[Senate Hearing 114-]
[From the U.S. Government Publishing Office]



 
TRANSPORTATION AND HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2016

                              ----------                              


                       WEDNESDAY, MARCH 11, 2015

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:02 a.m., in room SD-562, Dirksen 
Senate Office Building, Hon. Susan M. Collins (chairman) 
presiding.
    Present: Senators Collins, Daines, Reed, Mikulski, Schatz, 
and Murphy.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                        Office of the Secretary

STATEMENT OF HON. JULIAN CASTRO, SECRETARY


             opening statement of senator susan m. collins


    Senator Collins. The subcommittee will come to order. Today 
we welcome Secretary Castro, who will testify regarding the 
President's fiscal year 2016 request for the Department of 
Housing and Urban Development (HUD). Mr. Secretary, let me 
welcome you to the subcommittee. This is your first appearance 
before us. I had a great working relationship with your 
predecessor, Secretary Donovan, and I look forward to 
maintaining a similar working relationship with you.
    I also want to recognize the new ranking member of the 
subcommittee, my colleague and good friend, Senator Jack Reed, 
with whom I have worked very closely on countless issues over 
the years. Senator Reed is a long-time champion of housing 
programs, and I look forward to working with him toward the 
goal of crafting a bipartisan bill to address the critical 
transportation, housing, and community, and economic 
development needs of this country.
    The request for the Department of Housing and Urban 
Development is $49.3 billion, an increase of $4 billion and 9 
percent above the fiscal year 2015 enacted level. This request 
does not, however, exist in a vacuum, and must be considered in 
the broader context of the difficult financial environment in 
which we find ourselves, a context that the President's overall 
budget request simply does not take into account.
    The broader context includes the return of the ill-
conceived and harmful sequestration. While the Ryan-Murray 
budget agreement enabled us to avoid sequestration in 2014 and 
2015, we do not have that luxury when considering the fiscal 
year 2016 budget. The fact is, right now the Budget Control Act 
is current law regardless of the administration pretending 
otherwise in its request. Now, I hope we can work together with 
the administration to get rid of sequestration while living 
within our means.
    The fiscal year 2016 budget caps for non-defense 
discretionary Government spending are $493.5 billion, just $1.1 
billion above the fiscal year 2015 level. If this were not 
constraining enough, the budget request assumes Federal Housing 
Administration (FHA) and Ginnie Mae receipts will be $1.4 
billion below last year, and the Congressional Budget Office's 
(CBO's) most recent estimate is over $1 billion below last 
year. Because these receipts help offset the cost of our bill, 
this reduction means that to simply provide last year's funding 
levels would cast nearly $1.4 billion more than last year.
    This decrease is the result of the administration's recent 
reduction in annual mortgage insurance premiums, and I remain 
concerned that this decision could undermine the FHA's ability 
to return to its statutory 2-percent reserve level. 
Furthermore, the request includes over $2.2 billion to support 
the renewal of existing rental assistance. Merely maintaining 
last year's funding levels will require an additional $3.6 
billion just for HUD programs, while the non-defense budget cap 
only increases by $1.1 billion.
    Addressing this tyranny of math will require making tough 
choices, choices that this administration did not make as 
evidenced by the fact that almost every appropriations account 
in HUD has been increased relative to current spending, except 
one of my favorite and most effective programs, the Community 
Development Block Grant (CDBG) Program, which has been reduced 
by $200 million. I am very disappointed by the administration's 
decisions to propose this reduction, especially since it was 
not part of an effort to live within the current budget caps, 
and given the important role that the CDBG program plays in 
economic development and job creation throughout this Nation.
    While the fiscal constraints we face make it impossible to 
simply provide an abundance of funding to the Department, 
addressing housing and community development needs must also 
include addressing program effectiveness and ensuring the 
proper stewardship of the taxpayers' money. One such area that 
has such demonstrated effectiveness is homeless assistance and 
prevention, an area of great concern to me, especially in the 
case of reducing veterans homelessness.
    Since 2010, we have reduced veterans homelessness by 33 
percent, an admirable record of success. The VASH (Veterans 
Affairs Supportive Housing) voucher program has been critical, 
and the former ranking member, Senator Patty Murray, and I were 
always strong supporters of the VASH program. That is why I am 
deeply concerned that the administration has decided not to 
request additional VASH vouchers without knowing the results of 
the recent point in time count. That certainly seems premature.
    While overall chronic homelessness has also declined by 21 
percent since 2010, youth homelessness remains relatively 
constant, and reflects an area where better coordination and 
the dissemination of best practices is warranted. Youth 
homelessness is a subject that this subcommittee intends to 
devote a hearing to next month.
    These successes in reducing homelessness as well as 
programs that support community and economies of States and 
communities and promote the development of new affordable 
housing are challenged by the significant percentage of 
spending that is required merely to maintain existing rental 
assistance. That, too, is a tremendous challenge for this 
subcommittee and the administration. If we are to spend the 
overwhelming majority of the HUD budget simply to ensure that 
those currently assisted do not lose their housing, it is 
critical that we try and bend the cost curve of this 
assistance, see the results of the efforts, and explore more 
creative approaches to programs that are not achieving their 
goals.
    Toward that end, I am pleased to see that proposals to 
expand the Moving to Work (MTW) Program to provide a small 
level of administrative relief to public housing authorities in 
the form of triennial recertification of income for those 
families on fixed incomes, and beginning to consider public-
private partnerships to address energy efficiency improvements, 
are all opportunities to preserve existing housing and reduce 
its costs.
    Finally, HUD must continue to invest in effective oversight 
and management of housing authorities. The previous Secretary 
and the inspector general were very helpful to me in completely 
resolving a terrible problem that we had in one area of Maine 
due to insufficient oversight by the Maine Housing Authority. 
Thanks to strong new leadership at the Authority and the 
aggressive actions of the board, helped by Secretary Donovan 
and the inspector general investigation, that program, I am 
pleased to report, is back on track. But the fact is it is 
inexcusable that residents are ever put in substandard housing 
with serious violations. And it is doubly offensive when 
taxpayers are subsidizing these unfit units of housing.
    Mr. Secretary, I look forward to hearing from you this 
morning. But before I call upon you, I first want to ask 
Senator Reed for his opening statement. And, again, thank you 
for joining our subcommittee.


                     statement of senator jack reed


    Senator Reed. Well, thank you, Chairwoman Collins.
    Senator Collins. You can call me anything as long as it has 
``chair'' somewhere in there.
    Senator Reed. Grand chair of all chairs, I am 
extraordinarily pleased to have the opportunity to work with 
you as the ranking member. And as Senator Collins said, we have 
worked on many issues together in a bipartisan manner, and 
Senator Collins is respected in this body as one of the most 
thoughtful, dedicated, sincere, and effective legislators. I 
think it is a Maine tradition going back to Margaret Chase 
Smith and everybody else, but I am just delighted to be working 
with her.
    And we are also working not only for this subcommittee, but 
for the people in Maine, people in Rhode Island, all across the 
United States. This budget, the HUD budget, impacts the lives 
of so many Americans in such an important way. We take it very 
seriously. And the central challenge Senator Collins laid out 
very, very well. At a time of fiscal constraint, how do we 
ensure our limited Federal resources are aligned with the 
housing and other transportation infrastructure needs in 
communities across this country? And we could not have a better 
chairperson leading us than Senator Collins, and I am delighted 
to be here.
    Today, as she indicated, we are beginning our work by 
examining the fiscal year 2016 budget request of the Department 
of Housing and Urban Development. Thank you, Secretary Castro, 
for joining us today. You bring extraordinary experience as a 
mayor. You know how these programs work on the ground level, 
and we appreciate that. And thank you also for visiting Rhode 
Island last year, Central Falls, Rhode Island. We are able to 
see how much of an impact HUD makes in my State of Rhode 
Island.
    And, Mr. Secretary, today we are interested in talking 
about your priorities as well as our priorities, as well as the 
steps you are taking to address the findings and 
recommendations of your inspector general regarding HUD 
operations. It is very important that as we try to justify 
appropriate funding to HUD, you are continually improving the 
management and operations of HUD. Those two issues go hand-in-
hand. We have to ensure that Federal dollars are spent 
effectively. You know this, and you are doing a very good job 
to accomplish that mission. Thank you very much.
    The subject of today's hearing is the administration's 
budget that was sent up to us for fiscal year 2016, which is 
$49 billion in total. It is an increase of $4 billion over 
fiscal year 2015. This request includes resources to address 
the significant affordable housing needs in the country, 
including $512 million to support new targeted Housing Choice 
vouchers, an increase of about $160 million to create and 
preserve affordable housing programs through the HOME Program, 
and $250 million to redevelop housing and communities so 
through the Choice Neighborhoods initiative. And I think these 
are all worthwhile requests that restore cuts from 
sequestration and make targeted investments to increase 
affordable housing, help people out of poverty, and improve 
low-income neighborhoods.
    The request also supports the administration's goal to 
prevent and end homelessness, and the Chairwoman has done such 
a good job of talking about that. We worked together on the 
HEARTH Act, which is a significant improvement, but we still 
have more to do, and we both are committed to homelessness in 
this country. The increase of $345 million in the Homeless 
Assistance Grants Program will preserve existing programs, 
create additional units of permanent support of housing to 
serve the chronically homeless, and fund rather more rapid re-
housing interventions to help families.
    The budget also includes investments in the Department 
staff and upgrades the information technology system. This is 
critical to your management responsibilities, to making your 
operations more efficient, and we cannot neglect these 
important investments. But the reality, and again the 
Chairwoman has pointed out so well, the significant portion in 
the increase of the budget necessary simply to keep the 
affordable housing we already have. You know, we would like to 
think we are sitting here with a grand proposal to launch an 
initiative, to move forward and make available to every person. 
We are just trying to hold on to what we have got.
    And these resources include an increase of $848 million to 
maintain existing choice vouchers, an increase of over $1 
billion, to fully fund project-based rental assistance 
contracts. These are large numbers in any year, but in this 
year in the face of sequestration, they appear almost 
impossible. And again, echoing Senator Collins, we have to find 
a way to move past sequestration and the Budget Control Act and 
invest again in this country. And adding, as she pointed out 
also, to the challenges is about a billion dollars lower in 
terms of revenues coming from some of the sources you usually 
depend upon.
    So as we begin to make decisions about the Federal budget 
and discretionary funding levels, we need to be very clear that 
sequestration levels are not sufficient to even maintain 
current services, and we have to, again, find a way around 
this. Flat funding means that we would be faced with a need to 
slash programs, like CDBG. It has already been cut 25 percent 
since 2010, and you know as a former mayor, we know, this is 
one of the most effective programs. Local base, local 
initiative. This is not Washington telling people what to do. 
This is localities doing what they need to do for their economy 
and for their people.
    And then, of course, we are in the danger literally of 
forcing people out of subsidized housing, and the impact will 
not be academic. It will be seniors who are faced with a choice 
of a huge increase in rent or moving out, and we will hear 
about that, and it will be all across this country, too. So we 
have to move forward.
    We have made some progress, but we are still a long way 
off. Again, this is not a situation where we have succeeded and 
we are just trying to stay in place. According to HUD's Worst 
Case Housing Needs Report, there are 7.7 million very low-
income Americans that pay half of their income on housing, live 
in substandard housing, or both. This is an increase of 49 
percent since 2003. We are losing ground instead of moving 
forward. And in Rhode Island, at least half of the low-income 
renters are in this situation, paying 50 percent. Many are in 
both, substandard housing and paying 59 percent of their 
income. So we have to do better. These decisions have serious 
consequences, and we have to have a budget that reflects the 
needs of the American people and the need to invest.
    I would say last month I joined Chairman McCain to call for 
the elimination of sequester for defense. I want to be very 
clear that we need to increase the caps for non-defense 
discretionary spending as well. Senator Collins said it very 
well. There is $1 billion above for every domestic program. 
Your budget needs probably two or three or four times just to 
stay in place. So just the math does not work, and simple 
arithmetic would dictate we have to change. So we have found a 
way before through the good work of Senator Collins and others, 
and Senator Mikulski has joined me. Through Murray-Ryan, we 
have to find another way forward.
    Mr. Secretary, again, thank you very much, and thank you, 
Madam Chairwoman.
    Senator Collins. Thank you very much, Senator Reed. I am 
delighted that we are joined by the ranking member of the full 
committee, Senator Mikulski. And I want to give her an 
opportunity for any remarks that she might wish to make.


                statement of senator barbara a. mikulski


    Senator Mikulski. Thank you very much, Madam Chair. First 
of all, I want to just welcome Secretary Castro. We know him as 
Mayor. I do not know which term he likes better or longs for. 
Congratulations to you as the chair and certainly to Senator 
Reed, the new ranking. I know this subcommittee has the 
tradition of producing a great bipartisan bill, and I have 
every confidence, I know along with Senator Cochran, that you 
will do so, and look forward to doing it.
    Baltimore traffic delayed me. You know, I am a commuter. 
Have you gone to questions already?
    Senator Collins. We have not.
    Senator Mikulski. Listen, you ask your questions, and then 
I will come in with mine.
    Senator Collins. Okay.
    Senator Mikulski. Does that sound like a good way to go?
    Senator Collins. Thank you. Thank you.
    Senator Reed. Yes.
    Senator Collins. Senator Schatz, I just want to welcome you 
as a new member of the subcommittee and to the Appropriations 
Committee. I know that you will add a great deal to our 
deliberations, and we are happy to have you here.
    Secretary Castro.


                summary statement of hon. julian castro


    Secretary Castro. Well, thank you very much, Chair Collins, 
and to Ranking Member, to Vice Chair Mikulski, and to members 
of the subcommittee. Thank you for the invitation to speak 
today about our budget.
    But before I discuss HUD's fiscal year 2016 budget, I hope 
you will permit me to say a few words of gratitude to one of 
this subcommittee's longest-serving members, Vice Chair Senator 
Barbara Mikulski. Senator Mikulski has, of course, announced 
that this legislative term will be her last, and that news was 
met with both surprise and sadness at HUD where the senator is 
known as a champion for people, for the people that our Agency 
serves day in and day out. And whether we were rebuilding 
communities in the wake of devastating storms or ensuring that 
our Nation honors the sacrifice of our military heroes by 
working to end veteran homelessness, HUD could always count on 
Senator Mikulski's support. I want to thank you, Senator, and I 
want to wish you the best on what will be an exciting next 
chapter for you.
    The leadership of the members of this subcommittee has 
meant greater opportunity for millions of Americans, and while 
we have made significant progress together, as has been 
mentioned already today, there is much more work that remains 
to be done to fulfill each of our commitments and President 
Obama's commitment to support equitable community development, 
promote responsible homeownership, and to expand access to 
affordable housing that is both free from discrimination and 
available to Americans with the lowest incomes.
    This budget proposal would help us continue our progress 
toward all of these goals. That is because the President's 
budget would increase our Department's funding level to $49.3 
billion, nearly $4 billion more than fiscal year 2015's enacted 
level. This increase will advance HUD's mission and help us 
meet some of our Nation's shared priorities.
    That begins with helping more Americans secure a place to 
call home. HUD's budget proposes more than $21 billion for the 
Housing Choice Voucher Program. That would extend support to 
more than $2.4 million low-income families. Our budget also 
fulfills the promise to restore vouchers lost to sequestration, 
which will help 67,000 additional households.
    I do not have to tell you that this support is urgently 
needed out there in the country. Last year, Americans living in 
a number of cities, including Phoenix, St. Louis, San 
Francisco, and Denver, were confronted with rents that 
increased by double digits from the year before. And the crunch 
in housing affordability comes at a time when millions of our 
fellow citizens are working harder to make ends meet.
    As HUD outlined in our 2015 Worst Case Housing Needs 
Report, there are currently 13.7 million very low-income 
households in the United States that receive no assistance 
right now to cover the cost of housing. Even more alarming, 7.7 
million of those households, those with the worst case needs, 
live in severely inadequate housing, they pay more than 50 
percent of their income, or both.
    Helping citizens secure and maintain housing pays enormous 
dividends to communities. We know that living in a safe, stable 
home is one of the single greatest predictors that a child will 
succeed in the classroom and experience lower rates of chronic 
health conditions, like diabetes or depression, later in life. 
That is why HUD is also proposing funding that would 
effectively end chronic homelessness and make significant 
strides in our work to end homelessness among families and 
youth. With Congress' support through programs HUD-VASH, we 
have seen dramatic reductions in homelessness among veterans, 
and I want to commend the subcommittee for its work on this as 
well.
    If our Nation invests in the targeted programs we know 
work, we can make similar progress in tackling other forms of 
homelessness. Specifically, HUD's budget would fund homeless 
assistance grants at $2.5 billion, a $345 million increase over 
last fiscal year's level. This funding would provide 
communities with the forms of housing and service investments 
they need to effectively end homelessness in all its forms. We 
are also requesting $177.5 million in targeted housing choice 
vouchers that would support families experiencing homelessness, 
veterans regardless of discharge status, and American Indians 
living in tribal communities.
    We are also proposing new investments to boost upward 
mobility for our residents. That includes $100 million to fund 
a dynamic evidence-based initiative called Jobs Plus, and we 
are making an investment of $85 million as part of HUD's Family 
Self-Sufficiency Initiative. That would connect approximately 
80,000 families to job and financial literacy training, as well 
as important services like child care and transportation that 
make it possible for individuals to build their careers or to 
pursue an education.
    Finally, HUD is committed to ensuring that neighborhood 
opportunities are broadly shared, and that all communities--
rural, tribal, suburban, and urban--prosper. To help meet that 
commitment, our budget requests $250 million for HUD's Choice 
Neighborhoods Initiative, a program with an impressive track 
record of success. In fact, between fiscal years 2010 and 2013, 
the $351 million that HUD invested in Choice leveraged more 
than $2.6 billion additional investment dollars in extremely 
low-income communities.
    This year, as HUD commemorates 50 years of expanding 
opportunity for all Americans no matter where they live or how 
much they earn, we are also creating a solid foundation for the 
next 50 years and beyond. The President's budget helps us to do 
this, and I look forward to working with the members of this 
subcommittee in continued partnership to build a better future 
where every American can prosper. Thank you very much, Madam 
Chair.
    [The statement follows:]
                  Prepared Statement of Julian Castro
    Thank you, Chairman Collins and Ranking Member Reed, for this 
opportunity to discuss how HUD's fiscal year 2016 budget proposal 
follows the roadmap the President has laid out for jumpstarting our 
economy through educating, innovating, and building. This budget 
targets our investments to the families and geographies that need them 
the most, and puts Americans back to work.
    HUD's budget is an essential component of the President's vision of 
investing in the things we need to grow our economy, create jobs, 
increase skills training and improve education, while continuing long-
term deficit reduction. Our request makes critical investments to speed 
economic growth--growing neighborhoods of opportunity through Choice 
Neighborhoods and providing access to credit through FHA, and also 
reverses the effects of sequestration.
    Overall, the President's budget provides $49.3 billion for HUD 
programs, an increase of $4 billion above the 2015 enacted level. This 
spending is offset by projected receipts of $8.3 billion. Increases are 
provided to protect vulnerable families, reverse the effects of 
sequestration, make significant progress toward the goal of ending 
homelessness, and support community-centered investments, including 
funding to revitalize neighborhoods with distressed HUD-assisted 
housing and concentrated poverty. To build evidence of what works, 
State and local public housing authorities are offered program 
flexibilities in exchange for designing and rigorously evaluating 
innovative programs and policies.
    The fiscal year 2016 HUD budget:
  --Supports the Mortgage Market and Provides Access to Credit.--The 
        administration projects that the Federal Housing Administration 
        (FHA) will insure $204 billion in mortgage loans in 2016, 
        including mortgages for new home purchases and refinanced 
        mortgages that significantly reduce borrower payments. FHA's 
        loss mitigation program minimizes the risk of financially 
        struggling borrowers going into foreclosure, and last year, FHA 
        helped more than 477,000 families avoid foreclosure. The budget 
        also includes $60 million for housing and homeowner counseling 
        through HUD.
  --Provides Ladders of Opportunity for Anybody Willing To Work Hard 
        and Play by the Rules.--The budget provides $250 million for 
        Choice Neighborhoods to continue to transform neighborhoods of 
        concentrated poverty into opportunity-rich, mixed-income 
        neighborhoods. This funding level will be used to revitalize 
        HUD-assisted housing and surrounding neighborhoods through 
        partnerships between local governments, housing authorities, 
        nonprofits, and for-profit developers. Preference for these 
        funds will be given to designated Promise Zones--high-poverty 
        communities where the Federal Government is working with local 
        leadership to invest and engage more intensely to create jobs, 
        leverage private investment, increase economic activity, reduce 
        violence and expand educational opportunities. To further 
        support Promise Zones, the budget includes companion 
        investments of $150 million in the Department of Education's 
        Promise Neighborhoods program and $29.5 million in the 
        Department of Justice's Byrne Criminal Justice Innovation 
        Grants program, as well as tax incentives to promote 
        investment, jobs and economic growth.
  --Supports Strategic Infrastructure Planning and Investments To Help 
        Make America a Magnet for Jobs.--HUD is committed to ensuring 
        that its core community and housing development work 
        contributes to more and better transportation choices; promotes 
        equitable, affordable housing; helps communities address the 
        lingering neighborhood impacts of the foreclosure crisis; and 
        aligns Federal policies and funding to remove barriers to local 
        collaboration. The budget provides $2.8 billion for the 
        Community Development Block Grant (CDBG) formula program, and 
        proposes reforms to better target CDBG investments to address 
        local community development goals.
  --Protects the Vulnerable Recipients of HUD Rental Assistance and 
        Makes Progress on the Federal Strategic Plan to End 
        Homelessness.--The budget includes $21.1 billion for the 
        Housing Choice Voucher program to help about 2.4 million low-
        income families afford decent housing in neighborhoods of their 
        choice. This funding level supports all existing vouchers and 
        fully restores the sequestration funding cuts by adding 67,000 
        new vouchers to the program. The budget also includes $10.8 
        billion for the Project-Based Rental Assistance program to 
        maintain affordable rental housing for 1.2 million families, 
        and provides $6.6 billion in operating and capital subsidies to 
        preserve affordable public housing for an additional 1.1 
        million families.
    The budget provides $2.5 billion for Homeless Assistance Grants, 
$345 million above the 2015 enacted level. The increased funding will 
enable HUD to maintain existing projects, fund the increased 
competitive renewal demand for Continuums of Care in fiscal year 2015, 
and create 25,500 beds of permanent supportive housing for chronically 
homeless persons to reach the goal of ending chronic homelessness in 
2017. In addition, the budget includes 15,000 rapid rehousing 
interventions for households with children, which will support the goal 
of ending child, family and youth homelessness by 2020.
  --Puts HUD-subsidized Public and Assisted Housing on a Financially 
        Sustainable Path.--Public housing authorities (PHAs) house over 
        3 million families. To bring our rental housing system into the 
        21st century and continue to address the $26 billion in public 
        housing capital needs, this budget includes proposals that 
        would facilitate the conversion and preservation of additional 
        Public Housing and other HUD-assisted properties under the 
        Rental Assistance Demonstration (RAD). At the same time, the 
        budget provides $50 million for a targeted expansion of RAD to 
        Public Housing properties in high-poverty neighborhoods, 
        including designated Promise Zones, where the administration is 
        also supporting comprehensive revitalization efforts.
  --Improves the Way Federal Dollars Are Spent.--The Administration 
        continues to seek legislation to modernize the Housing for 
        Persons With AIDS (HOPWA) program to better reflect the current 
        case concentration and understanding of HIV/AIDS and ensure 
        that funds are directed in a more equitable and effective 
        manner. The budget's $332 million investment in HOPWA, in 
        combination with the proposed modernization, will assist local 
        communities in keeping individuals with HIV/AIDS housed, making 
        it easier for them to stay connected to treatment, and 
        therefore improving health outcomes for this vulnerable 
        population.
    The budget also provides $100 million for the evidence-based Jobs-
Plus program, a proven model for increasing public housing residents' 
employment and earnings. Through Jobs-Plus, public housing residents 
will receive on-site employment and training services, financial 
incentives that encourage work and ``neighbor-to-neighbor'' 
information-sharing about job openings, training, and other employment-
related opportunities.
    In addition, the budget proposes expansion of the Moving-To-Work 
demonstration program to up to 15 high-capacity PHAs over the next 3 
years through a competition. The Moving-to-Work program provides local 
PHAs with program flexibility to make local decisions about how to 
operate their programs and test innovative uses of Federal dollars to 
enhance tenant outcomes. MTW PHAs have implemented a range of policies 
designed to preserve and increase the overall affordable housing 
inventory, achieve administrative efficiencies and increase earnings 
for low-income families.
    Invests in Research and Support To Make HUD and Its Grantees More 
Effective.--The American economy of the future requires a Federal 
Government that is efficient, streamlined, and transparent. This budget 
once again calls for the flexible use of resources through the 
Transformation Initiative, which the Department will use to invest in 
technical assistance to build local capacity to safeguard and 
effectively invest taxpayer dollars; conduct innovative research, and 
evaluations of program initiatives and demonstration programs so we can 
fund what works and stop funding what doesn't.
    The budget also continues to invest in focused upgrades to the IT 
infrastructure to improve service delivery and to better track and 
monitor our programs.
    Consistent with the previous 3 years, HUD's fiscal year 2016 budget 
is structured around the five overarching goals the Department adopted 
in its new Strategic Plan 2014-2018. These goals reflect the 
Department's--and my--commitment to ``moving the needle'' on some of 
the most fundamental challenges facing America. Indeed, every month, I 
hold HUDStat meetings on one or more of these goals, to assess progress 
and troubleshoot problems in order to: (1) ensure that HUD is as 
streamlined and effective as possible in the way that we administer our 
own programs and partner with other Federal agencies; and (2) hold our 
grantees accountable for their expenditure of taxpayers' hard-earned 
dollars.
 goal 1: strengthen the nation's housing market to bolster the economy 
                         and protect consumers
    This administration entered office confronting the worst economic 
crisis since the Great Depression. And while the largest factors 
contributing to this crisis were market driven, the American people 
have turned to Congress and the administration for leadership and 
action in righting our Nation's housing market. HUD remains firmly 
committed to working together with communities and individuals to cope 
with these unprecedented challenges. This budget drives economic growth 
by increasing access to credit and strengthening the FHA.
    In fiscal year 2016, HUD is requesting $400 billion in loan 
guarantee authority for the Mutual Mortgage Insurance Fund, and $30 
billion in loan guarantee authority for the General and Special Risk 
Insurance Fund. The need for this investment is clear as FHA has 
stepped up in recent years to address the unprecedented challenges 
wrought by the housing crisis, playing an important countercyclical 
role that has offered stability and liquidity throughout the recession. 
While a recovery of the housing market is currently underway, FHA 
continues to act as a crucial stabilizing element in the market, and to 
assure ongoing access to credit for qualified first-time, low-wealth or 
otherwise underserved borrowers. However, FHA's expanded role is and 
should be temporary.
                  responding to the market disruption
    The Federal Housing Administration (FHA) and Government National 
Mortgage Association (GNMA) continue to have a significant impact on 
the Nation's housing recovery. The activities of the Federal Government 
are critical to both supporting the housing market in the short term 
and providing access to homeownership opportunities over the long term, 
and doing both in a way that minimizes risks to taxpayers.
    The fiscal year 2016 budget request will enable FHA to continue its 
mission of providing access to mortgage credit for families with low 
and moderate wealth, and to play an important counter-cyclical role in 
the continued stabilization and recovery of the Nation's housing 
market. In January, HUD announced a 50 basis points reduction in the 
FHA mortgage insurance premium, which will allow nearly 250,000 first-
time homeowners to buy a home over the next 3 years. It is estimated 
that FHA borrowers will save up to $900 per year, benefiting an 
estimated 2-3 million families over the next 3 years. Also, due to 
aggressive and necessary action over the last 6 years, FHA's value has 
improved $21 billion in the last 2 years, and remains on a very strong 
trajectory.
    The budget also includes a request for the FHA Administrative Fee 
that will assist FHA in performing critical Quality Assurance work by 
funding important Information Technology investments and contract 
administration. This modest fee on lenders will be applied only 
prospectively, and these funds will make it possible for FHA to 
continue to increase access, helping to place homeownership within the 
reach of more Americans.
          redoubling efforts to keep homeowners in their homes
    While there is work still to be done, HUD is proud of the progress 
this Administration has made in tackling ongoing foreclosure 
challenges. As part of the Administration's commitment to help 
responsible homeowners stay in their homes, we have actively sought to 
use our current programs and authorities to make homeownership 
sustainable for millions of American families. This budget supports 
homeowners, present and future, through increased housing counseling 
opportunities, for example. In fiscal year 2016, HUD is requesting $60 
million in Housing Counseling Assistance, to improve access to quality 
affordable housing, expand homeownership opportunities, and preserve 
homeownership, all of which are especially critical in today's economic 
climate. With this funding, HUD estimates that 2,400 HUD-approved 
counseling agencies employing an estimated 8,000 certified housing 
counselors, will assist a total of 2 million renters and owners. HUD-
approved counselors help clients learn about purchasing or refinancing 
a home; rental housing options; reverse mortgages for seniors; 
foreclosure prevention; loss mitigation; preventing evictions and 
homelessness; and moving from homelessness to a more stable housing 
situation.
       goal 2: meet the need for quality, affordable rental homes
    In an era when more than one-third of all American families rent 
their homes and over 7.7 million unassisted families with very low 
incomes spend more than 50 percent of their income on rent and/or live 
in substandard housing, it remains more important than ever to provide 
a sufficient supply of affordable rental homes for low-income 
families--particularly since, in many communities affordable rental 
housing does not exist without public support. HUD's 2016 budget 
maintains HUD's core commitments to providing rental assistance to some 
our country's most vulnerable households as well as distributing 
housing, infrastructure, and economic development funding to States and 
communities to address their unique needs. Overall, 84 percent of HUD's 
total 2016 budget authority requested goes toward renewing rental 
assistance for current residents of HUD-subsidized housing, including 
public housing and HUD grants to homeless assistance programs, and to 
some limited, strategic expansion of rental assistance to specific 
vulnerable households.
    HUD's core rental assistance programs serve some of the most 
economically vulnerable families in the country. In these programs, 
including Housing Choice Vouchers, Public Housing and Project Based 
Rental Assistance (PBRA): 75 percent of families are extremely low-
income (below 30 percent of area median income) and an additional 20 
percent are very low-income (below 50 percent of area median income). 
Although worst case housing needs decreased to 7.7 million in 2013 from 
the record high of 8.5 million in 2011, these needs are still a 
national problem. Housing needs have expanded dramatically during the 
past decade and were exacerbated by the economic recession and 
associated collapse of the housing market, which reduced homeownership 
through foreclosures and increased demand for renting.''
 preserving affordable housing opportunities in hud's largest programs
    This budget provides $21.1 billion for HUD's Housing Choice 
Vouchers program, which is the Nation's largest and preeminent rental 
assistance program for low-income families. For over 35 years it has 
served as a cost-effective means for delivering safe and affordable 
housing in the private market. This 2016 funding level is expected to 
assist approximately 2.4 million families and support new incremental 
vouchers for areas of high need, for targeted populations. After the 
loss of voucher opportunities for vulnerable families in sequestration, 
this budget restores voucher leasing opportunities through targeted 
add-backs, with funding for approximately 67,000 new units of housing. 
Approximately 37,000 vouchers ($277 million) are targeted to new 
vouchers for PHAs based on an allocation method that captures relative 
need. Additionally, approximately 22,500 new vouchers ($177.5 million) 
are added for families, veterans and Native American families 
experiencing homelessness through a competitive allocation of vouchers 
to PHAs that partner with their local Continuum of Care to identify 
families. Importantly, these vouchers are modeled on the successes of 
the HUD-Veterans Affairs Supportive Housing Vouchers (VASH) program, 
and may be extended to veterans regardless of discharge status in 
support of the goal to end veteran homelessness. Also, approximately 
5,000 vouchers ($37.5 million) will support victims of domestic and 
dating violence, and approximately 2,500 new vouchers ($20 million) 
will support the Family Unification Program, also allowing youth aging 
out of foster care to use a voucher for 5 years after aging out 
(increased from 18 months).
    The budget also provides a total of $6.6 billion to operate public 
housing and modernize its aging physical assets through the Public 
Housing Operating ($4.6 billion) and Capital ($2 billion) funds, a 
critical investment that will help over 1.1 million extremely low- to 
low-income households obtain or retain housing. Similarly, through a 
$10.8 billion request in funding for the PBRA program, the Department 
will provide rental assistance funding to privately owned multifamily 
rental housing projects to serve over 1.2 million families nationwide.
            rebuilding our nation's affordable housing stock
    Over the last 75 years, the Federal Government has invested 
billions of dollars in the development and maintenance of public and 
multifamily housing, which serve as crucial resources for some of our 
country's most vulnerable families. Despite this sizable Federal 
investment and the great demand for deeply affordable rental housing, 
we continue to see a decline in the number of available affordable 
housing units. Unlike other forms of assisted housing that serve very 
similar populations, the public housing stock is nearly fully reliant 
on Federal appropriations from the Capital Fund to make capital 
repairs. Funding and regulatory constraints have impaired the ability 
for these local and State entities to keep up with needed lifecycle 
improvements. The most recent capital needs study of the public housing 
stock, completed in 2010, estimated the backlog of unmet need at 
approximately $26 billion, or $23,365 per unit. Funding for the Capital 
Fund has been insufficient to meaningfully reduce public housing's 
backlog of repair and replacement needs or even meet the estimated $3 
billion in annual accrual needs. Under the strain of this backlog, and 
without financing tools commonly available to other forms of affordable 
housing, the public housing inventory has lost an average of 10,000 
units annually through demolitions and dispositions.
Rental Assistance Demonstration
    To help address the backlog of unmet capital needs and to preserve 
this critical source of affordable housing, HUD is continuing to 
implement the Rental Assistance Demonstration (RAD), a program which 
enables PHAs to convert public housing to the Section 8 platform. In 
addition to the public housing stock, the RAD program targets certain 
``at-risk'' HUD legacy programs. Prior to RAD, units assisted under 
Section 8 Moderate Rehabilitation (MR) were limited to short-term 
renewals and constrained rent levels that inhibit the recapitalization 
of the properties, and units assisted under Rent Supplement (RS) and 
Rental Assistance Program (RAP) had no ability to retain long-term 
project-based assistance beyond the current contract term. As a result, 
as their contracts expired, these projects would no longer be available 
as affordable housing assets.
    Conversion to Section 8 rental assistance, as permitted under RAD, 
is essential to preserving these scarce affordable housing assets and 
protecting the investment of taxpayer dollars these programs represent. 
Long-term Section 8 rental assistance allows for State and local 
entities to leverage sources of private and public capital to 
rehabilitate their properties. While the Department expects and 
continues to process Public Housing conversions of assistance without 
additional subsidy, HUD requests $50 million in 2016 for the 
incremental subsidy costs of converting assistance under RAD for very 
limited purposes. Such funding will be targeted only to public housing 
projects that are: (1) not feasible to convert at current funding 
levels, and 2) located in high-poverty neighborhoods, including 
designated Promise Zones, where the Administration is supporting 
comprehensive revitalization efforts. The Department estimates that the 
$50 million in incremental subsidies will support the conversion and 
redevelopment of approximately 25,000 public housing units that would 
not otherwise be feasible to convert and sufficiently stabilize over 
the long term without incremental subsidies, while helping to increase 
private investment in the targeted projects.
    In addition to the funding request, the proposed legislative 
changes to RAD are designed to allow for maximum participation by those 
PHAs and private owners whose current funding levels are sufficient for 
conversion. This includes, for example, elimination of the 185,000 unit 
cap, which will allow for a greater portion of the Public Housing stock 
that can convert at no cost to the Federal Government to participate in 
the demonstration.
    goal 3: use housing as a platform for improving quality of life
    Stable housing provides an ideal platform for delivering a wide 
variety of health and social services to improve economic, health, and 
broad-based societal outcomes. For some, housing alone is sufficient to 
ensure healthy outcomes, while others require housing with supportive 
services to assist with activities of daily living or long-term self-
sufficiency, as well as proximity to crucial services. HUD's fiscal 
year 2016 budget acknowledges this reality by making critical 
investments in housing and supportive services, and partnering with 
other Federal agencies to maximize resources and best practices. 
Moreover, these investments will save money in the long term, by 
avoiding overuse of expensive emergency and institutional 
interventions.
                   preventing and ending homelessness
    Nowhere is the relationship between housing and supportive services 
clearer than in the successful efforts in communities around the 
country to address homelessness, which have led to a 33 percent 
reduction in veterans' homelessness and a 21-percent reduction in 
chronic homelessness since 2010. Additionally, this work has yielded a 
substantial body of research, which demonstrates that providing 
permanent supportive housing to chronically homeless individuals and 
families not only ends their homelessness, but also yields substantial 
cost saving in public health, criminal justice, and other systems. This 
year's budget once again invests in this critical effort, by providing 
$2.5 billion in Homeless Assistance Grants. This funding level will 
support competitive programs that annually serve over 800,000 homeless 
families and individuals, and create 25,500 beds of permanent 
supportive housing for chronically homeless persons to reach the goal 
of ending chronic homelessness in 2017. The budget also includes 15,000 
rapid rehousing interventions for households with children.
      leveraging capital resources and serving our most vulnerable
    This budget provides a total of $632 million for the Housing for 
the Elderly and Housing for Persons with Disabilities programs, which 
includes $25 million to support 700 additional supportive housing 
units. Doing more with less, the budget proposes reforms to the Housing 
for the Elderly program to target resources to help those most in need, 
reduce the up-front cost of new awards, and better connect residents 
with the supportive services they need to age in place and live 
independently.
    Historically, HUD has provided both capital advances and operating 
subsidies to nonprofit sponsors to construct and manage multifamily 
housing for low-income people with disabilities. In an effort to 
maximize the creation of new affordable units in a time of funding 
restraints, in fiscal year 2012 HUD began providing operating 
assistance to State housing agencies that formed partnerships with 
State healthcare agencies for service provision to low-income persons 
with disabilities. These funds are used to set aside supportive units 
for this target population in affordable housing complexes whose 
capital costs are funded through Low-Income Housing Tax Credits, HOME 
funds, or other sources. Investing Section 811 funds under this 
authority allows HUD to rely on the expertise of the State housing 
agencies to administer the award and on the State healthcare agency to 
identify the most critical population to be served and guarantee the 
delivery of appropriate services. In fiscal year 2014, HUD requested, 
and received, similar authority for the Section 202 program. Drawing on 
lessons learned from implementation in the Section 811 program, HUD 
will take advantage of efficiencies inherent in these same agencies' 
oversight responsibilities for tax credits, HOME funds or similar 
housing funding.
       goal 4: build strong, resilient and inclusive communities
    No longer can the American economy tolerate the marginalization 
from the labor force of significant numbers of people because of 
individualized or systemic discrimination, or because they live in 
isolated neighborhoods of concentrated poverty. An American economy 
built to last requires an increased supply of affordable rental homes 
in safe, mixed-income communities that provide access to jobs, good 
schools, transportation, high-quality services, and, most importantly, 
economic self-sufficiency. As such, HUD's fiscal year 2016 budget puts 
communities in a position to plan for the future and draws fully upon 
their resources, most importantly their people.
    Each year HUD dedicates approximately 16 percent of its funds to 
the capital costs of housing and economic development projects 
throughout the country. Through this investment, HUD and its partners 
are able to provide better opportunities for people living in 
neighborhoods of concentrated poverty and segregation, offer choices 
that help families live closer to jobs and schools, and support locally 
driven solutions to overarching economic development challenges. HUD's 
capital grants--including the Public Housing Capital Fund, Choice 
Neighborhoods, CDBG, and HOME--are focused on assisting areas of great 
need, including communities with high unemployment.
 preserving hud's major block grant programs for community development 
                              and housing
    Through both formula and competitive grants, HUD has partnered with 
local organizations and State and local governments to fund innovative 
solutions to community development challenges. Underpinning these 
partnerships is the fundamental philosophy that local decisionmakers 
are best poised to drive a cohesive development strategy. In 2016, HUD 
is requesting a total of $2.9 billion in funding for the Community 
Development Fund to support economic development initiatives and 
projects that demonstrate the ability to connect private sector growth 
to some of our country's most distressed citizens and communities, and 
$1.1 billion for the HOME program.
    The budget requests $2.8 billion for the Community Development 
Block Grant (CDBG), which remains the largest and most adaptable 
community and economic development program in the Federal portfolio for 
meeting the unique needs of States and local governments. Since its 
inception in 1974, CDBG has invested in economic development at the 
local level, investing in infrastructure, providing essential public 
services and housing rehabilitation, and creating jobs primarily for 
low-and moderate-income families. Altogether, CDBG funding annually 
reaches an estimated 7,000 local governments across the country, in 
communities of all shapes and sizes. However, to ensure that CDBG funds 
effectively provide targeted benefits to these communities, especially 
to low- and moderate-income populations, HUD proposes a suite of 
reforms to strengthen the program; help grantees target funding to 
areas of greatest need; enhance program accountability; synchronize 
critical program cycles with the consolidated plan; and reduce the 
number of small grantees while providing more options for regional 
coordination, administration and planning.
    Often, CDBG dollars alone are insufficient to complete crucial 
economic development projects that communities desperately need. In 
those instances, HUD offers another potent public investment tool in 
the form of the Section 108 Loan Guarantee program. Section 108 allows 
States and local governments to leverage their CDBG grants and other 
local funds into federally guaranteed loans in order to pursue large-
scale physical and economic investment projects that can revitalize 
entire neighborhoods or provide affordable housing to low- and 
moderate-income persons. In 2015, HUD is requesting Section 108 loan 
guarantee authority of $500 million, and the continuation of a fee-
based structure will eliminate the need for budget authority to cover 
the program's credit subsidy.
    In addition, the HOME program is proposed at $1.1 billion and the 
budget proposes legislative changes to better target the assistance 
provided with this funding. HOME is the primary Federal tool of State 
and local governments for the production of affordable rental and for-
sale housing for low-income families. In the past 21 years, HOME has 
completed 1.185 million affordable units. The budget also proposes 
statutory changes that would establish a single qualification 
threshold, and revise ``grandfathering'' provisions so that HOME 
participating jurisdictions that fall below the threshold 3 out of the 
5 years would be ineligible for direct grants, permit statewide 
nonprofits to be designated as Community Housing Development 
Organizations (CHDOs), and provide for a formula reallocation of 
recaptured CHDO set-aside funds.
    Notably in 2016, CDBG and HOME are part of the proposed Upward 
Mobility Project, a new initiative to allow States, localities or 
consortia of the two to blend their CDBG and HOME allocations with 
funding from the Department of Health and Human Services' Social 
Services Block Grant and Community Services Block Grant in a flexible 
way to achieve local goals. Communities would design Upward Mobility 
Projects around achieving a specific outcome--like increasing families' 
earnings, improving children's outcomes, expanding employment 
opportunities, or increasing housing stability--then employ the most 
promising evidence-based methods to achieve that goal. To support the 
Upward Mobility Projects, Federal agencies will partner with applicants 
to blend the identified funds and provide the appropriate waivers 
needed for required flexibilities, including but not limited to 
aligning household eligibility criteria, aligning and streamlining 
reporting requirements, and coordinating and sustaining service 
delivery.
    In addition, the new Local Housing Policy Grants program would 
complement and leverage communities' CDBG and HOME activities by 
providing a total of $300 million in mandatory funding for competitive 
grants to increase economic growth, access to jobs and improve housing 
affordability by supporting new policies, programs or regulatory 
initiatives to create a more elastic and diverse housing supply. To 
that end, the funding would allow localities to make investments in 
areas like infrastructure expansion or improvement, housing market 
evaluations, code writing or design assistance, and stakeholder 
outreach and education.
                       assisting native americans
    Through innovative programming, HUD has found new ways to partner 
with American Indian and Alaska Native tribal governments to help these 
communities craft and implement sustainable, locally driven solutions 
to economic development challenges. HUD recognizes the right of Indian 
self-determination and tribal self-governance, and has fostered 
partnerships that allow tribal recipients the flexibility to design and 
implement appropriate, place-based housing programs according to local 
needs and customs. In most of these communities, housing and 
infrastructure needs are severe and widespread, disconnected from 
transportation networks and isolated from key community assets 
including jobs, schools and healthcare facilities. In fiscal year 2016, 
HUD is requesting a total of $748 million to fund programs that will 
directly support housing and economic development in American Indian, 
Alaskan Native, and Native Hawaiian communities nationwide, including:
  --$660 million for the Indian Housing Block Grant (IHBG) program, 
        which is the single largest source of funding for housing on 
        Indian tribal lands today.
  --$80 million for Indian Community Development Block Grants, a 
        flexible source of grant funds for federally recognized tribes 
        or eligible Indian entities, requested within the Community 
        Development Fund. Of this funding, $10 million is set aside to 
        attract and retain high-quality teachers in Indian Country by 
        improving the availability and physical condition of teacher 
        housing.
  --Up to $15 million to implement a demonstration of the Jobs-Plus 
        model in Indian Country.
  --$8 million for the Indian Housing Loan Guarantee Fund, which 
        provides loan guarantees to increase the availability of 
        mortgage lending on Indian reservations and other Indian areas.
  --Increases the setaside for colonias investment in communities along 
        the US-Mexico border from 10 percent to 15 percent, to address 
        problems with lack of infrastructure, including adequate water, 
        sewer facilities and decent housing.
                 transforming neighborhoods of poverty
    The President has made it clear that we cannot create an economy 
built from the middle class out if: a fifth of America's children live 
in poverty, at a cost of $500 billion per year--fully 4 percent of 
GDP--due to reduced skills development and economic productivity, 
increased later life crime, and poor health; a growing population lives 
with the problems of concentrated neighborhood poverty--high 
unemployment rates, rampant crime, health disparities, inadequate early 
care and education, struggling schools, and disinvestment--all of which 
isolate them from the global economy.
    That's why HUD's fiscal year 2016 budget provides $250 million for 
Choice Neighborhoods to continue transformative investments in high-
poverty neighborhoods where distressed HUD-assisted public and 
privately owned housing is located. Choice Neighborhoods--along with 
RAD-- is an essential element of the President's Promise Zones 
initiative, which is designed to support revitalization in some of 
America's highest poverty communities by creating jobs, attracting 
private investment, increasing economic activity, expanding educational 
opportunity, and reducing violent crime.
    The President announced the first five Promise Zones in January 
2014 and will designate an additional 15 zones by the end of calendar 
year 2016. Communities compete to earn a Promise Zone designation by 
identifying a set of positive outcomes, developing a strategy, 
encouraging private investment and realigning Federal, State, and local 
resources to support achievement of those outcomes. The Promise Zone 
designation process ensures rural and Native American representation. 
Promise Zones will receive tax incentives, if approved by Congress, to 
stimulate hiring and business investment along with intensive Federal 
support and technical assistance aimed at breaking down regulatory 
barriers and using Federal funds available to them at the local level 
more effectively. Applicants from Promise Zones will also receive 
points for competitive Federal grants that will increase the odds of 
qualifying for support and assistance to help them achieve their goals.
    Promise Zones are aligning the work of multiple Federal programs in 
communities that have both substantial needs and a strong plan to 
address them. The Promise Zones initiative builds on the lessons 
learned from existing place-based programs like the Department of 
Education's Promise Neighborhoods and the Department of Justice's Byrne 
Criminal Justice Innovation program, both of which receive substantial 
increases in the budget. Other Federal agencies that will be aligning 
their work with that of local Promise Zone partners include the 
Departments of Commerce, Health and Human Services, and Agriculture.
    The Choice Neighborhoods initiative is a central element of the 
Administration's inter-agency, place-based strategy to support local 
communities in developing the tools they need to revitalize 
neighborhoods of concentrated poverty into neighborhoods of 
opportunity. The Department's administration of the first rounds of 
funding for Choice Neighborhoods grants exemplify how our practices 
generate effective partnerships with local housing and community 
development efforts. In the past, many Federal grant programs followed 
a rigid, top-down, `one-size fits all' approach that dictated what 
local policymakers could and could not do rather than listening to them 
and providing the tools they needed to meet local needs. Having served 
in local government myself, I am committed to a collaborative approach 
responsive to local needs--and believe the results thus far demonstrate 
that we are making good on that commitment.
                 ensuring inclusive housing nationwide
    An inclusive community is one in which all people--regardless of 
race, ethnicity, religion, sex, disability, or familial status--have 
equal access to housing and economic opportunities. Throughout its 
portfolio of programs, HUD is committed to maintaining that inclusivity 
and providing accountability in housing and lending practices 
nationwide. Through inclusive development, education, enforcement of 
fair housing laws, expanded training and language assistance, HUD will 
affirmatively further fair housing and the ideals of an open society.
    The Fair Housing Initiatives Program (FHIP) is critical to building 
and sustaining inclusive communities. FHIP is the only grant program 
within the Federal Government whose primary purpose is to support 
private efforts to educate the public about fair housing rights and 
conduct private enforcement of the Fair Housing Act. In fiscal year 
2016, HUD is requesting $45.6 million in FHIP funds, representing the 
Department's strong commitment to fair housing. The requested amount 
will continue funding to support fair housing enforcement by all 
statutorily eligible private fair housing organizations. In addition, 
it will fund fair housing education at the local, regional and national 
levels.
    The Fair Housing Assistance Program (FHAP) is a critical component 
of HUD's effort to ensure the public's right to housing free from 
discrimination. FHAP multiplies HUD's enforcement capabilities, 
allowing the Department to protect fair housing rights in an efficient 
and effective manner. In fact, FHAP agencies investigate the majority 
of housing discrimination complaints filed in the United States. In 
fiscal year 2016, the budget provides $23.3 million in FHAP grants to 
nearly 90 government agencies to enforce laws that prohibit housing 
discrimination that have been reviewed and deemed substantially 
equivalent to Federal law.
   ensuring that an economy built from the middle class out includes 
                   opportunities for rural americans
    The administration has placed a significant emphasis on ensuring 
that America's rural communities are competitive in the global 
economy--particularly given the reality that rural communities 
generally have less access to public transportation, along with higher 
poverty rates and inadequate housing. HUD serves families in small 
towns and rural communities through almost every major program it 
funds.
    As the single largest sources of funding for housing on Indian 
tribal lands today, HUD initiatives in Indian country continue to have 
some of the Department's most successful track records. Programs like 
Indian Housing Block Grants, Indian Housing Loan Guarantees, and Indian 
Community Development Block Grants support development in remote areas 
where safe, affordable housing is desperately needed. HUD recognizes 
the right of Indian self-determination and tribal self-governance by 
allowing the recipients the flexibility to design and implement 
appropriate, place-based housing programs according to local needs and 
customs. Taken together, in fiscal year 2016 HUD is requesting $748 
million to fund programs that will support housing and development in 
American Indian, Alaska Native, and Native Hawaiian communities.
    In addition, HUD and the Department of Agriculture meet regularly 
through an interagency rental housing policy group to better align and 
coordinate affordable rental housing programs. For homeowners, the FHA 
helps first-time homebuyers and other qualified families all over the 
country purchase their own homes. HUD has also entered into a 
memorandum of understanding with the Department of Treasury's Community 
Development Financial Institutions Fund and the Department 
Agriculture--Rural Development, to expand the capacity of organizations 
providing loans and investment capital in underserved rural regions. 
The initiative, which is being piloted in colonias along the United 
States-Mexico border, will improve the delivery of funding from Federal 
agencies and private sources supporting small business, affordable 
housing and community facilities.
                goal 5: achieving operational excellence
    A 21st century American economy that is a magnet for jobs and 
equips its residents with the skills they need for those jobs demands a 
government that's leaner, smarter, and more transparent. The current 
economic and housing crisis; the structural affordability challenges 
facing low-income homeowners and renters; and the new, multidimensional 
challenges facing our urban, suburban, and rural communities all 
require an agency in which the fundamentals matter and the basics 
function. As such, HUD remains committed to transforming the way it 
does business. This transformation is more crucial now than perhaps 
ever before--HUD remains at the forefront of the Federal response to 
the national mortgage crisis, economic recovery, Hurricane Sandy 
recovery, and the structural gap between household incomes and national 
housing prices--roles that require an agency that is nimble and market-
savvy, with the capacity and expertise necessary to galvanize HUD's 
vast network of partners. HUD's 2016 budget reflects these critical 
roles, by investing in transformation, research, and development that 
will be implemented strategically.
                         investing in our staff
    HUD's greatest resource is its dedicated staff. When employees 
attain skills and are motivated to use those skills to help their 
organization reach goals, the capacity of the organization grows and 
employees in the organization grow as well; which is why HUD is 
creating training and leadership development opportunities for 
employees at all levels. Over time, the rules and regulations that 
develop within an organization become hurdles instead of the helpful 
pathways they were intended to be. HUD is in the process of simplifying 
and combining programs, streamlining regulations, and eliminating rules 
and constraints. In addition, the Department is in the middle of a 
major reform of its information technology, human resources, 
procurement, and other internal support functions to give more 
authority to managers and provide better service to HUD customers.
    In 2016, HUD is requesting $1.4 billion in salaries and expenses, 
in addition to $28 million for Ginnie Mae and $129 million for HUD's 
Office of Inspector General (OIG). The HUD request includes several 
initiatives to streamline the HUD organization and increase training 
for our staff. These efforts are supported by a modified resource 
account structure, and justified by increased detail of how HUD staff 
support the programs in the department. HUD is making specific 
investments of more staff to manage major rental assistance programs, 
increasing our ability to enforce new fair housing rules and provide 
more oversight to our community grant programs. The Department will 
continue to improve operations and create a dynamic organization 
capable of addressing some of our Nation's most difficult challenges.
       carrying out critical program demonstrations and research
    HUD's ongoing transformation is a multiyear effort that can only be 
achieved through the relentless focus of agency leadership, full 
transparency and accountability for real results, and sustained and 
flexible budget resources. The Transformation Initiative (TI) remains 
the primary source of funding for this transformation. Since TI was 
first enacted in 2010, it has bolstered research, evaluation, and 
program demonstrations crucial for increasing the efficiency and 
effectiveness of the Department's programs. Further, TI has provided a 
mechanism for innovative, cross-cutting technical assistance that goes 
beyond program compliance to improve grantee capacity, performance and 
outcomes.
    While the Department's transformation is a crucial long-term 
commitment, HUD continues to prioritize these efforts in a responsible 
manner that ensures HUD's constituent services don't suffer at the 
hands of internal transformation. This year's budget proposes a 
Department-wide HUD Transformation Initiative Fund to be funded by 
transfers from program accounts. In fiscal year 2016, HUD's request 
includes transfer authority of up to $120 million into its 
Transformation Initiative Fund, up to $35 million of which will be for 
research, evaluations and program demonstrations, and at least $85 
million of which will be for cross-cutting technical assistance, 
including place-based technical assistance. This includes training, 
education, support and advice to help community development 
corporations and community housing redevelopment organizations carry 
out community development and provide affordable housing activities for 
low- and moderate-income persons, as previously funded through the 
Self-Help and Assisted Homeownership Opportunity Program (SHOP) 
account. This modified approach will enable HUD to better integrate 
technical assistance and capacity building.
    upgrading the department's information technology infrastructure
    In 2016, HUD is requesting $334 million for the Information 
Technology Fund. HUD will continue development efforts and primarily 
focus on delivery of discrete capabilities in our FHA systems, as well 
as the continued development of New Core. New Core will enhance 
capabilities in financial management, travel, procurement, and 
workforce planning to better support strategic decisionmaking. In fact, 
New Core is implemented in four releases, two of which have been 
successfully completed this fiscal year; HUD's travel system and time 
and attendance systems have all migrated to the shared services 
environment. In Release 3, New Core will transition HUD's core 
financial management functions to the Treasury Department in the 
largest financial management shared service arrangement established to 
date, and implement a HUD enterprise-wide financial system that will 
allow the Department to resolve material weakness and audit findings 
though a consolidated shared services infrastructure platform. These 
changes will allow HUD to deliver services and manage these multi-
billion dollar programs faster, more accurately and using better 
information for analysis. These funds are crucial to complement HUD's 
transformation efforts, providing resources for maintaining and 
improving Department-wide information technology systems.
                               conclusion
    Chairman Collins, this budget reflects the administration's 
recognition of the critical role the housing sector must play to ensure 
that America becomes a magnet for jobs that strengthen the Nation's 
middle class, including providing ladders of economic opportunity for 
all Americans, whatever their circumstances. Equally important, it 
expresses the confidence of the President in the capacity of HUD to 
meet a high standard of performance.
    It's about making hard choices to reduce the deficit--and putting 
in place much-needed reforms to hold ourselves to a high standard of 
performance. But most of all, it's about the results we deliver for the 
vulnerable people and places who depend on us most.

                         VETERANS HOMELESSNESS

    Senator Collins. Thank you very much, Mr. Secretary. As I 
mentioned in my opening statement, the budget includes no 
additional funding for new VASH vouchers for fiscal year 2016. 
I understand that this is predicated on the belief that you 
hope to have ended veterans' homelessness by the end of this 
year. I am very concerned that you are premature in this 
belief, and I do not understand the basis for this belief given 
that the point in time count has not been conducted yet, and 
the results have not been evaluated.
    I also know from meeting recently with two veterans groups 
from Maine, the Disabled American Veterans and the VFW 
(Veterans Foreign Wars), that we still have a problem with 
homeless vets in my State. In fact, one of the veterans groups 
proposed to me that we convert an underused building that is in 
our veterans' hospital into a shelter or a home for homeless 
vets.
    And so, I do not understand the basis for the 
administration's optimism that all of a sudden we are going to 
be able to declare this problem solved. We have made 
significant progress, but it is by no means solved. There are 
still plenty of homeless veterans who would benefit from the 
combination provided by the VASH vouchers of services from the 
VA and housing assistance from HUD.
    Secretary Castro. Thank you very much for the question, 
Chairwoman Collins. I very much agree with you that we have 
tremendous progress, and I want to thank you and the members of 
the subcommittee for your support. You know, we have put out 
almost 70,000 VASH vouchers to over 400 public housing 
authorities over the last few years, and have served 83,000 
veterans. So as you mentioned, this has been tremendously 
effective in reducing the number of homeless veterans. In fact, 
we have a seen a 33-percent reduction in the last 4 years in 
veteran homelessness.
    I also agree with you that we are still working very hard 
to reach the President's goal of effectively ending veteran 
homelessness by the end of 2015. You know, let me be the first 
to acknowledge two things. First, that that is a stretch goal, 
and secondly, that we have confidence that we can achieve this 
because we see communities across the United States, 
significant communities that are actually getting there. The 
best example is New Orleans that has now effectively ended 
veteran homelessness in that city. Phoenix and Salt Lake City 
have ended chronic veteran homelessness. And we see communities 
across the United States utilizing these VASH vouchers very 
well, and also adopting policies like Housing First and Rapid 
Re-Housing, that have been tremendously effective in driving 
down that number, as well as using the traditional sources, 
like Housing Choice vouchers and public housing in terms of 
prioritizing veterans for those services, those resources that 
has driven that number down.
    Senator Collins. But, Mr. Secretary, it is by no means 
solved. You may be able to point to isolated examples in large 
cities, but your own statistics show that it is not solved.
    Secretary Castro. I would agree with you that as we speak 
right now, that the issue is not solved. We are going to try 
very, very hard to get there, but this is where our fiscal year 
2016 request comes in. What we have found is that we are making 
tremendous progress, but we also believe that there is a place 
for some flexibility in terms of the vouchers that we are 
working with. And so, one of the types of special purpose 
vouchers that we are requesting are for families, veterans, and 
Native American homeless individuals. This is a $170.5 million 
request that I mentioned in my opening remarks. This would help 
us address, for instance, veterans who were other than 
honorably discharged.
    Senator Collins. Yes, and let me ask you about that before 
I turn to the Vice Chairwoman for her questions, because even 
though overall veterans homelessness has only been reduced by a 
third, according to your latest statistics, so I would argue we 
have a long ways to go. You are proposing a new Section 8 
voucher program for veterans who have other than an honorable 
discharge. Now, if we are talking about those veterans who were 
drummed out of the service because of the inequality and 
injustice of the Don't Ask, Don't Tell law, then I am 
sympathetic. If we are talking about homeless veterans who 
received dishonorable discharges due to crimes that they 
committed, I do not understand why we would prioritize help to 
them with a new program rather than going through the regular 
VASH Program.
    Secretary Castro. Well, I think as you alluded to there, 
Chairwoman, there are certain circumstances where we believe 
that folks are deserving of this opportunity. And, of course, 
we would look forward to working with the subcommittee to 
fashion something that is appropriate, but that does get to 
those folks who ought to be helped.
    Senator Collins. But your proposal does not distinguish 
classes of discharge to separate out those who were discharged 
because they committed a crime or deserted, and I hope you will 
work with us. I just think that makes no sense whatsoever.
    Secretary Castro. We certainly will.
    Senator Collins. I would now like to--Senator Reed has 
yielded to the Vice Chairwoman of the full committee, and we 
are very pleased to have her here today.
    Senator Mikulski. Well, thank you very much, Madam Chair. 
You know, before these subcommittees were reconfigured some 
years ago, I actually chaired the subcommittee VA/HUD that 
drafted the annual spending bill for HUD, and we created the 
Hope VI program which has became CHOICE Neighborhoods.

                             MOVING TO WORK

    Mr. Secretary, first of all, we know you have got a big 
job. Housing particularly should be one of the tools in our 
economy to lead us out of the recession because it meets a 
compelling human need, and it also creates jobs. I could go 
through all the big picture issues like why I'm so concerned 
about the proposed cuts in CDBG. I like CDBG because it goes to 
every community. Baltimore city and our big urban counties 
benefit, but rural areas in States like Maine and Rhode Island 
also get the flexible funding they need. So we are very 
concerned about the cuts in CDBG.
    But I have today a very Baltimore focused question. In 
March--are you familiar with the issue of the Moving-to-Work 
agreements?
    Secretary Castro. Sure.
    Senator Mikulski. Well, in March 2014, HUD sent the housing 
commissioner of Baltimore city a letter saying that their 
contract would be renewed for 10 years without any changes in 
the financial terms. I was deeply troubled to learn that HUD 
has reversed its position. Just 5 months after the letter was 
sent in March, HUD proposed a cut to Baltimore operating 
subsidies by as much as 46 percent. As you can imagine, the 
mayor of Baltimore, who you know very well, sir, called me, and 
we had a meeting about this. We understand the loss could be as 
much as $42 million a year. My city cannot lose $42 million a 
year while it tries to meet the compelling needs.
    Now, since Baltimore was granted full status in 2005, it 
has successfully used the program's flexibility, which allows 
it to move a modest percentage of funds each year because just 
the way they handle the whole flexibility issue. What can we do 
about this?
    Secretary Castro. Yes, thank you very much for the 
question.
    Senator Mikulski. And by the way, it does not just affect 
Baltimore. It affects 11 communities--other communities around 
the country.
    Secretary Castro. Thank you very much for the opportunity 
to address this issue. I agree with you that for these 
communities that our MTW (Moving to Work) agencies, especially 
these 11 that are facing the prospect of different funding, 
this is an urgent matter. I also want to say that I share your 
enthusiasm for MTW because it has been effective in providing 
the kind of flexibility that we believe allows public housing 
authorities to best meet local needs.
    This is an issue that is in the process of negotiation with 
all 39 agencies as we look at extending MTW beyond 2018, 
renewing these contracts, and also negotiations with these 11. 
The reason that this arose was that originally when these 11 
agreements were signed, they were essentially on a different 
track from the other 28 agreements that were more uniform. 
These 11 agreements resulted in essentially a formula that is 
providing a lot more revenue to these 11 public housing 
authorities than they would normally get now under standardized 
agreement that the other 28 have. And we fully recognize that 
we need to find a way to work with them so that eventually we 
can have each of the communities that are MTW under the same 
formula.
    Senator Mikulski. But you know what, Mr. Mayor? Pardon me. 
You know, I was a Baltimore city councilwoman, so once a mayor, 
always a mayor. So when I call you ``mayor,'' it is really like 
calling you ``Mr. President,'' okay? So we mean it as a 
compliment. But these communities have names like Chicago, 
Philadelphia, Pittsburgh, and Seattle, Washington. So, but many 
of these cities are come-back cities. New Haven, Connecticut, 
you know well the difficult transition New Haven has gone 
through.
    So I do not want to take the time of the subcommittee in--
this is not a public negotiation. This is a public awareness 
conversation. Do I have your word that you would actually look 
at this and look at these circumstances affecting Baltimore? 
The age of our housing, a terrible legacy of lead paint that we 
have been working on back to Jack Kemp days and so on, and 
really help us do this? We know that there is the subject of 
negotiation. I am not asking for $42 million. I am not asking 
that you keep the current contract. But I am asking that we not 
be dismissed. My city feels that the bureaucracy is blowing 
them off. That is what they feel. Now, I know that is not your 
way, and I ask you to really address this.
    And I have a letter from me with more specific questions. I 
look forward to a conversation with you personally about this 
because we do not want to have this kind of problem. But $42 
million in a city budget would really be a very significant 
blow to Mayor Rawlings-Blake's agenda for revitalization and 
renewal.
    Secretary Castro. Sure. Thank you very much, Senator, for 
raising the issue. Please be assured that we do look forward to 
working with Baltimore and the other 10 communities that are in 
this situation. I have already devoted some personal attention 
to this, and I have been out to Baltimore a couple of times, 
and look forward to interacting with the mayor and the housing 
authority on this, and with yourself. We are confident that we 
can get to a resolution, I think, that preserves their ability 
to do great work, and also, you know, I think fits with the 
overall direction of the MTW Program.
    Senator Mikulski. Thank you very much, Mr. Secretary.
    Secretary Castro. Thank you.
    Senator Mikulski. Mr. Mayor.
    Senator Collins. Thank you, Vice Chairwoman. Senator Reed.

                         VETERANS HOMELESSNESS

    Senator Reed. Thank you very much, Senator Collins. First, 
let me follow up on Senator Collins' questions about the VA 
issues and housing issues in general. There are two major 
programs that we are trying to use to reduce homelessness. One 
is the HUD-VASH Program and the Veterans Affairs--the 
supportive service of veterans and families. And I would ask 
you to comment on kind of the interaction of those programs and 
how you are using both to meet the goal we all have of ending 
veterans homelessness.
    And another aspect of that, too, is I know you have 
identified 25 communities that have significant issues, but in 
Rhode Island, our last point of time count, there were only 108 
veterans statewide that did not have some housing arrangements, 
and we are so close to ending homelessness. And I wondered if 
you would also comment on how you can ensure that--this is the 
fourth State in the country to be in the 100 percent gets 
there. So if you could comment on your coordination with the VA 
(Veterans Affairs) and also how you could be helpful towards 
Rhode Island in terms of reaching our goal statewide, not just 
city.
    Secretary Castro. Yes, and this is a great question because 
I believe it goes to the results that have been produced. This 
HUD-VASH Voucher Program has been successful because of strong 
coordination between HUD and the VA, all the way down the line 
from the headquarters here in DC to the local HUD and VA 
offices out there in the field. This is something that has the 
attention of everyone on down the line. We meet monthly to 
review the progress that we are making on ending veteran 
homelessness.
    I know that the staffs at different levels meet as well, 
even more frequently, to assess that progress and to figure out 
how we can be as effective as possible. Secretary McDonald and 
I have had numerous conversations on this topic and making sure 
that we are coordinating very well. So I am confident that we 
are being responsive and acknowledging where we need to make 
adjustments and making those adjustments. Very sensitive to 
that. And so, I have been very proud of the coordination 
between HUD and the VA.
    With regard to your question on Rhode Island, it is 
important, of course, for me to say that when we say we want to 
effectively end veteran homelessness, that means everywhere in 
the United States. And so, we look forward to working with--I 
would imagine, I am very confident that our staff is already 
working with folks in Rhode Island very closely. But we would 
love to follow up on that and figure out if there are some 
other issues that have presented themselves or are there ways 
that we can address that as effectively as possible.
    Senator Reed. I think one of your comments, Mr. Secretary, 
is that when we look at the veterans homeless issue, we have to 
look just beyond the HUD-VASH Program, and also what the VA is 
doing to get a complete picture of the resources and also the 
programmatic initiatives that are going to, we hope, lead very 
quickly to end veteran homelessness everywhere. So thank you.
    Secretary Castro. That is true, and particularly because 
what we see is that the supportive services that are provided 
by the VA play such a role in ensuring that folks stay housed, 
and that they reach stability. And the other programs that VA 
runs, particularly the medical programs, are very essential to 
helping ensure success in this effort.
    Senator Reed. Madam Chair, do you intend to have a second 
round?
    Senator Collins. I do.

                             SENIOR HOUSING

    Senator Reed. Yes. So let me just sort of set the stage and 
yield to Senator Schatz. The huge 1,000-pound gorilla in the 
room is sequestration. And as Senator Collins pointed out, 
every subcommittee, non-defense subcommittee has a total of $1 
billion to work off, and you need much more than that just to 
keep the lights on basically. And then we have to look not just 
this year and next year, but to the future. You have the 202 
Program for elderly housing. That program has seen basically 
reductions by half since 2010, and one thing we all know is 
this population is getting older. We are not going to need less 
senior housing. We are going to need more senior housing.
    And, you know, one reason for helping the Greatest 
Generation is they sacrificed for us, and now we are sitting 
back and saying we are not going to do that. We are not going 
to provide the kind of housing that people need, and that I 
think is wrong also. That is another reason why we have got to 
just continue to focus on getting a reasonable budget that not 
only meets current demands, but also makes investments for what 
we know is going to happen, which is a huge--we hope happens I 
think. There is a significant increase in seniors, you know. I 
never thought I would say this, but I am going to be one. I am 
one.
    Senator Reed. There are 9 seconds left. Let me just save 
that for the next round, but I just wanted to set the stage. 
Thank you.
    Senator Collins. Senator Schatz, welcome.

                          HAWAII HOMELESSNESS

    Senator Schatz. Thank you very much, Madam Chair, and thank 
you, Senator Reed, for your leadership. I look forward to 
serving on this subcommittee.
    Secretary Castro, I appreciate you being here today, and I 
share the concerns expressed by the Secretary and members of 
the subcommittee about sequestration. Congress needs to 
coalesce around a reasonable alternative so that we can 
responsibly fund economic development, affordable housing, and 
homelessness prevention. Regarding homelessness, the 
administration's goal is to end veteran homelessness this year, 
chronic homelessness by 2017, and child, youth, and family 
homelessness by 2020. We are making progress nationwide, 
although it is not as fast as we would all wish.
    But I want to talk to you about Hawaii. In Hawaii, we are 
really facing a desperate situation, and it belies the 
trajectory that we see in terms of the progress made in most 
places in the continental United States. Total homelessness is 
up 14 percent, chronic homelessness is up 67 percent, and 
homelessness among veterans, youth, and families are all up by 
double digits. Now, I come from both the political context, but 
also from the not-for-profit sector. I know our mayor is 
working mightily on this. I know our legislature and our new 
Governor consider this to be one of our highest priorities as a 
matter of economic stability, but also in the human context.
    And, Mr. Secretary, because we are facing a desperate 
situation and because Hawaii is always different culturally, 
economically, and in terms of our housing shortages, my 
question is simple. Can I count on your leadership to work with 
us on this problem, recognizing that some of the mechanisms, 
programs, and policies that are working elsewhere are 
obviously, empirically speaking, not working in Hawaii?
    Secretary Castro. Yes, thank you very much for the 
question, Senator. You absolutely can count on that partnership 
from HUD, and I am pleased to say that that partnership is in 
action right now. In fact, over the last month and a half I 
have met with both the Mayor of Honolulu and the Governor of 
Hawaii specifically on these issues, and was pleased that the 
Mayor of Honolulu signed on to the Mayors Challenge to End 
Veterans Homelessness.
    And more broadly than that, our staff--just in the last 2 
months--has been to Hawaii on one occasion directly to speak 
with folks in the Governor's office and the mayor's office 
there in Honolulu about how we can address these issues. And we 
are prepared to work in strong partnership to do that with 
technical assistance, with looking at how outreach is 
prioritized, with ensuring that that coordination that I spoke 
with Senator Reed about is there. So you absolutely have our 
commitment to a strong partnership to turning those numbers 
around that you mentioned.
    Senator Schatz. Thank you very much, and I am hoping that 
we can continue this as sort of the beginning of the 
conversation from my seat here. The history in Hawaii, and I do 
not know whether it is a story that was ever told, is that 
Governors and mayors have always been in a fight in terms of 
shifting jurisdiction because a lion's share of the population 
for the State of Hawaii is on the Island of Oahu, which is a 
city and a county. And so, mayors and Governors have always 
been fighting over whose fault our chronic homelessness is.
    And we have a real opportunity right now that is maybe a 
first time in 30 or 40 years where we have a mayor and a 
Governor who are not fighting with each other, who are 
interested in solving this problem. We have your leadership. I 
am definitely engaged in this issue, so I am hoping this can be 
the beginning of the end of chronic homelessness in Hawaii.
    Secretary Castro. Absolutely, and I want you to know that 
you are well represented at HUD. Our Deputy Secretary hails 
from Hawaii, and one of our other assistant secretaries and 
folks working on this as well. So they are excited to do the 
work.
    Senator Schatz. I think they can save the Government money 
and stay with their mother and father when they come to visit.
    Secretary Castro. That is true.
    Senator Schatz. Thank you, Mr. Secretary. Thank you, 
Chairwoman.
    Senator Collins. Thank you. Senator Murphy, I want to 
welcome you to the subcommittee and to the Appropriations 
Committee as well. And you may proceed with your questions.
    Senator Murphy. Thank you very much, Senator Collins, Madam 
Chair, the Ranking Member. It is an honor to be a member of 
this subcommittee, a great pleasure to be before you. I 
apologize. I would have been here for the entirety of the 
hearing, but we have a Foreign Relations Committee hearing on 
the new AUMF (Authorization of Use of Military Force) down the 
hall. But thank you very much for taking some time to meet with 
me early in your tenure, Mr. Secretary.

                              SECTION 811

    I wanted to just cover a few subjects that may or may not 
have been covered already. The first is a program that has been 
very close to my heart for a number of years, and that is the 
Section 811 Supportive Housing Program. We made a number of 
changes to that program prior to your tenure through a bill 
that I helped author in the House, which really changed the way 
in which we fund 811 to try to prioritize partnerships where 
States and local governments and private developers are putting 
up money next to the funding that we were putting up for a 
while.
    We were only funding about a thousand units a year with 
Federal money. Today I think we are on our way to funding 3,000 
to 4,000 units, still not enough. But we were also pleased to 
get a relatively sizable award this last round in Connecticut. 
We are very good at supportive housing. We have made a pretty 
big robust State commitment.
    If we were able to fund your request in this budget for the 
811 Program, what can we expect in terms of the number of units 
perhaps that we might be able to fund all around the country 
given this new model?
    Secretary Castro. Yes. First let me commend you on your 
leadership, Senator Murphy, on the 811 Supportive Housing 
investment. It has been just a tremendous program for 
individuals with disabilities, and also in spurring States to 
work with local communities in figuring out the link between 
housing and savings in healthcare, and ultimately saving money 
for taxpayers. Last week, of course, we made an announcement of 
a $150 million round of funding to 25 States. Seventeen of 
those States were new States, new recipients of this funding, 
which is music to our ears because it means that more States 
are engaging in creative thinking about how they can link up 
supportive services to housing for these folks, and ultimately 
save taxpayers money.
    In terms of our request for fiscal year 2016, this would 
mean 700 additional units of permanent supportive housing. As 
you know, there is a tremendous amount of need out there, but 
we believe this would be a strong next step for the program.
    Senator Murphy. This is a transformational program. It is a 
relatively small investment that pays off extraordinarily down 
the line, as you know. As I would just encourage you to 
continue to work with States, States like North Carolina, for 
instance, who have done some really remarkable things in terms 
of making sure that private developers when they come in to 
look for State assistance are being put on the hook for 
developing a portion of supportive units, a lot of innovative 
programs out there.

                       REBUILD BY DESIGN PROGRAM

    My second question is to a subject that you and I had the 
chance to talk about as well privately, and that is the Rebuild 
by Design program. Connecticut actually was not officially one 
of the winners, but HUD did allocate as part of that round 
awards of $10 million to Bridgeport, Connecticut for a really 
remarkable project. Bridgeport is a city of only slightly more 
than 100,000, but you have got tens of thousands of America's 
lowest income families living right on the precipice of 
disaster. Long Island Sound right now is not very well guarded 
or sheltered from storms, and we have done an unprecedented 
process of bringing together stakeholders in and around 
Bridgeport to put together a very impressive application.
    I know that HUD views it that way because it was funded, 
but I would have sort of two questions. Are there any plans for 
new rounds of funding through Rebuild by Design? We got the 
lowest award of all the awards that were made. And second and a 
very personal request, I would love to ask you to come to 
Connecticut, come to Bridgeport to take a look at what we are 
doing with this sizable grant, though smaller than the others, 
just to get a sense of the imperative of this State and Federal 
partnership in very poor small cities like Bridgeport to get 
them to where they need to be on these rebuilding plans.
    Secretary Castro. Terrific. Well, as to the last question, 
I would be happy at some point in the future to get out there 
and to see it. We are very proud of Rebuild by Design because 
it took an innovative approach to helping communities rebuild 
and prepare for the kinds of climate events that we saw with 
Super Storm Sandy and a whole bunch of others between 2011 and 
2013.
    To answer your question about the next round of funding, 
there is not another round of funding identified for Rebuild by 
Design. However, part of the reason is because of our National 
Disaster Resilience Competition. In fact, we have taken that 
partnership with the Rockefeller Foundation that undergirds 
Rebuild by Design, and the same principle of including 
sustainability into how we rebuild to prepare for the next 
natural disaster, and put that into the $1 billion National 
Disaster Resilience Competition. And we are going to make those 
awards by the end of this calendar year.
    That is a competition that is open to 48 States and about 
19 other localities that had a disaster declaration between 
2011 and 2013. The Rockefeller Foundation has done a series of 
five different resilience academies that each of those grantees 
has had an opportunity to go to and get technical assistance in 
how they should be thinking about rebuilding in this kind of 
savvy forward-looking way.
    So that kind of work is actually now being spread out to 
many more communities across the Nation. And we will look 
forward to working with you hopefully so that we can continue 
that model in that future.
    Senator Murphy. Well, those kinds of partnerships are 
incredibly important in Connecticut. Connecticut, of course, 
only has two levels of government, State government and local 
government. And so, with dozens of local governments right 
along the Sound and subject to major storm damage, they often 
do not have the resources individually to do planning. We have 
actually stood up an institute in Connecticut through Inner 
City Connecticut, funded in part by EPA (Environment Protection 
Agency), that would help our municipalities do that planning. 
But we look forward to working with you to build on those 
opportunities for our towns.
    Secretary Castro. Certainly. Thank you.
    Senator Murphy. Thank you, Madam Chair.
    Senator Collins. Thank you. Senator Daines, we are 
delighted to have you on the subcommittee and the full 
committee as well.

                        HOMELESS IN TRIBAL LANDS

    Senator Daines. Thank you, Madam Chair. Thank you, 
Secretary Castro, for appearing before the subcommittee today. 
It is good to have you here, and I appreciate your dedication 
to HUD. I grew up the son of a home builder, so it is in my 
blood ever since I was a kid, shoveling a lot of gravel and 
carrying a lot of sheetrock.
    In my home State of Montana, tribal communities are some of 
the most impoverished communities and have tremendous housing 
needs. In fact, according to a 2012 HUD study, though only 1.2 
percent of the national population self-identifies as American 
Indian or Alaska Native, 4 percent of all sheltered homeless 
persons--4 percent of all sheltered homeless individuals, and 
4.8 percent of all sheltered homeless families self-identify as 
Native American or Alaska Native. As you can see, these 
communities are some of the most impoverished in the country 
and need accessibility to HUD's existing programs.
    One constituent of mine, Tribal Vice Chairman Dana Wilson 
of the Crow Tribe in Montana, he said this, and I quote, 
``Homelessness is invisible because the Crow always take care 
of each other. It is not uncommon to see 10 to 20 people living 
in a home.'' Given the nature of homelessness, especially among 
veterans in Indian country, there is severe doubt whether or 
not HUD has properly allocated funds towards homelessness in 
tribal lands. Year after year, folks in Indian country have 
voiced their difficulties to me and my staff, but we have 
little response from HUD, so I am glad to have the chance to 
interact on this issue. How much are you aware of this, and 
what do we need to change this situation?
    Secretary Castro. You ask just a fantastic and very 
meaningful question, Senator, and one that I know impacts your 
State and many, many others. And, you know, I like to say that 
our title is the Department of Housing and Urban Development, 
but really it should be the Department of Housing and Community 
Development because we also make significant investments in 
smaller towns and tribal communities.
    In the 7 months that I have been Secretary, I have had the 
chance to visit now probably about 25 different cities in 
almost 20 States. The most poignant visit that I had to any 
community was to the Pine Ridge Indian Reservation in South 
Dakota. And in Pine Ridge I saw two houses, one that was a 
four-bedroom house that had, I believe, 11 or 12 people living 
in it, and another that was a four-bedroom house that had 17 
people living in it. And I heard about the 85 percent 
unemployment rate there.
    And in one of the abandoned vacant houses that I went into, 
I saw on the ground and we picked up one of the pamphlets that 
they give folks at a funeral ceremony. And the picture on the 
top of it was of a young Native American in his full military 
uniform that had passed away in the community, so this is an 
issue of tremendous focus for us.
    The good news is that for the first time now, HUD-VASH 
dollars are available in tribal communities. We just made that 
announcement about a month ago. There was a $4 million set-
aside as a beginning for HUD-VASH availability in tribal 
communities to be administered locally, of course. So we see 
this as a good foot in the door to grow support for addressing 
veteran homelessness.
    I would also say that, of course, resources that--the 
everyday resources of HUD and the VA with regard to veteran 
homelessness are available to Native American veterans, but the 
challenge is on tribal lands, and the HUD-VASH specifically 
addresses this.
    Senator Daines. And I look forward--thanks for that 
update--to what has happened in the last month. And perhaps we 
should change it to Housing and Community Development. That may 
be part of your legacy there.
    Secretary Castro. My only concern is then we would not have 
the--you know, ``HUD'' actually sounds, you know----
    Senator Daines. I know----
    Secretary Castro. ``HCD'' sounds like a department----
    Senator Daines. Yes, you are probably right. We will figure 
out something. Put the marketing department in charge of that 
there. But back to this rural-urban divide, I think that so 
often it is a challenge to be faced particularly in States like 
Montana.

                 TECHNICAL ASSISTANCE FOR INDIAN TRIBES

    I want to pivot over to a different area. Bob Gauthier of 
Ronan, Montana, and he is from the Salish and Kootenai Tribes 
(CSKT), on February 4, 2015. And he recommended that HUD allow 
the Native American Indian Housing Council to assist the tribes 
with tech support and technical assistance. In fact, in 
conversations with the Montana Indian Tribe, HUD simply does 
not provide the level of technical assistance necessary, which 
leaves the tribe underserved. I think this is a chance where we 
can solve a problem here and better utilize resources.
    Has there been any progress made towards allowing the 
Native American Housing Council to provide technical 
assistance?
    Secretary Castro. First of all, let me just say that in 
general with technical assistance, that is something that we 
have put a lot greater focus on and doing robust outreach. With 
respect to the particular organization, we would love to follow 
up with you and give you a full update on that.
    Senator Daines. Yes. I spent 28 years in business before I 
came up here with this new job on the Hill. And I think we have 
got an opportunity here to, again--it is back to empowering 
organizations that probably will even provide better answers 
and have the capacity of providing better support here that I 
think everybody wins in that situation, and look forward to 
working on that and solving that problem.
    Secretary Castro. Absolutely.
    Senator Daines. All right.
    Secretary Castro. Thank you.
    Senator Daines. Thanks, Secretary Castro.
    Senator Collins. Thank you. I am very pleased to welcome 
back to the subcommittee Senator Murray, who was formerly the 
ranking member and Chairman.
    Senator Murray. And Chairman.
    Senator Collins. Sorry.
    Senator Murray. Thank you very much.
    Senator Collins. How quickly I forget, right?
    Senator Murray. I know. It seems like yesterday. Great to 
be here again, and thank you so much, Chairwoman Collins, for 
your leadership on this subcommittee and all the work you have 
put in with us over the years. I look forward to continuing to 
work with you on those priorities. And to Ranking Member Reed, 
I know you are passionate about housing issues and are a real 
champion for HUD programs. And I appreciate your work now on 
this as well.
    Increasing access to safe, affordable housing in thriving 
communities is really essential in expanding middle class 
security to more families. You know, there are a number of 
housing priorities that have either already been discussed, I 
know, or will be: CBG, home, rental assistance, demonstration. 
And the Moving to Work program is especially important in my 
home State of Washington, which has really used the flexibility 
it provides to pursue innovations that are really making a 
difference.
    So, Secretary Castro, great to see you here today, and I do 
want to emphasize that as the Department considers Moving to 
Work contracts, it really is essential that they retain that 
ability to provide those critical wraparound services. So I 
will just start with that. But I do have a number of questions.

                         VETERANS HOMELESSNESS

    I wanted to ask about HUD-VASH and sequestration. It has 
probably been brought up here already, but we have made really 
dramatic progress towards ending veterans homelessness. But 
according to the 2014 point in time count, there are still 
50,000 veterans who are homeless on any given night, so there 
is a lot of work ahead on that. And I still hear a lot from 
providers in my home State that there are not enough vouchers 
to meet demand. So I wanted to ask you today, with no new 
vouchers, how do we achieve the goal of ending homelessness?
    Secretary Castro. Thank you for the opportunity to address 
that. First, let me say I had mentioned earlier that we have 
made tremendous progress, as you say. We have seen a 33-percent 
reduction in the last 4 years, and we have helped 83,000 
veterans with the 70,000 HUD-VASH vouchers that have been 
allocated. And the President has a bold goal of effectively 
ending veteran homelessness by the end of 2015, and I would be 
the first to recognize that we are making strong progress. That 
is a stretch goal.
    The reason that we have had the success that we have had, 
though, is due to the vouchers. But it is also due to a series 
of other coordination and steps that have been taken out there 
in the United States. First of all, the adoption of policies 
like Housing First and Rapid Re-Housing, and in public housing 
authorities, for instance, the prioritization for vouchers and 
otherwise of veterans, so the use of traditional resources 
other than HUD-VASH by prioritization for veterans.
    And the effect of that, as I mentioned a little bit 
earlier, is that we see cities now hitting that functional zero 
like New Orleans, and like Phoenix and Salt Lake soon will. The 
request that we have for fiscal year 2016 also asks for special 
purpose vouchers, $177.5 million in special purpose vouchers 
that could be used for veterans who were other than honorably 
discharged. And as Chairwoman Collins brought up, there are I 
think--we look forward to working with the subcommittee on how 
those would be allocated. But we recognize that the work is not 
done.

                    VASH VOUCHERS FOR INDIAN TRIBES

    Senator Murray. Well, I am very worried about that and how 
sequestration is going to impact our veterans, too. So I will 
be talking with both our chairman and our ranking member, and 
continue that with you. I know Senator Daines just mentioned 
it, but I am pleased to see you focus a portion of the voucher 
program on the Native American families facing homelessness. 
But I wanted to ask you what steps you have taken to consult 
with the Native American community to make sure that it is most 
effective and culturally sensitive.
    Secretary Castro. Yes. Our staff, in fact, has engaged in 
robust discussions with the Native American community as we 
look at issues related to NAHASDA (Native American Housing and 
Self Determination Act) as part of the outreach that happens in 
the regional offices and HUD's headquarters. I also have had 
the opportunity to meet with different representatives of 
tribes and Native American organizations, and so it is 
something that we are absolutely committed to doing, having a 
strong partnership, to be responsive.

                 VOUCHERS FOR DOMESTIC VIOLENCE VICTIMS

    Senator Murray. Okay. I would just really encourage you to 
do that. I think it is really important to be sensitive to that 
issue going forward. And I just have a few seconds left, but I 
wanted to commend you for requesting $37.5 million for vouchers 
to support victims of domestic violence. It is really important 
that they are in safe housing. They cannot get out of a 
situation unless they have a place to be. But I wanted to ask 
you if your Department coordinated with the Department of 
Justice and DV service providers to help determine how to best 
administer and distribute those vouchers.
    Secretary Castro. Yes. There are, I believe, ongoing 
discussions with multiple departments on this. And we want to 
make sure, just as importantly, that going forward if this is 
funded, that we continue to do that. At the end of the day, I 
think we share with everyone a desire to see not just the money 
allocated, but, more importantly, for these vouchers to be used 
effectively to serve their purpose. And so, we look forward to 
a partnership there.
    Senator Murray. Great. Thank you very much, and thank you 
for your leadership at the Agency. And I, again, look forward 
to working with our chair and ranking member as they move 
forward on this really important subcommittee. Thank you.
    Senator Collins. Thank you. Mr. Secretary, let me follow up 
on the last question that Senator Murray just asked you about 
the funding that is requested for emergency transfers of 
tenants who are victims of domestic or dating violence, sexual 
assault, or stalking. I must say I was a bit puzzled by this 
request because it seems to me what we ought to do is move the 
perpetrators out of these housing. It reminds me in the 
military the first response was to transfer the survivor of a 
sexual assault out of the unit, whereas I always wanted the 
perpetrator gotten out of the unit.
    So explain a little bit more to me about this program 
because it sounds backwards to me. It seems to me that we 
should be going after the perpetrators, not forcing a victim of 
sexual assault or domestic violence to have to pack up and 
move, even if we are going to provide a new voucher and help 
for him or her to do so.
    Secretary Castro. Thank you for the opportunity to clarify 
just a little bit. We certainly are not asking individuals who 
have been the victim of domestic violence to move, but 
providing the opportunity for individuals who have experienced 
domestic violence, who may find themselves in a circumstance 
either where they choose if they want to move--that is their 
choice--or they are in a temporary facility and they want 
something more permanent, the opportunity to get that voucher, 
that assistance, to do so. It is not our intention to in any 
way require that folks leave if they do not want to leave.
    We also recognize that there is a law enforcement aspect to 
this. As mayor, I can say that while there is still a lot of 
work that needs to be done, I do think that police departments 
have gotten better over the years about handling domestic 
violence situations, and taking perpetrators out of the house, 
arresting perpetrators more frequently when they are accused of 
committing domestic violence. And we look forward to working 
cooperatively in that system to ensure that for victims of 
domestic violence who need a place to stay, that they have the 
resources through this program to do so.
    And what we have learned with our work with homeless 
veterans is that having these special purpose vouchers where 
our focus in on the coordination intensely with agencies that 
will deal with domestic violence victims, it makes a difference 
in the effectiveness. And that is why this is requested as a 
special purpose voucher.

                         HUD MANAGEMENT ISSUES

    Senator Collins. Let me turn now to two management issues, 
and I actually believe that they are related. The Partnership 
for Public Service releases an annual ranking of the best 
places to work in the Federal Government. And HUD has 
consistently ranked near the bottom of this list, and in the 
most recent ranking has the dubious honor of being ranked last. 
I think that is a real problem in terms of attracting people to 
this very important Department.
    The inspector general recently testified on the House side 
on a number of troubling management issues, and one issue 
raised in his testimony was the practice of employees, who had 
actually been suspended, who received performance bonuses and 
cash awards. In one case, the employer had been running a 
trucking operation, a trucking business, out of her HUD office. 
She received a 13-day suspension, and just days after returning 
to duty from her first week of suspension, she got a cash 
award. Then she got a second suspension, and 2 weeks later she 
received a time off award and a performance award later in the 
year.
    A second HUD employee misused his position by not only 
engaging in outside employment for several years--how could 
this have gone unnoticed--while on official government time, 
using HUD property, but he also misrepresented himself as being 
on official HUD business while conducting activities for 
personal gain. He received a 30-day suspension, only to return 
back to duty, and again got a performance-based cash award and 
a special cash award a few months later.
    This is terrible. No wonder morale is bad. If good 
employees, and there are so many hard-working talented 
employees at HUD, are not being rewarded or they see people who 
should have been fired getting cash awards, no wonder HUD is 
being ranked as the worst place to work in the Federal 
Government. What are you doing about this?
    Secretary Castro. I appreciate the chance to address this. 
First, let me say that I am very proud of the workforce, and 
that I believe that generally HUD has a good workforce. It is 
very committed and passionate about the people that we serve. 
The inspector general did highlight some of the shortcomings in 
individual situations that have arisen.
    I very much agree with you, Chairwoman Collins, that when 
we see these situations, for the rest of the employees that see 
it, it is deflating, and it does not send the right signal 
about the kind of workplace that we want to be and the standard 
that we expect folks to hold themselves up to. I will say that 
with regard to conduct and performance bonuses, that to the 
extent that a conduct violation impacts performance, then that 
performance bonus can be withheld or not given in the first 
place. And I want to assure you that we are implementing the 
recommendations of the inspector general to get better about 
how these situations are handled.
    And I also have taken very seriously during my 7 months, 
trying to create as strong and ethical culture as possible. In 
fact, one of the first things that I did in the first couple of 
weeks that I was there was co-author a letter with our 
inspector general that went out to all of our employees asking 
them to cooperate with inspector general investigations and 
reviews, and setting out the standard that we expect from them. 
I have also addressed this issue directly of fairly 
compensating and evaluating employees because they all owe it 
to each other to hold a high standard of conduct and 
performance.
    Senator Collins. Well, I would say with regard to your 
distinction between conduct affecting performance, I do not see 
how someone who is running a private trucking business out of 
her HUD office could possibly be performing her HUD duties. And 
I do not see how it is possible that no one noticed for several 
years that she was doing this, so.
    Secretary Castro. No, we recognize those shortcomings. And 
let me just very quickly give you an example of some of the 
things that we are talking through now. One of the issues that 
we are looking at, for instance, is ensuring that with the 
growth of telework, for example, among our employees, and this 
is not something that is endemic to just HUD, but across the 
Federal Government and private business, how do we ensure that 
our telework employees are being as productive as possible? And 
so, this is on our radar screen. It is something that we want 
to ensure we are doing right.
    Senator Collins. Good, because it truly--you need to make 
this a priority because it is only fair to the very hardworking 
majority of employees who are at HUD, and they see people 
getting away with this egregious conduct, and it is 
demoralizing. I have gone over my time. Senator Reed, take as 
much time as you would like.

                  FUNDING LEVELS FOR FISCAL YEAR 2016

    Senator Reed. Thank you very much, Madam Chairwoman. I set 
the stage before about the frustration. We understand where we 
are. Let me just quickly, how much do you estimate you need in 
fiscal year 2016 above the 2015 levels just to keep current 
programs operating?
    Secretary Castro. So we are asking for about $4 billion 
more. Somewhere near $3 billion I believe is just to keep the 
lights on, doing what we are doing, about 85 percent of our 
budget basically. You asked about sequestration, and while, of 
course, we hope, and, chairwoman, you and the ranking member 
have spelled out hopefully there is a legislative way to 
resolve this.
    What we do know is what we have seen in the past and what 
impact sequestration has had. And so, for instance, there were 
about 70,000 vouchers that were frozen essentially for families 
who thought they were going to have an opportunity to go out 
and get housing that were not able to. And housing authorities 
across the Nation had been dipping into their reserves to be 
able to not evict folks from housing they were already in. That 
is what we have seen, and so we are very hopeful that, as you 
say, there is a legislative compromise that can take us beyond 
sequestration.
    Senator Reed. Well, the other dilemma we have at the moment 
is those reserves have been exhausted.
    Secretary Castro. That is true.
    Senator Reed. So that--in fact, in your own Department, you 
have been doing things like sleeping the program reserves to 
keep things going because that is gone. So we might have been 
able to avoid evictions 2 years ago or a year ago, but that is 
what is going to happen. It is not going to be this just, well, 
we will----
    Secretary Castro. That is a very good point, a very germane 
point. And, you know, you cut and cut to the bone, and then 
there is nothing else to cut. And so, what we believe is that 
the budget that has been put forward is a sensible budget, and 
we will look forward to working with the subcommittee.
    Senator Reed. And the other aspect which we discussed 
before is that, you know, that is just immediately, but we know 
we have to invest for the future of the Section 202 Program. So 
what other areas of investment do you think you will fall 
behind dramatically if we do not make changes?
    Secretary Castro. I believe that our budget reflects and 
our request reflects what we see out there as the need. Let me 
just say in general, Senator, that only one out of four folks 
who are eligible for a HUD program actually are able to take 
advantage of that. That is how constrained our resources are 
already. And so, my hope is that the requests that have been 
made will find their way into a final budget.
    Senator Reed. You know, one other aspect of this, you have 
got several major programs. One is the Section 8 program, which 
we have in every community in this country. And last year, you 
were able to do a little bit of readjustment to the program. Do 
you have the same kind of flexibility this year--it is a 
similar question to----
    Secretary Castro. No, we do not. In fact, last year there 
was a one-time sort of an allocation of funding because we went 
to a calendar year funding model. This year there is no 
backstop there, and so if the request is not funded, then it 
would mean that we simply would not have the kind of assistance 
to keep folks housed that we have now.
    Senator Reed. Let me also, when it comes to Section 8 
vouchers, you are ultimately impacting not only individuals, 
but the landlords. There are many small real estate enterprises 
around the country, in Rhode Island, and Maine, et cetera, who 
view this is a major source of their funding. Now, the rental 
market is hot, so they might be able to, you know, make up for 
it, but this will go--initially there will be a disruption in 
the rental market, not just to the tenants, but also for the 
landlords. And that, I think, has to be considered also.
    Secretary Castro. No question that these programs have not 
just an impact on the individual. They have a ripple effect and 
economic impact that is significant in each of these 
communities, and that goes positively when we make investment, 
and that goes negatively when there is a disinvestment.

                       OVERSIGHT OF HUD GRANTEES

    Senator Reed. Exactly. Let me follow up on the chairwoman's 
very timely and important question about management. She 
focused on the internal management at HUD. But you also have 
supervision of the grantees, and that is something that, you 
know, you have to be equally diligent and dedicated to. And 
aspects of this involve not only oversight and, frankly, you 
know, the more you do the better people tend to behavior. That 
is human nature, not anything else. And second, education 
because there might be issues where there is a misuse of funds 
because they are not aware of how they should be used.
    Can you comment about how you are going to go forward for 
fiscal accountability and programmatic accountability with both 
oversight and with education?
    Secretary Castro. Yes. I appreciate this subcommittee's 
work to help allocate the HUD resources for technical 
assistance, for instance, for the governing boards of housing 
authorities to better understand what the rules are, 
particularly as it deals with the finances that are involved in 
a public housing authority. That has been a successful effort. 
It continues to be something that we are proud in our technical 
assistance portfolio. We offer a tremendous amount of guidance 
to public housing authorities and grantees in general.
    We do believe that one of the things that HUD needs in the 
long term is upgrades to its information technology systems to 
be able to better monitor the 8,000 or 9,000 grantees that we 
have. So the request for information technology funding is 
partly motivated by that. The education component that you 
speak of I think is accomplished both by technical assistance 
and by training, and training happens with these housing 
authorities constantly, and it is something that we are 
committed to. And we thank again the subcommittee for its 
investment in addressing some of these policy-level decisions 
that are made by the training of board members.
    I can tell you that as a former mayor, one of the things 
that I recognize, especially on these types of boards and on 
small school boards, for instance, you often have issues 
related to governance that prevent the organization from being 
as impactful with their resources and accountable with their 
resources as they could be.
    Senator Reed. Thank you very much, Mr. Secretary. Thank 
you.

                 ENERGY EFFICIENCY IN ASSISTED HOUSING

    Senator Collins. Thank you, Senator Reed. Just a couple 
more questions, Mr. Secretary. This winter has been very severe 
across many regions of the United States. In Maine we had 
record cold temperatures in the month of January and March, and 
we are used to a lot of snow and cold. But that brings my 
attention to the ability of HUD to improve the energy 
efficiency of subsidized housing and public housing in a way 
that will save money and make the residents much more 
comfortable. That is of particular concern when we are talking 
about elderly housing, for example.
    It also underscores the ability of programs, like the 
Department of Energy's Weatherization grants, to maximize the 
benefit of other critical spending, such as the Low Income Home 
Energy Assistance Program, which Senator Reed and I have teamed 
up on time and time again. It is so important to our States.
    So it is with interest that I see that your budget request 
includes a utility conservation pilot for public housing, in 
addition to the pay for success demonstration for multi-family 
properties. I am curious why you chose not to pursue a pay for 
success model for public housing.
    Secretary Castro. This is a great area of focus for us, and 
it is something that we have given a lot of thought to and that 
we are proud of in terms of doing our part to encourage energy 
efficiency. The good news here is that we see more and more 
public housing authorities that are taking us up on this. With 
regard to public housing, for instance, NYCHA in New York, New 
York Housing Authority, recently announced that they seek to do 
green energy retrofits of their entire stock, which I believe 
is 200,000 or so units.
    The fact is that these housing authorities and subsidized 
housing can pursue different models to achieve energy 
efficiency. Some take on energy performance contracts. The 
model that you mentioned we are interested in because we 
believe that it will allow housing authorities to take on less 
debt to accomplish the same goal, taking on less debt, and 
still to provide greener housing units for residents.

                          FHA CAPITAL RESERVES

    Senator Collins. Finally, I want to talk to you about a 
perennial issue. It is FHA's capital reserve ratio. As you 
know, it is currently .41 percent despite the legal requirement 
that it be 2 percent. The most recent actuarial report 
projected that FHA would reach the 2-percent level in 2016. 
Despite the recent reduction in annual mortgage insurance 
premiums, you have said that the fund is on a ``strong 
trajectory,'' and that the premium reduction will only delay 
reaching the goal of 2 percent by a couple of months.
    However, I have to tell you I have heard this song before 
every year, and that was even before the premium reduction. The 
actuarial reports seem to always project that FHA will reach 
the 2-percent reserve level 2 to 3 years down the road, which 
never seems to come to fruition, and every year the HUD 
Secretary comes up here and says 2 more years, 2 more years, 2 
more years. In addition, it is obvious that the premium 
reduction, and I understand the public policy rationale for 
that, but that is also going to have an adverse impact.
    So why should we accept HUD's most recent projection, and 
why should we believe the administration's projections are any 
different than the last five? I realize you were not here for 
those, but----
    Secretary Castro. Yes. This is, of course, a question that 
I had the opportunity to answer in front of the House Financial 
Services Committee a few weeks ago. And so, what we have seen 
is over the last couple of years significant improvement in 
terms of our capital reserve ratio and the Mutual Mortgage 
Insurance Fund. That fund has grown by $21 billion over the 
last 2 years. We project that even after this premium increase 
that it is going to continue to grow by at least $7 billion 
over the next 3 to 4 years.
    The success that we have had in improving that ratio has 
been due in part to premium increases. We have increased 
premiums five times. But maybe just as importantly as that, we 
have taken a series of steps to strengthen the fundamentals of 
that fund. For instance, for the first time we introduced at 
FHA a credit score floor of 500. We required borrowers with a 
credit score underneath 580 to actually put 10 percent down. We 
required borrowers who were taking out a loan in excess of 
about $620,000 to put 5 percent down instead of just 3 1/2. We 
also have worked on improving recovery, so introducing the 
Distressed Assets Sales Program, for instance, and conveyance 
without title.
    All of that has led to a stronger Mutual Mortgage Insurance 
Fund, and that is why we have confidence that, yes, of course 
even though reducing the premiums does mean about a billion-
dollar difference in this next year, that we are going to 
continue to see stronger performance that within 2 years will 
get us to the statutorily required 2-percent capital reserve 
ratio.
    Senator Collins. Absolutely. Senator Reed.

                          FHA LOSS MITIGATION

    Senator Reed. I would just like to follow on to the 
question with FHA because I understand that there are some 
proposals in the budget that would give you further tools to 
help FHA. And as a member of the Senate Banking Committee, the 
jurisdiction is the Banking Committee, but to get it done, we 
might have to help, too. One of them is lost mitigation, 
transferring servicing to a company that is better prepared to 
do loss mitigation.
    Can you tell us what impact that could have--I assume it is 
a positive impact--to doing something like this, giving you the 
authority. And you cannot do it without congressional 
authority.
    Secretary Castro. That is right, and we do request that. We 
believe that the ultimate impact of this is going to be more 
that more folks are able to stay in their homes and avoid 
foreclosure, and that because of that, the Mutual Mortgage 
Insurance Fund again is going to have one more policy that 
strengthens it and keeps it on an upward trajectory. And so, 
the servicing aspect of that is, of course, an important aspect 
of it.
    Senator Reed. Now, we saw this obviously from the time of 
the housing crisis with financial institutions in terms of the 
servicing. They were designed for sort of a one way, which is: 
collect the payments, send it to the trust, and that is it. And 
when they were asked to start doing mitigation, they just could 
not function. Now we have more specialized services. Mitigation 
is something they do as an expertise, and if you can engage 
those companies, that might be very useful. But that is 
something that legislatively we would have to give you that 
authority.
    Secretary Castro. Yes. Well, we have found whether it is 
with housing counseling on the front end or with services that 
are better about loss mitigation, is that working with 
borrowers works for the FHA. It makes sense in the long run, 
and so we hope that this is a request that will see the light 
of day.
    Senator Reed. Thank you very much. Thank you.
    Senator Collins. Mr. Secretary, I want to thank you for 
being here today. I have a few additional questions, but I am 
going to submit them for the record.
    I want to thank my staff for their hard work on the budget 
and the analysis of it. I would say to you, Mr. Secretary, that 
if you have found time to travel to 20 States and yet did not 
come to the State of Maine, you may wish to reconsider your 
travel in the next year.
    Secretary Castro. I think you are right, chairwoman. Thank 
you for that.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Collins. A word to the wise there.
    My second word to the wise would be to heed the comments 
that the Vice Chairman of the subcommittee, Senator Reed, and I 
would wager, everyone on this subcommittee would make about the 
cuts in the Community Development Block Grant Program. As a 
former mayor, you must know how flexible that program is, and 
it really does produce economic development and jobs. And I 
would think that would be the last program that this 
administration would want to cut. And you heard the strong 
support here.
    With that, I would announce that the hearing record will 
remain open until next Friday, March 20, for the submission of 
any additional questions or statements for the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department subsequent to the hearing:]
            Questions Submitted by Senator Susan M. Collins
                       reduction in cdbg funding
    Question. The Department's request is $4 billion, or 9 percent, 
above the fiscal year 2015 level and increases are requested for almost 
every program. The notable exception is the CDBG program.
    Why has the department requested a $200 million, or nearly 7 
percent reduction to this critical program?
    Answer. The Department's 2016 budget opts to increase funding for a 
range of programs, most notably Housing Choice Vouchers and Homeless 
Assistance Grants, which have a direct impact on the quality of life 
for individuals with the greatest needs. It is increasingly expensive 
to maintain existing service levels in these programs given increasing 
rents and the lack of affordable housing stock in many communities, but 
moreover, nearly 7.7 million households continued to report worst case 
housing needs in 2013 and need for assistance. While CDBG delivers 
substantial investment funds for low- and moderate-income 
neighborhoods, these needs are more elastic than those associated with 
housing programs as grantees can choose the scope and cost of 
activities funded through CDBG. Approximately 85 percent of the 
Department's budget goes to activities that provide essential housing 
and HUD is committed to providing housing to those most in need of it.
    The Administration's 2016 budget continues to provide strong 
support for the CDBG program by requesting $2.8 billion. It is clear to 
the Department that CDBG must be re-focused to effectively accomplish 
the goals of the program and strengthen the partnership between the 
Federal government and local governments that is the cornerstone of the 
program. The Department wants to make the program more effective by:
  --Allowing grantees, including States, to form regional combinations 
        to achieve savings in administering their CDBG grants and pool 
        resources for strategic investment decisions.
  --Reducing the growing number of small grantees to support local CDBG 
        programs that are adequately staffed and support meaningful 
        community investments. These changes include removing the 
        ``grandfathering'' of CDBG grantees and setting a minimum grant 
        threshold.
  --Reducing undue administrative burden on grantees by aligning the 
        cycles for the submission of plans and reports as well as the 
        cycles to qualify for the CDBG program.
  --Allowing for a more equitable treatment of States and entitlement 
        communities and counties by:
    --Allowing States to also receive reallocated funds for disasters 
            from the sanctions fund;
    --Giving the Department the authority to sanction a State in a 
            similar fashion to other CDBG grantees; and,
    --Increasing States' administrative cap and removing the matching 
            requirement.
    These changes would allow the CDBG funds to work harder and smarter 
for communities across the nation.
            flexibility between operating and capital funds
    Question. Mr. Secretary, Maine, like a number of other States, has 
small public housing agencies. A concern I often hear from the PHAs in 
my State is that although the public housing authorizing statues permit 
full flexibility between operating and capital funds for small PHAs, 
HUD continues to lack a process for those PHAs to be able to shift 
funds back and forth as needed over the course of the year.
    What process improvements can HUD undertake to enable small PHAs to 
access the flexibility the law intends them to have and to access the 
fully range of tools to manage their programs and make local decisions?
    Answer. Per section 9(g)(2) of the U.S. Housing Act, small PHAs 
have the ability to use Capital and Operating Funds flexibly. The 
statute limits that flexibility to small PHAs that are not troubled 
and, in the determination of the Secretary, are operating and 
maintaining their public housing in a safe, decent and sanitary 
condition. The Capital Fund has implemented this flexibility by 
permitting small PHAs to transfer either all (100 percent) or a portion 
of their Capital Funds to Operations through Budget Line Item (BLI) 
1406 in order to use them for operating purposes. This transfer is at 
the discretion of the PHA and designed to be easily integrated into its 
annual statement. The PHA's local field office reviews and approves 
these transfers, taking into consideration statutory requirements 
relative to the condition of the housing inventory.
    There has not been a clear mechanism for the transfer from 
Operating to Capital Funds, other than through the use of the Operating 
Fund Financing Program which enables Operating funds to be used for 
Capital purposes. To both clarify and simplify the process, HUD will be 
issuing guidance to state clearly that, per the statute, and subject to 
the non-troubled status and housing physical conditions requirements, 
Capital or Operating Funds can be used for either purpose without 
requiring the use of the Operating Fund Financing Program for capital 
improvements. Additionally, the 2016 budget proposed further funding 
flexibility for all PHAs that would also allow operating reserves to be 
used for capital purposes. The 2016 budget also proposes that PHAs be 
allowed to establish a capital fund reserve for replacement account (to 
be held at Treasury) for accumulation, eliminating the current Capital 
Fund obligation and expenditure requirements for funds held in such an 
account.
                        family self-sufficiency
    Question. GAO concluded a review of HUD's self-sufficiency programs 
in 2013. Among the findings, GAO noted that HUD's data cannot be 
reliably assessed, and that HUD lacks a strategy for using the data it 
requires PHAs submit in order to improve program design. As an aside, 
this point seems to be a recurring theme across HUD programs. Mr. 
Secretary, while helping families achieve self-sufficiency and 
transition out of public housing or vouchers must be a key objective 
where appropriate, given the waiting lists for assisted housing than 
span years, this outcome is even more critical. However, this cannot be 
achieved without effective data driven programs that disseminate best 
practices.
    How is HUD addressing the concerns raised in this report?
    Answer. HUD is in agreement with GAO's recommendations on HUD's 
self-sufficiency programs and is pleased to report on the progress it 
is making in fulfilling those recommendations for both Family Self-
Sufficiency (FSS) and Resident Opportunities and Self-Sufficiency 
(ROSS).
    GAO Recommendations for the FSS Program.--In response to GAO's 
recommendations,\1\ HUD proposed several corrective actions. The first 
was to develop a process to identify missing data, identify the reasons 
for the missing data, and take steps to help ensure data is complete. 
HUD proposed to work with Public Housing Agencies (PHAs) that have 
incomplete data in the Public and Indian Housing Information Center 
(PIC) System and to provide guidance and training to ensure that all 
FSS participant records are reflected correctly in PIC.
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    \1\ GAO's two recommendations for FSS were:
      -- Recommendation 1: [HUD should develop and implement] a process 
to better ensure that data on FSS participants grants are complete; 
such a process should include steps for identifying the reasons for 
missing data, and taking steps to help ensure data are complete.
      -- Recommendation 3: [HUD should develop and implement] a process 
to better ensure that data on FSS participants grants are complete; 
such a process should include steps for identifying the reasons for 
missing data, and taking steps to help ensure data are complete.
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    The second corrective action was to streamline the e-Logic model 
(LM) for FSS beginning with the fiscal year 2013 NOFA. The streamlined 
tool includes a list of metrics as well as definitions and instructions 
for completing the report. HUD also committed to providing training on 
the new LM to both grantees and PIH's Office of Field Operations (OFO), 
whose staff directly oversee grantees' performance.
    Specifics of these corrective actions are detailed below:
HUD Corrective Actions--Improving Data Collection
    FSS Notice of Funding Availability (NOFA).--As of fiscal year 2013, 
HUD developed its FSS NOFA in a manner that incents PHAs to properly 
document the number of families (heads of household only) participating 
in the program. HUD published the total number of Housing Choice 
Voucher (HCV) and Public Housing (PH) families (heads of household 
only) under an FSS contract of participation as shown in PIC, between 
April 2012 and March 2013, for each of the applicants that were funded 
under the fiscal years 2011 and/or 2012 HCV and PH FSS NOFAs. HUD 
instructed all applicants to review the published report and compare it 
with their own data. If they determined that the report was incorrect 
and that the inconsistency could result in an impact to their 
eligibility, they were instructed to provide documentation of the 
correct number of program participants in their application. Through 
this process, HUD received 129 FSS reports (out of 976 applicants) that 
documented a number of program participants different from what was 
listed in HUD's published report.
    PIC Modifications.--On May 27, 2014, HUD implemented modifications 
to the PIC system related to the FSS program. HUD established a set of 
flags that signal to users in specific situations when PHAs are 
entering incomplete or incorrect data.
    PHA Technical Assistance.--HUD has obligated technical assistance 
funds in fiscal year 2015 that will provide targeted assistance to a 
selection of these 129 PHAs. HUD will also instruct the technical 
assistance provider to deliver a report on actions that can be taken to 
improve reporting accuracy and results.
HUD Corrective Actions--Streamline Reporting
    The LM was revised to create mandatory metrics, along with a data 
dictionary so all grantees would have a common understanding of the 
metrics. HUD has also provided training, guidance, and instructions for 
how to complete the new LM. Using the indicators in the LM, HUD 
identified four useful performance indicators to evaluate high and low 
performers. These are:
  --Rate of Increased Earned Income.--The percentage of FSS 
        participants that have experienced an increase in earned 
        income. HUD will use the rate of increased earned income, 
        instead of the dollar amount of the increase, due to wage 
        variations across the country.
  --Graduation Rate.--The percentage of FSS participants who exit the 
        FSS program after completing their contract.
  --Rate of Exit Without Graduation.--The percentage of FSS 
        participants who exit the FSS program without completing their 
        contract.
  --Forfeiture Rate.--The amount of escrow forfeited by FSS 
        participants divided by total FSS participants. Escrow is 
        forfeited when the participant fails to graduate from the 
        program.
    The Department is also now working with a TA provider to determine 
if these are strongest performance evaluation metrics for FSS, so the 
specific metrics may change in the future.
    GAO Recommendations for the ROSS Program.--In response to GAO's 
recommendation \2\ for the ROSS program, HUD proposed several 
corrective actions. The first consisted of developing a more effective 
LM, the only tool available for data collection of the ROSS program. 
HUD committed to streamlining the LM's metrics, to simplify the 
reporting/submission process, and to issue specific reporting guidance 
which would accompany the revised LM as part of the fiscal year 2014 
ROSS NOFA. HUD also pledged to provide training to both grantees and 
HUD field staff.
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    \2\ GAO's two recommendations for the ROSS program were:
      -- GAO Recommendation 2: [HUD should develop and implement] a 
process to better ensure that PHAs awarded ROSS SC grants annually 
report required participation and outcome data that are comparable 
among grant recipients; this process should include the issuance of 
program-specific reporting guidance.
      -- GAO Recommendation 4: [HUD should develop and implement] a 
strategy for regularly analyzing ROSS SC participation and outcome 
data; such a strategy could include identification of PHAs from which 
lessons could be learned and PHAs that may need assistance improving 
participation rates or outcomes.
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    HUD expects the revised LM and submission process to substantially 
improve the quality of the data HUD is able to collect from grantees. 
With this improved tool and beginning in the fiscal year 2014 LM 
(approximately March 2016), HUD will be able to better monitor the 
program, derive lessons learned, and provide targeted assistance to 
PHAs whose reporting indicates that such assistance is necessary. 
Unfortunately, while HUD attempted to analyze data available from open 
grants, as well as completed grants (fiscal year 2008 through 2011) to 
identify trends in grantees' activities, outcomes and performance, the 
disparate nature of the data could not help inform actions.
    Specifics of these corrective actions are documented below:
HUD Corrective Actions--Improved Logic Model
    Significantly Streamlined LM.--Prior to the GAO report, the ROSS LM 
had over 100 activities (outputs) and over 170 outcomes from which 
grantees selected. The previous LMs did not contain a data dictionary 
to give all grantees a common understanding of the metrics. The new LM 
published with the fiscal year 2014 NOFA has 31 outputs and 36 
outcomes. Of these, there are 16 activities and 16 outcomes that are 
considered ``mandatory,'' meaning that all grantees will have to report 
on these metrics. The fiscal year 2014 LM also contains a glossary of 
terms, or data dictionary, for each metric as well as instructions for 
``how to count,'' which provides guidance regarding counting outputs 
and outcomes.
    LM Training for ROSS Applicants.--On July 16, 2014, as part of a 
Webinar for applicants for fiscal year 2014 ROSS funds, training on the 
revised ROSS LM was provided. Additional training on the LM will be 
provided to fiscal year 2014 ROSS grantees 6 months after awards have 
been made.
HUD Corrective Actions--Improving Analysis
    HUD has put in place and committed to the following:
  --HUD has held monthly conference calls with OFO staff for many years 
        to provide information on a range of grant-related topics. 
        During these calls, HUD HQ provides training on how to analyze 
        the LM and how to work with grantees to obtain good 
        information.
  --Annually, HUD will analyze the data it receives from grantees to 
        assess program outcomes. HUD HQ staff will share its findings 
        with OFO staff who are responsible for the day-to-day 
        monitoring of ROSS grantees. For grantees that are low 
        performers, HUD HQ staff will work with OFO to develop a work 
        plan for these grantees, to include interim deadlines for 
        achieving promised outcomes.
                          housing inspections
    Question. During this subcommittee's fiscal year 2013 budget 
hearing I discussed the importance of HUD collecting photographs during 
housing inspections to ensure proper oversight. This stemmed from a 
terrible situation in Maine where families were living in unsafe 
conditions while the inspections reported the units met HUD's 
standards. Three years later, HUD is finally beginning to require the 
submission of photographs from unit inspections, but only when the 
inspection reports a serious deficiency.
    Recalling that the original problem was inspections failing to 
report unsafe conditions, why is HUD not requiring photographs for all 
inspections?
    Answer. HUD has incorporated the use of photographs for the Uniform 
Physical Condition Standards for Vouchers (UPCS V) inspections of 
public housing (section 9) and multifamily units. The inspection 
protocol for the new section 8 inspection standards (UPCS V) will also 
include photographs.
    The UPCS protocol is structured so that deficiencies are ranked at 
3 Levels, ranging from minor (Level 1) to serious (Level 3). Inspectors 
are currently required to take photos of only Level 3 (serious) 
condition observations. Photographing only the Level 3 condition 
observations protects the integrity of the inspection process and 
prevents the unintended consequence of inspectors not recording all 
deficiencies to avoid having to take photos of every deficiency (Level 
1, 2 and 3) noted. In addition, requiring photos of all conditions in a 
unit would significantly increase the cost, time and resources 
necessary to complete all inspections.
    Our photo process is capable of taking photos of all deficiencies. 
However, we feel that photo recordation of the Level 3 conditions is an 
effective approach to guard against families living in unsafe 
conditions. We will continue to evaluate the effectiveness of this 
protocol.
    Housing Inspections
    Mr. Secretary, as I mentioned in my opening statement, the 
Committee has worked hard to provide funding not only for technical 
assistance to improve the capacity of Public Housing Agencies, but also 
to evaluate and improve the inspection standards for the physical 
quality of units. Based on the work HUD has done to this point, it is 
clear that the current inspection standard for tenant-based vouchers is 
too subjective and results in passing units that should fail or failing 
units that should pass. The need for a clear and consistent standard 
for both public housing and voucher units is clear.
    Question. What is HUD's timeline for implementing a single uniform 
inspection standard?
    Answer. With the assistance of Congressional funding, HUD has 
completed a quality assurance review of approximately 138 PHAs and 
inspected approximately 29,000 voucher units. The provided funding also 
has been used to develop business processes and software and to provide 
FTE support for this effort. Using the data obtained to date, HUD is 
moving aggressively to establish a uniform property standard for 
voucher units (UPCS V). In addition to developing clear and consistent 
standards, we plan to have established the business processes to 
receive inspection results from PHA inspectors for every voucher unit. 
Pictures of Level 3 (serious) inspection deficiencies will also be 
received. These capabilities will enable informed oversight of the 
condition of voucher units.
    Working with our PHA partners, we anticipate publishing a UPCS V 
proposed rule in February 2016 and a final rule in September of 2016. 
We are planning a phased implementation of UPCS V at PHAs, beginning in 
October of 2016.
         personnel security and suitability program weaknesses
    Question. In early 2013, the Office of Inspector General issued a 
Systemic Implication Report to HUD identifying weaknesses within the 
personnel security and suitability program. The OIG found that during 
the hiring process there were no policies, procedures, management, or 
oversight to ensure employees were effectively vetted before hiring. In 
a separate incident, a former HUD loan guarantee specialist, pled 
guilty last fall to a charge of wire fraud stemming from a scheme in 
which he stole $843,000 from the government. Of particular importance 
is the fact that HUD hired this individual despite having theft and 
larceny arrests and convictions spanning from 1984 to 2007. The 
Inspector General's office recommended that new policies, procedures, 
and regulations be developed and implemented to prevent this from 
occurring during initial hires and for re-investigations of current 
employees.
    How has HUD implemented these recommendations?
    Answer. The Personnel Security Division (PSD) established and 
developed new policies, procedures and regulations:
  --In 2013, PSD took immediate action to improve and strengthen 
        existing policies, procedures, and capabilities. HUD 
        implemented a second-level review of all issue cases for both 
        initial and final suitability determinations. A competitive 
        service Federal employee and/or applicant is flagged as an 
        issue case when it is found, for example, that they have a 
        history of misconduct or negligence in employment, criminal or 
        dishonest conduct, material, intentional false statement, or 
        deception or fraud. The second-level review is conducted by a 
        senior Personnel Security Specialist and/or the Director of 
        PSD. As a learning tool for staff, PSD continues to conduct 
        biweekly roundtable discussions with personnel security 
        specialists and assistants to review and discuss adverse 
        suitability issues.
  --A PSD desk reference of processes is under development. Expected 
        completion date for a final product is May 15, 2015.
  --PSD has implemented the regulation that all Personnel Security 
        Specialists be in compliance with the National Suitability 
        Adjudicator Training Standards. The training covers 
        adjudications of character and conduct for covered positions 
        made under Part 731 of the title 5, Code of Federal Regulations 
        (5 CFR 731). PSD currently has three of its four Personnel 
        Security Specialists registered for this training to be held in 
        May and June 2015. Once OPM issues its next training schedule, 
        the remaining specialists will receive the training.
  --The Personnel Security Handbook has been revised and forwarded for 
        departmental review and concurrence. Expected completion date 
        of approval for this Handbook is June 30, 2015.
                recertification of fixed-income families
    Question. Under current law, public housing agencies and owners 
must recertify the incomes of all program participants on an annual 
basis. The budget request includes a proposal to authorize housing 
agencies and owners to recertify fixed-income families every 3 years. 
Eligible families would be defined as those families for whom at least 
90 percent of income is from sources such as Social Security; Federal, 
State, local, and private pension plans; and the supplemental security 
income program.
    How many families would be covered under this proposal, and while 
this change is intended to reduce the administrative burden on PHAs and 
owners, how does it also balance the need to ensure tenants are being 
charged appropriate rents based on their incomes?
    Answer. On April 6, 2015, the number of public housing or Housing 
Choice Voucher (HCV) families who reported at least 90 percent of their 
income as being from pensions, social security or supplemental social 
security totaled 1.1 million out of 3.1 million. As of March 31, 2015, 
for Multifamily assisted households (Project-Based Section 8, Section 
202, Section 811, Rent Supplement/RAP) 844,035 households out of 
appoximatley1.4 million households has at least 90 percent of income 
from SS, SSI, Pension. This is 61.2 percent of Multifamily assisted 
households.
    Fixed income families are defined as having 90 percent of their 
income covered by sources as noted above and that do not fluctuate from 
year to year, but are adjusted by an inflation factor. Accordingly, it 
is unlikely that fixed income families will have income that varies 
greatly from year to year. In the case of Federal, State and local 
pensions, these inflation factors are generally publicly available 
information. HUD would be able to identify an appropriate inflation 
factor to use to account for average changes in fixed income families.
    This policy would not prevent any family from requesting an interim 
re-examination if their income changes, causing them to need an income 
adjustment. In addition to allowing families to request a 
recertification at any time should their income decrease, the 
Department would continue to monitor all households for the presence of 
unreported income through its Earned Income Verification system (EIV).
    The purpose of HUD's EIV System is to make integrated income data 
available from one source for HUD partners (PHAs and owners of assisted 
Multifamily properties to use to improve and streamline income 
verification. EIV provides the following information:
  --Monthly employer new hires;
  --Quarterly wages for Federal and non-Federal employees;
  --Quarterly unemployment compensation; and
  --Monthly social security (SS) and supplement security income (SSI) 
        benefits.
    PHAs and Multifamily owners are required to use and implement the 
EIV system in their day-to-day operations. HUD Partners receive 
quarterly reports from HUD where unreported income is uncovered as a 
result of the Department's monitoring efforts. EIV has been 
instrumental to the Department's success in reducing improper payments 
and ensuring the right people receive the right amount of assistance at 
the right time.
                       technical assistance funds
    Question. HUD is consolidating its funding for technical assistance 
within the Community Compass initiative which has been part of the 
Transformation Initiative account and in fiscal year 2015 was funded 
within the office of Policy Development and Research. This technical 
assistance is intended to be outcome-focused and strengthen the 
capacity and functionality of HUD's grantees.
    How are technical assistance funds being used to resolve audit 
findings or similar program office reviews of grantees?
    Answer. Technical assistance may be used to help grantees address 
underlying issues that caused adverse audit or monitoring findings. For 
example, if an Inspector General audit or HUD monitoring cites a 
grantee for inappropriate or ineligible payments to a sub-recipient, 
the technical assistance could improve the grantee's process and 
controls for sub-recipient oversight. Since only HUD staff can resolve 
inspector general audit or HUD monitoring findings, the technical 
assistance is used to help the grantee take corrective action and 
establish improved procedures and protocols to ensure the errors that 
caused the findings are not repeated. HUD is also working to develop 
online resources and curricula that assist grantees with addressing 
common challenges. For example, HUD has a suite of training and 
resource guides related to compliance with Federal requirements related 
to environmental review and financial management, and is developing 
resources and curricula related to fair housing, sub-recipient 
management, PHA-specific management and board governance topics, and 
FIFO requirements.
                                 ______
                                 
                Questions Submitted by Senator Jack Reed
                   improving management and oversight
    Question. In looking at OIG reports, it also seems that many of 
these problems could have been prevented if grantees had a better 
understanding of the rules, and if HUD was doing more real-time 
monitoring to catch problems early. If HUD is better able to identify 
systemic problems grantees are having in managing Federal grants, it 
could prevent them from repeating the same mistakes.
    Can you highlight for us a few items in the budget that are 
intended to address OIG recommendations and improve management and 
oversight?
    Answer. The 2016 budget includes $45 million in the Transformation 
Initiative Fund request for HUD's core technical assistance, much of 
which is used to assist grantees and PHAs with resolving or preventing 
the types of challenges that result in monitoring or audit findings. 
Training on topics like financial management and sub recipient 
monitoring is designed to build knowledge and capacity among grantee 
and PHA staff in areas that are often cited in monitoring or audit 
findings. TA can help identify the source of the problems that are 
causing grantees to have monitoring or audit findings. For example, 
errors in grant reporting may be due to staff error or a need for staff 
training, but could also be the result of a lack of proper systems and 
processes for tracking grant activities. Once the source of the problem 
is identified, TA is used to help the grantees take corrective action 
and establish improved procedures and protocols to ensure the errors 
that caused the findings are not repeated.
                improving the integrity of fha's program
    Question. FHA has suffered significant losses in recent years as a 
result of the housing crisis. HUD has taken numerous steps to tighten 
program requirements and improve its finances. But there are other 
reforms that can only be made if Congress provides HUD with new 
authorities.
    What proposed reforms included in the budget request do you think 
would be most effective in improving the integrity of FHA's programs 
and the position of FHA's Mutual Mortgage Insurance Fund?
    Answer. FHA continues to make it a priority to minimize losses to 
the MMI Fund by assisting homeowners through early delinquency 
intervention, loss mitigation programs, and specific joint efforts with 
the Department of Treasury, including: the Home Affordable Modification 
Program and the FHA Short Refinance program for underwater borrowers 
with conventional loans. Over fiscal years 2014 and 2015, FHA has 1-
year goals of assisting 275,000 homeowners through early delinquency 
interventions and 110,500 homeowners through loss mitigation programs, 
with an additional goal of having at least 92 percent of loans 
receiving this assistance to be current on their mortgages for at least 
6 months. For fiscal year 2014, FHA fell slightly short of its early 
intervention goal, but far exceeded the permanent loss mitigation 
program tools utilized and 499,945 homeowners were assisted in total.
    FHA has also made a number of changes to the Home Equity Conversion 
Mortgage (HECM) program to stabilize the Fund. Since the passage of the 
Reverse Mortgage Stabilization Act in 2013, FHA has implemented several 
changes to strengthen and enhance the HECM program. These changes 
include limiting upfront draws; changes to the mortgage insurance 
premium structure to encourage lower initial draws; and a shift to 
Adjustable Rate HECMs, which encourage borrowers to access funds as 
they need them, preserving equity to support them over time. A number 
of other improvements to the HECM program aimed at managing risk to the 
Fund will be made during fiscal year 2015.
    While FHA is making every effort using the tools currently 
available, Congress can help these efforts to strengthen the MMI Fund 
by enacting the new authorities requested in the 2016 budget. In 
particular, five authorities would have considerable positive impacts 
on the health of the Fund:
  --Allow an Administrative Support Fee.--This fee of up to $30 million 
        would allow improvements to Housing's IT infrastructure and 
        Risk Management support, improving the ability to increase or 
        decrease scalable Risk Management efforts in response to 
        changes in volume, to modernize FHA's quality control efforts 
        and support other risk-related initiatives, including those 
        introduced as part of FHA's Blueprint for Access in April 2014. 
        FHA continues its work to improve and strengthen its capability 
        for detecting and mitigating front and back end portfolio 
        risks, necessitating access to timely and useful decision data, 
        and this fee would support those efforts. After collecting 
        public feedback and after a designated implementation period, 
        the fee would be prorated for the remaining portion of the year 
        and would be based on volume. The fee of 2-4 bps would be 
        charged prospectively. This request is in Section 240 of the 
        general provisions.
  --Provide Additional HECM Flexibility.--Revise the National Housing 
        Act to give HUD additional flexibility in establishing the time 
        period for deferrals for the obligation to satisfy the loan in 
        HECM mortgages. This request is in Section 255 of the general 
        provisions.
  --Amend the National Housing Act To Enable FHA To Take Enforcement 
        Action Against Lenders on a Nationwide Basis.--This would give 
        the Secretary enhanced ability to review mortgagee performance 
        and, if a mortgagee is found to have an excessive rate of early 
        defaults or claims, to terminate the approval of the mortgagee 
        to originate or underwrite single family mortgages in a 
        specified area or areas, or on a nationwide basis. This request 
        is in Section 249 of the general provisions.
  --Allow FHA To Seek Indemnification From Direct Endorsement (DE) 
        Lenders in Addition to Lender Insurance (LI) Lenders.--This 
        language will make all FHA lenders subject to the same 
        enforcement regime. This amendment adds a new section that 
        gives FHA/the Secretary authority to ensure that DE (similar to 
        LI) mortgage lenders are liable to indemnify the Secretary for 
        loss on loans they had originated or underwritten if fraud or 
        misrepresentation was involved in connection with the 
        origination or underwriting regardless of when an insurance 
        claim is paid. This request is in Section 250 of the general 
        provisions.
  --Revises the National Housing Act To Allow for Short Sales in the 
        Case of Imminent and Not Just Actual Default.--Currently, FHA 
        is only able to allow for pre-foreclosure/short sales if a 
        borrower has entered into default, creating a disincentive for 
        homeowners having trouble making their mortgage payments and 
        seeking a loss mitigation solution. This request is in Section 
        252 of the general provisions.
                    family self-sufficiency program
    Question. The Family Self-Sufficiency Program helps residents 
improve their job prospects, incomes and work toward self-sufficiency. 
Some of the reforms I have worked on with Senator Blunt have been 
included in recent T-HUD bills, which have helped to streamline and 
expand the FSS program so it is accessible to more residents.
    What is the status of guidance on how HUD will implement the 
expansion to residents living in project-based section 8 housing? And 
when do you expect residents living in project-based rental housing 
will be able to start using the program?
    Answer. Residents of public housing that are currently 
participating in the FSS program will be able to continue their 
participation without interruption if their housing property converts 
to the project-based Section 8 platform through the Rental Assistance 
Demonstration (RAD). The Office of Multifamily Housing (MFH) is 
actively preparing guidance for Rental Assistance Demonstration (RAD) 
owners with FSS participants. This RAD guidance will be ready much 
sooner than the broader guidance for Project-Based Rental Assistance 
(PBRA).
    Residents of PBRA properties will be able to participate in FSS 
after MFH publishes guidance for PBRA owners. MFH expects that broader 
guidance that would apply to both RAD projects and newly eligible PBRA 
owners will be published in Fall 2015. That guidance will also include 
the process for using residual receipt accounts to hire coordinators 
for PBRA owners with an FSS program. In addition, MFH is preparing 
instructions for owners to enter data on FSS participants in the 
Multifamily TRACS (Tenant Rental Assistance Certification System).
                    remediation of lead-based paint
    Question. While we have a long history of dealing with the 
remediation of lead-based paint, HUD has more recently branched out to 
also address other home health hazards like indoor allergens and radon.
    What are your grantees reporting in terms of how healthy homes 
interventions have impacted the health and quality of life for the 
people they have helped serve?
    Answer. Many of HUD's Office of Lead Hazard Control and Healthy 
Homes (OLHCHH) grantees have conducted housing interventions to address 
multiple health hazards in addition to lead, including those related to 
asthma (such as from allergens), cancer (such as from radon and 
asbestos), and unintentional injuries (such as from poorly designed, 
lit, or maintained stairways). HUD allows applicants to its Lead Hazard 
Control grant program to apply for supplemental funds for making 
healthy homes interventions in housing units receiving lead hazard 
control work; over 90 percent of the applicants do so. (Note that lead 
hazard control funding is used exclusively for that purpose, the 
additional funding for controlling other housing-related hazards comes 
from separate healthy homes funding.)
    HUD identifies health outcome measures by applying the results of 
research that has demonstrated the health benefits of certain housing 
improvements to the outputs of its grants. Accordingly, HUD requires 
that its grantees provide output information from its grants that 
produce such housing improvements. HUD's approach to applying these 
results minimizes the information collection burden on its grantees, 
and avoids duplicating research. Specifically, grantees report on their 
assessment and mitigation of health-related housing hazards.
    Looking at asthma prevention in particular, from April 2013 through 
December 2014, OLHCHH grantees assessed 3,025 housing units for asthma-
related hazards, of which 2,184 had at least one such hazard addressed 
under the grant (per grantee reporting to the OLHCHH's Healthy Homes 
Grants Management System). Using the grantees' reported data, at least 
3,369 children directly benefited from the OLHCHH's grants.
    When OLHCHH grantees assessed housing for health-related hazards, 
the asthma-related hazards assessed were asbestos and man-made fibers 
(assessed in 24 percent of the units, and identified as present and 
controlled in 1 percent), carbon monoxide (32 percent and 13 percent), 
crowding and space (28 percent and 1 percent), dampness and mold growth 
(34 percent and 18 percent), domestic hygiene, pests, and refuse (30 
percent and 8 percent), excess cold (30 percent and 9 percent), excess 
heat (29 percent and 3 percent), food safety (27 percent and 1 
percent), personal hygiene (28 percent and 3 percent), and volatile 
organic compounds (24 percent and 0.1 percent) (Source: Grantee reports 
through HUD's online Healthy Homes Grants Management System).
    An extensive body of research has identified effective 
interventions and preventive measures, like those funded through 
OLHCHH, to reduce health hazards in homes. Notable examples include the 
reduction, by about one third across two studies, in the rate of 
children's asthma-related outpatient visits to emergency rooms or 
urgent care centers, or hospital inpatient stays, and the reduction, by 
about half across two other studies, in the rate of children's 
respiratory symptoms.
  --Cuyahoga County's Health Department and Case Western Reserve 
        University demonstrated significant improvement in Cleveland 
        children's asthma symptoms following remediation focusing on 
        mold and moisture problems in their homes.
  --The city of San Diego remediated housing-related health hazards at 
        low cost. Among other benefits, households with childhood 
        asthma emergency room or urgent care center such visits dropped 
        by 41 percent.
  --Seattle-King County Health upgraded green-built public housing 
        units to ``Breathe Easy Homes'' to improve indoor air quality 
        and reduce indoor asthma triggers. One year later, children 
        with asthma who moved in had a 70 percent drop in days with 
        symptoms.
  --The Boston Public Health Commission and Harvard School of Public 
        Health included integrated pest management interventions, 
        education and case management in private and public housing. 
        Respiratory symptom scores dropped from 2.6 to 1.5 out of 8.
    Question. Additionally, most people don't even know the risk and 
how easy testing is before you buy a new home to protect you and your 
family. What steps are you taking to educate at risk communities of the 
hazards of radon exposure and encourage testing for new homebuyers?
    Answer. HUD uses a variety of means to educate the public about 
radon and to encourage or require testing across HUD-assisted housing. 
The Department includes information on radon in its materials for 
outreach to housing managers and individual homeowners, including a 
Healthy Homes workbook and fact sheet developed by OLHCHH. The workbook 
has been translated into multiple languages and has been widely 
distributed by the OLHCHH and through the US Department of 
Agriculture's extension program network. The OLHCHH has written and 
made available the Help Yourself to a Healthy Homes booklet in several 
languages.
    HUD participates on Federal councils that address radon, including 
by promoting outreach to at risk communities; these councils include 
the Federal Radon Action Task Force, which issued the Federal Radon 
Action Plan, the Children's Environmental Health Task Force, the 
Council on Indoor Air Quality, and the Hurricane Sandy Rebuilding Task 
Force's Indoor Environmental Pollutants Work Group, among others.
    HUD has participated in the development of voluntary consensus 
standards for assessing and mitigating radon in single-family and 
multifamily housing issued by the American Association of Radon 
Scientists and Technologists (AARST) and recognized as American 
National Standards by the American National Standards Institute (ANSI), 
and is participating in the development of additional AARST standards.
    HUD's OLHCHH grant program recipients have conducted outreach and 
education on identification of radon hazards and mitigation. For 
example, in 2014, grantees assessed for radon hazards in over 1,200 
housing units, mitigating hazards in over 80. Radon warnings are 
provided in all contracts for HUD-acquired single family properties 
(also known as real estate owned (REO) properties) and to all 
recipients of FHA-backed mortgages for existing properties. The 
Department requires radon testing and, when levels meet or exceed the 
EPA's action level, mitigation in Multifamily Housing properties that 
receive HUD mortgage insurance financing. HUD estimates that about 
100,000 housing units are protected this way each year.
                                 ______
                                 
           Questions Submitted by Senator Barbara A. Mikulski
                             moving to work
    Question. In March 2014, HUD sent the Housing Commissioner of 
Baltimore city a letter that stated that the city's Moving To Work 
(MTW) Agreement would be renewed for 10 years without significant 
change to its financial terms.
    Since Baltimore was granted full MTW status in 2005, it has 
successfully used the program's flexibility, which allows it to move a 
modest percentage of funds each year between the city's public housing 
and section 8 programs, subject to HUD approval, to tackle the most 
vexing challenges it has in housing the thousands of very low-income 
families and individuals in Baltimore who lack the means to fully pay 
for their own shelter.
    I was deeply troubled to learn that HUD has reversed its position 
just 5 months after its letter last March and now proposes to cut 
Baltimore's public housing operating subsidy by as much as 46 percent. 
The loss of more than $42 million a year to the city would devastate 
its capacity to provide cost effective affordable to its residents and 
address the more than 71,000 households now on its waiting list.
    Please respond to the following questions:
    Under the terms of Baltimore's 2005 MTW agreement, did HUD agree to 
freeze Baltimore's public housing operating subsidy as long as the city 
agreed not to count any units that were shifted from public housing to 
section 8 or any authorized but unfunded section 8 units as part of the 
pool of units that would be counted in its section 8 formula 
allocation? How are these units counted now?
    Answer. HUD agreed to freeze the public housing operating fund for 
Housing Authority of Baltimore County (HABC) in order to test an 
alternative funding methodology. Over time, the funding received by 
Baltimore and the 11 other alternate operating subsidy MTW agencies has 
grown disproportionately to the funding received by the other 28 MTW 
agencies and approximately 3,300 non-MTW PHAs.
    In 2003, 2 years before its entry into the MTW Demonstration in 
2005, the HABC was rebaselined in the Housing Choice Voucher (HCV) 
program. All other non-MTW agencies were rebaselined at this time as 
well. This universally-applied rebaselining changed HCV funding from 
being distributed according to eligibility to being distributed 
according to actual utilization. The HABC's actual utilization was low 
in 2003, so the funding they received pursuant to the eligibility 
method was higher. The change in calculation from eligibility to actual 
utilization occurred before the HABC joined the MTW program.
    Upon entry to the MTW Demonstration, the HABC elected to freeze its 
HCV program funds to benefit more fully from the flexibility of the 
single fund budget. The HABC may still elect to go back to the pre-MTW 
Demonstration funding methodology, where HCV program funds would be 
provided annually according to actual utilization in the HCV program, 
if the agency felt that would better suit its needs and circumstances. 
This option would remain available as a part of the MTW extension.
    Question. The city of Baltimore has argued that HUD subsidizes the 
city $700 per month per public housing unit compared with $935 per 
month in subsidies for section 8 units. Does HUD see savings by 
preventing the cost of units from shifting from public housing to 
section 8 under the original MTW agreement?
    Answer. Under the terms of the MTW Agreement, the HABC is able to 
exercise fungibility of its funding streams (i.e., Housing Choice 
Voucher funds, and public housing Operating and Capital funds) to 
address local housing needs. HUD is not proposing to prevent MTW 
agencies from shifting public housing to section 8.
    Question. The city of Baltimore's formula funding under the public 
housing capital program of $1,200 per unit appears to be lower the 
national average of $1,420 on a per unit basis. What accounts for this? 
Is Baltimore receiving a fair share?
    Answer. The HABC's Public Housing Capital Fund program funds are 
calculated according to regulation. This regulatory calculation is 
equitably applied across all MTW and non-MTW PHAs. The calculation 
includes a number of variables that differ according to the 
characteristics of each PHA.
    Question. The city of Baltimore also argues that is authorized to 
receive funds for 19,100 section 8 units each year, but the city 
receives funds for just 14,500. Is the city correct in calculating $51 
million as the total gap in funding necessary to meet this authorized 
level each year?
    Answer. In 2003, 2 years before its entry into the MTW 
Demonstration in 2005, the HABC was rebaselined in the Housing Choice 
Voucher (HCV) program. All other non-MTW agencies were rebaselined at 
this time as well. This universally-applied rebaselining changed HCV 
funding from being distributed according to eligibility to being 
distributed according to actual utilization. The HABC's actual 
utilization was low in 2003, so the funding they received pursuant to 
the eligibility method was higher. The change in calculation from 
eligibility to actual utilization occurred before the HABC joined the 
MTW program.
    Upon entry to the MTW Demonstration, the HABC elected to freeze its 
HCV program funds to benefit more fully from the flexibility of the 
single fund budget. The HABC may still elect to go back to the pre-MTW 
Demonstration funding methodology, where HCV program funds would be 
provided annually according to actual utilization in the HCV program, 
if the agency felt that would better suit its needs and circumstances. 
This option would remain available as a part of the MTW extension.
    Question. Will you agree to alter the formulas for all the major 
housing assistance programs--public housing operating subsidy, public 
housing capital and section 8--in renewing Baltimore's MTW agreement--
rather than this narrower approach that looks only at public housing 
operating subsidies?
    Answer. HUD acknowledges the jurisdictional challenges that exist 
for the HABC in providing access to affordable housing. These 
challenges are shared by many other MTW and non-MTW PHAs that do not 
have the benefit of the alternate public housing operating fund 
calculation. The provision of a substantially greater amount of funding 
over a sustained period has assisted the HABC in meeting these 
jurisdictional challenges, but as public housing funding resources are 
limited, it is not an equitable solution to recognize jurisdictional 
challenges for 11 PHAs while ignoring them for thousands of others. The 
Department has committed to adjust only the public housing alternate 
operating fund formula.
    As stated in the response to the Senator's first question regarding 
HABC, the HABC elected to freeze its HCV program funds to benefit more 
fully from the flexibility of the single fund budget upon entry into 
the MTW Demonstration. The pre-MTW Demonstration funding methodology 
based on utilization that is applied to all other PHAs remains 
available to the HABC.
                                 ______
                                 
              Questions Submitted by Senator Chris Murphy
          chronic homelessness and mainstream housing programs
    Question. Can you please update this Subcommittee on efforts 
underway at the Department to develop guidance for State and local 
housing agencies on ways in which they can target mainstream housing 
programs--including Section 8, public housing, NHTF, and others--to 
non-elderly people with disabilities as part of overall efforts to 
either end chronic homelessness or implement legal settlements related 
to Title II of the ADA and the Supreme Court's Olmstead decision?
    Answer. In 2014, HUD trained regional leadership on the Olmstead 
decision, Olmstead-related actions within States, and how State actions 
intersect with all parts of HUD's portfolio. The goal was to ensure 
regional leadership can be responsive when HUD-assisted properties must 
evolve as a result of State actions and to know when States could 
benefit from HUD relationships with private multifamily landlords and 
public housing authorities. This work builds off of HUD guidance on the 
role of housing in accomplishing the goals of Olmstead published in 
2013.
    HUD and HHS are working closely together to promote best and 
emerging practices in using Medicaid benefits to support the service 
needs of people who are leaving institutions or homeless and help them 
find and maintain stable housing. In addition, in its overall work to 
end homelessness, HUD has issued guidance and provided technical 
assistance to both public housing authorities and multifamily property 
managers on how to increase access to mainstream housing resources by 
developing waiting list preferences for individuals experiencing 
homelessness, and how to connect these mainstream housing opportunities 
to new coordinated entry systems being created by HUD's Continuums of 
Care.
    Since many individuals experiencing chronic homelessness have 
histories of institutionalization and many individuals living in 
institutions have histories of homelessness, HUD views the work of 
ending chronic homelessness and community living in the same vein. 
Nowhere is that more evident than in the implementation of the 
Department's new Section 811 Project Rental Assistance (PRA) program, 
authorized by the Frank Melville Supportive Housing Investment Act of 
2010 and first funded in fiscal year 2012.
    The Section 811 PRA program funds State housing agencies that have 
partnered with State Medicaid agencies and other relevant health and 
humans services to provide integrated, community-based housing and 
services for extremely low-income persons with disabilities. Twelve 
States were awarded funds through the Section 811 PRA program for 
fiscal year 2012 funding round, and another 25 States for the combined 
fiscal years 2013/2014 funding round. By working with States, in 
partnership with the Center for Medicare and Medicaid Services, the 
Department will help communities leverage this housing assistance to 
help individuals have more supportive housing options in the community. 
The 2016 budget includes $177 million for the Section 811 program, 
including $25 million for new PRA awards.
                       fair housing requirements
    Question. There are growing concerns that State and local agencies 
are reluctant to engage in targeting housing assistance programs out of 
concern over fair housing requirements.
    What is the Department doing to provide clarity to State and local 
stakeholders?
    Answer. In an effort to promote greater awareness and clarity in 
this area, HUD has developed and published detailed guidance concerning 
HUD programs and the integration of people with disabilities. HUD's 
Statement on the Role of Housing in Accomplishing the Goals of Olmstead 
provides a detailed discussion of the Supreme Court's integration 
mandate set forth in the Olmstead decision, and the Department has 
developed a practical, straightforward ``Questions and Answers'' 
document on Olmstead and the Integration Mandate under Section 504 and 
the ADA. The Statement explains, with specificity, the programs funded 
by HUD which have express Federal statutory authority to limit 
eligibility to individuals with disabilities, and in some instances, to 
individuals with specific disabilities. In 2014, HUD conducted a series 
of regional Olmstead trainings and stakeholder forums to promote a 
better understanding of how HUD can support the transition of people 
with disabilities into integrated, community-based housing. These 
sessions also focused on the important role of housing services that 
can, under statutory authority, provide targeted assistance to 
disability-specific consumer groups.
    HUD continues to provide training and guidance on Olmstead and 
integrated housing to the public, housing industry groups, people with 
disabilities and advocacy organizations. HUD has approved several State 
and local Olmstead plans to provide targeted housing assistance for 
people with disabilities, and sometimes specific disabilities, to 
remediate past patterns of discriminatory institutionalization 
practices. HUD will continue to review and, where appropriate, approve 
these remedial plans for targeted housing assistance to people with 
disabilities.
                                 ______
                                 
          Questions Submitted by Senator Christopher A. Coons
             fha partnership with lenders and stakeholders
    Question. Do you support policies that recognize the important role 
of multifamily rental housing as a part of the broad housing finance 
system? Can you describe the ways in which the FHA is partnering with 
lenders and stakeholders in the multifamily rental housing market as 
well as residential healthcare facilities' market?
    Answer. FHA Multifamily understands the important role of rental 
housing, particularly affordable rental housing, to our economy. FHA 
credit enhances the loans of partner lenders through mortgage 
insurance. Our mortgage insurance allows our partners to offer critical 
long-term, fully amortizing financing for rental housing that is not 
offered by private lenders. FHA complements other sources of capital in 
the multifamily market to expand production and preservation.
    As an example of our effort to partner with our lenders and 
stakeholders, in 2011, FHA introduced the Low Income Housing Tax Credit 
(LIHTC) Pilot to better align our underwriting with affordable housing 
finance practices. We refined the Pilot several times since its launch 
and plan to expand the initiative later this year to our Section 
221(d)(4) substantial rehab/new construction product.
   adequate funding for all section 8 project-based rental assistance
    Question. Does HUD's proposed fiscal year 2016 budget incorporate 
adequate funding for all Section 8 project based rental assistance 
contracts?
    Answer. The Department requests a total of $10.760 billion to meet 
Section 8 Project-Based Rental Assistance (PBRA) program needs for 
fiscal year 2016. This includes $9.965 billion for renewals and $580 
million for amendments, as well as $215 million for Performance-Based 
Contract Administration. The requested funds provide adequate funding 
for all project-based Section 8 contract.
    With the assistance of HUD's recently enhanced Integrated Budget 
Forecasting Model (iBFM), the Department calculated month-by-month 
future funding needs for every contract in the portfolio. These 
projections were aggregated to form the budget request, ensuring 
adequate amounts to support 12 months of forward funding for expiring 
contracts, and 12 months of funding, corresponding to calendar year 
2016, for all other contracts.
    The Department is fully confident that the requested amount will be 
sufficient to cover both renewal and amendment needs in the account.
                       reduction in home funding
    Question. The HOME Investment Partnership Program (HOME) is the 
only Federal block grant program for State and local governments 
designed exclusively to produce affordable housing for low-income 
families. The need for affordable housing has never been greater. As of 
2012, 11.5 extremely low-income renters competed for only 3.3 million 
available and affordable housing units. Yet, despite this gap, funding 
for HOME has fallen dramatically. Since 2011, HOME funding has been 
slashed by 44 percent. Senator Leahy and I wrote a letter to the THUD 
Subcommittee on Appropriations, calling for a $1.2 billion allocation 
for HOME. Yet, the Administration is only asking for $1.06 billion.
    Can you describe the Administration's efforts to support HOME and 
how it came up with its funding level request?
    Answer. We appreciate your support. Like you, the Administration 
recognizes the vital role that HOME plays in meeting affordable housing 
needs of low-and very low-income families across the country. The 2016 
request for HOME is $1.06 billion, $160 million above 2015 enacted. 
Although this is an increase, the request also reflects the current 
budgetary environment. At this constrained resource level, the budget 
also proposes a number of general provisions to the HOME program that 
would improve the targeting focus and effectiveness of the overall 
program.
    In addition, HOME is a critical part of the proposed Upward 
Mobility Initiative. This new initiative would allow up to 10 States, 
localities or consortia of States and localities to blend funding 
across four block grant programs, including the Department of Health 
and Human Services Social Services Block Grant and Community Services 
Block Grant, as well as HUD's Community Development Block Grant and the 
HOME Investment Partnerships program, all of which share a common goal 
of promoting opportunity and reducing poverty.
               supportive housing for the elderly program
    Question. As you know, the Section 202 Supportive Housing for the 
Elderly Program provides investments in new facilities, as well as 
project-based rental assistance. Recently, most funding has gone toward 
rental assistance, yet the need to invest in new facilities is 
significant.
    Can you comment on what more HUD can be doing to provide new units 
for vulnerable seniors?
    Answer. The Department fully supports additional investment in new 
housing units for low-income elderly tenants. Given the current budget 
constraints, the Department has been limited in recent years mostly to 
requesting renewals of existing rental assistance contracts. However, 
the budget requests renewed authority to allow HUD to make more funds 
available for expansion activities through residual receipts 
collections, recaptures and other unobligated balances. The Department 
is also ready and willing to explore Congressional initiatives 
consistent with the President's budget that would support additional 
investment in new affordable housing units for the elderly. This could 
include mixed finance programs in which Section 202 funds are used to 
leverage other sources of funding, such as Low Income Housing Tax 
Credits.
    Question. Given tight budget constraints, what other Federal 
policies can we pursue to ensure that the indigent elderly have a safe, 
decent place to live?
    Answer. The Department recognizes the need for additional 
investment in new housing units for low-income elderly tenants. Given 
the current budget constraints, the Department has been limited in 
recent years mostly to requesting renewals of existing rental 
assistance contracts. However, the budget requests renewed authority to 
allow HUD to make more funds available for expansion activities through 
residual receipts collections, recaptures and other unobligated 
balances. The Department is also ready and willing to explore 
Congressional initiatives consistent with the President's budget that 
would support additional investment in new affordable housing units for 
the elderly. This could include mixed finance programs in which Section 
202 funds are used to leverage other sources of funding, such as Low 
Income Housing Tax Credits.
                      
            Questions Submitted by Senator Dianne Feinstein
                       homelessness and the youth
    Question. According to the U.S. Department of Education there were 
over 1.2 million homeless students attending public schools in the 
2012-2013 school year, which is a 6 percent increase from the previous 
school year and an 85 percent increase since the start of the recession 
(2006-2007 school year). These homeless children and youth often stay 
temporarily in motels or with others because there is no family or 
youth shelter in the community, shelters are full, or because shelter 
policies exclude them. They face serious health and safety threats, 
including higher risk of physical and sexual abuse as well as 
trafficking. Recognizing the vulnerability of these youth and their 
need for assistance, other Federal agencies, including the Department 
of Education and the Department of Health and Human Services, have 
programs that define this population as homeless and prioritize them 
for services like the McKinney-Vento Education for Homeless Children 
and Youth, Runaway and Homeless Youth, Health Care for the Homeless, 
and Head Start. However, many of the children and youth served by these 
programs are not eligible for HUD Homeless Assistance, and are, 
therefore, often excluded from services that could help end their 
homelessness.
    How does HUD's proposed 2016 budget aim to prioritize and provide 
homelessness assistance to homeless children and youth who are living 
temporarily in motels or doubled up with others because they cannot 
access shelter?
    Answer. In fiscal year 2016, HUD is requesting funding for 25,500 
new permanent supportive housing beds which will help serve families 
and for unaccompanied youth that meet the definition of chronically 
homeless. In addition to new funding for permanent supportive housing, 
HUD has requested additional funding for 15,000 additional rapid re-
housing interventions to serve homeless households with children. The 
2016 President's budget also includes $235 million in Housing Choice 
Vouchers targeted to families, Veterans, and Native Americans 
experiencing homelessness, survivors of domestic and dating violence, 
families with children in foster care, and youth aging out of foster 
care.
    HUD is strongly committed to meeting the administration's goals of 
ending homelessness as set forth in Opening Doors: Federal Strategic 
Plan to Prevent and End Homelessness (Opening Doors), including ending 
homelessness for families, youth, and children by 2020. HUD's current 
definition of homelessness, which was expanded through the HEARTH Act 
after a carefully negotiated compromise, includes many of the 
households mentioned in your question. In addition to individuals and 
families living in places not meant for human habitation, emergency 
shelters, or safe havens, HUD's definition of homelessness also 
includes those households residing in transitional housing, hotels and 
motels paid for by charitable organizations or by a unit of government, 
living with friends or family for no longer than 2 weeks, and 
households fleeing or attempting to flee domestic violence. This 
definition also includes a category for families with children and 
youth and unaccompanied youth that are considered homeless under other 
Federal definitions. However, the statute limits the extent to which 
funds can be used to serve this population. It is also important to 
make clear that no youth or family should ever have to sleep in an 
unsheltered location or in a place where they are abused or trafficked 
or fearful of abuse. People facing these circumstances that have no 
other alternatives should be able to access, at a minimum, our 
emergency shelter services, but may also be eligible for programs like 
transitional housing, rapid rehousing, and permanent supportive 
housing.
    HUD's Continuum of Care program funds approximately 251,000 beds 
with related supportive services, not nearly enough to house the 
578,424 people that were living on the street, in shelter or 
transitional housing on a given night in January 2014 or the other 
individuals and families that are currently eligible for these programs 
under the existing definition. HUD estimates that, in order to fully 
enact all of the legislative changes that were required in the HEARTH 
Act, including the broader definition of homelessness, it would take a 
sustained investment of over $4.3 billion per year.
    Over the last 5 years, Congress has increased funding for HUD's 
Homeless Assistance Grants programs, but not enough to implement all 
the legislative changes made by the HEARTH Act. Therefore, HUD and 
local communities have had to make difficult decisions about the use of 
limited resources. Over the last 3 years HUD has provided incentives to 
communities to prioritize its targeted resources to households with the 
highest levels of need, the longest periods of homelessness, and the 
highest barriers of housing, while also encouraging communities to 
leverage mainstream resources.
    HUD agrees that there is an even greater number of low income 
households in need of affordable housing. It is more important than 
ever to increase affordable rental housing opportunities for low-income 
families. In many communities, affordable rental housing does not exist 
without public support. That is why HUD's 2016 request restores 67,000 
vouchers that were lost in 2013 due to sequestration.
                       homelessness and the youth
    Question. The 2014 Annual Homeless Assessment Report to Congress 
reported that more than 50 percent of emergency shelter beds in the 
United States were located in major cities. However, due to the 
lingering effects of the recession, public schools have identified a 
record increase in the homeless children and youth population in areas 
outside of large cities, including suburban and rural areas.
    How does HUD's 2016 proposed budget address the lack of resources 
for homeless children, youth, and families living in suburban and rural 
areas who cannot access shelter or where there is a lack of options for 
shelter?
    Answer. The 2016 budget includes a request for 15,000 new rapid re-
housing interventions specifically for homeless households with 
children. Under rapid re-housing, a household is provided short- or 
medium-term rental assistance along with wrap around supportive 
services to maintain that housing. Where emergency shelter capacity is 
limited, HUD strongly encourages communities to use rapid re-housing to 
assist individuals and families to exit homelessness as quickly as 
possible.
    HUD will also continue to urge communities to put a greater amount 
of their ESG funds (which are especially useful in rural areas) towards 
rapid re-housing. Most communities are unable to increase emergency 
shelter capacity with ESG funding due to a statutory cap that prohibits 
recipients from using more than 60 percent of their allocation, or the 
amount spent on homeless assistance in 2010, towards such purposes. By 
using more ESG funds to assist a greater number of families with rapid 
re-housing, persons will be able to exit existing shelters more quickly 
thereby giving more access to more families experiencing a housing 
crisis.
    Lastly, HUD will continue to prioritize rapid re-housing as a best 
practice intervention, particularly for families with children, under 
the CoC Program.
                       homelessness and the youth
    Question. The 2014 Annual Homeless Assessment Report to Congress 
reports that homelessness among people in families declined by 8 
percent between 2007 and 2014. However, public schools identified an 85 
percent increase in the number of homeless students, many of whom are 
children living in families, since the 2006-2007 school year. The 
report also cites that zero families were reported as being homeless in 
the Fresno Continuum of Care, yet the count of homeless students in 
Fresno County stood at 6,738 for the 2012-2013 school year. This is a 
significant difference and indicates that many homeless children and 
youth identified by public schools are not being identified by HUD in 
the Point-in-Time Count.
    How does HUD's 2016 budget aim to reduce this discrepancy in the 
reporting of homeless children and youth?
    Answer. Data is a very important part of the Federal effort to end 
homelessness. Getting an accurate number of families, youth, and 
children is especially difficult but continues to be a priority for 
HUD. Each year the Point-in-Time (PIT) Count Report releases data that 
communities collect and report, without extrapolation by HUD. It is a 
national point of reference because it is easy to understand and has 
been in place for a long time. Both the PIT and the Housing Inventory 
Count allow for better understanding of what systems look like at local 
and national levels and allow for progress to be measured consistently 
from year to year. The Annual Homeless Assessment Report also includes 
data on the number of people who use emergency shelter, transitional 
housing, or PSH over the course of a year as captured through Homeless 
Management Information Systems. The Department of Education number that 
you referenced counts homeless families with children and youth as well 
as those that are identified as ``doubled up'' or ``couch surfing.'' It 
would be impractical to count all ``doubled up'' households during the 
point in time count, as a reliable count would require a household 
survey similar to what is used by the Census Bureau Continuums of Care 
and homeless services do not have the expertise or capacity for this 
type of effort.
    In the example, that you provided, although Fresno did report zero 
chronically homeless households with children, there were almost 400 
persons in families experiencing homelessness on the night of the PIT 
count in January 2014. The Departments of Education's number, on the 
other hand, represents data on the number of children identified during 
the 2012-2013 school year who met the criteria for homeless services 
through the Homelessness Liaison Program.
    While the PIT count data does not include a portion of the 
families, youth, and children captured in the Department of Education 
data, HUD's Worst Case Housing Needs study does. In February, HUD 
released the most recent results of the study, which is conducted every 
other year. Specifically, in 2013, 7.7 million very low-income families 
who are unassisted by HUD housing programs paid more than half their 
monthly income for rent, lived in severely substandard housing, or 
both--which is the category we call Worst Case Housing Needs.
    Taken together, we believe that the PIT count data, the Worst Case 
Housing Needs data, and data from the Department of Education and other 
agencies each provide a unique and complementary picture of the housing 
and service needs of families across the country. Rather than viewing 
this as a discrepancy in data, HUD views this as an opportunity to 
better understand those households.
    In terms of better capturing data on youth experiencing 
homelessness, we have made incredible strides over the last few years, 
and continue to work with communities to improve that data. HUD is 
working closely with its partners at the Departments of Education and 
Health and Human Services to improve our respective datasets as well as 
to provide guidance on how to improve counting youth throughout the 
country. Through collaborative efforts such as the Youth Count! 
Initiative in 2013, HUD has learned more about the challenges of 
counting youth experiencing homelessness and continues to work with 
communities to find ways to address and overcome those challenges.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
                       neighborhood stabilization
    Question. The economy and the housing market have made great 
strides since 2008. At the same time, several areas across the country 
are still struggling with abandoned and foreclosed properties. These 
properties tend to attract crime and health risks, drive down property 
values, and hurt the local economy. More than 500,000 homes in the 
United States were in some stage of foreclosure in January 2015. Data 
reported last month show about 25 percent of active foreclosures have 
been vacated by the homeowner prior to repossession of the property, 
leaving the property abandoned and without upkeep. Congress created the 
Neighborhood Stabilization Program (NSP) in 2008 to help curb the 
impact of the housing crisis on hard hit neighborhoods. NSP provided 
three rounds of assistance totaling nearly $7 billion to States and 
local governments to acquire, rehabilitate, and sell abandoned and 
foreclosed properties. In Illinois, NSP funds were used to rehabilitate 
or demolish hundreds of properties that otherwise would have become 
blighted. Other programs such as the Community Development Block Grant 
program have been available for these activities.
    Can you describe the results of the NSP in communities across the 
country?
    Answer. The three rounds of the Neighborhood Stabilization Program 
plus program income earned by grantees during the program now total in 
excess of $8.3 billion. HUD implemented a quarterly evaluation process 
early in the program to provide timely feedback to grantees and 
policymakers about program effectiveness. HUD also used NSP-related 
technical assistance resources to provide training and toolkits for 
communities learning how understand their markets and to best invest 
grant and local resources to stabilize neighborhoods.
    The quarterly Neighborhood Investment Cluster (NIC) analyses uses 
NSP data submitted by grantees to compare neighborhoods treated with a 
concentration of NSP investment to similar neighborhoods that have only 
minimally or not been touched by NSP. NIC reports have helped HUD and 
grantees understand which types of activities are effective. The most 
recent (thirteenth) quarterly NIC analyses show that a slowly growing 
proportion of NICs are outperforming all of their non-NSP-assisted 
comparable markets compared to earlier rounds of analysis.
    In its video series, Recovery from Crisis: Stories and Strategies 
from NSP , HUD features four communities that received Neighborhood 
Stabilization Program (NSP) funds--Columbus, Ohio; Lake Worth, Florida; 
Orange County, California; and Pima County, Arizona:
  --Columbus, Ohio, a city of 800,000, was hard hit by the foreclosure 
        crisis, and received $60 million in redevelopment funding 
        through NSP. In Columbus, a consortium of nonprofits worked 
        together with the city to revitalize neighborhoods around the 
        downtown area. One nonprofit, Homeport, targeted NSP funds in 
        the North of Broad (NOBO) neighborhood, a historically African-
        American neighborhood that has suffered from disinvestment. 
        Homeport changed neighborhood perception through highly 
        targeted redevelopment efforts and an elaborate neighborhood 
        marketing campaign to make NOBO a neighborhood of choice.
  --Lake Worth, Florida, a small working-class city north of Fort 
        Lauderdale, received $23 million in redevelopment funding 
        through NSP. A consortium of nonprofits led by the Lake Worth 
        Community Redevelopment Agency worked together to revitalize 
        their community through targeted acquisition, rehabilitation 
        and resale of foreclosed homes to local low and moderate income 
        families. The redevelopment strategy in Lake Worth centered on 
        celebrating Lake Worth's many assets and making homeownership 
        more affordable to longtime local renters.
  --Orange County, California, and Neighborhood Housing Services (NHS) 
        received $11.5 million in redevelopment funding through NSP. 
        Orange County's high cost market makes it extremely 
        unaffordable for low and moderate income families, who must 
        commute for hours to get to jobs located within the county. 
        Using NSP to rehabilitate foreclosed homes, Orange County and 
        its nonprofit partners were able to bring properties back up to 
        code and provide housing opportunities for low and moderate 
        income families to live closer to work and family.
  --Pima County, Arizona, received $25 million in redevelopment funding 
        through NSP. A consortium of nonprofits used NSP funds to 
        rehabilitate foreclosed homes in and around Tucson. The 
        Primavera Foundation utilized a resident-led development 
        strategy in South Tucson, a small impoverished city located 
        within the city of Tucson. Primavera partnered with the police 
        and the city government to rehabilitate problem properties into 
        safe and affordable homes for low income families.
    Question. What are the current resources available (or lack 
thereof) for communities to deal with blight and can you provide any 
recommendations to address this problem?
    Answer. Among existing programs, both CDBG and HOME may be used to 
carry out many of the same housing and clearance activities as under 
the Neighborhood Stabilization Program (NSP), although income 
eligibility for these programs is more restrictive. One of the three 
national objectives of the CDBG program is to eliminate slums and 
blighted conditions. HUD continues to provide technical assistance to 
communities dealing with blight and its related issues and encourages 
communities to focus on these areas of great need with their remaining 
NSP grants and their CPD block grants.

                          SUBCOMMITTEE RECESS

    Senator Collins. This hearing is now adjourned.
    Secretary Castro. Thank you all so much.
    [Whereupon, at 11:36 a.m., Wednesday, March 11, the 
subcommittee was recessed, to reconvene at a date and time 
subject to the call of the Chair.]