The Center's work on 'Vouchers' Issues


[Revised] Key Lawmaker’s Bill Would Raise Rents on Poor While Lowering Them for Better-Off Households

September 24, 2014 at 10:54 am

A new bill from Rep. Randy Neugebauer (R-TX), chair of the House Financial Services Committee’s Housing and Insurance Subcommittee, would raise rents on some of the nation’s poorest families.  The bill apparently intends the rent increases to balance the possible cost of allowing the Department of Housing and Urban Development (HUD) to lower rents for families with somewhat higher incomes.  The rent increases could cause hardship — and even homelessness — for vulnerable families.

Today, families that receive rental assistance through Housing Choice Vouchers, public housing, and other HUD programs generally pay rent equal to 30 percent of their income, the maximum share that’s considered affordable.  State and local housing agencies can charge the lowest-income families a “minimum rent” of up to $50 a month.  Agencies also must allow public housing residents to pay a “flat rent” of their unit’s estimated market value, even if it’s less than 30 percent of their income (which is typically only for the highest-income residents).

The Neugebauer bill would raise minimum rents, requiring agencies to charge voucher holders and public housing residents at least $50.  The bill would also eliminate the cap on minimum rents, allowing agencies to raise rents for a large share of assisted families.  Private owners who receive direct HUD subsidies through programs such as Section 8 Project-Based Rental Assistance would have to collect rents of at least $50 a month — up from $25 — and HUD could raise this minimum without limit.

Housing agencies could choose whether to raise public housing and voucher minimums above $50, but many would likely do so, in part to cope with tight budgets in coming years.  Of the 39 agencies granted discretion through HUD’s “Moving to Work” demonstration to set rents outside the regular rules, more than a dozen have minimums above $50 and several have set them at $200 or higher.

As we’ve explained, many affected families would struggle to pay higher minimum rents.  Technically, housing agencies and owners must exempt families from minimum rents if they would cause the families hardship, but this requirement is poorly designed and places the burden on vulnerable families to apply for exemptions.  A 2010 study found that most agencies exempted less than 1 percent of the families subject to minimum rents.

The bill’s other provision would allow HUD to lower flat rents for some public housing residents.  In January, Congress established new standards intended to prevent housing agencies from setting flat rents below market levels, but some agencies have complained that the standards go too far and require above-market rents.  The Neugebauer bill would give HUD discretion to set flat rent standards, including authority to permit lower rents than the January law requires.  The lower rents may more accurately reflect local market rents.  But since families paying flat rents can opt instead to pay 30 percent of their income, this change isn’t needed to make their homes affordable.

The Neugebauer bill gets its priorities backwards.  The top priority of the nation’s rental assistance programs should be to help the neediest families afford housing.  Some adjustment to flat rents may be warranted but, if so, Congress should enact it without adding to the struggles of the most vulnerable rental assistance recipients.

Sequestration’s Effects Linger for Housing Agencies

September 16, 2014 at 7:47 am

The 2013 sequestration budget cuts caused severe shortfalls at state and local housing agencies that administer federal rental assistance programs, and the cuts are continuing to affect low-income families, as the New York Times reports.  Most agencies sharply reduced the number of families they assisted by not reissuing housing vouchers when the families using them left the program.  These cuts have continued into 2014, despite the fact that Congress partly reversed sequestration this year.  As of March, housing agencies were assisting some 90,000 fewer low-income families due to sequestration.

The agencies are passing the budget strain on to low-income families in other ways, too.  In New York, the city’s Department of Housing Preservation and Development is raising the rent for nearly one-third of the 32,000 low-income families using its housing vouchers.  This forces families to make tough choices: either absorb rent increases of as much as several hundred dollars per month or move to a smaller, lower-priced unit, if they can find one in New York’s tight rental market.

Such choices are particularly difficult for seniors, who are disproportionately affected by the rent increases in New York.  Many have lived in their current apartment for many years, and they may have difficulty navigating the process of finding, moving, and adapting to a new apartment and neighborhood.

Housing authorities across the nation — from Napa, California, to Alexandria, Virginia — have continued to make similar changes in response to sequestration.  While Congress partly reversed the sequestration cuts in 2014, many housing agencies have been reluctant to reverse rent increases or cuts in the number of families they’re assisting, due in large part to the uncertain budget outlook for 2015.

Congress has yet to complete the fiscal year 2015 budget for the Department of Housing and Urban Development (HUD), which administers the housing voucher program and most other federal rental assistance programs, and it likely won’t until after the November elections.  Moreover, the HUD funding bills approved by the House and the Senate Appropriations Committee would increase housing voucher funding modestly, but not enough to cover the increase in program costs due to rising rent and utility costs.  As a result, they would risk locking in most of the sequestration voucher cuts.

As Congress completes the 2015 budget this fall, it should make a priority of fully restoring the vouchers lost to sequestration, or current voucher holders will face higher rents, while families on waitlists continue to pay unaffordable rents, risking homelessness if they fail to make ends meet.

Why the Ryan Plan Should Worry Those Concerned About the Affordable Housing Crisis, Part 2

August 5, 2014 at 11:52 am

House Budget Committee Chairman Paul Ryan’s proposal to consolidate 11 safety net and related programs, including the four largest federal rental assistance programs, into a single block grant to  states risks significant funding cuts to housing assistance that helps 4.7 million low-income families, as we explained last week.  Today, we’ll describe how the combination of those cuts, and the possible elimination under Ryan’s plan of program rules that ensure housing stability and affordable rents, could undercut rental assistance programs’ effectiveness and put substantial numbers of vulnerable families at risk for homelessness.

Federal rental assistance programs are effective.  They sharply reduce housing instability and homelessness and lift 2.8 million people out of poverty (with the bulk of these impacts coming from the programs included in the Ryan plan).  These effects, in turn, are linked to educational, developmental, and health benefits that can improve children’s long-term life chances.

But Chairman Ryan’s proposal, which would give states broad latitude in spending block grant funds, could enable states to jettison federal rules that are essential to the rental assistance programs’ success, or even to eliminate one or more programs.  The drops in funding that likely would occur over time would increase the risks that states would make damaging changes to housing assistance programs.  The following actions are among those states could take:

  • They could cut the number of families receiving rental assistance.  Such cuts would cause the long waiting lists to grow longer and could occur despite Ryan’s promise that his plan would honor existing rental assistance contracts. Most assistance included in the proposed Opportunity Grant is provided through the Housing Choice Voucher and Public Housing programs, which are typically funded annually (with assistance provided through annual contracts).  Most contracts with private owners under the other two rental assistance programs that Ryan would fold into the block grant also are short term, so this protection would not last long.  Moreover, if states seek to shift some funds from housing programs to other uses and don’t renew a substantial share of these contracts or maintain public housing properties, cities and towns — which may have little say in state decisions on how to use the Opportunity Grant funds — could see housing developments become unaffordable for many low-income households.  And if there is a perception that a state could fail to renew contracts or maintain rental subsidies, that almost certainly would make it more difficult and costly to attract private investment for affordable housing.
  • They could reduce per-unit subsidy levels, since the rules that set those levels in existing rental assistance programs would no longer apply.  In the Housing Choice Voucher program (which allows most participants to rent modest units of their choice in the private market), such cuts could force families to rent lower-priced units in higher-poverty neighborhoods with high crime rates and poor schools.  The other three programs that Ryan would include in the Opportunity Grant (Public Housing, Section 8 Project-Based Rental Assistance, and rural rental assistance, which the U.S. Agriculture Department administers) tie subsidies to particular developments; in those programs, subsidy cuts could make it difficult to pay for adequate building maintenance — already a major problem among Public Housing developments — or for owners to make units available to poor families at an affordable rent.
  • They could shift costs to participating families by raising rents.  Rent rules currently require most assisted families to contribute 30 percent of their income for housing, a share consistent with commonly accepted standards of affordability.  Rental assistance fills the gap between this contribution and actual costs, within reasonable limits that the federal and local agencies set.  Some poor families who may not be able to pay higher rents might find they could no longer afford their apartments if their rents rose substantially.

Why the Ryan Plan Should Worry Those Who Are Concerned About the Affordable Housing Crisis, Part 1

July 31, 2014 at 12:33 pm

A centerpiece of House Budget Committee Chairman Paul Ryan’s poverty plan is the proposal to consolidate 11 safety net programs — including four housing assistance programs — into a single, flexible block grant to states.  Among its downsides, this proposal threatens to lead to reductions in funding that provides housing assistance to millions of low-income families and individuals.

My colleagues have already set out some of the reasons to be concerned by Chairman Ryan’s proposal:

  • Block grants have proven to be easy targets for funding cuts, in part because their inherent flexibility makes it difficult to demonstrate how cuts would affect needy families and communities.
  • Total funding to assist low-income families — from federal, state, and local sources combined — likely would also decline, because broad block grants afford states opportunities to use block grant funds to replace state and local funds now going for similar services.

Because housing assistance and SNAP make up more than 80 percent of Ryan’s Opportunity Grant, any cuts in block grant funding would very likely reduce families’ access to these programs, as my colleague LaDonna Pavetti has explained.

The history of housing and community development program funding shows the risk of funding cuts that rental assistance programs face under Ryan’s plan.  Funding for flexible block grant programs such as the Community Development Block Grant (CDBG), HOME (which helps states and localities develop and preserve affordable homes for owners and renters), and the Native American Housing Block Grant has fallen sharply over time.  Meanwhile, programs that provide more narrowly prescribed forms of assistance to low-income families and that Congress funds separately each year — a category that includes housing vouchers, rural rental assistance, Section 8 Project-Based Rental Assistance, and Public Housing, the four rental assistance programs that Ryan’s proposal targets — have generally avoided reductions (sequestration in 2013 notwithstanding). (See chart.)

The reasons are easy to understand.  For example, HUD provides Congress every year with precise estimates of the cost of renewing the Housing Choice Vouchers that assist more than 2 million low-income families.  If Congress fails to provide sufficient funding to renew the vouchers, some of those families will lose assistance (and possibly their homes).  In contrast, policymakers can justify cutting a block grant by claiming that local agencies can avoid cutting direct assistance to families by using their flexibility to shift funds from other activities.

Cuts in rental assistance would fall mainly on low-income people who are elderly or have disabilities and working-poor families with children.  More than 80 percent of households with rental assistance in 2010 were elderly, had a disability, worked, or had recently worked.  (2010 is the most recent year for which these data are available to us.)

Rising rents and stagnant incomes have left increasingly more low-income Americans unable to afford decent, stable housing without cutting back on other basic needs.  Already fewer than one in four eligible low-income families receive rental assistance due to funding limitations, and waiting lists are long.  The cuts that would likely result from the Ryan plan would make this shortfall more severe and thus leave more families struggling to pay the rent and keep their homes.

Ryan’s “Opportunity Grant” Would Likely Force Cuts in Food and Housing Assistance

July 29, 2014 at 11:59 am

House Budget Committee Chairman Paul Ryan maintains that consolidating 11 safety-net and related programs into a single “Opportunity Grant” would give states the flexibility to provide specialized services to low-income people.  But providing these additional services would require cutting assistance funded through the Opportunity Grant to other needy people.  And because SNAP (formerly food stamps) and housing assistance together make up more than 80 percent of the Opportunity Grant, the cuts would almost certainly reduce families’ access to these programs, which are effective at reducing poverty — particularly deep poverty.

SNAP is an entitlement, which means that anyone who qualifies under program rules can receive benefits, and is heavily focused on the poor.  Over 91 percent of SNAP benefits go to households with incomes below the poverty line, and 55 percent goes to households in deep poverty — that is, households with cash incomes below half of the poverty line (about $9,800 for a family of three in 2013).

As a result, SNAP kept 4.9 million people out of poverty in 2012, including 2.2 million children.  It also lifted 1.4 million children out of deep poverty, more than any other benefit program.

Similarly, housing vouchers and other rental assistance lifted 2.8 million people — including 1 million children — out of poverty in 2012.

Chairman Ryan’s proposal to add new work requirements and provide individualized services to recipients of Opportunity Grant-funded assistance would surely require new staff and significantly raise administrative costs.  States would likely turn to SNAP for at least some offsetting savings:  it alone makes up more than half of the resources in the Opportunity Grant, and the Ryan proposal ends SNAP as an entitlement, eliminating eligible families’ guarantee to food assistance.  Rental assistance, which makes up nearly a quarter of the Opportunity Grant, is another likely target of cuts — though even today it serves only one in four eligible low-income families due to limited funding.

Whatever merit Chairman Ryan’s proposal for personalized services has, his Opportunity Grant could not possibly reach as many families as these existing programs serve.

Cutting food and housing assistance that lifts millions of people out of poverty and is effective at reducing hunger and homelessness in order to provide additional services to a smaller number of poor households isn’t a sound way to reduce poverty.