Housing and Urban Development:

Comments on HUD's Fiscal Year 1999 Budget Request

T-RCED-98-137: Published: Mar 25, 1998. Publicly Released: Mar 25, 1998.

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Stanley J. Czerwinski
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Pursuant to a congressional request, GAO discussed selected aspects of the Department of Housing and Urban Development's (HUD) fiscal year (FY) 1999 budget request, focusing on: (1) actions HUD has taken or plans to take to improve its budget estimates; (2) the reasonableness of HUD's request for Section 8 tenant-based and moderate rehabilitation housing assistance; (3) HUD's justification for its Section 8 project-based amendment request; (4) HUD's request for funding to assist the homeless; (5) HUD's request for $100 million to fund its new Regional Connections Initiative (RCI); (6) HUD's capacity to manage its HOPE VI program; and (7) the budgetary implications for public and assisted housing of welfare reform.

GAO noted that: (1) HUD has recognized the need to improve its budget-estimating process with better oversight and documentation, and has started to modify its organizational structure to increase its oversight of the staff responsible for formulating budget estimates; (2) however, many of HUD's planned improvements--such as the Office of Management and Budget's analysis of the program offices' submissions--were not implemented in time to help ensure the accuracy of HUD's FY 1999 budget estimate; (3) according to HUD officials, these improvements will be in place to enhance the FY 2000 process; (4) while HUD has significantly improved its budgeting for Section 8 tenant-based and moderate rehabilitation contract renewals, HUD's request for $4.8 billion to renew and amend Section 8 tenant-based and moderate housing contracts for FY 1999 could be overstated by as much as $691 million; (5) because this excess budget authority exists, HUD will not be likely to need the $70 million it has requested to amend Section 8 moderate rehabilitation contracts; (6) HUD's budget request for $1.3 billion to amend Section 8 project-based contracts--needed to cover shortfalls in these long-term contracts--substantially exceeds the amounts that HUD's analyses indicated are needed; (7) this figure exceeds the amount of $463 million that HUD used in its budget request to offset its FY 1999 needs for funding to amend project-based contracts; (8) to help address the needs of the nation's homeless, HUD has requested 34,000 new Section 8 vouchers; (9) if approved, the vouchers would help to address congressional concern that a high proportion of funding for homeless assistance has been spent in the past on supportive services instead of on direct housing assistance; (10) however, HUD has not developed the eligibility standards or other planning criteria that would facilitate the program's implementation; (11) HUD's budget request for $100 million for RCI does not provide enough detail to indicate whether this level of funding is reasonable for the program; (12) HUD may not have the capacity to properly manage $550 million it is requesting for the HOPE VI program and it will have to rely more on outside contractors to oversee the program; (13) welfare reform may have a substantial future impact on HUD's spending for assisted housing for low-income households; and (14) estimating the impact may not be possible because the states' differing welfare reform provisions produce different effects from state to state and year to year.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The recommendation suggested several areas in which Congress could consider reducing HUD's budget request. In one area, HUD's moderate rehabilitation program, the Congress rescinded the budget authority that GAO reported was excess to the programs planned and expected needs. In the other areas, however, Congress took no action.

    Matter: Congress may wish to consider reducing HUD's request for Section 8 tenant-based and moderate rehabilitation contract renewals and amendments to account for: (1) $182 million by which HUD overstated its moderate rehabilitation renewal needs; (2) $439 million of excess budget authority in the Section 8 moderate rehabilitation program that could offset new budget authority to renew expiring housing assistance contracts; and (3) $70 million HUD requested to fund amendments to Section 8 moderate rehabilitation contracts that may offset this excess budget authority.

  2. Status: Closed - Implemented

    Comments: The Congress provided no funding in response to HUD's request for $500 million to fund the Section 8 amendment account.

    Matter: Congress may wish to consider reducing HUD's request for funding to amend Section 8 project-based contracts because: (1) $500 million is in excess of the funds that HUD identified as actually needed for FY 1999; and (2) current analyses indicate that recapture amounts are likely to be substantially higher than those identified in HUD's budget request.

  3. Status: Closed - Implemented

    Comments: The Congress provided no funding to meet HUD's request for $100 million for the Regional Connections Initiative or $192 million for housing vouchers for the homeless in fiscal year 1999.

    Matter: Before appropriating $192 million for vouchers for the homeless and $100 million for HUD's Regional Connections Initiative, Congress may wish to seek assurances from HUD that these programs will be ready to effectively commit funds.


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