Public Housing
Small and Larger Agencies Have Similar Views on Many Recent Housing Reforms Gao ID: GAO-04-19 October 30, 2003In response to long-standing concerns, HUD initiated efforts to improve the administration of its programs in 1997, and Congress passed the Quality Housing and Work Responsibility Act (QHWRA) in 1998. The act contains over 80 reforms that affect two key rental housing assistance programs: the low-rent housing program (also referred to as public housing) and the Housing Choice Voucher program (formerly Section 8). According to many housing agencies, implementing these reforms challenged their ability to address their core mission of providing safe, decent, and sanitary rental units for low-income residents. In particular, some small agencies that manage properties with relatively few rental units have contended that some reforms have little relevance to their operations and pose a significant burden because of the agencies' limited staff and financial resources. In response to a Congressional request, GAO compared housing agencies by size in terms of (1) the impact of recent housing reforms on their ability to administer HUD programs, (2) the agencies' performance as measured by HUD, and (3) the differences in the technical assistance that the agencies require. To carry out its work, GAO surveyed a statistical sample of small and larger public housing agencies nationwide on the impact of QHWRA reforms. The response rate to the survey was about 69 percent.
Of the 18 QHWRA reforms GAO asked about in its national survey, housing agencies of all sizes had similar views on 11 of them. However, when asked to what extent these reforms affected their operations, agencies' responses sometimes differed by size category. For example, the largest percentages of agencies in all size categories viewed the annual plan reform--which requires agencies to provide certain information pertaining to their upcoming fiscal year--as helpful to them in managing and operating their agencies. But small agencies indicated that this reform helped to a lesser extent than larger agencies. Other results of our survey: (1) all agencies reported spending more time on administering HUD programs since QHWRA was implemented, (2) most agencies said they contracted out about the same amount of property management and services as before QHWRA, and (3) about 75 percent of small agencies reported they believe the regulatory changes HUD has issued to reduce administrative burden will help. Performance ratings varied between small and larger housing agencies, according to HUD assessment data. The ratings, which assess the agencies' management of HUD housing programs, showed small agencies scoring better than larger ones in managing low-rent units. However, smaller agencies received lower scores than larger agencies for managing Housing Choice Voucher units, but this result may be due partly to HUD scoring method. HUD uses its risk assessment and management performance assessment systems to target assistance based on its determination of those that need it most. In addition, housing agencies also contact HUD directly to request assistance. However, according to HUD field office officials, small agencies are more likely to need assistance with day-to-day management issues than large agencies because small agencies tend to have few staff that specialize in key areas that are important to managing HUD's programs.
GAO-04-19, Public Housing: Small and Larger Agencies Have Similar Views on Many Recent Housing Reforms
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Report to the Ranking Minority Member, Subcommittee on Housing and
Transportation, Committee on Banking, Housing, and Urban Affairs, U.S.
Senate:
October 2003:
PUBLIC HOUSING:
Small and Larger Agencies Have Similar Views on Many Recent Housing
Reforms:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-19] GAO-04-19:
GAO Highlights:
Highlights of GAO-04-19, a report to the Ranking Minority Member,
Subcommittee on Housing and Transportation, Committee on Banking,
Housing and Urban Affairs, U.S. Senate
Why GAO Did This Study:
In response to long-standing concerns, HUD initiated efforts to
improve the administration of its programs in 1997, and Congress
passed the Quality Housing and Work Responsibility Act (QHWRA) in
1998. The act contains over 80 reforms that affect two key rental
housing assistance programs: the low-rent housing program (also
referred to as public housing) and the Housing Choice Voucher program
(formerly Section 8). According to many housing agencies, implementing
these reforms challenged their ability to address their core mission
of providing safe, decent, and sanitary rental units for low-income
residents. In particular, some small agencies that manage properties
with relatively few rental units have contended that some reforms have
little relevance to their operations and pose a significant burden
because of the agencies‘ limited staff and financial resources.
In response to the request of the Ranking Minority Member of the
Subcommittee, GAO compared housing agencies by size in terms of (1)
the impact of recent housing reforms on their ability to administer
HUD programs, (2) the agencies‘ performance as measured by HUD, and
(3) the differences in the technical assistance that the agencies
require. To carry out its work, GAO surveyed a statistical sample of
small and larger public housing agencies nationwide on the impact of
QHWRA reforms. The response rate to the survey was about 69 percent.
What GAO Found:
Of the 18 QHWRA reforms GAO asked about in its national survey,
housing agencies of all sizes had similar views on 11 of them.
However, when asked to what extent these reforms affected their
operations, agencies‘ responses sometimes differed by size category.
For example, the largest percentages of agencies in all size
categories viewed the annual plan reform”which requires agencies to
provide certain information pertaining to their upcoming fiscal year”
as helpful to them in managing and operating their agencies. But small
agencies indicated that this reform helped to a lesser extent than
larger agencies.
Other results of our survey:
* All agencies reported spending more time on administering HUD
programs since QHWRA was implemented.
* Most agencies said they contracted out about the same amount of
property management and services as before QHWRA.
* About 75 percent of small agencies reported they believe the
regulatory changes HUD has issued to reduce administrative burden will
help.
Performance ratings varied between small and larger housing agencies,
according to HUD assessment data. The ratings, which assess the
agencies‘ management of HUD housing programs, showed small agencies
scoring better than larger ones in managing low-rent units. However,
smaller agencies received lower scores than larger agencies for
managing Housing Choice Voucher units, but this result may be due
partly to HUD scoring method.
HUD uses its risk assessment and management performance assessment
systems to target assistance based on its determination of those that
need it most. In addition, housing agencies also contact HUD directly
to request assistance. However, according to HUD field office
officials, small agencies are more likely to need assistance with day-
to-day management issues than large agencies because small agencies
tend to have few staff that specialize in key areas that are important
to managing HUD‘s programs.
www.gao.gov/cgi-bin/getrpt?GAO-04-19.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact David G. Wood, (202)
512-8678, or woodd@gao.gov.
[End of section]
Contents:
Letter:
Background:
Results in Brief:
With Some Exceptions, Small Agencies' Views of QHWRA Reforms Were
Similar to Those of Larger Agencies:
Scores from HUD's Performance Measurement and Risk Assessment Systems
Show That Small and Larger Agencies' Performance Varies:
HUD's Technical Assistance Is Based on Agency Needs, Which Sometimes
Vary by Agency Size:
Agency Comments:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Methodology for GAO's Survey of Local Housing Agencies on
QHWRA Housing Reforms and Initiatives:
The Study Population:
The Sample Design:
Developing the Survey:
Administering the Survey:
Nonsampling Error and Data Quality:
Response Rates:
Estimates:
Sampling Error:
Appendix III: Survey Results of Housing Agencies:
Appendix IV: Summary of 18 Reforms Contained in GAO's Survey of Public
Housing Agencies:
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: Small, Medium, and Large Public Housing Agencies and Their
Inventory, Based on GAO's Definition for Size, Fiscal Year 2002:
Table 2: Average SEMAP Scores for Seven Indicators for Which All
Agencies Are Scored, by Agency Size (Fiscal Year 2002):
Table 3: Survey Sample Size and Disposition:
Figures:
Figure 1: Survey Estimates on Effects of Seven QHWRA Reforms That
Primarily Helped Agencies to Operate and Manage HUD Programs:
Figure 2: Survey Estimates on Four QHWRA Reforms That Primarily Neither
Helped Nor Hindered Agencies to Operate and Manage HUD Programs:
Figure 3: Survey Estimates on Seven Reforms with Varied Impacts on
Agency Ability to Operate and Manage HUD Programs:
Figure 4: Survey Estimates of Time Agencies Spend Administering HUD
Programs Since QHWRA Reforms:
Figure 5: Survey Estimates of Extent to Which Agencies Reported
Increased Reporting Requirements and Changes in Existing Requirements
Contributed to Increased Time Spent on HUD Programs:
Figure 6: Survey Estimates of Extent to Which Difficulty in Submitting
Data on the Low-Rent Program and Accessing HUD's Computer Systems
Contributed to Increased Time Spent on HUD Programs:
Figure 7: Survey Estimates of Extent to Which Late and Unclear Guidance
and Changes in Regulations Contributed to Increased Time Spent on HUD
Programs:
Figure 8: Survey Estimates of Extent to Which Lack of Resources for
Hiring and Training New Staff and the Need to Train Staff Contributed
to Increased Time Spent on HUD Programs:
Figure 9: Survey Estimates of Extent to Which Agencies Report
Contracting Out for Property Management and Services Since QHWRA:
[See PDF for image]
[End of figure]
Figure 10: Survey Estimates of Extent to Which Agencies Believe HUD's
Regulatory Relief Will Help:
[See PDF for image]
[End of figure]
Figure 11: Overall PHAS Scores, by Agency Size (Fiscal Year 2002):
[See PDF for image]
[End of figure]
Figure 12: Overall SEMAP Scores, by Agency Size (Fiscal Year 2002):
[See PDF for image]
[End of figure]
Figure 13: Overall PIC Risk Assessment Scores, by Agency Size (Fiscal
Year 2002):
Abbreviations:
HUD: Department of Housing and Urban Development:
NAHRO: National Association of Housing and Redevelopment Officials:
PHADA: Public Housing Authorities Directors Association:
PHA: public housing agency:
PHAS: Public Housing Assessment System:
PIC: Public and Indian Housing Information Center:
QHWRA: Quality Housing and Work Responsibility Act:
REAC: Real Estate Assessment Center:
SEMAP: Section Eight Management Assessment Program:
TARC: Troubled Agency Recovery Center:
Letter October 30, 2003:
The Honorable Jack Reed:
Ranking Minority Member:
Subcommittee on Housing and Transportation:
Committee on Banking, Housing, and Urban Affairs:
United States Senate:
Dear Senator Reed:
Over 4,100 state, county, and municipal housing agencies administer
federal housing programs--which were funded at nearly $24 billion in
fiscal year 2003--on behalf of the Department of Housing and Urban
Development (HUD). In response to long-standing concerns, HUD initiated
efforts to improve the administration of its programs in 1997, and
Congress passed the Quality Housing and Work Responsibility Act (QHWRA)
[Footnote 1] in 1998. QHWRA contains over 80 reforms that affect two
key rental housing assistance programs: the Low-Rent Public Housing
Assistance Program (also referred to as low-rent or public housing) and
the Housing Choice Voucher program (formerly referred to as Section
8).[Footnote 2] According to many housing agencies, implementing these
reforms has challenged their ability to address their core mission of
providing safe, decent, and sanitary rental units for low-income
residents. In particular, some small agencies that manage properties
with relatively few rental units have contended that some reforms have
little relevance to their operations and pose a significant burden
because of the agencies' limited staff and financial resources.
HUD annually assesses the operating performance of the housing agencies
that administer the two programs, using performance measurement systems
that assign agencies a score for each program. HUD uses these scores
and ratings from its risk assessment system to identify housing
agencies that may be in need of monitoring and technical assistance.
HUD's technical assistance--sometimes called capacity building--
involves activities such as training staff at local housing agencies on
how to use HUD systems or comply with HUD's reporting requirements.
As agreed with your office, we (1) compared how small and larger
housing agencies view the impact of recent housing reforms on their
ability to administer HUD programs, (2) compared small and larger
agencies' performance, as measured by HUD, in administering the low-
rent housing and Housing Choice Voucher programs, and (3) described the
differences in the technical assistance that small and larger public
housing agencies require.
For the purposes of this report, we classified agencies based on the
number of low-rent and Housing Choice Voucher units they administered.
Small agencies administered fewer than 250 units; medium agencies
administered between 250 and 1,249 units; and large agencies
administered 1,250 units or more. To compare how small and larger
housing agencies view the impact of recent housing reforms on their
ability to administer HUD programs, we developed a survey that we
mailed to a statistical sample of public housing agencies nationwide.
Of the more than 80 QHWRA reforms, our survey focused on the 18 reforms
that public housing industry associations consider to have had the most
impact on agencies' operations. Based on the sample, we produced
national estimates of housing agency directors' perceptions about the
impact of QHWRA reforms and related issues and tested for size-response
differences. [Footnote 3] We analyzed respondents' most frequently
occurring answers to our survey questions to identify similarities and
differences between small, medium, and large agencies. To compare small
and larger agencies' performance in managing HUD's low-income housing
programs, we analyzed data from HUD's performance measurement
assessment systems. To determine differences in the technical
assistance that small and larger agencies require, we analyzed data
from HUD's performance measurement and risk assessment systems and
interviewed HUD headquarters and field office officials. Appendix I
contains additional information on our scope and methodology. Appendix
II contains details on our survey methodology, and appendix III
contains our survey results.
Background:
Under the United States Housing Act of 1937, as amended, Congress
created the federal public housing program to assist communities in
providing decent, safe, and sanitary dwellings for low-income families.
Today, more than 4,100 public housing agencies, typically local
agencies created under state law, develop and manage public housing
units for low-income families. Over 3,100 agencies operate low-rent or
a combination of low-rent and Housing Choice Voucher programs, and
about 1,000 provide housing through the voucher program only. Agencies
that participate in the low-rent program contract with HUD to provide
housing to eligible low-income households; in return, the agencies
receive both capital and operating fund grants. Under the Housing
Choice Voucher program, eligible households live in rental units they
locate in the private housing market. Participating housing agencies
that administer such units contract with HUD to receive funds for rent
subsidies for the participating households.
Congress and HUD Have Initiated Public Housing Reforms:
During the 1990s, the nation's public housing agencies gained broader
latitude from HUD and Congress to establish their own policies in areas
such as selecting tenants and setting rent levels. In 1996, Congress
enacted legislative reforms that allowed public housing agencies to set
minimum rents and to drop all mandatory federal preferences for
admission on the basis of hardships such as homelessness. These reforms
gave housing agencies greater control over their social and fiscal
environment, enabling them to tailor their policies to local needs and
conditions. In 1998, Congress enacted the Quality Housing and Work
Responsibility Act of 1998 (QHWRA).[Footnote 4] This act, which
extensively amended the United States Housing Act of 1937, embodied
many of the 1996 reforms, allowing public housing agencies to exercise
still more discretion over rents and admissions. For example, QHWRA
increased managerial flexibility by, among other things, making HUD-
provided capital and operating funds more fungible; allowing housing
authorities to sell some units to residents; converting some public
housing buildings to the voucher system; and developing mixed-income
housing units in order to bring more working and upwardly mobile
families into public housing. QHWRA also imposed new requirements on
housing agencies, including, for example, mandatory reporting
requirements in the form of a 5-year plan and annual operating plans.
This report focuses on the 18 QHWRA reforms public housing industry
groups believe have had the greatest impact on housing agencies'
operations. These reforms are described more fully in appendix IV.
Reforms concerning agencies' operations:
* Fungibility of capital and operating funds: gives agencies greater
flexibility to use HUD-provided capital and operating grants
interchangeably, within certain limits.
* Certificate/voucher merger: requires agencies to adjust
administrative operations, where needed, in response to the merger of
two former federal housing assistance programs.
* Five-year plans: requires agencies to prepare comprehensive 5-year
plans with goals and objectives that serve needs of low-income
households.
* Annual plans: requires agencies to prepare 1-year plans that include
information on the agency's low-rent and Housing Choice Voucher
programs and policies.
* Physical inspections: requires agencies to annually inspect their
low-rent housing units.
Reforms concerning rent setting:
* Minimum rents: allows agencies to charge public housing residents a
monthly minimum rent of not more than $50.
* Flat rents: allows households to choose to pay either a flat rent
based on market rates or rent based on a percentage of their household
income.
* Rent burden limitation: requires agencies to subsidize initial
voucher recipients so that their rent does not exceed 40 percent of
household income.
Reforms concerning resident selection/admission:
* Federal tenant preferences: repeals mandate that agencies give
admissions preference to certain categories of prospective tenants and
permits agencies to establish their own preferences within certain
limits.
* Deconcentration: prohibits agencies from concentrating very low-
income households in public housing projects or buildings within
projects.
* Income targeting: requires agencies to have a mix of household income
levels in both low-rent housing and Housing Choice Voucher units.
* Income disregard: requires agencies to exclude certain types of
income when determining household eligibility for assistance.
* Site-based waiting lists: permits agencies to allow public housing
applicants to designate specific projects in which they wish to reside,
subject to certain limits.
Reforms concerning residents:
* Pet policy: requires agencies to allow residents one or more common
household pets.
* Community service: requires agencies to ensure that most adult public
housing residents perform monthly community service.
* Resident board member: requires most agencies to have on their board
of directors at least one member who is directly assisted by the
agency.
* Resident advisory board: requires agencies to consult with the board
of residents in preparing annual and 5-year plans.
* Resident surveys: requires HUD to obtain information on the
involvement of public housing residents in the administration of public
housing, including residents' satisfaction with their living conditions
and services.
In response to concerns that some QHWRA reforms are placing an undue
burden on small housing agencies, HUD recently issued regulations
designed to lessen their regulatory burden.[Footnote 5] The rule is
designed to relieve eligible small agencies from administrative burden
in two areas--the annual plan requirement and annual Public Housing
Assessment System (PHAS) and Section Eight Management Assessment
Program (SEMAP) assessments. For example, under the rule, agencies who
operate fewer than 250 low-rent units are allowed to submit streamlined
annual plans for their low-rent units. In addition, for small agencies
that are assessed under PHAS and SEMAP, the rule reduces the frequency
of these assessments from an annual basis to every other year.
HUD Assists Public Housing Agencies and Evaluates Their Performance:
To improve the administration of its low-income housing programs, HUD
provides technical assistance either directly or indirectly to housing
agencies that request assistance or have been identified by HUD as
needing it. HUD sometimes uses the terms "technical assistance" and
"capacity building" interchangeably, and the definitions
overlap.[Footnote 6] Technical assistance programs can generally be
defined as training designed to improve the performance or management
of program recipients, such as one-on-one training in the use and
implementation of HUD's management assessment systems. Capacity
building can generally be defined as funding to strengthen the capacity
or capability of program recipients or providers--typically housing or
community development organizations. The overall goal of both technical
assistance and capacity building is to enhance the delivery of HUD's
housing and community development programs, and some assistance efforts
incorporate elements of each. The technical assistance is delivered by
staff from HUD's headquarters or one of its 43 field offices or by
contractors. According to HUD officials, most technical assistance is
delivered to agencies that request it directly from one of HUD's field
offices. HUD also provides technical assistance through several
programs that are administered primarily by headquarters, such as Hope
VI and the Capital Fund.[Footnote 7]
HUD assesses the performance of public housing agencies so that the
Secretary of Housing can evaluate agencies' performance in all major
areas of management operations. To this end, HUD uses two systems to
assess the management performance of public housing agencies:
* PHAS is designed to obtain an independent evaluation of housing
agencies' overall performance in managing low-rent units, including the
physical condition of the units, the soundness of agencies' financial
operations, the effectiveness of their management operations, and the
level of resident satisfaction with the services and living conditions.
HUD's Real Estate Assessment Center (REAC) arranges independent
physical inspections of HUD's low-rent properties, collects and
analyzes data on the financial and physical condition of the agencies,
and evaluates information from resident satisfaction surveys.[Footnote
8]
* SEMAP measures the performance of the housing authorities that
administer Housing Choice Voucher units. SEMAP uses 14 indicators that
measure factors such as procedures for selecting tenants, income
determinations, and inspections.
HUD uses the Public and Indian Housing Information Center (PIC) system
to generate a risk assessment of housing agencies. PIC risk assessment
scores take into account PHAS and SEMAP scores as well as funding and
compliance information and a number of qualitative factors--for
example, audit findings, court actions, and tenant claims against
agencies.
HUD uses PHAS, SEMAP, and PIC scores to identify agencies that are
having performance problems and determine the kind of technical
assistance needed to correct deficiencies. As a result of these
assessments, HUD may determine that a housing authority is "troubled"-
-that is, experiencing especially severe difficulties in managing its
housing programs. HUD's Troubled Agency Recovery Centers (TARC),
located in Cleveland, Ohio, and Memphis, Tennessee, provide technical
assistance to troubled housing agencies.[Footnote 9]
HUD Has Various Ways of Defining the Size of a Small Agency:
HUD has several ways of defining the size of small agencies. For
example, in its recent small agency deregulation rule, HUD provided two
definitions for a small agency: one for submitting streamlined annual
plans and less frequent PHAS assessments, and another for receiving
less frequent SEMAP assessments. In a 1999 report by the Office of
Policy Development and Research, HUD defined a small housing agency as
one with fewer than 500 low-rent units.[Footnote 10] And in another
report, HUD defined a small agency as one with fewer than 1,000 Housing
Choice Voucher units.[Footnote 11] However, when HUD's REAC assesses
the financial performance of housing agencies it classifies small
agencies as those with less than 250 combined low-rent and Housing
Choice Voucher units. In carrying out our work, we classified agencies
by size based on the total number of low-rent and Housing Choice
Voucher units they administered.
Regardless of the criteria used to define a small agency, most housing
agencies are considered small. Table 1 shows the number and percentage
of small, medium, and large agencies according to the definition of
size that we used in this report. This table also indicates that while
most agencies are small, they operate a relatively small proportion of
all units.
Table 1: Small, Medium, and Large Public Housing Agencies and Their
Inventory, Based on GAO's Definition for Size, Fiscal Year 2002:
Size: Small; Number of agencies: 2,438; Percentage of agencies: 58.2;
Low-rent units: 136,023; Housing Choice Voucher units: 86,271; Number
of units: 222,294; Percentage of units: 6.8.
Size: Medium; Number of agencies: 1,269; Percentage of agencies: 30.3;
Low-rent units: 255,749; Housing Choice Voucher units: 442,945; Number
of units: 698,694; Percentage of units: 21.3.
Size: Large; Number of agencies: 482; Percentage of agencies: 11.5;
Low-rent units: 858,528; Housing Choice Voucher units: 1,499,580;
Number of units: 2,358,108; Percentage of units: 71.9.
Size: Total; Number of agencies: 4,189; Percentage of agencies: 100.0;
Low-rent units: 1,250,300; Housing Choice Voucher units: 2,028,796;
Number of units: 3,279,096; Percentage of units: 100.0.
Source: GAO analysis of HUD data.
[End of table]
Results in Brief:
With some exceptions, small agencies' views on the impact of QHWRA
reforms on their ability to administer HUD programs were similar to
those of their larger counterparts. Agencies in all size categories
shared similar views on 11 of the 18 reforms. For example, the largest
percentages of agencies in all size categories viewed the annual plan
requirement as helpful to them in managing and operating their
agencies. But the percentage of small agencies sharing this view was
smaller than the percentages of medium and large agencies. For the
remaining seven QHWRA reforms, small, medium, and large agencies' views
varied. For example, small and medium agencies viewed the requirement
that each housing agency have a resident member on the board of
directors as neither a help nor a hindrance to them in managing and
operating their agencies, while large agencies viewed the requirement
as a help. Also, agencies of all sizes had similar views on factors
that account for additional time spent working on HUD programs since
the implementation of QHWRA. For example, the largest percentage of
agencies in all size categories reported spending more time on HUD-
subsidized programs after QHWRA than before the reforms were enacted,
in part because of increased reporting requirements and difficulties in
submitting data to HUD. Also, the largest percentage of agencies in all
size categories reported contracting out about the same amount of
property management and services as before QHWRA was implemented. HUD
has recently issued rules to simplify and streamline regulatory
requirement for small agencies. About 75 percent of small agencies
reported that they believe HUD's efforts will help their operations.
HUD measurement systems show mixed results for small and larger housing
agencies. Fiscal year 2002 data from the Public Housing Assessment
System (PHAS), HUD's system for measuring the performance of public
housing agencies that manage low-rent units, show that small agencies
performed slightly better than their larger counterparts. But scores
for the same period from the Section Eight Management Assessment
Program (SEMAP), which measures how well agencies administer Housing
Choice Voucher units, indicate that small agencies did not perform as
well as larger agencies. Small agencies may have lower SEMAP scores
both because of the method that HUD uses to calculate scores and
because small agencies generally have less experience administering
these units. Fiscal year 2002 scores from HUD's risk assessment system-
-the Public and Indian Housing Information Center (PIC)--show that a
larger proportion of small agencies were designated as low risk than
larger agencies. According to HUD officials, small agencies are more
likely to be considered low risk because these agencies typically have
a less complicated funding structure than larger agencies and operate
less complex programs.
According to HUD officials, public housing agencies receive technical
assistance based on HUD's determination of their individual needs and
agencies' requests for specific types of assistance. HUD uses its
performance measurement and risk assessment systems--PHAS, SEMAP, and
PIC--to determine housing agencies' need for technical assistance.
These systems indicate that small agencies may need more assistance
than their larger counterparts in administering Housing Choice Voucher
units. HUD field office officials told us that the needs of small
housing agencies sometimes differ from those of larger agencies. They
stated, for example, that small agencies are more likely to require
assistance with the day-to-day management of HUD programs because small
agencies often have few staff who specialize in finance, accounting,
management information systems, or other areas that are important to
managing these programs. Currently, HUD does not maintain centralized,
detailed information on the types of assistance housing agencies
require or request from them. According to HUD, the agency is
developing a tracking system that will allow it to collect such
information in the future.
The Acting Director of HUD's Office of Policy, Program, and Legislative
Initiatives provided us with technical comments on our report, which we
have incorporated as appropriate.
With Some Exceptions, Small Agencies' Views of QHWRA Reforms Were
Similar to Those of Larger Agencies:
Our national survey of directors of public housing agencies showed that
respondents from agencies in all size categories shared similar views
on the effects of many QHWRA reforms on their ability to administer HUD
programs and rental units.[Footnote 12] For example, we asked whether
individual reforms had helped or hindered directors' ability to operate
and manage their agencies. In response, directors of small, medium, and
large housing agencies cited many of the same reforms as having helped
them, although for some reforms the proportions of those agreeing
differed by size category. Further, a large proportion of agency
directors in each size category said that their staffs spent more time
on HUD-subsidized programs as a result of the QHWRA reforms. Regardless
of size, agencies in all size categories had similar views on the
extent to which 13 factors had contributed to this increase in
administrative time. These factors relate to new reporting
requirements, difficulty with HUD's data systems, lack of clear
guidance from HUD, and lack of resources for hiring and training staff.
Small agencies noted that proposed regulatory relief would relieve some
of their burden.
Agency Directors in All Size Categories Saw Many of the Same QHWRA
Reforms as Helping or Neither Helping Nor Hindering:
Regardless of their agencies' size, the largest proportion of directors
tended to agree on the effects of 11 of the 18 QHWRA provisions we
included in our survey. We asked whether the 18 reforms had helped,
hindered, or neither helped nor hindered the agencies in operating and
managing their HUD programs. Overall, 7 reforms were generally seen as
helping agencies to operate and manage their HUD programs, and 4
reforms were seen as neither helping nor hindering.
The Most Frequent Responses for All Agencies Viewed Seven Reforms as
Helping:
As shown in figure 1, agencies indicated that 7 of the 18 reforms had
helped them. Two reforms were viewed as helpful by large percentages of
agencies in all size categories. Fungibility of capital and operating
funds, which allows agencies to use up to 20 percent of their capital
funds for operating purposes, was seen as helping almost 70 percent of
small, 82 percent of medium, and 84 percent of large agencies,
respectively. The repeal of federal preferences, which gives agencies
more flexibility to decide who will be admitted to their public housing
units, was viewed as helpful by 44, 63, and 69 percent, respectively,
of small, medium, and large agencies.
Figure 1: Survey Estimates on Effects of Seven QHWRA Reforms That
Primarily Helped Agencies to Operate and Manage HUD Programs:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±5.8 percentage points or better.
[End of figure]
The popularity of these two reforms--the fungibility of capital and
operating funds and the repeal of federal preferences--may be directly
related to the funding shortfalls that have historically affected
public housing agencies. As we noted in our 1998 report on HUD's
Performance Funding System,[Footnote 13] the operating subsidies that
HUD has traditionally provided to public housing agencies have not
covered all operating expenses. However, the reforms appear to have
helped greater proportions of medium and especially large agencies,
which tend to manage more programs and to have more funding sources and
a larger pool of potential tenants.
More than a third of agencies may see QHWRA's flat rent reform, which
allows housing agencies to charge rents based on the market value of
the unit, as an important opportunity to increase their revenues and
counter some shortfalls. Approximately 40 percent of agencies saw the
flat rent reform as helpful. This reform may appeal more to small
agencies with limited revenue sources--which may explain the slightly
higher percentage of small agencies reporting this reform as helpful.
Similarly, as shown in figure 1, the largest proportion of agencies of
all sizes--about a third or more--saw the 5-year and annual plan
reforms as helpful. However, the larger the agency, the greater the
percentage that reported being helped, and nearly a third of
respondents from small agencies saw these plans as a hindrance. This
response is consistent with comments we received from HUD field staff
we interviewed, who generally agreed that housing agencies needed some
type of planning process but pointed out that small agencies did not
have staff to undertake the level of effort involved in developing
annual and 5-year plans.
Small agencies were much less likely to view the Housing Choice Voucher
program merger reform as helpful than were large agencies (45 percent
compared with 82 percent, respectively.) These responses are consistent
with other information from our survey, which indicated that
approximately 58 percent of small agencies do not have Housing Choice
Voucher units, while an estimated 90 percent of medium and large
agencies do.
The Most Frequent Responses for All Agencies Viewed Four Reforms as
Neither Helping Nor Hindering:
Based on the most frequent responses in each size category, the largest
proportions of housing agencies in all size categories viewed the
deconcentration, income targeting, site-based waiting list, and rent
burden limits for the voucher program reforms as generally neither
helping nor hindering their ability to manage and operate their
agencies (fig. 2).
Figure 2: Survey Estimates on Four QHWRA Reforms That Primarily Neither
Helped Nor Hindered Agencies to Operate and Manage HUD Programs:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±5.9 percentage points or less.
[End of figure]
Of these four reforms, the predominate percentage of agencies in each
size category viewed deconcentration and income targeting as neither a
help nor a hindrance. However, a smaller percentage of small agencies
viewed deconcentration as neither a help nor a hindrance than medium
and large agencies. Also, about 29 percent of medium and large agencies
view income targeting as a hindrance, whereas only 13 percent of small
agencies see it as a hindrance.
Agencies in Each Size Category Varied Somewhat in Their Views on Seven
QHWRA Reforms:
As shown in figure 3, for the remaining seven QHWRA reforms that we
asked about--the pet policy, community service requirement, income
disregard, resident surveys, resident advisory board, resident member
on agency board, and minimum rents--views varied among agencies of
different sizes. For example, a larger percentage of medium and large
agencies viewed the pet policy rule as a hindrance, while the largest
percentage of small agencies viewed it as neither a help nor a
hindrance.
Figure 3: Survey Estimates on Seven Reforms with Varied Impacts on
Agency Ability to Operate and Manage HUD Programs:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±5.8 percentage points or less.
[End of figure]
In contrast, small and medium agencies most frequently viewed the
resident advisory board, the resident member of agency board, and the
resident survey reforms as neither helping nor hindering, while large
agencies most frequently responded that these reforms were helpful.
This response is consistent with earlier GAO findings. As reported in
our May 2002 report on housing agencies' experiences preparing their
fiscal year 2000 plans,[Footnote 14] HUD officials told us that
agencies overall often had difficulty encouraging resident
participation, even when it was actively solicited. Further, the
officials pointed out that smaller agencies do not have the same pool
of potential residents to draw on that large agencies have, making it
more difficult to establish resident advisory boards and find residents
willing to serve as member representatives on agencies' boards.
Agencies of All Sizes Reported Spending More Time on HUD-Subsidized
Programs:
We asked agencies to compare the amount of time they were spending on
HUD-subsidized programs following the implementation of the reforms
with the amount of time they devoted to these programs before the
implementation of QHWRA. At least 60 percent or more of all agencies,
regardless of size, believed that they were spending more or much more
time on HUD programs since the implementation of QHWRA. However, as
shown in figure 4, a smaller percentage of small agencies (63 percent)
than of large agencies (79 percent) reported spending more time
administering their HUD programs.
Figure 4: Survey Estimates of Time Agencies Spend Administering HUD
Programs Since QHWRA Reforms:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±4.8 percentage points or less.
[End of figure]
These responses may reflect the fact that medium and large agencies
generally have more HUD programs and thus more complex administrative
responsibilities. Based on our survey, we estimate that only 10 percent
of small agencies--compared with 19 percent of medium agencies and 58
percent of large agencies--had HUD programs other than the low-rent and
voucher programs.
We asked agencies that reported spending more time on HUD programs
following QHWRA to indicate the extent to which each of 17 factors
added to their administrative time. In general, we found more
similarities than differences in the responses of agencies in all size
categories. The factors most frequently cited as accounting for the
increased time on HUD programs were increased reporting requirements,
problems submitting data to HUD, and insufficient guidance from HUD.
Smaller proportions of agencies of all sizes noted that other factors
added to their administrative time, though the proportions differed
somewhat.
New Reporting Requirements and Changes in Existing Requirements:
While agencies in all size categories cited increased reporting
requirements and changes in reporting requirements as adding to the
time they spent administering HUD programs, the proportions differed
according to the type of program (see fig. 5). The largest proportions
of agencies indicated that these items had increased the time spent
administering the low-rent program to some or a great extent. However,
small agencies cited these factors in larger proportions than medium or
large agencies.
Figure 5: Survey Estimates of Extent to Which Agencies Reported
Increased Reporting Requirements and Changes in Existing Requirements
Contributed to Increased Time Spent on HUD Programs:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±6.6 percentage points or less.
[End of figure]
However, questions about time spent administering the Housing Choice
Voucher program elicited the opposite pattern of responses, with over
40 percent of all large agencies but only 15-20 percent of small
agencies citing the requirements as increasing administrative time to a
great or very great extent. About 60 percent of small agencies
indicated that these questions were not applicable to them, reflecting
the fact that most small agencies operate primarily low-rent housing
programs, while larger agencies tend to operate both.
Most agency directors whom we interviewed while preparing our
questionnaire said that the increased reporting requirements associated
with QHWRA were causing them to spend more time on paperwork than on
their primary mission of providing safe, decent, and affordable housing
to low-income residents. One respondent noted, "It takes more man-hours
for processing and compiling statistical data for reporting and
tracking purposes," taking up time the agency needed to address other
functions. Housing agency directors we spoke with early in our review
acknowledged the need for reporting to ensure accountability, but they
reiterated that the level of reporting HUD requires is burdensome to
performing their core mission.
Difficulty Submitting Data and Accessing HUD's Computer System:
Almost half or more of respondents, regardless of size, responded that
accessing HUD's computer systems and submitting data to HUD on the low-
rent program accounted for increased administrative time to a great or
very great extent.[Footnote 15] As shown in figure 6, higher
percentages of large agencies reported having difficulty accessing
HUD's computer system (59 percent) than small agencies (49 percent),
but the difference in percentages was more modest on the issue of
submitting data on the low-rent program.
Figure 6: Survey Estimates of Extent to Which Difficulty in Submitting
Data on the Low-Rent Program and Accessing HUD's Computer Systems
Contributed to Increased Time Spent on HUD Programs:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±6.5 percentage points or less.
[End of figure]
These responses are consistent with prior GAO and other reports, which
have identified weaknesses in HUD's information systems. For example,
both GAO and HUD's Inspector General have cited the public housing and
Housing Choice Voucher information systems as management
challenges.[Footnote 16] Also, during our review of HUD and housing
agency experiences in preparing the fiscal year 2000 plans required by
QHWRA,[Footnote 17] over 50 percent of HUD field location respondents
said that the electronic submission of plans and the conversion of
plans into a readable format at HUD had a negative effect on their
ability to review and approve plans. HUD officials added that some
housing agencies were required to make multiple submissions and that
the agencies sometimes submitted hard copies to HUD field locations as
a backup to submitting the plans electronically to HUD.
Late or Unclear HUD Guidance and Changes in Policies:
As shown in figure 7, between 45 and 53 percent of agencies, regardless
of size, responded that late and unclear guidance or changes in HUD
policies and regulations added to the time they spent administering HUD
programs to a great or very great extent. These responses are
consistent with the results of our earlier review of HUD and its
housing agency experiences in preparing the fiscal year 2000 plans the
QHWRA reforms require.[Footnote 18] In our prior review, more than 70
percent of respondents said that the guidance HUD provided on the
process of developing agency plans was less than adequate. At that
time, HUD field office directors told us that because of late and
unclear guidance, they were unable to tell housing agencies how to
complete agency plans. One official commented that guidance from HUD
headquarters at the beginning of the planning process had not been very
good and was late in getting to field locations. Another official
reported at that same time that changing rules made it difficult to
know what housing agencies should do in preparing the plans and what
field offices should look for in reviewing them.
Figure 7: Survey Estimates of Extent to Which Late and Unclear Guidance
and Changes in Regulations Contributed to Increased Time Spent on HUD
Programs:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±6.5 percentage points or less.
[End of figure]
Lack of Resources to Hire and Train Staff:
In addition, the largest percentage of agencies, regardless of size,
reported that the lack of resources for hiring and training staff and
the need to train staff have contributed to the increased time spent on
HUD programs to some extent or a great extent (see fig. 8).
Figure 8: Survey Estimates of Extent to Which Lack of Resources for
Hiring and Training New Staff and the Need to Train Staff Contributed
to Increased Time Spent on HUD Programs:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±6.5 percentage points or less.
[End of figure]
However, when we asked housing agency directors whether they were
contracting out more, less, or about the same share of property
management activities after the QHWRA reforms than before, the largest
proportions said that either they were contracting out about the same
amount or the question did not apply to them (fig. 9).
Figure 9: Survey Estimates of Extent to Which Agencies Report
Contracting Out for Property Management and Services Since QHWRA:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±5.6 percentage points or less.
[End of figure]
Small Agencies Believe Regulatory Relief Will Help:
HUD has recognized the burden QHWRA reforms have placed on small
agencies and in August 2002 issued a proposed rule to simplify and
streamline regulatory requirements for small housing agencies that
administer the low-rent and voucher assistance programs. The rule was
issued in final form in June 2003, after our survey was completed.
According to HUD, the rule changes--including reducing the scope of
annual plans and reducing the frequency of assessing the performance of
small housing agencies under PHAS and SEMAP--will alleviate some of the
administrative burden these agencies face. The rule indicates that to
be eligible for the annual assessment relief, agencies need to be non-
troubled and operate less than 250 low-rent units to receive reduced
PHAS assessments, or operate less than 250 housing choice voucher units
to receive reduced SEMAP assessments. Because the regulatory changes
were in proposal form when we administered our survey, we asked
respondents their views on the proposed relief. About three-quarters of
the small agencies responding to our survey believed the proposed
regulatory relief would help their operations to a moderate or great
extent (see fig. 10). We noted that the majority of medium and large
agencies responded that the question was not applicable.
Figure 10: Survey Estimates of Extent to Which Agencies Believe HUD's
Regulatory Relief Will Help:
[See PDF for image]
Note: All percentage estimates in this table have 95% confidence
intervals ±3.8 percentage points or less.
[End of figure]
Scores from HUD's Performance Measurement and Risk Assessment Systems
Show That Small and Larger Agencies' Performance Varies:
We analyzed fiscal year 2002 scores from HUD's performance measurement
systems and found that small agencies received higher scores than large
agencies for administering low-rent units but lower scores for
administering Housing Choice Voucher units. However, we also found that
under SEMAP, which measures performance administering Housing Choice
Voucher units, small agencies may have lower scores because of the way
HUD calculates the scores and because small agencies generally have
less experience managing these units. Further, data for the same year
show that HUD's risk assessment system, PIC, which the agency uses to
help target its monitoring and assistance efforts, typically assigns
lower risk ratings to small agencies than to larger agencies. HUD
officials stated that smaller agencies are more likely to receive lower
risk ratings in part because these agencies generally operate less
complex housing programs and have less complicated funding systems.
Fiscal Year 2002 PHAS Scores Show That Many Small Agencies Performed
Slightly Better Than Large Agencies in Operating Low-Rent Units:
PHAS assesses housing agencies' performance in managing low-rent units
using four indicators: (1) the physical condition of the properties,
(2) the soundness of agencies' financial condition, (3) the
effectiveness of management operations, and (4) the extent to which
residents are satisfied with their services and living conditions. Each
of the four PHAS indicators is scored individually. Public housing
agencies can receive a total of 100 points: 30 each for the physical,
financial, and management indicators and 10 for the resident
satisfaction indicator. In assigning performance ratings, HUD uses a
variety of weights:
* High performers must have an overall score of more than 90 points and
scores for individual indicators of at least 60 percent of the possible
points for each of the four indicators.
* Standard performers must have an overall score of 60 to 90 points and
scores of at least 60 percent of the points for each of the physical,
financial, and management indicators.
* Troubled agencies have scores of less than 60 points overall or less
than 60 percent of the points for more than one of the three
indicators.
PHAS data for fiscal year 2002 showed that small and medium agencies
slightly outperformed large agencies in managing their low-rent units-
-that is, larger percentages of small and medium agencies were high
performers under the PHAS scoring system (fig. 11).
Figure 11: Overall PHAS Scores, by Agency Size (Fiscal Year 2002):
[See PDF for image]
[End of figure]
To identify potential differences based on size, we examined the scores
for the individual indicators. We found that the better performance of
small and medium agencies was largely attributable to slightly higher
scores for the physical condition of their units. For example, 62
percent of small and 56 percent of medium agencies were rated as high
performers on the physical condition indicator, compared with 45
percent of large agencies. According to HUD officials, small and medium
agencies tend to score slightly higher on this indicator for two
reasons. First, small agencies have fewer properties with features such
as elevators and complicated heating and cooling systems that are
difficult to maintain. Second, small housing agencies can more often
provide on-site property management and maintenance than large
agencies. HUD data show only slight differences among agencies of
different sizes in scores for management, financial soundness, or
resident satisfaction.
Fiscal Year 2002 SEMAP Scores for Operating Housing Choice Voucher
Units Were Lowest for Small Agencies:
SEMAP is intended to help HUD measure public housing agencies' ability
to operate Housing Choice Voucher units effectively and in compliance
with regulations. Like PHAS, SEMAP scores agencies as high, standard,
or troubled performers. High performers must earn at least 90 percent
of the 150 possible points, and standard performers must earn between
60 and 89 percent of the points. Agencies with scores of less than 60
percent of the possible points are considered troubled. Scores are
based on 14 performance areas, plus a deconcentration "bonus"
indicator. The 14 SEMAP indicators measure how well agencies with
Housing Choice Voucher units are monitoring the processes, reporting
the data, inspecting the units, determining the rents, and using
allocated vouchers. The additional deconcentration bonus indicator can
provide 5 of the total 150 possible points for agencies in metropolitan
areas where at least half of all Housing Choice Voucher units are in
low poverty areas.
As figure 12 shows, small housing agencies did not score as well, on
average, as larger ones. Compared with their larger counterparts, a
higher proportion of small agencies were considered troubled, and fewer
were high performers.
Figure 12: Overall SEMAP Scores, by Agency Size (Fiscal Year 2002):
[See PDF for image]
[End of figure]
According to HUD officials, small agencies tend to receive lower SEMAP
scores in part because these agencies lack economies of scale and may
have difficulty coping with the increasingly complex program rules and
data systems related to the Housing Choice Voucher program. However,
HUD officials also told us that small agencies' scores may be lower
because HUD calculates scores for small and larger agencies
differently. Small housing agencies receiving less than $300,000 in
federal funds are not rated on 7 of the 14 indicators that together
account for approximately 55 percent of the total SEMAP score. As a
result, small agencies that receive low scores on one indicator on
which they are scored may find that their scores are lowered
precipitously, resulting in a troubled rating.
HUD officials have stated that the current method of SEMAP scoring
makes small agencies more susceptible to a troubled rating. Using HUD's
fiscal year 2002 SEMAP data, we estimated that 62 percent of small
agencies were not rated on at least 1 of 7 indicators. Accordingly, we
compared the scores for small, medium, and large agencies for the 7
indicators that all agencies were scored for. We found that small
agencies did not perform as well as medium and large agencies on these
indicators (table 2).
Table 2: Average SEMAP Scores for Seven Indicators for Which All
Agencies Are Scored, by Agency Size (Fiscal Year 2002):
Indicator: Payment standards; Possible points[A]: 5; Average score:
Small: 3.6; Average score: Medium: 4.1; Average score: Large: 4.4.
Indicator: Annual reexaminations; Possible points[A]: 10; Average
score: Small: 4.7; Average score: Medium: 5.8; Average score: Large:
5.7.
Indicator: Correct tenant rents; Possible points[A]: 5; Average score:
Small: 2.1; Average score: Medium: 2.7; Average score: Large: 2.5.
Indicator: Precontract HQS inspections[B]; Possible points[A]: 5;
Average score: Small: 1.9; Average score: Medium: 2.5; Average score:
Large: 2.7.
Indicator: Annual HQS inspections[C]; Possible points[A]: 10; Average
score: Small: 0; Average score: Medium: 0; Average score: Large: 0.
Indicator: Lease-up; Possible points[A]: 20; Average score: Small: 5.8;
Average score: Medium: 6.6; Average score: Large: 8.6.
Indicator: Family self-sufficiency; Possible points[A]: 10; Average
score: Small: 1.1; Average score: Medium: 3.0; Average score: Large:
3.8.
Indicator: Total; Possible points[A]: 65; Average score: Small: 19.2;
Average score: Medium: 24.8; Average score: Large: 27.7.
Source: GAO analysis of HUD's data.
[A] In some cases, not all indicators may apply to agencies. For
example, not all public housing agencies participate in the Family Self
Sufficiency program and thus may not be scored on that particular
indicator.
[B] HUD stopped scoring this indicator as of March 31, 2002.
[C] Presently, HUD is not scoring this indicator.
[End of table]
Of these 7 indicators, the most heavily weighted is the lease-up
indicator, which measures how well each agency does in meeting HUD's
goal of using 95 percent of all allocated vouchers. For small public
housing agencies receiving less than $300,000 in federal funds, the
lease-up indicator constitutes 20 out of the possible 65 points, or
about 30 percent of the score. According to housing industry groups,
most public housing agencies face barriers to making full use of
Housing Choice Vouchers and thus to maintaining a 95-percent leasing
rate. According to industry groups, these barriers may be financial
(for example, cost of transportation, credit checks, and security
deposits) or may involve a lack of experience in the private rental
market. According to HUD officials, small housing agencies face
additional burdens in attempting to achieve a 95-percent leasing rate
because of the complexities of the program's rules and regulations for
monitoring, reporting, inspecting, and leasing units in the private
rental market.
Fiscal Year 2002 PIC Risk Assessment Scores Show That Small Agencies
Were the Most Likely to Receive Low-Risk Ratings:
HUD developed the PIC risk assessment system during the mid-1990s to
measure housing agencies' operating risk. PIC scores are based on three
factors: performance (PHAS or SEMAP scores), funding, and compliance
issues. Agencies' scores on each of these factors determine their risk
levels. Of 100 possible points, agencies must have fewer than 44 points
to be considered low risk, while those with 45 to 64 points are
considered moderate risk and those with 65 to 100 points are considered
high risk. The performance factor is based on the overall PHAS or SEMAP
score, whichever is lower. The funding factor measures total authorized
and disbursed funds and the percentage of disbursed funds already
expended. The compliance factor measures open findings and audits from
independent public accountants and HUD's Inspector General. As shown by
figure 13, a greater percentage of small agencies were considered to be
low risk, compared to medium and large agencies.
Figure 13: Overall PIC Risk Assessment Scores, by Agency Size (Fiscal
Year 2002):
[See PDF for image]
[End of figure]
According to HUD officials, more small agencies are rated as low risk
because they operate less complex programs, have a less complicated
financial structure, and account for a smaller percentage of HUD
funding.
HUD's Technical Assistance Is Based on Agency Needs, Which Sometimes
Vary by Agency Size:
According to HUD officials, public housing agencies receive technical
assistance based on HUD's determination of their needs and agencies'
requests for specific types of assistance. HUD has two ways of
determining the technical assistance needs of housing agencies: its
risk assessment and performance measurement systems--PIC, SEMAP, and
PHAS--and direct requests from agencies for specific types of
assistance. Several HUD officials told us that small housing agencies
frequently need different kinds of assistance than larger agencies. For
example, they stated that small agencies typically need more assistance
with day-to-day management issues than large agencies because small
agencies tend to have few staff that specialize in finance, management
information systems, and other areas that are important to managing
HUD's programs. Currently, HUD does not maintain centralized, detailed
information on the types of assistance housing agencies require or the
kinds of assistance they request. However, a HUD official told us that
the agency is developing a system that will allow it to collect such
information in the future.
HUD Uses Its Risk Assessment and Performance Measurement Systems to
Determine Agencies' Technical Assistance Needs:
HUD uses PIC, SEMAP, and PHAS scores to target technical assistance to
the agencies that, according to these systems, need it most. PIC scores
allow HUD to identify housing agencies that are having serious
performance, funding, and compliance problems and to devise monitoring
and technical assistance strategies to address such problems. For
agencies designated as high-risk based on their PIC scores, HUD
generally provides on-site monitoring to gain further information on
their technical assistance needs. Agencies that are at moderate risk
receive remote assistance mostly by telephone and e-mail. Agencies
designated as low risk receive routine assistance.
HUD field offices supplement their PIC analyses by assessing agencies
on 15 "qualitative" factors--to help identify specific situations,
events, and conditions that are not reflected in the quantitative
factor score. These additional pieces of information help indicate
problems as they emerge or instances of deteriorating performance.
Field office staff use their "professional judgment" in applying the
quality factors. For example, in assessing agencies on the "local crime
rate" (one of the factors), field office staff may examine information
from the local police and compare local crime rates with those of
similar communities. If the crime rate where the agency is located is
higher than the rates in similar communities, the agency may be rated
as having a risk factor associated with crime. According to our
analysis of fiscal year 2002 HUD data on the quality factors, a larger
percentage of small agencies than medium and large agencies exhibited
risk factors in several areas: staff turnover and training, timeliness
(for example, in submitting HUD reports) and board and management
issues (such as inadequate training for board members). A higher
percentage of large agencies than small or medium agencies exhibited
risk factors associated with operating major new programs, problems
identified in audits, unfavorable media reports, and litigation issues
(such as disputes with contractors).
SEMAP scores for fiscal year 2002 were lowest for small agencies and,
since SEMAP measures performance managing Housing Choice Voucher units,
suggest that these agencies may need more technical assistance than
others in this area. As previously discussed, 14.4 percent of small
agencies were considered to be troubled under SEMAP, compared with 2.4
percent of medium and 3.8 percent of large agencies. Under SEMAP,
troubled agencies must develop corrective action plans that address
deficiencies identified by the assessment. HUD field offices review
these plans to determine the type of technical assistance that is
needed to correct the deficiency.
We also found that troubled small and medium agencies did not perform
as well as troubled large agencies on one of SEMAP's most important
indicators--the "lease-up" indicator, which reflects agencies'
performance in leasing available units. Of a maximum of 20 points,
small and medium troubled agencies had an average score of 2.8 points,
compared with 4.1 points for troubled large agencies. Most agencies
that receive a low score on this indicator are likely to need technical
assistance to develop a program to improve their leasing rate.
According to a HUD official, although most agencies have difficulty
leasing Housing Choice Voucher units, small agencies generally have
greater difficulty than their larger counterparts because they have
less experience managing such units.
Finally, HUD uses PHAS scores to decide how to target assistance to
agencies that show weaknesses in administering their low-rent units.
Agencies designated as troubled under PHAS are referred to one of HUD's
two Troubled Agency Recovery Centers (TARC) for follow-up. As
previously indicated, while our analysis of PHAS data showed that small
agencies were somewhat more likely than larger agencies to be
considered high performers, it did not show significant differences
between the percentages of small, medium, and large agencies that were
designated as troubled. Further, small troubled agencies did not
perform as well as troubled medium or large agencies on one of PHAS'
four major indicators--management assessment. Specifically, out of a
maximum 30 points, small troubled agencies had an average score of 14.8
compared to 21.4 for medium and 21.7 for large troubled agencies.
According to HUD officials, these scores suggest troubled small
agencies may need more assistance than larger agencies with managerial
tasks such as completing work orders and releasing vacant units.
HUD Also Responds to Requests from Individual Housing Agencies for
Specific Types of Technical Assistance:
HUD field offices regularly receive telephone, e-mail, or other written
requests from housing agencies asking for help in a variety of areas,
such as accessing and submitting data through HUD's computer systems,
completing various HUD forms, and understanding HUD regulations. HUD
officials told us that the department also receives a large number of
calls from housing agencies, contractors, property owners, and others
requesting assistance regarding PIC and PHAS. Most of these calls are
made to HUD headquarters, which operates (1) a PIC help desk, which
receives calls from housing agencies and others requesting assistance
on matters such as how to log into the PIC system and how to interpret
PIC requirements, and (2) the REAC technical assistance center, which
serves as the primary point of contact for PHAS and other matters.
According to a HUD official, the PIC help desk received 6,932 calls
between August 2002 and August 2003, and REAC's technical assistance
center receives between 9,000 and 10,000 calls monthly.
HUD currently does not maintain detailed, centralized information on
the types of assistance that it has determined housing agencies require
or that agencies who contact HUD field offices or headquarters request.
Accordingly, neither we nor HUD were able to determine this information
on a national basis or by size. However, according to a HUD official,
HUD is in the process of developing a tracking system that will allow
it to collect such information in the near future.
According to HUD field office directors we contacted, small agencies
need more assistance with routine, day-to-day management of HUD housing
programs than medium and large agencies.[Footnote 19] The officials
added that small agencies need this assistance largely because they
lack staff with specialized knowledge of finance, accounting, and other
disciplines that are important to managing HUD's housing
programs.[Footnote 20] These officials noted the following:
* Small agencies are more likely than their larger counterparts to need
assistance with things such as occupancy regulations, lease
enforcement, rent calculations, and HUD's reporting requirements. Most
of the calls that field offices receive from housing agencies
requesting this type of assistance come from small agencies. Larger
agencies typically do not need such assistance because they generally
have in-house accountants, financial management specialists,
information systems specialists, and others with detailed knowledge of
HUD's programs and policies. Larger agencies often operate more complex
programs than smaller ones and tend to need assistance with more
complicated matters, such as leveraging private funds, developing
partnerships with nonprofits, converting public housing units into
Housing Choice Voucher units, and using low-income housing tax credits.
* Because small agencies have fewer staff, they rely more heavily than
larger agencies on contractors to carry out key functions in the
administration of HUD's programs, such as accounting, finance, and
procurement. In comparison, larger agencies are likely to have in-house
staff who specialize in these areas. Public housing agencies require a
highly specialized type of accounting services that are difficult to
obtain, so small agencies and their contractors frequently contact HUD
for technical assistance. Ultimately, small agencies' reliance on
contractors to carry out functions such as accounting, finance, and the
preparation of planning documents limits the agencies' own
understanding of key aspects of their operations and further
contributes to requests for technical assistance from HUD.
* Small agencies are more likely than larger ones to have problems
related to using HUD's data systems. Unlike large agencies, most small
agencies do not have in-house information systems experts and are more
likely to hire consultants to assist them with HUD's information
systems. One field office director we spoke with stated that many small
agencies also need assistance with HUD's information systems because
either HUD's systems are not compatible with the agencies' systems or
the agencies do not have staff with the skills needed to operate HUD's
systems.
We conducted our work between July 2002 and October 2003. Our work was
conducted in accordance with generally accepted government auditing
standards.
Agency Comments:
We requested comments on a draft of this report from the Secretary of
HUD or his designee. On October 22, the Acting Director of HUD's Office
of Policy, Program, and Legislative Initiatives provided us with
technical comments on our report, which we have incorporated as
appropriate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution of this report
until 30 days from the report date. At that time, we will provide
copies of this report to the interested congressional committees and
Members of Congress; the Secretary of Housing and Urban Development;
the Director of the Office of Management and Budget; and other
interested parties. In addition, the report will be available at no
charge on GAO's Web site at [Hyperlink, http://www.gao.gov] http://
www.gao.gov.
If you have any questions regarding this report, please contact me or
Charles E. Wilson, Jr., Assistant Director, at (202) 512-8678. Key
contributors to this report are listed in appendix V.
Signed by:
Sincerely yours,
David G. Wood:
Director, Financial Markets and Community Investment:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
The objectives of this study were to (1) compare how small and larger
housing agencies view the impact of recent housing reforms on their
ability to administer HUD programs, (2) compare small and larger
agencies' performance, as measured by HUD, in administering the low-
rent housing and Housing Choice Voucher programs, and (3) describe the
differences in the technical assistance that small and larger public
housing agencies require.
For this report, we defined size as the number of low-rent units and
housing voucher units combined as follows: very large, more than 6,599
units; large, 1,250 units to 6,599 units; medium, 250 units to 1,249
units; small, 100 units to 249 units; and very small, less than 100
units. To determine differences based on size and present the results
of our analyses, throughout the report we collapsed the five categories
into three: small, medium, and large housing agencies. Small agencies
include very small and small, and large include large and very large.
To compare how small and larger housing agencies view the impact of
QHWRA reforms on their ability to manage their agencies, we used a mail
questionnaire to survey a nationwide statistical sample of public
housing agencies. Of the more than 80 QHWRA reforms, our survey focuses
on 18 reforms public housing industry associations consider to have had
the most impact on agency operations. Based on our sample, we produced
national estimates of the impact of QHWRA reforms as perceived by
agency directors. We analyzed respondents' most frequently occurring
answers to our survey questions to identify similarities and
differences between small, medium, and large agencies' perceptions
about the impact of QHWRA reforms on their operations. Estimates based
on our sample are subject to sampling error. All percentage estimates
in this report have 95 percent confidence intervals of plus or minus 7
percentage points or less, unless otherwise noted. See appendix II for
a more detailed discussion of the development of this survey and the
sampling frame. A copy of the survey can be found in appendix III.
To compare the assessed performance of small, medium, and large public
housing agencies, we analyzed fiscal year 2002 PHAS data, fiscal year
2002 SEMAP data, and fiscal year 2002 PIC data, which we obtained from
HUD. We used HUD's criteria for designating housing agencies as
troubled, standard, or high performers under PHAS and SEMAP, and low,
medium or high risk under PIC. To understand how HUD applies its
criteria for determining performance and risk levels, we reviewed HUD
guidance and interviewed HUD officials.
HUD collects data for PHAS, SEMAP, and PIC once a year on a rolling
quarterly basis. We requested and received the most current data
available from these systems. We assessed the reliability of these data
by (1) reviewing existing information about the systems and the data,
(2) interviewing agency officials knowledgeable about the data, and (3)
performing electronic testing of the data elements used in the report.
We determined that the data were reliable enough for purposes of this
report.
To determine differences in the technical assistance that HUD provides
to small, medium, and large housing agencies, we interviewed HUD
headquarters and field office officials within the Office of Public and
Indian Housing. To obtain information on the technical assistance that
field offices provide to housing agencies across the country, we
randomly selected a limited sample of nine field office directors. We
also analyzed fiscal year 2002 PHAS, SEMAP, and PIC data that HUD uses
to target technical assistance to those in need.
[End of section]
Appendix II: Methodology for GAO's Survey of Local Housing Agencies on
QHWRA Housing Reforms and Initiatives:
This study's primary objective was to compare how small and larger
housing agencies view the impact of recent housing reforms on their
ability to administer HUD programs. To address this objective, we
surveyed a stratified random sample of public housing agency directors
based on size. We developed and administered a survey designed to
obtain the directors' views on issues associated with QHWRA's effects
on agency operations, staffing and resources, and management. We
received 1,119 completed, usable surveys.
The Study Population:
We used end of fiscal year 2002 data from HUD's Office of Public and
Indian Housing databases to identify the number of agencies
nationwide[Footnote 21]. Since our primary interest was to compare
responses based on size, we also requested and received the various
definitions HUD uses to classify housing agencies by size. We assessed
the quality of HUD's electronic data by testing for internal
consistency; validating the data using other sources; and, to the
extent possible, reviewing the associated documentation. Based on these
tests, we determined that the data were sufficiently accurate for our
purposes.
The Sample Design:
We used a single-stage stratified random sample of the directors of
local housing agencies nationwide. For the original stratification, we
used HUD's criterion, which is the number of low-rent housing units. We
separated agencies into five strata: 100 low-rent units or less, 101 to
249 low-rent units, 250 to 1,250 low-rent units, 1,251 to 6,599 low-
rent rent units, and 6,600 or more low-rent units. We were also able to
identify a sixth stratum of agencies with an unknown number of low-rent
units or with voucher units only. Our total sample included 1,611
agency directors. Of the 1,611 that were in our sample, we received a
total of 1,119 valid and usable surveys, for an overall response rate
of 69 percent.
Table 3: Survey Sample Size and Disposition:
Stratum: 100 low-rent units or less; Population size: 1,587; Sample
size: 413; Respondents: 262; Response rate: 63%.
Stratum: 101 to 249 low-rent units; Population size: 768; Sample size:
343; Respondents: 253; Response rate: 74%.
Stratum: 250 to 1,250 low-rent units; Population size: 673; Sample
size: 326; Respondents: 257; Response rate: 79%.
Stratum: 1,251 to 6,599 low-rent units; Population size: 114; Sample
size: 114; Respondents: 91; Response rate: 80%.
Stratum: 6,600 or more low-rent units; Population size: 44; Sample
size: 44; Respondents: 32; Response rate: 73%.
Stratum: Other and Voucher Units; Population size: 1,028; Sample size:
371; Respondents: 224; Response rate: 60%.
Stratum: Total; Population size: 4,214; Sample size: 1,611;
Respondents: 1,119; Response rate: 69%.
Source: GAO analysis of HUD data.
[End of table]
Developing the Survey:
To identify specific reform issues that were areas of concern, we met
with officials from the public housing industry and held group
discussions with 19 directors from small, medium, and large public
housing agencies throughout the country. We met with directors of
housing agencies at conferences of the Public Housing Authorities
Directors Association (PHADA) and the National Association of Housing
and Redevelopment Officials (NAHRO). During these discussion sessions,
we explored (1) the challenges directors face, (2) what is being done
to meet the challenges, and (3) how PHAS and QHWRA have impacted their
agencies. We used a nominal group technique to prioritize the most
important challenges directors of small housing agencies face.
We developed our survey, in part based on our meetings with directors
and officials of the public housing agencies. Specifically, the survey
asked about 18 reform issues that were identified as concerns in these
group discussions. About half of the 18 concerns dealt with admissions
and occupancy issues, such as tenant selection and income limits. The
other half included reporting requirements and resident-related issues,
such as having a resident member on the board of directors. We asked
whether these QHWRA reforms had helped or hindered directors' ability
to operate and manage their agencies. We also asked about staffing,
management, and finances.
To verify the clarity, length of time of administration, and
suitability of the questions, we pretested the questionnaire with the
directors of local housing agencies. We also sought feedback from NAHRO
and PHADA staff. A copy of the Survey of Local Housing Agencies on
Housing Reforms and Initiatives can be found in appendix III.
Administering the Survey:
We conducted the survey between January 2003 and July 2003, using a
self-administered mail-out form. We sent a second questionnaire on
March 28, 2003, to all those who did not respond to our first survey in
order to encourage a higher response rate. We ended data collection on
July 8, 2003.
We received 1,119 completed, usable surveys, for an overall response
rate of 69 percent. Two surveys were eliminated because they were
returned blank or indicated that they do not currently administer low-
rent housing or Housing Choice Voucher programs. We used a contractor
to create a database of survey responses. All data were double keyed
during the data entry process, and GAO staff verified a sample of the
resulting data to ensure accuracy.
Nonsampling Error and Data Quality:
The practical difficulties of conducting any survey can result in
nonsampling errors. For example, measurement errors can be introduced
if difficulties exist in interpreting a particular question or in the
sources of information available to respondents in answering a
question, keying in completed questionnaires, or preparing data files
for analysis. We took extensive steps to minimize such errors in
developing the questionnaire, collecting the data, and editing and
analyzing the information.
To reduce measurement error, we conducted in-depth pretesting of the
questionnaire with public housing agency directors, as well as with
industry officials, to make sure questions and response categories were
interpreted in a consistent manner. GAO edited all surveys for
consistency before they were sent for keypunching. All questionnaire
responses were double key-entered into our database (that is, the
entries were 100 percent verified), and a random sample of the
questionnaires was further verified for completeness and accuracy. In
addition to the steps taken during the development of the survey and
its administration, we performed computer analyses to identify
inconsistencies and other indicators of errors. When edit checks
revealed inconsistent responses or individual question elements did not
add correctly to the total provided, we established parameters for
either calling the respondent for clarification or treating the data as
missing. In addition, all computer syntax was peer reviewed and
verified by separate programmers to ensure that it was written and
executed correctly.
Response Rates:
To maximize response rates, we sent one follow-up mailing with copies
of the survey on March 28, 2003, and one or two e-mail reminders to
nonrespondents with known e-mail addresses. Overall, 69 percent of the
sampled agencies responded to our survey, with minimal response
differentials by size (see table 3 for response rates).
Estimates:
Estimates produced in this report are for a target population defined
as directors of public housing agencies in our study population. Since
one of our primary objectives involved comparing small and larger
agencies, we computed estimates for our three groups of agencies--
small, medium, and large. For the report itself, we collapsed the six
strata into three, combining small and very small into the small group
and large and very large into the large group. We then had three groups
for analysis: (1) small agencies that administered fewer than 250 low-
rent and housing choice voucher units, (2) medium agencies that
administered between 250 and 1,250 units, and (3) large agencies that
administered more than 1,250 units. For presentation and statistical
testing, we also collapsed responses. For example, in question 16,
which asked about specific reforms, we combined the "greatly helped"
category into the "helped" category and "greatly hindered" into
"hindered" in order to derive single response categories. In question
21, we combined "moderate extent" with "some extent" and "very great
extent" with "great extent." Also, because of the number of agencies
answering "not applicable," "no basis to judge," or in some cases
nothing at all, we chose to use this information in our analysis.
Estimates were formed by weighting the survey responses to account for
effective sampling rates in each stratum. These weights reflect both
the initial sampling rate and the response rate for each stratum. As
with most surveys, our estimation method assumes that nonrespondents
would have answered like the survey respondents.
We analyzed the response data on selected questions based on the most
frequently occurring responses in order to identify similarities and
differences in the responses across categories.
Sampling Error:
The results of random samples like ours are subject to sampling errors
that reflect the differences between the results obtained from the
samples and the results that would have been obtained from a survey of
the entire population under consideration. Because we surveyed a sample
of directors of public housing agencies, our results are estimates of
the characteristics of public housing agencies and thus are subject to
the sampling errors associated with samples of this size and type.
Measurements of sampling errors are stated at a certain level of
statistical confidence. GAO used the weighted results to make estimates
about the entire population of local housing agencies. Our confidence
in the precision of the results from this sample is expressed in 95
percent confidence intervals. The 95 percent confidence intervals are
expected to include the actual results for 95 percent of the samples of
this type. We calculated confidence intervals for our study results
using methods that are appropriate for a stratified probability sample.
For the percentages presented in this report, we are 95 percent
confident that the results we would have obtained had we studied the
entire study population would have been within +7 or fewer percentage
points of our results, unless otherwise noted. For example, our survey
estimates that 63 percent of the small agency directors believed they
and their staff were spending "more or much more time" on HUD-
subsidized programs after the QHWRA reforms (question 20). The 95
percent confidence interval for this estimate would be no wider than +7
percent, or from 56 percent to 70 percent. For estimates other than
percentages, 95 percent confidence intervals are presented with the
estimate or otherwise noted. (A modified copy of the questionnaire,
showing aggregate response percentages by size, is included as appendix
III.):
[End of section]
Appendix III Survey Results of Housing Agencies:
[See PDF for image]
[End of figure]
[End of section]
Appendix IV: Summary of 18 Reforms Contained in GAO's Survey of Public
Housing Agencies:
[See PDF for image]
Source: HUD Directives and QHWRA Notices.
[End of table]
[End of section]
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
David G. Wood (202) 512-8678 Charles E. Wilson, Jr. (202) 512-6891:
Staff Acknowledgments:
In addition to the individuals named above, the following individuals
made significant contributions to this report: Johnnie Barnes, Mark
Braza, Emily R. Chalmers, Rudy Chatlos, Mark Egger, Gloria Hernandez-
Saunders, Jamila L. Jones, Beth Koviach, John McGrail, Marc Molino,
Jobenia Odum, Roberto Piñero, Mark Ramage, Terry Richardson, and
Caroline Villanueva.
(541022):
FOOTNOTES
[1] Also known as the Public Housing Reform Act.
[2] Throughout this report, we refer to the Low-Rent Public Housing
Assistance program as the low-rent program. Under the low-rent program,
local housing agencies own and manage buildings with rental units for
low-income families. Under the Housing Choice Voucher program, local
housing authorities make subsidy payments on behalf of assisted
households living in privately owned rental units.
[3] Estimates based on our sample are subject to sampling error. Except
where noted, all percentage estimates have 95 percent confidence
intervals within +/-7 percentage points. See appendix II for more
information.
[4] Some of QHWRA's provisions went into effect when the act was
enacted on October 21, 1998, while other provisions took effect later.
[5] 24 CFR, Parts 902, 903, and 985, Final Rule: Deregulation for Small
Housing Authorities, June 24, 2003.
[6] Throughout this report, we use the term technical assistance to
encompass both technical assistance and capacity building.
[7] Under the Hope VI program, HUD provides assistance to help housing
agencies replace and revitalize severely distressed public housing with
physical, management, and social and community service improvements.
Under the Capital Fund, HUD provides grants to housing agencies for
capital improvement and management activities, including modernization
and development of low-rent housing.
[8] These surveys are administered by the housing agencies.
[9] During our review, a HUD official told us that effective October 1,
2003, HUD plans to eliminate the Memphis TARC and rename the Cleveland
TARC the Recovery and Prevention Corps. The Corps will serve functions
similar to those of the current TARCs.
[10] U.S. Department of Housing and Urban Development, The Uses of
Discretionary Authority in the Public Housing Program, July 1999.
[11] U.S. Department of Housing and Urban Development, The Uses of
Discretionary Authority in the Tenant Based Section 8 Program, November
2000.
[12] For purposes of presenting results from the survey, we say
responses are "similar" for a reform if the largest proportion of
estimates from all three agency size categories was for the same
response. This definition is for organizing the descriptive results of
the survey for presentation purposes. We conducted tests to determine
the statistical significance of responses by agency size.
[13] U.S. General Accounting Office, Public Housing Subsidies:
Revisions to HUD's Performance Funding System Could Improve Adequacy of
Funding, GAO/RCED-98-174 (Washington, D.C.: June 1998).
[14] U.S. General Accounting Office, Public Housing: HUD and Public
Housing Agency Experiences with Fiscal Year 2000 Plan Requirements,
GAO-02-572 (Washington, D.C.: May 2002).
[15] Housing agencies are required to submit information to HUD through
automated systems such as the Public Housing Assessment System, the
Tenant Rental Assistance Certification System, and the Multifamily
Tenant Characteristics Tracking System.
[16] See U.S. General Accounting Office, Major Management Challenges
and Program Risks: Department of Housing and Urban Development, GAO-03-
103 (Washington, D.C.: January 2003).
[17] GAO-02-572, May 2002.
[18] GAO-02-572, May 2002.
[19] We interviewed a total of nine HUD field office directors located
in Jacksonville, Florida; Chicago, Illinois; Boston, Massachusetts;
Miami, Florida; Richmond, Virginia; Atlanta, Georgia; New Orleans,
Louisiana; Little Rock, Arkansas; and Newark, New Jersey.
[20] Our nationwide survey of public housing agency directors found
that 48 percent of small housing agencies had full-time staff working
in financial management, compared to 90 percent for medium agencies and
99 percent for large agencies; 56 percent of small housing agencies had
full-time staff working in property management compared to 86 percent
for medium and 96 percent for large agencies; and 13 percent of small
agencies had full-time staff working in information technology compared
to 31 percent for medium and 89 percent for large agencies. (For
additional information, see appendix III).
[21] We made a minor adjustment to this database by removing two
records that were no longer PHAs at the time of the survey. This
resulted in 4,214 agencies in our target population.
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