Welfare Reform: Changes Will Further Shape the Roles of Housing Agencies
and HUD (Chapter Report, 06/25/98, GAO/RCED-98-148).

Pursuant to a legislative requirement, GAO reviewed the implications of
welfare reform on public housing agencies and their tenants, focusing on
the: (1) impact of welfare reform on the revenue, employment status of
tenants, and roles of selected housing agencies; and (2) Department of
Housing and Urban Development's (HUD) role in assisting housing agencies
and their clients as they adapt to welfare reform.

GAO noted that: (1) it is too early to be certain what impact welfare
reform will have on the revenue of the housing agencies that GAO
selected, the employment status of their tenants, and the roles of these
housing agencies; (2) most of the agencies had not attempted to estimate
welfare reform's impact on their revenue for multiple reasons, including
a lack of resources to undertake detailed analyses of the impact of
their state's welfare reform plan; (3) welfare rolls had declined in the
states that GAO visited, and state officials described services being
provided to help Temporary Assistance for Needy Families (TANF)
recipients overcome obstacles to employment; (4) housing agency
officials, residents, and others believed that tenants would face
significant challenges in moving from welfare to work; (5) their
concerns are supported by research, based on past behavior, which shows
that welfare recipients with housing assistance tend to have longer
stays on welfare than those without housing assistance; (6) executive
directors recognized that the role of housing agencies increasingly
includes providing social services as well as housing; (7) however,
agencies' social service activities were generally operated separately
from states' welfare reform efforts; (8) the agencies that GAO visited
had limited involvement in their state's welfare reform efforts; (9)
state and local government offices with welfare reform responsibilities
rarely targeted funds and programs to public housing developments;
however, TANF recipients with housing assistance are eligible for the
same services as other TANF recipients; (10) HUD has a smaller role in
welfare reform than the states or some other federal agencies; however,
HUD said that it is committed to making welfare reform work; (11) HUD's
role is driven, in part, by the large numbers of tenants who currently
receive welfare benefits whose incomes will decline if they do not find
jobs or other sources of income within the time limits; (12) HUD's own
financial status depends, to some extent, on these tenants' success in
replacing welfare benefits with earnings; (13) to date, HUD has
emphasized the importance of welfare reform in at least two strategic
planning documents, issued guidance on welfare reform, redirected some
programs to focus on welfare reform, and begun to coordinate its welfare
reform activities internally and externally; and (14) HUD's strategic
plans do not include a comprehensive strategy for bringing together
HUD's resources for welfare reform and the funds and programs avaliable
from the states and other federal agencies.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-98-148
     TITLE:  Welfare Reform: Changes Will Further Shape the Roles of 
             Housing Agencies and HUD
      DATE:  06/25/98
   SUBJECT:  Federal aid for housing
             Housing programs
             Public housing
             Welfare benefits
             Strategic planning
             Low income housing
             Interagency relations
             Workfare
IDENTIFIER:  HHS Temporary Assistance for Needy Families Program
             HUD 2020 Management Reform Plan
             
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Cover
================================================================ COVER


Report to Congressional Committees

June 1998

WELFARE REFORM - CHANGES WILL
FURTHER SHAPE THE ROLES OF HOUSING
AGENCIES AND HUD

GAO/RCED-98-148

Welfare Reform Changes

(385676)


Abbreviations
=============================================================== ABBREV

  AFDC - Aid to Families with Dependent Children
  CDBG - Community Development Block Grant
  CHAA - California Housing Authority Association
  EDSS - Economic Development and Supportive Services
  EPA - Environmental Protection Agency
  ESL - English as a second language
  FSS - Family Self-Sufficiency Program
  HHS - Department of Health and Human Services
  HOPEVI - Housing Opportunity for People Everywhere
  HUD - Department of Housing and Urban Development
  JTPA - Job Training Partnership Act
  MFIP-S - Minnesota Family Investment Program-Statewide
  MTCS - Multifamily Tenant Characteristics System
  NOFA - Notice of Funding Availability
  PHADA - Public Housing Authorities Directors Association
  SSI - Supplemental Security Income
  STEWARD - Simulation of Trends in Employment, Welfare, and Related
     Dynamics
  TANF - Temporary Assistance for Needy Families
  TOP - Tenant Opportunity Program

Letter
=============================================================== LETTER


B-279439

June 25, 1998

The Honorable Rick Lazio
Chairman, Subcommittee on Housing
 and Community Opportunity
Committee on Banking, Housing,
 and Urban Affairs
House of Representatives

The Honorable Jerry Lewis
Chairman
The Honorable Louis Stokes
Ranking Minority Member
Subcommittee on VA, HUD, and
 Independent Agencies
Committee on Appropriations
House of Representatives

This report responds to your request and a mandate in the 1998 House
Report on the Departments of Veterans Affairs, Housing and Urban
Development, and Independent Agencies Appropriations Bill (Report
105-175) that GAO examine the implications of welfare reform on
public housing agencies and their tenants.  Specifically, our report
(1) identifies the impact of welfare reform on the revenue,
employment status of tenants, and roles of selected housing agencies
and (2) HUD's role in assisting housing agencies and their clients as
they adapt to welfare reform. 

We are sending copies of this report to the Secretaries of Housing
and Urban Development, Health and Human Services, and Labor.  We will
make copies available to others on request. 

Please call me at (202) 512-7631 if you or your staff have any
questions.  Major contributors to this report are listed in appendix
VII. 

Sincerely yours,

Judy A.  England-Joseph
Director, Housing and Community
 Development Issues


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

Because many of the people that the Department of Housing and Urban
Development (HUD) serves depend on federal cash assistance for some
or all of their income, welfare reforms embodied in the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 are
likely to affect HUD's programs.  The welfare reform legislation
replaced the former entitlement program--Aid to Families With
Dependent Children (AFDC)--with block grants to the states--Temporary
Assistance for Needy Families (TANF).  The act also established work
requirements and placed a 5-year lifetime limit on the receipt of
federal TANF assistance.  According to HUD's data, about 29 percent
of the households that reside in public housing or receive
tenant-based rental assistance also receive cash assistance through
TANF.  If these households lose their benefits without finding
alternative sources of income, their rental payments, which generally
equal 30 percent of their income, will also decline.  Alternatively,
if these households find other sources of income, their rental
payments will remain stable or could increase.  Because many public
housing agencies derive a substantial portion of their revenue from
tenants' rental payments, changes in tenants' incomes resulting from
welfare reform are likely to affect housing agencies' needs for
operating subsidies from HUD. 

Concerned about welfare reform's implications for public housing
agencies and their tenants, the Chairman of the Subcommittee on
Housing and Community Opportunity, House Committee on Banking and
Financial Services, asked GAO to review welfare reform's impact on
selected public housing agencies.  In response to that request and to
a mandate in the 1998 House Report on the Department of Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Bill (H.R.  Report 105-175), GAO identified (1)
welfare reform's impact on the revenue, employment status of tenants,
and roles of selected housing agencies and (2) HUD's role in
assisting housing agencies and their clients as they adapt to welfare
reform.  To obtain information on these issues, GAO, among other
things, interviewed officials in four states and at 18 housing
agencies using a standard set of questions. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

Designed to promote self-sufficiency for families on welfare, the
welfare reform legislation created TANF, which is authorized to
provide the states with $16.5 billion annually.  The legislation also
shifted major responsibilities for welfare programs to the states,
giving them more flexibility than before to design their own programs
and strategies for aiding needy families, including helping those on
welfare to move into the workforce.  In addition, the Balanced Budget
Act of 1997 appropriated $3 billion in fiscal years 1998 and 1999 for
the states to provide job training and placement services for welfare
recipients. 

The Department of Health and Human Services (HHS), which administered
AFDC, remains the primary federal agency responsible for assisting
the states in developing TANF programs.  In addition, HHS provides
the states with block grant funding for child care and other social
services.  The Department of Labor administers several programs to
help welfare recipients find jobs.  Other federal agencies, including
the Department of Transportation and the Small Business
Administration, also have initiatives related to welfare reform under
way.  At local welfare offices, TANF programs are generally
administered by state, county, or local officials. 

HUD provides housing assistance to about 4.5 million low-income
households.  In fiscal year 1997, HUD's outlays for assisted housing
programs--including funds to operate and modernize buildings and
subsidize private-market tenant-based and project-based rental
housing programs--were $23.8 billion.\1

Locally, housing agencies receive funds from HUD to operate and
maintain public housing and administer Section 8 tenant-based rental
assistance programs.  Many housing agencies also receive funds from
HUD to provide supportive services.  Through recent appropriations
laws, the Congress has temporarily provided housing agencies with new
authority to admit more working families and to exclude portions of
these families' earnings from rent calculations. 


--------------------
\1 This report will not cover project-based rental assistance
programs because public housing agencies do not administer these
programs. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

It is too early to be certain what impact welfare reform will have on
the revenue of the housing agencies that GAO selected, the employment
status of their tenants, and the roles of these housing agencies. 
Most of the agencies had not attempted to estimate welfare reform's
impact on their revenue for multiple reasons, including a lack of
resources to undertake detailed analyses of the impact of their
state's welfare reform plan.  Welfare rolls had declined in the
states that GAO visited, and state officials described services being
provided to help TANF recipients overcome obstacles to employment,
such as a lack of child care and transportation.  Still, housing
agency officials, residents, and others believed that tenants would
face significant challenges in moving from welfare to work.  Their
concerns are supported by research, based on past behavior, which
shows that welfare recipients with housing assistance tend to have
longer stays on welfare than those without housing assistance. 
Executive directors recognized that the role of housing agencies
increasingly includes providing social services as well as housing. 
However, agencies' social service activities were generally operated
separately from states' welfare reform efforts.  The agencies that
GAO visited had limited involvement in their state's welfare reform
efforts.  State and local government offices with welfare reform
responsibilities rarely targeted funds and programs to public housing
developments; however, TANF recipients with housing assistance are
eligible for the same services as other TANF recipients. 

HUD has a smaller role in welfare reform than the states or some
other federal agencies, such as the departments of Health and Human
Services and Labor; however, HUD said that it is committed to making
welfare reform work.  HUD's role is driven, in part, by the large
numbers of tenants who currently receive welfare benefits whose
incomes will decline if they do not find jobs or other sources of
income within the time limits.  HUD's own financial status depends,
to some extent, on these tenants' success in replacing welfare
benefits with earnings.  To date, HUD has emphasized the importance
of welfare reform in at least two strategic planning documents,
issued guidance on welfare reform, redirected some programs to focus
on welfare reform, and begun to coordinate its welfare reform
activities internally and externally.  However, some field and
housing agency officials whom GAO interviewed were confused about
HUD's role and said they had not received guidance from HUD.  In
addition, HUD's strategic plans do not include a comprehensive
strategy for bringing together the Department's resources for welfare
reform and the funds and programs available from the states and other
federal agencies.  Although HUD has resources--demographic data on
tenants, expertise gained through demonstration programs, and staff
at the state and local levels--and supports physical facilities for
providing services, it has not systematically developed relationships
with the states, which have most of the funds for welfare reform. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      EFFECT OF WELFARE REFORM ON
      THE REVENUE, EMPLOYMENT
      STATUS OF TENANTS, AND ROLES
      OF SELECTED HOUSING AGENCIES
      IS UNCERTAIN
-------------------------------------------------------- Chapter 0:4.1

Executive directors and finance officers were uncertain how welfare
reform would affect housing agencies' revenue because welfare reform
continues to evolve at both the federal and the state levels and its
effects are difficult to separate from those of local economic
conditions.  However, welfare reform is likely to affect revenue at
the housing agencies GAO visited because 37 percent of their tenants
depend on TANF for some or all of their income.  Housing agency
officials were concerned about the possibilities of falling rental
revenue, declining operating subsidies, and rising operating costs. 
These officials were also concerned about welfare reform's impact on
Section 8 tenant-based rental assistance revenue, but they said that
they could cover short-run increases with reserve funds.  Housing
agencies lack the resources needed to undertake detailed analyses of
the impact of their state's welfare reform plan on their revenue. 
However, three of the selected housing agencies had developed some
financial estimates of welfare reform's impact. 

Although welfare rolls had declined and additional services were
being provided in the states GAO visited, housing agency officials,
residents, and others believed tenants would face significant
challenges in moving from welfare to work.  Welfare rolls decreased
by 16 percent in California and Minnesota, 20 percent in
Massachusetts, and 47 percent in Louisiana between January 1996 and
September 1997.  Although it was too early at the time of GAO's
review to tell to what extent the residents of public and assisted
housing on TANF were receiving services, officials at welfare and
employment offices in the states GAO visited were implementing new
and revised training, child care, and transportation efforts for TANF
recipients.  Nevertheless, housing agency managers, residents, and
others said that barriers--such as a lack of job skills, work
experience, child care, proficiency in English, and
transportation--would challenge residents in finding and retaining
jobs.  Their concerns are supported by recent simulations of welfare
reform plans completed for GAO by Mathematica--a public policy
research organization--which showed that under the plans analyzed,
TANF recipients reporting housing assistance would be less likely to
leave the welfare rolls or find work 4 years after the implementation
of welfare reform than TANF recipients not reporting housing
assistance.  In addition, research conducted at Johns Hopkins
University shows that, in the past, welfare recipients with housing
assistance spent more time on welfare than recipients without housing
assistance.  The housing authority officials also noted that the job
opportunities for Section 8 residents and public housing residents
might differ.  For example, Section 8 residents might be able to move
more easily in search of a better job because their housing benefit
is portable, while public housing residents--whose housing is
typically more concentrated--might have better access to supportive
services that housing agencies provide on-site. 

At the housing agencies GAO visited, the executive directors viewed
themselves primarily as housing providers but, under HUD's direction,
had started to provide social services before welfare reform began. 
Even though the percentage of AFDC households that also received
housing assistance in 1996 ranged from 12 percent to 43 percent in
the states GAO visited, about half of the executive directors said
they had limited or no involvement in developing their state's
welfare reforms.  Nevertheless, some housing agencies were becoming
more involved in local welfare reform efforts. 


      HOUSING AGENCIES NEED MORE
      GUIDANCE FROM HUD AND
      INVOLVEMENT WITH THE STATES
      UNDER WELFARE REFORM
-------------------------------------------------------- Chapter 0:4.2

HUD is not a major federal player in welfare reform, yet a sizable
portion of those who reside in public housing or receive tenant-based
rental assistance may be affected by changes in welfare benefits.  In
part because of the effect these changes could have on HUD's
financial status, HUD elevated welfare reform's success to a
strategic planning objective and provided guidance on welfare reform
to its field offices and to public housing agencies.  However, some
field and housing agency officials GAO interviewed said they did not
receive guidance from HUD.  In addition, at one field office and
several housing agencies, officials were confused or unsure about
HUD's role.  Housing interest groups, researchers, and public housing
officials discussed the need for HUD to provide data on tenants'
characteristics, along with guidance for using the data to manage
their units under welfare reform. 

To further promote welfare reform, HUD has redirected some existing
supportive service and community development programs.  Yet HUD's
supportive service programs typically receive limited funding and
serve a limited number of sites.  In addition, communities have
traditionally used a majority of HUD's Community Development Block
Grant program funds for housing and public works rather than for job
skills training or economic development projects that might lead to
the creation of jobs.  Compared with the states, which have received
funds for TANF and child care benefits and, in many instances, are
accruing additional budgetary resources as their welfare caseloads
decline, HUD has limited resources to invest in welfare reform. 

Despite the advantages of working more closely with state agencies,
HUD has not developed a comprehensive strategy for bringing its
tenants' needs to the attention of state welfare officials.  Though
HUD's financial resources for investment in welfare reform are
limited, the Department has other resources that states or localities
need to make welfare reform work.  Sizable numbers of welfare
recipients reside in assisted housing, and HUD has data on their
demographic characteristics, as well as expertise gained through a
variety of demonstration programs.  In addition, HUD supports public
housing facilities that have space housing agencies could make
available to service providers.  Finally, HUD has field staff at the
state level and housing agency staff at the local level who could
work with state and local officials to coordinate joint welfare
reform efforts.  In the past, housing agencies relied almost
exclusively on federal funding and seldom interacted with state and
local governments.  As a result, they and their residents were often
isolated.  Today, reducing that isolation could help make housing
agencies a resource local service providers could use to assist
residents in moving from welfare to work. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5

To assist public housing authorities in their efforts to help
residents move from welfare to work, GAO recommends that the
Secretary of Housing and Urban Development

  -- increase communications with field offices and housing agencies
     to clarify HUD's role in welfare reform, explain how current
     programs can be used to complement welfare reform efforts, and
     identify sources of information about other federal welfare
     reform efforts;

  -- provide additional technical assistance and data on tenants'
     characteristics along with guidance that would help housing
     agencies use the data to assist in managing the units and in
     determining the potential impact of welfare reform on the
     agencies; and

  -- develop a comprehensive strategy that relies on each field
     office to promote the benefits of using assisted housing
     developments as places to deliver services related to welfare
     reform and to help link other field office and housing agency
     staff with federal, state and local welfare reform efforts. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

GAO requested comments on a draft of this report from HUD.  HUD
commended GAO for the report's overall conclusions and said that they
reflect many of the agency's own concerns.  Furthermore, HUD agreed
that, in general, housing agency officials are being faced with major
challenges in understanding and dealing with the potential effects of
welfare reform on the recipients of housing assistance and on the
housing agencies themselves.  HUD was also pleased that the report
recognized the Department's commitment to making welfare reform work. 
According to HUD, all three of the report's recommendations have a
great deal of merit and the Department plans to implement them. 

HUD's primary concern was that the draft did not sufficiently
acknowledge the initiatives undertaken by the Department to deal with
welfare reform.  For example, HUD said that the report did not
address (1) departmental legislative proposals containing a number of
provisions related to welfare reform and (2) new program initiatives
undertaken or planned by HUD's Office of Public and Indian Housing
and Office of Policy Development and Research.  In addition, HUD said
that the report did not sufficiently acknowledge the numerous efforts
taken by the Department to coordinate with other federal agencies and
that references to "informal" coordination seemed inadequate.  After
reviewing HUD's comments, GAO added further references to HUD's
legislative proposals.  In response to HUD's comments about the
Department's coordination with other federal agencies, GAO expanded
its description in chapter 3 of HUD's efforts to coordinate with
other federal agencies and eliminated references to "informal"
external coordination.  GAO considered HUD's comments about the
Department's new program initiatives but concluded that the report
already cited the primary efforts that could be documented at the
time of GAO's review. 

GAO also provided chapter 2 of the draft report to the 18 housing
agencies visited by GAO for their comments.  Nine of the housing
agencies responded, and several provided clarifying language and
technical corrections.  GAO incorporated their comments as
appropriate.  In addition, GAO provided Mathematica with excerpts of
the draft report for its technical review.  Mathematica provided
technical corrections that GAO incorporated as appropriate.  HUD's
comments and GAO's detailed responses appear in appendix VI. 
Additionally, GAO's responses to HUD's broader comments are
summarized at the end of chapters 2 and 3. 


INTRODUCTION
============================================================ Chapter 1

The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 (P.L.  104-193), generally known as welfare reform, imposed
time limits on the receipt of welfare benefits and established work
requirements to promote self-sufficiency for families on welfare.  In
addition, the act shifted important responsibilities for welfare from
the federal government to the states.  Housing programs, some of them
dating back to the 1980s, and recent changes in housing policies have
also encouraged work and self-sufficiency.  The changes in housing
policies are intended to make public housing agencies, as well as
tenants, less dependent on federal subsidies. 

Many recipients of federal housing assistance have been or will be
affected by the changes in both welfare and housing programs and
policies.  According to the Department of Housing and Urban
Development's (HUD) data, about 29 percent of the households that
received housing assistance also received Aid to Families with
Dependent Children (AFDC) as of September 1996.  A majority of these
households reside either in public housing or in private rental
units--under HUD's Section 8 certificate and voucher programs--that
they select and that HUD subsidizes through payments by public
housing agencies to landlords of a portion of each household's rent. 
Because households that receive housing assistance generally pay 30
percent of their income for housing, changes in tenants' incomes
resulting from welfare reform will affect the rental revenue that
public housing agencies receive and the amounts of the subsidies they
need from HUD to cover their operating costs.  Several federal
departments, the states, and local public housing and welfare
agencies have roles in efforts to move families from welfare and
housing assistance to work and self-sufficiency. 


   PURPOSE, PROVISIONS, AND STATUS
   OF WELFARE REFORM
---------------------------------------------------------- Chapter 1:1

The Personal Responsibility and Work Opportunity Reconciliation Act
of 1996 established time limits and work requirements to promote
self-sufficiency for families on welfare.  The act replaced the
entitlement program--AFDC--with block grants to the states under
Temporary Assistance for Needy Families (TANF).  The fixed amounts of
states' grants under the new law are based on the amount of their
grants\2 in specified fiscal years under prior law, supplemented for
population increases under certain circumstances.  In total, TANF
grants to the states are authorized at $16.5 billion per year.  With
respect to state funding, the federal welfare reform law includes a
"maintenance of effort" provision requiring the states to provide 75
or 80 percent of their historic level of funding.\3 Under the act,
the states must meet statewide mandatory requirements for the
percentage of families engaged in work activities or their TANF
grants will be reduced.  In turn, if a recipient family fails to
participate as required, the state must reduce and may terminate the
family's cash assistance.  The act also imposed a 60-month lifetime
limit on the receipt of TANF benefits for most individuals.\4 In
addition, the federal welfare reform law increased federal funding
for child care subsidies for low-income families under the Child Care
and Development Fund, authorized to provide $3 billion in fiscal year
1997 and increase to $3.7 billion by 2002.  The act also tightened
the eligibility requirements for food stamps and Supplemental
Security Income (SSI), a source of cash assistance for some children
with special needs, immigrants, and others. 

In subsequent legislation,\5 the Congress restored SSI benefits for
many legal aliens, ensured Medicaid coverage for some children who
became ineligible for SSI benefits, and authorized $3 billion in
welfare-to-work grants to the states for fiscal years 1998 and 1999,
to be overseen by the Department of Labor.  Appendix I provides
information on the welfare reform plans and benefit levels
established by the states we visited. 


--------------------
\2 The grants include those for AFDC, Emergency Assistance, and the
Job Opportunities and Basic Skills Training Program. 

\3 States that have met mandatory goals for the percentage of
recipients engaged in work activities must provide 75 percent of
their historic level of funding; other states must provide 80
percent. 

\4 The states can exempt up to 20 percent of their families from this
limit because of hardship and may use their maintenance-of-effort
funds to provide aid to families who reach the federal time limits. 

\5 The Balanced Budget Act of 1997 (P.L.  105-33). 


   PURPOSE, PROVISIONS, AND STATUS
   OF HOUSING REFORM
---------------------------------------------------------- Chapter 1:2

HUD and the Congress have undertaken and proposed efforts to reform
the nation's public housing industry in much the same way as welfare
has been reformed.  These efforts are designed to promote
self-sufficiency on the part of both tenants and housing agencies. 
Specifically, HUD now manages a variety of self-sufficiency programs,
such as the Family Self-Sufficiency (FSS) program,\6 which provides
employment-related services for tenants of public and assisted
housing who volunteer for the program.  The Congress, through
appropriations bills, has implemented changes in public housing
policies to encourage work.  The revised policies eliminate
requirements for public housing agencies to give preference only to
the poorest of the poor in selecting tenants and allow the agencies
to establish local preferences, ceiling rents, and adjustments to
earned income.  HUD and the Congress have also proposed permanent
legislation that would, among other things, consolidate public
housing programs and increase the mix of incomes among tenants. 


--------------------
\6 The FSS program is currently administered by HUD's Office of
Public and Indian Housing.  Besides FSS, the Office of Public and
Indian Housing operates approximately 12 self-sufficiency programs. 
Other HUD offices also offer self-sufficiency and economic
opportunity programs. 


      SELF-SUFFICIENCY PROGRAMS
-------------------------------------------------------- Chapter 1:2.1

Since the mid-1980s, HUD has provided housing-based self-sufficiency
and economic opportunity programs to deliver supportive services to
the tenants of public and assisted housing.  These programs have
provided job training, counseling, and placement services; child
care; and transportation.  Several of these programs require
coordination with other local efforts.  One of the most widely used
of these programs, FSS, was created under the National Affordable
Housing Act of 1990 (P.L.  101-625) to help the tenants of public and
assisted housing reduce their reliance on welfare and gain employment
through education, training, and supportive services.  Since fiscal
year 1993, HUD has required housing agencies that receive additional
public housing units or Section 8 certificates and vouchers to
participate in FSS.  The Anti-Drug Abuse Act of 1988 (42 U.S.C. 
11901 et seq.), as amended, authorized the Public and Assisted
Housing Drug Elimination program, whose goal is to provide
alternative approaches to reducing crime and drug activity in public
and assisted housing.  Under this program, HUD awards grants to
housing agencies and owners of assisted housing for activities such
as protective services, drug prevention programs, and youth sports
programs.  Other self-sufficiency programs include the Economic
Development and Supportive Services grant program and Jobs Plus, both
of which provide housing agencies with additional resources and
incentives to encourage tenants to achieve self-sufficiency. 
Appendix II describes HUD's self-sufficiency and economic development
programs identified by selected housing agencies as facilitating
welfare reform. 


      HOUSING POLICIES
-------------------------------------------------------- Chapter 1:2.2

The Congress has authorized some changes for public housing agencies
through recent appropriations laws, beginning in 1996 with the
Balanced Budget Downpayment Act, I (P.L.  104-99, also known as the
Continuing Resolution).  These changes eliminated the requirement
that housing agencies select families from their waiting lists on the
basis of federal preferences\7 and allowed the agencies to establish
local preferences, ceiling rents, and adjustments to earned income. 
Local preferences enable housing agencies to select working families,
those in employment and training programs, veterans, and persons
living in the immediate vicinity to fill vacant units.  The agencies
may determine which preference(s) to implement as long as they do not
change the makeup of their developments in a way that would displace
elderly or disabled tenants. 

Ceiling rents--levels above which rents no longer rise with increases
in tenants' incomes--are designed to attract, retain, and support
working families, who are generally thought to provide leadership to
housing developments and serve as role models for other tenants.  A
ceiling rent must reflect the reasonable market value of the housing
unit and cannot be less than the monthly per-unit operating costs. 
HUD considers ceiling rents useful in easing the rent burden on
working families residing in public housing.  In addition, ceiling
rents can create incentives for tenants to save money and purchase
their own homes.  The Continuing Resolution provided a transition
rule allowing housing agencies to establish ceiling rents until HUD
issues final regulations.  HUD proposed a regulation on ceiling rents
for public housing in November 1997. 

Like ceiling rents, adjustments to earned income can be used to
attract working families, increase the mix of incomes among public
housing tenants, and help tenants save money and become homeowners. 
Adjustments to earned income allow housing agencies to exclude
certain types of income in calculating rents.  As a result, tenants
may retain more of the income they earn if they have participated in
certain types of training and work activities.  Housing agencies
electing to use adjustments may recoup potential losses by attracting
tenants with higher incomes. 


--------------------
\7 Under these preferences, housing agencies were required to offer
at least 50 percent of the units that became available in any given
fiscal year to those living in substandard housing, paying over 50
percent of their income in rent, or experiencing involuntarily
displacement. 


      CURRENT HOUSING REFORM
      PROPOSALS
-------------------------------------------------------- Chapter 1:2.3

In addition to the rent policies discussed above, HUD and the
Congress have proposed more sweeping housing reforms that would
further transform public housing.  Under HUD's proposal, public
housing programs would be consolidated, and the tenant-based
certificate and voucher programs would be merged.  HUD has also
proposed the deregulation of well-performing housing agencies and
acknowledges the need for more predictable and effective actions to
address problems at failing housing agencies.  In addition, HUD has
proposed to strengthen the Department's policy on coordination with
welfare agencies, consolidate the Economic Development and Supportive
Services grant program with another program for tenants, and create a
welfare-to-work voucher program. 

Both the House and the Senate have proposed legislation that would
modify the U.S.  Housing Act of 1937.  The House bill would repeal
the act, replacing it with new legislation,\8 while the Senate bill
would revise the act.\9 Both the House and Senate bills would combine
the Section 8 certificate and voucher programs into a single
tenant-based assistance program, to be called choice-based under the
House bill.  The proposed legislation would also allow local
governments to receive federal funds for public housing directly,
alter income-targeting rules, and increase funding for tenant
organizations. 

H.R.  2 passed the House in May 1997.  S.  462 passed the Senate in
September 1997.  As of April 1998, permanent housing reform
legislation had not been enacted. 


--------------------
\8 The Housing Opportunity and Responsibility Act of 1997 (H.R.  2). 

\9 The Public Housing Reform and Responsibility Act of 1997 (S. 
462). 


   AGENCIES' WELFARE REFORM AND
   HOUSING ROLES
---------------------------------------------------------- Chapter 1:3

Among federal agencies, the departments of Health and Human Services
(HHS) and Labor have the greatest responsibilities for welfare
reform.  The states play a larger role under welfare reform than they
did in the past.  HUD subsidizes public housing and provides rental
assistance and grants for supportive services.  Local public housing
agencies own and operate public housing and administer the subsidies,
rental assistance, and grants that they receive from HUD. 


      HHS
-------------------------------------------------------- Chapter 1:3.1

While welfare reform shifted responsibility to the states for
designing and implementing TANF programs, HHS remains the federal
agency with primary responsibility for welfare programs.  The TANF
legislation made HHS responsible for aiding and overseeing the
states' development of TANF programs; developing certain types of
regulations, including reporting requirements for the states and
penalties for noncompliance with the law; drafting a formula to
reward "high performing" states (i.e., those that achieve the goals
of the law); and conducting research on the benefits, costs, and
effects of the new law.  HHS may also assist the states in developing
innovative approaches to reduce dependency on welfare and increase
the well-being of children and is responsible for evaluating these
approaches.  In addition, HHS administers the Child Care and
Development Fund. 


      LABOR
-------------------------------------------------------- Chapter 1:3.2

The Department of Labor also has a prominent role under welfare
reform.  Its programs for low-income adults include, among others,
the Welfare-to-Work program, the Job Training Partnership Act (JTPA)
Title II-A Adult Training Grants, and the One-Stop Career Center
initiative.  Labor's Welfare-to-Work program is designed to move the
hardest-to-serve welfare recipients into unsubsidized jobs and
economic self-sufficiency.\10 The Balanced Budget Act of 1997 (P.L. 
105-33) authorized $1.5 billion annually for formula and competitive
grants for the Welfare-to-Work program over 2 years.  The JTPA Title
II-A program supplements the Welfare-to-Work program by providing
both job training for welfare recipients and job training and
placement services for other low-income adults to keep them off
welfare.  For fiscal year 1999, Labor requested $1 billion for this
program--$45 million more than it received for fiscal year 1998.  The
agency also requested $146.5 million for the One-Stop Career Center
initiative.  Labor considers this initiative the cornerstone of a
reform effort to encourage state and local bureaucracies to reinvent
themselves, consolidate service delivery at the "street level," focus
on the customer, and restructure accountability.  Other federal
agencies, such as the Department of Transportation and the Small
Business Administration, also have initiatives related to welfare
reform under way. 


--------------------
\10 The Welfare-to-Work program uses strategies such as job creation;
job readiness, job placement, and postemployment services; on-the-job
training; community service or work experience; and job retention
services. 


      STATES AND LOCALITIES
-------------------------------------------------------- Chapter 1:3.3

The act shifted important responsibilities for welfare from the
federal government to the states.  The states have more flexibility
than before to design their own programs and strategies for aiding
needy families, including those for helping welfare recipients move
into the workforce.  In addition, the states are allowed to set forth
their own criteria for eligibility and for the types of assistance
and services that will be available, provided they ensure that
recipients are treated fairly and equitably.  As a result, the states
can decide how to allocate their TANF funds between cash assistance
and support services, such as child care and education and training. 
A state may also devolve its responsibility to county or local
authorities.  At local welfare offices, TANF programs are generally
administered by state, county, or local officials. 

Before the states could receive their block grants, the act required
them to submit their TANF plans to the Secretary of Health and Human
Services for approval by July 1, 1997.  Most states had begun
implementing their TANF programs before the July 1, 1997, deadline. 
Because many states had already begun changing their AFDC programs
under waivers of federal law from HHS, the states were at different
stages of implementing their reform efforts when the federal
legislation was enacted. 


      HUD
-------------------------------------------------------- Chapter 1:3.4

HUD establishes the guidelines for receiving federal housing
assistance and provides several types of subsidies to produce and
maintain housing affordable to low-income households.  Of these, the
most important for housing agencies are operating subsidies (to
offset some or all of any shortfall between rental revenue and
operating costs) and modernization funds.  HUD also provides rental
assistance to tenants through certificates and vouchers.  Housing
agencies can compete for a variety of grants, such as those for
operating Drug Elimination programs.  Housing agencies can also
compete for Homeownership and Opportunity for People Everywhere
(HOPE) grants to revitalize severely distressed housing through both
physical improvements and activities, such as training and education,
to promote residents' self-sufficiency.\11

Finally, HUD operates other programs to promote self-sufficiency,
many of which are targeted to the tenants of public housing (see app. 
II). 

HUD provides housing assistance through three types of
programs--public housing, the Section 8 certificate and voucher
programs, and the Section 8 project-based program.  Nationwide, there
are 1.2 million units of public housing, 1.4 million units rented to
holders of certificates and vouchers who receive Section 8
tenant-based rental assistance, and 1.7 million units with
project-based rental assistance.  In fiscal year 1997, HUD spent
$23.8 billion on these programs.  Because housing agencies do not
administer the project-based program, it is not discussed in this
report. 


--------------------
\11 The Congress has provided funds for these grants through
appropriations legislation since fiscal year 1993.  While the name
for the grants--HOPE--was derived from the title of the fiscal year
1993 appropriation act, the appropriation act for fiscal year 1997 is
entitled Revitalization of Severely Distressed Public Housing. 


      PUBLIC HOUSING AGENCIES
-------------------------------------------------------- Chapter 1:3.5

Local public housing agencies own and operate public housing for low-
and moderate-income households.  The housing agencies operate under
state and local laws that set forth their organization and structure,
but state governments do not oversee public housing.  In many cities,
the mayor appoints a governing body or board of commissioners that
hires the housing agency's executive director, who oversees the
agency's day-to-day operations.  Housing agencies enter into
contracts with HUD, under which the agencies agree to abide by
federal regulations and HUD agrees to provide subsidies for public
housing and rental assistance for low-income households residing in
private housing.  As discussed previously, housing agencies may also
compete for grants from HUD to provide supportive services. 


      PUBLIC HOUSING SUBSIDIES
-------------------------------------------------------- Chapter 1:3.6

To calculate a housing agency's operating subsidy, HUD uses its
Performance Funding System.\12 Under this system, the amount of the
subsidy, determined at the beginning of the housing agency's fiscal
year, is based on projections of the agency's future funding needs,
as well as the total congressional appropriation for operating
subsidies.  This method is known as forward funding.  Projections of
the housing agency's future funding needs are based on assumptions
about the agency's future income and expenses, which, in turn, are
based on assumptions about future conditions, including the number of
eligible units, tenants' incomes--tenants generally pay 30 percent of
their adjusted income for rent--the rate of inflation, and other
factors that affect income and expenses.  If the amount of the
operating subsidy is insufficient for the housing agency's needs
during the year, the housing agency must reduce its spending.  After
the end of each fiscal year, certain adjustments are made on the
basis of the housing agency's experience during the year. 


--------------------
\12 HUD implemented this system in 1975 under section 9(a) of the
U.S.  Housing Act of 1937. 


      SECTION 8 TENANT-BASED
      RENTAL ASSISTANCE
-------------------------------------------------------- Chapter 1:3.7

The Section 8 certificate and voucher programs allow eligible
households to select their own units in the private housing market
and receive subsidies to cover part of their rent.  HUD operates the
certificate and voucher programs by entering into contracts and
providing payments to local and state housing agencies, including
public housing agencies.  Housing agencies use these payments to
provide rent subsidies to the owners of private housing on behalf of
the assisted households.  HUD also pays each housing agency a
statutorily determined administrative fee for tasks involved in
managing the program, including certifying applicants for
eligibility, inspecting units found by tenants for compliance with
housing standards, and verifying that the terms of leases meet HUD's
requirements.  If HUD's payments are insufficient to cover the
housing agency's rent subsidy needs, the agency uses its Section 8
reserve account to cover the difference.  But if HUD's payments
exceed the agency's subsidy needs, the additional funds are added to
the reserve fund and HUD can subsequently adjust the housing agency's
future funding.  In the past, some housing agencies used the
additional funds to issue more Section 8 certificates and vouchers. 
However, HUD has instructed housing agencies that they may not issue
any more vouchers and certificates using reserve funds than they have
in the past. 

Under the certificate program, a household generally pays 30 percent
of its income for rent.  The housing agency pays the difference
between the rent charged--which, under most circumstances, cannot
exceed the fair market rent set by HUD--and each tenant's payment. 
Under the voucher program, the housing agency pays the difference
between a payment standard that is set by the housing agency and 30
percent of the tenant's monthly income.  Generally, a household with
a voucher must pay more than 30 percent of its income for rent if the
unit's rent exceeds the payment standard.  Conversely, a household
usually pays less than 30 percent of its income for rent if the
unit's rent is lower than the payment standard. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:4

To obtain information about the potential implications of welfare
reform on housing agencies, the Chairman of the Subcommittee on
Housing and Community Opportunity, House Committee on Banking and
Financial Services, asked us to review the impact of welfare reform
on selected public housing agencies.  In response to that request and
to a mandate in the 1998 House Report on the Departments of Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Bill (H.R.  Report 105-175), we identified (1) the
impact of welfare reform on the revenue sources, employment status of
tenants, and roles of selected housing agencies and (2) HUD's role in
assisting housing agencies and their clients as they adapt to welfare
reform. 

To obtain information about the impact of welfare reform on the
revenue sources, employment status of tenants, and roles of selected
housing agencies, we interviewed and gathered studies from HUD
officials, researchers, and interest groups, including those
representing housing agencies and the recipients of housing
assistance.  To identify the factors that determine tenants'
prospects of moving from welfare to work, we reviewed various studies
on welfare and housing.  We also contracted with Mathematica Policy
Research, Incorporated,\13 to use its Simulation of Trends in
Employment, Welfare, and Related Dynamics (STEWARD) model to estimate
the impact of alternative welfare reform plans and economic scenarios
on welfare recipients with and without housing assistance.  Appendix
III provides additional information on the work performed by
Mathematica.  In addition, we selected four states for field
work--California, Louisiana, Massachusetts, and Minnesota.  As table
1.1 indicates, these states have differing approaches to welfare
reform, a significant number of tenants who receive TANF benefits,
geographical diversity, varied poverty levels, housing agencies of
different sizes, and varied unemployment rates.  To identify changes
resulting from welfare reform in the selected states, we obtained and
reviewed the states' TANF plans and related studies.  To learn more
about the states' implementation of welfare reform and to determine
whether the states had involved housing agency officials in their
welfare reform efforts, we interviewed and obtained plans, reports,
and other documents from state welfare, housing and community
development, and labor officials using standard sets of questions
that we developed.  To obtain additional perspectives, we used a
standard set of questions to interview and collect information from
officials representing HUD field offices, state associations, public
housing and community groups, and mayoral and legislative offices. 
Appendix V provides maps of the states showing the selected housing
agencies. 



                               Table 1.1
                
                   Characteristics of Selected States

                                            State
                        ----------------------------------------------
                                                Massachuse
Factor                  California   Louisiana         tts   Minnesota
----------------------  ----------  ----------  ----------  ----------
Geographic location           West   Southeast   Northeast     Midwest
Poverty rate                 16.7%       19.7%       11.0%        9.2%
Unemployment rate             7.2%        6.7%        4.3%        4.0%
Number of housing              127         171         134         143
 agencies
Percentage of housing          50%         41%         33%         28%
 agencies' tenants
 receiving AFDC
----------------------------------------------------------------------
Source:  These data were the most recent available at the time we
selected the states in our study.  The poverty rates are from the
U.S.  Bureau of the Census, Current Population Survey, as of 1995;
the unemployment rates are from the Bureau of Labor Statistics, State
and Regional Unemployment 1996 Annual Averages; the numbers of
housing agencies are from HUD's Office of Public and Indian Housing,
as of April, 1997; and the percentages of housing agencies' tenants
receiving AFDC are from HUD's Multifamily Tenant Characteristics
System, as of November 1996. 

Within each state, we visited a minimum of four housing agencies to
obtain more detailed information about the anticipated effects of
welfare reform.  We selected housing agencies on the basis of their
size, location, tenants' characteristics (including reliance on cash
assistance), local economic conditions, and approaches to providing
social services.  As table 1.2 indicates, we generally selected a
small (250 to 499 federally funded public housing units), medium (500
to 1,249 federally funded public housing units), large (1,250 to
4,999 federally funded public housing units), and extra large (5,000
or more federally funded public housing units) housing agency in each
state.  In California, we selected six agencies--two small, two
medium, one large, and one extra large--because of the size of the
state.  We did not select a medium-sized housing agency in Minnesota
because none of the agencies in the state has from 500 to 1,249
public housing units.  Instead, we selected the Duluth housing agency
because, with 1,261 units, it is the closest to the medium range. 
The housing agencies that we visited in Massachusetts and rural
California generally own and manage additional units under state or
U.S.  Department of Agriculture programs.  In addition, all but one
of the selected housing agencies operated certificate and voucher
programs, which ranged in size from 30 to 28,134 authorized
certificates and vouchers.  Before visiting the selected housing
agencies, we sent them a survey to obtain information on their
housing stock, revenue sources, and tenants' incomes and
demographics.  During our visits to the housing agencies, we used a
standard set of questions for our interviews with the agencies'
executive directors, finance managers, social service coordinators,
occupancy specialists, and tenants and tenant associations.  We also
interviewed local government officials, social service officials, and
housing advocacy groups about their expectations for welfare reform
and the actions that housing agencies might take or have taken in
response to welfare reform.  In addition, we obtained reports on
housing agencies' self-sufficiency efforts, analyses of housing
agencies' financial positions, and copies of documents on welfare
reform used by the housing agencies.  Where available, we obtained
reports on the financial impact of welfare reform on the housing
agencies and surrounding communities. 



                               Table 1.2
                
                 Selected Housing Agencies, by Size and
                                 State

                                            State
                        ----------------------------------------------
                                                Massachuse
Size of housing agency  California  Louisiana   tts         Minnesota
----------------------  ----------  ----------  ----------  ----------
Small                   Butte       Bogalusa    Chicopee    Hibbing
                        County
                        Kings
                        County

Medium                  Kern        Shreveport  Lawrence    None
                        County
                        Merced
                        County

Large                   San         E. Baton    New         Duluth
                        Bernardino  Rouge       Bedford     St. Paul
                        County

Extra large             Los         New         Boston      Minneapoli
                        Angeles     Orleans                 s
----------------------------------------------------------------------
We obtained additional data on the characteristics of the selected
housing agencies from HUD's September 1996 Picture Book of Subsidized
Housing, a compilation of data primarily derived from information
sent to HUD by local housing agencies, and had these data verified by
the housing agencies.  Because of past concerns about the reliability
of the data--which come from HUD's Multifamily Tenant Characteristics
System (MTCS) database--we asked the housing agencies in our study to
help us corroborate the accuracy of the data.  We believe that, with
a few exceptions, the data were close enough to state that the data
for the selected housing agencies reported in the Picture Book are
reliable for these agencies.  Our analysis was based on responses to
our request from all 18 housing agencies in our review.  For about 75
percent of the data in our review that could be verified, there were
no differences between the data reported by the housing agencies and
the MTCS data.  For an additional 10 percent of the data, differences
of 1 to 2 percent were reported.  However, for several housing
agencies, the number of tenant-based Section 8 certificates and
vouchers reported by the housing agencies differed from the MTCS data
by more than 5 percent.  To determine whether this difference was
meaningful, we summed the numbers for all of the housing agencies and
found a difference of about 24 percent between the two sets of
numbers; the housing agencies reported higher total numbers than the
Picture Book.  The data for one housing agency, operated by the city
of Los Angeles, was responsible for a significant portion of this
difference.  We also identified differences in the data on tenants'
incomes.  For example, the differences between the housing agencies'
figures for tenants' average annual incomes and the Picture Book's
figures ranged from 2 percent to 30 percent; the housing agencies
generally reported lower average annual incomes for tenants in public
housing, while the Picture Book reported lower average annual incomes
for tenants receiving certificates and vouchers.  Appendix IV
provides additional information on the selected housing agencies'
demographics and sources of revenue. 

To identify HUD's role in helping housing agencies and their tenants
adapt to welfare reform, we reviewed HUD's studies, reports, and
notices on self-sufficiency programs, employment and training
programs, and public and Indian housing programs.  We conducted a
literature search and reviewed documents on welfare reform, housing
and welfare reform legislation, proposed housing bills, and HUD's
self-sufficiency and economic opportunity programs.  We interviewed
and gathered studies and planning documents from senior HUD officials
in HUD's Office of Policy Development and Research, Office of Public
and Indian Housing, Office of Community Planning and Development, and
Office of Labor Relations.  We interviewed senior officials from HHS'
Administration for Children and Families and Office of the Assistant
Secretary for Planning and Evaluation.  Finally, we interviewed and
gathered studies and position papers from researchers studying
welfare reform and housing issues, as well as from interest groups
representing HUD's clients, including tenant organizations, public
housing agencies, state agencies, and local government officials.  We
also drew on our prior and ongoing work on welfare reform and the
Government Performance and Results Act.  We performed our work from
June 1997 through April 1998 in accordance with generally accepted
government auditing standards. 


--------------------
\13 Mathematica analyzes public policy issues in areas including
health care, education, welfare, employment, and child development
for federal and state governments, as well as private-sector clients. 


IMPACT OF WELFARE REFORM ON THE
REVENUE, EMPLOYMENT STATUS OF
TENANTS, AND ROLES OF SELECTED
HOUSING AGENCIES IS UNCERTAIN
============================================================ Chapter 2

It is too early to be certain what impact welfare reform will have on
the revenue of the housing agencies we visited, the employment status
of their tenants, and the roles of the housing agencies.  Although
these agencies serve many tenants who depend on cash assistance for
some or all of their income, most of their executive directors and
other officials had not developed financial estimates of welfare
reform's impact.  These officials had considered the challenges that
tenants will face in moving from welfare to work and that housing
agencies will face in using new rent policies to provide support and
incentives for working families.  Although recent appropriations laws
have given housing agencies the flexibility to change some rent rules
that discourage work, the officials said they had made minimal use of
the laws' provisions.  The officials also noted that the roles of
their agencies have expanded to include providing a broader range of
social services that are consistent with welfare reform's goal of
moving recipients from welfare to work.  However, the housing
agencies' supportive service activities were generally operated
separately from the states' welfare reform efforts.  In addition, the
state government offices with welfare reform responsibilities that
are providing services to help welfare recipients reduce their
reliance on cash assistance are rarely targeting funds and programs
to public housing developments or assisted housing programs. 

While the executive directors of the housing agencies we visited were
uncertain about the specific effects of welfare reform, their views
on its overall impact varied widely, ranging from significantly
positive to significantly negative.  Expectations tended to vary by
location on the basis of characteristics such as state time limits
and local economic conditions. 


   HOUSING AGENCIES ARE UNSURE
   ABOUT, AND LACK THE RESOURCES
   TO ESTIMATE, THE IMPACT OF
   WELFARE REFORM ON THEIR REVENUE
---------------------------------------------------------- Chapter 2:1

Welfare reform is likely to affect the revenue of the housing
agencies we visited because many of their tenants depend on TANF for
some or all of their income.  However, the executive directors and
finance officials were uncertain how--and how extensively--welfare
reform would affect their revenue because welfare reform continues to
evolve at both the federal and the state levels.  In addition, they
had difficulty separating the effects of welfare reform from those of
local economic conditions.  For public housing, they were primarily
concerned about the possibilities of falling rental revenue,
declining operating subsidies, and rising operating costs.  These
officials were also concerned about welfare reform's impact on
Section 8 revenue.  Officials generally lack the resources needed to
undertake detailed analyses of the impact of their state's welfare
reform plan on their revenue.  However, three of the selected housing
agencies had developed some financial estimates of welfare reform's
impact. 


      OFFICIALS ARE UNCERTAIN
      ABOUT THE DIRECTION AND
      EXTENT OF WELFARE REFORM'S
      IMPACT
-------------------------------------------------------- Chapter 2:1.1

Although housing agency officials were generally uncertain about the
direction and extent of its effects, welfare reform is likely to
affect the revenue of the housing agencies we visited because 37
percent of their tenants rely on TANF for some or all of their
income.  At the housing agencies we visited, 19 to 61 percent of the
tenants relied on TANF.  If tenants' incomes change because of
welfare reform, changes will also occur in the rental revenue housing
agencies receive and in the amount of the subsidies they may need
from HUD to cover their operating costs. 

To cover most of their annual operating expenses, housing agencies
depend on the rent paid by public housing tenants and on HUD's
payments, including public housing operating subsidies, Section 8
tenant-based program funds, and program grants.  Housing agencies use
the bulk of their Section 8 tenant-based program funds to pay private
landlords to subsidize tenants' rents, but they also receive
administrative fees for managing the program.  As figure 2.1 shows,
the housing agencies we visited received 31.1 percent of their
operating revenue from rental income, 43.5 percent from HUD's
operating subsidies, 15.8 percent from Section 8 administrative fees,
and 9.5 percent from other sources.\14 The percentage of revenue that
each housing agency received from rental income ranged from about
18.6 percent at the Shreveport housing agency to about 68.7 percent
at the Hibbing housing agency.  Eleven of the 18 housing agencies
received more funds from rental income than from HUD's operating
subsidies.  See appendix IV, table IV.8, for additional information
about the revenue sources for the selected housing agencies. 

   Figure 2.1:  Sources of
   Operating Revenue for Selected
   Housing Agencies, Fiscal Year
   1996

   (See figure in printed
   edition.)

Note:  Other revenue includes revenue from profit-making activities,
state and local sources, and HUD's grant programs, such as the HOPE
VI and Drug Elimination programs.  This chart does not include
modernization funding.  Percentages do not add up to 100 percent
because of rounding. 

Source:  GAO's analysis of fiscal year 1996 data received from
selected housing agencies. 

At the time of our review, welfare reform was evolving at both the
federal and the state levels.  Therefore, housing agency officials,
tenants, social service providers, government officials, and interest
groups said it was too early to predict welfare reform's impact on
rental revenue with any certainty.  At the federal level, for
example, some benefits for legal immigrants were restored and
additional funds were appropriated to provide welfare-to-work
programs in the states.  At the state level, housing agency officials
and tenants continue to face great uncertainty.  For example, when we
visited California, the state had only recently adopted welfare
reform legislation, and counties were still formulating plans for
implementing the reforms in January 1998.  In Massachusetts, where
some TANF recipients will lose benefits in December 1998, state
officials had not determined as of April 1998 what groups would be
among the 20 percent of beneficiaries who would be exempted from the
5-year federal limit on the receipt of benefits. 

Officials at many of the housing agencies we visited expected welfare
reform to affect their revenue, but some found it difficult to
separate the effects of welfare reform from those of other economic
changes.  While some housing agency officials attributed recent
changes in rental revenue to increases in TANF recipients' earnings
under welfare reform, others ascribed the changes to different
causes.  In Massachusetts, officials at the Chicopee and Lawrence
housing agencies believed their rental revenue was rising because
more tenants were working under welfare reform, but the officials
were uncertain what would happen in December 1998, when the state's
2-year time limit went into effect.  They reasoned that the people
who could go to work fairly easily were doing so but that when the
time limit hit, the people who could not find employment at
reasonable wages might see their incomes plummet and housing agencies
might be faced with falling rental revenue.  In Merced County, the
executive director said that turnover had increased with the 1995
closing of Castle Air Force Base; however, he attributed the recent
exodus of residents on welfare to their need to find work before they
lost their TANF benefits.  Similarly, the executive director of the
New Bedford housing agency attributed its high turnover to the
long-term stagnation of the economy in southeastern Massachusetts,
while staff said tenants' Section 8 rental payments had recently
decreased because tenants were losing income through sanctions
imposed on them for failing to follow the state's TANF requirements. 

Officials at the housing agencies we visited also expressed
uncertainty about the impact that welfare reform's tighter
eligibility requirements for food stamps could have on housing
agencies' rental revenue.\15 Although food stamps are not considered
income in tenants' rent calculations, changes in food stamp benefits
may affect the rents that tenants can afford to pay.  In California,
where reductions in food stamp benefits were among the few provisions
of welfare reform that had been implemented when we visited, the
executive director at the Butte County housing agency said that
several tenants had moved out after losing their food stamps.  In
Louisiana, where cash assistance levels are lower than in the other
states we visited, housing agency officials and tenants said the loss
of food stamps would have a significant impact.  One housing agency
official in East Baton Rouge said that in the past recipients might
have sold their food stamps to meet their cash obligations.\16 While
housing agency officials and tenants in several locations said they
would expect families who had lost their food stamps to have
difficulty paying their rent because they would need their income to
buy food, in Boston where affordable housing is scarce, tenants said
that families might forgo food in order to pay their rent.  Housing
agency officials in Lawrence, where much of the private housing is
substandard, said they thought their tenants might also pay their
rent before buying food. 

Because of restrictions in food stamp eligibility, some housing
agency officials said that uncollected rents or turnover might
increase.  Housing agencies varied in their estimates of the
likelihood that they would be able to evict tenants for not paying
their rent.  For example, officials at a Minnesota housing agency, a
California housing agency, and two Louisiana housing agencies said
that they would evict people for not paying rent, while officials at
two Massachusetts housing agencies said that the law probably would
require them to exempt tenants who could not meet the minimum rent
requirements. 

Besides being concerned about possible declines in rental revenue,
housing agency officials raised questions about their ability to
maintain their public housing units if operating costs rose or HUD's
funding did not fully meet their needs for operating subsidies. 
Officials at the Kern County, Hibbing, and St.  Paul housing agencies
said that operating costs might also increase if turnover among
residents increased as a result of welfare reform.  In addition, when
we asked whether HUD would be likely to fully meet the housing
agencies' operating subsidy needs during the next fiscal year, most
housing agency finance officials thought that it would not. 

Some housing agency executive directors and finance directors were
also concerned about welfare reform's impact on revenue from the
Section 8 tenant-based assistance program.  If the incomes of Section
8 tenants fall, housing agencies cover short-term increases in
subsidies with reserves set aside for that purpose.  However,
officials at the Duluth, Minneapolis, and San Bernardino housing
agencies said that in the longer term, the number of households
served by the program might have to be reduced. 


--------------------
\14 Percentages do not add up to 100 percent because of rounding. 

\15 Welfare reform reduced food stamps for many participants and
eliminated them, except under certain conditions, for two
groups--able-bodied adults without dependents and legal immigrants. 
Able-bodied adults without dependents can receive benefits for only 3
months in a 3-year period unless they meet work or training
requirements.  Legislation made most legal immigrants ineligible for
food stamps as of Aug.  22, 1997. 

\16 It is illegal to sell food stamps.  See 7 U.S.C.  sections 2013,
2024. 


      HOUSING AGENCY OFFICIALS
      LACK RESOURCES FOR ANALYZING
      WELFARE REFORM'S IMPACT
-------------------------------------------------------- Chapter 2:1.2

Housing agency staff lack some of the basic information they would
need to analyze the impact of welfare reform and said that they do
not have resources to devote to collecting and using this kind of
information.  Although housing agency staff are required to collect
information on all tenants' income sources, family composition, and
minority status, they are required to collect information on
education only for tenants in the FSS program.  Information on
education and prior work experience for all tenants would be useful
because recent research has shown that education, prior work
experience, age, and minority status are important determinants of
the speed with which an individual may leave welfare.\17 In addition,
housing agency officials would probably need basic information about
their state's welfare reform plan and local employment opportunities. 
According to housing policy analysts at the National Association of
Housing and Redevelopment Officials, if housing agencies had the
information, only the large housing agencies would have access to the
research skills needed to analyze the impact of welfare reform on
tenants' incomes.  New Orleans, a large troubled housing agency, has
recently hired a strategic planner, but the finance director at the
Butte County housing agency, a small California agency, said he would
like HUD to analyze the data for his agency. 

In addition to information and resources for predicting tenants'
incomes, housing agencies might also need to understand how welfare
reform would affect the demand for public and assisted housing.  For
example, officials at the housing agency in Hibbing, where private
housing is inexpensive, said that if the agency's current tenants
become independent of welfare and leave public housing, the housing
agency could be left with vacant units or units housing nonworking
poor tenants.  Then, new tenants might pose greater social and
economic problems for the housing agency.  Similarly, at the New
Bedford housing agency, managers questioned whether public housing
could compete with private housing if tenants' incomes rose.  If the
housing agencies use HUD's new rent and admission policies to attract
working families, the interaction with the local housing market would
become more complex. 

Despite the difficulties, three of the housing agencies we visited
had completed some quantitative estimates of the impact of welfare
reform.  A finance official at the Los Angeles housing agency said
that agency officials had estimated the financial impact of the
governor's original welfare reform plan.  They projected a 3- to
6-percent loss in rental revenue, not taking into account any
reductions in the agency's operating subsidy.  Adding a 3-percent
increase for inflation to the 3- to 6-percent decrease in rental
income, the Los Angeles housing agency estimated a possible total
loss of 6 to 10 percent under welfare reform.  These estimates were
completed before some benefits were restored for legal immigrants and
additional funds were allocated to the states to provide
welfare-to-work programs by the Balanced Budget Act of 1997. 
According to the housing agency's planning director, the final
welfare reform plan, adopted by the California legislature in August
1997, has a stronger safety net than the governor's original plan. 
Thus, he does not expect rental revenue to fall by more than 5
percent under the adopted plan.  However, because the adopted plan
includes many more variables than the governor's plan, the agency has
decided that it is too early to undertake a new detailed estimate at
this time.  In addition, two Minnesota housing agencies we visited
estimated the impact of a state welfare reform provision on their
revenue.  Under Minnesota's welfare reform plan, households that
receive both TANF and housing assistance were scheduled to have their
TANF benefits reduced by $100.\18

In developing their estimates, housing agency staff assumed that the
adjusted incomes of tenants receiving TANF benefits would fall by
$100.  Then, because tenants generally pay 30 percent of their
adjusted income in rent, the staff assumed that the housing agencies'
rental revenue would fall by $30 a month for each resident receiving
TANF benefits.  To calculate the monthly drop in rental revenue, they
multiplied the number of TANF recipients by $30.  Their estimates
assumed that the number of tenants receiving TANF benefits and the
adjusted incomes of these tenants would remain fixed over a 12-month
period. 


--------------------
\17 See LaDonna Pavetti, "Who is Affected by Time Limits?" Welfare
Reform:  An Analysis of the Issues, ed.  Isabel V.  Sawhill, Urban
Institute (June 1995); LaDonna Pavetti, How Much More Can They Work? 
Setting Realistic Expectations for Welfare Mothers, A Report to the
Annie E.  Casey Foundation (July 1997); and Greg J.  Duncan, Kathleen
Mullan Harris, and Johanne Boisjoly, Time Limits and Welfare Reform: 
New Estimates of the Number and Characteristics of Affected Families
(Apr.  1997). 

\18 Minnesota postponed its plans to reduce TANF payments for
recipients who also receive housing assistance until July 1, 1999. 


   TENANTS FACE CHALLENGES WHILE
   WELFARE REFORM AND NEW RENT
   POLICIES OFFER SOME SUPPORT AND
   INCENTIVES TO WORK
---------------------------------------------------------- Chapter 2:2

At the housing agencies we visited, the residents of assisted housing
were facing challenges in seeking employment and the housing agencies
were struggling to use new rent and admission policies to provide
support and incentives for working families.  The challenges facing
tenants seeking employment included a lack of job readiness skills,
basic literacy skills, child care, and transportation.  However,
officials in welfare and employment offices in the states were
developing new programs that could help to address these challenges. 
In addition, recent appropriations laws have given housing agencies,
for a limited time, the flexibility to change some rent rules--such
as those that increase rent with every increase in income--that can
discourage work.  Recent appropriations laws also allow housing
agencies to give preference in admission to certain groups, such as
working tenants.  Thirteen of the housing agencies we visited were
using one or more of these rent and admission policies to support or
provide incentives for working families.  However, four of the
housing agencies we visited had encountered obstacles in employing
these policies, and few tenants were benefiting from them. 


      WELFARE REFORM POSES
      CHALLENGES FOR TENANTS
-------------------------------------------------------- Chapter 2:2.1

Although most of the housing agency managers and tenants we
interviewed believed that entry level and minimum wage jobs existed
in their areas, they cited the lack of job readiness skills and lack
of work experience as barriers to the success of welfare reform for
assisted housing tenants.  Research has shown that lack of prior work
experience is a major factor in increasing the length of time that
people stay on welfare.\19 Recent analysis by staff at Mathematica
Policy Research, Incorporated, for GAO also suggests that single
mothers on TANF with less prior work experience are less likely than
single mothers with more work experience to become employed.  These
results also show that TANF recipients who receive housing assistance
have less work experience than other TANF recipients.  See appendix
III for a more detailed description of Mathematica's results. 

In the states we visited, managers, tenants, service providers, and
local government officials cited poor language skills as a
significant barrier to moving tenants from welfare to work.  In areas
with large immigrant populations, such as California; St.  Paul and
Minneapolis, Minnesota; and New Bedford, Chicopee, and Lawrence,
Massachusetts, officials cited lack of literacy in the native
language and a shortage of courses in English as a second language
(ESL) as difficulties.  In California, where employment for those who
speak only Spanish is possible in some areas, officials or residents
at all six of the housing agencies we visited said that those who did
not speak English well would have a difficult time finding
employment.  Because of economic incentives, church sponsorship, and
family ties, St.  Paul and Minneapolis attracted large pools of Hmong
(from Southeast Asia) and Somali immigrants.  Both groups lack
proficiency in English in an area where English is necessary for
employment.  In Massachusetts, where over 25 percent of the public
housing residents at the housing agencies we visited were Hispanic,
managers, tenants, local government officials, and service providers
at three of the four locations cited low literacy skills as a severe
challenge.  Also, the executive directors of the New Orleans and East
Baton Rouge housing agencies, state and local officials, and HUD
field officials cited low literacy rates among Louisiana welfare
recipients and housing agency tenants as a serious barrier to
employment. 

Lack of affordable child care was also mentioned as a barrier for
tenants by housing agency officials and tenants we interviewed. 
While the federal welfare reform law provides additional child care
funds to the states, some housing agency officials and tenants said
that access to child care is sometimes a problem.  Officials and/or
tenants at 10 of the 18 housing agencies we visited said that child
care was unavailable or unavailable during late hours or that
residents needed child care.  Even when child care centers are
located at public housing sites, they do not necessarily serve the
public housing tenants.  For example, in Boston, the resident
initiatives director explained that in the past, child care centers
in public housing units had not been under contract to reserve a
large number of spaces for residents' children.  In addition, tenants
did not always have the resources to pay for child care services.  He
said it was not surprising to find that only 30 percent of the
children in the child care centers were public housing tenants.  In
New Bedford, we visited a child care center that was using the
housing agency's space but, at the time of our visit, was not serving
any of the development's children.  The executive director of the New
Bedford housing agency said that he contracted with the child care
center to improve relations with the surrounding neighborhood. 

Some housing agency officials and tenants said transportation was a
barrier to achieving independence from welfare because mass
transportation sometimes does not exist from the neighborhoods where
public and assisted housing tenants live to those where jobs are
likely to be found.  In seven locations, either city or housing
agency officials and tenants said bus service did not exist, did not
operate on a reasonable schedule, or did not reach areas where public
and assisted housing tenants live. 

Some housing agency staff and tenants, interest groups, and federal
and local officials thought that welfare reform would have different
effects on the tenants of public housing and tenants receiving
Section 8 tenant-based assistance.  Staff at the New Bedford,
Minneapolis, Lawrence, and San Bernardino housing agencies noted that
those with tenant-based assistance were more likely to be independent
and have more control over their lives, while officials or residents
at the Boston, Chicopee, Duluth, and Hibbing housing agencies said
that those in public housing could face discrimination because of
their address.  However, the Director of the Citizens Housing and
Planning Association and housing agency officials in Hibbing, Los
Angeles, and Kern County noted that Section 8 residents do not have
the same access to programs and services as the residents of more
concentrated public housing units.  In addition, housing agencies can
provide space for these activities at public housing developments. 

Nationwide, the welfare rolls have declined dramatically, and the
states have additional budgetary resources to spend on low-income
families.  Because of the dramatic decline in caseloads, the fixed
amounts of the federal grants to the states under the new law, and
the maintenance-of-effort provision in TANF requiring the states to
provide 75 or 80 percent of their historic level of funding, we
estimate that the total assistance--federal and state--available in
fiscal year 1997 for states' low-income programs was about $4.6
billion more than would have been available under the AFDC
program.\20 Between January 1996 and September 1997, the welfare
rolls decreased by 16 percent in California and Minnesota, 20 percent
in Massachusetts, and 47 percent in Louisiana.  Although it was too
early at the time of our review to tell to what extent the residents
of public and assisted housing on TANF were receiving services,
welfare and employment officials in the states we visited were
implementing new and revised child care, training, and transportation
efforts that could address the barriers cited by housing agency
managers and tenants.  According to a recent survey of state child
care agencies, California is offering pilot programs to train TANF
recipients to become child care and development teachers, and
Minnesota has provided $700,000 for grants to increase the
availability of culturally appropriate child care options.\21
Massachusetts is redirecting its Career Centers to serve low-income
residents, while Louisiana is using its Family Independence Work
Program to provide transportation for TANF recipients attending
training or community service activities.  According to the manager
of the state social service office in Caddo Parish, each parish
welfare office contracts for transportation services with local
providers.  In Shreveport, for example, the office contracts with the
local bus company to provide TANF recipients with monthly bus passes,
while in a more rural area of the same county, cabs take recipients
to training courses. 


--------------------
\19 See LaDonna Pavetti, "Who is Affected by Time Limits?" Welfare
Reform:  An Analysis of the Issues, ed.  Isabel V.  Sawhill, Urban
Institute (June 1995). 

\20 Because not all states were eligible to receive their full fiscal
year 1997 TANF grant, the full increase in resources was not
realized.  If caseloads increase in the future, fewer federal funds
may be available than under AFDC because of the fixed nature of the
TANF grants. 

\21 Child Care and Development Block Grant:  Report of State Plans
for the Period 10/01/97 to 9/30/99, Administration of Families and
Children, HHS (Mar.  1998). 


      USE OF POLICIES TO ATTRACT
      AND KEEP WORKING FAMILIES IS
      LIMITED
-------------------------------------------------------- Chapter 2:2.2

Beginning with the Continuing Resolution in 1996, the Congress gave
housing agencies the flexibility to adopt "local admission
preferences" for a limited time.  Some of the housing agencies we
visited were using this option to give preference in admission to
working families, those in employment and training programs,
veterans, and persons living in the immediate vicinity of the housing
agency.  In a 1997 survey of its members, the Public Housing
Authorities Directors Association (PHADA) found that about 59 percent
of housing agencies surveyed were using local preferences.\22 Of
those that were using these preferences, about 40 percent said they
were giving preference in admission to households with income from
wages.  Some of the housing agencies we visited had adopted
preferences for working families or for those in training programs
with varying success.  In Kern County, the housing agency staff said
local preferences are helping the housing agency move toward creating
mixed-income developments.  However, an official at the San
Bernardino housing agency said the agency is abandoning the local
preference for working families after finding it difficult to
administer.  According to this official, families who initially
qualified under the local preference and were put on the waiting list
were no longer working when a unit became available.  In East Baton
Rouge, housing agency staff said some tenants got jobs to become
eligible for housing and then quit working as soon as they moved in. 

The Continuing Resolution in 1996 and subsequent appropriations
legislation have also allowed housing agencies to use ceiling rents
and adjustments to earned income.  Of the respondents to PHADA's
survey, 37 percent said they had implemented ceiling rents while 12
percent said they had adopted adjustments to earned income.  Over 80
percent of the respondents who had implemented ceiling rents and over
70 percent who had adopted adjustments to earned income said they had
done so because these tools would help them attract and retain
working families.  Of the housing agencies we visited, over one-third
had implemented ceiling rents and one-third had implemented
adjustments to earned income.  About half of the housing agency
managers we interviewed believed ceiling rents and/or adjustments to
earned income would be very or somewhat effective in encouraging
tenants to work.  But even at the housing agencies where these
policies had been adopted, they were relatively new, and few families
were enjoying their benefits.  For example, at the housing agencies
with ceiling rents that we visited, the percentage of tenants paying
ceiling rents ranged from less than 1 percent to 6 percent. 

Housing agency officials in Boston, Duluth, Hibbing, and St.  Paul
said that adopting ceiling rents and adjustments to earned income
would reduce their revenue, since the policies would reduce the
amount of rent tenants would pay the housing agency.  Officials in
Butte and St.  Paul also said that the policies were administratively
burdensome.  For example, they said that, to administer the
adjustment to earned income, they must keep two sets of financial
records--one showing their income and expenses with the income
adjustment and a second showing their financial position as it would
have been without the adjustment.  Finally, the Minneapolis housing
agency said that it would not actively pursue these policies until
after the passage of a federal public and assisted housing reform
bill.  The Continuing Resolution provided a transition rule that
allowed housing agencies to establish ceiling rents pending HUD's
issuance of final regulations.  HUD issued a proposed regulation on
ceiling rents for public housing in November 1997. 


--------------------
\22 Of the 1,636 surveys PHADA sent to its members, 828 usable
responses were received.  The response rate for the survey was 50.6
percent. 


   HOUSING AGENCIES BROADEN ROLES
   BUT PLAY LIMITED PARTS IN
   STATES' WELFARE REFORM EFFORTS
---------------------------------------------------------- Chapter 2:3

According to executive directors at the housing agencies we visited,
their primary role is to provide housing, but they adopted broader
roles that included providing social services before welfare reform
began.  However, the types of services and delivery systems varied
across the housing agencies we visited.  Although housing agencies
have adopted broader social service roles consistent with welfare
reform, their programs are not fully integrated with their states'
welfare reform efforts.  While housing agencies house and provide
services to a significant portion of each state's welfare population,
in the states we visited, the housing community had limited
involvement in developing the state's welfare reform plan.  In
addition, the state and local government offices with welfare reform
responsibilities that we visited rarely targeted funds and programs
to public housing developments. 


      HOUSING AGENCIES OFFER A
      RANGE OF SOCIAL SERVICES
-------------------------------------------------------- Chapter 2:3.1

All of the housing agencies we visited made some use of HUD's
self-sufficiency grant programs for purposes related to welfare
reform; however, the large and extra large housing agencies were able
to make use of a wider range of programs.  Table 2.1 shows the number
of housing agencies that used specific HUD self-sufficiency programs. 
All but two of our selected housing agencies operated an FSS program. 
As part of their drug prevention efforts, the housing agencies we
visited used funds from the Drug Elimination program to set up and
operate after-school activities for youth and develop centers to
provide some employment opportunities for older youth in the housing
developments.  For example, in Chicopee, the housing agency uses Drug
Elimination funds for summer youth programs.  In Boston, the housing
agency uses Drug Elimination dollars to fund training centers that
provide tenants with training in life skills.  Some housing
agencies--particularly the larger ones--also received HUD grants for
other self-sufficiency efforts, including employment-related
demonstration programs, such as Jobs Plus and Moving to Work, and
competitive grant programs, such as the Economic Development and
Supportive Services (EDSS) program. 



                               Table 2.1
                
                Number of Selected Housing Agencies That
                   Received Grants From HUD for Self-
                Sufficiency Programs, by Size of Housing
                                 Agency

                                                                 Extra
                             Small      Medium       Large       large
----------------------  ----------  ----------  ----------  ----------
Family Self-                     4           3           4           4
 Sufficiency (FSS)
Drug Elimination                 2           4           4           4
Jobs Plus                                                1           1
Moving to Work                                                       1
Moving to Opportunity                                                2
Economic Development                         1           1           1
 and Supportive
 Services (EDSS)
HOPE VI                                                              3
Family Investment                1                       1           1
 Center
Tenant Opportunity               1                       3           4
 Program (TOP)
======================================================================
Total                            8           8          14          21
----------------------------------------------------------------------
Note:  We visited five small, four medium, five large, and four extra
large housing agencies.  See ch.  1 for details on our criteria for
selecting these housing agencies. 

Housing agency coordinators of resident services said they also
provided services to tenants by offering space to outside service
providers and using service coordinators to link tenants with
services in the surrounding community.  However, the extent to which
services were provided varied greatly among the housing agencies we
visited.  In St.  Paul, the housing agency provided space for
services, including food pantries, ESL classes, Head Start programs,
and employment counseling.  In Merced, the housing agency's FSS
coordinator is also the president of the county's Family Resource
Council and works with other social service agencies to gain access
to services for the housing agency's tenants.  The East Baton Rouge
housing agency has contracted with several service organizations that
provide family mentoring, job placement, and counseling services. 
The Lawrence housing agency houses a Boys and Girls Club and provides
space for employment and training counseling associated with its EDSS
grant. 


      SELECTED HOUSING AGENCIES'
      WELFARE REFORM EFFORTS ARE
      NOT WELL-INTEGRATED WITH
      THOSE OF THEIR STATES
-------------------------------------------------------- Chapter 2:3.2

About half of the executive directors at the housing agencies and
most of the officials at the HUD field offices we visited said they
had little or no involvement in developing the welfare reforms of the
states they cover.  While four of the housing agency executive
directors said they were moderately involved, none said they were
very involved, and the involvement they described was generally
limited.  At the Minneapolis housing agency, the manager of the
welfare-to-work department said the housing agency was moderately
involved with the legislature but had limited involvement with other
state officials in developing the state plan.  At the Lawrence
housing agency, a staff member served on a state senator's local
welfare reform task force.  This task force is generally credited
with having had a significant impact on the deliberations of the
state legislature.  In Los Angeles, the planning director said he had
limited input into the state plan through the California Housing
Authority Association (CHAA) but had a strong relationship with the
county welfare system that led to coordinated efforts for the housing
agency's tenants.  The executive director of the Kings County housing
agency also reported being involved through CHAA, as did directors at
two other California housing agencies.  A CHAA official said she
worked through the California Welfare Directors Association to
provide comments on legislative proposals, testified before the state
legislature, and communicated regularly with her members.  Table 2.2
summarizes the responses of the directors to our questions about
their level of involvement in developing their state's welfare reform
plan and their level of satisfaction with this involvement. 



                                        Table 2.2
                         
                             Housing Agencies' Involvement in
                           Developing State Welfare Reforms and
                              Satisfaction With Involvement

                                            Level of involvement
                   ----------------------------------------------------------------------
                   Very or
Level of           moderately        Somewhat          Slightly or not    Total number of
satisfaction       involved          involved          involved                 responses
-----------------  ----------------  ----------------  ----------------  ----------------
Satisfied          Kings County,     Merced County,    Bogalusa                         7
                   Lawrence,         San Bernardino
                   Los Angeles,      County
                   Minneapolis

Neither satisfied                    Butte County,     Boston,                          4
nor dissatisfied                     St. Paul          Kern County

Dissatisfied                         New Orleans       Chicopee,                        6
                                                       Duluth,
                                                       Hibbing,
                                                       New Bedford,
                                                       Shreveport

=========================================================================================
Total              4                 5                 8                             17\a
-----------------------------------------------------------------------------------------
\a While we met with the executive directors of 18 housing agencies,
17 responded to questions about their involvement in their state's
welfare reforms.  The executive director of the East Baton Rouge
housing agency had been with the housing agency for only a month when
we visited.  Neither he nor the previous acting executive director
was able to respond to questions about the housing agency's
involvement in developing Louisiana's welfare reforms. 

In California, Massachusetts, and Minnesota, state welfare officials
said they did not reach out to the public housing community for input
into their state's welfare reforms, perhaps because housing issues
were not central to these reforms.  In Louisiana, a state welfare
official said she did elicit input from the public housing community
at a state housing conference, but housing interests were not
represented on the state's welfare reform task force.  In addition,
officials at state welfare offices and housing agencies said the
states had not targeted funds for employment, training, and support
services to housing agencies with large TANF populations; however,
TANF recipients with housing assistance are eligible for the same
services as other TANF recipients.  At the housing agencies we
visited, officials were somewhat more likely to be involved at the
local level during the implementation of welfare reforms.  In
Massachusetts, the Deputy Director of the Department of Transitional
Assistance said that welfare offices and public housing agencies have
always interacted; however, the department is encouraging them to
interact and communicate more often around the issue of welfare
reform, and they are certain that this is happening.  In California,
where budgetary resources for employment services, supportive
services, and training increased by nearly 60 percent in the state
fiscal year that began in July 1997 and resources for child care
increased by over 125 percent, state officials said counties had the
flexibility to involve public housing agencies in developing their
local implementation plans.  During the development of Merced
County's implementation plan, the executive director of the housing
agency drafted a position paper on housing issues and participated in
community forums. 

Housing agencies' and states' efforts to move welfare recipients to
work are not as well coordinated as they might be.  For example, the
executive director of the Butte County housing agency said that when
housing agency staff approached welfare officials to form a
collaboration between the state's self-sufficiency programs and FSS,
the officials said the 5-year FSS program sent the wrong message
because California has a 2-year limit on the receipt of TANF
benefits.  When we visited, staff and tenants at the housing agency
were just discovering that they could tailor their program to meet
changing needs.  The director of the Butte County Department of
Social Welfare also described efforts to set up one-stop centers for
TANF recipients in collaboration with the local private industry
council and the local employment and training office.  She said the
effort was moving slowly because of a lack of available space;
however, she had not brought in the housing agency as a partner. 

Similarly, in Massachusetts, where the Lawrence housing agency was
awarded an $800,000 EDSS grant to move welfare recipients toward
employment through an intensive employment and training program, the
program's requirements were not well coordinated with those of the
state plan or of other local employment and training efforts. 
Tenants at the Lawrence housing agency said that participants in the
program, who might be mothers of school-age children, were required
to participate in 30 hours of training a week, while the state
welfare plan required them to work or participate in community
service for 20 hours a week.  Thus, participants in the program faced
the possibility of having to be away from their homes for 50 hours a
week.  Although the Lawrence area's private industry council used the
same trainer and offered similar programs, the executive director of
the Lawrence housing agency said he needed his own program because
the state could meet its welfare reform participation rate
requirements without ever getting to his tenants. 

Some housing agencies and local welfare offices are beginning to
coordinate more to ensure the success of local welfare reform efforts
and housing self-sufficiency programs.  These efforts are especially
evident at Jobs Plus sites in Los Angeles and St.  Paul, where local
coordination was required for the housing agency to be included in
the program.  The Los Angeles social services director said that the
Jobs Plus program, which is still in the planning phase, has
strengthened the collaboration between the housing agency and other
social service agencies.  In St.  Paul, the welfare officials said
they plan to locate a welfare office at the Jobs Plus site.  Other
housing agencies also report increasing coordination.  For example,
12 federally funded housing developments in Boston are working with
one of Massachusetts' Career Centers to offer on-site job search
facilities.  The centers are quasi-public entities responsible for
delivering many of the state's employment services.  In Minneapolis,
the housing agency is under contract with the county welfare office
to provide employment and training services for the tenants.  In
addition, in Kern County, the new executive director--who previously
held a position in the county welfare office--has involved the
housing agency in several welfare working groups and has proposed
that the county contract with the housing agency to make rental
payments for welfare recipients who pass the time limit for receiving
TANF benefits but have children who still receive benefits. 


   OVERALL EXPECTATIONS OF WELFARE
   REFORM'S IMPACT VARY
---------------------------------------------------------- Chapter 2:4

We asked the 18 executive directors we interviewed to rate their
overall expectations about the impact of welfare reform on their
housing agencies from significantly positive to significantly
negative.  Because the number of housing agencies we visited was
small, consistent patterns across various characteristics are
difficult to discern.  However, as table 2.3 indicates, the executive
directors of the housing agencies we selected in California and
Minnesota were generally more positive about the impact of welfare
reform than the executive directors in Massachusetts and Louisiana. 
In general, the latter--and their tenants--have less time to adapt to
welfare reform.  Researchers with the Institute for Policy Studies at
the Johns Hopkins University have shown that welfare recipients with
housing assistance have longer spells on welfare than those without
housing assistance.  Thus, welfare recipients with housing assistance
are more likely than other welfare recipients to reach the limits on
their receipt of TANF benefits without having found employment, and
their employment prospects worsen as their time limits decline. 
While Massachusetts and Louisiana will reach their 2-year limits by
the end of 1998, Minnesota has a 5-year limit that did not start
until July 1997.  California has a 2-year limit that did not start
until January 1998 and may, in some instances, be extended to 5
years.  In addition, California counties were still formulating plans
to implement the state's welfare reform plan when we visited. 



                                        Table 2.3
                         
                         Views of Selected Executive Directors on
                          the Effect of Welfare Reform on Their
                                 Housing Agency, by State

                                             State
                     ------------------------------------------------------
                                                 Massachusett
Director's view      California    Louisiana     s             Minnesota            Total
-------------------  ------------  ------------  ------------  ------------  ------------
Significantly        Los Angeles                               Minneapolis              2
positive

Generally positive   Butte                       Lawrence      St. Paul                 6
                     County,
                     Kern County,
                     Merced
                     County
                     San
                     Bernardino
                     County

Neither positive                   Bogalusa,     Chicopee                               3
nor negative                       East Baton
                                   Rouge

Generally negative   Kings County  Shreveport    New Bedford   Duluth                   4

Significantly                      New Orleans   Boston        Hibbing                  3
negative
-----------------------------------------------------------------------------------------
Recent modeling by Mathematica also shows, on the basis of prior
behavior, who will be likely to go to work within the proposed time
limits under various welfare plans.  According to Mathematica's
analysis, TANF recipients with housing assistance are less likely to
leave the welfare rolls, less likely to find jobs, and more likely to
have lower incomes than TANF recipients without housing assistance. 

In addition, local economic conditions may have affected the
executive directors' expectations.  Although we visited our housing
agencies during a time of high national job growth, some localities
were experiencing long-term economic declines that were limiting the
job opportunities of welfare recipients.  For example, the executive
directors of the Duluth and Hibbing housing agencies expected welfare
reform to have a negative impact on their housing agencies, even
though they were not facing an imminent time limit.  However,
according to the Hibbing housing agency, the region has been severely
affected by a long-term decline in the iron ore industry.  Similarly,
in Massachusetts, the generally negative expectations of the New
Bedford housing agency's executive director may be attributable to
the long-term economic decline in southeastern Massachusetts. 
However, local economic conditions do not seem to have affected the
expectations of the executive directors of housing agencies in
California's Central Valley.  There, even though unemployment rates
were high, the directors' expectations were generally positive. 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 2:5

HUD agreed that, in general, housing agency officials are facing
major challenges in understanding and dealing with the potential
effects of welfare reform on the recipients of housing assistance and
on the housing agencies themselves.  However, HUD said that our
report could have provided more information in several areas to help
HUD improve its performance.  For example, HUD identified a need for
more guidance on what housing agencies need to know to estimate the
impact of welfare reform.  HUD also suggested that we include more
information on obstacles to the use of rent reform policies and
mention that welfare agencies collect and should provide housing
agencies with data on recipients' education levels.  We considered
HUD's comments but made no changes because the draft already
explained the housing agencies' reasons for not using rent reform
policies--namely, that the policies would reduce the agencies'
revenue, are difficult to administer, and have not been permanently
adopted.  In addition, the draft report discussed the reasons why
demographic information--such as data on tenants' education, prior
work experience, age, and minority status--is useful for housing
agencies to know. 

We also provided chapter 2 of the draft report to the 18 housing
agencies we visited for their comments.  Nine of the housing agencies
responded, and several provided clarifying language and technical
corrections.  We incorporated their comments as appropriate.  In
addition, we provided Mathematica with excerpts of the draft report
for its technical review and incorporated its technical corrections
as appropriate. 


UNDER WELFARE REFORM, HOUSING
AGENCIES NEED MORE GUIDANCE FROM
HUD AND INVOLVEMENT WITH THE
STATES
============================================================ Chapter 3

HUD has a smaller role in welfare reform than the states or some
other federal agencies, such as the departments of Health and Human
Services and Labor, yet HUD has stated that it is committed to making
welfare reform work.  HUD's commitment rests, in part, on the large
numbers of tenants who currently receive, but may lose, welfare
benefits if they do not find work.  The potential reductions in
tenants' incomes from such losses could decrease many housing
agencies' revenue and increase the need for operating subsidies from
HUD.  To date, HUD has discussed the importance of making welfare
reform work in the strategic plan that it developed under the
Government Performance and Results Act, redirected several existing
programs to emphasize work activities, and emphasized the use of
existing programs to achieve welfare reform's goals.  However, some
field and housing agency officials whom we interviewed were confused
about HUD's role and said they had not received guidance from HUD. 
In addition, housing agencies said that some of the programs HUD
identifies as relevant to welfare reform are of limited use because
of funding and other constraints.  HUD officials have begun to
coordinate discussions of welfare reform efforts, both internally and
externally, but HUD has not developed a comprehensive strategy for
bringing its resources for welfare reform together with the funds and
programs available through the states and other federal agencies. 
Although HUD has resources--demographic data on tenants, expertise
gained through demonstration programs, and staff at the field
level--and supports physical facilities for providing services, it
has not systematically developed relationships with the states, which
have most of the funds for welfare reform. 


   ALTHOUGH THE STATES AND HHS ARE
   PRIMARILY RESPONSIBLE FOR
   WELFARE REFORM, HUD PLANS TO
   ASSIST
---------------------------------------------------------- Chapter 3:1

While HUD plans to do its part to make welfare reform succeed, the
success or failure of welfare reform does not depend on HUD.  The
states are the most important players under welfare reform because
they have the flexibility under the law to design and implement
welfare reform plans and to determine how to use their block grants. 
HHS is the federal agency that is primarily responsible for assisting
the states with their TANF programs and for providing additional
funding for social services, such as child care.  In addition, the
Department of Labor plays a prominent role because of its job
training programs and welfare-to-work initiatives.  Although HUD
recognizes that its role under welfare reform is limited, it has made
welfare reform a priority for the Department. 


      THE STATES AND HHS ARE THE
      KEY PLAYERS IN WELFARE
      REFORM
-------------------------------------------------------- Chapter 3:1.1

Under welfare reform, important responsibilities were shifted from
the federal government to the states.  As discussed in chapter 1, the
states have acquired more flexibility to design their own programs
and strategies for aiding needy families, including those for helping
welfare recipients move into the workforce.  In addition, the states
can decide how to allocate their TANF funds between cash assistance
and support services, such as employment services and child care.  As
discussed in chapter 2, the states, on average, have more budgetary
resources available under TANF for their low-income family assistance
programs than they did under the AFDC program, at least at this time. 

While welfare reform shifted responsibility to the states, HHS, as
discussed in chapter 1, is responsible for overseeing the states'
implementation of the law, and other federal agencies are involved in
welfare-to-work efforts.  HHS also distributes the majority of the
federal funds for social service block grant programs, which are
important components of the states' welfare reform efforts.  For
example, HHS administers the Child Care and Development Block Grant
and the Social Services Block Grant.  Additionally, the Department of
Labor has a prominent role under welfare reform because it operates
jobs programs, such as the welfare-to-work grants, the Job Training
Partnership Act (JTPA) Title II-A Adult Training grant program, and
the One-Stop Career Center initiative.  Other agencies, such as the
Department of Transportation and the Small Business Administration,
have also initiated efforts to support welfare reform. 


      HUD PLANS TO PLAY ITS PART
      TO MAKE WELFARE REFORM WORK
-------------------------------------------------------- Chapter 3:1.2

At least in part because tenants' incomes could decline under welfare
reform and thus potentially lower housing agencies' revenue, HUD has
made the success of welfare reform a priority for the Department. 
HUD also recognizes that it is in a unique position to assist people
moving from welfare to work because its programs--such as public
housing, Section 8, and the Community Development Block Grant (CDBG)
program--have a physical presence where the poor live.  HUD's 1998
budget stated that the Department would play its part by pursuing
several strategies to make welfare reform work:  (1) creating jobs
for welfare recipients; (2) using housing assistance and community
facilities strategically to link welfare recipients to jobs and to
help ensure that work will pay; and (3) providing and leveraging
services to link welfare recipients to jobs and to help them stay
employed.  HUD also discussed the importance of making welfare work
in its 1997 HUD 2020 Management Reform Plan.  In the plan, HUD stated
that it is "the agency with potentially the largest economic
development portfolio in the federal government; and the branch that
deals most directly with the fate of cities, where most people on
welfare live." In the plan, HUD said that its long-term success as an
agency will largely depend on the degree to which welfare reform
works. 

In its September 30, 1997, strategic plan, prepared under the Results
Act for fiscal years 1998-2003, HUD proposed a two-pronged approach
for implementing welfare reform: 

  -- Create and retain jobs through its economic development
     programs, such as CDBG, a flexible formula grant program that
     provides resources to communities; Section 108, which allows
     communities that receive CDBG grants to leverage private funds
     for loans for large-scale projects that could result in job
     creation and community development initiatives; the Economic
     Development Initiative, a grant program that supplements Section
     108; and the planned second round of the Empowerment Zones and
     Enterprise Communities program, which would focus on moving
     residents from welfare and poverty to work. 

  -- Coordinate housing assistance with welfare reform efforts by
     supporting rent incentives that reward work, encouraging
     partnerships, and providing services.  In the plan, HUD said
     that it supports changing the public and assisted housing rent
     rules that discourage work and would encourage housing agencies
     to use the flexibility they have in establishing rents and
     managing their units to support the goals of welfare reform.  In
     addition, HUD said that it would encourage partnerships between
     housing agencies and local social service agencies so that
     housing agencies do not create redundant case management
     programs for residents.  HUD also discussed how some of its
     self-sufficiency and housing programs and programs for the
     homeless provide services for the residents of assisted housing
     and for homeless people seeking employment. 


   HUD HAS PROVIDED GUIDANCE , BUT
   HOUSING AGENCIES ARE CONFUSED
   ABOUT HUD'S ROLE AND LACK DATA
---------------------------------------------------------- Chapter 3:2

HUD has provided information to its field offices and housing
agencies on welfare reform and how it may affect them and has
provided additional guidance during training sessions.  However, some
field offices and housing agencies we visited did not recall
receiving guidance from HUD and were confused about HUD's role and
about how HUD's programs can be used to promote welfare reform.  In
addition, housing interest groups, researchers, and public housing
officials discussed the need for data on tenants' characteristics and
information on how welfare reform could affect housing agencies. 


      HUD HAS PROVIDED GUIDANCE TO
      HOUSING AGENCIES AND FIELD
      OFFICES
-------------------------------------------------------- Chapter 3:2.1

In October 1996, HUD's Acting Assistant Secretary for Public and
Indian Housing and Assistant Secretary for Policy Development and
Research issued a package of information to HUD's field offices and
housing agencies.  This information summarized the major changes
resulting from welfare reform and discussed the steps housing
agencies could take to adapt to the new environment.  Through the
information package, HUD urged housing agencies to learn about their
state's welfare reform plan and to consider how the plan would affect
the housing agency and its tenants.  HUD also suggested that housing
agencies examine how ceiling rents, adjustments to earned income, and
local preferences in admission could be used to reinforce the
benefits of work.  In addition, HUD asked the housing agencies to
examine their resources and find out how their facilities could be
used in partnership with others in the community.  Finally, HUD
discussed the importance of having a good working relationship with
local public and private service organizations in order to bring
resources to the housing agency. 

HUD also provided guidance on welfare reform during training
sessions.  For example, officials from the Office of Public and
Indian Housing in HUD headquarters provided welfare-to-work training
sessions in four states/areas--Massachusetts, New York, California,
and Kansas/Iowa.  According to these headquarters officials, the
training, which they provided for HUD field and housing agency
officials from the four states, addressed the notice of funding
availability (NOFA) for the grant programs--Drug Elimination,
Economic Development and Supportive Services (EDSS), and Tenant
Opportunity Program (TOP)--and how these programs could be used to
foster coordination with local welfare reform efforts.  During the
training sessions, participants were also briefed on the federal
welfare reform law and their state's implementing legislation, the
possible impact of this legislation on public housing agencies, and
best practices in housing and welfare department cooperation.  In
addition, some field offices arranged their own welfare reform
training sessions by inviting state and/or local welfare officials to
brief staff, according to Public and Indian Housing officials.  The
Director of Planning and Coordination for HUD's Office of Community
Planning and Development said that his office included a welfare
reform component in training sessions that it held for field office
staff in four or five locations during calendar year 1997.  Community
Planning and Development officials also discussed using the Internet
to transmit guidance to HUD's field offices and provide information
on best practices. 


      NOT ALL FIELD OFFICES AND
      LOCAL HOUSING AGENCIES
      RECEIVED OR UNDERSTOOD
      GUIDANCE
-------------------------------------------------------- Chapter 3:2.2

Although HUD headquarters has made efforts to educate the field
offices and housing agencies about welfare reform, some field offices
we visited did not recall receiving guidance from HUD and one was
confused about HUD's role and about how HUD's programs could be used
to promote welfare reform.  For example, the Director of the Office
of Public Housing in HUD's Louisiana state office said that HUD
headquarters did not provide any instructions or direction to his
office on welfare reform.  He said that his office expected
information, such as abstracts on related welfare reform activity, to
be sent by HUD headquarters.  The HUD Secretary's representative in
the New England field office said that it was hard to answer a
question about what guidance on welfare reform her office had
received because HUD operates through several different divisions. 
She said that although she knew welfare reform was a priority for HUD
and her office had formed a committee to work on welfare reform, she
and her staff were confused about HUD's role and did not plan to do
anything on the subject except what they were told to do.  HUD field
officials in Minnesota and California said that with HUD's
reorganization under way, it was difficult for them to discuss HUD's
role.  HUD field officials in San Francisco said that although they
had received some written information from HUD headquarters, they got
most of their information on welfare reform from meetings of the
National Association of Housing and Redevelopment Officials and from
television. 

Through their links with HUD headquarters, on the one hand, and local
housing agencies, on the other, HUD field offices are in a position
to receive, consolidate, and transmit information and guidance from
headquarters and its multiple program offices to the local housing
agencies and, in turn, to relay the housing agencies' questions and
concerns to headquarters.  As discussed later in this chapter, HUD
has taken steps to coordinate its national program offices' welfare
reform efforts, but it has not taken parallel steps to keep its field
offices abreast of welfare reform issues.  Given the field offices'
proximity to the state welfare offices that administer most of the
funds available for implementing welfare reform, vertical as well as
horizontal coordination would appear to be in HUD's best interests. 

Some of the housing agencies we visited also said they had not
received guidance from HUD or were unsure about HUD's role in welfare
reform.  For example, the executive director of the New Orleans
housing agency said the agency had not received any guidance from
HUD, and the executive director of the Bogalusa housing agency and
the manager of the welfare-to-work department at the Minneapolis
housing agency said most of the guidance their agencies received from
HUD arrived over a year ago.  Furthermore, executive directors at
three housing agencies we visited in Louisiana said they were unsure
of, or were struggling to figure out, HUD's role in welfare reform. 
According to the executive director of the St.  Paul housing agency,
HUD is recommending some policies to encourage tenants to stay--such
as ceiling rents--and others to encourage them to go--such as the
Moving to Opportunity demonstration program, which is evaluating the
impact of using Section 8 certificates at five sites to move families
into low-poverty areas.  According to the executive director of the
San Bernardino housing agency, HUD rarely visits the housing agencies
and is unable to assist them because of the downsizing occurring at
the field level.  The executive director said he offered to pay the
travel costs for HUD staff so they could provide on-site technical
assistance to the housing agency, but the HUD officials said their
office's ethics code prevented them from accepting the offer. 


      LOCAL HOUSING AGENCIES NEED
      DATA TO BETTER MANAGE THEIR
      DEVELOPMENTS AND ESTIMATE
      WELFARE REFORM'S IMPACT
-------------------------------------------------------- Chapter 3:2.3

Housing interest groups, researchers, and public housing officials
discussed the housing agencies' need for data on tenants'
characteristics and information on how welfare reform could affect
housing agencies.  Because the recent changes in rent policies have
given housing agencies more flexibility in choosing their tenants and
because housing agencies now provide or coordinate supportive
services as well as provide housing, sound management practices
dictate that housing agencies know something about the tenants they
serve, according to the Interim Director for the Institute for Policy
Studies at Johns Hopkins University and the Co-Director of the Urban
Institute's New Federalism Project. 

HUD is already in a position to provide data to local housing
agencies.  Through the annual recertification process, housing
agencies collect information about individual households--such as
their sources of income, family composition, and minority
status--that the agencies use primarily to determine rents.  The
housing agencies are required to submit these data to HUD, and HUD
compiles the data into its Multifamily Tenant Characteristics System
(MTCS) but does not routinely return the data to the housing
agencies.  The larger housing agencies tend to keep the data or have
their own data systems, but some of the smaller housing agencies do
not have the capacity or resources to maintain their own systems. 
Although HUD has summarized data for each housing agency on the
Internet and in printed documents that can be ordered from HUD, eight
of the housing agencies we visited said that they do not use HUD's
MTCS data in their operations.  While some of the larger housing
agencies collect their own data, the smaller ones tend not to collect
their own data or use MTCS. 

As discussed in chapter 2, at most of the locations we visited,
housing agency staff said they did not have the resources or
expertise to compile and analyze the data to determine the impact of
welfare reform.  The St.  Paul public housing agency commented that
the MTCS data on the Internet provide an interesting overview, but
the agency is concerned about the accuracy of these data and has had
difficulty reading and manipulating them.  Policy analysts at the
Council of Large Public Housing Authorities and the National
Association of Housing and Redevelopment Officials suggested that HUD
reformat its data to be more user-friendly.  They also said that HUD
could gather and disseminate data easily and should consider sending
the MTCS data back to the housing agencies along with instructions
for analyzing the data to help the agencies develop sound management
practices and determine which programs their tenants need to become
self-sufficient.  Although prior GAO\23 and HUD\24 studies have
questioned the reliability and accuracy of HUD's data, interest group
officials and researchers said that the more housing agencies use the
data, the more they will demand that the current data problems be
corrected. 


--------------------
\23 HUD:  Field Directors' Views on Recent Management Initiative
(GAO/RCED-97-34, Feb.  12, 1997). 

\24 U.S.  Department of Housing and Urban Development Accountability
Report, Fiscal Year 1996 (Washington, D.C.:  Mar.  1997). 


   HUD HAS REDIRECTED PROGRAMS AND
   EMPHASIZED EXISTING PROGRAMS,
   BUT OPPORTUNITIES FOR
   PARTICIPATION ARE LIMITED
---------------------------------------------------------- Chapter 3:3

HUD has redirected several self-sufficiency programs to emphasize the
importance of coordination for housing agencies and discussed the
potential for using some of its other programs to promote welfare
reform.  HUD also operates four demonstration programs that are
testing the impact of providing services on tenants' ability to move
toward self-sufficiency.  However, most of the self-sufficiency
programs are small, and the opportunities for housing agencies to
receive funds are limited.  While HUD's CDBG program provides a
steady stream of funding to over 4,000 communities nationwide, the
bulk of this funding has historically been used for housing
activities and public facilities that have not directly benefited the
residents of public and assisted housing. 


      HUD HAS MODIFIED PROGRAMS
      AND STRESSED THE USEFULNESS
      OF EXISTING PROGRAMS
-------------------------------------------------------- Chapter 3:3.1

To more closely align its self-sufficiency programs with the goals of
welfare reform, HUD has redirected several programs to emphasize the
importance for housing agencies of coordinating with local welfare
efforts and has proposed new welfare-to-work vouchers.  For example,
applicants for the 1997 EDSS and TOP grants are required to explain
how they will use their grant funds to coordinate programs with the
local welfare offices.  HUD has broadened the applicability of the
Drug Elimination grant so that the funding can be used to develop
employment programs that are consistent with local welfare reform
efforts.  In addition, in its fiscal year 1999 budget, HUD requested
50,000 new welfare-to-work vouchers to help meet the housing needs of
those moving from welfare to work. 

HUD has also discussed ways in which some of its other programs can
be used to support welfare reform.  For example, HUD said that its
core economic development programs, such as the Empowerment
Zones/Enterprise Communities, Economic Development Initiative,
Section 108, and CDBG programs, have the dual purpose of restoring
communities and providing funds for activities that may lead to the
creation of jobs.  In a December 1996 policy paper, HUD outlined the
importance of CDBG--funded at about $4.5 billion for fiscal years
1996 and 1997--as a potential major contributor to employment and
training programs that could be used to support welfare reform.  In
the paper, HUD discussed the flexibility that the CDBG program gives
communities to tailor their local programs to fit their particular
needs.  The paper also emphasized the potential for using CDBG funds
in strategies for creating jobs, providing public services, assisting
microenterprises, and revitalizing neighborhoods. 

Finally, HUD operates demonstration programs that are examining how
providing services will affect tenants' ability to move toward
self-sufficiency.  For example, HUD's Bridges to Work demonstration
program is evaluating the utility of linking inner city jobs with a
package of services, such as transportation and child care referrals. 
The Moving to Opportunity program moves tenants to low-poverty areas,
and the Moving to Work and Jobs Plus demonstration programs are
evaluating how work incentives or services affect tenants' ability to
move toward self-sufficiency. 


      PARTICIPATION IN HUD'S
      PROGRAMS IS LIMITED
-------------------------------------------------------- Chapter 3:3.2

HUD has tried to refocus its programs targeted toward public and
assisted housing to facilitate welfare reform; however, the programs
are small and the opportunities for housing agencies to receive funds
are limited.  Although all 3,200 housing agencies are eligible to
apply for the self-sufficiency programs, the grants are modest and
very competitive.  For example, the Drug Elimination program--funded
at $310 million in fiscal year 1998--offers the best odds of
receiving funding, since over half of the 889 applicants in fiscal
year 1997 received funding.  The grant awards ranged from $25,000 to
$250,000.  However, the FSS program--required for housing agencies
that receive additional public housing units or Section 8
certificates and vouchers--provides no funding for services, but
$25.2 million is available in fiscal year 1998 for FSS program
coordinators.  The EDSS program--with $43.6 million available in
fiscal year 1998--and the HOPE VI program\25 --with $550 million in
fiscal year 1998 funding--were also competitive.  For example, in
1997 HUD received 221 applications for EDSS and awarded 112 grants. 
For HOPE VI , 28 out of 127 applicants received grants in 1997.  HUD
acknowledges the small-scale nature of these programs but views the
funding as a mechanism to leverage other resources. 

HUD's demonstration programs serve few sites, as is consistent with
their purpose, and are targeted toward large metropolitan areas. 
Bridges to Work is limited to 5 distressed neighborhoods in large
metropolitan areas, and Jobs Plus is restricted to 7 large housing
agencies in large metropolitan areas.  Commonly, the selection
criteria for demonstration programs are controlled, and not all
housing agencies are eligible to participate.  Consequently, given
the small number of awards available and the restrictions on
participating in the demonstration programs, three of the housing
agencies we visited said they sometimes decide not to spend the time
developing applications. 

While HUD's CDBG program provides a steady stream of funding to over
4,000 communities nationwide, most of the funding has not been used
for economic development and public services activities, and data are
not available to determine whether the jobs that are created benefit
those who formerly received cash assistance.  For example, in fiscal
year 1994, entitlement communities--which receive 70 percent of the
funding--used 36 percent of their funds for housing activities and 23
percent for public works.  These communities used only 8 percent of
their funds for economic development activities and 13 percent for
public service activities.  Furthermore, data do not exist to
determine whether the jobs created using CDBG funds help those with
incomes as low as those of individuals receiving cash assistance. 
However, HUD's Deputy Assistant Secretary for Policy Development said
that HUD is exploring ways to modify its data collection procedures
to track jobs created for those receiving TANF benefits.  According
to the Executive Director of the Council of State Community
Development Agencies, it is doubtful that CDBG funds are helping
people on welfare get jobs because most jobs created probably go to
individuals with incomes at about 80 percent of median income.  He
said that in most areas, welfare recipients' incomes would be less
than 50 percent of median income.  Finally, CDBG was mentioned as a
source of income by only 2 of the 18 housing agencies we visited. 


--------------------
\25 HOPE VI is primarily a housing revitalization program; however,
public housing authorities may use a portion of the funding they
receive for HOPE VI for supportive services. 


   HUD HAS TAKEN STEPS TO INCREASE
   COORDINATION, BUT HAS NOT
   DEVELOPED A COMPREHENSIVE
   STRATEGY FOR INTERACTING WITH
   THE STATES
---------------------------------------------------------- Chapter 3:4

Internally, HUD department and office program managers meet
periodically to coordinate and share information on welfare reform
issues.  Internal coordination is important for HUD because at least
five of its departments and offices have responsibility for
self-sufficiency and economic opportunity programs that it believes
will support welfare reform.  HUD program managers also meet with
managers from other federal agencies.  However, HUD has not developed
a comprehensive strategy for bringing the needs of its tenants on
cash assistance to the attention of the state offices that administer
most of the funds available for welfare reform.  HUD has resources
that it could use to leverage benefits for its tenants. 


      HUD HAS TAKEN STEPS TO
      INCREASE INTERNAL AND
      EXTERNAL COORDINATION
-------------------------------------------------------- Chapter 3:4.1

Internally, HUD department and office program managers meet
periodically to coordinate and share information on welfare reform
issues.  For example the Deputy Assistant Secretary for Policy
Development in HUD's Office of Policy Development and Research--who
is responsible for coordinating welfare reform activities within HUD
and with other federal agencies--and program directors in the Office
of Public and Indian Housing and Community Planning and Development
said that HUD does not follow a specific process for coordinating
welfare reform efforts, but internal coordination takes place through
the Department's Welfare Task Force, through the NOFA review process,
or informally, in the course of administering programs.  HUD's
Welfare Reform Task Force met biweekly prior to the passage of
welfare reform.  After the passage of welfare reform, the group met
less frequently but has recently begun to meet again.  Internal
coordination also occurs when a NOFA is circulated, before its
release, to the various assistant secretaries so they can review and
comment on it and look for ways to maximize funding opportunities and
provide additional services to support welfare reform.  Finally,
coordination occurs in administering programs, such as the Jobs Plus
demonstration program, which is managed by the Office of Policy
Development and Research and is a component of the Moving to Work
initiative, administered by the Office of Public and Indian Housing. 
According to managers of both programs, representatives from the two
offices met regularly to develop and share information on the
selection and evaluation criteria for both programs. 

Internal coordination is particularly important for HUD because at
least five of its departments and offices have programs that assist
housing agencies and their residents.  Together, these departments
and offices administer 24 programs designed to move tenants toward
self-sufficiency.\26 The Office of Public and Indian Housing operates
roughly 13 self-sufficiency programs, the Office of Community
Planning and Development operates 6 programs, the Office of Housing
manages 1 program, the Office of the Secretary's Office of Labor
Relations operates 1 program, and the Office of Policy Development
and Research oversees 3 demonstration programs. 

HUD program managers also coordinate with managers from other federal
agencies.  For example, the Deputy Assistant Secretary for Policy
Development in HUD's Office of Policy Development and Research serves
on the Department of Labor's Welfare Reform Task Force.  HUD's Office
of Labor Relations manager for Step-Up provides work experience
through registered apprenticeships and works closely with the
Environmental Protection Agency (EPA) to develop a mechanism for
creating jobs through Step-Up and EPA's brownfields cleanup program. 
In addition, several Office of Public and Indian Housing managers
have developed relationships with officials in HHS.  For example,
HHS' Office of Community Services and HUD's Office of Public and
Indian Housing developed a partnership between housing agencies and
community development corporations to provide EDSS in six
communities.  In addition, representatives from HHS' Administration
for Children and Families and HUD officials said that they have met
several times to discuss issues such as income verification, and HHS
officials have provided information on welfare reform at HUD training
sessions.  The HHS officials said they saw HUD as a proactive agency
and were impressed with the way its demonstration programs, such as
Bridges to Work and Moving to Work, anticipated the reforms of the
welfare system.  However, the Branch Chief for the Office of Family
Assistance within the Office for Children and Families said that
better coordination is needed between all federal agencies and that
his office within HHS had been directed to establish a federal
welfare reform coordinating body.  HUD has also collaborated with the
Department of Labor, HHS, and a number of private foundations in the
Jobs Plus demonstration program; coordinated efforts on the Bridges
to Work demonstration program with the Department of Transportation;
provided information to the Small Business Administration in support
of its efforts to help women make the transition to work; and signed
a memorandum of understanding with the Department of Agriculture that
resulted in the delivery of Agriculture's services at six public
housing communities. 

According to HUD officials, the expiration of legislative authority
to transfer funds from one federal agency to another has limited
interagency coordination.  The Joint Funding Simplification Act of
1974, which permitted interagency transfers, expired on February 3,
1985.  HUD officials believe that without the ability to move funds
from one agency to another, it is difficult for federal agencies to
operate joint programs because agencies must separate funds and
operate under two sets of federal rules.  HUD believes that this
requirement makes coordination more challenging at the federal and
local levels. 


--------------------
\26 HUD:  Inventory of Self-Sufficiency and Economic Opportunity
Programs (GAO/RCED-97-191R, July 28, 1997). 


      HUD HAS NOT ESTABLISHED A
      COMPREHENSIVE STRATEGY FOR
      COORDINATION WITH STATES
-------------------------------------------------------- Chapter 3:4.2

The devolution of decision-making authority for cash assistance
programs to the states and sometimes to localities has created a new
need for HUD and public housing agencies to interact with state and
local decisionmakers.  In the past, housing agencies carried out
federal public and assisted housing programs--relying on dedicated
funds from HUD--and seldom interacted with broader community
development agencies.  Today, as the states exercise greater control
over welfare benefits and administer additional funds for employment
and supportive services, HUD and the housing agencies have a greater
stake in the results of state and local decision-making.  To the
extent that HUD and housing agencies can reach out and inform state
and local decisionmakers of their tenants' needs, they may be able to
reduce the historical isolation of public housing residents from the
community at large and help the tenants obtain needed services. 
Greater interaction between local housing professionals and welfare
administrators could also streamline the delivery of services to
assisted households and create mutually beneficial opportunities for
collaboration. 

Despite the advantages of working more closely with state agencies,
HUD has not developed a comprehensive strategy for bringing the needs
of its tenants to the attention of these agencies.  Although HUD has
an organizational presence at both the national (headquarters) and
state (field office) levels, it has not systematically taken
advantage of its field structure to establish connections with state
welfare offices and agencies that have more resources than it does to
provide employment and supportive services.  While HUD's strategic
plan and other management documents stress the importance of making
welfare reform work and explain how HUD's own programs can facilitate
welfare reform, they do not recognize a role for HUD at the state
level and do not include a formal strategy for increasing the states'
awareness of the assisted housing population and for improving
coordination among HUD, the states, and the public housing agencies. 
Such a strategy is critical, for, as we reported in chapter 2,
officials at three state welfare offices said they did not reach out
to the public housing community for input into state welfare reform
plans.  In addition, we found little evidence that the states were
targeting funds for services to public housing developments. 

HUD recognizes that it is in a unique position to assist people
moving from welfare to work because it has a physical presence where
the poor live.  Nationwide, in 1996, about one-fourth of the
households on AFDC also benefited from housing assistance provided by
HUD.  In the states we visited, the proportion ranged from a low of
12.1 percent in California to a high of 43.1 percent in
Massachusetts.  In Louisiana and Minnesota, 27.8 percent and 40.1
percent, respectively, of the households on welfare also received
housing assistance.  Especially in states such as Massachusetts and
Minnesota, where many of the same households receive both types of
assistance, public housing agencies could use place-based strategies
to help welfare recipients move to work. 

Because HUD's funding is limited and housing agencies vary in their
ability to administer programs, public housing, local government, and
interest group officials believe that HUD and housing agencies should
establish partnerships with other social service providers to bring
services to housing agencies.  For example, the Assistant Director of
the American Public Welfare Association said that HUD could play a
valuable role by marketing housing agencies' facilities, making them
available to state and local providers for the delivery of supportive
services.  She said that HUD could also help educate service
providers by sharing demographic data with them on TANF recipients
who reside in public and assisted housing, together with findings
from HUD's demonstration programs.  Moreover, according to the
Research Director for the Council of Large Public Housing
Authorities, the data and expertise HUD has acquired through its
supportive service programs could help service providers understand
how local housing agencies operate and what their tenants need. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 3:5

Although HUD has provided guidance on welfare reform, it has not
ensured that all of the field offices and public housing agencies
have received and understood the guidance.  As a result, some offices
and agencies are confused about HUD's role under welfare reform. 
Without vertical as well as horizontal coordination within HUD,
information available at the national level may not be reaching the
field and local levels, and the field offices and local housing
agencies may be missing opportunities to obtain funds or services for
their tenants from the states, other federal agencies, or HUD itself. 
With greater emphasis on vertical coordination, field officials might
also be encouraged to consolidate and clarify information and
guidance from HUD's multiple national program offices for the local
housing agencies within each field office's jurisdiction. 

Just as HUD has made guidance on welfare reform available to the
field offices and housing agencies but not followed through to make
sure they have received and understood the guidance, so the
Department has made data available to the housing agencies but not
followed through to make sure they are using the data.  HUD has made
summaries of the data that it collects from public housing agencies
available electronically and in printed documents, but the agencies
are not using the data.  Many of the agencies, particularly smaller
ones, lack experience in analyzing the data and in translating the
results of analyses into actions--such as establishing appropriate
self-sufficiency programs or rent policies, as discussed in chapter
2.  Providing the agencies with data and guidance for analyzing the
data could assist them in assessing the impact of welfare reform on
their tenants' incomes and their own rental revenue.  While such an
effort might take time in the short run, it could pay off in the long
run by equipping the agencies to monitor, analyze, and respond to the
needs of their tenants and thus to operate more independently and
effectively in the future. 

In the states that we visited, public housing agencies' historical
lack of involvement in state and local decision-making has continued
under welfare reform, as we learned from the agencies' executive
directors, most of whom did not help to develop their state's welfare
reforms.  Now, as the states implement their welfare reforms, the
agencies may remain on the sidelines unless HUD makes a comprehensive
effort to let the state offices know that, in many locations, housing
agencies could provide good places for delivering services.  HUD can
use its resources--data, expertise, and staff at the state level--and
encourage housing agencies to use their physical facilities, to build
links with the state offices and leverage federal and state funds for
tenants.  For example, HUD can rely on staff in its field offices to
contact state offices and statewide service providers to market the
benefits of using assisted housing developments as places to deliver
services related to welfare reform.  Similarly, HUD can
systematically encourage housing agency officials to initiate such
contacts at the local level. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 3:6

To assist public housing agencies in their efforts to help residents
move from welfare to work, GAO recommends that the Secretary of
Housing and Urban Development

  -- increase communications with field offices and housing agencies
     to clarify HUD's role in welfare reform, explain how current
     programs can be used to complement welfare reform efforts, and
     identify sources of information about other federal welfare
     reform efforts;

  -- provide additional technical assistance and data on tenants'
     characteristics along with guidance that would help housing
     agencies use the data to assist in managing the units and in
     determining what impact welfare reform might have on the
     agencies; and

  -- develop a comprehensive strategy that relies on each field
     office to promote the benefits of using assisted housing
     developments as places to deliver services related to welfare
     reform and to help link other field office and housing agency
     staff with federal, state and local welfare reform efforts. 


   AGENCY COMMENTS AND OUR
   EVALUATION
---------------------------------------------------------- Chapter 3:7

HUD commended us for the report's overall conclusions and said that
they reflect many of the agency's own concerns.  HUD was also pleased
that the report recognized the Department's commitment to making
welfare reform work.  According to HUD, it is important that our
report recognizes the need for a great deal of coordination within
HUD; between HUD and the housing agencies; and among HUD, the housing
agencies, and the other players in the welfare reform effort.  In
addition, HUD said that all three of the report's recommendations
have a great deal of merit and that it plans to implement them. 

HUD did not believe that the draft report sufficiently acknowledged
the initiatives undertaken by the Department to deal with welfare
reform.  For example, HUD said the report did not address (1)
departmental legislative proposals containing a number of provisions
related to welfare reform and (2) new program initiatives undertaken
or planned by HUD's Office of Public and Indian Housing and Office of
Policy Development and Research.  In addition, HUD said the report
did not sufficiently acknowledge the numerous efforts taken by the
Department to coordinate with other federal agencies and that
references to "informal" coordination seemed inadequate.  After
reviewing HUD's comments, we added additional references to HUD's
legislative proposals in the introductory chapter; however, EDSS and
TOP, the welfare-to-work vouchers, and the expanded empowerment zones
were already mentioned in this chapter.  We considered the comments
about HUD's new program initiatives but concluded that the report
already included the primary efforts that could be documented at the
time of our review.  In response to HUD's comments about its
coordination with other federal agencies, we expanded our description
of HUD's efforts to coordinate with other federal agencies and
eliminated references to "informal" external coordination.  We also
added several additional examples of HUD's external coordination
efforts. 

Finally, HUD said that it has several efforts under way or about to
begin that will result in information sharing and will make use of
the lessons in our report.  For example, HUD said that Policy
Development and Research staff are preparing guidelines for housing
agencies to help them look at the data they have in hand and the data
they might need to gather to do their own assessments of the impact
of welfare reform on their rental revenue.  In addition, Public and
Indian Housing staff are finalizing a best practices guidebook on
welfare-to-work programs and techniques being used in public housing
agencies.  HUD said that it has also begun work on a book of
welfare-to-work case studies that will expand the scope of the best
practices guidebook to show how a variety of HUD funding sources are
already being used to help families on welfare make the transition to
work. 


CHARACTERISTICS OF WELFARE REFORM
PLANS, WELFARE BENEFIT LEVELS, AND
AFDC/TANF POPULATIONS FOR SELECTED
STATES
=========================================================== Appendix I

Each state we visited--California, Louisiana, Massachusetts, and
Minnesota--implemented its state Temporary Assistance for Needy
Families (TANF) plan in a different way.  California implemented its
plan to encourage and reward personal responsibility and
accountability.  Its TANF program, CalWORKs, went into effect January
1, 1998.  CalWORKs requires TANF recipients to begin looking for a
job immediately.  Although California has imposed a 5-year cumulative
lifetime limit on aid, the state restricts aid to 18 months (or 24
months for those on the rolls on Jan.  1, 1998) for each enrollment. 
The state may continue to provide assistance beyond this limit if the
county determines that a job is unavailable for a recipient and the
recipient participates in community service.  The state may then
provide aid to a parent or caretaker for up to 60 months with some
exceptions and the state may continue to provide aid to children
beyond 60 months. 

Louisiana's Family Independence Temporary Assistance Program,
effective as of January 1, 1997, limits cash assistance to 24 months
within a 60-month period, with some exceptions.  The state will end a
family's eligibility for assistance for 3 months if the head of the
family refuses to accept employment.  The state will also limit the
receipt of benefits if children fail to attend school or are not
immunized.  Louisiana's work activities program, named the FINDWork
Program, started in May 1997 and requires a single parent to work 20
hours per week to receive assistance.  The state will use individual
plans to assess all recipients' employability. 

Massachusetts' TANF plan was effective as of September 30, 1996.  The
state's TANF program requires a nonexempt recipient (as defined by
the state) to work at least 20 hours per week after receiving
benefits for 2 months unless the recipient has a child below school
age.  Work can include community service.  A nonexempt recipient--one
who is expected and required to work--is limited to 24 months of aid
in a continuous 60-month period, with some exceptions.  The state
provides a smaller maximum benefit but more generous work incentives
for a nonexempt recipient than for an exempt recipient. 

Minnesota welfare officials explained that the state's goal in
implementing welfare reform was to reduce dependency on welfare and
to reduce poverty.  State welfare officials said that the state's
plan combines an expectation for recipients to work with financial
incentives to work.  Minnesota's TANF program, called the Minnesota
Family Investment Program-Statewide (MFIP-S) expands a program that
was started in 1994 under a waiver of provisions of the state's Aid
to Families with Dependent Children (AFDC) program.  Under MFIP-S,
which began in July 1, 1997, the state limits assistance to 60
months.  One-parent families are required to work within 6 months and
two-parent families are required to work immediately.  Minnesota's
counties have the option to lower the time that recipients are
required to work.  The state converted from the previous pilot
program to MFIP-S between January 1998 and March 1998. 

Despite their different approaches, the states we visited offered
transitional assistance for child care and health care for low-income
families.  These states' welfare reform plans also included
provisions for training and educating welfare recipients. 

Information on the benefit levels and the numbers and percentages of
persons receiving AFDC, TANF, and housing assistance in the states we
visited appears in tables I.1 through I.3. 



                               Table I.1
                
                  Monthly Benefit Levels for Selected
                        States, Fiscal Year 1997

                                          Maximum benefit level,
State                                     family of 3 (2 children)
----------------------------------------  ----------------------------
California                                Region 1 -$565
                                          Region 2 -$538

Louisiana                                 $190

Massachusetts                             $579

Minnesota                                 $532
----------------------------------------------------------------------
Source:  HHS, Summary of Selected Provisions of State TANF Plans. 



                               Table I.2
                
                Number of Persons Receiving AFDC/TANF in
                   January 1996 and September 1997 in
                            Selected States

                                                            Percentage
                               Number of       Number of      decrease
                                 persons         persons  from January
                          receiving AFDC  receiving TANF       1996 to
                              in January    in September     September
State                               1996            1997          1997
------------------------  --------------  --------------  ------------
California                     2,648,772       2,225,893          16.0
Louisiana                        239,247         127,752          46.6
Massachusetts                    242,572         194,401          19.9
Minnesota                        171,916         145,220          15.5
----------------------------------------------------------------------
Source:  Department of Health and Human Services (HHS),
Administration for Children and Families. 



                               Table I.3
                
                Percentage of Households Receiving AFDC
                   and Housing Assistance in Selected
                             States in 1996

                                                    Percentage of AFDC
                                                  households that also
                                           received housing assistance
State                                                          in 1996
----------------------------------------  ----------------------------
California                                                        12.1
Louisiana                                                         27.8
Massachusetts                                                     43.1
Minnesota                                                         40.1
----------------------------------------------------------------------
Source:  Center on Budget and Policy Priorities, Tabulations of 1996
AFDC Quality Control Data. 


HUD SELF-SUFFICIENCY PROGRAMS USED
BY SELECTED HOUSING AGENCIES TO
PROMOTE WELFARE REFORM
========================================================== Appendix II

Program                        Purpose of program            Target group
-----------------------------  ----------------------------  ----------------------------
Tenant Opportunity Program     To provide resident           Residents of public housing
(TOP)                          organizations (e.g.,
                               resident corporations) with
                               funding for activities such
                               as business development,
                               education, and social
                               services that will help meet
                               the challenges of welfare
                               reform.

Economic Development and       To provide service            Residents of public and
Supportive Services (EDSS)     coordinators, education,      Indian housing, the elderly,
                               training, and supportive      and persons with
                               services (e.g., child care,   disabilities
                               employment training,
                               computer skills, counseling,
                               youth mentoring, and
                               transportation) that will
                               help meet the challenges of
                               welfare reform.

HOPE VI                        To revitalize severely        Residents of public housing
                               distressed public housing
                               through physical
                               improvements and activities
                               to promote residents' self-
                               sufficiency (e.g., training,
                               education, and other
                               activities designed to
                               encourage and support work
                               by public housing
                               residents).

Public and Assisted Housing    To reduce or eliminate drug-  Residents of Indian, public,
Drug Elimination               related crime in or around    and assisted housing
                               the premises of the housing
                               agency. Funds may be used to
                               establish employment,
                               training, and educational
                               opportunities that promote
                               federal and local welfare-
                               to-work goals.

Family Self-Sufficiency (FSS)  To help residents of public   Residents of public housing
                               housing and recipients of     and
                               tenant-based Section 8        recipients of tenant-based
                               assistance obtain education,  Section 8 housing
                               training, and supportive
                               services.

Moving to Opportunity          To increase household choice  Low-income families
Demonstration                  by providing assistance to
                               help low-income families
                               move from public and
                               assisted housing in
                               distressed, high-poverty
                               inner-city neighborhoods to
                               low-poverty neighborhoods.

Moving to Work Demonstration   To evaluate the impact of     Low-income families
                               helping low-income families
                               with children become
                               economically self-
                               sufficient by providing
                               incentives when the head of
                               the household is working,
                               seeking work, or preparing
                               for work by participating in
                               job training, education, or
                               programs that assist people.

Family Investment Centers      To provide access to          Residents of public housing
                               educational and employment
                               opportunities in order to
                               achieve self-sufficiency and
                               independence by (a)
                               developing facilities in or
                               near public housing for
                               training and support
                               services; (b) mobilizing
                               public and private resources
                               to expand and improve the
                               delivery of services; (c)
                               providing funding for
                               essential training and
                               support services that cannot
                               otherwise be funded; and (d)
                               improving the capacity of
                               management to assess the
                               training and service needs
                               of families, coordinate the
                               provision of training and
                               services that meet needs,
                               and ensure the long-term
                               provision of such training
                               and services.

Jobs Plus                      To target, as the first       Residents of public housing
Demonstration                  phase of the Moving-to-Work
                               Demonstration, public
                               housing sites in 6 to 10
                               communities to (1) saturate
                               those sites with services,
                               (2) dramatically increase
                               the share of residents who
                               are employed, and (3) retain
                               those residents within the
                               community.
-----------------------------------------------------------------------------------------

SIMULATING TRENDS IN EMPLOYMENT,
WELFARE, AND RELATED DYNAMICS TO
ESTIMATE THE POTENTIAL IMPACT OF
WELFARE REFORM ON ASSISTED TENANTS
========================================================= Appendix III

This appendix discusses the results of a welfare reform simulation
model developed by Mathematica Policy Research, Incorporated. 
Mathematica analyzes public policy issues in several areas--including
health care, education, welfare, employment, and child
development--for federal and state governments, as well as
private-sector clients.  We requested an analysis of the potential
impact of welfare reform on tenants of public and assisted housing to
provide us with information for several assignments on welfare
reform.  This appendix includes information on the background of
Mathematica's Simulation of Trends in Employment, Welfare, and
Related Dynamics (STEWARD) model, a description of the analyses we
requested from Mathematica, and some summary results from the STEWARD
model. 

We requested simulations of trends in employment and welfare for
single mothers, including those that were receiving AFDC and/or
living in public or assisted housing\27

before the implementation of the Personal Responsibility and Work
Opportunity Reconciliation Act.  We were particularly interested in
information on changes in income and movements from welfare under
different state welfare plans, as well as in whether reforms are
likely to have different effects on households with different
demographic characteristics.  We designed our request so that we
could see whether welfare reform would have different effects on
welfare populations that did and did not receive housing assistance. 


--------------------
\27 Mathematica's data do not distinguish between residents of public
housing and assisted housing. 


   THE STEWARD MODEL
------------------------------------------------------- Appendix III:1

The STEWARD model is a dynamic simulation model designed by
Mathematica to capture the effects of complex changes in welfare
programs and in policies affecting welfare recipients.  The decisions
of single mothers to participate in one or more programs are modeled,
as are their decisions to work.  The effects of program changes are
simulated using data on nearly 3,200 female household heads over 48
months.  These data were obtained from the National Longitudinal
Survey of Labor Force Behavior, Youth Survey, and Panel Study of
Income Dynamics. 

To produce the simulations, the model analyzes information about past
behavior and examines how households actually made decisions on the
basis of programs' characteristics and economic conditions over 4
years.  On the basis of that information, the model then projects the
behavior of similar households, given changes in programs and the
economy.  Hence, simulations show expected behavioral responses to
the changes embodied in welfare reform.  Each simulation provides
estimated outcomes that can be compared to a baseline estimate of how
the same households would have behaved without welfare reform or in
response to a different set of reforms. 

The model illustrates the effects of several changes in welfare
programs and shows how outcomes may vary, depending on factors that
differ by state.  However, the model has some important limitations. 
First, it uses the behavior of welfare recipients in the 1980s to
predict the behavior of recipients in the 1990s.  Because the changes
incorporated in the 1996 welfare reform law were so extensive, past
behavior may not accurately reflect future choices.  In addition,
this model does not fully account for differences in the
implementation of welfare reform across the states.  Finally, for its
analysis of the tenant population, the model uses self-reported
information about housing that is based on responses to a survey and
may not be accurate.  As a result of these limitations, Mathematica's
analysts advise using the results for assessing changes, but not for
predicting future levels of households on welfare. 


   WHAT WE REQUESTED FROM
   MATHEMATICA
------------------------------------------------------- Appendix III:2

To test the effects of differences in key features of welfare reform
plans, implementation measures, and economic conditions, we asked
Mathematica to run simulations for several different types of welfare
reform packages.  The key features of the reform plan that differed
were the time limits (some runs assumed a 2-year limit on the receipt
of TANF benefits, others a 5-year limit); the adjustments to earned
income (runs assumed that different percentages of TANF recipients'
earnings would be ignored in calculating TANF benefits); the family
cap (some runs included a family cap that excluded benefits for
additional children born while recipients were on assistance); and
the exemptions from work requirements (some runs exempted the head of
household from work requirements if the youngest child was under 3
months of age, while other runs assumed an exemption if the youngest
child was under 1 year).  The implementation measures that differed
were the percentages of nonexempt recipients (those required to work)
that were sanctioned for noncompliance with work or other
requirements and the percentages by which their monthly benefits were
reduced.  The runs with the highest sanctioning levels assumed a
15-percent sanctioning rate and a 75-percent loss in TANF benefits
for those sanctioned.  Mathematica also tested the effects of
differences in the degree to which recipients would anticipate the
future--in some runs, they anticipated the time limits, while in
other runs, they ignored the limits.  Although most of the
simulations assumed the current economic environment of low
unemployment, some created a high unemployment scenario using
unemployment rates from 1992. 

Mathematica performed the simulations and presented the results for a
simulated group of households--both with and without housing
assistance--that were receiving public assistance (AFDC).  The
results show the expected outcome 4 years after welfare reform went
into effect for households (both with and without housing assistance)
within subgroups that were defined according to their work and
welfare status.  The results include data for several indicators of
the economic status of these populations after the implementation of
welfare reform, including the percentage of households that are
working/not working and are/are not on TANF, the percentage of
households with earnings and the percentage in poverty, and the
average income per group.  Additionally, the results provide
demographic information about the households within each subgroup,
including the number of years of work experience, the level of
education, and the age of the head of household; whether the head of
household had health limitations or a disabled child; and the number
of children in the household under 3 and 6 years old. 


   SUMMARY OF RESULTS
------------------------------------------------------- Appendix III:3

Across variations in welfare reform plans and economic conditions,
the model's results suggest that when time limits are imposed,
welfare rolls will decline.  However, people with housing assistance
appear less likely to leave welfare rolls in response to impending
time limits than people without housing assistance.  Similarly,
across variations in welfare reform plans and economic conditions,
the results suggest that people with housing assistance are less
likely to enter the workforce than people without housing assistance. 
Finally, according to the results, people with housing assistance are
likely to have lower incomes than people without housing assistance. 

Tabulations of the model's results allowed us to compare the
demographic characteristics of TANF recipients who the model
predicted would enter the workforce after 4 years and of TANF
recipients who the model predicted would continue to receive TANF
benefits after that time.\28 Female household heads that, according
to the model, were in the workforce after 4 years tended to (1) have
more work experience, (2) have fewer young children in the home, (3)
have fewer serious reported health problems,\29 and (4) be somewhat
younger than those that were not working after 4 years.  Conversely,
female household heads that, according to the model, were still
receiving TANF benefits after 4 years were more likely to (1) have
less education, (2) have more young children in the home, and (3)
have less work experience than those that had left the TANF rolls. 

According to the model's results, the demographic characteristics of
those originally on welfare also varied with whether or not they
reported receiving housing assistance.  In particular, heads of
households with assisted housing were more likely to (1) have little
prior work experience, (2) be somewhat older, and (3) have reported
health problems or a disabled child in the home.  Interestingly,
these characteristics were also associated with those that did not
enter the workforce after the implementation of welfare reform. 


--------------------
\28 The results were tabulated for women predicted to be in one of
three categories 48 months after welfare reform went into effect. 
The three categories were working, still receiving TANF, and neither
working nor receiving TANF.  A small number of women were predicted
to be working and receiving TANF; these women are included in the
results for both those working and those on TANF. 

\29 For all simulations except the baseline, exemptions from TANF's
time limits were specified for households with disabled children or
for mothers unable to work because of a disability. 


DEMOGRAPHIC AND REVENUE SOURCE
DATA FOR SELECTED HOUSING AGENCIES
========================================================== Appendix IV

Table IV.1 presents demographic data from several sources for the
states and housing agencies we selected.  Tables IV.2 through IV.7
provide data from HUD's Multifamily Tenant Characteristics System
(MTCS), which were verified by the selected housing agencies.  The
data in table IV.8 were provided by the selected housing agencies. 



                               Table IV.1
                
                Demographic Data for Selected States and
                            Housing Agencies

                                                Unemployme
                                                  nt rate\
                             Total     Poverty  (by state/   AFDC/TANF
                        population    rate (by  metropolit  population
State/housing agency            \a   county)\b  an area)\c          \d
----------------------  ----------  ----------  ----------  ----------
California              31,878,234        17.4         7.4   2,225,893
Butte County               192,507        19.0        10.3
Kern County                622,729        21.8        14.2
Kings County               113,351        22.5          \e
Los Angeles              3,553,638        23.8         7.8
Merced County              192,311        24.5        20.0
San Bernardino           1,598,358        17.5         7.4
 County
Louisiana                4,350,579        23.9         7.3     127,752
Bogalusa                    13,877        31.0          \e
E. Baton Rouge             395,914        19.7         5.9
New Orleans                476,625        37.9         6.2
Shreveport                 191,558        25.3         8.0
Massachusetts            6,092,352        11.1         4.8     194,401
Boston                     558,394        19.4         3.8
Chicopee                    54,532        14.6         5.1
Lawrence                    68,807        12.4         5.9
New Bedford                 96,903        11.6        10.3
Minnesota                4,657,758        10.8         4.4     145,220
Duluth                      83,699        14.3         6.2
Hibbing                     17,600        14.3         6.2
Minneapolis                358,785        11.7         3.1
St. Paul                   259,606        13.4         3.1
----------------------------------------------------------------------
Note:  The data in this table are not all reported for the same time
period; the total population, TANF population, and unemployment rate
data are reported for the time period that is the most recent and
closest to September 1996, the date of the MTCS data.  The poverty
rate data are the most recent available at the county level. 

\a From population estimates for July 1996, U.S.  Bureau of the
Census. 

\b From County Estimates for People of All Ages in Poverty, Small
Area Income and Poverty Estimates Program, U.S.  Bureau of the Census
(1993). 

\c Labor force data, Bureau of Labor Statistics (Jan.  1997).  These
data are not seasonally adjusted. 

\d From the Administration for Children and Families, HHS (Sept. 
1997). 

\e Because this county is not part of a metropolitan area, there are
no corresponding unemployment data. 



                                              Table IV.2
                               
                               Demographic Characteristics of Heads of
                                 Household in Public Housing (PH) or
                                  Assisted Housing (AH) at Selected
                                           Housing Agencies

                               Percentage of heads of household who are
                   -----------------------------------------------------------------
                                                       Single with
                                                       one or more                    Average number
                                                      children under                  of persons in
                       Disabled          Elderly          age 18          Female        household
                   -----------------  --------------  --------------  --------------  --------------
State/housing
agency                    PH      AH      PH      AH      PH      AH      PH      AH      PH      AH
-----------------  ---------  ------  ------  ------  ------  ------  ------  ------  ------  ------
California
----------------------------------------------------------------------------------------------------
Butte County              21      31      27      19      20      39      56      79     3.7     3.1
Kern County               30      32      26      16      42      60      67      87     3.3     3.1
Kings County              19      18      13       9      54      53      59      68     3.9     3.0
Los Angeles               15      35      12      22      75      94      69      67     3.5     2.6
Merced County             18      21      19      15      35      48      67      76     3.6     3.7
San Bernardino
 County                   22      26      18      22      46      53      71      88     3.4     3.0

Louisiana
----------------------------------------------------------------------------------------------------
Bogalusa                  37      20      19      16      61      69      85      93     2.6     2.8
E. Baton Rouge            17       4      16       7      62      83      82      97     2.5     3.3
New Orleans               18      24      12      17      69      71      93      89     3.0     2.7
Shreveport                25      21      15       8      67      75      90      93     3.0     3.3

Massachusetts
----------------------------------------------------------------------------------------------------
Boston                    17      22      32      14      35      66      70      89     2.0     3.0
Chicopee                  29      34      31      23      33      39      74      81     2.0     2.3
Lawrence                  22      35      41      22      33      53      73      84     2.0     2.6
New Bedford               28      27      18      25      53      52      80      88     2.6     2.2

Minnesota
----------------------------------------------------------------------------------------------------
Duluth                    41      32      39      14      25      55      64      79     1.8     2.3
Hibbing                   26      \a      39      \a      27      \a      74      \a     1.7      \a
Minneapolis               21      16      32      14      11      66      54      83     1.6     3.0
St. Paul\b                36      29      39      14      19      59      63      86     2.5     2.9
----------------------------------------------------------------------------------------------------
\a Not applicable because the Hibbing housing agency does not
administer any assisted housing. 

\b Data include 135 households (about 4 percent of the total number
of households) in project-based Section 8 programs. 



                                        Table IV.3
                         
                         Racial Demographics of Tenants in Public
                         Housing (PH) or Assisted Housing (AH) at
                                Selected Housing Agencies

                                       Percentage of tenants
           ------------------------------------------------------------------------------
                                                              Asian or
                                                              Pacific          Native
             Caucasian         Black          Hispanic        Islander        American
           --------------  --------------  --------------  --------------  --------------
State/
housing
agency         PH      AH      PH      AH      PH      AH      PH      AH      PH      AH
---------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------
California
-----------------------------------------------------------------------------------------
Butte          37      73       1       4      40       6      19      15       2       3
 County
Kern           21      26      20      49      58      24       1       1       0       0
 County
Kings          11      32      12      24      72      40       5       3       0       1
 County
Los             2      16      32      57      62      24       4       2       0       1
 Angeles
Merced         23      28      13      17      54      40      10      15       1       0
 County
San            19      31      28      38      37      29      16       2       0       0
 Bernardi
 no
 County

Louisiana
-----------------------------------------------------------------------------------------
Bogalusa        9      51      91      49       0       0       0       0       0       0
E. Baton        6       4      94      95       0       1       0       0       0       0
 Rouge
New             1       1      99      98       0       0       0       1       0       1
 Orleans
Shrevepor       2       6      98      93       0       1       0       0       0       0
 t

Massachusetts
-----------------------------------------------------------------------------------------
Boston         34      22      32      48      27      26       6       3       1       1
Chicopee       62      82       2       2      36      14       0       1       0       1
Lawrence       36      35       1       1      63      63       0       0       0       0
New            34      57      24       8      42      18       1       1       0      11
 Bedford

Minnesota
-----------------------------------------------------------------------------------------
Duluth         87      87       4       4       1       1       2       1       7       8
Hibbing        98      \a       0      \a       0      \a       1      \a       0      \a
Minneapol      43      31      42      59       1       2      11       4       3       4
 is
St. Paul       50      52      16      35       3       6      30       4       1       3
-----------------------------------------------------------------------------------------
\a Not applicable because the Hibbing housing agency does not
administer any assisted housing. 



                                        Table IV.4
                         
                          Household Income of Tenants in Public
                         Housing (PH) or Assisted Housing (AH) at
                                Selected Housing Agencies

                               Percentage of households with average annual income of
                           --------------------------------------------------------------
           Average annual
             household                        $5,001-        $10,001 -       $20,001 or
              income\a       $0 -$5,000       $10,000         $20,000           more
           --------------  --------------  --------------  --------------  --------------
State/
housing
agency         PH      AH      PH      AH      PH      AH      PH      AH      PH      AH
---------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------
California
-----------------------------------------------------------------------------------------
Butte      11,000  10,000       1       2      42      61      52      35       5       2
 County
Kern       10,000  11,000       2       2      54      56      41      37       3       5
 County
Kings      11,200  10,600       4       5      47      51      42      39       7       5
 County
Los         9,900  10,500       8       9      58      52      28      32       6       7
 Angeles
Merced     12,000  11,000       3       2      41      50      45      41      11       7
 County
San        11,000  10,400       5       5      51      56      38      34       6       5
 Bernardi
 no
 County

Louisiana
-----------------------------------------------------------------------------------------
Bogalusa    5,500   6,000      39      37      54      51       7      11       0       1
E. Baton    3,800   7,500      64      34      30      39       5      25       1       2
 Rouge
New         5,300   7,100      53      27      35      50      11      22       1       1
 Orleans
Shrevepor   6,800   7,300      33      31      48      46      18      21       1       2
 t

Massachusetts
-----------------------------------------------------------------------------------------
Boston     10,200  11,000      10       4      58      52      25      31       7      13
Chicopee    9,200  10,000       5       3      64      55      28      37       3       5
Lawrence   10,400  10,000       4       2      57      56      35      37       4       6
New         9,100   9,400       5       2      66      67      26      27       3       4
 Bedford

Minnesota
-----------------------------------------------------------------------------------------
Duluth      8,300   8,300       8       5      68      74      22      19       2       2
Hibbing     8,200      \b       8      \b      67      \b      24      \b       1      \b
Minneapol   7,800   8,400      23       7      52      52      22      34       3       7
 is
St. Paul    9,300   8,300       8      14      58      59      31      24       3       4
-----------------------------------------------------------------------------------------
\a Rounded to the nearest hundred. 

\b Not applicable because the Hibbing housing agency does not
administer any assisted housing. 



                               Table IV.5
                
                 Percentage of Household Income Derived
                From AFDC for Tenants in Public Housing
                or Assisted Housing at Selected Housing
                                Agencies

                                     Percentage for households in
                                --------------------------------------
State/housing agency                Public housing    Assisted housing
------------------------------  ------------------  ------------------
California
----------------------------------------------------------------------
Butte County                                    24                  42
Kern County                                     29                  37
Kings County                                    32                  39
Los Angeles                                     39                  38
Merced County                                   32                  45
San Bernardino County                           29                  33

Louisiana
----------------------------------------------------------------------
Bogalusa                                        15                  13
E. Baton Rouge                                  15                  10
New Orleans                                     27                  26
Shreveport                                       9                   8

Massachusetts
----------------------------------------------------------------------
Boston                                          17                  23
Chicopee                                        17                  12
Lawrence                                        19                  22
New Bedford                                     32                  24

Minnesota
----------------------------------------------------------------------
Duluth                                          18                  29
Hibbing                                         13                  \a
Minneapolis                                      9                  38
St. Paul                                        23                35\b
----------------------------------------------------------------------
\a Not applicable because the Hibbing housing agency does not
administer any assisted housing. 

\b Data include 135 households (about 4 percent of the total number
of households) in project-based Section 8 programs. 



                                        Table IV.6
                         
                            Percentage of Households in Public
                          Housing (PH) or Assisted Housing (AH),
                           With Income Assistance, at Selected
                                     Housing Agencies

                                   Percentage of households with
           ------------------------------------------------------------------------------
              AFDC as only
            source of income    Any AFDC income     Any wage income      Any SSI income
           ------------------  ------------------  ------------------  ------------------
State/
housing
agency           PH        AH        PH        AH        PH        AH        PH        AH
---------  --------  --------  --------  --------  --------  --------  --------  --------
California
-----------------------------------------------------------------------------------------
Butte            18        31        34        53        42        22        25        38
 County
Kern             19        28        42        54        41        26        30        37
 County
Kings            18        33        25        30        22        24        13        15
 County
Los              41        20        53        37        32        30        19        32
 Angeles
Merced           21        31        55        64        45        34        28        30
 County
San              38        37        57        44        29        18        24        25
 Bernardi
 no
 County

Louisiana
-----------------------------------------------------------------------------------------
Bogalusa         29        23        42        37        19        35        41        30
E. Baton         27        23        34        32        20        20        25         7
 Rouge
New              40        13        50        26        17        30         0        36
 Orleans
Shrevepor        20        15        30        26        36        40        29        32
 t

Massachusetts
-----------------------------------------------------------------------------------------
Boston           18        29        20        34        28        40        35        27
Chicopee         16        10        26        21        13        29        32        27
Lawrence         16        20        20        33        22        24        41        39
New              36        27        48        37        17        22        33        33
 Bedford

Minnesota
-----------------------------------------------------------------------------------------
Duluth           16        28        24        43        16        28        24        27
Hibbing          15        \a        19        \a        28        \a        18        \a
Minneapol         5        18        12        52        21        29        27        34
 is
St. Paul         14        27        29        49        15        22        32        26
-----------------------------------------------------------------------------------------
\a Not applicable because the Hibbing housing agency does not
administer any assisted housing. 



                               Table IV.7
                
                   Size of Selected Housing Agencies

                                           Number of units
                                --------------------------------------
State/housing agency                Public housing    Assisted housing
------------------------------  ------------------  ------------------
California
----------------------------------------------------------------------
Butte County                                   295               1,053
Kern County                                    997               2,096
Kings County                                   265                 662
Los Angeles                                  8,363              36,682
Merced County                                  544                 927
San Bernardino County                        1,728               5,372

Louisiana
----------------------------------------------------------------------
Bogalusa                                       340                  82
E. Baton Rouge                               1,326               1,394
New Orleans                                 13,114               4,169
Shreveport                                     934               1,771

Massachusetts
----------------------------------------------------------------------
Boston                                      10,638               6,280
Chicopee                                       383                 397
Lawrence                                     1,056                 832
New Bedford                                  1,607               1,337

Minnesota
----------------------------------------------------------------------
Duluth                                       1,250               1,122
Hibbing                                        326                   0
Minneapolis                                  6,221               2,856
St. Paul                                     4,274               3,055
----------------------------------------------------------------------


                                        Table IV.8
                         
                          Selected Housing Agencies' Sources of
                                         Revenue

                                         Percentage of total revenue
                     --------------------------------------------------------------------
                                      Operating                   Section 8
State/housing           Rent from       subsidy    COMP grant  administrati         Other
agency                    tenants      from HUD      from HUD       ve fees       sources
-------------------  ------------  ------------  ------------  ------------  ------------
California
-----------------------------------------------------------------------------------------
Butte County                 49.0           0.0          16.2          25.8           9.0
Kern County                  20.4          17.0          23.4          13.8          25.4
Kings County                 29.1          16.1          37.1          15.5           2.1
Los Angeles                  18.9          24.1          23.1          28.2           5.7
Merced County                25.3           9.1          25.5          11.6          28.7
San Bernardino               35.1          28.1           4.7          30.5           1.5
 County

Louisiana
-----------------------------------------------------------------------------------------
Bogalusa                     32.0          26.7          33.2           2.4           5.7
E. Baton Rouge               29.5          35.5          23.5           9.8           1.7
New Orleans                  13.8          40.6          38.9           2.3           4.3
Shreveport                   15.1          24.4          18.9          17.5          24.1

Massachusetts
-----------------------------------------------------------------------------------------
Boston                       21.1          34.6          38.7           4.9           0.7
Chicopee                     17.6          10.2          15.8           4.3          52.1
Lawrence                     28.4          29.1          22.5           6.3          13.8
New Bedford                  19.5          15.8          41.9           3.7          19.0

Minnesota
-----------------------------------------------------------------------------------------
Duluth                       41.4          16.3          28.6            \a          13.7
Hibbing                      47.2          21.5          31.3           0.0           0.0
Minneapolis                  28.6          37.6          29.7           4.1            \a
St. Paul                     24.2          21.5          34.3           5.7          14.3
-----------------------------------------------------------------------------------------
\a No information reported for this source of revenue. 


MAPS OF SELECTED LOCATIONS
=========================================================== Appendix V



   (See figure in printed
   edition.)




(See figure in printed edition.)Appendix VI
COMMENTS FROM THE DEPARTMENT OF
HOUSING AND URBAN DEVELOPMENT
=========================================================== Appendix V



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Department of Housing and
Urban Development's letter dated May 14, 1998. 

GAO'S COMMENTS

1.  In drafting our recommendations, we avoided being overly
prescriptive.  However, in chapter 2, we discuss difficulties that
housing agencies encountered in implementing reforms such as ceiling
rents and local preferences.  Additional guidance from HUD could help
housing agencies overcome these difficulties.  In chapter 3, we
discuss the reasons why HUD and housing officials believe it is
important to improve coordination and the flow of information. 

2.  In chapter 2, we address the kinds of information that housing
agencies would need to estimate the impact of welfare reform. 
Although it was beyond the scope of our review to assess the capacity
of the 18 housing agencies we visited to make their own estimates,
the smaller housing agencies generally said they had less experience
using basic demographic information (such as that already available
to them through HUD's MTCS) in managing their units. 

3.  The reasons why demographic information on tenants--such as data
on their education, prior work experience, age, and minority
status--is useful for housing agencies to know are discussed in
chapter 2.  It was beyond the scope of our review to examine housing
agencies' access to state welfare agencies' data. 

4.  After reviewing HUD's comments, we added information to chapter 1
to acknowledge the provisions related to welfare reform in HUD's
proposed public housing reform bill.  However, the consolidation of
the Economic Development and Supportive Services Program and the
Tenant Opportunity Program, the welfare-to-work vouchers, and the
expansion of empowerment zones were already mentioned in chapter 3. 

5.  During the course of our work, we asked HUD's Office of Public
and Indian Housing to document their efforts to increase
communications and provide technical assistance related to welfare
reform.  Our draft report included the primary efforts documented by
the Office at the time of our review.  We commend the Office for its
plans to finalize a best practices guidebook on successful
welfare-to-work programs and techniques used by housing agencies. 

6.  We expanded our description in chapter 3 of HUD's efforts to
coordinate with other federal agencies, and we eliminated our
characterization of the efforts as "informal." However, we did not
mention the Domestic Policy Council's coordinating meetings on
welfare-to-work policy activities because during the course of our
review, HUD, HHS and Domestic Policy Council officials informed us
that the Council meets on an ad hoc basis as issues arise, but does
not have a set schedule for meeting on welfare reform issues. 

7.  We agree that HUD's recent hiring of community builders could
help to increase coordination with the states on welfare reform.  HUD
could consider using the community builders as part of its strategy
to implement our recommendation on promoting the benefits of using
assisted housing developments as places to deliver services related
to welfare reform and to help link other field office and housing
agency staff with federal, state and local welfare reform efforts. 

8.  In chapter 3, we added HUD's comment about the increased
challenges to coordination posed by the expiration of legislation
permitting interagency transfers of funds. 

9.  We expanded our discussion in chapter 1 to emphasize
opportunities for local coordination through some of HUD's
self-sufficiency programs.  While we agree with HUD, in principle
that a reciprocal coordination policy for welfare agencies (discussed
in ch.  3) could help, HUD needs to demonstrate to these agencies
that the housing community can provide resources to support welfare
reform. 

10.  Chapter 3 discusses HUD's efforts to create and retain jobs
through the Empowerment Zone and Enterprise Community, Section 108,
Economic Development Initiative, and other community development
programs.  We did not discuss the Section 3 program because,
according to a November 1996 HUD-funded study,\30 it is an inherently
limited mechanism for employing large numbers of residents.  The jobs
that residents receive through this program are mainly in
construction and therefore provide periodic and short-term
employment.  Furthermore, the number of jobs resulting from federal
funding to any single housing agency is small compared with the
number of jobs residents need. 

11.  We added HUD's view that the Department's small-scale
self-sufficiency programs are intended to provide seed capital that
housing agencies can use to leverage other funding agencies'
resources. 

12.  See comment 7. 

13.  We revised the report's executive summary to make it clear that
the residents of public and assisted housing on TANF are eligible to
receive services.  For our response to HUD's comments about its
legislative proposals, see comment 4. 

14.  We believe that the issues HUD raises are adequately addressed
in the body of the report.  For example, in chapter 2 we discuss the
kinds of information housing agencies might need.  In chapter 3, we
identify some problems with the MTCS data that limit the usefulness
of these data in determining the impact of welfare reform. 

15.  In chapter 2, we cite some housing agencies' reasons for not
using ceiling rents and adjustments to earned income.  According to
the housing agencies, these policies would reduce revenues, are
difficult to administer, and have not been permanently adopted. 

16.  The section of the report that HUD refers to here discusses
housing agencies' past reliance on federal funding and lack of
interaction with state and local governments, which often resulted in
isolation.  In chapter 2, we discuss the increased efforts made by
some of the housing agencies we visited to take advantage of state
and local programs and interact with local welfare agencies. 

17.  See comment 1. 

18.  We revised our discussion of the Family Self-Sufficiency
program. 

19.  See comment 4. 

20.  We eliminated the reference to "Section 8" project-based units. 

21.  We considered HUD's comments but made no changes to the report. 
We believe that HUD should convey its suggestions directly to the
Butte County housing agency. 

22.  After following up on HUD's comment with Minnesota officials, we
updated the footnote in chapter 2 to reflect the delay in
implementing the $100 decrease in TANF benefits for recipients with
housing assistance. 

23.  The two agencies did not have an obligation to operate a Family
Self-Sufficiency program. 

24.  Although we considered HUD's suggestion, we did not revise table
2.1.  We did, however, add a reference to the discussion of our
selection criteria in chapter 1. 

25.  In chapter 2, we reported that welfare officials in three of the
four states we visited said they did not reach out to the public
housing community during the development of their state's TANF plan. 
However, officials in some states said they were reaching out to the
public housing community during the implementation of welfare reform. 
In addition, we provide several examples of housing agencies
coordinating with state and local agencies around welfare reform
issues.  Chapter 3 includes a discussion of the guidance HUD provided
to housing agencies on welfare reform. 

26.  Appendix III of the report provides more details on this issue. 

27.  We revised the wording in the executive summary and chapter 3 to
reflect this distinction. 

28.  See comment 5. 

29.  The director of the St.  Paul housing agency made the comment to
demonstrate that the goals of some of HUD's programs contribute to
the confusion over HUD's role in welfare reform.  In chapter 3, we
noted that the demonstration project is operating at five sites. 

30.  See comment 17. 

31.  We revised the text so that it emphasizes uses of CDBG funds
rather than job creation. 

32.  See comment 6. 

33.  See comment 6. 

34.  Our conclusion suggests that HUD take every reasonable
opportunity to ensure that housing agencies receive and understand
the guidance and data available to assist them in welfare reform
efforts.  It is up to HUD to determine what is reasonable. 

35.  We did not revise our report on the basis of this comment
because, in discussions with HUD and Mathematica, we learned that HUD
and Mathematica had discussed the Math STEWARD model, a newer version
of the STEWARD model that was not available when we contracted with
Mathematica for the simulations discussed in this report. 


--------------------
\30 Lessons From the Field on the Implementation of Section 3,
Prepared for HUD's Office of Policy Development and Research by the
Manpower Demonstration Research Corporation (Nov.  1996). 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix VII

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C. 

Susan Campbell
Stan Czerwinski
Bess Eisenstadt
Vondalee Hunt
Stephen Jones
DuEwa Kamara
Luann Moy
Merrie Nichols-Dixon

ATLANTA FIELD OFFICE

Signora May

BOSTON FIELD OFFICE

Nancy Barry

CHICAGO FIELD OFFICE

Frank Taliaferro





RELATED GAO PRODUCTS
============================================================ Chapter 1

Section 8 Tenant-Based Housing Assistance:  Opportunities to Improve
HUD's Financial Management (GAO/RCED-98-47, Feb.  20, 1998). 

Welfare Reform:  HHS' Progress in Implementing Its Responsibilities. 
(GAO/HEHS-98-44, Feb.  2, 1998). 

Welfare Reform:  States' Efforts to Expand Child Care Programs
(GAO/HEHS-98-27, Jan.  13, 1998). 

Welfare Reform:  HUD's Preliminary Estimate of the Financial Impact
of Welfare Reform on HUD's Programs (GAO/RCED-98-57R, Jan.  30,
1998). 

Managing for Results:  Agencies' Annual Performance Plans Can Help
Address Strategic Planning Challenges (GAO/GGD-98-44, Jan.  30,1998). 

Welfare Reform:  State and Local Responses to Restricting Food Stamp
Benefits (GAO/RCED-98-41, Dec.  18, 1997). 

Results Act:  Observations on the Department of Housing and Urban
Development's Draft Strategic Plan (GAO/RCED-97-224R, Aug.  8, 1997). 

HUD:  Inventory of Self-Sufficiency and Economic Opportunity Programs
(GAO/RCED-97-191R, July 28, 1997). 

Welfare Reform:  Issues and Possible Implications for HUD's Programs
and Tenants (GAO/RCED-97-148R, June 16, 1997). 

Welfare Reform:  Implications of Increased Work Participation for
Child Care (GAO/HEHS-97-75, May 29, 1997). 

Welfare Reform:  States' Early Experiences With Benefit Termination
(GAO/HEHS-97-74, May 15, 1997). 

Food Stamp Program:  Characteristics of Households Affected by Limit
on the Shelter Deduction (GAO/RCED-97-118, May 14, 1997). 

*** End of document. ***