10/17/2012

On October 15, HUD held a briefing on Quality Control for Rental Subsidy Determinations, at which the Final Report for the FY2011 Study was presented. The briefing opened with introductory remarks by HUD Deputy Secretary Maurice A. Jones; Jean Lin Pao, General Deputy Assistant Secretary for Policy Development and Research; and Dr. Kurt Usowski, Deputy Assistant Secretary for Economic Affairs in the Office of Policy Development and Research, about the importance of the decade-long series of quality control studies and the progress that HUD has made towards minimizing improper payments. In 2007, HUD’s rental assistance subsidy programs were removed from the “high risk” category by GAO. Though still on OMB’s “high error program” list as of 2010, rental assistance improper payment rates were among the lowest for those on the list, at 2.9 percent. Overall, the FY2011 Quality Control study shows a 69 percent reduction in gross erroneous payments for HUD rental assistance subsidy programs between 2000 and 2011.

The briefing, by researchers from ICF International, focused primarily on the Quality Control study, which measures program administrator error in income determination and rent calculation. The study used a nationally representative sample of 2,404 households in 600 projects in the United States and Puerto Rico, evenly divided among three program types: public housing, PHA-administered Section 8 (Housing Choice Vouchers and Moderate Rehabilitation), and Owner-administered projects (Section 8, Section 202 PRAC, Section 811 PRAC, Section 202/162 PAC). A quality control rent was calculated for each household in the sample, using information reported by the PHA/project, household, Social Security match, and third-party verification. Rent error was calculated by subtracting the Quality Control rent from the actual paid tenant rent. The results from the sample were used to estimate national estimates for each of the program types together and separately, through weighting by population counts.

The analysis showed that 75 percent of all households paid the correct amount of rent, within $5 (a differential used to eliminate rounding differences and minor calculation discrepancies). Twelve percent of all households paid over $5 less than they should have (with an average error of $72 per month), and thirteen percent of all households paid over $5 more than they should have (with an average error of $35 per month). By program, the frequency of rent underpayment (subsidy overpayment) was 11 percent for public housing, 15 percent for PHA-administered Section 8, and 9 percent for Owner-administered projects. The frequency of rent overpayment (subsidy underpayment) was 10 percent for both public housing and Owner-administered projects and 16 percent for PHA-administered Section 8. Spreading errors across all households produces an average gross rent error per case of $13.33, and an aggregate gross rent error of $695 million (±$109 million) annually. The aggregate net erroneous payments total $243 million (±$145 million) annually. As noted above, the overall decline in improper payments is 69 percent since 2000, but there was no overall significant change in average dollar error from FY2010 to FY2011. The estimate for total gross dollar error increased from FY2010 to FY2011, but this increase may be due to an increase in the population and not due to an increase in error. The study identifies a number of types of errors. In terms of the components of error, incorrect income (especially earned income) and allowance amounts were by far the most significant components of error in determining rents.

During the question and answer period, CLPHA and other industry groups focused attention on the report’s policy recommendations, which include simplification of income verification and rent determination policies, as “the current statutory environment poses substantial obstacles to efficient, accurate income and rent calculations” and allowing for reexaminations for selected populations (such as elderly and disabled families) to be completely less often than annually.

The Executive Summary to the Final FY2011 Report on Quality Control for Rental Assistance Subsidy Determinations is available here. The full final report does not appear to yet be online; watch for a link in a future CLPHA Report.