Statement of Nancy O. Andrews, President and CEO of the Low Income Investment Fund, on President Trump’s Fiscal Year 2018 Budget ‘Blueprint’
This week, President Trump released further details on the deeply troubling budget outline for federal fiscal year (FY) 2018 he provided to Congress in late March. Unfortunately, this more complete budget, if enacted would inflict even greater harm on communities and vulnerable families across the country than its preview suggested. Not only does the Administration maintain proposals to eliminate key programs at the Departments of Treasury and Housing and Urban Development (HUD), it now targets other effective housing and education programs.
Most alarming, the Administration’s “Blueprint” proposes to halt funding for the Capital Magnet Fund (CMF) and the National Housing Trust Fund (NHTF). These programs were created by the bipartisan Housing and Economic Recovery Act of 2008 (HERA) to target a small share of the profits from Fannie Mae and Freddie Mac to increase America’s supply of affordable housing.
The call to end funding for the CMF is especially problematic given recent evidence of its remarkable track record. Last month, the Community Development Financial Institutions (CDFI) Fund reported on the accomplishments of an $80 million appropriation for the CMF in FY 2010. As detailed here the impact has been nothing short of stunning:
- $1.8 billion leveraged in other investment by the public and private sector (a 20:1 ratio);
- 10,800 affordable homes produced for families, seniors, veterans, persons with disabilities and the formerly homeless;
- 15,000 jobs created or retained in communities across America; and
- Constant recycling and redeployment, as CMF funds are returned and reinvested in new projects, meaning that the return on taxpayer dollars continues to multiply for 10 years.
LIIF’s experience illustrates CMF’s success. We deployed a $6 million CMF grant to spur $146 million in other investments (a 21:1 ratio), blending public and private capital to put more than 200 people to work on 16 projects, producing over 1,600 affordable rental units.
The CMF is poised to continue to yield dramatic results. The CDFI Fund projects that its recent allocation of an additional $92.5 million through CMF will create approximately 17,000 additional jobs, produce 17,000 affordable housing units and attract more than $2.2 billion in private investment. An additional $120 million is expected be available for the next funding round. The Administration’s attempt to defund a program that produces so high a return on taxpayer investment is mystifying.
The Blueprint’s attempt to redistribute funds from the CMF and NHTF in the name of deficit reduction is particularly egregious given that HERA was designed precisely to create a durable mechanism for addressing the nation’s need for affordable housing outside of the annual federal budget process. Meanwhile, the crisis of housing affordability has only grown. While the nation has seen a broader economic recovery, rising housing costs coupled with income stagnation have disproportionately hurt the poorest Americans. Consequently, nowhere in America can full-time workers earning the minimum wage afford a modest two-bedroom rental.
Among the poorest households, the problem is staggering. Nearly three-fourths of renters with incomes below $15,000 spend over half of this income on rent alone. In short, the CMF and NHTF are needed now more than ever.
Also disappointing is that the Administration’s detailed FY 2018 budget proposal on education undermines one of the few bright spots in the initial outline. The budget proposes charter school programs appropriations aligned with levels in the landmark Every Student Succeeds Act (ESSA) of 2015.However, it would reduce overall support for the Department of Education by more than 13.6 percent ($10.6 billion) from the bipartisan, omnibus appropriations agreement enacted by Congress just a few weeks ago. This will put the bipartisan agreement around ESSA at risk, harming the nation’s public education system.
LIIF strongly supports high quality education for all kids, recognizing that a good education can serve as a linchpin of broader neighborhood revitalization initiatives, such as the East Lake neighborhood in Atlanta. Charter schools are often the educational alternative that low income communities turn to, when their traditional public schools are failing. Indeed, LIIF chairs the Charter School Lenders Coalition, a network of nonprofit CDFIs that have invested over $2.5 billion to create and enhance more than 200,000 seats in high quality charter schools nationwide. But we cannot support increasing funding for important tools like the charter school credit enhancement program at the expense of other critical education needs.
Simply put, the budget blueprint for FY 2018 outlined by President Trump today fails to provide communities and families nationwide with the tools they need to thrive. LIIF looks forward to working with Congress—which has many longstanding Congressional champions of bipartisan approaches to affordable housing, community development and educational opportunity—to enact one that does.
 Shortly after HERA’s passage, the deepening housing and economic crisis drove the GSEs into conservatorship, and for six years payments to the CMF and NHTF we suspended. In December, 2014, Federal Housing Finance Administration (FHFA) Director Mel Watt resumed payments to both funds. In April 2016, HUD announced $174 million in NHTF funding available to states.
 Out of Reach 2016. National Low Income Housing Coalition. http://nlihc.org/sites/default/files/oor/OOR_2016.pdfc.
State of the Nation’s Housing 2016. Harvard Joint Center for Housing Studies. http://www.jchs.harvard.edu/sites/jchs.harvard.edu/