Housing and Community Development Issue Area Plan--Fiscal Years 1996-98
(Letter Report, 08/01/95, GAO/IAP-95-15).
GAO presented its Housing and Community Development issue area plan for
fiscal years 1996 through 1998.
GAO plans to assess the: (1) restructuring of federal housing and
community development agencies to improve service delivery, eliminate
duplication, and produce cost savings; (2) improvement of federal
oversight of housing and community development services to reduce fraud,
waste, abuse, and mismanagement; (3) reduction of the federal
government's financial risk in its mortgage assistance programs; (4)
fostering of self-sufficiency among low-income people while meeting
budgetary constraints; (5) promotion of community economic and social
development; (6) cost-effectiveness of programs that promote small and
minority business development; and (7) control of federal disaster
assistance costs.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: IAP-95-15
TITLE: Housing and Community Development Issue Area Plan--Fiscal
Years 1996-98
DATE: 08/01/95
SUBJECT: Housing programs
Community development programs
Disaster relief aid
Federal agency reorganization
Risk management
Small business assistance
Disadvantaged persons
Economic development
Mortgage programs
Program abuses
IDENTIFIER: Community Development Block Grant
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Cover
================================================================ COVER
Resources, Community, and Economic Development Division
August 1995
HOUSING AND COMMUNITY DEVELOPMENT
ISSUE AREA PLAN - FISCAL YEARS
1996-98
GAO/IAP-95-15
Abbreviations
=============================================================== ABBREV
HUD - x
RHCDS - x
VA - x
SBA - x
FEMA - x
FHA - x
GAO - x
GNMA - x
FOREWORD
============================================================ Chapter 0
As the investigative arm of Congress and the nation's auditor, the
General Accounting Office is charged with following the federal
dollar wherever it goes. Reflecting stringent standards of
objectivity and independence, GAO's audits, evaluations, and
investigations promote a more efficient and cost-effective
government; expose fraud, waste, abuse, and mismanagement in federal
programs; help Congress target budget reductions; assess financial
and information management; and alert Congress to developing trends
that may have significant fiscal or budgetary consequences. In
fulfilling its responsibilities, GAO performs original research and
uses hundreds of databases or creates its own to compile and analyze
information.
To ensure that GAO's resources are directed toward the most important
issues facing Congress, each of GAO's 35 issue areas develops a
strategic plan that describes its key issues and their significance;
the objectives and focus of its work; and the planned major job
starts. Each issue area relies heavily on input from congressional
committees, agency officials, and subject-matter experts in
developing its strategic plan.
The Housing and Community Development issue area has audit
responsibility for over $1 trillion of financial services and
assistance programs that are aimed at providing decent, affordable
housing and healthy communities, including assistance to communities
adversely affected by disasters. Agencies primarily responsible for
these programs include the Department of Housing and Urban
Development (HUD) and its Federal Housing Administration (FHA); the
Department of Veterans Affairs (VA); the Rural Housing and Community
Development Services (RHCDS); the Small Business Administration
(SBA); and the Federal Emergency Management Agency (FEMA). HUD
provides the bulk of assistance by insuring or guaranteeing mortgage
financing through its $497 billion FHA loan portfolio; guaranteeing,
through the Government National Mortgage Association, about $485
billion in outstanding mortgage-backed securities; annually providing
almost $25 billion in rental subsidies and for the operation of
housing units for about 4.7 million lower-income households; and
annually providing $5 billion for community assistance through its
Community Development Block Grant program.
In addition, assistance is provided through SBA's $30 billion
business loan portfolio; VA's $174 billion in guarantees on veterans'
home loans; and RHCDS' assistance to rural residents, totalling $30
billion. Finally, an average of $7 billion (in constant 1993
dollars) was obligated annually between 1977 and 1993 to prepare for
and respond to disasters.
After decades of costly housing and community development assistance,
the delivery of federal services is being reexamined. Our work
assists this examination by focusing on the following principal
issues in the housing and community development area:
-- restructuring federal housing and community development agencies
to improve service delivery, eliminate duplication, and produce
long-term cost savings;
-- improving federal oversight of housing and community development
services to reduce fraud, waste, abuse, and mismanagement;
-- reducing the federal government's financial risk in its mortgage
assistance programs;
-- fostering self-sufficiency among low-income people while meeting
budgetary constraints;
-- promoting the economic and social development of communities;
-- improving the cost-effectiveness of programs that promote small
and minority business development; and
-- controlling federal disaster assistance costs.
In the following pages, we describe our key planned work on these
pivotal issues. Because events may significantly affect this plan,
our planning process allows for updating this plan and responding
quickly to emerging issues. If you have any questions or
suggestions, please call Jim Wells, Associate Director, at (202)
512-7100, or me at (202) 512-7631.
Judy A. England-Joseph
Director
Housing and Community Development Issues
CONTENTS
============================================================ Chapter 1
FOREWORD
---------------------------------------------------------- Chapter 1:1
1
TABLE I: KEY ISSUES
---------------------------------------------------------- Chapter 1:2
4
TABLE II: PLANNED MAJOR WORK
---------------------------------------------------------- Chapter 1:3
8
TABLE I: KEY ISSUES
============================================================ Chapter 2
Issue Significance
---------------------------- --------------------------------------------------
Federal housing and The current focus on "restructuring" and
community development "reinventing" agency missions and operations has
agencies: What changes must affected HUD, RHCDS, VA, SBA, FEMA, and other
the federal government make agencies involved in housing and community
to improve delivery of development assistance. These agencies are
services, eliminate proposing to restructure--including downsizing--
duplication, and produce their organizations and are developing options to
long-term cost savings? improve delivery of federal services with
significant cost savings. HUD, for instance,
projects its reinvention will take 6 to 8 years.
The 104th Congress has made HUD's restructuring a
priority.
Federal management: What Congress and the administration have mandated that
changes must federal federal agencies, including HUD, RHCDS, and VA,
agencies make to oversee improve their accountability for the effective and
housing and community efficient use of budgetary resources by correcting
development services and deficiencies in management, accounting, and
reduce fraud, waste, abuse, information systems. GAO has designated HUD as a
and mismanagement? high-risk area because of its long-standing
departmentwide deficiencies.
Mortgage financing: How can FHA, VA, and RHCDS underwrite mortgage credit for
the federal government purchases of residential and rental properties
minimize financial risks in that are riskier than purchases made in the
mortgage assistance programs conventional market. These programs support nearly
while meeting affordable $500 billion in outstanding mortgage loans; HUD's
housing needs? Government National Mortgage Association (GNMA)
guarantees timely payment to investors on $485
billion of securities backed by these mortgages.
These agencies need to continue working to limit
losses, improve delivery of home mortgage and
rental housing assistance, and improve oversight.
Low-income housing: How can Housing the nation's low-income population within
federal low-income housing existing budget constraints has sparked
programs meet budgetary considerable debate. Since 1977, real outlays for
constraints while federal housing assistance have tripled.
effectively serving low- Accordingly, policymakers must find more cost-
income people and promoting effective methods to house low-income people,
self-sufficiency? better ways for federal housing programs to
promote self-sufficiency, and the best management
practices for assisted housing.
--------------------------------------------------------------------------------
Objectives Focus of work
---------------------------------------- --------------------------------------
--Analyze the restructuring proposals, --Analysis of HUD's, other agencies',
including HUD's "reinvention and congressional reinvention
blueprint." proposals affecting housing and
community development programs
--Assess the alternatives for
restructuring FHA, including making it a --Analysis of the Rural Housing Act of
government-owned corporation. 1949 to determine ways to improve and
streamline housing assistance to rural
--Assess the effects of reinvention residents
proposals on program costs and
customers. --Review of the proposals to
restructure HUD's multifamily housing
--Assess the feasibility of transforming and FHA, including the proposals'
HUD's current programs, such as assisted effects on FHA's customers and
housing, into performance-based funds. financial position
--Review of the efforts to determine
the oversight necessary at the federal
level and administrative
responsibilities that may be
transferred to state and local
governments as a result of
consolidating programs
--Identify and target spending --Potential savings in HUD's budget
reductions to decrease the federal
deficit. --Implementation of initiatives at HUD
to correct long-term management
--Monitor HUD's and FEMA's actions to deficiencies
correct long-standing departmentwide
management deficiencies, including --Improvement of financial and
financial and information systems. information systems at HUD and FEMA
--Recommend ways to improve mission --Review of agencies' efforts to
focus, program effectiveness, and design develop better performance measures
of controls to reduce fraud, waste,
abuse, and mismanagement in agency
operations.
--Identify options for mortgage --Improvement of the financial
financing programs to limit the federal position of FHA's mortgage assistance
government's exposure to losses. programs for single-and multifamily
properties
--Recommend ways to improve controls
over property disposition. --Reduction of losses through better
management over property disposition
--Analyze alternatives to provide activities
mortgage financing options to urban and
rural residents. --Reduction of risks through changes
in FHA's and RHCDS' programs
--Identify ways to better manage and --Improvements in the federal
maintain urban and rural federally- oversight, regulatory framework, and
assisted multifamily properties. budgeting practices of assisted
housing
--Evaluate ways to improve the cost-
effectiveness of housing subsidies. --Analysis of the cost and
programmatic implications of project-
--Evaluate options to better link versus tenant-based housing
housing and human services to encourage
self-sufficiency. --Integration of federal housing
programs with social service programs
to encourage self-sufficiency among
low-income households
--------------------------------------------------------------------------------
Issue Significance
---------------------------- --------------------------------------------------
Community development: What Over a dozen federal agencies provide community
roles do HUD and other development assistance. Congress is currently
federal agencies play in debating whether to consolidate some of these
promoting the economic and programs into performance-based funds or block
social viability of grants to improve effectiveness and efficiency.
communities and their Consolidation must also factor in performance
residents and with what measures that ensure appropriate use of funds,
level of capacity and types safeguards against duplicate federal programs, and
of performance measures? the effects of the loss of needed services to
communities.
Small and minority-owned Although several SBA loan, technical assistance,
business development: Do grant, and equity investment programs are directed
existing programs meet at establishing or preserving small and/or
clearly defined goals; what minority-owned businesses, only about 7 percent of
benefits have been accrued; all small business lending is SBA-backed. Other
and what is the most cost- agencies also provide similar services that appear
effective way to deliver to overlap SBA's goals. Federal purchasing
these services? requirements annually direct billions of dollars
to support small business development. Congress
has raised concerns about the benefits of these
programs, and court cases have challenged minority
set-asides and mandates.
Disaster assistance: How can Twenty-six federal agencies are involved in
the federal government disaster relief and recovery, which has totaled
reduce expenditures for more than $17 billion since 1989. Policymakers
disaster relief while face simultaneous needs to encourage choices that
improving service delivery? lessen future federal costs, minimize federal
spending, eliminate duplicative efforts, and
promote economic growth. The 103rd Congress
established bipartisan Task Forces on Disasters,
whose reports are expected to spark a number of
legislative proposals during current and future
congressional sessions.
--------------------------------------------------------------------------------
Objectives Focus of work
---------------------------------------- --------------------------------------
--Identify any overlap among programs --Economic development in distressed
that support community development and urban areas and overlap and
recommend ways to streamline them. differences among community
development programs across agencies
--Identify options to integrate social,
economic, and housing programs to --The effects of performance-based
maximize service delivery. funds and block-grant consolidation on
community development programs
--Assess performance indicators used to
rate existing programs and recommend --The integration of social, economic,
other indicators to improve oversight of and housing programs
these programs.
--The impact of fund allocation
formulas, including equitability, and
standards for consistent performance
measures
--Determine what market needs SBA serves --Markets and sources serving these
and whether those needs could be met in businesses and approaches for
other ways. assisting them
--Measure the extent to which existing --Program goals and achievement of
programs have met, or contributed to, intended outcomes
specified goals to promote small and
minority-owned business development and --Overlaps and gaps among programs
the effectiveness of technical providing support to small and
assistance and guidance. minority-owned businesses among
agencies
--Identify the most cost-effective ways
to assist small and minority-owned
businesses.
--Identify potential inefficiencies --Duplication and lack of coordination
arising from having 26 federal agencies in federal programs helping
involved in disaster relief. communities recover from recent large
disasters
--Recommend options to reduce the
federal government's exposure to claims --Options to reduce costs, such as
for disaster relief and recovery. revising the eligibility criteria for
federal assistance, providing
incentives to mitigate disasters, and
increasing the use of insurance
mechanisms
--------------------------------------------------------------------------------
TABLE II: PLANNED MAJOR WORK
============================================================ Chapter 3
Issue Planned major job starts
------------------------- -----------------------------------------------------
Federal housing and --Assess HUD's reinvention proposals, including
community development transformation of FHA into a government-owned
agencies corporation.
--Evaluate existing rural housing programs to
determine whether they meet current needs.
--Evaluate options to restructure HUD's multifamily
housing program.
Federal management --Analyze HUD's $26-billion budget to identify
budgetary savings.
--Assess implementation of HUD's management and
information resource management reforms, including
their potential for adopting leading industry
practices.
--Analyze changes needed in information management
systems for a restructured HUD.
--Review information management and systems support
for FEMA's disaster assistance programs.
Mortgage financing --Review economic net worth of FHA's single-family
program.
--Evaluate program changes to reduce risk in single-
family housing programs.
--Review multifamily risk-sharing arrangements.
--Assess the low-income property disposition
program.
--Analyze alternatives to provide mortgage financing
to rural areas.
Low-income housing --Assess the concept of vouchering out public housing
in terms of comparative costs, feasibility in all
situations, performance measurement, and local
management capability.
--Assess the link between housing and other human
service programs and the extent these programs
promote economic independence.
Community development --Identify federal assistance programs that support
economic development in distressed urban areas and
review overlap and differences among community
development programs across agencies.
--Evaluate and identify performance indicators and
formulas for delivering community development
programs.
Small and minority-owned --Identify target markets served by SBA's programs.
business --Determine interagency overlaps and gaps among
development programs providing support to small businesses,
including programs in the Small Business
Administration and the Department of Commerce's
Minority Business Development Agency.
Disaster assistance --Identify options to reduce costs in federal
disaster assistance.
--Identify advantages and disadvantages of
consolidating major disaster assistance programs and
propose solutions for coordination problems
identified after recent large disasters.
--------------------------------------------------------------------------------
*** End of document. ***