Last month, HUD released a report on new findings from the Rent Reform Demonstration, a randomized control study examining the effects of new rent rules on families served by four PHAs. Approximately 6,600 families in the voucher program at the Lexington, Louisville, San Antonio, and D.C. Housing Authorities were randomly assigned to existing rent rules in the control group or to new rent rules in the treatment group. Conducted by MDRC, the report looks at a variety of outcomes just over two years of study enrollment and prior to the treatment group’s first recertification.
The demonstration tested several new rent rules including:
- Triennial recertifications;
- A new formula for calculating the total tenant payment (TTP) that eliminates all deductions, sets the TTP at 28 percent of the household’s gross income using 12-month retrospective income, ignores assets of less than $25,000, uses a streamlined utility allowance schedule, and establishes a minimum TTP of at least $50 a month; and
- Safeguards for participants, including a six-month grace period TTP if anticipated income is lower than retrospective income by more than 10 percent, one interim recertification per year if income falls by more than 10 percent, and robust hardship protections.
Report findings include:
Earnings and Benefits - Among all four PHAs combined, the new policy did not improve labor market outcomes among household heads. Looking individually, the new rules modestly increased average labor earnings in Lexington and San Antonio, but not in Louisville or D.C.
Across all sites, there was no effect on TANF or SNAP receipt. Because benefit levels are tied to earnings, it is not surprising that there are no effects for these benefits given the lack of results for earnings.
Housing - Families under the new rent rules paid less TTP on average than the control group and were less likely to exit the voucher program. The study team expected that shorter-term costs for housing subsidies would increase, as families would not complete a recertification (or rent increase) for three years. The next report on the demonstration will hopefully shed light on whether PHAs fully recouped those costs in increased subsidies once recertifications are completed and TTPs, at least for some families, increase.
Administrative Burden - A major goal of the study was to examine whether simplifying the rent calculation process would reduce PHA burden. While some savings was eaten up by the time required by PHA staff to determine retrospective income, which was challenging for some families, 72 percent of families under the new rent rules required at least one action by the PHA during the follow-up period, compared to 90 percent of the control group. These actions may include a variety of activities, such as processing changes to the household roster, income, or contract rent. Despite challenges with retrospective income, the study team found that the new rent rules reduced administrative burden overall.
In sum, this report finds some mixed evidence that the new rent reform rules reduce work disincentives and decrease administrative burden. Results related to earnings vary considerably by site, perhaps partially due to differences across PHAs in how the rent rules were implemented. For example, the PHAs had varying minimum rents, and D.C. had its participants on a biennial recertification schedule rather than triennial. A fourth report, to be released in 2021, will examine outcomes over a longer follow-up period that includes time after the triennial recertification, which may provide more insight into the inconclusive results on earnings impacts.