PHADA has sent the attached letter to the White House, OMB, HUD, and the congressional leadership with purview over the HUD budget. The association will continue to push aggressively for adequate operating and capital funding for both this year and next.

Look for updates on the budget situation through future e-mail alerts, reports on the web site, and in the Advocate.

December 16, 1998 Honorable William J. Clinton President The White House 1600 Pennsylvania Avenue, N.W. Washington, DC 20500 Dear Mr. President: PHADA represents the professional administrators of more than 1650 housing agencies from all over the United States. Our members help provide affordable housing to millions of low income Americans. I am writing to express our concerns about the lack of adequate funding in the current budget and the administration's spending plan for next year. Public housing operating subsidies are the lifeblood of the program our members administer. Distributed through a formula called the Performance Funding System (PFS), they make up the difference between what residents pay in rent and the actual cost of operations. Pursuant to the administration's budget request, Congress appropriated $2.818 billion in FY 1999. HUD now concedes this amount is inadequate, amounting to only 86 percent of the overall need. The PFS shortfall is disastrous for housing authorities and residents. It will harm virtually every aspect of public housing administration and services. Among other things, day-to-day maintenance will be deferred, safety and sanitary conditions will be negatively impacted, and the quality and quantity of resident programs will diminish. We must point out as well that about 40 percent of all residents are elderly and/or disabled. In addition, many families are headed by single mothers, many of whom seeking better lives for themselves and their children by accessing job-training and child care programs offered through their local housing authorities. These families clearly will be hurt under the existing budget crunch. The recent progress resulting from program reforms initiated by your administration and Congress could be also lost in relatively short order if the shortfall is not addressed. Moreover, we cannot anticipate that a continued healthy economy and welfare reform will generate much in the way of new revenues to negate the budget gap. The recently-enacted Quality Housing and Work Responsibility Act of 1998 mandates that any new revenues generated by more residents entering the workforce be exempt from rent payments. In light of the foregoing, we urge you and the Office of Management and Budget to work with Secretary Cuomo and the Department to augment current PFS funding up to 100 percent capacity. The situation is urgent and action is needed now. The budget picture for FY 2000 is not as urgent, but certainly not any less important. Unfortunately, reports indicate your administration's proposed budget could be even worse for public housing. It is our understanding that the administration is proposing public housing operating subsidy funding at $2.75 billion, and capital funding at approximately $2.4 billion (compared to $3 billion this year). As noted above, current PFS funding is woefully inadequate. In comparison to the administration's FY 2000 proposal, however, 86 percent seems rosy. Simply put, a funding level along the lines suggested by OMB could very well result in the bankruptcy of many housing authorities and serve to undermine the program. Even worse, the millions of Americans relying on public housing for safe and affordable shelter would suffer dramatically. The capital budget proposal is equally deficient. This year's allocation of $3 billion was a major step in the right direction for the capital program. The 20 percent cut recommended by OMB reverses that course, and would undoubtedly force many HAs to scale back plans for improving and modernizing their stock at the expense of their residents' well-being. We suggest that, at a minimum, PFS be funded at what HUD reportedly deems would be 100 percent, $3.2 billion. Likewise, we feel the capital program should be allocated at least as much as this year, $3 billion. PHADA respectfully requests that the administration allocate sufficient funding to HUD for these programs as it prepares to finalize its FY 2000 budget request. Thank you for considering the association's views. Sincerely, Timothy G. Kaiser Executive Director cc: Hon. Andrew Cuomo, Secretary of HUD Hon. Harold Lucas, Assistant Secretary, HUD-PIH Hon. Jacob Lew, Director, OMB Hon. Christopher Bond, Chairman Senate VA/HUD Subcommittee Hon. Barbara Mikulski, Ranking Minority Member, Senate VA/HUD Subcommittee Hon. James Walsh, Chairman, House VA/HUD Subcommittee

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