Rural Housing Service: Efforts to Identify and Reduce Improper Rental Assistance Payments Could Be Enhanced
Highlights
What GAO Found
The Rural Housing Service (RHS) has identified improper rental assistance payments caused by certain sources of errors, but its reported error rate (total amount improperly paid divided by program outlays) may understate the magnitude of the problem. RHS has identified improper payments resulting from inaccurate calculations of tenant subsidies and incomplete supporting documents. From fiscal years 2007 through 2010, RHS reduced its reported error rate from 3.95 percent (representing $35 million in errors) to 1.48 percent (representing $15 million in errors). However, these figures may be understated because RHS has not estimated improper payments due to unreported tenant income, and it lacks the authority to match tenant data to federal income data for this purpose. These data include the Department of Health and Human Services’ (HHS) New Hires database and the Social Security Administration’s (SSA) data on benefits payments. RHS has proposed legislation to gain access to the HHS data but not the SSA data. Additionally, RHS has not recently estimated payment processing errors and has not strictly adhered to procedures for classifying payments as improper. Further, in 2008, RHS began excluding improper payments of less than $100 from its estimated error rates. However, it did not submit this change to the Office of Management and Budget (OMB), which is responsible for approving agency methodologies for estimation. As a result, RHS lacks assurance that its approach is appropriate.
RHS uses required statistical methods for estimating improper payments but has not fully met requirements for reporting on, reducing, and recovering such payments. Consistent with the Improper Payments Information Act of 2002, as amended, and OMB guidance, RHS examines a statistically valid sample of payments and generates estimates with an acceptable level of precision. RHS also has reported required information, such as actions to address payment errors. However, RHS did not fully comply with the requirement to implement and report steps for holding agency managers accountable for reducing improper payments. In addition, although OMB cites data matching as a way to reduce payment errors, RHS has not used data already available from SSA to detect payments made on behalf of deceased tenants. Further, RHS has yet to institute a recovery audit program in accordance with the Improper Payments Elimination and Recovery Act of 2010, although it plans to do so sometime in 2012. These shortcomings negatively affect the integrity of RHS’s subsidy payments.
The Department of Housing and Urban Development’s (HUD) use of data matching to reduce improper payments in its rental assistance programs illustrates the potential benefits and challenges of this technique for RHS. HUD developed a web-based system that allows authorized HUD staff and program administrators (e.g., public housing agencies) to match tenant information to HHS’s New Hires database and SSA benefits data. According to HUD, the system has helped to reduce income reporting errors and has contributed to a more than threefold decline in total improper payments from fiscal years 2000 through 2010. Negotiating a data-sharing agreement with one agency and fully implementing the data matching system took several years. Additionally, HUD provides extensive guidance, training, and technical assistance to program administrators to help ensure effective use of the system.
Why GAO Did This Study
RHS, an agency within USDA, paid property owners about $1 billion in fiscal year 2011 to help more than 270,000 low-income rural tenants afford rental housing. Each year, some of RHS’s rental subsidy payments are improper—that is, too high or too low. Federal requirements regarding improper payments are set forth in statute and in OMB guidance. GAO was asked to review (1) the extent to which RHS has examined the sources and magnitude of improper rental assistance payments, (2) RHS’s compliance with requirements and guidance concerning improper payments, and (3) potential lessons RHS could learn from HUD efforts to identify and reduce improper rental assistance payments. To do this work, GAO analyzed agency data and documents; reviewed statutes and guidance; and interviewed RHS, HUD, and OMB officials.
Recommendations
To help reduce improper payments caused by unreported tenant income, GAO suggests that Congress should consider authorizing RHS access to HHSs New Hires database and recommends that RHS develop proposed legislation to gain access to SSA benefits data. GAO also recommends that USDA submit RHSs method for estimating improper payments to OMB for review and that RHS take steps to consistently apply procedures for classifying payments as improper, examine improper payments made on behalf of deceased tenants or caused by payment processing errors, and hold agency managers accountable for reducing improper payments. USDA said it generally agreed with GAOs recommendations.
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should consider amending Section 453(j) of the Social Security Act to grant RHS access to HHS's New Hires database for purposes of verifying tenant incomes. If such access were granted, RHS would need to develop specific procedures with HHS to facilitate it. | In December 2015, the Consolidated Appropriations Act, 2016, granted the Secretary of Agriculture and the Secretary's designees access to the New Hires database for purposes of verifying the incomes of individuals participating in RHS's housing programs. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Agriculture | To help estimate, reduce, and recover improper payments in the Section 521 rental assistance program, the Secretary of Agriculture should draft proposed legislation for congressional consideration that would grant RHS access to SSA benefits data for purposes of verifying tenant incomes. |
USDA's congressional budget justification for fiscal year 2016 included proposed legislative language that would grant RHS access to the SSA benefits data. A provision enacted as part of the Consolidated Appropriations Act, 2018 (Pub. L. 115-141) contains a modified version of this language and grants RHS access to the data. USDA needs to execute an agreement with SSA before it can use the data. As of October 2018, USDA officials said they were working to complete the interagency agreement.
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| Department of Agriculture | To help estimate, reduce, and recover improper payments in the Section 521 rental assistance program, the Secretary of Agriculture should submit RHS's methodology for estimating improper payments, including use of the $100 exclusion threshold, to OMB for review. |
In June 2015, USDA's Office of the Chief Financial Officer submitted RHS's methodology to OMB for review. In July 2015, OMB responded with follow-up questions for USDA, which USDA answered in September of that year. As of July 2016, USDA was awaiting a final response from OMB.
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| Department of Agriculture | To help estimate, reduce, and recover improper payments in the Section 521 rental assistance program, the Secretary of Agriculture should consider examining payment processing errors as part of the next improper payments audit to provide more current information on whether these errors are significant. |
RHS included the examination of payment processing errors in its fiscal year 2012 and 2013 improper payments audits. RHS said this examination will be a permanent part of its improper payment audit methodology.
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| Department of Agriculture | To help estimate, reduce, and recover improper payments in the Section 521 rental assistance program, the Secretary of Agriculture should, in conducting the annual improper payments audit, either count all payments made on behalf of tenants with signed but undated Tenant Certification forms as improper or revise the audit procedure to classify such payments as proper when an acceptable certification date can be imputed from other documents. |
Beginning with its fiscal year 2012 improper payments audit, RHS revised its methodology to classify payments as proper when an acceptable certification date can be imputed from other documents.
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| Department of Agriculture | To help estimate, reduce, and recover improper payments in the Section 521 rental assistance program, the Secretary of Agriculture should complete steps to use SSA's Death Master File-potentially utilizing the batch-processing option offered through Treasury's 'Do Not Pay" web portal-to identify improper payments made on behalf of deceased tenants and use this capability in conducting the annual improper payments audit and for ongoing oversight of program payments. |
In its Agency Financial Report for Fiscal Year 2015, USDA indicated that it had implemented the Do Not Pay portal, which allows for checks on USDA payments against the Death Master File. RHS uses the portal to check payments made under the rental assistance program. For the fiscal year 2015 improper payments audit, RHS reviewed all 666 rental assistance payments it sampled against the Do Not Pay portal and did not identify any direct matches to the Death Master file.
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| Department of Agriculture | To help estimate, reduce, and recover improper payments in the Section 521 rental assistance program, the Secretary of Agriculture should complete steps to ensure that RHS managers are held accountable for reducing and recovering improper payments in the rental assistance program and include a discussion of the accountability steps in USDA's Performance and Accountability Reports (PAR). |
In October 2012, USDA officials reported that RHS and Rural Development (RD) would adopt accountability steps similar to those of other departmental agencies. Subsequently, in its Agency Financial Report for Fiscal Year 2012 (which includes information on improper payments previously reported in the PAR), USDA included specific accountability steps and timeframes to hold RHS and RD managers responsible for improper rental assistance payments.
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| Department of Agriculture | To help estimate, reduce, and recover improper payments in the Section 521 rental assistance program, the Secretary of Agriculture should include a discussion in USDA's PAR of whether RHS has the internal controls, human capital, information systems, and other infrastructure to reduce improper rental assistance payments to targeted levels. |
In its Agency Financial Report for Fiscal Year 2015 (which includes information on improper payments previously contained in the PAR), USDA included the required discussion of whether RHS has the internal controls, human capital, information systems, and other infrastructure to reduce improper rental assistance payments to targeted levels. Among other things, USDA identified opportunities for improving internal controls over improper payments in the rental assistance program.
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