HUD Took Steps to Improve Oversight, but Has Not Conducted Workforce Planning for Demonstration Expansion

Since our last review of the MTW demonstration in April 2012, HUD has  taken steps to improve MTW agencies’ annual reporting and its process  for monitoring agencies’ compliance with requirements of the  demonstration. While the MTW Office added  staff to assist with the oversight of the current 39 MTW agencies, HUD  has not conducted workforce planning to address the resources needed  for overseeing the 100 agencies to be added through the MTW  demonstration expansion. According to this analysis,  HUD determined that a significant number of staff would be needed to  oversee the new agencies. MTW Agencies Had Lower Public Housing Occupancy and Voucher Utilization Rates and Higher Expenses Than Comparable Non-MTW Agencies in Recent Years

We found significant differences between MTW agencies and comparable  non-MTW agencies in key outcomes of the public housing and voucher  programs, possibly affecting the number of tenants MTW agencies  served. Limitations in HUD Data Make It Difficult to Fully Understand Differences

			Potential Reasons for Observed Differences

The observed differences in public housing occupancy and voucher unit  utilization rates and program expenses between MTW and non-MTW  agencies, which could affect the number of tenants served, may be a  result of MTW agencies’ ability to (1) combine their public housing and  voucher funds and use them interchangeably and (2) use funds to  implement policies that go beyond traditional forms of housing  assistance. Nontraditional activities. Other factors related to expenses. According to HUD officials, factors  that could explain the observed differences in the expenses for the public  housing and voucher programs of MTW agencies and non-MTW  agencies include that MTW agencies typically (1) need more time and  resources to develop and implement “innovative” activities, (2) serve  hard-to-serve households such as those experiencing homelessness, and  (3) provide additional services to the households they serve as a result of  the funding flexibilities. According to 2016 HUD voucher reserve data, the 39 MTW agencies had  almost as much voucher reserves as the 2,166 non-MTW agencies  combined. HUD has performed limited oversight of MTW reserves. However, HUD has not developed and implemented a process to monitor  MTW reserves. Without a process to monitor  existing MTW agencies’ plans for their reserves and the appropriateness  of the cap for expansion agencies, HUD cannot provide reasonable  assurance that MTW agencies have sound plans for expending their  reserves. HUD Does Not Have a Framework for Monitoring the Effect of Certain Policies on Tenants

HUD does not have a framework—standard definitions for rent reform  and self-sufficiency, clear guidance on reporting requirements, or analysis  plans—for monitoring the effect of rent-reform, work-requirement, and  time-limit policies. However, Attachment B does not include similar requirements for  proposed work-requirement or time-limit policies. However, HUD did not  develop guidance requiring agencies to report on their hardship policies  for time-limit policies for public housing assistance. Workforce planning. Data collection. Improving oversight of the demonstration would help HUD  assess what MTW agencies have done, including their use of funding. As discussed in the draft report, due to  data limitations, we could not evaluate the effect of MTW flexibilities on  tenants. HUD disagreed with the draft report’s third recommendation to develop  and implement a process to track how public housing and voucher  funding is being used for other allowable activities, including local,  nontraditional activities. HUD generally agreed with our remaining eight recommendations. HUD acknowledged in its response to the  recommendation that its workforce planning efforts will continue in 2018. Appendix I: Objectives, Scope, and Methodology

Our objectives were to examine (1) the Department of Housing and Urban  Development’s (HUD) oversight of agencies participating in the Moving to  Work (MTW) demonstration, including agency reporting and compliance  with demonstration requirements; (2) any association between MTW  flexibilities and program outcomes, including public housing occupancy  rates and voucher unit utilization rates; and (3) the extent to which HUD  monitored effects of rent-reform, work-requirement, and time-limit policies  on tenants. To determine the extent to which HUD monitors the effect on tenants of  rent-reform, work-requirement, and time-limit policies, we reviewed HUD  documents such as Attachment B of the standard agreement and HUD’s  Table of Applicable Standard Metrics by Activity to determine how HUD  defines these types of activities and the guidance HUD provides on  monitoring and reporting their effects on tenants.
Why GAO Did This Study

The MTW demonstration gives 39 participating public housing agencies the flexibility to use funding for HUD-approved purposes other than housing assistance, such as developing affordable housing; change HUD's tenant rent calculation; and impose work requirements and time limits on tenants. In 2015, Congress authorized the expansion of MTW by adding 100 new agencies. GAO was asked to evaluate the MTW demonstration. GAO examined HUD oversight of MTW agencies, including its monitoring of demonstration effects on tenants.
For this report, GAO reviewed HUD and MTW agency policies and documentation; interviewed officials at HUD and seven MTW agencies (selected based on type of policy changes, size, and geographic diversity); and interviewed tenants served by selected agencies. GAO also conducted a statistical analysis comparing data for MTW and non-MTW agencies on public housing occupancy rates, voucher utilization rates, and program expenses.

What GAO Found

The Department of Housing and Urban Development‘s (HUD) oversight of the Moving to Work (MTW) demonstration has been limited. Improving oversight—particularly for information collection and analysis—would help HUD assess what MTW agencies have done, including funding use. HUD took steps to improve oversight and reporting, but GAO found limitations in the following areas:
Workforce planning. While HUD has taken steps to address staffing to oversee the current 39 MTW agencies, HUD has not finalized its workforce planning for 100 agencies to be added to the demonstration. According to a 2015 HUD analysis, a large number of additional staff would be needed for the expansion. HUD officials said field office staff might assume greater oversight responsibilities to fill this gap, but a joint (headquarters-field) oversight structure is not final and HUD's workforce analysis has not been updated to reflect this proposed oversight structure.
Data collection. Due to limited data, HUD cannot fully determine the extent to which demonstration flexibilities affected the performance of MTW agencies, especially in relation to outcomes that affect the number of tenants served—occupancy and voucher utilization rates and program expenses. GAO found that MTW agencies had lower yearly median rates for public housing occupancy and Housing Choice Voucher (voucher) unit utilization and higher yearly median program expenses than comparable non-MTW agencies. The differences may be partly the result of demonstration funding flexibilities, such as the ability to use public housing and voucher funding for purposes such as gap financing for affordable housing (a nontraditional activity). But limitations in HUD data (such as not differentiating expenses for nontraditional activities) make it difficult to fully explain differences in outcomes GAO analyzed.
Oversight of reserves. HUD has not implemented a process to monitor MTW reserves or agencies' plans for such reserves, which led to agencies accruing relatively large amounts of unused funds that could be used for vouchers. According to HUD data as of June 30, 2017, the 39 MTW agencies had more voucher reserves than the 2,166 non-MTW agencies that administer the voucher program combined ($808 million compared to $737 million). Without a monitoring process, HUD cannot provide reasonable assurance that MTW agencies have sound plans for expending reserves.
Monitoring the effect of rent reform, work requirements, and time limits on tenants. HUD is limited in its ability to evaluate the effect of MTW policies on tenants. HUD does not have a framework—including clear guidance on reporting requirements and analysis plans—for monitoring the effect of rent-reform, work-requirement, and time-limit policies. HUD guidance instructs agencies to analyze the impact of their rent reform activities, describe how they will reevaluate them, and develop a tenant hardship policy for such policies (but not for time limits or work requirements). But the guidance does not describe what must be included in the analyses or policies, leading to wide variation in how agencies develop them. Also, HUD does not assess the results of agencies' analyses.

What GAO Recommends

GAO makes 11 recommendations to HUD, which include completing workforce planning, developing processes to track use of funds and monitor agencies' reserves, and developing a framework—including clear guidance on reporting requirements and analysis plans—to monitor effects on tenants. HUD generally agreed with eight of the recommendations and disagreed with three, citing the need for flexibility. GAO maintains the recommendations, as discussed further in the report.