Revised September 10, 2002

 

 FUNDING NEW WELFARE-TO-WORK HOUSING VOUCHERS
SHOULD BE A PRIORITY FOR FISCAL YEAR 2003
By Barbara Sard and Shayna Strom

Executive Summary

PDF of the full report Related reports

If you cannot access the files through the links, right-click on the underlined text, click "Save Link As," download to your directory, and open the document in Adobe Acrobat Reader.

The Senate VA-HUD appropriations bill for fiscal year 2003 (S. 2797), approved by the Senate Appropriations Committee in late July, includes several improvements to the Welfare-to-Work Housing Voucher Program that should enable public housing agencies (PHAs) to build on the program’s successes to date.  The legislation also should encourage states and housing agencies to contribute additional resources to help families have stable, affordable housing during their transition from welfare to work.

In addition, the legislation would fund approximately 3,300 new welfare-to-work vouchers, as well as an overall total of 15,000 new vouchers.  Unfortunately, these amounts fall well short of the need for new vouchers.  Congress should fund at least the 34,000 new vouchers the Bush Administration requested and should set aside one-third of these new vouchers for families moving from welfare to work.

• Most families leaving welfare do not earn enough to afford adequate-quality housing.  While the average renter household paid 26.5 percent of its income for housing in 2001, the average working household that previously received welfare benefits must pay more than twice as large a share of its income — 58 percent — to rent a modest two-bedroom unit.  The sharp increases in housing costs in recent years are making housing less affordable for such families.

• Housing vouchers have been shown to help families leave welfare and succeed in the workplace.  A recently released study of welfare recipients in three cities found that families with federal housing vouchers were nearly twice as likely to leave welfare as comparable renters without housing assistance.  In addition, results from several studies suggest that former welfare recipients with housing vouchers are more likely to become and remain employed than those without vouchers.  Vouchers also appear to promote improvements in children’s health and educational success and reductions in their involvement in violent crime.

• Despite the apparent effectiveness of housing assistance in advancing welfare reform goals, only about one-third of the families currently or recently receiving Temporary Assistance to Needy Families (TANF) benefits also receive federal housing assistance.  Federal housing programs serve only about one-quarter of the eligible low-income households, and few states invest significant resources in low-income housing programs.

To help families for whom the lack of stable, affordable housing is a barrier to employment, Congress in fiscal year 1999 funded 50,000 “welfare-to-work” housing vouchers for current or recent welfare recipients.  HUD subsequently awarded the vouchers on a competitive basis to 131 public housing agencies in 35 states.  Through July 2002, more than 60,000 families had participated in the program.

Families with welfare-to-work vouchers have been significantly more successful at leasing housing than families with regular Section 8 vouchers.  Some 77 percent of the families issued welfare-to-work vouchers in 2000 succeeded in using them to rent housing, compared with a 65 percent success rate for households issued regular vouchers.  Welfare-to-work vouchers have worked so well, in fact, that 40 percent of the PHAs participating in the program have transferred regular vouchers that have become available to expand the size of their welfare-to-work programs.  Early reports also indicate that welfare-to-work vouchers have helped many families achieve and sustain independence from welfare assistance.

In addition, the welfare-to-work voucher program has encouraged cooperation between welfare and housing agencies.  HUD’s criteria for awarding the vouchers gave PHAs a strong incentive to plan their welfare-to-work voucher programs in conjunction with state or local welfare agencies and to make use of employment-related resources from the welfare agency, as well as other public or private sources.

The Senate VA-HUD appropriations bill for fiscal year 2003 would add permanent authorization for the welfare-to-work program to the U.S. Housing Act and make a number of improvements in the program:

• Promoting ongoing collaboration between housing and welfare programs.  Some PHAs operating welfare-to-work voucher programs have reported difficulty in securing the ongoing cooperation of welfare or workforce agency staff after vouchers were awarded.  The new legislation requires PHAs, as a condition of receiving new welfare-to-work vouchers, either to have an effective welfare-to-work housing program in place or to have a signed memorandum of understanding with the local welfare and workforce agencies specifying their future responsibilities.  This should help ensure that the collaboration between PHAs and these agencies continues through the program’s implementation.

• Helping voucher holders move to areas with more job opportunities.  One of the strong rationales for funding welfare-to-work vouchers in fiscal year 1999 was recognition of the growing “spatial mismatch” between where a majority of TANF recipients live (central cities) and where a majority of job growth is occurring (the suburbs).  Anecdotal evidence suggests, however, that relatively few families have used these vouchers to move from central city to suburban locations.  The Senate legislation would require that HUD, in awarding new welfare-to-work vouchers, give preference to PHAs that will facilitate families’ moves to areas with greater job opportunities.

• Encouraging PHAs and states to contribute additional resources.  The Senate legislation would require HUD to give preference in awarding new welfare-to-work vouchers to PHAs that commit some of their existing vouchers to the welfare-to-work program, as well as to PHAs that administer state- or locally-funded welfare-to-work housing subsidies.  Moreover, state welfare agencies may be more willing to commit TANF or state maintenance-of-effort funds to rental assistance if doing so may leverage additional federal housing resources for their clients.

This paper first briefly reviews data on the housing needs of families moving from welfare to work and research indicating that housing vouchers can help families leave welfare and succeed in the workplace while also benefiting their children.  It then discusses how the fiscal year 1999 welfare-to-work voucher program has fared, including the program’s effectiveness in improving families’ ability to use housing vouchers and encouraging collaboration between welfare and housing agencies.  The third part of the paper analyzes the improvements in the program contained in the fiscal year 2003 Senate VA-HUD appropriations bill.  The analysis concludes with a discussion of the importance of funding a larger number of new vouchers than the Senate bill does, including additional welfare-to-work vouchers.

Click here to read full report.