Housing and Urban Development

Serious management and budgetary problems continue to plague the Department of Housing and Urban Development (HUD). Although HUD has taken steps during the past two years to address some of its most pressing problems, those actions are far from complete. HUD's programs continue to represent large federal loan commitments and discretionary spending, much of which goes to rental assistance for people who are least able to afford decent housing. This testimony focuses on (1) the long-standing management shortcomings that hamper HUD's effectiveness, progress made in addressing these problems, and the work remaining; (2) the problems in HUD's assisted and public housing programs, which represent the largest part of its outlays and a vast share of the budget authority that HUD expects to need in the future; and (3) the need to reach agreement on federal housing policy, HUD's mission, and the resources devoted to achieving that mission.

GAO noted that: (1) four long-standing departmentwide management deficiencies continue to make HUD vulnerable to waste, fraud, abuse, and mismanagement: (a) weak internal controls; (b) inadequate information and financial management systems; (c) an ineffective organizational structure; and (d) an insufficient mix of staff with the proper skills; (2) while HUD has made progress in addressing these weaknesses, GAO has determined that much remains to be done and HUD continues to warrant the focused attention that comes with being designated by GAO as a "high-risk area"; (3) HUD faces a variety of problems in its largest assisted and public housing programs, including how to: (a) continue providing Section 8 housing assistance to 3 million families while not undermining funding for other important housing and community development programs; (b) reduce excess rental subsidies to some insured multifamily properties while minimizing insurance losses to the Federal Housing Administration fund and ensuring that those properties meet basic housing quality standards; and (c) help public housing authorities deal with increasingly tight funding levels while ensuring a minimum level of oversight and assistance from HUD for the authorities with management problems; (4) the Congress and the administration need to agree on the future direction of federal housing policy and put in place the organizational and program delivery structures that are best suited to carrying out that policy; and (5) doing so will require revisiting fundamental issues about that policy, including whom the federal government will serve, how much will be spent on those being served, and how those policies will be implemented.