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“Moving to Work” Bill Would Harm Rental Assistance, Undercut Recent Legislation

A bill from House Majority Leader Kevin McCarthy to sharply expand the Department of Housing and Urban Development’s Moving to Work (MTW) demonstration would undermine a research-focused MTW expansion enacted just five months ago and allow sweeping, harmful changes to rental assistance programs — programs that are highly effective in preventing homelessness, overcrowding, and housing instability. 

Thirty-nine state and local housing agencies participate in MTW, which lets them obtain broad waivers of federal laws and rules governing the public housing and Housing Choice Voucher programs, shift funds from those programs to other purposes, and receive funding under special block-grant formulas.  Though intended to allow experimentation with alternative policies, MTW has caused significant harm, including sharp rent increases on the lowest-income families and transfers of voucher funds that leave many vulnerable families unassisted.  

Also, MTW has generated almost no firm findings about which alternative policies work.  The policies haven’t been rigorously evaluated, and agencies can make so many different changes that it’s hard to assess the impact of any one.

Policymakers enacted a large MTW expansion in December, requiring HUD to add 100 agencies over seven years.  That legislation also sought to address MTW’s lack of useful research findings by directing HUD to require each group of new MTW agencies to test a specific alternative policy and conduct a rigorous evaluation in consultation with an expert advisory committee.  HUD has moved promptly to implement this expansion and expects to request applications for the first group of new agencies later this year.

Rather than allowing the current expansion to play out, the McCarthy bill would require HUD to add at least 25 agencies to MTW each year, indefinitely.  This would make it much harder for HUD to administer the smaller, research-focused expansion that policymakers just enacted.  Even the smaller MTW expansion will greatly increase HUD’s administrative burdens because it takes more resources to oversee agencies that aren’t subject to common rules or program standards.  Admitting 25 agencies each year would further strain HUD’s resources and inhibit monitoring and evaluation of MTW policies. 

In addition, agencies may be less willing to comply with the requirements of the research-focused expansion if HUD must add agencies to MTW each year under the McCarthy bill — which doesn’t include those requirements. 

Moreover, the McCarthy bill would allow HUD to extend MTW to all state and local housing agencies (except the small number rated as “troubled” under HUD’s performance measurement system).  That would radically alter federal rental assistance, giving agencies assisting more than 3 million low-income households sweeping authority to raise rents, divert rental assistance funds to other purposes, and make other harmful changes.  It could also lay the groundwork for deep long-term funding cuts, since history shows that block grants for housing, health, and social services have fallen markedly over time. 

A future administration might well extend MTW to nearly all agencies.  For example, the George W. Bush Administration proposed several times to block-grant the entire housing voucher program, which would have a similar impact.  

The 100-agency MTW expansion enacted in December will be enough to test a wide range of experimental policies.  At a minimum, Congress shouldn’t add more agencies until HUD has implemented and evaluated it.