Assisted Housing:

Utility Allowances Often Fall Short of Actual Utility Expenses (Vol. I)

RCED-91-40A: Published: Mar 26, 1991. Publicly Released: Mar 26, 1991.

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Pursuant to a legislative requirement, GAO provided information on how utility allowances are provided to assisted households and the extent to which the allowances cover utility costs.

GAO found that: (1) about 61 percent of public housing households and 79 percent of section 8 certificate households receive utility allowances; (2) the majority of the 9,500 households at six public housing agencies (PHA) did not pay 30 percent of adjusted income for rent and utilities; (3) the annual rent burden for an estimated 4,471 public housing households at six agencies averaged 30.5 percent, and averaged 36 percent for an estimated 5,015 section 8 households; (4) about 45 percent of the public housing households and 70 percent of the section 8 households had annual rent burdens exceeding 30 percent; (5) households were likely to find their utility expenses difficult to pay when monthly variations between allowances and expenses were large; (6) Department of Housing and Urban Development (HUD) reviews did not always disclose problems with PHA monitoring of rent burdens; (7) PHA erred in calculating monthly adjusted income, rent, utility allowances, and for check-metered households, excess utility consumption charges; and (8) through greater management attention, HUD and PHA could increase the number of assisted households with rent burdens close or equal to 30 percent.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: No congressional action has been taken or is expected.

    Matter: If Congress wishes to ensure a rent burden of exactly 30 percent for each assisted household, it will have to revise the United States Housing Act of 1937, as amended, to require that assisted households pay 30 percent of adjusted income for rent and utilities.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The agency response indicates that public housing agencies have the flexibility to accomplish the result intended.

    Recommendation: The Secretary of Housing and Urban Development should set performance expectations for PHA by better defining its reasonable consumption utility allowance standard. This action will provide public housing agencies with a clear understanding of the results that they are expected to achieve and will minimize rewarding or penalizing households unfairly. Because setting utility allowances is not an exact exercise, HUD may wish to specify: (1) an acceptable range for the rent burdens of households receiving utility allowances; and (2) the proportion of households that are expected to fall within that range. In doing so, however, it may also want to reaffirm that PHA should strive for average rent burdens of 30 percent. This affirmation would serve to preclude the possibility of rent burdens gravitating to the higher end of the range.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Not Implemented

    Comments: The agency response indicates that public housing agencies have the flexibility to accomplish the result intended.

    Recommendation: The Secretary of Housing and Urban Development should encourage PHA to: (1) use assisted households' experiences with the allowances as a mechanism for ensuring that allowances are reasonable; and (2) investigate the possibility of smoothing out monthly fluctuations between allowances and expenses. This could require PHA to: (1) evaluate the vulnerability of their assisted households to seasonal fluctuations; and (2) take actions, if practical, to minimize the impact of these fluctuations on assisted households, such as using budget plans and adjusting check-metered allowances monthly.

    Agency Affected: Department of Housing and Urban Development

  3. Status: Closed - Implemented

    Comments: HUD decided not to perform corrective action for a portion of problems found because it let the errors age. It is likely that many of the affected families will have moved by now so errors become moot. Recommendation should be closed.

    Recommendation: The Secretary of Housing and Urban Development should direct the six PHA to correct the income, allowance, and rent determination errors. HUD should also direct those PHA to reimburse those households whose rental contributions were too high because of PHA errors.

    Agency Affected: Department of Housing and Urban Development

  4. Status: Closed - Implemented

    Comments: Existing guidance, if followed, should be adequate. Additional action, as mentioned in GAO's recommendation, is not a high priority in the Department.

    Recommendation: The Secretary of Housing and Urban Development should ensure that PHA review the reasonableness of their allowances annually, as HUD requires.

    Agency Affected: Department of Housing and Urban Development

  5. Status: Closed - Implemented

    Comments: Existing guidance, if followed, should be adequate. Additional action, as mentioned in GAO's recommendation, is not a high priority in the Department.

    Recommendation: The Secretary of Housing and Urban Development should determine whether HUD oversight of PHA utility allowance determinations is consistent with HUD policy. If this oversight is determined to be insufficient, the Secretary should require corrective action.

    Agency Affected: Department of Housing and Urban Development

 

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