During the first week in May, the federal Department of Housing and Urban Development (HUD) announced that it is changing the way it funds the 2004 voucher (Section 8) program. As a result of HUD's new Directive, many local housing authorities are short of the funds needed to cover all vouchers currently in use. On April 22, HUD announced it would no longer reimburse local housing authorities based on actual current voucher costs. Instead, HUD is now issuing payments based on the cost of vouchers under lease on August 1, 2003, adjusted for inflation. Now, housing authorities across the country are planning for the possibility of having to terminate residents from the program or otherwise cover funding shortfalls.
The notice is retroactive to the beginning of the year. This unexpected change in the middle of a fiscal year catches many local housing authorities off-guard, without sufficient time and resources to plan for implementation of the new policy.
Already, local voucher administrators are making changes to the program that will have dire effects on families. This is the first time in the 30-year history of Section 8 voucher program that existing vouchers will be cut. Rent levels for some voucher holders will increase, and maximum rent covered by a voucher will decrease. Additionally, vouchers may be directed to higher-income households.
This announcement by HUD will mean that Public Housing Authorities (PHAs) can make the decision to not re-issue vouchers when tenants leave, and even withdraw vouchers from families who have them but have not yet found a willing landlord. If private housing partners (like landlords, bankers, and developers) can't count on HUD to keep its funding commitments, may stop participating in the program, leaving an increasing unmet housing need in many communities.
The problem is exacerbated because HUD has withheld payments of funds owed from last year (overdue reserves) to many housing authorities, leaving many without sufficient funds to cover the emerging shortfalls. This policy will could have a very negative impact on people with disabilities and their families, especially because people with disabilities are among the nation's citizens with the lowest incomes and in need of rental assistance.
Because of their extremely low incomes, this new HUD policy may mean that many people with disabilities will find that PHAs are unwilling to provide vouchers at the maximum rent levels needed to find an accessible apartment. The lower a person's income, the higher the subsidy they need. Many others may be forced to pay higher rents that they cannot afford.
The "Frelinghuysen vouchers," specifically set-aside for people with disabilities, have been administered in a program that is administered inconsistently across local PHAs. In many cases, because of this disarray, these disability vouchers have been the last ones allocated to people and there is a major concern that one of the outcomes of this new HUD directive will be that PHAs pull vouchers on a last-served, first-out basis. Congress will respond to concerns over this new directive and may be able to direct HUD to rethink this policy.