Expansion of HUD’s “Moving-To-Work” Demonstration Is Not Justified
Other Approaches Would Promote Demonstration’s Goals More Effectively
[i] For additional information on SESA, 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.
[ii] The appendix provides an explanation of the sources and methods used for this calculation and others in this analysis. HUD has not released 2011 voucher funding levels for individual agencies, so it is not yet possible to compare 2011 funding for MTW and non-MTW agencies, https://www.cbpp.org/sites/default/files/atoms/files/9-27-11hous-appendix.pdf.
[iii] A "reserve offset" is a policy of reducing an agency's current year funding level based on unspent funds the agency has accumulated in prior years. In 2009, Congress gave HUD authority to offset reserves at non-MTW agencies but not MTW agencies. Congress did not enact a reserve offset in 2010 or 2011, and a House subcommittee did not include an offset in the 2012 HUD appropriations bill it approved on September 8. The Senate Appropriations Committee did include an offset in the version it passed on September 21, but it gave HUD authority to apply the offset to both MTW and non-MTW agencies — making it less likely to contribute to the imbalance in funding.
[iv] 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.
[v] 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.
[vi] The percentage of all authorized vouchers left unused in 2010 was 15 percent at MTW agencies and 8 percent at non-MTW agencies. The number of vouchers that an agency could have issued with available funds may be higher or lower than the number of vouchers Congress and HUD have authorized the agency to administer. At certain MTW and non-MTW agencies, some vouchers were left unused because the agency did not receive sufficient funds to support them. In addition, MTW agencies (unlike non-MTW agencies) are permitted to issue more than their authorized number of vouchers if they have funds available. In 2010, 15 MTW agencies received sufficient funds to support more than their authorized number of vouchers as a result of various favorable provisions in their funding formulas.
[vii] The limited evidence available suggests that differences in family size also fail to explain the discrepancy in the number of families that MTW and non-MTW agencies assist per dollar of federal funding. Many MTW agencies report no data on the number of people in the families they assist or the number of bedrooms in the units those families live in. The five largest MTW agencies, however, did report data on unit size in 2009. The data show that those five agencies assisted families living in units that were marginally larger than those typically occupied by families assisted by non-MTW agencies, but the difference was only sufficient to explain a 3 percent difference in costs — a small fraction of the 60 percent difference in funding per family assisted.
[viii] 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.
[ix] 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.
[x] 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.
[xi] 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.
[xii] 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.
[xiii] 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.
[xiv] ICF Macro International, "Quality Control for Rental Assistance Subsidy Determinations: Final Report for FY 2009," prepared for the HUD Office of Policy Development and Research, October 16, 2009.
[xv] Rent errors do not directly affect federal expenditures for agencies with block grant funding formulas, since rent payments at these agencies have no direct effect on agency funding levels. Errors would nonetheless be significant, however, since they could harm families or building owners or cause federal funds to be misspent.
[xvii] HUD 2010, p. 4.
[xviii] HUD has begun to require MTW agencies to report more information on program activities and outcomes, and 2010 appropriations legislation directed HUD to carry out an evaluation of the demonstration. HUD has indicated that it is procuring a third-party contractor to conduct this evaluation. These efforts may generate some useful information, but since they will not alter the basic design of the demonstration at participating agencies, they are unlikely to generate rigorous research findings.