Study says impact of welfare reform on HAs still uncertain

To conduct its study, GAO selected twenty representative housing authorities from around the country. The researchers interviewed with housing authority staff, including managers, occupancy specialists, financial directors, and social service coordinators. They collected housing authority reports, self-sufficiency records, financial position papers, and tenant characteristic data.

GAO also spoke with tenants, local government officials, social service officials, and housing advocacy groups. In addition, the researchers reviewed various reports and studies on welfare reform, from HUD, industry groups and others.

Despite the breadth of the information collected for the study, GAO was unable to determine what impact welfare reform has had or will have on HAs. Citing a lack of accurate data and the short time welfare reform had been in effect, the researchers concluded that it is "too early to be certain what impact welfare reform will have on the revenue of the housing agencies GAO selected, the employment status of their tenants, and the roles of these housing agencies."

During the study, GAO documented concerns and issues that housing officials have about the impact of welfare reform and HUD's role in the reform efforts. In response to the report's findings, GAO offers three broad recommendations to HUD that the authors believe will help HAs move residents from welfare to work.

The first recommendation advises HUD to increase communication with field offices and housing authorities. Better communication is needed to clarify roles says the report. Further, HUD should explain to HAs how they can use existing programs to support and enhance welfare reform efforts. HUD should also identify sources of information about the reform efforts, according to GAO.

In its second recommendation, GAO suggests that HUD provide technical assistance and data on tenants' characteristics to HAs. Along with the data, GAO urges HUD to give HAs guidance on how to use the data to find out what effect welfare reform is having on individual agencies.

Lastly, GAO recommends that HUD develop a "comprehensive strategy" that fully utilizes the field offices as links with other field offices, housing agencies and federal, state and local welfare reform efforts. Additionally, the report states that HUD should use field offices to promote assisted housing developments as places to deliver services related to welfare reform.

Most of the housing authorities the GAO talked to said they had not attempted to estimate how welfare reform affected their revenue or the employment of residents. They said that they did not have the resources or data to conduct a detailed analysis. Additionally, the housing officials said they had difficulty distinguishing between the effects produced by local economic conditions and those produced by welfare reform efforts.

Nevertheless, GAO notes that welfare reform will affect many families receiving housing assistance since about 29 percent of all families receiving housing assistance also receive welfare assistance. At the housing agencies GAO visited, the percentage of tenants receiving Temporary Assistance to Needy Families (TANF) benefits varied from 19 to 61 percent. Overall, 37 percent of the tenants in the housing authorities GAO reviewed depend on TANF for some or all of their income.

At these agencies, rental income accounted for 31 percent of the HA's revenue while 43.5 percent of revenue came from operating subsidies, 16 percent from Section 8 administrative fees and 9.5 percent from other sources.

Some officials thought that recent increases in their HA's rental income resulted from families getting jobs under welfare reform's mandates, states the report. However, the officials worry that when the state's two-year time limit on TANF benefits expires, those individuals who were unable to get or maintain employment will lose benefits.

Others expressed concern to GAO about the tighter eligibility requirements for receiving food stamps. Under the new food stamp rules, some families lost their allotment or had the amount of food stamps reduced. HAs officials note that the lose of food stamps has meant that some families could no longer pay their rent. One housing manager stated that several families moved out of assisted housing after losing the stamps.

Some housing managers surmise that families who lose their food stamp allotment must decide whether to use their limited resources to purchase food or pay the rent. Another manager speculated that some food stamp recipients sold their stamps for cash and then used the cash to pay their rent. When the stamps were withdrawn, these families could not longer make their rent payment.

Another concern raised by the housing managers was their ability to maintain their public housing units if tenant income declines. Some officials expressed concern that HUD would not fully fund operating subsidies next year and would not offset reductions in rental income through operating subsidies. Additionally, some managers thought that welfare reform would lead to an increase in unit turnover that would increase operating expenses.

Housing managers also raised issues about welfare reform and the tenant-based Section 8 programs, says the report. According to these manages, if income for Section 8 families should fall, housing authorities would fund the additional subsidy needed. However, several officials pointed out that if the overall cost of assistance per family increases, the number of families that the HA can assist will be reduced.

Despite the recent decline in the number of families receiving welfare, housing officials, residents and others told GAO that they expect public housing tenants to have a difficult time transitioning from welfare to work. Those interviewed listed lack of job skills, minimal work experience, the high cost of child care, limited transportation options, and proficiency in English as barriers to job retention.

The concern that housing program participants tenants may not easily transition from welfare to work is supported by a study completed by Mathematica -- a public policy research organization, says GAO's report. Mathematica analyzed several welfare reform plans and reported that TANF recipients receiving housing assistance "would be less likely to leave the welfare roles or find work 4 years after the implementation of welfare reform than TANF recipients not reporting housing assistance." An older study, conducted by Johns Hopkins University, indicates that, welfare recipients receiving housing assistance spent more time on welfare than those not receiving housing assistance.

GAO states that although HUD has a smaller role in welfare reform than the Departments of Heath and Human Services and Labor, HUD has made a commitment to making the reforms work. According to the report, the Department's strategic plan focused on job creation and retention, and coordination of housing assistance as the core elements of HUD's support of welfare reform. The Department would fulfill its goal of job creation and retention through economic development programs. HUD would use rent incentives, community partnerships, and the provision of other services to provide support to welfare reform efforts, says the report.

However, the GAO found that HUD has not developed a "comprehensive strategy for bringing its resources for welfare reform together with funds and programs available through the states and other federal agencies." GAO also notes that the Department has not successfully brought "tenants' needs to the attention of state welfare officials."

GAO also found that many of the field office and housing officials they interviewed were confused about the Department's role in welfare reform. Many either did not receive guidance or did not understand the materials they received. According to GAO, "information at the national level may not be reaching the field and local levels, and the field offices and housing agencies may be missing opportunities to obtain funds or services for their tenants from the states, other federal agencies or HUD itself."

In general, the researchers found a lack of integration between local housing agencies supportive service programs and state welfare reform efforts. The authors report that HAs generally operate their supportive programs separately from the state's welfare reform efforts and that states rarely target programs or funds to those receiving housing assistance. In addition, half of the housing authority executive directors and most HUD field staff said they had little or no input into their state's welfare reforms.

The report "Welfare Reform, Changes Will Further Shape the Roles of Housing Agencies and HUD," (GAO/RCED-98-148) can be downloaded from GAO's web page at www.gao.gov.

PHADA Advocate (vol. 13, number 13, 7/27/98)

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