Housing and Urban Development

This testimony comments on the Department of Housing and Urban Development's (HUD) fiscal year 1999 budget request, which totals about $25 billion. GAO discusses (1) the actions that HUD has taken or plans to take to improve its budget estimates, (2) the reasonableness of HUD's estimate for Section 8 tenant-based assistance, (3) HUD's justification for its Section 8 project-based amendment request, (4) HUD's request for funding to assist the homeless, (5) HUD's request for $100 million to fund its new Regional Connections Initiative, and (6) the future budgetary implications of welfare reform.

GAO noted that: (1) HUD has recognized the need to improve its budget-estimating process with better oversight and documentation, and has started to modify its organizational structure to increase its oversight of the staff responsible for formulating budget estimates; (2) however, many of HUD's planned improvements--such as the Office of Management and Budget's analysis of the program offices' submissions--were not implemented in time to help ensure the accuracy of HUD's FY 1999 budget estimate; (3) according to HUD officials, these improvements will be in place to enhance the FY 2000 process; (4) while HUD has significantly improved its budgeting for Section 8 tenant-based and moderate rehabilitation contract renewals, HUD's request for $4.8 billion to renew and amend Section 8 tenant-based and moderate housing contracts for FY 1999 could be overstated by as much as $691 million; (5) because this excess budget authority exists, HUD will not be likely to need the $70 million it has requested to amend Section 8 moderate rehabilitation contracts; (6) HUD's budget request for $1.3 billion to amend Section 8 project-based contracts--needed to cover shortfalls in these long-term contracts--substantially exceeds the amounts that HUD's analyses indicated are needed; (7) this figure exceeds the amount of $463 million that HUD used in its budget request to offset its FY 1999 needs for funding to amend project-based contracts; (8) to help address the needs of the nation's homeless, HUD has requested 34,000 new Section 8 vouchers; (9) if approved, the vouchers would help to address congressional concern that a high proportion of funding for homeless assistance has been spent in the past on supportive services instead of on direct housing assistance; (10) however, HUD has not developed the eligibility standards or other planning criteria that would facilitate the program's implementation; (11) HUD's budget request for $100 million for RCI does not provide enough detail to indicate whether this level of funding is reasonable for the program; (12) HUD may not have the capacity to properly manage $550 million it is requesting for the HOPE VI program and it will have to rely more on outside contractors to oversee the program; (13) welfare reform may have a substantial future impact on HUD's spending for assisted housing for low-income households; and (14) estimating the impact may not be possible because the states' differing welfare reform provisions produce different effects from state to state and year to year.

Recommendations

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

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