Revised February 2, 1999

Welfare-to-Work Housing Vouchers:
An Innovative Approach to Welfare Reform
by Jeff Lubell and Barbara Sard

For 1999, the President and Congress have created a promising new program to help states achieve their welfare reform objectives.  Designed to help families for whom the lack of stable, affordable housing is a barrier to employment, the Welfare-to-Work Voucher Program will provide 50,000 Section 8 housing vouchers to families attempting to make the transition from welfare to work.  These vouchers can be used to help families move to areas with better job opportunities or transportation networks or to provide incentives for families on welfare to secure and retain employment.

In conjunction with state and local welfare agencies and local entities administering Department of Labor (DOL) welfare-to-work grants, public housing agencies (PHAs) will compete for the vouchers in a competition administered by the U.S. Department of Housing and Urban Development (HUD).  Winners of the competition will receive an allocation of new Section 8 housing vouchers, which will carry the standard administrative fee.  Applicants will have substantial flexibility to design programs that meet local needs and support local welfare reform strategies.

Applications for the welfare-to-work voucher program are due April 28, 1999. To obtain a copy of the request for proposals (termed a Notice of Funding Availability, or NOFA) and an application kit, contact HUD at 1-800-955-2232.  The NOFA also may be obtained from the January 28, 1999 Federal Register or downloaded from the Internet at: www.hudclips.org (select “Current NOFAs” from the main menu).
 
 

Promoting Employment Through Welfare-to-Work Vouchers

The vouchers families receive through the welfare-to-work voucher program will subsidize the rents of apartments they locate in the private market.  Families receiving welfare-to-work vouchers will pay approximately 30 percent of their income in rent; the difference between the family’s rent payment and a “reasonable rent standard” for housing will be paid by the PHA with funds obtained through HUD.

There are any number of different ways to use the new vouchers to promote families’ transition from welfare to work.  The following are a few examples:

These are only a few of the different ways in which welfare-to-work vouchers can contribute to state or local welfare reform efforts. Agencies interested in applying for the vouchers may choose whatever design or combination best fits the needs of families attempting to make the transition from welfare to work in their community.
 
 

Families Eligible for Welfare-to-Work Vouchers

To be considered for one of the new welfare-to-work housing vouchers, a family must be eligible to receive, currently receiving, or a recipient within the past two years of federal or state welfare funds.(1)  In addition, the housing voucher must be “critical” to the family’s success in obtaining or retaining employment.  Although families that already have Section 8 housing certificates or vouchers are not eligible participants, families participating in other housing programs are eligible.  Thus, families that live in public housing or benefit from another project-based subsidy are eligible participants.  Families receiving time-limited rental assistance under the HOME block grant or a state or local initiative also are eligible for the new vouchers.

The statute authorizing the welfare-to-work voucher program does not specify how participants are to be selected from the large number of eligible families.  Agencies awarded welfare-to-work vouchers will have substantial freedom to determine which families receive the vouchers.(2)  Agencies interested in applying for welfare-to-work vouchers should give this matter careful attention, as they must specify in their application how they plan to select families to participate.

All families awarded welfare-to-work vouchers must be on a PHA’s waiting list for Section 8 assistance.  If necessary, a PHA may reopen its waiting list for this purpose.
 
 

Agencies Eligible to Apply for Funds

Congress clearly envisions the close collaboration of PHAs and other agencies in developing and implementing local welfare-to-work voucher programs.  While the applicant for funds to administer a welfare-to-work voucher program must be a PHA, the NOFA requires that PHAs develop their proposed programs “in coordination” with state or local agencies administering the TANF program (i.e., welfare agencies) and DOL Welfare-to-Work grants (in most cases, local Private Industry Councils).  The NOFA also requires that each application be accompanied by certification from these other agencies that they support the PHA’s application and will cooperate with the PHA to ensure the coordinated delivery of welfare-to-work services.

In light of Congress’ intent to foster coordinated efforts to help families receiving the new vouchers move from welfare to work, the NOFA gives preference in funding to PHAs exhibiting close and thoughtful coordination and collaboration with other agencies.  The better applications are likely to spell out in some detail the different services each agency promises to contribute to make the program a success.  Applicants should think creatively and specifically about the types of services that welfare agencies and recipients of DOL grants can provide to complement the housing component of this program and help participating families both find and retain employment.

Prospective applicants also should consider the possibility of additional partners, such as employers, nonprofit organizations or government agencies other than those specifically mentioned in the statute.  The participation of these entities could enhance the effectiveness of the program and increase its base of local support.

In addition to facilitating coordination among different agencies and building local support, partnerships can provide services (or funding for services) to help participating families find and retain jobs.  The vouchers awarded through the welfare-to-work program will carry the standard Section 8 administrative fee, which is unlikely to be sufficient to cover all the services that applicants may wish to bundle with the vouchers in a comprehensive welfare-to-work program.  To ensure that participating families have the supportive services they need to make a successful transition from welfare to work, applicants should reach out to partners that will provide or fund these services.

Finally, the NOFA permits PHAs to partner with other PHAs.  For example, a PHA that serves an area with a large number of eligible families may wish to partner with a PHA that serves a job-rich area.  Similarly, a group of PHAs serving a single metropolitan region may wish to apply as a consortium to take advantage of economies-of-scale.  By working and/or applying together, two or more PHAs may present a stronger application and stand a better chance of receiving an allocation of the new vouchers.(3)
 
 

Content of Proposals

Local housing agencies may apply for up to 700 new welfare-to-work vouchers; state housing agencies may apply for up to 2000 new vouchers.  The number of requested vouchers may not exceed one-half the total number of certificates and vouchers in the agency’s portfolio.  Agencies may increase the size of their proposed welfare-to-work voucher program by augmenting any new appropriations with vouchers from their current Section 8 portfolio.

The NOFA specifies five criteria for ranking applications.  All criteria are weighted equally:

Factor 1: Need for Welfare-to-Work Voucher Program.  “This factor examines the extent to which [applicants] identify the community need that [their] proposed activities will target and the urgency of meeting this need.”   To satisfy this requirement, applicants must show that the requested assistance “is necessary to assist Welfare-to-Work eligible families to obtain [or] retain employment.”

Among the factors that applicants may wish to consider in preparing to meet this proposal requirement are:

Factor 2: Soundness of Approach.  This factor examines the overall quality of the proposed plan to help families move to work.  In preparing to meet this proposal requirement, applicants should consider how their proposal would: Applicants also must describe the proposed strategy for tenant counseling, housing search assistance and landlord outreach and show that the vouchers are likely to be under lease within a year of being awarded to the applicant by HUD.

Factor 3: Capacity of Applicant and Relevant Organizational Experience.  This factor examines the administrative capacity of the applicant and its partners.  In preparing to meet this criterion, applicants should consider the extent to which they can demonstrate success in meeting Section 8 program goals and in implementing other self-sufficiency efforts, such as the Family Self-Sufficiency Program or a state-funded housing allowance program targeted on families leaving welfare for work.

Factor 4: Leveraging Resources.  “This factor addresses the commitment of public and private resources that will support [an applicant’s] Welfare-to-Work voucher program.”   Both cash funding and in-kind contributions of services or personnel will be considered.  Among other potential services that could be provided through these resources are case management services, housing search assistance and landlord outreach, child care, job training, or transportation services.

Factor 5: Comprehensiveness and Coordination.  This factor addresses the extent and quality of the coordination between the PHA and its partners, including the agencies administering the TANF program and DOL welfare-to-work funds.
 
 

Waiver Authority

PHAs may seek waivers of HUD regulatory requirements but not of statutory provisions.  Proposals must be workable without the requested waivers and waiver requests will play no part in the evaluation process.  Waiver requests will be considered only after an applicant has been selected to participate in the welfare-to-work voucher program.  Per the statute, any waivers must “substantially further the objective” of the welfare-to-work voucher program.
 
 

Evaluation Component

Congress has directed HUD to track the success of the welfare-to-work voucher program in helping families obtain and retain employment and to prepare a formal evaluation.  To obtain welfare-to-work vouchers, communities may be required to participate in the evaluation process.
 
 

Conclusion

The welfare-to-work voucher program holds significant promise as a strategy for promoting employment.  Although this memo sketches the broad contours of the program, it is important to read the NOFA carefully and tailor applications accordingly.
 
 

The Center welcomes inquiries and is interested in assisting state and local policymakers and advocates in efforts to develop initiatives at the intersection of welfare and housing policy. The Center's Director of Housing Policy is Barbara Sard. Jeff Lubell works on housing policy at the Center as a Housing Policy Analyst. Those interested in further information and assistance should contact the Center by e-mail at: lubell@cbpp.org.


End Notes:

1. These include federal funds provided under the Temporary Assistance for Needy Families (TANF) program and qualified state expenditures under section 409(a)(7)(B)(i) of the Social Security Act (sometimes known as Maintenance of Effort funds).

2. There are a few basic constraints on the tenant selection process for federal housing programs that will apply to the welfare-to-work voucher program. One constraint is the Fair Housing Act, which prohibits discrimination on the basis of race, color, national origin, religion, sex, family status, or disability. Another is the requirement in the Quality Housing and Work Responsibility Act of 1998 that at least three of every four families provided federal housing vouchers have incomes below 30 percent of the area median income.

3. Applicants also may wish to consider contracting-out some or all of the administration of the new program.  This could be a good option where applicants lack in-house experience in providing desired services.  PHAs with low management ratings must contract out administration of the new funds.

4. Among other potential sources of useful data on this subject are applicants for the Job Access and Reverse Commute Program; they are required to compile data on the location of welfare recipients, jobs and transportation networks.  Job Access applicants also could contribute transportation services for welfare-to-work voucher programs.  Information on the program may be found on the Internet at: http://www.fta.dot.gov/wtw.
 

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