The NewStandard ceased publishing on April 27, 2007.

Funding Holes Found in Housing Voucher Program

by Michelle Chen

Section 8 has accumulated significant gaps that are leaving some households out in the cold as advocates scramble to pressure Congress to re-think its approach.

Sept. 2, 2005 – Sherron Grant couldn’t believe her luck. Her ten-year wait for a federal housing voucher had finally ended, and, that same week in 2004, the single mother of thirteen found the perfect home: a six-bedroom house in a quiet part of Buffalo, New York, away from the cramped housing project where she was raising her family.

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"I was so happy that I was going to be able to move into a house… because I’m not financially stable to pay for it all by myself," she recalled.

But Grant’s good fortune slipped away as quickly as it had come when, well into the fiscal year, the government decided to defund 75,000 vouchers under a new plan to control the program’s expenses.

"I was so happy once they gave me the voucher," she said. "Then, when it got tooken away, I was in tears."

To keep legislators from gambling with the dream homes of people like Grant in the future, affordable housing advocates are calling on Congress to strengthen the funding system for Section 8 vouchers, the major low-income rental assistance program. So far, lawmakers have offered a plan that analysts say would restore much of the funding gutted in 2004, but would still fall short of covering the more than two million vouchers that families will need in 2006.

Since housing agencies do not always use up all the vouchers they have been authorized to use through government contracts, Congress adopted a policy in 2003 of funding only those vouchers that they estimate to be "in use" at the time -- a number that did not include the voucher the Grant family received and then lost.

“I was so happy once they gave me the voucher. Then, when it got tooken away, I was in tears.” --Sherron Grant

According to an analysis published this month by the progressive think tank Center on Budget and Policy Priorities (CBPP), Congress would need to provide $14.3 billion in order to restore the shortfalls from 2004 and 2005 and to fully fund the program for 2006. The Senate has proposed to underfund the program by about $200 million and House by about $100 million. According to the CBPP, this could potentially cut between 11,000 and 28,000 vouchers that housing agencies recently administered to low-income people.

The key issue in the CBPP’s analysis is not simply reduced funding, but shortcomings in the budget methodology that could squander thousands of vouchers and undermine long-term efforts to sustain the program’s funding. The House bill, based on a data "snapshot" covering May to July 2004, along with some adjustments for inflation, would underfund over 1,000 public housing agencies nationwide and overfund about 540, according to the analysis, resulting in nearly $80 million in wasted voucher funds in some areas and shortfalls in others. The Senate’s proposed methodology, based on voucher data from the previous 12 months, more closely reflects the CBPP’s estimates for recent voucher costs.

Housing agencies are still feeling the sting from the last snapshot Congress used in the appropriations for the fiscal year 2005. Cutbacks from the revised funding scheme, finalized late in the year, blindsided many agencies, since by that point, they had already issued vouchers in anticipation of higher funding levels.

Housing agencies are still feeling the sting from the last "snapshot" Congress used in the appropriations for the fiscal year 2005.

Sheila Crowley, president of the National Low Income Housing Coalition, said that some housing agencies "literally were expecting checks to come forward the next month that didn’t come … It created real havoc."

In Buffalo, where Grant struggled to access Section 8 support, budget deficiencies have stripped one local housing agency of the capacity to provide approximately 300 vouchers. Belmont Shelter’s executive director, Kathy O’Brien, recalled that when the 2004 appropriation finally landed on them, right around the holidays, they had to inform many voucher applicants who had just been taken off the waiting list that they were back on it.

O’Brien told The NewStandard that Belmont’s voucher backlog, now roughly 16,000 families, has remained frozen for about ten months, because the organization fears their next budget appropriation will not cover any effort toward expansion. "You can’t afford to go over," she said. "So, you tend to leave a whole heck of a lot of it on the table."

She noted that there is no shortage of local landlords willing to rent to voucher-holders. "There’s places that people can go and rent something," O’Brien said. "But they still need help in renting it, and the federal housing policy has just not kept up with this need."

Vouchers Fill but Expand Housing Gaps

Groups working to protect voucher funding say that with its tight-fisted response to changing voucher needs, Congress is playing a numbers game at the expense of housing agencies and the low-income households they serve.

The aim of Section 8, named for the federal housing statute, is to provide rental assistance to low-income families who might otherwise be relegated to poor neighborhoods. It is supposed to give them more choice in where they live, work and go to school.

A voucher generally subsidizes the rent for a government-approved housing unit, and also requires that a tenant contribute 30 percent of household income toward rental payments. Federal law commits three-quarters of vouchers toward the area’s lowest income brackets. According to Department of Housing and Urban Development data, about 9 in 10 vouchers go to families with children, the elderly or people with disabilities.

Nonetheless, census data indicates that the 2 million voucher beneficiaries nationwide are still dwarfed by more than 7 million poor households that lose over half their yearly income to extreme housing cost burdens.

Unlike some other public assistance programs, Section 8 does not automatically adjust to changing social needs. Congress uses the number of authorized vouchers – essentially the cumulative number granted to agencies since the program began in 1974 – as a rough guidepost for funding. However, the actual demand for vouchers fluctuates with changes in the economy and the financial situations of individual voucher-holders.

CBPP Director of Housing Policy Barbara Sard said that in a static world, Congress’s effort to estimate the number of vouchers actually used "would be efficient and harm no one." But she pointed out that Congress’s current definition of "unused" might not square with the goals of housing agencies serving poor communities. "The problem," she explained, "is it puts the primacy on getting it right -- on how many vouchers will be used, and where, and what will they cost?"

Denise Muha, executive director of the National Leased Housing Association, which represents renters, developers and housing agencies, warned that government estimates inevitably involve guesswork: the cost of each voucher varies according the renter’s income, and the turnover rate is hard to gauge because "you really don’t know how many people are going to turn back their vouchers because they got a better job, or they’re moving away."

In its budget analysis, CBPP measured House and Senate proposals against its own records of vouchers in use from May 2004 to January 2005, the most recent data available. Even though both bills allocate enough funds to cover most of the vouchers that Congress failed to fund in 2005, the CBPP predicted that gaps due to funding miscalculations would persist in 2006.

In total, according the CBPP, the House bill would force agencies to abandon an estimated 27,889 of the vouchers recently distributed, while the Senate’s bill would force agencies to drop 11,866 vouchers.

Groups working to build the country’s affordable housing supply say that a sputtering stream of voucher-spending not only presents barriers for low-income people, but also hinders future community development. Lenders and investors, Muha explained, will be less willing to launch affordable housing projects without assurance that local people will be able to afford the rent. "We’re not creating much more housing," she said. "We can’t afford to lose what we have."

Rebuilding Section 8

This year, the administration sought to curb Section 8 expenditures by pushing the "State and Local Housing Flexibility Act," a proposal to shift voucher funding toward a block grant model and away from the longstanding system based on the number of vouchers historically authorized.

But affordable housing advocates contend that structuring the budget around a simple dollar amount, rather than the number of families that can be assisted, runs counter to the social welfare goal of the voucher program.

Groups like the National Leased Housing Association are pushing Congress to revamp Section 8 to give agencies the right balance of stability and flexibility, including adequate reserve funds to deal with budget emergencies and more accurate budget calculations. The government’s funding formula, said Muha, "has to allow for some ability for housing authorities to meet the changing needs of the community and changing costs."

Yet outside of the budget process, individuals lucky enough to obtain vouchers could still have trouble keeping up with changes. Sherron Grant recently received another voucher, but too late to reclaim the house of her dreams. Still living in the projects, with another baby on the way, she continues looking for a home she can afford -- and remembers how, for a few days last year, she almost had one.

"Nice clean street, quiet area, perfect house," she said. "And then I wasn’t able to move there. And now I can’t find one at all."

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The NewStandard ceased publishing on April 27, 2007.

Michelle Chen is a staff journalist.

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