oversight

HUD's Monitoring and Administration of the Housing Choice Voucher Family Self-Sufficiency Program

Published by the Department of Housing and Urban Development, Office of Inspector General on 2013-10-30.

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

                                              U.S. DEPARTMENT OF
                              HOUSING AND URBAN DEVELOPMENT
                                      OFFICE OF INSPECTOR GENERAL




                                           October 30, 2013

                                                                                           MEMORANDUM NO:
                                                                                                2014-NY-0801

Memorandum
TO:           Sandra Henriquez
              Assistant Secretary for Public and Indian Housing, P



FROM:         Edgar Moore
              Regional Inspector General for Audit, New York-New Jersey, 2AGA

SUBJECT:      HUD’s Monitoring and Administration of the Housing Choice Voucher Family
              Self-Sufficiency Program


                                         INTRODUCTION

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General
(OIG), completed a review of HUD’s monitoring and administration of the Housing Choice
Voucher Family Self-Sufficiency (HCV FSS) program. The review was included in OIG’s
annual audit plan and contributes to OIG’s objective of improving HUD’s execution of and
accountability for grant funds. The objectives of the review were to determine whether HUD
officials sufficiently monitored public housing agencies (PHA) to encourage the use of the
program, evaluate its outcome, and ensure that PHAs properly monitor the participating families’
progress while in the program and upon graduation and document the program benefit.

This memorandum contains five recommendations for corrective action. HUD Handbook
2000.06, REV-4 sets specific time frames for management decisions on recommended corrective
actions. For each recommendation without a management decision, please respond and provide
status reports in accordance with the HUD Handbook. Please furnish us copies of any
correspondence or directives issued because of the review.




                                                        Office of Audit
                                               New York/New Jersey Region 2
                                                 26 Federal Plaza, Room 3430
                                         Phone (212) 264-4174, Fax (212) 264-1400
                              Visit the Office of Inspector General Website at www.hudoig.gov
                                       METHODOLOGY AND SCOPE

To accomplish our objectives, we emailed questionnaires to officials from a sample of 9 PHAs1
located nationwide, 10 local field offices2 (one from each of HUD’s 10 regions with juridiction
over the previously mentioned PHAs), and HUD headquarters. Using HUD’s HCV FSS Public
and Indian Housing Information Center (PIC) system data report for the fiscal year 2012 and the
HCV FSS Notice of Funding Availability (NOFA), we selected a nonstatistical sample of 93 of
1,074 PHAs. The PHAs were stratified by the number of FSS participating families as detailed
in the table below.

 Stratification on number of                     Number of PHAs                        Percentage of PHAs
  FSS participating families
1 to 143                                                                1,030                                95.90%
144 to 286                                                                 30                                 2.79%
287 to 429                                                                  8                                 0.74%
430 to 572                                                                  3                                 0.28%
573 to 715                                                                  3                                 0.28%
Totals                                                                  1,074                               100.00%

Since the vast majority of PHAs administered HCV FSS programs that contained between 1 and
143 participating families, we randomly selected 5 PHAs from this stratum and 1 from each of
the next 3 strata. From the remaining stratum, we selected the PHA with the greatest number of
participating families.

To achieve our objectives, we also conducted telephone interviews with PHA, local field office,
and headquarters officials. We reviewed prior audit reports on the program, including a recently
issued U.S. Government Accountability Office (GAO) audit report; applicable Code of Federal
Regulations references and Office of Public and Indian Housing (PIH) notices; the Housing
Choice Voucher Program Guidebook; NOFAs for HUD’s fiscal years 2011 and 2012 HCV FSS
program; the PIH Grants Management Desk Guide; the Quality Housing and Work
Responsibility Act of 1998; the Government Performance and Results Act Modernization Act of
2010; HUD’s strategic plan for fiscal years 2010 to 2015 and fiscal years 2011 and 2012 annual
performance plans; eLogic models and management questions obtained from the sampled PHAs
1
    The sample of 9 PHAs included (1) the Housing and Urban Renewal Agency of Polk County in Oregon; (2) the
    New York State Housing Trust Fund Corporation; (3) the Housing Opportunity Commission of Montgomery
    County in Maryland; (4) the Tampa Housing Authority in Florida; (5) the PHA in and for the City of Minneapolis
    in Minnesota; (6) the San Antonio Housing Authority in Texas;(7) the Omaha Housing Authority in Nebraska;
    (8) the Housing Authority of the County of Salt Lake in Utah; and (9) the City of Long Beach Housing Authority
    in California.
2
    The sample of 10 HUD local field offices included Region 1 - Boston Hub, Region 2 - New York City Hub,
    Region 3- Baltimore Hub, Region 4 - Miami Hub, Region 5 - Minneapolis Hub, Region 6 - San Antonio Hub,
    Region 7 - Omaha Program Center, Region 8 - Denver Hub, Region 9 - Los Angeles Hub, and Region 10 -
    Portland Program Center.
3
    While we initially selected a sample of 10 PHAs, 1 from each of HUD’s 10 regions, the Paperwork Reduction Act
    prohibited the solicitiation of information from 10 or more public respondents without the approval of the Office
    of Management and Budget. Therefore, we reduced the sample size to 9 to avoid delaying the review. However,
    we sent questionnaires to 10 instead of 9 local field office officials because the Paperwork Reduction Act does not
    apply to them since they are government representatives and are not considered public respondents.

                                                           2
and local field offices; and a Section 8 Management Assessment Program (SEMAP)
certification. We also examined FSS program studies and program evaluations and analyzed
HUD’s HCV FSS PIC system data report for the fiscal year 2012 HCV FSS NOFA, quarterly
Voucher Management System data reports for fiscal years 2011 and 2012, key management
indicators reports, and HUD’s fiscal year 2014 congressional justification.

We performed our survey work from March through August 2013 at the HUD OIG New York,
NY, regional office. The review covered the period October 1, 2010, through September 30,
2012, and was expanded as deemed necessary.

                                                  BACKGROUND

The HVC FSS program was established in 1990 by Section 554 of the National Affordable
Housing Act. The purpose of the program is to promote the development of local strategies to
coordinate the use of assistance under the HCV program with public and private resources to
help participating families increase earned income and financial literacy, reduce or eliminate
dependency on welfare assistance and rental subsidies, and achieve economic independence and
self-sufficiency.

Participation in the FSS program is voluntary for families and is open to HCV program
participants who are unemployed or underemployed. Families entering the FSS program work
with an FSS program coordinator to develop goals that will, over a 5-year period, lead to self-
sufficiency. These goals may include education, specialized training, job readiness and job
placement activities, and career advancement. Goals for each participating family member are
set out in individual training and services plans that are attached to the FSS contract of
participation.4

Generally, a family becomes eligible to receive funds deposited into an escrow account on its
behalf when it meets its goals and completes its FSS contract. The amount credited to the
family’s escrow account is based on the increased rent the family pays due to increases in the
family’s earned income during the term of the FSS contract. While employment and asset
accumulation are two major indicators of a participating family’s success in the FSS program,
successful program completion generally requires that the head of the participating family be
employed and that no family member receive cash welfare assistance.

In addition, the success of the FSS program overall can be broadly defined and encompasses
both the number of participating families who achieve self-sufficiency and the number of family
members who are helped to

          Obtain a first job or a higher paying job,
          Gain independence from public assistance,
          Obtain a high school diploma or higher education degree, or
          Accomplish similar goals that will assist the family in obtaining economic independence.

4
    The initial term of the contract of participation is up to 5 years. In response to a family’s written request, the PHA
    may grant an extension of no more than 2 years for a good cause.

                                                             3
Each PHA is required to implement a HUD-approved action plan outlining the policies and
procedures for operating its HCV FSS program, including an estimate of the number of
participating families and the supportive services to be provided.

Ongoing HUD funding for the HCV FSS program is awarded annually through a competitive
notice of funding availability process. While HUD does not fund direct services, it provides
funding for the salaries of FSS program coordinators. The program coordinators ensure that
participating families are linked to the supportive services they need to achieve self-sufficiency.
In fiscal years 2011 and 2012, HUD awarded PHAs more than $58 million and $61.5 million,
respectively, for HCV FSS program coordinator salaries.

                                    RESULTS OF REVIEW

Our review determined that due to the priority of the HCV program over the FSS program and a
lack of resources, HUD officials did not (1) sufficiently monitor PHAs, (2) encourage the use of
the FSS program, (3) evaluate its overall outcome, and (4) determine whether PHAs properly
monitored the participating families’ progress while in the program. In addition, HUD officials
did not require PHAs to track participating families after program graduation and document the
program benefit in terms of realized cost savings resulting from reduced or eliminated rental
assistance.

                  More Effective Monitoring Procedures Should Be Developed

HUD Housing Choice Voucher Program Guidebook 7420.10G, sections 19.1 and 19.2, provide
that HUD officials’ primary mechanisms for monitoring and evaluating PHA performance are
the data required on the Family Report, form HUD-50058, submitted to HUD electronically and
through SEMAP. The form HUD-50058 includes an FSS addendum, which consists of three
FSS reports—program enrollment, progress, and exit—which must be submitted in PIC within
60 days of the effective date of each action. Progress reports must also be completed at least
annually during the families’ participation in the program. In addition, PHAs must submit an
annual SEMAP certification to HUD. The SEMAP certification measures the PHAs’
performance in 14 key Section 8 program areas. SEMAP indicator 14 measures the performance
of PHAs’ FSS programs in terms of required program enrollment and the percentage of
participants with progress reports and escrow accounts. However, this indicator applies only to
PHAs administering mandatory FSS programs. While local HUD field office officials may
conduct onsite confirmatory reviews to verify the SEMAP certifications, these reviews are only
required before field office officials can change an annual overall performance rating from
troubled to standard or high performer and for PHAs designated as troubled. Further, HUD
officials generally conduct onsite monitoring reviews when remote monitoring efforts identify
performance or compliance problems.

HUD Notice PIH-2011-65 (HA) states that HUD officials place great importance on the data
they receive from PIC and thus rely on PHAs to submit accurate, complete, and timely reports to
administer, monitor, and report on the management of HUD’s rental assistance programs. Since
PIC reporting is the basis for HCV FSS program awards, chapter 3, section D, of the PIH Grants
Management Desk Guide instructs HUD officials to review the approved HCV FSS action plan


                                                 4
to determine the number of approved slots, compare that information with the PHA’s eLogic
model, and ensure that PHAs report all contracts of participation in PIC. While HUD officials
post a report on the HCV program Web page showing PIC data on HCV FSS programs, both
mandatory and voluntary, which include the total number of families under contract, total with
FSS progress reports, total with positive escrow balances, and total successfully completing their
FSS contracts, this report and the HCV FSS program coordinator funding application are used to
determine a PHA’s funding eligibility under the notice of funding availability. The PIC data
report also assists local field offices in their PHA monitoring efforts. An eLogic model showing
a PHA’s proposed outputs and outcomes must also be submitted with the funding application.
Further, to satisfy HUD’s annual reporting requirements, an updated eLogic model showing a
PHA’s accomplishments against proposed outputs and outcomes must be submitted within 30
days after the funding increment’s end date. However, PHAs that do not receive HCV FSS
coordinator funding are not required to submit eLogic models.

A recently completed GAO audit concluded that although HUD officials maintained that they
posted PIC data on their Web page to emphasize to PHAs the importance of ensuring the
accuracy of the data they submit, as part of the notice of funding availability process, neither
HUD nor PHA officials were required to correct the data errors identified. Further, HUD
officials stated that no HUD staff member had the specific responsibility for monitoring the
completeness of the data. Thus, officials made the PHAs responsible for ensuring that the data
submitted in PIC were accurate, complete, and timely. While HUD officials recognized
challenges with the PIC system, given that the PIC system allows PHAs to enter incomplete data
without generating an error message, HUD officials need to develop more effective monitoring
procedures to ensure the accuracy, completeness, and timeliness of the PIC data. This is
particularly important since such data are used as the basis for justifying budget requests to
Congress and awarding HCV FSS program coordinator funding to PHAs.

In response to our questionnaire, a HUD headquarters official and officials of 6 of 10 local field
offices indicated that HUD did not have sufficient staffing resources to adequately monitor
PHAs administering HCV FSS programs. Therefore, problems could exist of which they were
unaware. HUD officials also asserted that HCV FSS program monitoring was not considered a
workload priority,5 given the program’s size and the funding6 involved in comparison to the
HCV program overall. Although officials remotely monitored PHAs’ program outcomes, due to
a lack of resources, HUD officials seldom conducted onsite monitoring reviews to verify PHAs’
self-reported performance data and determine whether PHAs properly oversaw the participating
families’ progress while in the program. As a result, several HUD OIG audits concluded that
PHAs did not always administer their FSS programs in accordance with HUD requirements and
their action plans and cited examples, such as improperly maintained FSS escrow accounts and
program files.


5
    Field office officials’ workload priority was increasing the voucher utilization rate.
6
    In 2012, $60 million, or about 3 tenths of 1 percent of the approximately $18.3 billion Congress appropriated to
    fund the HCV program, was allocated to the FSS program. During that same period, program coordinator
    expenses in excess of the funds awarded totaled $6.3 million, and monthly FSS escrow deposits funded by
    housing assistance payments averaged more than $3.7 million.


                                                           5
Unlike Public Housing (PH) FSS or Residential Opportunity and Self-Sufficiency service
coordinator funding, HCV FSS program coordinator funding is not disbursed through the Line of
Credit Control System (LOCCS). Therefore, HUD officials could not prevent a PHA from
receiving funding if it did not submit required reports in a timely manner or they identified
financial or program management problems. However, since HUD officials proposed to
combine the fiscal year 2014 funding for HCV and PH FSS program coordinators, they should
consider disbursing the combined grant through LOCCS to allow for greater monitoring and
control over the funds.

     HCV FSS Program Expansion Could Not Be Encouraged in The Current Economic Climate

Despite studies revealing that the FSS program effectively improves the employment status of
participating families, increases their wages, and enables them to accumulate assets, the program
as a whole was underutilized, as evidenced by the fact that as of July 31, 2013, only 52,186, or
approximately 3.2 percent, of the approximately 1.63 million families participating in the HCV
program were enrolled in the FSS program. Further, HUD officials stated that PHAs had fully
utilized every dollar appropriated for the program and since no additional funding was available
in the current economic climate, they could neither encourage nor expect more PHAs to operate
voluntary or larger FSS programs to increase the program’s utilization rate.

    Standard Annual Performance Outcome Goals and a System To Identify and Implement Best
                              Practices Should Be Established

As previously mentioned, PHAs report their performance through FSS data submitted in PIC, the
annual SEMAP certification, and the eLogic model. However, GAO officials concluded that
HUD officials had performed limited analyses of the data related to self-sufficiency outcomes
already reported in PIC for the programs as a whole. In addition, apart from PIC data
requirements, HUD officials had not standardized PHAs’ annual reporting requirements. As a
result, PHAs were not required to submit annual reports on standard performance outcome goals
to be achieved and measured related to the FSS program’s objective of reducing or eliminating
dependency on welfare and rental assistance. This deficiency is evidenced by the fact that only
PHAs operating mandatory HCV FSS programs7 were required to report on indicator 14 of their
annual SEMAP certifications and only funded FSS programs were required to submit eLogic
models as part of their annual reporting requirements. While PHAs must clearly identify on the
eLogic models the HCV FSS program outcome goals to be achieved and measured, HUD
officials permitted them to select and report on outcomes from several options contained in drop-
down menus, which represented most of the eligible program activities and overall outcomes.
However, since HUD officials did not require PHAs to report on standard performance outcome
goals, their ability to evaluate such outcomes for the program as a whole was limited.

Chapter 5 of the PIH Grants Management Desk Guide provides that the Division of
Departmental Grants Management and Oversight will collect eLogic models that local field
office officials upload to SharePoint sites and produce program performance reports. However,
HUD headquarters officials stated that they had not produced such reports because the eLogic

7
    HUD officials maintained that they do not have the discretion to extend the SEMAP reporting requirement to
    PHAs with voluntary FSS programs without a regulatory change.

                                                          6
model was a cumbersome tool from which to aggregate data and needed to be modified and
simplified. While headquarters officials contended that field officials could still effectively use
eLogic models to monitor and evaluate local HCV FSS programs, they indicated that a grant
team was reviewing how to streamline and revise the eLogic model to make it more user friendly
and less cumbersome to use as an effective monitoring and data collection tool.

The Government Performance and Results Modernization Act of 2010 requires that each agency
(1) establish performance goals in its annual performance plan to define the level of performance
to be achieved; (2) express such goals in an objective, quantifiable, and measurable form; (3)
establish performance indicators to be used in measuring or assessing progress toward each
performance goal; (4) provide a basis for comparing actual program results with the established
performance goals; and (5) describe how the agency will ensure the accuracy and reliability of
the data used to measure progress toward its performance goals. While HUD officials
maintained that HUD’s strategic plan8 goal number 3, using housing as a platform to improve the
quality of life, related to the FSS program, neither that nor its subgoal, using HUD assistance to
increase economic security and self-sufficiency, was among HUD’s fiscal years 2011 and 2012
annual performance plan priority goals. As a result, these plans did not address the strategic
plan’s program outcome and implementation measures of increasing the average income and the
percentage of HUD-assisted households with earned income as their primary income source.

The absence of specific measurable annual performance outcome goals compromised HUD
officials’ ability to compare individual FSS programs, identify and implement best practices, and
evaluate the success of the program overall. However, HUD officials maintained that since
individual FSS programs differed in terms of size, available community resources, and local job
markets, the success of the program as a whole would be difficult to measure through a set of
standardized metrics. Despite officials' assertion, the Government Performance and Results
Modernization Act requires them to establish objective, quantifiable, and measurable
performance goals or state why it is infeasible or impractical to do so; yet, officials had done
neither. Further, officials stated that they were looking into identifying best practices but this
effort would depend on available staffing resources.

      There Was No Requirement To Monitor the Progress of Program Graduates and Document
                       Program Benefit in Terms of Realized Cost Savings

HUD officials did not require PHAs to track HCV FSS program graduates to assess their
continued progress or to document the program benefit in terms of the cost savings realized from
reduced or eliminated rental assistance. Officials asserted that requiring PHAs to track FSS
graduates over time would be an added administrative burden on the PHAs and would be too
costly to implement. Further, once FSS graduates exited the HCV program, PHAs would no
longer be able to track them. An official also stated that HUD did not calculate the cost savings
realized from the FSS program because to do so would require a large investment of resources
and data that were not readily available.




8
    The strategic plan covers fiscal years 2010 to 2015.

                                                           7
                                        CONCLUSION

Our review determined that due to the priority of the HCV program over the FSS program and a
lack of resources, HUD officials did not (1) sufficiently monitor PHAs, (2) encourage the use of
the FSS program, (3) evaluate the program outcomes overall, and (4) determine whether PHAs
properly oversaw the participating families’ progress while in the program. In addition, annual
reporting requirements differed depending on whether the FSS programs were mandatory or
voluntary, received HCV FSS funding, or both. Further, HUD officials had not established
standard annual performance outcome goals or sufficiently analyzed self-sufficiency-related
outcomes already reported in PIC to evaluate the overall success of the FSS program. Also,
HUD officials had not established a system to identify and implement best practices. Lastly,
HUD officials did not require PHAs to track the progress of program graduates or document the
program benefit in terms of realized cost savings because to do so would be impracticable and
would require unavailable resources and data.

                                   RECOMMENDATIONS

We recommend that HUD’s Assistant Secretary for Public and Indian Housing

1A.    Develop policies and procedures to periodically verify the timeliness, completeness, and
       accuracy of key performance data, such as FSS enrollment, participant progress, escrow
       accounts, and program exits that PHAs self-report through PIC.

1B.    If the fiscal year 2014 program coordinator funding for HCV FSS and PH FSS is
       combined, consider disbursing the new grant through LOCCS, which would require
       PHAs to request the grant payments and enable HUD officials to manually approve
       payment requests, if necessary, to prevent the misuse of funds or ensure that required
       performance reports are submitted.

1C.    Establish and require all PHAs to report annually on standard performance outcome goals
       to be achieved and measured or analyze self-sufficiency outcomes already reported in the
       PIC system to evaluate the overall success of the FSS program in meeting its objective.

1D.    Modify the eLogic model to make it more user friendly or develop a new reporting tool
       for the HCV FSS program from which to aggregate data.

1E.    Establish and implement a system to identify best practices and recommendations that
       would improve the effectiveness of the HCV FSS program.




                                                8
Appendix A
        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




Comment 2




Comment 2




                          9
Ref to OIG Evaluation   Auditee Comments




Comment 2

Comment 2


Comment 2

Comment 2




Comment 2




Comment 2




Comment 2




                         10
Ref to OIG Evaluation   Auditee Comments




Comment 3




                         11
                         OIG Evaluation of Auditee Comments

Comment 1   HUD officials generally agreed with the issues identified in the audit
            memorandum and stated that they are consistent with those GAO identified in a
            recently issued report. Accordingly, officials have already begun to take steps to
            address our recommendations.

Comment 2   We revised the audit memorandum to provide clarification in accordance with the
            technical points and suggestions provided by HUD officials.

Comment 3   HUD officials expressed concern that the report gives the perception that they
            have the discretion to extend the SEMAP reporting requirement, applicable only
            to PHAs administering mandatory FSS programs, to those administering
            voluntary FSS program. Therefore, we inserted footnote 7 to clarify HUD
            officials’ position that they have no discretion to do so without a regulatory
            change.




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