This document presents witnesses' testimonies and prepared statements from the Congressional hearing called to review the United States Department of Health and Human Services' response to mental illness, focusing on the delivery of services for the severely mentally ill, and the leadership role of the National Institute of Mental Health in helping states and communities improve those services. Issues examined include the extent of the problems regarding lack of appropriate services for the severely mentally ill, why federal entitlement programs have been inadequate in providing basic living requirements and treatment for many of the severely mentally ill, and what federal programs have been most effective. Opening statements are included by Representatives Ted Weiss and Jim Lightfoot. Witnesses providing testimony include: (1) Ann Baxter, director, Calvary Shelter, Washington, D.C.; (2) Davis Pollack, representing the National Alliance for the Mentally Ill; (3) Shervert Frazier, psychiatrist in chief, McLean Hospital, Belmont, Massachusetts; (4) Charles Kiesler, provost, Vanderbilt University, representing the American Psychological Association; (5) Steven Sharfstein, vice president, Sheppard and Enoch Pratt Hospital, Baltimore, Maryland, representing the American Psychiatric Association; (6) Joseph Autry, acting associate administrator for policy coordination, Alcohol, Drug Abuse, and Mental Health Administration; (7) Frank Sullivan, acting director, National Institute of Mental Health; (8) Richard Surles, administrator, Office of Mental Health/Mental Retardation, Philadelphia Health Department, Pennsylvania; and (9) Martha Knisley, deputy director, Ohio Department of Mental Health. Letters, statements, and other relevant materials submitted for the record are included. (NB)