Housing Programs

Funding Approach for HUD's Section 8 Certificate Program Needs Changing Gao ID: RCED-88-136 April 18, 1988

In response to a congressional request, GAO provided information on the adequacy of the Department of Housing and Urban Development's (HUD) funding approach for its Section 8 Existing Rental Assistance Certificate Program, focusing on: (1) the potential shortfall in program funds; (2) whether HUD adequately compensated state and local public housing agencies (PHA) for their costs; and (3) how PHA charged administrative fees that exceeded their actual costs.

GAO found that: (1) HUD omitted some cost factors in its program cost estimates, such as inflationary rent increases, the usage rate for rental certificates, tenant contributions, and PHA administrative costs; (2) many state and local PHA depleted their project reserves, resulting in Congress granting $1.3 billion in supplemental budget authority from 1982 through 1987; (3) PHA had a net surplus of over $22 million because HUD reimbursed them substantially more than their costs to administer the program; (4) HUD preferred to leave primary responsibility for usage of surplus funds with PHA; and (5) PHA used the funds for varying purposes, such as subsidizing other housing units, purchasing office equipment, and paying for office parties.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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