Major Study Examines Errors in Rental Assistance Subsidies

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“HUD’s goal remains to ensure that the right benefits go to the right people,” states a recent report by the U.S. Department of Housing and Urban Development. In 2001, HUD undertook a major effort to improve the quality control measures used in determining rental assistance subsidies. Through these efforts, the Department continues to reduce errors in subsidy calculations.

Quality Control for Rental Assistance Subsidies Determinations for FY 2003 presents the latest findings from a series of quality reviews of more than 600 representative projects covering more than 4.3 million units in the United States and Puerto Rico, and proposes remedial actions. The projects for the study were selected from several programs: public housing, public housing authority (PHA)-administered Section 8, owner-administered Section 8, Section 202 Project Rental Assistance Contract (PRAC), Section 811 PRAC, and Section 202/162 Project Assistance Contracts.

Implementation of an income-matching system could reduce the rental assistance subsidy errors in the public housing and Section 8 voucher programs by half.

Translating Data Into Dollars

Errors in the amount that HUD pays on behalf of families receiving public housing and Section 8 program assistance occur for a number of reasons, but the most common are miscalculations, failure to verify tenant financial information, and incorrect income and deduction amounts. The study found that rent underpayments totaled $1.7 billion, or $32 per unit annually — nearly three times that of rent overpayments, which totaled more than $600 million, or $12 per unit annually. When combined, the average gross rent error per case is $44 per unit. Over- and underpayments partly offset each other, meaning that the resulting net average rent error is $20 per unit annually.

Addressing the Issue

The study makes recommendations for improving quality control and accuracy in rental assistance determinations, and identifies ways of reducing costly errors in the local administration of both public housing and Section 8 programs. Recommendations also support a plan to use the U.S. Department of Health and Human Service’s National Directory of New Hires. Because most of the subsidy overpayment errors are associated with earned income determinations, full implementation of an income matching system should quickly reduce by half the errors in the public housing and Section 8 voucher programs. The report also suggests the following actions:

• Provide PHAs and owners with accurate and consistent guidance about the apartment size for which residents qualify;

• Conduct an outreach campaign to inform PHAs and owners of the Department’s available resources; and

• Provide PHAs and owners with the forms, training, and tools needed to correctly determine rents.

The report notes that, “The reduction in errors and improper payments is unlikely to have an equivalent impact on budget outlays.” HUD’s efforts are likely to cause some higher income tenants to leave assisted housing and to be replaced with lower income tenants who require increased outlays. Nevertheless, HUD’s goal remains to ensure that the right benefits go to the right people.

Quality Control for Rental Assistance Subsidies Determinations for FY 2003 is available free online at www.huduser.org/publications/pubasst/qualcontrol03.html or from HUD USER for a nominal fee by calling 800.245.2691 and selecting option 1.

This report is one of three studies, completed in 1996, 2001, and 2003 that comprise HUD’s Quality Control Project. Each study contains national estimates of the extent, severity, costs, and sources of errors occurring in the certification and recertification procedures used by Public Housing Agencies (PHAs) and owner-administered assisted housing programs. The two earlier studies, Assisted Housing Quality Control (www.huduser.org/publications/pubasst/asthsgqalcntrl.html) and Quality Control for Rental Assistance Subsidies Determinations (www.huduser.org/publications/pubasst/qualitycontrol.html) can be downloaded for free or ordered for a nominal fee by calling HUD USER at the number shown above.