Testimony: Will Fischer, Senior Policy Analyst, Before the House Financial Services Subcommittee on Insurance, Housing, and Community Opportunity
 For analysis of SESA's other provisions see the testimony by Barbara Sard before the House Financial Services Subcommittee on Insurance, Housing, and Community Opportunity on June 23, 2011, https://www.cbpp.org/cms/index.cfm?fa=view&id=3517. That testimony recommends several additions to SESA, including provisions to further improve the voucher funding formula and facilitate "project-basing" of vouchers in particular developments. None of the additions the testimony recommends are included in the October 5 SESA draft; Congress could strengthen SESA considerably by adding them as the legislative process moves forward.
Section 210 of the current SESA draft contains a potentially significant new provision that is not related to self-sufficiency. That section states that HUD policies and standards dealing with "the flexibility of the criteria that may be used to establish local preferences, the use of waiting list management tools, and the inclusion of certain activities in house rules and lease provisions" that are in effect with respect to public housing at the time SESA is in enacted will also apply to Section 8 vouchers and project-based rental assistance. The scope of the policies and standards affected is broad, and it is unclear which specific areas the provision is intended to affect.
 In addition to the families with children targeted by SSRACSP, non-elderly, non-disabled households without children (who make up about a fifth of all non-elderly, non-disabled housing assistance recipients) could benefit from employment services.
 The SESA inspection provisions are limited in the same way, but these provisions only cover the voucher program so making them inapplicable to project-based Section 8 owners has no effect.
 Nandita Verma and James Riccio, 2003, Housing Assistance and the Effects of Welfare Reform: Evidence from Connecticut and Minnesota, prepared by MDRC for the U.S Department of Housing and Urban Development, Office of Policy Development and Research.
 If full funding for the operating fund and voucher administrative fees were provided together with the streamlining changes in SESA, many agencies could undertake modest self-sufficiency initiatives that rely on services provided through other entities. Congress should not actually require agencies to undertake self-sufficiency programs without first directing HUD to assess the cost of these programs and determine whether added funds are needed beyond the current full funding level.
 If the broader restriction making the SESA rent provisions inapplicable to project-based Section 8 were removed, the minimum rent provision would also allow HUD to require project-based Section 8 tenants to pay minimum rents at the higher of $75 or 12 percent of the FMR.
 One of MTWs three statutory objectives is to "increase housing choices for low-income families." Despite this goal, HUD has approved waivers whose main impact is to reduce housing choice.
 MTW funding arrangements also typically provide for increases when an agency receives an increase in the number of vouchers it is authorized to administer, as occurs when a public housing development is demolished and vouchers are issued to replace it.
 Available data suggest that the majority of MTW agencies would be found to violate the "substantially the same" requirement if it were rigorously enforced. Agencies are required to certify each year that they meet the requirement, but they are not required to demonstrate their compliance. Moreover, HUD has not defined key aspects of the requirement, such as how agencies should calculate how many families they would have assisted without MTW funding flexibility or how much the number of families assisted can decline and still be considered "substantially the same."
Some HUD and agency documents appear to misinterpret the "substantially the same" provision to require that agencies assist a number of families equal to a "baseline" number they served before they joined the demonstration. Since the MTW demonstration began, however, the number of voucher and public housing units that Congress has authorized has grown significantly — by 20 percent at all agencies and by 47 percent at MTW agencies from 1998 to 2009, according to HUD. Thus, an agency that assisted approximately the same number of families as it did before entering the demonstration will typically be serving far fewer families than it is authorized to administer, and far fewer than it could assist if it used funds for the purposes for which they were appropriated. HUD is in the process of revising requirements for MTW agencies to report data regarding the number of families they assist and in other areas, but it is unclear whether this revision will significantly improve enforcement of the "substantially the same" requirement.
 The data on MTW expenditures and families served in this testimony cover the 30 agencies that participated in MTW throughout 2009 and 2010. Three additional agencies began participating in the demonstration between August 2010 and January 2011, and two more have been selected and are in the process of negotiating MTW agreements with HUD. Estimates of funds not spent on vouchers are based on HUD data on the amount of voucher subsidy funds provided to MTW agencies and the amount that the agencies spent on voucher subsidies. Some MTW agencies receive voucher administrative funding (which for non-MTW agencies is provided through a separate budget account) and subsidy renewal funds together in a single funding stream. In these cases, we estimated the amount that was intended as administrative funding and deducted it from the agency's funding level before calculating the amount of funds unspent.
Many MTW agencies receive more funds than they need to support all of their authorized vouchers, so some of these unused vouchers do not fall within agencies' authorized levels. MTW agencies are permitted to use vouchers above their authorized level, however, so they could have issued the full number of vouchers that their funding supported had they opted to do so.
 2009 is the last year for which sufficient data are available to make this comparison. The calculations include families listed in HUD data or agency reports as receiving assistance during calendar year 2009 (or the most closely overlapping period available) through vouchers, public housing, or other comparable housing assistance provided through MTW-funded agency initiatives. The funding levels are for calendar year 2009 and include voucher subsidy funds, administrative fees, public housing operating funds and regular public housing capital formula grants, but not HOPE VI grants, replacement housing factor grants, or capital funds provided through the 2009 economic recovery package.
 Government Accountability Office, Federal Housing Assistance: Comparing the Characteristics and Costs of Housing Programs; GAO-02-76, January 2002, http://www.gao.gov/new.items/d0276.pdf. Modest renovation of existing public housing can be less expensive than the development efforts that GAO examined and could consequently prove comparable to vouchers in cost effectiveness over the long run. The available information, however, suggests that MTW agencies have emphasized more extensive renovation and replacement projects, similar to those studied by GAO. A number of MTW agencies, for example, have obtained waivers of HUD development cost limits to enable them to undertake more expensive projects.
 Barry Steffan et al., Worst-Case Housing Needs, 2009: A Report to Congress, Office of Policy Development and Research, Department of Housing and Urban Development, February 2011.
 Gregory Mills et al., "Effects of Housing Vouchers on Welfare Families," prepared by Abt Associates for the HUD Office of Policy Development and Research, 2006.
 See, for example, Diana Becker Cutts et al., "US Housing Insecurity and the Health of Very Young Children," American Journal of Public Health, August 2011, p. 1508.
 See for example Philadelphia Inquirer, "PHA Spent Lavishly on Pet Projects, Upgrades," December 19, 2010, http://www.philly.com/philly/news/homepage/20101219_PHA_spent_lavishly_on_pet_projects__upgrades.html ; and HUD Office of Inspector General, The Philadelphia, PA, Housing Authority Did Not Comply with Several Significant HUD Requirements and Failed to Support Payments for Outside Legal Services , Audit Report 2011-PH-1007, March 10, 2011,http://www.hud.gov/offices/oig/reports/files/ig1131007.pdf.