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.


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