March 22, 2000
The Administrations FY 2001 Proposal to Expand Modestly the
Number of Section 8 Housing Vouchers
In each of the last two years, Congress has appropriated funds to expand modestly the Section 8 housing voucher program. For fiscal year 1999, Congress funded 50,000 new vouchers to help families make the transition from welfare to work. For fiscal year 2000, Congress funded 60,000 new vouchers to help meet needs that state and local housing agencies identify.(1)
For FY 2001, the Administration has proposed 120,000 new Section 8 housing vouchers. This paper briefly addresses a number of questions regarding this proposal.
What is the Section 8 Housing Voucher Program?
The Section 8 housing voucher program helps low-income families secure decent and affordable rental housing by subsidizing the housing costs of apartments they locate in the private market. Families with housing vouchers generally pay between 30 percent and 40 percent of their income for rent and utilities, with the housing voucher subsidizing the balance of their costs. Rules authorizing vouchers to be used for homeownership are expected to be finalized this year.
The housing voucher program currently serves more than 1.4 million households. Nearly two-thirds are families with children. The balance are predominantly elderly persons and persons with disabilities. For more than a decade, the housing voucher program has been the primary vehicle that Congress and HUD have used to expand the number of households that receive federal housing assistance.
Is There a Need for More Federal Housing Assistance?
Despite a strong economy, there continues to be a substantial shortage of affordable housing. As of 1995, some 5.3 million very low-income renter households including 2.4 million households with earnings as their primary income source spent more than half of their income on housing or lived in severely substandard housing, but received no government housing assistance.(2) Preliminary data suggest this situation may have grown worse since 1995. According to the Joint Center for Housing Studies of Harvard University, between 1995 and 1997, "incomes for renters in the bottom quarter of the income distribution fell 2.9 percent [yet] costs for units in the bottom quarter of the rent distribution rose 4.5 percent."(3)
There are a number of possible reasons for the persistence of such a large affordable housing shortage during the economic upswing. In some areas, housing costs have risen faster than the incomes of low-income working families. More widespread prosperity has made it possible for landlords to find tenants who can afford higher rents and has made condominium conversions more profitable. In addition, due to gentrification as well as the abandonment of some older housing stock, the number of affordable units in the private rental market has declined. Between 1973 and 1995, the number of unsubsidized rental housing units costing $300 or less in 1995 dollars declined from 4.9 million to 2.8 million.(4) In the brief period between 1991 and 1995, the Joint Center estimates that the number of units affordable to renters with incomes below 30 percent of the area median income fell by 400,000.(5)
Who Would Benefit from the New Housing Vouchers?
The Administration has proposed allocating the new vouchers as follows:
- 60,000 vouchers to be distributed to public housing agencies through the "fair share" process to meet locally-identified needs.
- 32,000 vouchers for a second round of welfare-to-work housing vouchers. (See box on the next page.)
- 18,000 vouchers to help homeless households secure affordable housing.
- 10,000 vouchers for a proposed "housing production voucher" program. This proposal would help to increase the number of extremely low-income households that can access developments funded through the low-income housing tax credit program. The proposal also could help to produce additional housing by reducing the amount of construction subsidies needed to make units affordable to households with such low incomes.
Do Housing Vouchers Really Work?
Most families with housing problems in the United States have an "affordability" rather than a "housing quality" problem. HUD data show that nearly four in five households with "worst case housing needs" in 1995 lived in housing that was neither moderately or severely inadequate nor overcrowded. Despite the apparent physical adequacy of their housing, these households were classified as having worst case housing needs because their housing costs consumed more than half of their very low incomes.(6)
Highlights of the Welfare-to-Work Voucher Program
- Promoting Employment. Vouchers specifically designed to move people from welfare to work can help to promote employment among families desiring housing assistance. Many housing agencies require participation in employment activities to qualify for the new vouchers. In Kansas City, applicants on the waiting list are linked with employers before housing assistance is provided, allowing employment opportunities to guide housing search. In Massachusetts, "hard-to-serve" welfare recipients without adequate housing who are participating in employment programs funded through the Department of Labor's Welfare-to-Work competitive grants can receive the new housing vouchers.
- Inter-Agency Cooperation. The requirement that local housing and welfare agencies work together to prepare applications for welfare-to-work housing vouchers has helped to foster inter-agency dialogues in many cities and states that are likely to yield benefits beyond the welfare-to-work housing voucher program itself. In New York City, for example, discussions initiated for the purpose of applying for welfare-to-work housing vouchers have led to further discussions about how the city welfare agency could provide services to participants in the housing agency's Family Self-Sufficiency program. (FSS is a program that combines case management to help tenants improve their skills and retain employment with escrow accounts in which tenants accumulate savings resulting from increased earnings.*) In Massachusetts, the state welfare agency has contributed $350,000 of TANF funds to the housing agency to hire regional project coordinators to build effective partnerships among the local welfare, workforce development and housing agencies.
- Leveraging Other Resources. In addition to receiving housing vouchers, families may receive social services from other agencies as part of the local welfare-to-work voucher program. Some housing authorities have obtained commitments of substantial amounts of resources from other agencies. The Housing Authority of Baltimore City, for example, has received commitments for employment services whose value is estimated to exceed five million dollars. The Chicago MetroLinks program estimates that nearly $10 million of resources have been leveraged, including contributions from government agencies and non-profit organizations.
- Encouraging Mobility. Many welfare recipients live in areas with relatively few job opportunities. The voucher program allows families to move to areas with a larger supply of jobs. Such neighborhoods also may be safer and provide improved educational opportunities for children. For example, under its welfare-to-work voucher program, the Metropolitan Council Housing and Redevelopment Authority in the Minneapolis/St. Paul area will provide intensive mobility counseling through contracts with experienced housing search agencies to help families move out of areas of concentrated poverty. The Council, which serves the suburbs surrounding Minneapolis and St. Paul, also will waive its own rules that would have restricted the locational choices of some families. Similarly, the Housing Authority of Kansas City has established a goal of moving 30 percent of welfare-to-work voucher recipients into low-poverty census tracts. In the Chicago metropolitan area, five housing authorities have joined together to reduce administrative barriers to families moving from one jurisdiction to another; this has been done to combat "spacial mismatch" between job opportunities and where welfare recipients live. As another example, the Seattle Housing Authority and the surrounding King County Housing Authority have joined together to allow families to move more easily between the city and the surrounding county.
*The Center's fact sheet on the FSS program is available at /archiveSite/5-5-99hous.htm.
In part because families may use Section 8 housing vouchers to help them afford the costs of their current rental housing, such vouchers generally work well to address housing affordability problems. Where there is a shortage of available rental housing of adequate quality, however, strategies to promote the construction or rehabilitation of additional rental housing may be needed. As discussed below, Section 8 vouchers can contribute to such a production strategy.
Research confirms that, in most areas, Section 8 tenant-based assistance is effective in helping families afford rental housing. The most recent data on this subject come from the "Final Report" on the "Section 8 Rental Voucher and Rental Certificate Utilization Study," prepared for HUD by Abt Associates in October 1994. The data from that study show that, outside of New York City, some 87 percent of the households newly issued a Section 8 voucher or certificate nationwide succeeded in obtaining housing with their subsidies.(7) A new study is currently underway to update these results.
In addition to considering the relative success of new voucher recipients in finding housing, it is important to examine the extent to which the total universe of outstanding housing vouchers are being utilized at any given time. HUD data show that, as of January 2000, some 93 percent of the vouchers that HUD has allocated to state and local housing agencies were being used to subsidize the housing costs of low-income households.(8)
In recent years, as rents have risen and vacancy rates have fallen in many areas, there has been a growing number of informal and anecdotal reports suggesting that families are having problems using vouchers in some areas. Legislation enacted in 1998 should help to improve voucher usage by making the program more attractive to landlords and giving public housing agencies more flexibility to adapt the program to local circumstances. Because these program changes are complex, however, it will take time to implement them at the local level.
For FY 2001, the Administration has proposed a $50 million "voucher success fund." This fund would help to improve voucher usage in those areas experiencing problems by:
- providing funds for technical assistance to help public housing agencies respond to local difficulties in using vouchers and integrate the new program options into their existing programs;
- providing grants to enable public housing agencies to provide expanded landlord outreach, housing search assistance, and other targeted assistance to help vouchers work better; and
- evaluating the outcomes of the various small grants to ascertain the most effective and efficient solutions.
Housing vouchers should be thought of as one piece of a larger low-income housing strategy. As noted above, the voucher program works best where there already is an adequate supply of rental housing. In areas with supply problems it may be necessary to promote the production of additional rental units. Sources of federal funding for such efforts include the HOME block grant program and the low-income housing tax credit. To enable units produced through these programs to serve poor and near-poor families, including families attempting to make the transition from welfare to work, housing agencies can link a portion of their Section 8 vouchers to these units.
For a more detailed analysis of Section 8 utilization issues, see the Center's paper on "Section 8 Utilization and the Proposed Housing Voucher Success Fund." To obtain a copy, call the Center at 202-408-1080 or visit the low-income housing section of the Center's website: /archiveSite/pubs/housing.htm.(9)
Are There Additional Social Benefits to Housing Vouchers?
The Center recently completed an analysis of the value of housing subsidies to welfare reform efforts. As described in that paper,(10) preliminary research results suggest that housing vouchers may help to advance a number of important welfare reform objectives. An evaluation of Minnesota's welfare reform initiative (known as MFIP) by the Manpower Demonstration Research Corporation, for example, found that residents of Section 8 and public housing benefitted more from that initiative than poor families not residing in such housing. The evaluation found that among long-term welfare recipients in urban counties subject to both work participation requirements and a generous earnings disregard, employment and earnings increases were significantly greater for families living in Section 8 and public housing than for those in private housing.(11)
On a parallel front, researchers from UCLA who analyzed data from four California counties (Alameda, Los Angeles, San Bernardino, and San Joaquin) found that families receiving both Aid to Families with Dependent Children (AFDC) benefits and Section 8 housing subsidies worked significantly more hours on average than AFDC families living in other forms of housing, including unsubsidized housing.(12)
In addition, the Gautreaux program in Chicago provides evidence of the employment benefits that may result from using vouchers to help families move to safer neighborhoods that offer better employment and education opportunities. In this program, a number of African-American residents of inner-city public housing in Chicago received Section 8 tenant-based subsidies, along with housing search assistance.(13) As families on the waiting list for the Gautreaux program came to the top of the list, they were offered an available housing unit. Some of these units were in the city of Chicago; others were in the surrounding suburbs. An analysis of the attributes both of the families that moved within the city and of the families that relocated to the suburbs found that these two groups of families were very similar before they moved; they had, for example, comparable employment rates before they moved. Within several years after their respective moves, however; their employment rates diverged, with the suburban movers having an employment rate of 64 percent and the city movers having an employment rate of only 51 percent.(14)
The Gautreaux program also provides evidence that moving to lower-poverty neighborhoods can yield important benefits for children. The children of the suburban movers in the Gautreaux program were much less likely to drop out of high school than the children of city movers, and much more likely to be enrolled in a college track curriculum and to go to college. Among those not attending college, a much higher proportion of youth from suburban-mover families had full-time jobs than of youth from city-mover families.(15)
In addition to the potential role that housing vouchers can play in promoting employment among welfare recipients, housing subsidies may provide several other important social benefits:
Housing subsidies may help to improve children's educational prospects in two ways. First, some studies have shown that children of families that move frequently tend to do less well in school. By enabling poor families to find and keep affordable housing, housing subsidies may help these families' children to maintain attendance rates and remain in a stable school environment, improving their educational prospects.(16) Second, there is some evidence to suggest that school performance is correlated with certain neighborhood characteristics, such as poverty concentration. By enabling families to move to neighborhoods with better educational opportunities, tenant-based housing vouchers (as well as some well-located project-based developments) may help assisted families to secure better education for their children.
- Child health.Studies by doctors in Boston suggest that receipt of housing subsidies may lead to child health benefits. One study, for example, found that children of families on a waiting list for housing assistance were more likely to suffer from stunted growth than children of families receiving housing subsidies.(17) The most likely explanation for these results is the increased ability of families with housing subsidies to afford nutritious food.
- Domestic violence.Housing vouchers can help victims of domestic violence escape abusive living situations. Without access to housing subsidies, domestic violence victims may be forced to stay in an abusive living situation or to leave their homes and possibly become homeless, undermining family stability.
1. The Notice of Funding Availability for the vouchers appropriated for the current fiscal year was published on March 10, 2000 (65 Fed. Reg. 13,222). The deadline for housing agencies to apply for funds is April 24, 2000.
2. U.S. Department of Housing and Urban Development (HUD), Rental Housing AssistanceThe Crisis Continues: The 1997 Report to Congress on Worst Case Housing Needs, Washington, DC, 1998. HUD defines "very-low income" households as those with incomes below 50 percent of the area median family income, as adjusted for family size and other factors. The area median family income varies substantially from area to area.
3. Joint Center for Housing Studies of Harvard University, The State of the Nation's Housing 1999, p. 25.
4. Jennifer Daskal, In Search of Shelter: The Growing Shortage of Affordable Housing, Center on Budget and Policy Priorities, 1998.
5. Joint Center for Housing Studies of Harvard University, supra n. 3.
6. HUD, supra n. 1, Table A-7. HUD defines households with worst case housing needs to be renter households with incomes below 50 percent of the area median income that do not receive government housing assistance and either (a) spend more than half their income on rent and utilities or (b) live in housing with severe physical problems. Although HUD tracks the extent to which households live in overcrowded housing or housing with moderate physical problems, this information is not used in determining the number of households with worst case housing needs. The database that HUD uses for its report on worst case housing needs, the American Housing Survey, does not include data on homeless households.
7. The comparable "success" rate in New York City was 62 percent. Although called for based on the study's research protocol, the study did not include data from Los Angeles because of data reporting problems.
8. Resident Characteristics Report for the Section 8 Certificate and Voucher Programs, Multifamily Tenant Characteristics System, January 2000. The latest version of this report may be accessed through the Internet at: http://www.hud.gov/mtcs/public/navmenu.cfm. The January MTCS data is a snapshot for the particular month.
9. See also Brian Maney and Sheila Crowley, Scarcity and Success: Perspectives on Assisted Housing, National Low-Income Housing Coalition and Meeting America's Housing Needs, 1999, available on the Internet at: http://www.nlihc.org/mahn/sec8index.htm.
10. Barbara Sard and Jeff Lubell, The Value of Housing Subsidies to Welfare Reform Efforts, Center on Budget and Policy Priorities, February 2000. This paper is available on the Internet at: /cms/index.cfm?fa=view&id=1593. Printed copies may be ordered from the Center by calling 202-408-1080.
11. Cynthia Miller, Explaining MFIP's Impacts by Housing Status, Manpower Demonstration Research Corporation (MDRC), 1998. The evaluation also found that MFIP participants living in public or subsidized housing outperformed residents of private housing on an absolute basis; average earnings over 18 months among long-term welfare recipients in urban counties who were subject to the work participation requirements and the earnings disregard and lived in public or subsidized housing exceeded by more than 40 percent the average earnings of participants not residing in such housing.
12. The researchers found this result held true after controlling for observed differences in personal characteristics. Paul Ong, "Subsidized Housing and Work Among Welfare Recipients," Housing Policy Debate 9:4 (1998), p. 775.
13. Families on the waiting list for public housing also were eligible to participate in the Gautreaux program, along with public housing residents.
14. Although families had the right to reject the particular housing offered to them, few did so. As a result, researchers at Northwestern University studying the Gautreaux program concluded that the program had a "quasi-experimental" design: participants were effectively divided, more or less randomly, into two sub-groups: one sub-group that moved to low-income black neighborhoods within the city ("city movers") and another sub-group that moved to white middle-income suburban neighborhoods ("suburban movers"). For purposes of this research, Gautreaux families that moved within the city but not to "low-income black neighborhoods" were excluded from the "city mover" sample. James E. Rosenbaum, "Changing the Geography of Opportunity by Expanding Residential Choice: Lessons from the Gautreaux Program.," 6:1 Housing Policy Debate 231 (1995), p. 232, n. 1, 234-36. See also James E. Rosenbaum and Susan J. Popkin, "Employment and Earnings of Low-Income Blacks Who Move to Middle-Class Suburbs," in C. Jencks and P. Peterson (eds.), The Urban Underclass, The Brookings Institution, 1991.
15. Rosenbaum, supra n. 15, pp. 241-244.
16. See, e.g., "A Report from the Kids Mobility Project," March 1998, available from the Hennepin County Office of Planning & Development, Government Center A-2308, 300 S. Sixth St., Minneapolis, MN 55487-0238, (612) 348-4466.
17. Allan R. Meyers et al., "Housing Subsidies and Pediatric Undernutrition,"Archives of Pediatric Adolescent Medicine (1995), 149:1079-1084.