HUD's Fiscal Year 2000 Budget Request:

Additional Analysis and Justification Needed for Some Programs

RCED-99-251: Published: Sep 3, 1999. Publicly Released: Oct 20, 1999.

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Pursuant to a congressional request, GAO reviewed the Department of Housing and Urban Development's (HUD) fiscal year (FY) 2000 budget request, focusing on: (1) whether HUD has the capacity to implement, and adequate justification to support, the new or significantly expanded programs and initiatives included in its budget request; (2) the potential for HUD to use available unexpended balances in some programs to reduce its need for new funding in other programs; and (3) whether HUD adequately justified its use of or requests for funds in the following five areas: (a) disaster assistance; (b) salaries and expenses; (c) Schedule C and non-career Senior Executive Service positions; (d) rural housing and economic development; and (e) international housing initiatives.

GAO noted that: (1) out of its total FY 2000 budget request of over $28 billion, HUD has requested $731 million for 19 programs and initiatives that were not funded in FY 1999; (2) however, in GAO's March 1999 testimony on HUD's FY 2000 budget request, GAO questioned HUD's capacity to manage this volume of additional work because of the time-consuming organizational reform occurring at this time and the substantial resources HUD would need to implement new programs; (3) in GAO's review of one of the largest of these new programs--Contract Administration, with $209 million requested for FY 2000--GAO found that HUD has not accomplished two tasks that are critical for effective implementation; (4) as proposed, the Contract Administration program would contract out for the administration of 20,000 multifamily properties in HUD's project-based section 8 housing assistance inventory; (5) although HUD has taken steps to identify qualified contractors, HUD has not established, to date, essential oversight procedures nor assigned key staff to monitor the contractors' performance; (6) furthermore, HUD recently decided to exclude certain properties from the program, which could reduce the need for fully funding the request; (7) therefore, HUD is not prepared to fully implement the program and likely will not need the full amount of its FY 2000 budget request for this program; (8) the potential exists for HUD to better manage unexpended balances in a number of programs and for some unobligated funding to be used to meet other needs; (9) however, determining the full extent to which unexpended balances are available for other purposes will require additional information and analysis by HUD; (10) GAO's limited review identified some programs--such as the Homeless Assistance, Rent Supplement, and Rental Assistance programs--in which the need for carrying unobligated balances is questionable; (11) it also showed that the unobligated, unexpended balances for three selected programs are caused by several factors, including HUD's lengthy process for making competitive awards and funding allocation policies that delay providing funds to grantees; (12) taking steps to scrutinize and make more productive use of its unobligated balances is important because these balances have grown over the past 3 years for some of HUD's existing programs; and (13) for 4 of the 5 areas GAO reviewed, GAO found that HUD had adequate support for its budget request.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to the recommendation, HUD appointed a Departmental Task Force chaired by the Deputy Chief of Staff for Policy and Programs, to examine the unexpended balances in HUD program offices. The task force has initiated the following steps to get behind these balances: (1) contracted with three different contractors to review programs carrying large balances, including the Section 202 and Public Housing Capital fund programs, Community Development Block Grant program, and Section 8 project and tenant based programs; and (2) held meetings with all departmental heads to inform them that getting behind these balances is a top priority of the department, and that they need to investigate balances in their programs and determine whether they can be rescinded or recaptured. To date, contracted studies have been completed on all programs mentioned above, except the Section 8 project and tenant based program. Furthermore, according to HUD, all other program offices carrying unexpended balances are swept in August to determine the amount of unexpended balances that can be recaptured or rescinded.

    Recommendation: The Secretary of Housing and Urban Development should direct the Office of Budget to work with HUD's program offices to identify programs with a history of unobligated and undisbursed obligated balances, as well as grantees holding excessive balances, so that action can be taken to ensure the expeditious obligation and expenditure of these funds.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Implemented

    Comments: In response to the recommendation, HUD agreed to review the procedures used by the Federal Emergency Management Agency (FEMA) for obligating its unmet needs funding. HUD has also developed a streamlined approach that incorporates FEMA's procedures for allocating and awarding funds for disaster recovery.

    Recommendation: The Secretary of Housing and Urban Development should adopt, where practicable, the practices used by the Federal Emergency Management Agency for obligating emergency funding for disaster relief, provided HUD's authority to fund its disaster assistance program does not change.

    Agency Affected: Department of Housing and Urban Development

  3. Status: Closed - Implemented

    Comments: In response to the recommendation, HUD indicated that draft policies and procedures had been developed for monitoring and oversight of the Contract Administration program, and that these procedures would be finalized in January 2000. However, to date, HUD has not finalized these procedures, and they are still in draft form. HUD also indicated in response to the recommendation that it would reevaluate the need for the number of units included in its budget estimate before starting the effort. According to HUD officials, the number of units factored into the original budget request should be $934,184 not $1.1 million, resulting in an estimated reduction from HUD's original request of about $12 million. HUD agreed to reduce the amount appropriated to the program, and plans to make these excess funds available for other priority needs under the Housing Certificate Fund Account.

    Recommendation: The Secretary of Housing and Urban Development should provide, prior to letting new contracts for administering multifamily housing assistance contracts, written assurances to the Senate and House Committees on Appropriations that HUD has: (1) established firm monitoring procedures for overseeing the performance of contract administrators and the condition of the properties they administer through the Contract Administration Program; and (2) amended its budget request to reflect the reduction in the scope of the Contract Administration Program resulting from the exclusion of certain properties from the program.

    Agency Affected: Department of Housing and Urban Development

  4. Status: Closed - Implemented

    Comments: In response to the recommendation, HUD appointed a Departmental Task Force chaired by the Deputy Chief of Staff for Policy and Programs, to examine the unexpended balances in HUD program offices. The task force has initiated the following steps to get behind these balances: (1) contracted with three different contractors to review programs carrying large balances, including the Section 202 and Public Housing Capital fund programs, Community Development Block Grant program, and Section 8 project and tenant based programs; and (2) held meetings with all departmental heads to inform them that getting behind these balances is a top priority of the department, and that they need to investigate balances in their programs and determine whether they can be rescinded or recaptured. To date, contracted studies have been completed on all programs mentioned above, except the Section 8 project and tenant based program. Furthermore, according to HUD, all other program offices carrying unexpended balances are swept in August to determine the amount of unexpended balances that can be recaptured or rescinded.

    Recommendation: To improve HUD's management of unexpended balances, the Secretary of Housing and Urban Development should direct the Department's Chief Financial Officer and its Office of Budget to work with HUD's program offices to independently verify unexpended balances that are certified by program offices.

    Agency Affected: Department of Housing and Urban Development

  5. Status: Closed - Implemented

    Comments: In response to the recommendation, HUD established new distribution formulas for the major Section 8 programs, Public Operating Subsidies, Public Housing Capital/Modernization Funds, and Section 8 renewal of annual contracts, which are intended to alleviate many of the distribution problems that were noted in the report.

    Recommendation: The Secretary of Housing and Urban Development should direct the Office of Budget to work with HUD's program offices to identify and alleviate barriers to the timely obligation of funds in HUD's programs.

    Agency Affected: Department of Housing and Urban Development

 

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