	Background

HUD implemented the MTW demonstration program in 1999. In addition to addressing the program’s three statutory purposes—reduce  costs and achieve greater cost-effectiveness in federal housing  expenditures, give families with children incentives to obtain employment  and become self-sufficient, and increase housing choices for low-income  families—MTW agencies must meet five requirements. As we reported in 2012, HUD had not identified the performance data  needed to assess the results of similar MTW activities or of the program  as a whole. HUD also had not established performance indicators for MTW. The shortage of standard performance data and performance indicators  had hindered comprehensive evaluation efforts, which are key to  determining the success of any demonstration program. We  recommended in 2012 that HUD (1) improve its guidance to MTW  agencies on providing performance information in their annual reports by  requiring that such information be quantifiable and outcome-oriented, (2)  develop and implement a plan for quantitatively assessing the  effectiveness of similar activities and for the program, and (3) establish  performance indicators for the program. HUD partially agreed with these  recommendations. Since our report, HUD has revised the performance  reporting requirements for MTW agencies. The Office of Management  and Budget (OMB) approved these revisions on May 31, 2013. Because HUD had not  developed criteria and a systematic process for identifying lessons  learned, we reported in 2012 that it was limited in its ability to promote  useful practices for broader implementation. HUD Could Strengthen Some Monitoring Policies and Procedures

HUD had policies and procedures in place to monitor MTW agencies but  could have done more to ensure that MTW agencies demonstrated  compliance with statutory requirements and to identify possible risks  relating to each agency’s activities. For example, as noted in our 2012  report, HUD had not issued guidance to MTW agencies clarifying key  program terms, including definitions of the purposes and statutory  requirements of the MTW program. As discussed later, HUD has since  updated its guidance. Without a process for systematically assessing  compliance with statutory requirements, HUD lacked assurance that  agencies were complying with them. HUD also lacked assurance that it had been using its  limited monitoring resources efficiently. Finally, we reported that HUD did not have policies or procedures in place  to verify the accuracy of key information that agencies self-report, such as  the number of program participants and the average income of residents  “graduating” from MTW programs. reported performance information during their reviews of annual reports  or annual site visits. information that MTW agencies self-report. HUD also described steps it was taking to improve its  guidance to MTW agencies and implement risk-based monitoring  procedures. Additionally,  according to a HUD official, the recently approved reporting requirements  will result in more standardized data that HUD can verify either through  audits or during site visits. Since our report was  issued, four additional agencies were admitted into the program. HUD  required these agencies to implement and study rent reform activities  through partnerships with local universities and a research organization. HUD, Moving to Work (2010). Finally, information from a private research organization,  affordable housing advocates, and MTW agencies suggested that  allowing additional PHAs to participate in the program could result in  additional opportunities to test innovative ideas and tailor housing  programs and activities to local conditions. However, a lack of performance information (which creates a limited basis  for judging what lessons could be taken from the program to date), limited  HUD oversight, and concerns about the program’s impact on residents  raised questions about expanding the MTW program. The report concluded that, given these limitations,  expansion should occur only if newly admitted PHAs structured their  programs for high-quality evaluations that permitted lessons learned to be  generalized for other PHAs. Until more complete information on the program’s effectiveness and the  extent to which agencies adhered to program requirements is available, it  will be difficult for Congress to know whether an expanded MTW would  benefit additional agencies and the residents they serve.
Why GAO Did This Study

Implemented in 1999, HUDs MTW demonstration program gives participating PHAs the flexibility to create innovative housing strategies. MTW agencies must create activities linked to three statutory purposesreducing costs, providing incentives for self-sufficiency, and increasing housing choicesand meet five statutory requirements. Congress has been considering expanding MTW.
This testimony discusses (1) the programs progress in addressing the three purposes, (2) HUDs monitoring efforts, and (3) potential benefits of and concerns about expansion.
This testimony draws from a prior report on the MTW program ( GAO-12-490 ). For that report, GAO analyzed the most current annual reports for 30 MTW agencies; compared HUDs monitoring efforts with internal control standards; and interviewed agency officials, researchers, and industry officials. For this testimony, GAO also reviewed actions HUD has taken in response to the reports recommendations.

What GAO Found

Opportunities existed to improve how the Department of Housing and Urban Development (HUD) evaluated the Moving to Work (MTW) program, which is intended to give participating public housing agencies (PHA) flexibility to design and test innovative strategies for providing housing assistance. GAO reported in April 2012 that HUD had not (1) developed guidance specifying that performance information collected from MTW agencies be outcome-oriented, (2) identified the performance data needed to assess results, or (3) established performance indicators for the program. The shortage of such standard performance data and indicators had hindered comprehensive evaluation efforts; such evaluations are key to determining the success of any demonstration program. In addition, HUD had not developed a systematic process for identifying lessons learned from the program, which limited HUD's ability to promote useful practices for broader implementation. Since the GAO report, HUD has revised reporting requirements for MTW agencies. These requirements were approved by the Office of Management and Budget in May 2013. GAO is reviewing this new guidance.
In 2012, GAO also reported that HUD had not taken key monitoring steps set out in internal control standards, such as issuing guidance that defines program terms or assessing compliance with all the program's statutory requirements. As a result, HUD lacked assurance that MTW agencies were complying with statutory requirements. Additionally, HUD had not done an annual assessment of program risks, although it had a requirement to do so, and had not developed risk-based monitoring procedures. Without taking these steps, HUD lacked assurance that it had identified all risks to the program. Finally, HUD did not have policies or procedures in place to verify the accuracy of key information that MTW agencies self-report. For example, HUD staff did not verify self-reported performance information during their reviews of annual reports or annual site visits. Without verifying at least a sample of information, HUD could not be sure that self-reported information was accurate. According to HUD, the recently approved reporting requirements will result in more standardized data that HUD can verify either through audits or during site visits.
Finally, GAO noted in 2012 that expanding the MTW program might offer benefits but also raised questions. According to HUD, affordable housing advocates, and MTW agencies, expanding MTW to additional PHAs would allow agencies to develop more activities tailored to local conditions and produce more lessons learned. However, data limitations and monitoring weaknesses raised questions about expansion. HUD had reported in 2010 that expansion should occur only if newly admitted PHAs structured their programs to permit high-quality evaluations and ensure that lessons learned could be generalized. Since the GAO report was issued, four additional agencies were admitted into the program. HUD required these agencies to implement and study rent reform activities through partnerships with local universities and a research organization. Until more complete information on the program's effectiveness and the extent to which agencies adhered to program requirements is available, it will be difficult for Congress to know whether an expanded MTW would benefit additional agencies and the residents they serve.

What GAO Recommends

GAO recommended that HUD improve MTW information and monitoring. HUD partially agreed with these recommendations and has since issued new guidance to MTW agencies.