Earlier this summer, the D.C. Council undermined Initiative 17, saying the District can't afford the "right to shelter" anymore. Economics aside, sympathy for the homeless is seemingly on the wane in our city, perhaps because people no longer believe there are solutions to the problem.

But there are solutions, alternatives to shelters and mental hospitals that can creatively address the differing needs of the homeless -- and without breaking the bank. And as surprising as it may sound to the legions of the cynical, one such solution is in operation in the District right now.

In a city that will spend nearly $8,000 a person to shelter single men and women in trailers or shelters where drug abuse and violence are a daily occurrence, this program is placing homeless mentally ill clients into humane housing at a comparatively reasonable cost.

As part of the June 2, 1989, agreement between the D.C. Commission on Mental Health Services and the Dixon Committee, which was formed in response to a suit brought on behalf of a chronically mentally ill person, 100 homeless mentally ill people were to be enrolled in case management services and moved into permanent housing -- not temporary shelter -- by FY '90. Six private agencies were identified to provide services at an average cost of $7,000 per person per year, or about one-third of one percent of D.C. Mental Health's yearly budget.

Each person enrolled has to have a serious and persistent mental illness and has to be either living on the streets or in a shelter. Each is eligible for $401 per month in federal benefits plus food stamps. Obtaining benefits -- Medicaid, housing, psychiatric and medical treatment -- is part of the services contracted for under the agreement. Additional services, including arranging for vocational and educational services and monitoring compliance with required psychiatric and medical treatment, are also part of the package.

The project was based on a study of a prototype program for 25 D.C. homeless women, which ran from March of 1987 to March of 1990, and which was reported upon in the March 1990 Hospital and Community Psychiatry Journal. In that program, 80 percent of the women were still in their apartments after three years.

As the director of Calvary Shelter for homeless women, I have referred six women to the Dixon program, and I know that it works. The homeless mentally ill, like other groups inhabiting our shelters, need professional help. Shelter alone is not enough. They must have a continuum of support in the community. For the city to spend $7,000 per year not just to house this population but to provide professional assistance for their special needs while obtaining federal benefits is good public policy.

As a shelter staff, one of our greatest challenges is to convince our residents that their possibilities and potential as individuals are greater than they have imagined -- great enough to enable them to leave the shelter.

As a community, one of our greatest challenges is to convince ourselves that we can make significant inroads into the problem of homelessness. We do not need more institutional housing for the mentally ill. We need more original and creative solutions to their problems, like this housing program.

As a matter of dignity and public policy, this rare combination of cooperation between the city, nonprofit shelters and the contractors who provide the housing and services has served the taxpayers well and, more important, served the homeless mentally ill well.

Let's examine this program and expand it. Let's publicize it and applaud it.

-- Larry Graham is director of the Calvary Women's Shelter in Washington.