President’s Budget Would Strengthen Housing Voucher Program
Yet Need for Rental Assistance Will Continue to Far Exceed Capacity of Federal Programs
 See Arloc Sherman, “Safety Net Effective at Fighting Poverty, But Has Weakened for the Very Poorest,” Center on Budget and Policy Priorities, July 6, 2009, https://www.cbpp.org/files/7-6-09pov.pdf; and Jill Khadduri, “Housing Vouchers Are Critical for Ending Family Homelessness,” Homelessness Research Institute, January 2008.
 These funding figures exclude amounts proposed to be transferred to the Transformation Initiative, which would fund upgrades to HUD IT systems, the development of more effective program evaluation tools and research, and technical assistance. The Center’s renewal funding estimate for 2011 is based on voucher usage and cost data as of September 30, 2009, and assumes that each agency’s per-voucher costs will increase in 2010 at a rate equal to its Annual Adjustment Factor (AAF). The estimate takes into account new tenant protection vouchers issued in 2010 and the continued lease-up of incremental vouchers issued in recent years, but assumes no increase in the voucher utilization rate.
 The prioritization of rental assistance is also evident in the budget request for Section 8 project-based rental assistance, as well as in the Transforming Rental Assistance Initiative, the Administration’s major proposal to help preserve public and private assisted housing. For a discussion of this proposal, see Will Fischer, “Obama Budget Includes Major Plan to Preserve Needed Affordable Housing,” Center on Budget and Policy Priorities, March 16, 2010.
 The index for household fuels and utilities is currently somewhat below the level of a year ago — but utilities make up only about 15 percent of total housing costs.
 For a discussion of recent evidence, see Rob Collinson and Ben Winter, “U.S. Rental Housing Characteristics: Supply, Vacancy, and Affordability,” Office of Policy Development and Research at HUD, 2010.
 Our estimates are derived using a simple model based on recent changes in the Consumer Price Index for residential rents and housing fuels and utilities. The model is similar to the method used by HUD to determine AAFs, except that our model relies on national rather than local price data.
 Over the 12 months ending in September 2009, the CPI for residential rents increased by 1.6 percent, the CPI for household fuels and utilities declined by 7.4 percent, and a weighted combination of the two increased by 0.3 percent. Over the same period, the average cost of a housing voucher increased by about 5 percent.
 Another possible factor is that voucher costs are affected by changes in HUD fair market rents (FMRs) and housing agency payment standards, both of which tend to lag behind changes in market conditions. While FMRs and payment standards will eventually catch up with the market, this suggests that the CPI is not a reliable standard by which to gauge near-term changes in voucher costs.
 Figure 2 shows combined data for the Section 8 project-based and tenant-based rental assistance programs, rather than data for the voucher (i.e., tenant-based) program alone. The programs were funded out of a single account as recently as 2006, which makes it difficult to separate expenditures for the two programs for earlier years.
 The rescissions ranged from $1.2 billion in 2003 to $2.8 billion in 2004. Most of these unspent balances were budget authority allocated to the original long-term Section 8 project-based rental assistance contracts that turned out not to be needed (a risk of providing up front the budget authority needed to cover contracts for periods of 20 to 40 years). As the number of long-term funding contracts has dwindled, the pool of funds available for rescission has dried up.
 OMB Public Budget Database and other OMB budget documents. Note that amounts for FHA and GNMA were excluded from the HUD totals to eliminate fluctuations due to annual changes in receipts.
 The threshold would be set prior to any action by HUD to pro-rate renewal funds. Proration of renewal funding occurs when the total amount of renewal funding available is higher or lower than the total amount of renewal funding for which housing agencies are eligible. Congress has set a new and different reserve policy every year over the past four years; while the individual policies have been reasonable, the annual changes in policy have created unnecessary uncertainty about funding and weakened the positive incentives of the policies.
 Data sources are American Community Survey, 2000 and 2008, housing agency data reported to HUD’s Voucher Management System, and HUD’s Performance and Accountability Reports. The number of low-income families assisted includes all units funded under the public housing and Section 8 project-based rental assistance programs (including some that are vacant at any given point in time) and all vouchers leased under the Housing Choice voucher program.