May 21, 2003

Block Grant Would UNDERMINE Housing Voucher Program

PDF of this report

Full Report:
Housing Voucher Block Grant Bills Would Jeopardize An Effective Program And Likely Lead To Cuts In Assistance For Low-Income Families

View Related Analyses

If you cannot access the files through the links, right-click on the underlined text, click "Save Link As," download to your directory, and open the document in Adobe Acrobat Reader.

A new report from the Center on Budget and Policy Priorities analyzes an Administration proposal to replace the nation’s largest low-income housing program, called the Housing Choice Voucher Program or the “Section 8” voucher program, with a block grant to the states beginning in fiscal year 2005.  The specifics of the Administration proposal are contained in two similar bills (H.R. 1841 and S. 947) introduced in Congress on April 29.  Summarized below are the main conclusions of the Center’s report.


Voucher Funding Would Likely Fail to Keep Pace with Housing Costs

Currently, Congress adjusts voucher funding each year based on changes in actual costs, to ensure that housing agencies have sufficient funds to cover all vouchers that families are using. A block grant would eliminate this funding structure: Congress could simply pick a lump sum to appropriate each year, with no built-in link to the actual number of families using vouchers and no built-in adjustment for rising rents.

History has shown that funding for block grants often erodes over time, in part because the human impacts of cuts can be difficult to see.  An analysis of 11 block grants that serve low-income people in housing, health, and social services shows that, when adjusted for inflation, funding fell by an average of 11 percent from 1982 (or the first year the program was funded as a block grant, if later) through 2003.  Two of the 11 block grants fund child care assistance and received large funding increases in the late 1990s to respond to the growing need for child care under new welfare-to-work requirements.  When these two block grants are excluded, the drop in inflation-adjusted funding for the remaining grants was even greater: 22 percent.  In light of these data and the tight funding constraints Congress will face in coming years, funding for the new voucher block grant would be unlikely to keep pace with increases in rental costs.

If Funding Erodes, States Would Need to Scale Back Their Voucher Programs

If voucher funding falls behind the program’s needs, states would have to contribute their own funds or scale back their programs in one or more of the following ways:


Some Owners and Lenders Might Be Deterred from Accepting Vouchers

By eliminating the federal commitment to maintain voucher funding at a level sufficient to meet the program’s needs, the proposed block grant would make rental revenues from vouchers less reliable and, as a result, likely deter some landlords from accepting vouchers.  The National Association of Realtors and six other groups representing apartment owners have warned that a block grant would “have a chilling impact upon market participation in the [voucher] program.”  Similarly, lenders may be unwilling to rely on voucher subsidies to back home mortgage loans; this would undermine the use of vouchers to support homeownership.

Block-Granting Isn’t Needed to Improve the Voucher Program

The stated goals of the plan’s proponents could, in fact, be achieved more easily without a block grant.  For example, a block grant would make it harder, not easier, to reallocate unused vouchers to families that can use them successfully (because the block grant would very likely eliminate funding for unused vouchers) or to undertake initiatives — such as targeting vouchers on homeless families — that can raise per-voucher costs but can benefit the community.

The bipartisan, Congressionally-chartered Millennial Housing Commission strongly endorsed the voucher program in a May 2002 report, describing it as “flexible, cost-effective, and successful in its mission.”  The Administration proposal risks undermining these achievements.