HUD released a new study, The Impact of the Moving to Work Demonstration on the Per Household Costs of Federal Housing Assistance, that assesses the impact of the Moving to Work (MTW) demonstration program on cost effectiveness within public housing agencies (PHAs). Expanding on past research, the authors use new analytical methods to assess whether PHAs’ cost per household changed after gaining MTW status. The analysis found that while MTW does not affect PHAs’ cost effectiveness, MTW is associated with increased dollars held in reserves per household. The report indicates that while MTW supporters may see this as a way to preserve or increase the supply of affordable housing in the long run, MTW critics argue these funds can be used now to serve more households.
Moving to Work (MTW) is a demonstration program that allowed up to 39 PHAs to use public housing capital and operating funds, as well as Housing Choice Voucher funds, more flexibly to provide locally specific housing assistance to low-income households (see Memo 1/22/18, 2/20/18, and the Advocates’ Guide for discussion of the MTW demonstration program). The program’s goals are threefold: increase cost effectiveness of federal dollars, boost employment and economic self-sufficiency, and promote housing choice among low-income families. The new report assesses whether PHAs are meeting the first goal by measuring differences in cost per household among MTW-status and non-MTW-status PHAs.
Previous research had found that MTW PHAs spend more per household than their non-MTW counterparts, indicating that a key program goal is not being met. That research, however, did little to account for pre-existing differences between MTW and non-MTW PHAs. The present study was designed to address limitations of past MTW cost-effectiveness research. The researchers examined historical data from 2003-2017 to assess PHA cost trends before and after receiving MTW status for 18 out of 39 MTW agencies. The authors compared these trends to those of non-MTW-status PHAs of similar size, controlling for key pre-existing differences such as area median rent and government wages.
The study found no significant differences in cost-per-household spending for MTW and non-MTW-status households, a finding that held true using multiple analytical approaches. Because HUD funding to PHAs increases once PHAs join MTW, PHAs participating in MTW received an average of 11% more funding and served 10% more households than their non-MTW-status counterparts. The increases in spending and households offset one another, resulting in no significant differences in cost per household based on MTW status. The researchers also found that controlling for program mix, housing quality and affordability, and household characteristics did not alter their findings. One concern about MTW is that PHAs can provide households non-traditional rental subsidies, which are smaller subsidies than traditional assistance, thereby showing cost-effectiveness while providing less assistance to households. The authors, however, obtained similar results about the lack of change in cost per household when they excluded from their analysis households receiving non-traditional rental subsidy assistance.
Though the study found no differences in cost per household spending, researchers identified a significant difference in the amount that PHAs with MTW status held in their operating reserves. MTW status was associated with an additional $840 held in reserves per household. Interviews with several PHAs indicated that these reserves are helpful to provide gap financing for affordable housing construction and preservation, though it is unclear how these funds have historically been spent and whom they primarily serve. MTW agencies can accumulate more savings in part because their voucher allocation formula differs from the formula used for non-MTW agencies. Previous research, which found even larger differences in reserves, suggests that MTW agencies do not have the same incentive that non-MTW agencies have to use all their voucher funds to assist needy families (see Memo, 2/20/18).
The authors conclude by recommending that further MTW research focus on the intersection of cost effectiveness, housing choice, and economic self-sufficiency. This would provide a more robust understanding of whether the MTW program is meeting its three primary goals.
More information about the Moving to Work Demonstration and Expansion, including discussion of the risks MTW poses to low-income families, can be found in NLIHC’s Advocates’ Guide to Housing and Community Development Policy, p. 4-42.
The full report is at: https://bit.ly/2Bp7sl2