Anticipating billions in cuts to HUD's budget, public-housing authorities that allocate Section 8 housing vouchers are already starting to hold back.
In his first televised appearance as secretary for the U.S. Department of Housing and Urban Development, Ben Carson did not address the looming $6.2 billion in cuts to housing assistance for vulnerable American families. Blame it on the friendly format: Armstrong Williams, Carson’s longtime friend and former aide, and comedian Steve Harvey lobbed him softballs.
Housing authorities aren’t banking on the limited assurances that Carson has otherwise offered. For example, he has said that the infrastructure bill on the horizon will make up for imminent budget cuts at HUD. Bracing instead for austerity, some public-housing authorities are making difficult decisions about their future financial plans.
As the Trump administration’s planned spending cuts come into greater relief, those authorities may lean into anxiety. Even before Congress takes up the question of cutting housing aid, belt-tightening by public-housing authorities could make Housing Choice Voucher program (or Section 8) vouchers harder to find.
“We see this regularly with the threat of budget cuts,” says Deborah Thrope, supervising attorney for the National Housing Law Project. “We’re in an interesting situation, because the budget hasn’t been cut yet, so we don’t know what is going to happen on a federal level. But housing authorities, in preparation for potential cuts, will often start cutting down their spending.”
Nonprofit public-housing authorities administer vouchers at the state and local level using funds they receive from HUD. These agencies have a lot of flexibility to set their own rules for determining eligibility and how to assign housing vouchers. When these agencies face budget cuts, Thrope says, their responses can range from short-term drawbacks to decisions that can have a “drastically negative impact on tenants.”
Every public-housing authority receives a limited allotment of housing vouchers under Section 8. (This isn’t the name of the Housing Choice Vouchers program any longer, even if everyone still calls it that.) Each agency uses a certain percentage of those vouchers in any given fiscal year, because the program experiences turnover. Families leave the area, no longer require the aid, fail to qualify, and so on; the average length of time for a household to access housing subsidies is 3 to 5 years. That means that there are usually opportunities to issue new vouchers every year.
But when the housing authorities responsible for distributing these subsidies see budget cuts on the horizon, they may pocket those turnover vouchers.
“Let’s say you’re a family that’s been on the waitlist for 10 years, and your name is finally about to come up,” Thrope says. “You’re going to have to wait even longer, because the housing authority has ceased issuing new vouchers that come up for families on the waitlist.”
When the specter of cuts arises, housing agencies cut their own budgets
That’s just one example of a cost-saving measure that public-housing authorities turn to when they feel pinched. The federal government reimburses agencies for the number of vouchers in use; every family using vouchers means certain administrative costs for the program. Agencies that are maximizing their voucher count may worry that they will not have the funds to administer to all of the families when their budgets are cut, says Shamus Roller, executive director of the National Housing Law Project. So they hold back.
Some housing agencies are already turning to preemptive cost-cutting. That’s a problem for housing advocates (and vulnerable families), since the number of vouchers being used determines allocations for the next year. Withholding vouchers is a draconian fix. But housing agencies—which are still reeling from the sequester, when budget cuts imposed almost overnight forced some of them to take drastic action—have been forced to do worse.
“We did see instances of housing authorities actually kicking families out of the program, after they had issued their vouchers,” Thrope says. “Voucher families were given their vouchers, and told they had to give them back, and terminated immediately.”
Marie Claire Tran-Leung, staff attorney for the Sargent Shriver National Center on Poverty Law, says that advocates and agencies share the goal of ensuring that no current Section 8 recipients are terminated as a consequence of budget cuts. She identifies a number of other ways that agencies are more likely to react to budget cuts, if and when they happen. They can look more closely for fraud among among tenants, landlords, or even the authorities themselves, for example. Or they can deny all moving vouchers, which give families flexibility in where they choose to live.
Most of the reactions are less dire than taking away a family’s assistance entirely. These outcomes fall into three main categories.
Reducing the payment standard. This refers to the formula for determining the value of a Section 8 voucher. A household receiving the subsidy pays 30 percent of their income toward the rent; the voucher makes up the rest, up to a cap that is set at the market rate.* Facing budget cuts, many housing agencies will immediately lower this ceiling. If an agency lowers the cap from $1,500 for a two-bedroom apartment to $1,300, then the family receiving the voucher is responsible for making up the remaining $200.
Reducing the subsidy standard. Housing agencies also respond to budget cuts by paying for smaller apartment units. A voucher meant for a head-of-household and two other tenants—say, a single mother and her two children—may require that the dependents share a room. Thrope says cuts to what is known as the subsidy standard are common. “[The vouchers] are not only paying less for rent, they’re putting people in smaller housing sizes with fewer bedrooms,” she says.
Refusing to grant reasonable accommodation. A third way that housing agencies cut back on aid involves denial of what is known as reasonable accommodation. This affects families in which a person has a disability. Under federal fair housing law, families with a disability are exempt from certain rules and policies or entitled to other benefits. However, agencies may reject these requests for reasonable accommodation, citing an alleged financial burden.
“Let’s say that a [public-housing authority] decreases the payment standard, but this would force a tenant to move away from her home, which is close to medical services that she needs as a result of her disability,” Tran-Leung says. “There’s an argument that she needs to maintain the [payment] standard to accommodate her disability. But a [public-housing authority] facing budget cuts may argue that it can’t do so because of the financial burden.”
Another example: A person whose disability means that he needs to have his own bedroom for medical equipment may be entitled to that subsidy standard under the law. Unless a housing agency rejects his claim, requiring his household to seek a smaller home.
“This is often one of the first things to go when some of the authorities are getting worried about having their funding cut,” Thrope says. “This has major fair housing implications. In most cases, the budget cuts certainly have a disproportionate impact on people with disabilities, because these accommodations are routinely denied.”
Where the budget axe will fall—and how housing cutbacks will affect communities
It’s not at all clear that Congress can pass a budget that includes all of the spending cuts that the Trump administration desires. (Thanks to the perilous mechanics of sequestration, a White House budget may not have any hope, period.) And many details in the budget blueprint remain unclear: On housing assistance, for example, the Trump administration has promised “reforms that reduce costs while continuing to assist 4.5 million low-income households”—without specifying what this means in dollar figures.
But housing agencies have ample reason to believe that the cuts are indeed coming. Trump’s austerity budget comes at a time when rents are rising so quickly that even funding vouchers at status-quo levels would result in a large drop in the number of low-income households that would receive vouchers. The sheer size of the cuts proposed for HUD, a lot of which are still vague, is a tell that housing vouchers face a lean future.
Affordable Housing Online, which helps people find federal housing aid and compiles nationwide affordable-housing data, just launched a calculator to show how fiscal year 2018 budget cuts for HUD could affect communities across the country. The calculator drills down to effects at state, county, and city levels; its best guesstimate for total cuts to the Housing Choice Voucher program is more than $1 billion.
Such a scenario would inflict appreciable pain. In Nevada, to pick just one state, FY 2018 budget cuts indicate a $6.9 million decrease for housing vouchers, per the calculator. Looking at an average monthly voucher cost of $730, Nevada public-housing agencies stand to lose Section 8 vouchers for about 792 families. As the Nevada Independent reports, adding up all the cuts for various HUD vouchers, some 1,300 Nevada families will lose assistance. The cuts will only exacerbate an affordable-housing crisis in Nevada, where just 39 percent of very-low income families can find affordable units.
If these budget cuts come to pass, public-housing agencies may need to take shortcuts—drawing down on payment standards or subsidy standards, rejecting reasonable accommodations—to stretch out their funds. But that won’t be enough.
And housing agencies may need to make difficult decisions even if Trump’s budget doesn’t pass. As Politico reports, the White House hopes to cut some fat out of the current fiscal-year budget. The administration’s detailed short-term spending cuts—meant for the continuing resolution, which must be passed by April 28 to avoid a government shutdown—aren’t necessarily going to sail through, either. Right now, they don’t include specific cuts to housing vouchers, but budget negotiations have yet to play out.
Even if Republicans take no action, public-housing authorities will still be starved for funds by rising rents. But the budget cuts promised by the Trump administration will have agencies scrambling as they did after the last budget drawdown.
“Going back to the sequester, every advocate we were speaking to was experiencing these changes,” Thrope says. “Many of them had a negative impact on the clients they were serving and the families in the program. I would expect that it would be very similar here, and again, we’re already hearing from local advocates that this is the case.”
“It’s true across the country,” she adds, “rural, metro, really everywhere.”
*CORRECTION: Housing Choice Voucher program recipients pay 30 percent of their income, not area median income, toward the rent.