New Research Reinforces Case for Restoring Lost Housing Vouchers

Two important new studies reinforce the already strong case for restoring the rest of the 100,000 Housing Choice Vouchers cut by the March 2013 sequestration and using a large share to reduce homelessness, as the President has proposed.  Funding increases in 2014 and 2015 have enabled state and local housing agencies to restore roughly a third of the lost vouchers, but the need for housing assistance continues to grow, and the studies highlight vouchers’ effectiveness in reducing homelessness and producing other short- and long-term gains for families.  In the 2016 funding legislation that policymakers will negotiate over the next several weeks, they should include sufficient funding to renew all vouchers that families are using this year, provide an additional $470 million to restore the remaining vouchers cut by sequestration, and target these vouchers to reduce homelessness and meet other urgent needs.

Studies Show Vouchers Reduce Homelessness, Improve Children’s Well-Being and Long-Term Outcomes

One of the new studies, the Family Options Study, is the first rigorous, large-scale evaluation of alternative strategies to reduce homelessness among families with children.  Nearly 2,300 families living in homeless shelters in 12 cities were randomly assigned one of several types of assistance, including vouchers.^[1]  Researchers are tracking a wide range of outcomes over 36 months and recently released interim results at 20 months.

Vouchers sharply reduce homelessness and housing instability among families.The interim analysis found that vouchers sharply reduce homelessness and housing instability (a broader category that also includes living doubled up with friends and family) among families, and do so much more effectively than the other interventions.  (See Figure 1.)  In addition, the housing stability that vouchers provided appears to have had positive radiating effects on other aspects of family well-being.

For instance, children in families receiving vouchers were less likely to miss school days or change schools — and less than half as likely to be placed into foster care (which can be triggered by parents’ inability to afford suitable housing) — than families receiving no additional assistance.  Also, adults in families with vouchers had lower rates of psychological distress, drug and alcohol dependence, and domestic violence.^[2]  Vouchers were also cost-effective relative to the other interventions tested.^[3]

Share Chart on Facebook Share Chart on Twitter

Chart

These interim results reinforce the impressive results from the earlier Housing Voucher Evaluation, which compared families with children who were randomly assigned vouchers to those who did not receive vouchers.  It found that vouchers reduced homelessness by three-quarters and housing instability by close to 80 percent.^[4]

The second new, ground-breaking study highlights the long-term benefits to low-income children whose families use vouchers to move to better neighborhoods.  A group of Harvard economists led by Raj Chetty reanalyzed data from the five-city Moving to Opportunity (MTO) Demonstration (an experimental study of poor families in public housing in distressed neighborhoods), some of whom received vouchers to move to low-poverty neighborhoods.  Children whose families moved to low-poverty neighborhoods when they were young were more likely to attend college and less likely to become single parents as adults than control group families that did not receive an MTO voucher; they also earned significantly more as adults.  (See Figure 2.)

Share Chart on Facebook Share Chart on Twitter

Chart

Sequestration Cuts Forced Large Voucher Losses

The 2011 Budget Control Act (BCA) required arbitrary, across-the-board sequestration cuts in most discretionary programs in March 2013, including a $938 million cut for Housing Choice Vouchers.^[5]  This forced state and local housing agencies to cut the number of families using vouchers.  As of July 2014, agencies were assisting 100,000 fewer families than they had before sequestration.

The voucher cuts have come even as a growing number of low-income families struggle to pay the rent and homelessness remains a large and persistent problem.  The number of low-income families paying more than half their income for rent has risen in every state but Delaware since 2007, as rent increases have outpaced income gains.^[6] 

Share Chart on Facebook Share Chart on Twitter

Chart

While the nation has made progress in reducing homelessness among some groups — such as veterans — and in some communities, the problem remains serious.  More than 1 million school-aged children were homeless or living temporarily with other families or in motels during the 2013 – 2014 school year, according to school reports, more than ever before.^[7]  And Los Angeles, Portland (OR), and the State of Hawaii recently declared “emergencies” in response to dramatic increases in homelessness.^[8] 

To their credit, policymakers raised voucher funding in 2014 relative to the sequestration-depleted 2013 level and provided a more modest increase in 2015.  These increases stemmed the cuts in the number of families assisted and enabled agencies to begin reissuing vouchers to families on their waiting lists.  By June 2015, agencies had restored about 30,000 vouchers to families’ use.  Moreover, the number of “vouchers on the street” — that is, the number of new families with vouchers seeking rentals — remained high as of June, suggesting that agencies will restore an additional 10,000 – 15,000 vouchers to families from July to December of this year.^[9]

Renewing All Vouchers in Use and Restoring Vouchers Lost to Sequestration Should Be High Priorities for 2016 Funding Legislation

Policymakers should make it a priority in the 2016 omnibus appropriations bill to include sufficient funds to renew all vouchers in use.  More specifically, because many agencies will likely continue restoring vouchers in the second half of 2015, policymakers should provide enough renewal funding to cover all vouchers that families are using at the end of the calendar year, as well as sufficient funding to restore the remaining vouchers cut under sequestration, as explained below.

Approximately $18.05 billion will be required to fully renew all vouchers in use at the end of 2015, according to CBPP analysis of program cost data.  This is about $100 million less than the House-passed funding bill provided, and about $65 million more than the Senate Appropriations Committee included in its bill.^[10]  If policymakers fail to provide sufficient funds to renew the vouchers in use at the end of this year, many agencies will have no choice but to assist fewer families, thereby reversing recent progress in restoring vouchers to families’ use.

Congress also should allocate $470 million to fully restore the remaining 60,000 housing vouchers cut under sequestration and direct that these vouchers be used to reduce homelessness and meet other urgent needs, similar to what the President proposed in his 2016 budget.^[11]  The recent budget agreement effectively makes $33 billion above the sequestration level available for non-defense discretionary programs in fiscal year 2016.  Providing adequate funding to restore the vouchers lost to sequestration would require less than 1.5 percent of these funds and would be an important use of a very small portion of the funds.

The President’s 2016 budget included sufficient funds to fully reverse the voucher sequestration cuts and proposed to target restoration vouchers on several groups with particularly urgent needs for assistance:^[12]

• Homeless families, including veterans, tribal families, and victims of domestic and dating violence.  This proposal builds on the successful strategy used in the Veterans Supportive Housing Program (VASH) that the Departments of Veterans Affairs (VA) and Housing and Urban Development (HUD) administer jointly:  since 2008, Congress has funded approximately 76,000 vouchers for homeless veterans who also receive mental health treatment and other services from the VA.  The number of homeless veterans fell by 33 percent between 2010 and 2014, and the nation is on track to virtually eliminate veterans’ homelessness by the end of 2015, according to HUD.^[13]  Providing funding for these restoration vouchers would give housing agencies a strong incentive to strengthen and expand their efforts to address homelessness.^[14]

• Victims of domestic and dating violence living in assisted housing.  Congress amended the Violence Against Women Act in 2013 (VAWA) to require HUD to establish policies and procedures under which victims of domestic violence, dating violence, sexual assault, or stalking who live in assisted housing may receive a transfer to another assisted unit or a voucher to enable them to move to a safe location.  Because alternative assisted units in a safe location will not always be available, vouchers are essential to ensuring the safe relocation of some families who request transfers. 

• Family Unification Program (FUP).  This program provides vouchers to families that are at imminent risk of having their children placed in foster care, or are experiencing a delay in having their children returned to them from such placements, primarily because they cannot afford adequate housing.  Youth who are “aging out” of foster care are also eligible for FUP vouchers; a significant share of such youth experience homelessness, and a much larger share struggle to maintain stable housing.  Research suggests that FUP reduces youth and family homelessness as well as the risk of foster care placement.^[15]  Moreover, the cost of foster care far exceeds the cost of FUP rental assistance.  Congress has funded approximately 46,000 FUP vouchers since the program’s initiation in the early 1990s but has funded no additional such vouchers since fiscal year 2010.^[16] 

The 2016 HUD funding bill approved by the Senate Appropriations Committee takes a modest step towards restoring vouchers.  It includes $75 million for approximately 10,000 new vouchers for homeless veterans (VASH) and $20 million for roughly 2,600 new FUP vouchers.  The House-passed HUD funding bill includes no funding to restore vouchers, although the report that the Appropriations Committee issued in conjunction with the bill expresses clear support for the President’s proposed policy of issuing additional targeted vouchers, particularly vouchers for families participating in FUP, homeless veterans, and families seeking emergency transfers as authorized by the Violence Against Women Act.

Expanding on the Senate bill’s funding provisions for VASH and FUP, policymakers should fully restore housing vouchers in the final 2016 funding bill by including $470 million for housing vouchers targeted on the three categories of vulnerable people identified in the President’s proposal:  (1) homeless families, including veterans (particularly those who are unable to use VASH vouchers), tribal families, and victims of domestic and dating violence; (2) victims of domestic violence living in assisted housing, as necessary to implement the emergency transfer provisions of VAWA; and (3) youth and families eligible for the Family Unification Program.^[17]

Additional Administrative Funds Also Needed

While policymakers’ first priority should be to restore voucher assistance to low-income families in need, they should also provide more adequate funding for program administration.  The 2,200 state and local housing agencies that administer vouchers perform tasks that are essential to the program’s effectiveness, such as inspecting housing units where voucher subsidies are used to make sure they are in safe and sanitary condition, and verifying tenants’ incomes to ensure the accuracy of subsidy payments and guard against fraud.  They also help homeless and other families to locate suitable housing, which can be challenging in many local markets.

Yet agencies receive only about 81 percent of the administrative funding for which they are eligible under the HUD fee formula, and 2015 is the fifth consecutive year that policymakers have substantially underfunded voucher program administration.  Moreover, HUD recently released an exhaustive study of a large, representative sample of high-performing agencies confirming that agencies’ actual program-related costs far exceed their federal funding.^[18]   

Persistently inadequate funding hinders agencies’ ability to reissue vouchers quickly to needy families on their waiting lists when other families leave the program, to help families locate suitable housing in neighborhoods that best meet their needs, to respond to complaints about unsafe or unsanitary housing conditions, and to prevent subsidy overpayments.

The President’s budget includes a $490 million increase in administrative funding, giving agencies approximately 90 percent of the funding for which they are eligible, HUD estimates.  The Senate bill includes a more modest $90 million increase, while the House bill would provide no additional funds for agencies in 2016.  We recommend that policymakers meet the President’s request in the 2016 funding bill.