Tenant-based Section 8 inadequately funded in HUD's 2005 budget

Policy proposals offer HAs greater flexibility

HUD's 2005 budget for the tenant-based Section 8 program calls for a direct cut of $1 billion from 2004 levels, leading to a shortfall for 2005 that will result in housing authorities being unable to assist 200,000 families. A cut of this magnitude cannot realistically be absorbed by housing authorities without their resorting to terminating participants from the program.

The 2005 budget includes significant policy changes, which would convert the program to a dollar-based one and allow HAs flexibility in eligibility, tenant portion of the rent, payment standards, and other administrative matters. PHADA believes that some of these proposed changes have the potential of improving program efficiency and reducing costs, but they can only be implemented through careful planning over a period of years and must not be used as a reason to terminate assistance to families. PHADA is prepared to work with HUD, the Congress, participants and low-income advocates to refine the proposals in order to improve the efficacy of the Section 8 program.

It seems very unlikely, though, that policy changes could be implemented in 2005, since the Department is given 180 days to issue an interim notice, at which point housing authorities would have to engage in extensive local consultation before putting any new policies in place. Therefore, funding in 2005 must continue to reflect the need to fund all authorized vouchers in use at their actual costs. An adequate funding level to avoid eliminating assistance for 200,000 families is PHADA's number one priority.

Similarly, administrative fees must be fully funded in 2005 so that housing authorities can accomplish their mission of serving as many low-income families as possible through the use of their authorized vouchers. Without full funding, HAs will not be able to provide the counseling to applicants and outreach to landlords which have made it possible to achieve a 97 percent utilization rate.

PHADA opposes the Department's administrative fee proposals and believes instead that fees must be based on units leased, reflecting the actual amount of work performed, not a percent of housing assistance payments, which vary considerably based on location. It does not make sense and is unfair to pay high rent areas dramatically more than low rent areas for the same service. The proposed incentives run counter to the program's intended flexibility and should not be part of the administrative fee structure. If new regulations are implemented in the future reducing administrative responsibilities, it will be possible to gauge their effect on costs at that point. Changes will not take effect in time to impact 2005, however.

PHADA has long supported increased local decision making which moves away from "one size fits all" policies. As a result, it looks forward to examining these proposals in a deliberative manner with the interested parties to accomplish the goal of using the Section 8 funds in the most responsible manner possible. PHADA, though, strongly opposes a funding reduction in 2005 that will result in 200,000 families losing their housing assistance.

PHADA FRONT