Rental Housing: Improvements Needed to Better Monitor the Moving to Work Demonstration, Including Effects on Tenants
GAO-18-150
Published: Jan 25, 2018. Publicly Released: Feb 15, 2018.
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Highlights
What GAO Found
The Department of Housing and Urban Development‘s (HUD) oversight of the Moving to Work (MTW) demonstration has been limited. Improving oversight—particularly for information collection and analysis—would help HUD assess what MTW agencies have done, including funding use. HUD took steps to improve oversight and reporting, but GAO found limitations in the following areas:
- Workforce planning. While HUD has taken steps to address staffing to oversee the current 39 MTW agencies, HUD has not finalized its workforce planning for 100 agencies to be added to the demonstration. According to a 2015 HUD analysis, a large number of additional staff would be needed for the expansion. HUD officials said field office staff might assume greater oversight responsibilities to fill this gap, but a joint (headquarters-field) oversight structure is not final and HUD's workforce analysis has not been updated to reflect this proposed oversight structure.
- Data collection. Due to limited data, HUD cannot fully determine the extent to which demonstration flexibilities affected the performance of MTW agencies, especially in relation to outcomes that affect the number of tenants served—occupancy and voucher utilization rates and program expenses. GAO found that MTW agencies had lower yearly median rates for public housing occupancy and Housing Choice Voucher (voucher) unit utilization and higher yearly median program expenses than comparable non-MTW agencies. The differences may be partly the result of demonstration funding flexibilities, such as the ability to use public housing and voucher funding for purposes such as gap financing for affordable housing (a nontraditional activity). But limitations in HUD data (such as not differentiating expenses for nontraditional activities) make it difficult to fully explain differences in outcomes GAO analyzed.
- Oversight of reserves. HUD has not implemented a process to monitor MTW reserves or agencies' plans for such reserves, which led to agencies accruing relatively large amounts of unused funds that could be used for vouchers. According to HUD data as of June 30, 2017, the 39 MTW agencies had more voucher reserves than the 2,166 non-MTW agencies that administer the voucher program combined ($808 million compared to $737 million). Without a monitoring process, HUD cannot provide reasonable assurance that MTW agencies have sound plans for expending reserves.
- Monitoring the effect of rent reform, work requirements, and time limits on tenants. HUD is limited in its ability to evaluate the effect of MTW policies on tenants. HUD does not have a framework—including clear guidance on reporting requirements and analysis plans—for monitoring the effect of rent-reform, work-requirement, and time-limit policies. HUD guidance instructs agencies to analyze the impact of their rent reform activities, describe how they will reevaluate them, and develop a tenant hardship policy for such policies (but not for time limits or work requirements). But the guidance does not describe what must be included in the analyses or policies, leading to wide variation in how agencies develop them. Also, HUD does not assess the results of agencies' analyses.
Why GAO Did This Study
The MTW demonstration gives 39 participating public housing agencies the flexibility to use funding for HUD-approved purposes other than housing assistance, such as developing affordable housing; change HUD's tenant rent calculation; and impose work requirements and time limits on tenants. In 2015, Congress authorized the expansion of MTW by adding 100 new agencies. GAO was asked to evaluate the MTW demonstration. GAO examined HUD oversight of MTW agencies, including its monitoring of demonstration effects on tenants.
For this report, GAO reviewed HUD and MTW agency policies and documentation; interviewed officials at HUD and seven MTW agencies (selected based on type of policy changes, size, and geographic diversity); and interviewed tenants served by selected agencies. GAO also conducted a statistical analysis comparing data for MTW and non-MTW agencies on public housing occupancy rates, voucher utilization rates, and program expenses.
Recommendations
GAO makes 11 recommendations to HUD, which include completing workforce planning, developing processes to track use of funds and monitor agencies' reserves, and developing a framework—including clear guidance on reporting requirements and analysis plans—to monitor effects on tenants. HUD generally agreed with eight of the recommendations and disagreed with three, citing the need for flexibility. GAO maintains the recommendations, as discussed further in the report.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Housing and Urban Development |
Priority Rec.
The Assistant Secretary for the Office of Public and Indian Housing (PIH) should complete workforce planning for the MTW demonstration to help ensure that PIH has sufficient staff with appropriate skills and competencies to manage an expanded demonstration, including reviewing reports and carrying out compliance reviews in a timely manner. (Recommendation 1) |
In response to this recommendation, HUD stated that the agency would continue its workforce planning efforts to ensure that the agency had sufficient staff with appropriate skills and competencies to appropriately implement the MTW expansion. Specifically, it conducted a workload analysis in January 2020, assessing organizational functions, work products, and resources to determine the staffing gaps within the MTW Office. Since then, HUD has hired nine staff to fill gaps identified. HUD's identification of the skills and competencies needed and hiring of staff to address gaps should help it to oversee the expanded MTW demonstration.
|
| Department of Housing and Urban Development | The Assistant Secretary for PIH should more fully document the process for annually assessing compliance with the five demonstration requirements. (Recommendation 2) |
In response to this recommendation, HUD stated that it would finalize internal written procedures. In April 2019, HUD developed guidance detailing how it will annually assess compliance with the five requirements for existing MTW agencies. In addition, on August 28, 2020, HUD issued a Federal Register operations notice for the expansion of the MTW demonstration, which also detailed how HUD will annually assess compliance with the five requirements for the expansion agencies. Both of these documents generally describe the data, data source, and methodology HUD will use to assess compliance with each of the five requirements. Taking these steps should help HUD ensure that it more consistently monitors MTW agencies' compliance with the five requirements.
|
| Department of Housing and Urban Development |
Priority Rec.
The Assistant Secretary for PIH should develop and implement a process to track how MTW demonstration funds are being used for other allowable activities, including local, nontraditional activities. (Recommendation 3) |
In March 2022, HUD revised its user manual for the Voucher Management System, which includes new data fields to better track how Housing Choice Voucher funds are being used for local, nontraditional activities. In addition, since our report HUD revised its guidance to require existing MTW agencies to include in their annual reports more detailed data on the number of households served through local, nontraditional activities. Similarly, the template for the MTW Supplement to the Annual PHA Plan that expansion agencies are required to submit to HUD requires these agencies to report on the total number of households housed through local, nontraditional activities in the fiscal year. By collecting more comprehensive data on the uses of MTW demonstration funds and households served through local, nontraditional activities, HUD can better assess the extent to which demonstration flexibilities affected the performance of MTW agencies.
|
| Department of Housing and Urban Development | The Assistant Secretary for PIH should identify and implement changes to PIC to capture household data for households served through local, nontraditional activities. (Recommendation 4) |
In May 2024, HUD officials stated that HUD planned to add fields for capturing data on households served through local, nontraditional activities to the next generation of PIC. HUD officials said they expect expansion MTW agencies to begin reporting this information by the fall of 2024. In addition, in November 2022, HUD published on its website a spreadsheet presenting data for the 39 existing MTW agencies on the number of households served through local, nontraditional activities, which HUD said it will update annually.
|
| Department of Housing and Urban Development |
Priority Rec.
The Assistant Secretary for PIH should develop and implement a process to monitor MTW agencies' reserves. (Recommendation 5) |
In response, HUD implemented such a process for existing MTW agencies and limited the ability of new MTW agencies to build large reserves. In May 2021, HUD revised its guidance on annual reporting to require existing MTW agencies to provide a description of how they planned to use their unexpended public housing and voucher funding. The guidance states that to derive the public housing unspent funds balance, the agency is to subtract current assets from current liabilities in its most recent financial statement submission. The revised guidance further states that, where possible, MTW agencies should identify the planned use, the estimated amount, which funding source the planned use or uses are attributable to, and the projected timeline or timeline update. In addition, on August 28, 2020, HUD issued a Federal Register operations notice for the expansion of the MTW demonstration that significantly limits expansion agencies' ability to accumulate large reserves. Unlike the funding for existing MTW agencies, HUD will fund the expansion agencies using the same public housing funding formula used for non-MTW agencies and will generally base their voucher funding on prior-year actual expenditures. Taking these steps should help HUD provide reasonable assurance that MTW agencies have sound plans for expending their reserves.
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| Department of Housing and Urban Development | The Assistant Secretary for PIH should clarify HUD's rent-reform definition for the MTW demonstration as part of a framework for monitoring the effect of rent-reform, work-requirement, and time-limit policies on tenants. (Recommendation 6) |
On August 28, 2020, HUD published the MTW expansion operations notice, which clarified the definition of rent reform for expansion agencies. On December 8, 2021, HUD published responses to frequently asked questions to accompany its guidance to existing MTW agencies on annual reporting requirements, one of which clarifies its rent-reform definition. By clarifying its definition of rent reform and providing specific criteria or standards with which to classify activities as rent reform, HUD has taken steps to help ensure it is in the position to collect quality information needed to monitor all rent-reform activities.
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| Department of Housing and Urban Development | The Assistant Secretary for PIH should set parameters for HUD's definition of self-sufficiency for the demonstration, either by providing one definition or a range of options from which agencies could choose, as part of a framework for monitoring the effect of rent-reform, work-requirement, and time-limit policies on tenants. (Recommendation 7) |
In response to this recommendation, HUD set parameters on the definition of self-sufficiency for both expansion and existing MTW agencies. For expansion agencies, on January 13, 2021, HUD provided a list of measures it developed for testing the impact of the MTW demonstration on self-sufficiency. For example, HUD plans to assess, among other things, the average earnings of nonelderly, nondisabled adults (aged 18-61) over the last four quarters and the percentage of these adults with earnings greater than 30 percent of the area median income. In addition, in June 2022, HUD published responses to frequently asked questions on its reporting requirements for existing MTW agencies, one of which sets parameters for defining self-sufficiency. In the response, HUD states that existing MTW agencies must create a local definition of self-sufficiency using one or more of the following factors: the household voluntary exited from HUD assistance, the household increased income, the household increased savings, one or more adult members of the household achieved full time-employment, the household was removed from Temporary Assistance for Needy Families, or the household met a local standard established by the MTW agency and approved by HUD. By taking these steps, HUD should be able to collect consistent information that would allow for the evaluation of the effect of MTW rent-reform and occupancy policies on tenants.
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| Department of Housing and Urban Development | The Assistant Secretary for PIH should revise HUD's guidance to MTW agencies to make it clear which elements are required in impact analyses, annual reevaluations, and hardship policies and the information required for each element as part of a framework for monitoring the effect of rent-reform, work-requirement, and time-limit policies on tenants. (Recommendation 8) |
In response to this recommendation, HUD revised its guidance for expansion and existing MTW agencies. On August 28, 2020, HUD published an MTW expansion operations notice that described the elements required in impact analyses, annual reevaluations, and hardship policies that expansion MTW agencies develop. In June 2022, HUD published responses to frequently asked questions on its reporting requirements for existing MTW agencies in which it clarified the elements required in impact analyses, annual reevaluations, and hardship policies. For example, HUD stated that when developing an impact analysis, and at annual reevaluation as required, the MTW agency should include information such as the impact on affordability of housing costs for affected families and on the rate of hardship requests and the number granted and denied because of this activity. Taking these steps should help MTW agencies to better assess the effects of MTW activities on tenants, including their unintended consequences, and to better communicate the information tenants need to understand the circumstances in which they may be exempted from rent-reform activities.
|
| Department of Housing and Urban Development | The Assistant Secretary for PIH should develop written guidance for existing MTW agencies that requires a hardship policy for public housing time limits and encourages an impact analysis, annual reevaluation, and hardship policy for work-requirement and time-limit policies for public housing and voucher programs as part of a framework for monitoring the effect of these policies on tenants. (Recommendation 9) |
In January 2018, HUD updated its guidance to require existing MTW agencies to develop a hardship policy for public housing time limits. In addition, in June 2022, HUD developed responses to frequently asked questions on its reporting requirements for existing MTW agencies, one of which encourages an impact analysis, annual reevaluation, and hardship policy for work-requirement and time-limit policies for public housing and voucher programs. By taking these steps, HUD should be able to collect information needed to evaluate the effect of work-requirement and time-limit policies on tenants.
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| Department of Housing and Urban Development | The Assistant Secretary for PIH should require an impact analysis, annual reevaluation, and hardship policy for work-requirement and time-limit policies new MTW agencies adopt for their public housing and voucher programs as part of a framework for monitoring the effect of these policies on tenants. (Recommendation 10) |
In response to this recommendation, HUD stated that new agencies would be required to take these steps once it finalized the MTW operations notice. On August 28, 2020, HUD finalized the notice, which required agencies that adopt work-requirement and time-limit policies to develop impact analyses and hardship policies for these activities. By requiring new MTW agencies to develop impact analyses and hardship policies for work-requirement and time-limit policies, HUD has taken steps to help ensure it collects information needed to evaluate the effect of these policies on tenants.
|
| Department of Housing and Urban Development |
Priority Rec.
The Assistant Secretary for PIH should develop and implement a plan for analyzing the information that agencies report on the effect of rent-reform, work-requirement, and time-limit policies on tenants as part of a framework for monitoring the effect of these policies on tenants. (Recommendation 11) |
HUD developed analysis plans for the new and initial MTW agencies. On August 28, 2020, HUD published an MTW expansion operations notice, which states that the policy changes implemented by each cohort of new agencies-including rent reform policies such as stepped rent (increases to the family's rent payment on a fixed schedule)-will be subject to cohort-specific evaluation. According to the notice, the purpose of this evaluation will be to measure the outcomes associated with the specific policy change(s) in order to offer policy recommendations for implementing the policy change(s) across all public housing agencies. For example, in September 2018, HUD contracted with Abt Associates Inc. to conduct a five-year evaluation of the first cohort of new MTW agencies to assess how small public housing agencies use their MTW flexibilities and their effect on the agencies and their tenants. The evaluation is to produce five reports: a baseline report documenting the characteristics of the agencies and their tenants at the time of MTW designation and four annual reports to assess the effect of the MTW flexibilities over time on the treatment group agencies and their tenant outcomes. HUD plans to publish the first report in the fall of 2022. In addition, HUD provided a plan in July 2022 that it had developed to monitor stepped rent, term-limited assistance, and work requirement activities, collectively referred to as high-impact activities, across the 39 initial MTW agencies. HUD plans to use tools such as Housing Choice Voucher (HCV) and Public Housing (PH) dashboards to help the MTW Office identify MTW agencies that could be at-risk of harming families and perform an investigation of their high-impact activities. According to the plan, monitoring would occur every January, evaluating data through December 31 of the previous calendar year. HUD staff would investigate the three MTW agencies with the largest reduction in HCV leasing and the three MTW agencies with the lowest public housing occupancy over a 12-month period. The staff would then produce a report detailing factors such as PH attrition, HCV attrition, and high-impact activities. Based on this annual evaluation of selected MTW agencies, the MTW Office is to determine whether the agencies should revise or discontinue their activities. HUD plans to first implement this process in January 2023.
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Compliance oversightData collectionHousingHousing programsInformation collectionInternal controlsMonitoringPublic housingRental housingReporting requirementsTenantsWorkforce planning