Housing Block Grant Proposal Would Likely Pave the Way for Deep Cuts

January 13, 2012 at 2:27 pm

Representative Gary Miller (R-CA) has proposed a sweeping expansion of Moving to Work (MTW), a pilot block grant program that exempts 35 of the nation’s 3,900 public housing agencies from nearly all federal housing regulations so they can experiment with new ways to deliver housing assistance.  But experience with other block grants suggests that this would lay the groundwork for even deeper cuts in federal housing funding than Congress is likely to impose in the coming years, as our new paper explains.

Why is expanding MTW a bad idea for housing agencies?

Many agencies would likely be attracted to joining MTW if given the option.  Because of the bleak federal budget outlook and funding cuts made in recent years, they may reason that further cuts are inevitable.  Block grant funding would give agencies more flexibility to decide how to use their shrinking resources — to spend a larger share on program administration, for example, an area that experienced deep cuts in 2011 and 2012.

MTW expansion offers agencies a very risky tradeoff, however.  In exchange for more flexibility, agencies agree to receive funding for housing vouchers and sometimes public housing in the form of block grants, which are much easier targets for funding cuts than other kinds of programs.

As the graph shows, funding for the major housing block grants — the Public Housing Capital Fund, Community Development Block Grant (CDBG), HOME Investment Partnerships program, and Native American Housing Block Grant (NAHBG) — has declined sharply over the past decade, compared to funding for other housing programs.

Why are block grants at increased risk of cuts?

Since housing agencies can use block grant funds in a large variety of ways, it is difficult for policymakers to assess how many low-income families these agencies could help with a given amount of funding — or how many families would lose assistance under a proposed funding cut.  When there is no easy way to measure or predict a program’s impact, it is hard to defend program funding when the competition for resources is great.  And that competition will only intensify over the coming decade as lawmakers struggle to adhere to the spending limits in the Budget Control Act.

As a result, agencies risk losing billions of dollars in funding under a sweeping expansion of MTW.

What would large funding cuts mean for low-income families?

MTW would give agencies more choices about how to carry out these cuts — but all of them would be bad choices, with harmful consequences for low-income families.

Agencies could save some money by streamlining administrative costs, but these already are relatively small.  Instead, they would have to absorb funding cuts primarily by raising rents on families (the great majority of which are poor and include seniors, people with disabilities, or children), shifting their programs away from the neediest households (who cost the most to help), or assisting far fewer families.

For more reasons why expanding MTW isn’t a good idea, see this earlier CBPP report.

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More About Douglas Rice

Douglas Rice

As a Senior Policy Analyst, Rice's work focuses on the impact of federal housing policy on low-income families.

Full bio | Blog Archive | Research archive at CBPP.org

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