapidated buildings.

  • the increased sense of safety within communities.

  • the sense of dignity and social connection experienced by formerly homeless people.

The Penn study can be viewed at http://www.fanniemaefoundation.org.












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