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Rural Housing Service: Standardization of Budget Estimation Processes Needed for Rental Assistance Program

GAO-04-424 Published: Mar 25, 2004. Publicly Released: Mar 25, 2004.
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Highlights

The Rural Housing Service's (RHS) Section 521 Rental Assistance Program provides rental subsidies to about 250,000 rural tenants. With an annual budget of over $700 million, the program is RHS's largest line-item appropriation, accounting for approximately 70 percent of the agency's budget. In early 2003, RHS reported hundreds of millions of dollars in unexpended balances, primarily tied to 5- and 20-year contracts issued from 1978 through 1982. Concern has arisen that these unexpended balances may be the result of the agency's budget practices, especially its procedures for estimating funding needs. GAO was asked to assess the accuracy of RHS's budget estimates for the rental assistance program, the activity level of rental assistance contracts issued from 1978 through 1997, and the activity level of rental assistance contracts issued from 1998 through 2002 and the accuracy of RHS's estimates of the rate at which these funds would be used.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture To more accurately estimate rental assistance budget needs, the Secretary of Agriculture should require program officials to use and correctly apply the inflation rates provided by OMB in its annual budget and allocation estimation processes.
Closed – Implemented
In a letter dated 5/28/2004, USDA responded that it agrees with the recommendation and that USDA will use the recommended OMB rate for the fiscal year 2006 budget projection. In 1/2007 RHS officials confirmed that they also used the OMB rate in the 2007 and 2008 budget projection and will continue to do so in the future.

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Topics

Budget outlaysFuture budget projectionsInflationRent subsidiesRental housingRural housing programsStandardsHousing assistanceExpenditure of fundsRural housing