Reflecting the political clamor for spending cuts, President Obama’s proposed budget for HUD for the fiscal year to begin October 1, 2011 is less than what he requested for FY11 and for several HUD programs is less than funding levels in the FY10 appropriations.
At a budget briefing on February 14, HUD Secretary Shaun Donovan said that the President’s HUD budget achieves the Administration’s goal of addressing the budget deficit while protecting low income families. The budget will keep HUD’s core programs functioning and use the majority of funds to ensure that households that are already served continue to receive support, said the Secretary. He stressed that the President’s budget would provide funding needed to maintain current contracts for both the Tenant-based and Project-based Section 8 Rental Assistance programs.
The Secretary reported that no new initiatives are proposed and numerous programs are funded at less than desirable levels, including Section 202 Housing for the Elderly, Section 811 Housing for People with Disabilities, the HOME Investment Partnerships program and the Community Development Block Grant program.
However, HUD expects to serve an additional 86,000 households in FY12 through a public housing demonstration, the National Housing Trust Fund, and changes to the Low Income Housing Tax Credit. Increasing funding for Homeless Assistance Grants to fully implement the HEARTH Act will also allow HUD to serve additional households.
The President’s FY12 total net budget authority for HUD would be $41.74 billion, an increase of $149 million over the Administration’s initial proposal for FY11 but a decrease of $1.83 below the budget authority enacted for FY10. HUD’s gross budget authority would actually increase over FY10 enacted levels and HUD would rely upon Ginnie Mae and Federal Housing Authority receipts to offset expenditures for other housing programs.
Specific components of the Administration’s proposed FY12 HUD budget are as follows:
Tenant Based Rental Assistance (Vouchers). The FY12 budget proposes $19.22 billion for the Tenant-based Rental Assistance program, a 2% decrease below the President’s FY11 request and an increase of 6% over the FY10 appropriation for the program. HUD anticipates that the $17.14 billion requested for contract renewals would fully fund the approximately 2.1 million vouchers currently in use, ensuring stability for those households that are now in the program.
This contract renewal request is $166 million below the President’s FY11 request. After sending its budget to Congress in February 2010, HUD worked with appropriators to revise the estimated amount needed to fully renew contracts for FY11. The House used this revised figure of $17.08 billion in the Transportation, Housing and Urban Development (T-HUD) appropriations bill passed in July 2010. The President’s FY12 budget would increase contract renewal funding by $64 million over this figure to account for increased costs of maintaining existing vouchers.
As in the FY11 request, HUD shifted renewal funding for the Section 811 Housing for People with Disabilities program’s rental assistance contracts to the Tenant-based Rental Assistance program. The FY12 budget requests $114 million to fully renew the existing 15,000 tenant-based contracts. Funding for the construction portion of the program remains in the original Section 811 account.
The Tenant-based Rental Assistance program would also receive funding for new vouchers in programs serving people with special needs. HUD proposes funding the Veterans Affairs Supported Housing (VASH) Program at $75 million, providing 10,000 new vouchers in FY12. The Administration did not request new funding for the VASH program in FY11 due to a lag in spending the $75 million of FY10 funding. Since the FY11 budget was proposed, HUD and Veterans Affairs (VA) have improved voucher utilization sufficiently that officials are confident additional vouchers will be used in FY11 should Congress appropriate more funds. The FY11 HUD funding bills passed by the Senate Committee on Appropriations and the full House in the 111th Congress both included $75 million for VASH.
The proposed budget funds fewer new tenant protection vouchers than proposed in FY11 and funded in FY10. The tenant protection program provides tenants of public or assisted housing with vouchers when their units are demolished or sold. HUD requested $75 million for the program, approximately 40% below the FY11 requested and FY10 enacted levels. Assuming a cost of approximately $8,160 per voucher based upon HUD’s budgeted amount for renewing 2.1 million tenant-based contracts, $75 million for tenant protection vouchers would fund only 9,200 vouchers, 6,100 fewer vouchers than requested in FY11.
HUD requested $50 million for the Disaster Housing Assistance Program (DHAP), a new request in FY11 to replace the Disaster Displacement Assistance Program, funded in FY09 and FY10. The FY12 budget would provide $16 million, 24% less than was requested for the program in FY11. Assuming similar costs to tenant based contract renewals, $50 million would fund just over 6,100 vouchers, 1,960 fewer vouchers than proposed in FY11.
The budget would provide $60 million for Family Self Sufficiency Coordinators, the amount requested by the President in FY11 and appropriated for the program in FY10. As in FY11, the President did not request additional funds for Family Unification Program (FUP) vouchers or Nonelderly Disabled Vouchers in FY12.
Project-Based Section 8 Rental Assistance. The President’s budget requests an increase of $47 million for the Project-based Rental Assistance account, bringing the total to $9.42 billion over the FY11 request and $877 million over the FY10 enacted level. Despite requesting a smaller increase for the program than in prior years, Secretary Donovan stated that HUD’s funding request would meet the current 1.3 million contract renewals serving extremely low income and very low income households.
Public Housing. The public housing operating fund would receive $3.96 billion under the President’s FY12 budget to support public housing agencies (PHAs) in providing approximately 1.2 million units of public housing. HUD estimates the public housing operating need is $4.96 billion and proposes using $1 billion currently held in PHAs’ operating reserves to fund the balance of this need. HUD proposes to provide lower operating fund allocations to PHAs that have excess reserves, but does not intend to drain PHAs of reserves completely.
HUD proposes to fund the public housing capital fund at $2.4 billion in FY11, an 18% or $361 million increase over the FY11 request but a 17% or $95 million decrease below FY10 enacted levels. HUD says this amount would fully fund the capital program. Public housing agency trade groups disagree, citing $4 billion as the amount needed in FY12.
The $95 million decrease in funds is partially accounted for by the elimination of the Resident Opportunity and Supportive Services (ROSS) program line item. The ROSS program provides service coordinators for work with public housing tenants. In FY10, the program was funded at $50 million, but the President’s FY11 budget did not include funding for ROSS. The ROSS program is an eligible activity within the capital fund, but eliminating specific funding will require PHAs to choose between continuing ROSS programs and meeting the capital needs of the aging public housing stock that already has a several billion dollar backlog in necessary repairs and renovations.
Community Development Fund. The President’s budget would reduce the Community Development Fund by 13% below the FY11 request and 15% below the FY10 enacted level. Unlike the FY11 budget which did not apply these cuts to the Community Development Block Grant (CDBG) formula grants, the FY12 budget proposes a cut of $306 million, or 8%, to CDBG.
Other Community Development Fund programs would be cut under the FY12 proposal. Two programs included in the FY11 request, the University Community Fund and the Catalytic Investment Grants, are not in the FY12 request. The Economic Development Initiatives Grants, otherwise known as earmarks, would not be funded in FY12, consistent with the President’s FY11 request.
The FY12 budget does include $25 million for the Rural Innovation Fund, the level appropriated for the program in FY10. The Administration’s FY11 budget did not request funds for this program but both the House and Senate included $25 million for the program in their bills in the 111th Congress. Consistent with prior year funding levels, the Sustainable Communities Initiative, companion funding to HUD’s Office of Sustainable Housing and Communities, would be funded at $150 million in FY12.
Homeless Assistance Grants. HUD proposes strong FY12 funding for Homeless Assistance Grants and new Housing and Services Demonstration Vouchers, reflecting the Administration’s commitment to ending homelessness in general and the federal strategic plan to end homelessness through an increasing focus on housing for vulnerable households specifically.
In the President’s FY12 budget, Homeless Assistance Grants would receive $2.37 billion, a significant increase over both FY10 enacted levels and the President’s FY11 request. Secretary Donovan said that this level of funding, which is $600 million below the program’s new authorization, will allow HUD to implement the HEARTH Act, which reauthorized the Homeless Assistance Grants programs in 2009. HUD is now finalizing regulations for the Act’s new initiatives.
The budget would provide $1.9 billion for renewals of the Continuum of Care (CoC) program, $130 million for new CoC projects, Rural Housing Stability Assistance and data analysis, $286 million for the Emergency Solutions Grant Program, and $50 million for incentives to public housing agencies (PHAs) and private owners of assisted housing to serve homeless households.
HUD is still designing incentives for PHAs and private owners to increase the number of homeless households they will serves, but anticipates applying funds equally between rent incentives and supportive services.
In addition to increasing the funding for these core homeless assistance programs, HUD also requested funds for a new Housing and Services Demonstration for Homeless Persons that would serve both homeless families and individuals. The program is included in the President’s budget for the second year but would receive less funding than proposed in FY11. HUD is requesting $57 million for the demonstration to combine services for individuals and families through the Department of Health and Human Services and the Department of Education.
In FY11, HUD proposed serving 4,000 individuals and 6,000 families. HUD may continue this 40/60 split of individual and family households served, though with less funding, fewer households would be assisted.
Capital Programs. Secretary Donovan emphasized that, despite the effectiveness of many HUD programs, the Administration made the difficult decision to fund housing production programs at levels lower than FY10. The HOME Investment Partnerships Program would be funded at $1.65 billion dollars, the same amount requested in FY11 but a 10% cut below FY10 funding.
Section 202 Housing for the Elderly would be cut 8% below FY10 funding levels. The budget includes funding to renew existing subsidy contracts but provides lesser funding for the capital advance portion of the program. HUD proposed cutting Section 202 entirely in FY11 while working on ways to reform the program. The House and Senate both included funding for 202 in their bills and legislation to reauthorize the program that passed in the 111th Congress. Meanwhile, HUD introduced its own reform proposal for the Section 202 program which it hopes to advance in the 112th Congress.
HUD proposes $196 million for the Section 811 Housing for People with Disabilities program but, as with FY11, shifts $114 million for rental assistance contracts to the Tenant-Based Rental Assistance account. The two accounts bring the total program funding to $310 million, $10 million above the FY10 level. A bill to reform the Section 811 program passed at the end of the 111th Congress. This bill enables a demonstration program that shifts construction funding to operating subsidy funding to increase the number of units funded and easily integrate units for people with disabilities into mainstream housing developments. HUD has also proposed its own Section 811 reform package which builds on the program changes enacted by the last Congress.
HOPWA. The Housing Opportunity for Persons with AIDS (HOPWA) program would be funded at $335 million, consistent with the FY10 funding level but $5 million lower than the President’s FY11 proposal.
Fair Housing. HUD requests Fair Housing funding of $72 million, the amount appropriated in FY10. The President’s FY11 budget proposal cut Fair Housing funding by $11 million.
Policy and Research. Funding for the Office of Policy, Development and Research would be cut by 34% over the FY11 request but would still receive an increase of 19% over FY10 enacted levels. The FY12 request of $57 million would allow HUD to enhance existing surveys and develop several additional research studies and activities.
Other Programs. The Native American Housing Block Grant would be funded at $700 million, an increase of $120 million over the President’s FY11 request but level funding with FY10 appropriations. Requested funding for the Native Hawaiian Housing Block Grant is at the FY11 requested level of $10 million which represents a 23% or $3 million cut below the FY10 enacted level. The Healthy Homes and Lead Hazard Control program would receive $140 million, the same amount proposed for FY11 and appropriated for FY10. The President’s FY12 request for the Housing Counseling Program is $88 million, consistent with the FY11 request which was a slight increase of $500,000 over FY10 appropriations.
View NLIHC’s budget chart illustrating FY07-FY12 funding levels for HUD programs: http://www.nlihc.org/doc/FY11_12_Budget_Chart_HUD.pdf
View NLIHC’s budget chart comparing FY10, FY11 proposals and the FY12 request: http://www.nlihc.org/doc/FY10_11_12_Budget_Chart_Comparisons.pdf
View the Administration’s complete HUD proposal at: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hud.pdf