HUD Rental Assistance: Improved Guidance and Oversight Needed for Utility Allowances
Fast Facts
Over 3 million low-income households get federal rental assistance from local public housing agencies. Most of those households pay utilities separately from rent and get a federal utility allowance to help cover them.
But the Department of Housing and Urban Development doesn't comprehensively monitor whether utility allowances are current and reasonable. For example, at least 97,000 households got the same amount for 4 years, although utility rates had sharply increased in that time.
Also, some public housing agencies said HUD's tool for calculating allowances is hard to use.
Our 5 recommendations address these issues and more.
Highlights
What GAO Found
The Department of Housing and Urban Development (HUD) provides rental assistance to low-income households, including through the Housing Choice Voucher (voucher) and Public Housing programs administered by about 3,700 public housing agencies (PHA). PHAs are required to provide utility allowances to assisted households that pay utilities separately from rent.
The number of assisted households that are rent-burdened (pay more than 30 percent of income on rent and utilities) because their utility expenses exceed their allowances is unknown. But GAO's analysis suggests out-of-pocket utility expenses can increase the risk of being rent-burdened. GAO estimated that 32 percent of voucher households were rent-burdened when utility allowances were assumed to equal expenses (baseline, top bar in figure). When GAO incorporated American Housing Survey (AHS) utility expense estimates, the estimated share of voucher households that were rent-burdened in 2021 (most recent data available) was 56 percent (bottom bar in figure).
Rent Burdens of Voucher Households Using Different Utility Expense Estimates, 2021
Note: For more details, see fig. 1 in GAO-24-105532.
HUD's allowance-related tools and guidance have weaknesses that may limit their usefulness for PHAs. For instance, HUD has a model to help PHAs calculate allowances, but some PHAs and industry stakeholders told GAO it was hard to use or they could use more support and training. HUD plans to update the model if it receives funds to do so, but its proposed operating plan does not include steps to obtain feedback on the model's usability. HUD's guidebooks are not readily accessible or searchable on its website and do not provide avenues for user feedback.
HUD's oversight of utility allowances provides limited assurance that allowances are current and reasonable. For instance, HUD does not collect or regularly analyze certain program-wide data on allowances for the Public Housing or voucher programs. GAO's analysis of HUD data identified at least 97,000 households (assisted by at least 1,800 PHAs) with the same allowance in every year in 2019–2022. Utility rates increased sharply in this period, suggesting some PHAs may not have updated allowances as required.
Improvements in HUD's model usability, guidebooks, data collection, and analysis could help ensure that utility allowances better approximate expenses and help reduce rent burdens of assisted households.
Why GAO Did This Study
About 5 million low-income households receive HUD rental assistance. Households that pay utilities separately from rent receive utility allowances that should cover reasonable utility costs. To the extent allowances do not fully cover costs, households may become rent-burdened.
The joint explanatory statement for the Consolidated Appropriations Act, 2022 includes a provision for GAO to study the effect of utility costs on assisted households' rent burdens, with a focus on HUD rental assistance programs administered by PHAs. This report examines (1) the risk of households being rent-burdened because of utility expenses, (2) utility allowance tools and guidance that HUD provides to PHAs, and (3) HUD's oversight of PHAs' utility allowances.
GAO reviewed laws, regulations, and HUD tools and guidance for utility allowances; analyzed HUD and AHS data; and interviewed HUD officials, industry stakeholders such as contractors that PHAs use, and a nongeneralizable sample of 13 PHAs selected for diversity in size and location.
Recommendations
GAO is making five recommendations to HUD, including developing a plan to obtain feedback on the usability of its utility allowance model, improving the accessibility and feedback mechanisms for its guidebooks, and enhancing collection and analysis of allowance data. HUD neither agreed nor disagreed with the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Housing and Urban Development | The Secretary of HUD should ensure that the Principal Deputy Assistant Secretary for Public and Indian Housing and the Principal Deputy Assistant Secretary for Policy Development and Research develop a plan to solicit feedback on usability challenges that PHAs may face using HUSM. (Recommendation 1) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Housing and Urban Development | The Secretary of HUD should ensure that the Principal Deputy Assistant Secretary for Public and Indian Housing works with the Customer Experience Division to make utility allowance guidance more available and accessible on HUD's website, including by improving website navigability and optimizing the search bar. (Recommendation 2) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Housing and Urban Development | The Secretary of HUD should ensure that the Principal Deputy Assistant Secretary for Public and Indian Housing includes feedback mechanisms and HUD contact information in utility allowance guidance or on HUD guidance web pages for PHAs. (Recommendation 3) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Housing and Urban Development | The Secretary of HUD should ensure that the Principal Deputy Assistant Secretary for Public and Indian Housing takes initial steps toward collecting PHAs' utility allowance schedules for the Public Housing program, such as determining how existing IT systems could be leveraged or modified to capture the information, defining the content and format of PHA reporting, and estimating associated costs. (Recommendation 4) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Housing and Urban Development | The Secretary of HUD should ensure that the Principal Deputy Assistant Secretary for Public and Indian Housing develops mechanisms to regularly analyze utility allowance data for patterns that indicate a risk of noncompliance with HUD requirements and incorporates such analysis into monitoring reviews of PHAs. (Recommendation 5) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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