Does HUD’s Moving to Work demonstration help low-income renters?

HUD recently began expanding the Moving to Work (MTW) demonstration program. MTW  allows selected Public Housing Agencies (PHAs) to try innovative approaches that increase housing choice, improve the quality of housing, increase cost-effectiveness, and promote self-sufficiency. Although Congress and HUD have expanded MTW, there are questions about how well low-income residents are being served by agencies currently in the program.

What is the Moving to Work program?

The MTW demonstration began in 1996, with 39 PHAs selected. MTW allows PHAs to seek exemption from many Public Housing and Section 8 Housing Choice Voucher (HCV) rules. MTW agencies must pursue three main objectives. They are supposed to make changes that promote cost-effectiveness. They also must provide incentives for families with children to find employment and become financially self-sufficient. Finally, these PHAs must also increase housing choice for low-income families. MTW agencies do not receive extra funding beyond what they would have gotten if they were not in the program.

MTW agencies have flexibility in how they can combine and use different funds. MTW PHAs can shift money between their public housing operating and capital funds, as well as their housing choice voucher subsidy funds. Whatever strategies a PHA chooses, it must still serve substantially the same number of households as it would under regular HUD rules.

Cost-saving activities include streamlining HUD procedures, redesigning HUD forms, changing recertification schedules and prioritizing inspections based on risk. Some cost-saving measures may benefit low-income renters. Most MTW agencies, for example, have changed recertification schedules for elderly and disabled tenants. Because most of these residents have fixed incomes, PHAs can save money and staff time by recertifying income every two years instead of annually. 

Other cost-saving measures, however, may not benefit low-income renters. For example, many MTW agencies have eliminated or simplified income deductions. This can raise the eligible income for an applicant, who could then have a higher monthly rent payment. It allows the PHA to spend less subsidy on that tenant.

MTW agencies have worked to connect their residents to supportive services that increase self-sufficiency. Many also provide case management. A number of the agencies establish escrow accounts for residents participating in self-sufficiency programs. When the requirements are met, the escrow accounts can be used for education, starting a business or making a down payment on a home. On the other hand, many MTW agencies have imposed work requirements, time limits on housing assistance and rent restructuring. These measures are supposed to push residents to use services and improve their earnings before their housing benefits are cut off. 

MTW agencies have tried to expand housing choices in a number of ways. They have developed mixed-income and Low-Income Housing Tax Credit projects. They have also increased the percentage of project-based vouchers they can use to support renovated and newly developed affordable housing properties. A few have used their funds for homeownership activities like foreclosure prevention and mortgage assistance.

You can see a list of current MTW agencies and view their MTW plans here, and you can look at innovative measures these agencies have taken here.

How Well Does It Work?

In a 2017 report by Abt Associates that evaluated MTW performance measures, MTW agencies were found to do better on a number of measures than PHAs not in the program. They were able to offer additional supportive services to improve families’ self-sufficiency and promote growth in earnings. MTW agencies also appeared better able to extend the life of their public housing stock by making improvements in their properties.

The Abt Associates evaluation also revealed concerns about the MTW program. As noted by The Center on Budget and Policy Priorities, the report shows a net loss of 60,000 vouchers due to the diversion of voucher funding to other activities. These included improvements to public housing properties, preservation of units at risk of losing affordability, increasing program reserves and other affordable housing initiatives. The units gained through these efforts did not come close to covering the loss of vouchers. 

MTW agencies also may not be doing as well promoting housing choice. According to the Abt report, families assisted by MTW agencies were less likely to live in low-poverty neighborhoods and significantly more likely to live in high-poverty areas than those assisted by other PHAs. The HCV program has portability rules, allowing voucher holders to take their assistance with them if they move to other jurisdictions. The Abt report found that MTW agencies had more “port-ins” compared with other PHAs, and fewer “port-outs.” This could mean that more families were seeking the enhanced services of MTW agencies, or it could reflect other factors. Many MTW agencies have limits on moving to other jurisdictions or restrict port-outs.

The program is supposed to promote cost-saving measures, but MTW agencies had administrative costs 21% higher than other PHAs. Although providing additional supportive services can increase administrative costs, overall they were serving fewer voucher holders. 

MTW agencies also kept much larger program reserves than other PHAs. A recent report by the Government Accountability Office (GAO) found that the 39 original MTW agencies had more reserves set aside in 2017 than the other 2,166 PHAs in the country combined ($808 million vs. $737 million). Large reserves can help during emergencies, like keeping programs going during a government shutdown. But if PHAs kept smaller reserves, they could make more vouchers available for low-income renters.

Expanding MTW

Congress authorized expanding the demonstration by 100 PHAs in the 2016 Appropriations Act. HUD is now selecting new MTW agencies in four groups. HUD invited applications for the first group in October 2018, recently extending the application deadline to May 2019. The first group will be made up of small agencies. The PHAs must be high performers, with 1,000 or fewer Housing Choice Vouchers and Public Housing units combined. The focus of the first group will be evaluating the overall effects of MTW flexibility on a PHA and the residents it serves.

HUD invited applications for the second group in March 2019. The second group will be made up of large PHAs with more than 1,000 Housing Choice Vouchers and/or Public Housing units. Their units must include at least 1,000 non-elderly, non-disabled households. The second cohort will explore different rent reform models. The rent reform may or may not be income-based, and can include tiered and/or stepped-up rents.

As the MTW demonstration expands, more areas around the country will be served by these agencies. Low-income renters in these areas may find more streamlined paperwork and greater supportive services if they live in public housing or receive a voucher. However, low-income renters should look carefully at the PHA’s MTW plan to see what kind of restrictions they may have. Work requirements, time limits and restrictions on taking vouchers to other areas may pose problems for low-income households trying to really achieve financial self-sufficiency.

Congress should move cautiously before authorizing more expansion of the MTW program. Innovations by MTW agencies have shown how to streamline HUD procedures and have allowed them to better maintain their public housing properties. However, MTW administrative costs are higher than other PHAs.

A big consideration, though, is that the innovative activities pursued by MTW agencies have not made up for the loss of vouchers. MTW agencies are required to serve substantially the same number of households as they would have if not in the program. Given the huge number of low-income renters desperate for housing assistance, MTW agencies should be held accountable to this standard.