oversight

Columbia Housing Authority, Columbia, MO, Is Unnecessarily Paying Housing Choice Voucher Program Funds for Overhoused Tenants

Published by the Department of Housing and Urban Development, Office of Inspector General on 2005-11-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                Issue Date
                                                                         November 30, 2005
                                                                Audit Report Number
                                                                             2006-KC-1001




TO:        Patricia Straussner, Public Housing Program Center Coordinator, 7EPH

           //signed//
FROM:      Ronald J. Hosking, Regional Inspector General for Audit, 7AGA

SUBJECT:   The Columbia Housing Authority, Columbia, MO, Is Unnecessarily Paying
           Housing Choice Voucher Program Funds for Overhoused Tenants


                                  HIGHLIGHTS

 What We Audited and Why

            We reviewed the Columbia Housing Authority’s (Authority) Housing Choice
            Voucher program (voucher program) to identify savings that the Authority will
            realize by not overhousing tenants. We selected the Authority for review based
            on a computer analysis, which identified tenants whose voucher size exceeded the
            number of members in their household.


 What We Found


            The Authority overhoused 99 tenants. Since 2002, the Authority has
            unnecessarily paid $216,352 in voucher program funds for these tenants. The
            funds were overpaid because the Authority’s procedures were ineffective in
            preventing overhousing. Better procedures are needed to ensure that voucher
            program tenants receive the proper voucher size and subsidy payment. By
            enhancing its procedures, the Authority could avoid future losses of $300,276,
            thereby allowing it to provide vouchers to additional tenants.




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What We Recommend


           We recommend that the public housing program center coordinator require the
           Authority to
           • Immediately correct overhoused tenants’ vouchers,
           • Repay the voucher program fund from its reserve account, and
           • Develop and implement procedures to ensure that tenants receive correct-size
              vouchers.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3.
           Please furnish us copies of any correspondence or directives issued because of the
           audit.


Auditee’s Response


           We requested the Authority’s response on October 13, 2005, and received their
           response on November 18, 2005. The Authority’s written response indicated
           general agreement with our report. The complete text of the Authority’s response
           can be found in appendix B of this report.




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                            TABLE OF CONTENTS

Background and Objectives                                                         4

Results of Audit
      Finding: The Authority Is Paying Unnecessary Subsidy Funds by Overhousing   5
               Tenants


Scope and Methodology                                                             9

Internal Controls                                                                 10

Appendixes
   A. Schedule of Questioned Costs and Funds to Be Put to Better Use              11
   B. Auditee Comments                                                            12




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                     BACKGROUND AND OBJECTIVES

The Columbia Housing Authority (Authority) is a municipal corporation, created by state statute
and formed in 1956. The Authority is governed by a five-member board of commissioners
(board), including one resident commissioner, that is appointed by the mayor of Columbia,
Missouri. An executive director appointed by the board manages the Authority. The Authority
has 52 employees and is funded primarily by federal funds from the U.S. Department of Housing
and Urban Development (HUD).

The Authority operates HUD’s Housing Choice Voucher program (voucher program). This
program provides rental assistance to qualified applicants to facilitate rental of privately owned
units. The Authority administers 1,062 voucher program units with a $4,851,846 annual budget.

Through HUD’s voucher program, public housing authorities assist families and individuals in
meeting their housing needs. HUD pays the housing authority the subsidy for the family, along
with an administrative fee. The subsidy is portable; an eligible family may take the subsidy to a
new acceptable unit. The housing authority must inspect the dwelling and determine that the rent
requested is reasonable.

The public housing authority determines a payment standard, based on HUD’s fair market rent.
This amount is generally needed to rent a moderately priced dwelling unit in the local housing
market. The housing authority determines the voucher size and calculates the maximum subsidy
allowable and gross rent of the unit. The monthly subsidy is paid by the housing authority
directly to the landlord. The tenant pays the difference between the rent charged by the landlord
and the amount subsidized by the program.

Our audit objective was to identify voucher program savings that the Authority will realize by
not overhousing tenants.




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                               RESULTS OF AUDIT

Finding: The Authority Is Paying Unnecessary Subsidy Funds by
Overhousing Tenants
The Authority overhoused 99 tenants during 2005 because its procedures were inadequate to
prevent tenants from receiving larger vouchers than necessary. Overhousing these tenants
resulted in unnecessary voucher program payments totaling $216,352 and exposes the Authority
to $300,276 in future losses.



 99 Overhoused Tenants

              The Authority has overhoused 99 of its voucher program tenants by issuing larger
              than necessary vouchers. This overhousing occurred in the following manner:

                                                             Number of
                            Overhousing situations            tenants

                      Reasonable accommodations:
                        Care giver not documented                9
                        Doctor’s note lacks nexus                27
                        Equipment not verified                   11

                      Computer conversion                        38

                      Processing errors                          14

                      Total overhoused tenants                   99



              HUD’s Housing Choice Voucher Guidebook explains that housing authorities
              should generally assign vouchers for units with the smallest number of bedrooms
              needed to house a family without overcrowding. The Authority’s administrative
              plan provides that families are to be given appropriate-size units based on the
              Authority’s occupancy standards, federal regulations, and fair housing guidelines.
              The Authority can grant exceptions when justified.

              The Authority granted unjustified exceptions to the occupancy standards for
              reasonable accommodations. This includes nine exceptions granted for in-home
              care givers whose identities were not documented in the tenants’ file. Either the
              care givers worked part time, or the medical condition was temporary or
              anticipated. For example, the Authority granted an exception for a care giver due
              to occasional migraines and an occasional care giver due to fibromyalgia. An



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extra bedroom should not be allowed for temporary medical conditions or care
givers who are not living in the unit.

In 27 cases, the Authority granted exceptions without questioning doctors’ notes
that were vague or did not identify a nexus between the larger voucher and the
individual’s disability. Section 504 of the Rehabilitation Act of 1973 indicates
there should be a nexus to grant a reasonable accommodation. For example, the
Authority improperly granted exceptions to the following tenants based on
medical need documentation that did not provide for an adequate nexus between
the medical condition and the requested accommodation:

     •      Tenant needed a more spacious unit.
     •      Tenant needed more windows and better light.
     •      Tenant needed no additional bedroom because medically unnecessary.
     •      Tenant needed an additional bedroom based on letters from a
            veterinarian and a registered nurse.

In addition, 11 tenants were granted unnecessary exceptions to the occupancy
standards for specific items of medical or exercise equipment. We performed site
visits that disclosed these tenants were not entitled to the larger voucher because

     •      Medical and exercise equipment did not exist,
     •      Equipment size did not justify a larger voucher, or
     •      Additional bedroom was not used for the stated medical condition.

The following pictures show that one tenant’s circumstances did not justify the
extra bedroom:




     The additional bedroom was being            The small oxygen tank (medical
     used to house the tenant’s brother,         equipment) was found, not in the
     who was not on the lease.                   additional bedroom, but in the tenant’s
                                                 bedroom at the foot of the bed.


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            Overhousing also occurred when the Authority’s computer conversion improperly
            increased 38 tenants’ vouchers, causing these tenants, who had smaller vouchers
            than their unit size in 2002, to receive vouchers equal to their unit size in 2003.
            This error occurred when the Authority replaced its computer software in October
            2002.

            Additionally, the Authority made processing errors by issuing 14 tenants vouchers
            that exceeded the smaller occupancy standard. These tenants’ files did not
            contain explanations justifying the larger voucher. In some cases, the Authority’s
            notes in the files indicated that it needed additional documentation to support an
            extra bedroom. In other cases, the tenants were allowed to enter the voucher
            program and remain in their oversized units.


Inadequate
  III      Procedures

            The Authority’s procedures are inadequate to prevent overhousing. Current
            procedures allow staff to grant exceptions without adequately evaluating the
            nexus or reasonableness of the requested accommodation. This allows practically
            any tenant who requests a larger voucher to obtain one.

            The Authority has not provided sufficient
            •     Criteria defining what justifies a larger voucher,
            •     Supervisory approval over granting exceptions to occupancy standards,
            •     Procedures for verifying additional space is used for the reasons it was
                  granted, or
            •     Corrective action on larger vouchers caused by a computer conversion.


$516,628 in Excess Subsidies

            Overhousing 99 tenants has caused the Authority to overpay voucher program
            funds totaling $216,352. This amount was calculated from applicable
            recertifications for sampled tenants during 2002 through 2005. If the Authority
            corrects its weak controls, it will avoid additional overpayments totaling
            $300,276. This estimate is based on the total current monthly overhousing cost of
            $8,341 times 36 months, which is the average number of months a tenant stays in
            a unit.
                                        Number of   Overpayment     Future
                      Error type         tenants       funds        savings     Total
                      Reasonable
                      accommodation         47         $97,965     $156,276   $254,241
                      Computer
                      conversion            38         $95,537     $112,392   $207,929

                      Processing            14         $22,850     $31,608    $54,458
                               Totals       99        $216,352     $300,276   $516,628


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Recommendation

          We recommend that the public housing program center coordinator ensure that
          the Authority

          1A. Immediately corrects overhoused tenants’ vouchers.

          1B. Reimburses HUD the $216,352 in excess housing assistance payments from
               its administrative fee reserves.

          1C. Develops and implements procedures to ensure that each tenant receives the
               proper voucher size to put $300,276 to better use.




                                          8
                         SCOPE AND METHODOLOGY

Our review generally covered the period from October 1, 2002, through July 31, 2005. To achieve
our objectives, we conducted interviews of the Authority’s staff and staff of the local public
housing office. We reviewed the Authority’s policies and procedures, files, and audited financial
statements. We also reviewed federal regulations and the Authority’s administrative plan and
obtained an understanding of the Authority’s controls. We analyzed HUD data and inspected
units.

To determine the extent and effect of overhousing, we applied a computer formula to HUD’s
Public Housing Information Center data to identify 99 potentially overhoused tenants. We
reviewed tenant files to determine whether there was acceptable justification for issuing vouchers
larger than the occupancy standards, and if not, we calculated the overhousing cost. This
identified 80 overhoused tenants.

We expanded our testing beyond the original sample of 99 to identify tenants who were
overhoused because of the Authority’s October 2002 computer conversion. We identified 89
additional tenants who appeared to be overhoused by applying a computer formula to Public
Housing Information Center data. These data showed tenants had smaller vouchers than their
unit size in 2002 and vouchers equal to their unit size in 2003. We reviewed the data to
eliminate tenants who did not fit the overhousing pattern and calculated the overhousing cost for
those remaining. Of the 89 tenants, we determined 19 were overhoused.

To achieve our audit objective, we relied in part on computer-processed data contained in HUD’s
Public Housing Information Center database. We assessed the data’s reliability and found it to
be adequate. We also conducted sufficient tests of the data. Based on these tests and
assessments, we concluded the data were sufficiently reliable to be used in meeting our audit
objectives. The data were significant to our findings, conclusions, and recommendations.

We discussed our results with the Authority, as well as HUD staff, to obtain clarification and
agreement.

We performed audit work from June through September 2005 at the Authority’s main office
located at 201 Switzler, Columbia, Missouri. This audit was conducted in accordance with
generally accepted government auditing standards.




                                                9
                             INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.



 Relevant Internal Controls
              We determined the following internal controls were relevant to our audit objectives:

              •     Controls over assigning voucher sizes.


              We assessed the relevant controls identified above.

              A significant weakness exists if management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.


 Significant Weaknesses


              Based on our review, we believe the following item is a significant weakness:

              •   The Authority does not have adequate procedures in place to ensure that it
                  assigns proper-size vouchers (see finding).




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                                    APPENDIXES

Appendix A

               SCHEDULE OF QUESTIONED COSTS
              AND FUNDS TO BE PUT TO BETTER USE


                  Recommendation       Unreasonable or Funds to be put to
                      number            unnecessary 1/   better use 2/
                         1B               $216,352
                         1C                                    $300,276



1/   Unreasonable/unnecessary costs are those costs not generally recognized as ordinary,
     prudent, relevant, and/or necessary within established practices. Unreasonable costs
     exceed the costs that would be incurred by a prudent person in conducting a competitive
     business.

2/   “Funds to be put to better use” are quantifiable savings that are anticipated to occur if an
     Office of Inspector General (OIG) recommendation is implemented, resulting in reduced
     expenditures later for the activities in question. This includes costs not incurred,
     deobligation of funds, withdrawal of interest, reductions in outlays, avoidance of
     unnecessary expenditures, loans and guarantees not made, and other savings.




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Appendix B

             AUDITEE COMMENTS




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