Public housing authorities (PHAs) are significantly underfunded in managing their Housing Choice Voucher programs, according to a new study released by the Department of Housing and Urban Development (HUD).
In 2013-2014, Congress appropriated just 77% of the amount needed to effectively and efficiently administer the program, says the Housing Choice Voucher Program Administrative Fee Study.
HUD funds more than 2,300 PHAs that administer approximately 2.1 million vouchers.
Conducted by Abt Associates, the study compared the estimates of 2013 costs with the fees received by 60 high-performing PHAs between July 1, 2013, and June 30, 2014.
Across the 60 PHAs, the average cost of administering the program in 2013 was $70.03 per voucher per month. The minimum cost was $42.06 per voucher per month.
However, the average fee received during the same period (existing formula at 75% proration) was $51.64 per voucher per month. The minimum fee received was $30.11 per voucher per month. Only two of the 60 PHAs received enough fees to cover their costs, according to the report.
The report comes at time when the White House is asking for increased funding. HUD’s proposed fiscal 2016 budget seeks $2 billion in administrative fees, an increase of $490 million from 2015.
“This study offers clear evidence on what local housing authorities already know to be true—that current funding limits on their administrative fees don’t come close to meeting the reasonable costs of operating a well-run voucher program,” said Julián Castro, HUD secretary, in a statement. “We’re asking Congress to consider the President’s 2016 Budget request which will go a long way toward filling this gap and, ultimately, will help more Americans reach their goals and achieve upward mobility.”
The study found that PHAs spend an average of 13.8 hours per voucher per year in frontline work, including 6.8 hours on ongoing occupancy work for existing voucher households.
For much of the voucher program’s history—starting with the Sec. 8 certificate program in the 1970s—program administrative fees have been calculated based upon historical Fair Market Rents (FMRs).
The study suggests HUD cease using FMRs as a basis for the allocation of fees because actual costs are driven by other factors, notably local wages, health insurance costs, program size, family characteristics, and the extent to which voucher-assisted families live at substantial distance from the PHA’s main office.
The study proposes a new formula based on seven variables that cover a broad range of cost drivers capturing the actual costs of running a high-performing program.
