Housing and Urban Development: Comments on HUD's Fiscal Year 2000 Budget
Request (Testimony, 03/03/99, GAO/T-RCED-99-104).

Pursuant to a congressional request, GAO discussed the Department of
Housing Urban Development's (HUD) fiscal year (FY) 2000 budget request,
focusing on: (1) new initiatives or significant increases proposed by
HUD; and (2) observations about HUD's request for funding related to
several areas GAO has reported on in the past year.

GAO noted that: (1) to support 19 new programs and initiatives, HUD is
requesting nearly $731 million of its $28 billion total request for FY
2000; (2) in each case, Congress did not provide funding for the
activity in FY 1999, although in some cases the program has been funded
in prior years; (3) GAO is concerned about HUD's overall capacity to
plan for, administer, and oversee this many new programs, particularly
when HUD itself is undergoing significant organizational reform and when
some of the new initiatives are in areas, such as contracting, that
HUD's performance has been questioned in the past; (4) one of the most
significant increases in HUD's current programs for FY 2000 is a $1
billion increase in its Section 8 rental housing assistance program; (5)
however, the budget does not provide sufficient information to evaluate
this request; (6) GAO believes a number of associated issues exist that
warrant review; (7) HUD's tracking and oversight of its Community
Development and Planning grants are made difficult because information
in its grants management information system is unreliable; (8) although
HUD plans to replace the current system for managing and tracking
Community Development Block Grants, a new system is several years away
from implementation; (9) in the meantime, HUD's FY 2000 budget request
proposes to continue adding set-asides to the block grant; (10) however,
HUD cannot be assured that financial tracking of the individual grants
and grantees will be adequate; (11) in one of its largest new
initiatives, HUD is requesting over $200 million in FY 2000 to fund
contract administrators for the contracts it has with owners of
multifamily properties in HUD's project-based Section 8 housing
assistance program; (12) however, work that GAO, HUD's Inspector
General, and the National Academy of Public Administration have done in
the past on HUD's contracting activities identified weaknesses in HUD's
ability to administer contracts and monitor contractors' performance;
(13) however, GAO believes that the success of this program will depend
on the adequacy of HUD's contract selection, administration, and
oversight of these contracts; (14) HUD is proposing both a new
initiative and a program increase in the area of empowerment zones as
well as two set-asides in the Community Development Block Grant Program
for empowerment zones; and (15) these proposals raise questions about
how the programs will coordinate with and benefit from each other
because they target similar beneficiaries.

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

 REPORTNUM:  T-RCED-99-104
     TITLE:  Housing and Urban Development: Comments on HUD's Fiscal 
             Year 2000 Budget Request
      DATE:  03/03/99
   SUBJECT:  Low income housing
             Grant administration
             Rent subsidies
             Federal aid for housing
             Financial management
             Community development programs
             Contract administration
             Presidential budgets
             Housing programs
IDENTIFIER:  HUD HOME Program
             HUD Empowerment Zones and Enterprise Communities Programs
             Community Development Block Grant
             HUD Indian Housing Program
             HUD Community Development and Planning Program
             HUD Section 8 Housing Assistance Program
             HUD Public Housing Program
             HUD Note Sales Program
             
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Cover
================================================================ COVER


Before the Subcommittee on Housing and Community Opportunity
Committee on Banking and Financial Services
House of Representatives

Not to be
Released Before
3 p.m.  EST
Wednesday
March 3, 1999

HOUSING AND URBAN DEVELOPMENT -
COMMENTS ON HUD'S FISCAL YEAR 2000
BUDGET REQUEST

Statement by Judy A.  England-Joseph,
Director, Housing and Community
Development Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED-99-104

GAO/RCED-99-104T


(385794)


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

  HUD - Department of Housing and Urban Development
  CDBG - Community Development Block Grant
  EZ -
  EZ/EC -
  FHA - Federal Housing Administration
  GAO -
  HOME -
  IDIS -

============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are here today to testify on the fiscal year 2000 budget request
of the Department of Housing and Urban Development (HUD).  We
understand that the resources available to the Congress to support
our nation's myriad housing and community development needs cannot
adequately address all needs.  However, we also believe that the
resources the Congress makes available to HUD should be used as
wisely as possible and that HUD's programs should reflect a national
consensus on the best approaches to meeting housing and community
development challenges.  For this reason, in reporting our work on
HUD's budget requests over the past several years, we have sought to
highlight for the Congress program requests from HUD that either do
not provide sufficient justification to enable the Congress to make a
rational choice or do not require new budget authority because of
available unexpended funding provided in prior years. 

We have been requested by the House and Senate Appropriations
Subcommittees responsible for HUD to identify areas in which HUD's
budget justification is insufficient or in which unexpended funds
might offer the opportunity to rethink the need for new
appropriations.  Having received HUD's fiscal year 2000 budget
justification materials only about 2 weeks ago, we have just begun
our analysis.  Nevertheless, we have begun our initial review with a
particular focus for this hearing on the proposal's new programs or
initiatives.  Specifically, we will discuss (1) new initiatives or
significant increases proposed by HUD and (2) our observations about
HUD's request for funding related to several areas we have reported
on in the past year. 

In summary, we will make the following points about HUD's budget
proposal: 

  -- To support 19 new programs and initiatives, HUD is requesting
     nearly $731 million of its $28-billion total request for fiscal
     year 2000.  In each case, the Congress did not provide funding
     for the activity in fiscal year 1999, although in some cases the
     program has been funded in prior years.  We are concerned about
     HUD's overall capacity to plan for, administer, and oversee this
     many new programs, particularly when HUD itself is undergoing
     significant organizational reform and when some of the new
     initiatives are in areas, such as contracting, in which HUD's
     performance has been questioned in the past. 

  -- One of the most significant increases in HUD's current programs
     for fiscal year 2000 is a $1 billion increase in its Section 8
     rental housing assistance program.  HUD would use these
     additional funds to renew expiring contracts in both the
     tenant-based and project-based portions of this program. 
     However, the budget does not provide sufficient information to
     evaluate this request.  We believe a number of associated issues
     exist that warrant review, including the extent to which HUD has
     used unexpended balances to offset its request, the basis for
     the Section 8 contract renewal costs, and the rationale for the
     $4.2 billion advance appropriation for fiscal year 2001
     requested in the fiscal year 2000 budget request. 

  -- Currently, HUD's tracking and oversight of its Community
     Development and Planning grants are made difficult because
     information in its grants management information system is
     unreliable.  Unreliable information diminishes HUD's capacity to
     administer and monitor new initiatives in this program area. 
     Although HUD plans to replace the current system for managing
     and tracking Community Development Block Grants, a new system is
     several years away from implementation.  In the meantime, HUD's
     fiscal year 2000 budget request proposes to continue adding
     set-asides to the block grant.  However, HUD cannot be assured
     that financial tracking of the individual grants and grantees
     will be adequate. 

  -- In one of its largest new initiatives, HUD is requesting over
     $200 million in fiscal year 2000 to fund contract administrators
     for the contracts it has with owners of multifamily properties
     in HUD's project-based Section 8 housing assistance program. 
     However, work that we, \1 HUD's Inspector General, and the
     National Academy of Public Administration have done in the past
     on HUD's contracting activities identified weaknesses in HUD's
     ability to administer contracts and monitor contractors'
     performance.  HUD's budget request states that having contract
     administrators will give HUD field staff more time to perform
     program management functions.  However, we believe that the
     success of this program will depend on the adequacy of HUD's
     contract selection, administration, and oversight of these
     contracts.  The Congress needs to seek assurances from HUD that
     it has the capacity to perform these functions for such a large
     initial contracting endeavor. 

  -- HUD is proposing both a new initiative and a program increase in
     the area of empowerment zones.  The Department also is
     requesting two set-asides in the Community Development Block
     Grant Program for empowerment zones.  These proposals raise
     questions about how the programs will coordinate with and
     benefit from each other because they target similar
     beneficiaries. 


--------------------
\1 HUD Management:  Contracting Issues Need Continued Attention
(GAO/T-RCED-98-222, June 5, 1998). 


   HUD'S FISCAL YEAR 2000 BUDGET
   AND PROGRAMS
---------------------------------------------------------- Chapter 0:1

Established in 1965, HUD is the principal federal agency responsible
for programs in four areas--housing assistance, community
development, housing finance, and regulatory issues related to areas
such as lead-based paint abatement and fair housing.  To carry out
its many responsibilities, HUD was staffed by 9,386 employees as of
February 1999. 

  -- Housing Assistance:  HUD provides (1) public housing assistance
     through allocations to public housing authorities and (2)
     private-market housing assistance under section 8 of the U.  S. 
     Housing Act of 1937 for properties--referred to as project-based
     assistance--or for tenants--known as tenant-based assistance. 
     In contrast to entitlement programs, which provide benefits to
     all who qualify, the benefits of HUD's housing assistance
     programs are limited by budgetary constraints to only about
     one-fourth of those who are eligible. 

  -- Community Development:  Primarily through grants to the states,
     large metropolitan areas, small cities, towns, and counties, HUD
     provides community planning and development funds for local
     economic development under its Community Development Block Grant
     (CDBG) and Empowerment Zone/Enterprise Community Programs
     (EZ/EC), housing development under its HOME Program, and
     assistance to the homeless under its McKinney Act Homeless
     Programs.  The funding for some programs, such as those for the
     homeless, may also be distributed directly to nonprofit groups
     and organizations. 

  -- Housing Finance:  The Federal Housing Administration (FHA)
     insures lenders--including mortgage banks, commercial banks,
     savings banks, and savings and loan associations--against losses
     on mortgages for single-family properties, multifamily
     properties, and other facilities.  The Government National
     Mortgage Association, a government-owned corporation within HUD,
     guarantees investors the timely payment of principal and
     interest on securities issued by lenders of FHA-insured and VA-
     and Rural Housing Service-guaranteed loans. 

  -- Regulatory Issues:  HUD is responsible for regulating interstate
     land sales, home mortgage settlement services, manufactured
     housing, lead-based paint abatement, and home mortgage
     disclosures.  HUD also supports fair housing programs and is
     partially responsible for enforcing federal fair housing laws. 

The Congress supports HUD's programs through annual appropriations
that are subject to spending limits under the Budget Enforcement Act,
as amended. 

For fiscal year 2000, HUD is proposing a total budget of about $28
billion in new discretionary budget authority, which, in combination
with available budget authority from prior years, will help support
about $34 billion in discretionary outlays.\2 This request represents
a 9-percent increase in budget authority over fiscal year 1999.  In
its Fiscal Year 2000 Budget Summary, HUD states that its proposed
budget will allow the renewal of all Section 8 rental assistance
contracts, increases to virtually all program areas, and continued
increases to programs, such as CDBG and Homeless, that address
communities' worst case needs.  The summary also states that many
program enhancements will be initiated, and, as we discuss below, HUD
proposes to fund many set-asides within existing programs. 


--------------------
\2 Budget authority is the authority provided by federal law to incur
obligations that will result in outlays.  Appropriations are the most
common means of providing budget authority.  Outlays are the measure
of federal spending and are payments to liquidate obligations. 


   NEW PROGRAMS AND INCREASES IN
   EXISTING PROGRAMS
---------------------------------------------------------- Chapter 0:2

HUD's fiscal year 2000 budget request includes 19 new initiatives and
programs that were not funded during fiscal year 1999.  Some,
however, may have been funded in prior years.  These fall under
various programs, including Community Development and Planning,
Public and Indian Housing, and Housing Programs.  This request
includes seven set-asides totaling $210 million.  Five of the
set-asides ($60 million) will be funded within the CDBG Program and
two ($150 million) in the HOME Program.  See appendix I for a list of
the proposed fiscal year 2000 initiatives and their status in fiscal
year 1999.  We also note that HUD's fiscal year 2000 request includes
significant funding increases in several ongoing programs, including
Section 8 contract renewals.  See appendix II for a list of these
programs. 

While the budget impact--a net increase of about 9 percent in new
budget authority--of the new programs and increases to existing
programs that HUD proposes is not overwhelming, the proposed budget
does raise questions about HUD's capacity to manage such an increase. 
Questions arise for two reasons:  First, HUD is currently going
through a significant, complex, and time-consuming organizational
reform in which many functions that it once managed in many field
offices will be managed in one or more "centers" in various parts of
the country.  This reform is necessary to improve the efficiency and
effectiveness of HUD's operations and to address long-standing yet
basic problems in program management.  To accommodate this reform,
HUD is moving and retraining many of its staff.  Second, new
initiatives and programs require a certain amount of dedicated
resources to plan, implement, and manage over the long term.  It is
questionable whether these resources are available at this point in
the reinvention of HUD.  Therefore, we are concerned about whether
HUD has the capacity to effectively initiate and oversee the set of
new programs it is proposing for fiscal year 2000 while it is also
trying to develop for itself a new operating style and way of doing
business. 


   THE DETAILS OF HUD'S
   PROJECT-BASED SECTION 8 PROGRAM
   ARE NOT CLEARLY EXPLAINED IN
   THE BUDGET PROPOSAL
---------------------------------------------------------- Chapter 0:3

One of the largest program increases in HUD's fiscal year 2000 budget
proposal is in its Section 8 housing assistance program (see app. 
II).  \3 For the past few years, we have reviewed the accuracy of
HUD's budget proposals for the tenant-based and project-based
components of this program and have found many inconsistencies.  For
example, in July 1998, we reported that the Department had not
identified all available Section 8 project-based unexpended balances
and accounted for them in its budget process.\4 As a result, HUD
requested $1.3 billion in its fiscal year 1999 request for
project-based funding that it did not need to cover shortfalls in
current contracts. 

To remedy such overstatements, we recommended that HUD's future
funding requests for the Section 8 programï¿½both the tenant-based and
the project-based components--fully consider unexpended balances that
may be available to offset funding needs.  HUD has improved its
annual review of unexpended balances.  Although HUD's budget
justification shows that funding needs to cover contract shortfalls
will be met by existing unexpended balances, it does not identify the
estimated funding shortfall or the amount of unexpended balances
available in each of the project- and tenant-based components.  As a
result, we cannot assess the extent to which the Department's budget
request includes the use of unexpended project-based balances. 
Therefore, we have requested information from HUD on its shortfall
estimates and on the unexpended balances that may be available to
fund these shortfalls.  Balances in excess of those needed to fund
shortfalls could be used to offset HUD's request for contract renewal
funding. 

HUD's fiscal year 2000 budget justification raises other issues about
its Section 8 program request that we believe warrant review.  These
issues include the basis for the contract renewal costs for the
Section 8 project-based program for fiscal year 2000--more than $3
billion--as well as the basis for renewal costs beyond 2000.  The
budget proposal shows that HUD's estimates of the unit costs of some
project-based housing are substantially higher than HUD projected
just a year ago.  Moreover, unlike prior years, HUD's fiscal year
2000 budget does not provide estimates of Section 8 costs in the
years following 2000.  Therefore, we have requested information that
would support HUD's assumptions and source data for both the number
of units and average unit costs for this program in fiscal year 2000
and for several years thereafter.  We also believe that the basis for
the substantial increase in total Section 8 project-based and
tenant-based outlays--$2.5 billion\5 --should be examined, as well as
HUD's rationale for the $4.2 billion advance appropriation for fiscal
year 2001 requested in the fiscal year 2000 budget request. 


--------------------
\3 Section 8 tenant-based rental assistance is provided to specific
individuals, while project-based assistance is provided to specific
housing units. 

\4 Section 8 Project-Based Rental Assistance:  HUD's Processes for
Evaluating and Using Unexpended Balances Are Ineffective
(GAO/RCED-98-202, July 1998). 

\5 This figure can be found on page P-1 of HUD's budget
justification, dated February 1999, for its fiscal year 2000 budget
proposal. 


   COMMUNITY DEVELOPMENT BLOCK
   GRANTS MAY NOT BE SUFFICIENTLY
   REPORTED AND CONSIDERED FOR
   BUDGET REQUEST OFFSETS
---------------------------------------------------------- Chapter 0:4

HUD's CDBG Program provides communities with grants for activities
that will benefit low- and moderate-income people, prevent or
eliminate slum or blight, or meet urgent community need.\6 While CDBG
is largely allocated on a formula basis, funds are also set aside for
specific purposes such as Community Outreach Partnership, Hispanic
Serving Institutions, and Historically Black Colleges and
Universities.  HUD's fiscal year 2000 budget request for the CDBG
Program proposes set-asides for 10 projects or initiatives totaling
about $428 million.  Of the 10 set-asides, half are for new
initiatives totaling about $60 million.  These new set-asides include
Metropolitan Job Links, Homeownership Zones, EZ/EC Technical
Assistance, EZ Round II Planning and Implementation, and a Citizens
Volunteer Housing Corps. 

The CDBG Program is HUD's most flexible tool for assisting
communities to meet local development priorities.  To help monitor it
and other formula grant programs like HOME and Housing Opportunities
for Persons With AIDS, HUD developed the Integrated Disbursement and
Information System (IDIS) to provide current information on how
grantees are using federal funds and what they are achieving with
those funds.  However, our recent work shows that IDIS, as
implemented, does not provide detailed performance information. 
Also, because of its design, the information in IDIS is incomplete,
inaccurate and untimely.  Many states are apprehensive about using
the problem-plagued system and plan to adopt it only if forced to do
so by law.  To broaden IDIS, HUD plans a replacement system, called
the Departmental Grants Management System that HUD plans to design to
track every grant.  However, HUD plans to convert the current version
of IDIS for use in the new grants management system, which may occur
over the next several years.  Also of immediate concern is the fact
that IDIS is not secure, which opens up the possibility of unapproved
access to program funds. 

Because of the poor quality of information in IDIS and a replacement
system not being readily available, we are concerned that the
activities and projects under CDBG may not be sufficiently reported
and considered for budget request offsets.  This is of particular
concern because past budget requests show that actual CDBG
unobligated balances have been increasing at a rate well over $50
million annually since fiscal year 1996.  Moreover, in 1998, the
authority to use about $7.6 million in CDBG funds expired.  Although
a reasonable explanation for this expiration may exist, we would not
expect funds to expire without benefiting grantees, given the
flexibility for the uses of CDBG funds and the discretion grantees
have for their use. 


--------------------
\6 Economic Development Activities:  Overview of Eight Federal
Programs (GAO/RCED-97-193, Aug.  28, 1997)


   THE SUCCESS OF HUD'S NEW
   CONTRACT ADMINISTRATION PROGRAM
   DEPENDS ON ADEQUATE CONTRACT
   SELECTION, ADMINISTRATION, AND
   OVERSIGHT
---------------------------------------------------------- Chapter 0:5

Contract Administration is a new initiative in fiscal year 2000 under
HUD's Housing Certificate Fund.  HUD is requesting $209 million for
this program, of which $42 million will be available to contractors
who have not formerly participated in this activity.  According to
HUD, the use of contract administrators to manage project-based
Section 8 housing assistance contracts will relieve HUD field staff
of many duties they currently perform in this regard, allowing them
to concentrate on their direct responsibilities, such as monitoring
program effectiveness and ensuring that property owners are
accountable for the rental subsidy payments they receive.  Duties to
be shifted to the new contract administrators include conducting
annual physical inspections of the properties, reviewing project
financial statements, and verifying tenants' income and eligibility
for program rental assistance benefits.  HUD's Section 8 Financial
Management Center would oversee the work of contract administrators,
and the Department would select contract administrators through a
competitive procurement process. 

However, because of the documented weaknesses in HUD's contracting
practices in other areas, we question whether HUD is prepared to
administer a new contracting initiative of this size.  We, HUD's
Inspector General, and the National Academy of Public Administration
have cited weaknesses in HUD's contracting and procurement practices: 
inadequate oversight of contracted services because of a lack of
skilled, trained staff; workload imbalances; and unclear duties, time
frames, costs, and products.  In addition, the Department has been
under an investigation by its Inspector General for allegations of
improper contract solicitation and administration of its contracts in
the Department's Note Sales program.  Therefore, we believe that to
ensure the success of HUD's contracting for the new Section 8
contract administration initiative, HUD may need to provide some
assurances to the Congress that the Department will have an adequate
administrative structure and sufficient staffing in place to provide
proper oversight of a new contracting program of this magnitude. 


   EMPOWERMENT ZONE INITIATIVES
   AND INCREASES RAISE QUESTIONS
---------------------------------------------------------- Chapter 0:6

HUD is also proposing an increase in its EZ Program.  HUD's $150
million request for Urban Empowerment Zones includes $45 million that
would be distributed to the 15 communities that were designated as
Strategic Planning Communities.  These communities, which submitted
applications for Round II EZ designation but were not chosen, could
use the funds to support activities proposed in their EZ
applications.  Eligible activities include those covered by HUD's
CDBG and the Social Services Block Grant Program administered by the
Department of Health and Human Services.  However, under CDBG, HUD
has already included a $10 million set-aside for meritorious
communities that applied for Round II EZ designation but were not
chosen.  It is unclear why HUD needs to fund the same communities
with two different programs. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:7

We provided a draft of this statement to HUD for its review and
comment.  Departmental officials, including HUD's Chief Financial
Officer, provided comments on several issues, including the number of
programs or new initiatives that we listed and categorized as new for
fiscal year 2000.  HUD officials stated that programs that were
funded in the past, such as Section 8 vouchers, should not be
considered new, although they meet our criterion of not receiving
funding in fiscal year 1999.  We have included these programs because
our purpose in listing new programs and initiatives is to provide an
indication of the additional workload HUD may have in the approaching
year.  We believe that a 1 or more year break in a program's funding
can create administrative workload, even though the Department
retains programmatic expertise among its staff and contractors.  HUD
officials also suggested that we check some of the budget figures
that we reported in the statement.  We did so and made adjustments
where necessary. 


-------------------------------------------------------- Chapter 0:7.1

This concludes my prepared testimony, Mr.  Chairman.  I would be
happy to respond to any questions that you or the Members of the
Subcommittee might have. 


NEW PROGRAMS AND INITIATIVES\A IN
HUD'S FISCAL YEAR 2000 BUDGET
REQUEST
=========================================================== Appendix I

                              (Dollars in millions)

                                                   Budget Authority \b
                                          --------------------------------------
Initiative or
Program Enhancement   Notes                  FY 1999 enacted     FY 2000 request
--------------------  ------------------  ------------------  ------------------
Community Planning and
--------------------------------------------------------------------------------
Metro Job Links       Set-aside\c                         $0               $[10]
Homeownership Zones   Set-aside\c                          0                [25]
EZ/EC Targeted        Set-aside\c                          0                [10]
 Technical
 Assistance
EZ Round II Planning  Set-aside\c                          0                [10]
 and Implementation
 Grants
Citizens Volunteer    Set-aside\c                          0                 [5]
 Housing Corps
Regional Connections                                       0                  50
Regional Empowerment                                       0                  50
 Zone Initiative
America's Private                                          0                  37
 Investment
 Companies Credit
 Subsidy
America's Private                                          0           {1,000}\d
 Investment
 Companies Guarantee
 Commitment Limit
Homeless Multi-                                            0                   5
 Agency
 Demonstration
Incremental Vouchers  18,000 vouchers                      0               [104]
 for the Homeless
Regional Affordable                                        0                [25]
 Housing Initiative
Redevelopment of                                           0                  50
 Abandoned Buildings
Public and Indian
 Housing
Contract                                                   0                 209
 Administration
Incremental Rental    42,000 vouchers                      0                 243
 Assistance
Youth Anti-Drug                                            0               [100]
 Diversion Program
 (Drug Elimination
 Grant Program)
Housing Programs
Elderly Capital       Set-aside\e                          0               [100]
 Grants/Assisted
 Living
Service Coordinators  Set-aside\e                          0                [50]
================================================================================
Mandatory Program
Low Income Housing    15,000 vouchers                      0                  87
 Tax Credit Vouchers
 for the Elderly
Total of Line Items                                                          731
 Not in Brackets
--------------------------------------------------------------------------------
\a For this table, GAO defined new programs and initiatives as any
program or initiative that the Congress did not fund in fiscal year
1999.  However, some of these programs or initiatives may have been
funded in prior years. 

\b Brackets around a table entry indicate that a program is either a
set-aside under another program or its funding is included within the
funding total of another program in HUD's budget request. 

\c These set-asides are proposed within the Community Development
Block Grant program. 

\d Guarantee Commitment Limits -- no budgetary authority is requested
for this line item. 

\e These set-asides are proposed within the HOME Investment
Partnership Grant program. 

Source:  HUD's FY 2000 Budget Justification


INCREASES IN EXISTING PROGRAMS
INCLUDED IN HUD'S FISCAL YEAR 2000
BUDGET REQUEST
========================================================== Appendix II

                              (Dollars in millions)

                                                   Budget authority \a
                                          --------------------------------------
Program/Initiative       FY 1999 enacted     FY 2000 request            Increase
--------------------  ------------------  ------------------  ------------------
Community Planning and Dev
--------------------------------------------------------------------------------
Community                         $4,750              $4,775                 $25
 Development Block
 Grant Fund
Youthbuild                          [43]                [75]                [32]
Homeless Assistance                  975               1,020                  45
 Grants
Housing                              225                 240                  15
 Opportunities for
 Persons with AIDS
 (HOPWA)
HOME Investment                    1,600               1,610                  10
 Partnership Program
Brownfields                           25                  50                  25
 Redevelopment
 Program
Public and Indian
 Housing
Regional Opportunity                  10                  20                  10
 Counseling
Public Housing                     2,818               3,003                 185
 Operating Fund
Section 8 Renewals/                9,599              10,640               1,041
 Amendments
Administrative Fee                 N/A\b                   6               N/A\b
 Increase
Housing Programs
Housing Counseling                  [18]                [20]                 [2]
 Assistance (funded
 in HOME)
FHA Mutual Mortgage                  329                 491                 162
 Insurance and
 Cooperative
 Management Housing
 Insurance Funds
 program account
Mortgage Insurance           {110,000}\c           {120,000}            {10,000}
 Limitation in FHA's
 Mutual Mortgage
 Insurance and
 Cooperative
 Management Housing
 Insurance Funds
Government National
 Mortgage
 Association
Mortgage-Backed                        9                  15                   6
 Securities
 Guarantee program
 account
Mortgage-Backed                {150,000}           {200,000}            {50,000}
 Securities
 Guarantee
 limitation
Policy Development
 and Research
Research and                          38                  40                   2
 Technology
Fair Housing and
 Equal Opportunity
Fair Housing                          17                  20                   3
 Assistance Program
Fair Housing                          23                  27                   4
 Initiatives Program
Management and
 Administration
Salaries and                         535                 559                  24
 Expenses
Mandatory Programs
FHA General                           46               1,164               1,118
 Insurance and
 Special Risk
 Insurance Funds
 Liquidating
Manufactured Home                     15                  16                   1
 Inspection and
 Monitoring
Urban Empowerment                     45                 150                 105
 Zones
--------------------------------------------------------------------------------
\a Brackets around a table entry indicate that a program is either a
set-aside under another program or its funding is included within the
funding total of another program line item in HUD's budget request. 

\b The administrative fee is paid to public housing authorities that
administer the Section 8 tenant-based assisted housing program and is
included in the baseline unit cost for the Section 8 Tenant-Based
program.  Therefore, the exact amount of the aggregate fee is
unknown. 

\c Guarantee Commitment Limits - not budgetary authority. 

Source:  HUD's FY 2000 Budget Justification


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