HUD’s Management Deficiencies

In February 1995, we reported that HUD’s top management had begun to focus attention on overhauling the Department’s operations to correct its long-standing management deficiencies—an ineffective organizational structure, an insufficient mix of staff with the proper skills, weak internal controls, and inadequate information and financial management systems.The agency had formulated a new management approach and philosophy that included balancing risks with results, had begun implementing a substantial reorganization of field offices, and had initiated a number of other actions that would address the four management deficiencies. Accordingly, we believe that both now and for the foreseeable future, the agency’s programs will be high-risk in terms of their vulnerability to waste, fraud, and abuse. Specifically, for a large proportion of this housing, the government is paying more to house lower-income families than what is needed to provide them decent, affordable housing. The insured multifamily properties also expose the federal government to substantial current and future financial liabilities from default claims. The economic net worth of FHA’s single-family Mutual Mortgage Insurance Fund (Fund) continued to improve in fiscal year 1994. Public Housing Management and Budget Problems

The nation’s 3,300 PHAs do not all have severe management problems nor do they share the same problems. We believe that these legislative and regulatory changes will help maintain PHAs’ financial health. Future Federal Housing and Community Development Policy

HUD’s serious management and budget problems have greatly hampered its ability to carry out its wide-ranging responsibilities. High-Risk Series: Department of Housing and Urban Development (GAO/HR-95-11, Feb. 1995).
Why GAO Did This Study

GAO discussed management and budget problems facing the Department of Housing and Urban Development (HUD).

What GAO Found

GAO noted that: (1) weak internal controls, an ineffective organizational structure, an insufficient staff skill mix, and inadequate information and financial management systems have hampered HUD ability to carry out its mission and led to GAO designating HUD as a high-risk area in January 1994; (2) despite some progress in curing management deficiencies, problems persist and, as a result, will likely continue to make HUD vulnerable to waste, fraud, and abuse; (3) HUD and Congress must try to reduce excessive housing subsidies, address the physical inadequacies of insured multifamily properties, maintain the single-family insurance fund's financial health, address public housing's social, management, and budget problems, and contain the costs of renewing housing subsidy contracts for lower-income families; (4) Congress and HUD also need to reexamine and reach consensus on housing and community development policy; and (5) HUD downsizing will likely affect its ability to limit financial exposure, carry out its mission, and correct Department-wide management and information system problems.