Department of Housing and Urban Development: Better Guidance and Performance Measures Would Help Strengthen Enforcement Efforts

HUD established DEC in 1998 to consolidate enforcement functions. In fiscal year 2017, DEC received about 2,800 referrals from program offices for oversight of and enforcement actions against property owners, public housing agencies, and state and local grantees that do not comply with requirements.

The Joint Explanatory Statement accompanying the Consolidated Appropriations Act, 2017, included a provision for GAO to assess DEC's effectiveness addressing noncompliance. GAO examined (1) the processes selected program offices have in place to make referrals, (2) how DEC assesses its performance, and (3) challenges that may affect the ability of DEC to achieve its mission. GAO reviewed agreements and referral data between DEC and three of the nine HUD program offices that made referrals to DEC from fiscal years 2014 to 2017 (accounting for 73 percent of the total referrals during that period), and interviewed HUD staff in headquarters and field offices.

The three program offices of the Department of Housing and Urban Development (HUD) that GAO examined have a process in place for referring cases of potential noncompliance to the Departmental Enforcement Center (DEC), but two of the offices do not provide their staff with specific guidance on when to make referrals. The Office of Multifamily Housing makes referrals to DEC based on defined thresholds for noncompliance, such as for properties that do not pass physical inspections. In contrast, the Offices of Public and Indian Housing (PIH) and Community Planning and Development (CPD) have broad guidelines but not specific thresholds for when to refer an entity to DEC. These two offices do not provide field staff with specific guidance to help determine which housing agencies or grantees to refer to DEC for possible enforcement action. As a result, the offices cannot ensure that decisions on whether to make referrals are made on a well-supported and consistent basis, potentially limiting DEC's effectiveness in fulfilling its mission of providing independent oversight of HUD's programs. In addition, PIH and CPD have targets for how many annual referrals the program office will make to DEC, but the targets are not based on program risk. According to federal internal control standards, management should identify, analyze, and respond to risks related to achieving the defined objectives. Without a target number of referrals based on program risk, PIH and CPD cannot be confident that the number of cases referred to DEC is appropriate and that DEC resources are being used efficiently.

DEC tracks some performance measures, but it largely measures outputs, such as number of work assignments completed, rather than outcomes, such as financial performance improvements resulting from its work, that would help assess the impact of its activities. DEC also does not track the status of recommendations it makes to program offices or measure indicators of its timeliness in completing its reviews for the referrals it receives. In addition, GAO found that DEC staff did not consistently record two key data elements (including the corrective action taken) in the spreadsheet used to track referrals. Improving DEC's performance measurement system and data recording would be consistent with federal internal control standards and allow DEC to better assess its effectiveness, ensure accountability, and identify potential improvements.

DEC has experienced various information technology challenges that have affected its ability to carry out its mission. For example, DEC's current system is not designed to allow staff to easily determine the basis for certain referrals or identify and analyze trends in referrals over multiple years. In addition, DEC has experienced continuing outages and breaks in service. HUD has developed plans for a replacement system, but funding constraints have delayed the implementation of the new system. DEC staff also noted that the organizational location of DEC within the Office of General Counsel was a challenge to carrying out its mission because it limited DEC's ability to hold program offices accountable for corrections. HUD disagreed and also stated that the department has no plans to relocate DEC. Based on GAO's review, other factors, such as the lack of guidance for making referrals (discussed above), may better explain why DEC may not be utilized more effectively.

GAO is making eight recommendations to HUD related to DEC, including for staff guidance on when to make referrals; targets for the number of DEC referrals based on program risk; outcome measures to track performance; and controls to ensure consistent data recording. HUD agreed with five of the eight recommendations, noting that setting referral targets was inconsistent with basing them on program risk. GAO maintains that setting referral targets can help ensure that program offices make referrals to DEC.

The Department of Housing and Urban Development (HUD) administers  a wide variety of programs that help households obtain quality, affordable  housing and that seek to build and strengthen communities. Each year,  these programs provide rental assistance to millions of lower-income  households, mortgage insurance to hundreds of thousands of home  buyers, and community development grants to hundreds of state and  local governments. In 1997, HUD announced a management reform  initiative, HUD 2020, designed to improve the agency’s performance and  eliminate waste, fraud, and abuse. One of the main reforms was to  implement a new system of assessment, monitoring, and enforcement to  ensure the quality of HUD-assisted housing. HUD established the  Departmental Enforcement Center (DEC) in 1998 to help ensure program  participants’ compliance with HUD program requirements and consolidate  non-civil rights enforcement actions across HUD into a single center.  HUD program offices make referrals of potential noncompliance to DEC  under formal agreements between the parties. In fiscal year 2017, HUD  data shows that DEC received about 2,800 referrals from 9 program  offices.

The Joint Explanatory Statement accompanying the Consolidated  Appropriations Act, 2017, included a provision for GAO to assess the  effectiveness of DEC in resolving owners’ noncompliance with physical,  financial, and other requirements for public housing and multifamily  housing properties. This report examines (1) the processes that selected  HUD program offices have in place to make referrals to DEC, (2) how  DEC assesses its performance, and (3) challenges that may affect the  ability of DEC to achieve its mission.

We focused our review on DEC and three HUD program offices:  Community Planning and Development (CPD), Multifamily Housing  (MFH), and Public and Indian Housing (PIH). Collectively, these three  program offices accounted for 73 percent of the total referrals DEC  received from fiscal years 2014 through 2017. To address the first  objective, we reviewed the formal agreements between DEC and CPD,  MFH, and PIH, as well as the guidance these program offices developed  for monitoring multifamily properties, public housing agencies, and  grantees. We compared this guidance against internal control standards  for designing control activities and communicating internally. We  analyzed data from DEC’s system for managing referrals from program  offices (extracted as of March 2018) and a spreadsheet DEC maintains to  track referrals from CPD and PIH (as of March 2018). To assess the  reliability of the data, we performed various tests—including searching for  missing data and dates, and checking for completeness of the data. We  concluded that the data from DEC were sufficiently reliable for purposes  of describing general trends.

To address the second objective, we reviewed DEC’s performance  measures and other information DEC collects and reports on its  performance. We compared DEC’s practices against federal internal  control standards and leading practices of results-oriented organizations  that we have identified in prior work. To address the third objective, we  reviewed our prior reports and reports from the HUD Office of Inspector  General (OIG) that identified challenges DEC faces in achieving its  mission. We also reviewed internal HUD documents related to these  challenges, including plans for a new information technology system and  a proposal to relocate DEC. For all of the objectives, we interviewed HUD  headquarters staff from DEC, HUD Office of General Counsel (OGC) and  OIG, and program office officials at HUD headquarters and 10 field  locations. Appendix I contains more details about our scope and  methodology.

We conducted this performance audit from July 2017 to October 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

HUD established DEC in 1998 to consolidate enforcement activities of  PIH, CPD, the Office of Fair Housing and Equal Opportunity (for non-civil  rights violations), and MFH into one new organization. The HUD 2020  management reform plan envisioned that DEC would take enforcement  action against: (1) public housing agencies that do not pass annual  assessments; (2) owners of private, HUD-assisted housing that do not  pass physical or financial audit inspections; and (3) local and state  governments and non-profit organizations that do not comply with the  requirements of grants they received from CPD and the Office of Fair  Housing and Equal Opportunity (for non-civil rights violations). In  addition, as part of the plan, HUD created the Real Estate Assessment  Center (REAC) to help monitor public housing and HUD-insured  multifamily housing projects by providing independent assessments of the  physical quality and financial condition of public housing and multifamily  developments.

DEC’s current mission is to provide independent oversight of the  administration of HUD programs and its external partners. According to  HUD, DEC’s primary goal is to bring owners to full compliance so that  there is no compromise in the quality of HUD-assisted housing. In  instances where owners do not bring properties up to standard, and  where physical and financial deficiencies persist, DEC can take  appropriate enforcement action. This includes administrative sanctions,  such as civil money penalties, suspension or debarment, as well as  possible referral to HUD OIG when criminal activity is suspected, or to the  Department of Justice for civil action. DEC also conducts more targeted  oversight reviews for some program offices. These reviews are intended  to provide program offices with an independent means to analyze and  evaluate the efficiency or vulnerability of their programs and operations.

DEC has staff in HUD headquarters and five field offices. In general,  headquarters staff develops policy and coordinates the reviews of the  referrals DEC receives from the HUD program offices while field office  staff conducts the reviews. DEC works primarily with MFH and conducts  more targeted oversight reviews for PIH and CPD. (See Appendix II for a  breakdown of DEC referrals by program office and the state where the  property is located.) These program offices have staff in headquarters  and field offices, which are organized into 10 regions. There is at least  one field office or regional office in each state, and the number of field  offices varies by region. PIH further combines these regions into six  networks.

These program offices oversee different areas within HUD:

MFH oversees the Federal Housing Administration’s multifamily  mortgage insurance on loan originations, manages HUD’s portfolio of  multifamily housing, provides rental assistance, and helps preserve  affordable housing. Additionally, MFH administers project-based  rental assistance, supportive housing for the elderly, and programs for  persons with disabilities. Collectively, the properties MFH oversees  provided affordable rental housing to more than 1.2 million low- income households in 2017.

PIH helps low-income families through a number of programs. PIH  provides assistance to state and local public housing agencies that  generally own and administer units for eligible tenants. The Housing  Choice Voucher program provides tenant-based rental assistance that  eligible individuals and families can use to rent houses or apartments  in the private housing market. Native American programs provide  block grants and loan guarantees to tribal entities for housing  development and assistance. PIH is supporting 2.2 million vouchers  and 1.1 million public housing units in 2018.

CPD provides financial and technical assistance to states and  localities through the Community Development Block Grant and  HOME Investment Partnerships programs—the federal government’s  largest block grant programs for community development and  affordable housing production, respectively. CPD also leads a number  of HUD’s efforts to combat homelessness. Additionally, Congress  appropriated about $36 billion in new Community Development Block  Grant-Disaster Recovery funds in fiscal years 2017 and 2018 to states  and local governments that experienced major disasters in 2015,  2016 and 2017. CPD oversaw more than 37,000 grants in 2017.

DEC uses an internal database to manage the referrals it receives from  HUD program offices. DEC’s system is designed to capture various data,  including the date DEC received the referral, name of the property owner  or grantee being referred, cause of the referral, status of the referral, final  action to close the referral, and corrections made related to the referral,  among other things.

Two of Three HUD Program Offices We Examined Lack Guidance for Making Referrals and Targets Based on Program Risk

DEC and the three HUD program offices we examined have agreements  in place that generally describe the process the offices follow to make  referrals to DEC and the responsibilities of the parties. However, two of  the three program offices (PIH and CPD) do not provide their staff with  specific guidance for making referrals, and the target number of referrals  these two offices have established to send to DEC does not address the  risk of noncompliance.

Multifamily Housing Office Makes Referrals to DEC Based on Defined Thresholds

MFH makes automatic and elective referrals to DEC based on specific  thresholds for program noncompliance defined in its agreement with  DEC. MFH properties are automatically referred to DEC if: (1) the  property scores below a certain threshold on a REAC physical inspection;  (2) the owner fails to submit audited financial statements to HUD within  60 days following the end of the owner’s fiscal year; or (3) REAC’s  automated compliance review of the property’s financial statements  identifies unauthorized uses of project funds greater than an agreed-to  threshold (see figure 1).

MFH also may make an elective referral to DEC based in part on specific  situations of program noncompliance defined in their agreement, such as  the failure to comply with program regulations or use agreements. MFH  officials told us that they make these referrals on a case-by-case basis if  they believe that DEC’s expertise could help resolve the concerns. In  addition, MFH officials distributed a 2017 DEC notice that clarified the  procedures for making an elective referral to DEC. Whereas automatic  referrals are system-generated, MFH can use its discretion whether to  make an elective referral to DEC.

From fiscal years 2014 through 2017, the total number of referrals DEC  received on MFH properties increased by 23 percent. However, as seen  in figure 2, the composition of those referrals varied. Referrals related to  failure to submit timely financial statements increased by about 59  percent, while referrals related to other instances of financial  noncompliance decreased by about 6 percent. Referrals for physical  noncompliance, while relatively few overall, increased by 113 percent.

MFH officials told us that the increase in referrals for failure to file timely  financial statements was due, in part, to new program participants from  2011 to 2013 who did not understand the requirements. In addition,  according to MFH officials, MFH changed certain thresholds of financial  noncompliance from automatic to elective referrals in 2013, which officials  believe resulted in fewer referrals for those types of financial  noncompliance.

MFH officials also noted that the increase in physical noncompliance  referrals in fiscal year 2016 likely resulted from the informal  encouragement given to field offices to make more elective referrals. In  addition, during this period HUD’s inspection process came under  additional scrutiny due to concerns about a multifamily property in Florida.  The property had received a passing REAC inspection score in August  2015 but city code inspectors subsequently found multiple and serious  deficiencies. The case attracted attention from the media and Congress  and culminated in a Senate hearing in September 2016. Subsequently  HUD reviewed the integrity of the REAC inspection and DEC referral  processes.

DEC officials told us that one reason there are fewer referrals for physical  noncompliance compared to financial noncompliance is that a relatively  small number of properties reach the threshold for an automatic referral  based on physical noncompliance (inspection score less than or equal to  30 out of 100). According to HUD data, REAC conducted approximately  8,700 physical inspections in 2017. Of these inspections, our analysis of  DEC data showed that DEC received 64 referrals (0.7 percent of the  inspections conducted) for physical noncompliance.

PIH and CPD Program Offices Lack Specific Guidance for Making Referrals

PIH and CPD do not provide specific guidance to staff on when a referral  should be made to DEC. This stands in contrast to MFH, whose  agreement with DEC includes a more detailed discussion of what  problems should result in a risk-based referral.

PIH. A PIH official told us that they periodically send an email to field  offices requesting potential candidates for referrals to DEC, and that the  email cites factors that might warrant such referrals—such as potential  violations of statute, regulation, or agreement. However, beyond that,  there is no guidance to help field staff decide when to make a referral. In  addition, PIH does not provide direction to field offices on how to use the  results of their quarterly risk assessment to identify high-risk PHAs for  potential DEC referrals. According to PIH officials, PIH has not issued  more detailed guidance because it did not want to be too prescriptive in  telling field office staff when to refer a public housing agency to DEC, as a  DEC referral may not always be appropriate.

CPD. An official from a CPD field office told us that they may refer a  grantee to DEC for an oversight review—for example, if they identify a  complex financial issue requiring an in-depth financial investigation  beyond the capacity of the field office. However, beyond that, neither  DEC nor CPD have developed guidance to help field offices determine  when to refer a grantee to DEC. In addition, CPD does not provide  direction to field offices on how to use the results of their risk-based  assessment of grantees to identify potential DEC referrals. CPD officials  told us that they do not provide guidance because they believe that their  current approach where field offices make referrals to DEC on a case-by- case basis is better and more effective.

As shown in figure 3, in recent years, the number of referrals has declined  slightly for PIH and varied for CPD. DEC has agreed with PIH and CPD  on a target number of elective referrals they should aim to make to DEC  each fiscal year. However, neither program office met their targets for  referrals to DEC in fiscal years 2016 and 2017: PIH made 25 and 12  referrals, respectively, but had an annual target of 40, while CPD referred  6 each year but had a target of 10. A number of factors may help explain  the decline in referrals and failure to meet targets. For example, PIH  officials told us that a new requirement that PIH field offices make every  attempt to satisfy oversight review recommendations may have resulted  in hesitation to make referrals among some field staff.

However, the lack of formal guidance for field staff may also play a role in  the number of referrals made. According to officials from two CPD field  offices, many field offices do not understand the role of DEC or the  assistance it can provide, and officials from one field office told us that  providing formal guidance would be helpful in this regard. Our analysis  found that half of the CPD field offices had not made a referral to DEC  during the previous two fiscal years and, according to PIH officials, the  number of PIH referrals varied for reasons not related to noncompliance  risks. The 2016 HUD OIG report noted that when program field offices  requested DEC services, they did so largely because of personal  relationships and trust between DEC and some field office managers, an  observation reiterated by officials from one field office we interviewed.

According to the Office of Management and Budget, a ‘‘guidance  document’’ is an agency statement of general applicability and future  effect, other than a regulatory action, that sets forth a policy on a  statutory, regulatory or technical issue or an interpretation of a statutory  or regulatory issue. The office notes that guidance documents, used  properly, can channel the discretion of agency employees, increase  efficiency, and enhance fairness by ensuring equal treatment of similarly  situated parties. In addition, federal internal control standards state that  agencies should design control activities to achieve objectives and  respond to risks, such as by documenting the responsibilities for these  activities through policies and procedures. Because two of the program  offices (PIH and CPD) we examined have not developed specific  guidance for making referrals for oversight reviews, these offices cannot  ensure that field staff are identifying and making referrals on a well- supported, risk-based, and consistent basis, and this may limit DEC’s  effectiveness in fulfilling its mission of providing independent oversight of  HUD’s programs. Such additional guidance could include information on  how the field offices should incorporate the results from their risk  assessments, more detailed criteria on when the field office should make  a referral, and examples of potential noncompliance that could be  referred.

Target Number of Referrals for Two HUD Program Offices Are Not Based on Program Risk

The target number of referrals for two program offices, PIH and CPD,  appears to have been selected somewhat arbitrarily, rather than based on  the risks to the programs. As noted earlier, DEC, PIH and CPD have  agreed to set targets annually for the number of elective referrals they will  make. PIH’s quarterly target of 10 public housing agency referrals  represents less than 2 percent of the total number of agencies PIH  designates as very high-risk and high risk each quarter. In addition,  CPD’s target of 10 referrals per year represents about .03 percent of the  grantees overseen by CPD and about 1 percent of the grantees  monitored by CPD each year.

However, PIH and CPD officials could not explain the basis for selecting  these targets, nor is it clear how these targets are related to the overall  risk these program offices face. Both program offices’ agreements with  DEC state that they will review the agreements each year. PIH officials  said this review typically has included a general discussion of the  appropriate number of referrals to set as the target. DEC officials told us  that future reviews will take a more risk-based approach to selecting that  number, but they could not tell us when this would occur. In addition,  according to a HUD official, program offices such as CPD are reviewing  their processes for managing risk, which could impact the target number  of referrals to DEC needed for them to adequately manage their risk.

According to federal internal control standards, management should  identify, analyze, and respond to risks related to achieving the defined  objectives, and management should design control activities in response  to the entity’s objectives and risks to achieve an effective internal control  system. Without a target number of referrals based on the risks to the  programs, PIH and CPD offices cannot be confident that DEC resources  are being used most efficiently to address the risks of noncompliance by  housing agencies and grantees.

DEC Lacks Measures Needed to Fully Assess Its Performance

While DEC currently tracks some measures related to its performance, its  performance measurement system is lacking in key respects that limit  DEC’s ability to fully assess its performance. DEC’s performance  measures include the number of work assignments completed, reduction  in number of aged referrals (2 or more years old), and the number of  families impacted by its enforcement activities. DEC officials told us that  they also track other measures, such as the dollar amounts of recoveries, and the numbers of suspensions and debarments. These measures are  contextual indicators—measures intended to provide a broader  perspective on the conditions that may influence an agency’s ability to  achieve its performance goals. As shown in table 1, HUD data shows  that for these contextual indicators DEC has recovered millions of dollars  in inappropriately used HUD program funds and suspended or debarred  some individuals. HUD data shows that DEC generally exceeded its  targets for the performance measures.

Federal internal control standards state that agency management should  define objectives in measurable terms so that performance toward those  objectives can be assessed. Consistent with those standards, we  identified several challenges with DEC’s system of performance  measurement.

DEC’s performance measures do not include outcome measures, which  track the results of products and services. Instead, the performance  measures track outputs, which are the direct products and services  delivered by a program. Prior work and guidance that we have issued  stress that performance measurement should evaluate outcomes related  to program activities to judge program effectiveness. Previously, DEC  tracked some outcome measures, such as the increase in the percentage  of residents living in acceptable insured or assisted multifamily housing as  a result of civil or administrative enforcement actions. However, DEC no  longer tracks those measures, and officials were unable to explain why  they stopped tracking them. Similarly, the 2014 agreement between DEC  and PIH included examples of outcome measures for program offices– such as financial performance improvements and early detection or  prevention of fraud—but these measures are not in the current  agreement.

Measuring outcomes can help assess a program’s activities and  operations, identify areas that need improvement, and ensure  accountability for results. DEC officials told us that outcome measurement  is challenging because it can be difficult to establish a direct correlation  with DEC’s work. We attempted to independently examine the outcome of DEC’s work. Specifically, we tried to measure the extent to which  referrals to DEC resulted in suspensions or debarments of multifamily  owners, but, in general, DEC’s data did not readily allow for this type of  assessment. Outcome measures such as timeliness and monetary  outcomes can still be used to capture essential program information and  help assess program effectiveness. By not measuring and reporting on  outcomes, DEC cannot fully assess the effectiveness or impact of its  activities, or determine where improvement is needed.

DEC does not track the status of its recommendations. DEC’s oversight  reviews sometimes result in recommendations to program offices to  ensure program compliance with regulatory and policy requirements;  streamline operations; improve customer service; and reduce program  vulnerabilities to fraud, waste, abuse, or mismanagement. According to  PIH and CPD’s agreements, the program offices will make every attempt  to satisfy the recommendations, but the program offices are not required  to implement them. However, according to DEC officials, DEC does not  gather information on the status of its recommendations or assess  program offices’ progress in implementing them. OGC officials told us that  they were concerned about the burden that would be placed on program  staff for providing such information, but PIH and CPD officials told us it  would not require much additional work. We have previously reported that  successful performance measures demonstrate results and provide  useful information for decision makers. Without tracking the status of its  recommendations and the extent to which program offices are  implementing its recommendations, DEC is limited in its ability to assess  its effectiveness in improving program operations, such as better program  compliance.

DEC does not have a performance measure to assess the timeliness of  its reviews for the referrals it receives. DEC does not measure how much  time it takes to complete a referral from MFH, PIH, or CPD. DEC’s  guidance and its agreements with CPD and PIH state that DEC will  complete oversight reviews and issue a final report to program offices  within 90 business days of the referral. These reviews are intended to be  completed within this timeframe so that CPD and PIH program offices will have prompt feedback to address any areas of concern. According to  HUD officials, DEC tracks the timeliness of its oversight work. However,  DEC has not created a performance measure to track the extent that it is  meeting its goals. In addition, DEC has no target timeframe for MFH  referrals because, according to DEC officials, these referrals require  varying strategies for fact gathering, analysis, and determining a course  of action. Our analysis of HUD data showed that from fiscal years  2014-2017, DEC took an average of 168 days to complete its review after  receiving a referral from MFH for failure to file financial statements, and  an average of 254 days to complete its review for referrals related to  financial noncompliance. We have previously reported that one attribute  of a successful performance measure was whether the measure covered  a government-wide priority, such as timeliness. Because it does not  have a measure related to its timeliness in completing its reviews nor  report on that information, DEC cannot ensure accountability or evaluate  its efficiency for completing the reviews.

Lack of Consistent Recording of Dates and Corrective Actions Taken

DEC did not consistently record two pieces of information that could be  relevant in assessing its performance—date of referral and corrective  action taken. We analyzed an internal spreadsheet DEC uses to track the  referrals it received from CPD and PIH to conduct oversight reviews of  grantees and housing agencies. DEC did not record the date that the  referral was assigned a DEC lead analyst (the point DEC begins tracking  the referrals) or the date DEC signed the final report for 36 percent of the  CPD referrals and 20 percent of the PIH referrals DEC completed from  fiscal years 2015-2017. Consequently, we could not reliably evaluate  DEC’s average timeframes for completing an oversight review referral.

In addition, DEC did not consistently record information on the corrective  actions taken by DEC or MFH following a DEC review. DEC’s MFH  referral-tracking database includes an “Outcomes” module with a  “Corrections Made” field where DEC analysts can choose a description of  the corrections made as a result of the review by either MFH or by the  owner of the property, such as filing an annual financial statement.  However, based on our review of this database, DEC analysts are not  regularly using the “Corrections Made” field.

According to DEC officials, the inconsistent recording of dates and  corrective actions was likely due to human error. This may suggest the  lack of a process or controls to ensure accurate and complete recording  of this information. Federal internal control standards state that an  agency’s managers should use quality information, such as the accurate  and timely recording of transactions, to achieve the agency’s objectives  and manage risk. Without such controls, DEC will continue to have  unreliable data to measure its timeliness in completing reviews and will  not be able to reliably track the status of its recommendations to MFH and  hold that office accountable for their implementation.

Information Technology Challenges Have Affected DEC’s Ability to Achieve Its Mission

Information technology challenges have affected the ability of DEC to  achieve its mission. Although DEC has experienced staffing declines over  time, there is disagreement about the extent to which these declines have  impacted DEC’s ability to achieve its mission. Further, disagreement  exists over DEC’s placement within HUD and the impact on DEC’s ability  to achieve its mission.

DEC has experienced various information technology challenges that  have affected its ability to achieve its mission. For example, the system  does not allow DEC to easily determine the basis for a financial referral it  receives from REAC on MFH properties. Instead, according to HUD, to  determine the issues that triggered the referral, DEC staff must review  each property’s financial statements—a labor-intensive process. In  addition, DEC’s information technology system is designed to share  information among staff but not to analyze or track information. Its referral  data are stored in databases that generally cover one fiscal year each,  according to OGC officials, which makes it challenging to identify trends.  Further, DEC officials told us that the system has experienced continuing  outages and breaks in service.

HUD has acknowledged that DEC needs more robust information  technology to carry out its enforcement and tracking functions. The HUD  Enforcement Management System is part of the department’s efforts to  streamline, consolidate, and automate its enforcement business  processes. According to HUD, the system will consolidate six  enforcement-related systems into one and automate the monitoring and  compliance review processes for several offices within HUD. Officials said  this will help DEC manage its workflow and reviews and enable it to more  easily track the focus of a review and any monetary findings. OGC  officials noted that the department implemented the first phase of the  HUD Enforcement Management System in December 2015, initially  focusing on HUD’s Office of Fair Housing. However, HUD’s development  contract expired in March 2017. Due to funding constraints, as of June  2018, HUD had not awarded a new contract that would incorporate DEC,  and such funding is not expected to be allocated until at least fiscal year  2020, according to OGC officials.

Although DEC has experienced staffing declines over time, disagreement  exists within HUD about the impact of these staffing declines on DEC’s  ability to achieve its mission. DEC’s staff level in fiscal year 2017 (an  estimated 95 full-time equivalents) represented its lowest staff level since  fiscal year 1999. HUD OIG reported in 2016 that limits on DEC  resources resulted in lost opportunities to improve program effectiveness  and strengthen conditions that discouraged waste, fraud, and abuse.  The report also noted that these limits had prevented DEC from extending  comprehensive enforcement activities to all program offices, which had  reduced its effectiveness. OIG’s report further noted that DEC said it  would need additional staff to perform financial analysis and enforcement  if DEC were to expand its efforts with PIH and CPD. OIG recommended  that OGC provide DEC with the resources and support to strengthen  enforcement across HUD programs.

HUD disagreed with the OIG’s conclusion that staffing declines limited  DEC’s ability to achieve its mission. HUD noted that DEC’s decrease in  workload over time mitigated the effect of reduced staffing. In addition,  HUD said that despite its reduced resources, DEC had succeeded in  preventing some individuals from participating in MFH programs through  suspension or debarment, and in encouraging compliance. HUD stated  that DEC had sufficient staffing to handle MFH referrals under current  protocols and serve as HUD’s troubleshooter by conducting oversight  reviews for CPD and PIH. As of August 2018, HUD had not provided the  department’s status of actions taken or planned related to OIG’s  recommendation to the OIG.

Disagreement also exists regarding the placement of DEC within HUD. At  its creation in 1998, DEC was located within HUD’s Office of the Deputy  Secretary, but in 2002 it was moved to OGC. HUD OIG and DEC officials  have stated that DEC’s placement within OGC limits DEC’s ability to  achieve its mission. OIG reported in its 2016 report that DEC’s initial  placement within the Deputy Secretary’s office provided DEC with  independent enforcement authority. In addition, DEC officials told us  that DEC’s initial placement highlighted HUD’s commitment to  enforcement and that its current placement limits its authority to oversee  program areas and hold them accountable for corrections.

In a December 2017 internal paper, DEC proposed returning to the  Deputy Secretary’s office. It noted that DEC’s oversight of programmatic  operations began to decline in 2016, and that PIH referrals to DEC  through December 2017 represented less than one-half of the goal of one  percent of PIH’s inventory. DEC’s paper also noted that a return to the  Deputy Secretary’s office would highlight HUD’s responsibility to develop  and maintain effective internal controls, independent of the program  areas. Finally, DEC stated that its placement within the Deputy  Secretary’s office would provide an opportunity to consolidate the  department’s enterprise risk management functions. According to HUD officials, as of August 2018, the department had no plans to move DEC  and did not request funding for such a move in HUD’s fiscal year 2019  budget.

In response to the 2016 OIG report, HUD stated that DEC’s current  location within OGC had not affected DEC’s ability to make referrals for  enforcement or initiate suspension or debarment actions. HUD added that  placing DEC within OGC achieved significant efficiencies by consolidating  DEC’s administrative, information technology, and legal functions without  affecting the ability of either office to carry out its mission. OGC officials  told us that DEC’s current placement within OGC is similar to the Federal  Bureau of Investigation’s placement within the Department of Justice.  They also noted that DEC’s enforcement and compliance analysts and  attorneys coordinate enforcement activities and that DEC field office  directors routinely seek legal advice from OGC attorneys. According to  OGC, returning DEC to the Deputy Secretary’s office would have adverse  effects on the administrative efficiencies achieved.

It is unclear whether DEC’s placement within OGC has adversely affected  DEC’s ability to fulfill its mission. We asked DEC staff for documentation  that would support a move to the Deputy Secretary’s office, but the  information we received did not provide specific examples of how DEC’s  current placement limited its ability to achieve its mission. Furthermore,  as part of their 2017 paper discussing a proposed relocation, DEC  officials did not identify how DEC’s placement in OGC adversely impacted  it. Other factors besides DEC’s current location may explain why DEC  may not be utilized more effectively. For example, we previously identified  findings related to the lack of guidance that might contribute to program  offices’ underutilization of DEC. In addition, as we note above, the  absence of guidance on when program offices should make referrals may  limit DEC’s ability to assess its enforcement efforts. These findings  generally are independent of DEC’s organizational location.

DEC has recovered millions of dollars in inappropriately used HUD  program funds, suspended or debarred some individuals, and helped  strengthen program offices’ monitoring efforts. However, our review  identified opportunities for DEC to better achieve its mission and assess  its impact:

Guidance. PIH and CPD field office staff use their discretion in  deciding which cases to refer to DEC, but these decisions do not  appear to always be based on well-supported assessments of risk.

Without specific guidance to help staff direct their decision making,  DEC and the program offices cannot ensure that referrals are made  using a consistent and risk-based approach, limiting DEC’s  effectiveness in fulfilling its mission of providing independent oversight  of HUD’s programs.

Target number of referrals. The target number of referrals that PIH  and CPD aim to make to DEC has not been chosen based on a risk- based process and it is not clear how these targets related to the  programs’ overall risks. Without a determination of appropriate risk- based target numbers, PIH and CPD cannot ensure that they are  using DEC resources efficiently to address the risks of noncompliance  by housing agencies and grantees.

Performance measurement. Although DEC reports on some aspects  of its performance, it lacks measures that assess outcomes rather  than outputs and does not report on the timeliness of its reviews or  track program offices’ implementation of its recommendations.  Without improvements in its performance measurement, it will be  difficult for DEC to fully assess and demonstrate its effectiveness,  ensure accountability, and identify and prioritize potential  improvements.

Data recording. Controls to ensure that analysts consistently record  referral dates and corrective actions taken would give DEC more  reliable data with which to assess its timeliness and the impact of its  enforcement activities.

We are making the following eight recommendations to HUD:  The Director of the Departmental Enforcement Center and the Assistant  Secretary for Community Planning and Development should develop  written guidance for CPD’s field offices to use when determining whether  to make a referral to the Departmental Enforcement Center.  (Recommendation 1)

The Director of the Departmental Enforcement Center and the Assistant  Secretary for Public and Indian Housing should develop written guidance  for PIH’s field offices to use when determining whether to make a referral  to the Departmental Enforcement Center. (Recommendation 2)

The Director of the Departmental Enforcement Center and the Assistant  Secretary for Community Planning and Development should develop  targets for the number of referrals that CPD should make to DEC that are  based on program risk. (Recommendation 3)

The Director of the Departmental Enforcement Center and the Assistant  Secretary for Public and Indian Housing should develop targets for the  number of referrals that PIH should make to DEC that are based on  program risk. (Recommendation 4)

The Director of the Departmental Enforcement Center should develop  and implement performance measures that assess the outcomes, or  desired results, of its enforcement activities. (Recommendation 5)

The Director of the Departmental Enforcement Center should develop  and implement performance measures of its timeliness in completing  oversight reviews. (Recommendation 6)

The Director of the Departmental Enforcement Center should track the  implementation of the recommendations that it makes to program offices  as a result of its oversight reviews. (Recommendation 7)

The Director of the Departmental Enforcement Center should develop  controls to ensure that analysts consistently and reliably record dates  related to referral activity, corrective action taken, and other key  information used to determine DEC’s impact. (Recommendation 8)

We provided a draft of this report to HUD for review and comment. HUD  provided written comments that are reprinted in appendix III. HUD  disagreed with three of the eight recommendations and agreed with the  other five. In its general comments, HUD indicated that it planned to use  DEC to address the most egregious violators of HUD’s programs. HUD  also anticipated assessing the current agreements between DEC and  HUD program offices and, where appropriate, revising those agreements  to incorporate current agency goals and priorities, among other things.  HUD further noted that DEC’s work would continue to be a part of HUD’s  agency-wide risk and fraud management mitigation activities.

HUD disagreed with the third and fourth recommendations that DEC  should work with CPD and PIH to develop targets for the number of  referrals that the program offices should make to DEC that are based on  program risk. In its written comments, HUD said that developing “targets”  for the number of referrals made to DEC could potentially be inconsistent  with the methodology of basing referrals on program risk and that a single  measure of risk-based referrals would be a more effective strategy. As  discussed in the report, the current target numbers of referrals for the  program offices to make to DEC appear to have been selected somewhat  arbitrarily and the officials could not explain the basis for selecting these  targets. By identifying a target number of referrals based on the  anticipated need for DEC reviews, the program offices can more  efficiently plan the use of their resources. Setting the targets will also  allow DEC and the program offices to better assess whether they are  achieving their goals and objectives, and may encourage program offices  to refer entities to DEC.

HUD also disagreed with our sixth recommendation that DEC should  develop and implement performance measures that measure its  timeliness in completing reviews, noting that DEC has tracked the  timeliness of its oversight work since 2014. However, as we discuss in the  report, DEC has not included performance measures related to the  timeliness of its reviews, which is separate from tracking the information.  We revised the language in the final report to note that DEC tracks this  information, but has not created a related performance measure.

HUD agreed with our remaining five recommendations and provided  information about planned steps to implement them. HUD noted in its  response to our first and second recommendations that CPD and PIH  would establish parameters for when a referral will be made to DEC. With  respect to our fifth recommendation, HUD stated that DEC would work  with relevant offices in fiscal year 2019 to develop performance measures  that assess outcomes of enforcement activities and would consult with  federal enforcement agencies to understand how they measure  outcomes. In response to our seventh recommendation, HUD stated that  DEC would make improvements to its information system to track the  implementation of the oversight review recommendations. Finally, HUD  noted that it anticipates incorporating quality control components into  DEC’s data collection efforts to ensure that dates, corrective actions  taken, and other key information are captured consistently and reliably to  address our eighth recommendation.

We are sending copies of this report to the appropriate congressional  committees and the Secretary of Housing and Urban Development. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-8678 or GarciaDiazD@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in Appendix IV.

Appendix I: Objectives, Scope, and Methodology

Our objectives were to examine (1) the processes that selected  Department of Housing and Urban Development (HUD) program offices  have in place to make referrals to the Departmental Enforcement Center  (DEC), (2) how DEC assesses its performance, and (3) challenges that  may affect the ability of DEC to achieve its mission.

We focused our review on DEC and three HUD program offices:  Community Planning and Development (CPD), Multifamily Housing  (MFH), and Public and Indian Housing (PIH). Collectively, these three  program offices accounted for 73 percent of the total referrals DEC  received from fiscal years 2014 through 2017 (6,724 of the 9,258 total  referrals). To address the first objective, we reviewed DEC’s formal  agreements with CPD, MFH, and PIH to determine the roles and  responsibilities of the parties, any criteria for making referrals, and any  goals on number of reviews. In addition, we reviewed guidance  developed by program offices for monitoring multifamily properties, public  housing agencies, and grantees to determine what, if any, criteria existed  for making referrals to DEC. We also observed demonstrations of the  system DEC uses to manage referrals and the risk assessment tool PIH  uses in its reviews of public housing agencies. We compared the  guidance and the processes for determining the role DEC should play  against federal internal control standards.

We analyzed data from DEC’s system for managing referrals from  program offices (extracted as of March 2018) and a spreadsheet DEC  maintains to track referrals from CPD and PIH (as of March 2018). We  used the data extract to compute the number and type of referrals DEC  received from the program offices from fiscal years 2014 through 2017.  We interviewed DEC and program office staff about the number of  referrals that program offices made during this time period. To assess the  reliability of the data, we performed various tests—including searching for  missing data and dates, and checking for completeness of the data. We  concluded that the data from DEC were sufficiently reliable for purposes  of describing general trends.

We interviewed DEC and program office officials at HUD headquarters to  discuss how program offices make referrals to DEC and any guidance or  training DEC or program offices provide regarding the referral process.  We also conducted interviews with staff in each of HUD’s six PIH  networks and in CPD field offices in Atlanta, Georgia; Denver, Colorado;  Fort Worth, Texas; and Los Angeles, California. We selected the Fort  Worth and Los Angeles CPD field offices because they had made  referrals to DEC between fiscal years 2016 and 2017, and selected  Atlanta and Denver because they had not.

To address the second objective, we reviewed the current and previous  performance measures used by DEC. We compared DEC’s practices  against federal internal control standards and against practices GAO has  previously identified as being associated with agencies that were  successful in measuring their performance. We used the data extract  discussed above to compute the average number of days DEC took to  complete referrals on multifamily properties and the extent that  information was not recorded. We also interviewed DEC and OGC  officials regarding the performance information DEC collects and reports.

To address the third objective, we reviewed prior reports from GAO and  from the HUD Office of Inspector General that identified and discussed  challenges DEC faces in achieving its mission. We also reviewed  internal HUD documents related to these challenges, including plans for a  new information technology system, historical staff levels, and a proposal  DEC officials created to relocate DEC back to the Deputy Secretary’s  Office. We also interviewed officials from various HUD headquarters and  field offices, HUD’s Office of Inspector General, and DEC about  challenges DEC may face in achieving its mission.

Appendix II: Location of Entities That Were Referred to the Departmental Enforcement Center, Fiscal Years 2014-2017

From fiscal year 2014 through 2017, the Department of Housing and  Urban Development’s Departmental Enforcement Center received about  8,000 referrals from the agency’s program offices. Table 3 provides  details on the number of referrals by program and state from fiscal years  2014 through 2017.

Appendix III: Comments from Department of Housing and Urban Development

Appendix IV: GAO Contact and Staff Acknowledgments

In addition to the contact named above, GAO staff who made key  contributions to this report include Marshall Hamlett (Assistant Director),  Daniel Newman (Analyst-in-Charge), William R. Chatlos, Laura Gibbons,  John McGrail, Marc Molino, and Tovah Rom.

HUD seeks to help millions of Americans find quality, affordable housing through its rental assistance and other programs.

Recipients of HUD funding, such as private owners of HUD-assisted housing, must meet regulations and may face inspections. If housing does not pass inspection, HUD employees may refer the case to its Departmental Enforcement Center for enforcement.

Our review found ways the Center, which has recovered millions of dollars in inappropriately used funds, can better achieve its mission. Our recommendations include

developing guidance for HUD staff on when to make referrals


Older Adult Housing: Future Collaborations on Housing and Health Services Should Include Relevant Agencies and Define Outcomes

According to the Census Bureau, by 2030, about 1 in 5 Americans will be 65 and older. This aging of the population presents challenges and opportunities for policymakers and service providers in helping ensure that the older population's needs—including housing and health services—are met. Federal agencies with programs that provide housing assistance to low-income older households include HUD and USDA. Several HHS programs provide those households with health services.

This report assesses the extent to which the three agencies collaborated to address the housing and health service needs of older adults living in federally assisted housing.

GAO compared agency efforts to leading collaboration practices it has identified (including written agreements; roles and responsibilities; leveraged resources; relevant participants; and defined outcomes) and interviewed HUD, HHS, and USDA officials.

The Departments of Housing and Urban Development (HUD) and Health and Human Services (HHS) have collaborated on older adult housing and health issues, but these efforts did not fully demonstrate leading practices GAO identified for effective collaboration.

The HUD-HHS efforts demonstrated some leading practices. For example, the agencies have written agreements for data-sharing projects and have leveraged resources to conduct research on older adults.

The Department of Agriculture (USDA) was not included in the efforts although it provides housing assistance to older rural households. GAO identified the inclusion of all relevant participants as a leading practice. According to HUD, the efforts were intended to explore the health of HUD-assisted households. However, by not including USDA in future collaborations, HUD and HHS may miss opportunities to leverage expertise and USDA may not be able to benefit from any resulting insights and improvements.

The HUD-HHS collaborative efforts also did not define common outcomes, another leading practice GAO identified, likely because their collaboration is relatively new. Without common outcomes (for instance, focused on recipient impact or cost savings), the agencies lack measures against which to monitor, evaluate, and report the results of any collaborations.

Future collaborations would benefit from consistent USDA involvement. And by defining common outcomes, the agencies would help inform Congress and stakeholders of results achieved and strategies or areas on which to focus.

GAO is making three recommendations (one each to HUD, HHS, and USDA). They focus on including USDA in collaborations on older adult housing and health services and defining outcomes for the efforts. The three agencies concurred with GAO's recommendations. HUD stated that it had begun examining challenges relating to services for low-income rural older adults.

The Census Bureau projects that by 2030, about 74 million people (nearly  21 percent of the U.S. population) will be 65 and older—up from 49  million (15 percent) in 2016 and 35 million (12 percent) in 2000. This  growth presents challenges as well as opportunities for policymakers and  service providers in planning for and helping to address the needs of the  older population, including housing and health services. Researchers  predict a shortage over the next two decades of housing suitable for the  needs of older people.

A number of federal programs assist older households with housing. The  Department of Housing and Urban Development (HUD) and the  Department of Agriculture (USDA) administer housing programs to assist  older households through rental subsidies, home loans, loan guarantees,  and mortgage insurance. Many of these programs serve the most  economically insecure older adults by allowing them access to adequate  and affordable housing. While it does not administer housing programs,  the Department of Health and Human Services (HHS) funds health  services for older adults through the Medicare and Medicaid programs,  and a range of home and community-based services through the Older  Americans Act of 1965 and Medicaid.

At the same time that the older population is growing, programs that  target or serve a significant number of older adults are challenged in a  number of ways. For example, housing assistance programs have lost  housing stock. In addition, a significant number of federally assisted units  are occupied by older households that often receive health care and other  services from different agencies than those providing the housing  assistance. In this context, programs may face challenges with planning,  researching, and collaborating across multiple agencies.

Under the authority of the Comptroller General, this report assesses the  extent to which selected federal agencies collaborate to address the  housing needs of an aging population living in federally assisted housing.  This is the first of two reports that examine issues related to housing for  older adults, including those who are low-income. The second report will  address future demand for housing by older households and older adults’  housing-related needs.

For this report, we examined housing programs that target or serve a  significant number of older adults and are administered by HUD and  USDA’s Rural Housing Service, two agencies that provide housing  assistance to renters and homeowners. We reviewed program  regulations; our prior reports; Congressional Research Service reports;  other agency documents; and reports and studies related to housing a  growing older population. According to research studies, housing can  serve as a platform for overall well-being and for health services for older  adults, and access to health services can be integral to aging in place.  Thus, we reviewed documentation on relevant collaborations involving  HUD, USDA, and HHS. We compared the efforts to leading collaboration  practices identified in our prior work. To describe any goals related to  older adults, we reviewed HUD’s and USDA’s strategic plans for fiscal  years 2014–2018, and an HHS (Administration for Community Living)  strategic plan for fiscal years 2013–2018. We also interviewed and  obtained documentation from HUD, USDA, and HHS officials on their  programs, goals, and ongoing collaborations.

We conducted our work from April 2015 to April 2018 in accordance with  generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on  our audit objectives.

Federal Housing Programs That Assist Older Adults

Older adults may receive federal housing assistance through a number of  programs, but only a few programs specifically target older households.  To be eligible for those programs, the head of household or spouse must  be 62 or older.

HUD has two programs specifically targeted to older households—the  Supportive Housing for the Elderly (Section 202) program for renters and  the Home Equity Conversion Mortgage program for homeowners.

HUD’s Section 202 program is the only program that provides  supportive housing targeted to very low-income older adults.  Supportive housing is defined as non-institutionalized housing that  connects residents with the services they need to live independently,  such as in-home care, meal delivery, and transportation. Until fiscal  year 2012, the Section 202 program funded the development of new  units.

The Home Equity Conversion Mortgage program, administered by the  Federal Housing Administration (FHA), a component of HUD, allows  older homeowners to access FHA-insured mortgages to convert some  of the equity in their homes into monthly streams of income or lines of  credit (reverse mortgage). In addition to being at least 62 years old,  borrowers must occupy the property as a principal residence, and any  existing lien on the property must be small enough to be paid off at  settlement. In a reverse mortgage, the loan balance increases and  home equity decreases over time. As the borrower receives payments  from the lender, the lender adds the principal and interest to the loan  balance, reducing the homeowner’s equity. The homeowner  remains responsible for paying insurance and property taxes.

The Rural Housing Service has one homeownership program that  specifically serves households aged 62 and older. The Section 504 Rural  Home Repair and Rehabilitation Grant program finances the removal of  health and safety hazards or remodels dwellings to make them accessible  for disabled household members. According to USDA officials, grants  often are made in conjunction with Section 504 loans that have a 1  percent interest rate.

Other Programs That Can Serve Older Households

HUD has rental assistance programs that do not target, but serve a  significant number of older households. According to HUD officials,  HUD’s primary rental assistance programs, including the Housing Choice  Voucher, Public Housing, and Project-Based Section 8 programs, serve  nearly 1.5 million such households. In addition, FHA’s Section 221(d)(3)  and Section 221(d)(4) Multifamily Rental Housing for Moderate-Income  Families provide mortgage insurance to finance multifamily properties,  some of which may be designated for the elderly. The HOME Investment  Partnerships Program provides formula grants to states and localities that  communities use to fund a range of activities including building,  purchasing, and rehabilitating affordable housing for rent or  homeownership or providing direct rental assistance to low-income  households.

HUD Public Housing Designated for Older  Households  Local public housing agencies can apply to  HUD for approval to designate public housing  developments (or portions of developments,  such as buildings or floors) for occupancy only  by elderly families, by disabled families, or  both. HUD refers to this as “designated public  housing”. 42 U.S.C. § 1437e. However, HUD  officials stated that HUD had fewer than  40,000 units of designated public housing and  the majority of elderly persons were not  assisted through such housing.

Similarly, the Rural Housing Service administers a number of  homeownership and rental programs not targeted to older rural  households, but that can serve them. They include the Section 502 Rural  Direct Home Loan; Section 502 Home Loan Guarantee; Section 504  Rural Housing Repair and Rehabilitation Loan; and the Section 521 Rural  Rental Assistance programs. The Section 521 program provides rental  subsidies to low-income, elderly, or disabled households living in  properties funded by the Section 515 Rural Rental Housing program and  others.

Finally, the Low-Income Housing Tax Credit, established under the Tax  Reform Act of 1986 and administered by the Internal Revenue Service, is  the largest source of federal assistance for developing affordable rental  housing for low-income households, including elderly households, and as  of 2017, had financed about 2.9 million rental units. It provides tax credits  to encourage private-equity investment in affordable housing  development.

Worst-Case Needs for Rental Housing  HUD tracks older adults in its biennial Worst  Case Housing Needs report. HUD defines  households with worst-case needs as very  low-income renters who do not receive  government housing assistance and paid  more than half of their income for rent, lived in  severely inadequate conditions, or both. The  latest report (2017) indicated that severe  housing problems were on the rise among  unassisted renter households in 2015. This  included older renters, for whom the number  and proportion of households with worst-case  needs increased from 2013, by 382,000 and  2.6 percentage points, respectively. In 2015,  1.85 million such households experienced  worst-case housing needs, including  unaffordable rents. The report noted that low- income older households that rely on fixed  incomes rather than wages may be less likely  to benefit from economic recovery trends that  raised incomes for others in recent years.

In recent years, HUD and USDA have lost subsidized housing stock.  Losses can happen under several scenarios, including when federal  rental assistance contracts expire, federally subsidized mortgages reach  maturity or are paid off and owners convert the units to market-rate  rentals, or units fall into disrepair. In its fiscal year 2014–2018 strategic  plan, HUD reported that its public housing stock faced a capital needs  backlog, estimated at $26 billion, which would be difficult to meet given  federal fiscal constraints. The decreasing supply of adequate affordable  housing may affect older low-income renters (see sidebar), who were well  represented in HUD- and USDA-assisted housing.

In addition to losing housing stock, HUD and USDA have programs that  previously added to the supply of affordable housing but no longer do so.  One example is HUD’s Section 202 program, which specifically serves  very low-income older adults. Except for $10 million in its fiscal year 2017  appropriation that could contribute to capital advances, since fiscal year  2012, the program has primarily funded contract renewals for existing  rental assistance and for service coordinators. According to USDA  officials, the Section 515 program (direct loans for multifamily housing)  had no funds for new construction. They told us that Section 515 funds  almost exclusively were being used for unit rehabilitation, and that only  the Section 538 loan guarantee program was funding new construction.  According to USDA officials, many of the rehabilitated Section 515  properties are described in loan applications as properties serving the  elderly, as are some newly constructed properties funded by the Section  538 program.

Reports on Integration of Housing and Health Services

Federal and other entities have reported on a lack of integration among  housing and health programs and services and the benefits of closing  gaps.

In 2002, the congressionally mandated Commission on Affordable  Housing and Health Facility Needs for Seniors in the 21st Century  reported that a lack of integration between housing and health care for  older adults resulted in inefficiencies, noting that the basis was partly  historical differences in policies, funding systems, and regulatory  structures. The Commission found that, with few exceptions, older  adults obtained their housing from one source and health care and  supportive services from a different source.

In July 2015, the White House Conference on Aging highlighted the  importance of collaboration across sectors and the need to better  integrate housing, transportation, health care, and long-term services  and supports to encourage healthy aging. It noted that opportunities  existed to leverage approaches taken by states and localities to  consider how best to serve older adults.

In 2016, the Bipartisan Policy Center’s Health and Housing Task  Force reported that bridging the current policy gap between housing  and health had the potential to provide a number of benefits, including  improving health outcomes for older adults, reducing costs incurred by  the health care system, and enabling many older adults to age in their  own homes and communities.

Senior leadership in HUD’s Office of Policy Development and  Research recently amplified the discussion about housing and health,  noting that the Housing Act of 1937 recognized the linkage between  the two. That office also has observed that efforts to better link  housing and health services hold promise to improve the ability of  older adults to safely, comfortably, and more affordably age in place.

Collaboration on Housing Assistance and Health Services for Older Adults Did Not Include USDA or Define Common Outcomes

Collaborations that were focused on coordinating housing and health  services for older adults involved HUD and HHS. While these  collaborations demonstrated some leading practices we identified, they  did not include USDA (a relevant participant) and did not define common  outcomes for these efforts.

USDA, HUD, and HHS Collaborated on Some Housing and Health Service Efforts That Did Not Focus on Older Adults

USDA has collaborated with HUD on two efforts related to housing, and  with HUD and HHS on one effort that addressed both housing and health  services, although these efforts were not focused specifically on older  adults. Officials at HUD and USDA told us that they primarily collaborated  on administrative initiatives through the Rental Policy Working Group.  For example, in 2016, HUD, USDA, and the Department of the Treasury  entered into a memorandum of understanding to formalize the activities of  the Rental Policy Working Group, such as reducing duplicative physical  unit inspections at properties assisted by one or more of the agencies.  While older renter households may benefit from administrative  improvements made through the Rental Policy Working Group, its efforts  were not intended to focus on any particular household type served by  HUD and USDA. Under a 1991 memorandum of understanding, HUD and  USDA also are required to coordinate where both agencies’ rental  programs could overlap in serving rural families.

In 2016, USDA started participating in interagency training intended to  help coordinate the provision of home and community-based services and  supports to vulnerable populations, including older adults. The training  was initiated by HHS, and since 2011, HHS and HUD have conducted it  for program staff as part of their efforts to strengthen cross-agency  collaboration. In 2017, the 1-day training session focused on housing as a  platform for improving the quality of life of persons with disabilities, older  adults, and other at-risk populations. USDA participated in a discussion  on housing and health collaboration between federal, state, local, and  community partners. Representatives of both HUD and HHS said that  USDA’s increased participation had been positive. HUD officials also told  us that in 2018, the agenda for the 1-day training would focus on housing  and health supports for older and disabled persons living in rural areas.

Additionally, in 2016, HUD and USDA began coordinating on developing  topics for HUD’s research agenda. Specifically, HUD’s Office of Policy  Development and Research develops a research agenda with input from  external stakeholders, and both HUD and USDA officials told us of efforts  to develop rural housing topics for inclusion in HUD’s research. HUD  Policy Development and Research officials stated that HUD conducted  extensive research in rural areas and was interested in coordinating more  with USDA, though this research has not been specific to older adult  issues. In response to HUD’s outreach, USDA submitted topics to HUD,  some of which were incorporated into HUD’s 2017 research agenda  update. They include the relationship between housing, food, and health  and the impact of home equity loss on rural homeowners, particularly  those who are aging.

HUD and HHS Have Had Several Collaborations on Services and Data Sharing for Older Adults

HUD and HHS have undertaken multiple collaborative efforts that link  data on housing and health services and often have focused on older  adults.

The Support and Services at Home demonstration was launched in  2011 to connect older residents of affordable housing properties with  home and community-based supportive services and promote health  care coordination. The latest evaluation report was published in  January 2016 and described the program’s ongoing implementation  and impact from 2011 through 2014. It found lower rates of growth in  Medicare expenditures among program participants than among a  comparison group. As of August 2017, HUD representatives told us  that the departments were still collaborating on evaluating the  demonstration.

Data sharing between HUD and HHS on another demonstration  program—the Supportive Services Demonstration for Elderly  Households in HUD-Assisted Multifamily Housing—began in 2014.  Like the Support and Services at Home demonstration, the Supportive  Services Demonstration is intended to test aging-in-place models that  show potential for delaying or avoiding the need for nursing home  care. HUD has been conducting a 4-year, two-part evaluation, which  includes an evaluation of the implementation process and an impact  evaluation that will match Medicare claims data from HHS’s Centers  for Medicare and Medicaid Services and HUD administrative data.  HUD and HHS completed a pilot of the data match in 2014, and HUD  has submitted two semi-annual reports to Congress on program  implementation, the latest in May 2017. HUD officials stated that in  October 2017, HUD secured a contract to conduct a full evaluation of  the Supportive Services Demonstration, as described above.  According to the officials, the demonstration implementation team  conducted an in-person, 2-day training event for care coordination  teams in November 2017.

The National Center for Health Statistics at the Centers for Disease  Control and Prevention, also a component of HHS, in 2014 began to  link national health survey participant data to HUD administrative data  covering HUD’s largest housing assistance programs through 2014.  The data linkage is intended to help those agencies and other federal  entities and researchers complete independent projects for statistical  and research purposes. The first linkage included two household  surveys (National Health Interview Survey and National Health and  Nutrition Examination Survey) that covered 1999–2012 and it was  completed in July 2016. HUD officials told us that HUD and HHS were  working on the second data linkage project. HHS confirmed that the  second linkage was underway as of February 2018, with an expected  completion date of summer 2018. It will add survey years 2013–2016  and administrative data years through 2016. While the project was not  focused specifically on older adults, it could include a significant  proportion of older adults living in non-institutionalized settings who  receive housing assistance from HUD.

HHS’s Office of the Assistant Secretary for Planning and Evaluation  and HUD completed a study on health care utilization among HUD- assisted older adults in 12 jurisdictions, and published a final report in  August 2016. The study, which began in 2009, explored the  feasibility of matching administrative data from HUD and HHS’s  Centers for Medicare and Medicaid Services to determine if doing so  could help track housing and health outcomes, and reliably support  future research and policy analysis. More specifically, it linked HUD  individual tenant-level data to Medicare and Medicaid beneficiary  enrollment, payment, and claims data. In the 2016 report, HHS and  HUD found that, controlling for previously identified factors, HUD- assisted dual Medicare-Medicaid beneficiaries were less likely to use  some Medicare-covered services such as acute hospital stays, but  more likely to use Medicaid-covered home and community-based  supportive services. According to the report, the study demonstrated  that linking the agencies’ data could inform decisions about future  program investment.

Select Collaborations Did Not Include USDA or Define Common Outcomes

We found that the collaborative efforts between HUD and HHS (pilot  programs and data sharing related to older adults) demonstrated some  but not all relevant leading practices we previously identified for effective  interagency collaboration. As we reported in 2012, interagency  collaborative mechanisms can be enhanced by leading practices,  including written guidance and documenting agreements on how the  participating agencies will be collaborating, clarifying roles and  responsibilities, leveraging resources (such as funding and staffing),  including all relevant participants, and clearly defining outcomes.

HUD and HHS established interagency agreements or memorandums of  understanding for collaborative efforts that focused on or included older  adults. For example, HUD and HHS entered into a memorandum of  understanding for the National Center for Health Statistics data linkage  effort and had contracts for the Support and Services at Home  demonstration and other collaborations. Our leading collaboration  practices state that agencies articulating their agreements in formal  documents can strengthen their commitment to working collaboratively,  as long as they are continually updated and monitored.

The roles and responsibilities of agencies participating in a collaborative  effort may be defined in a number of ways, including through laws,  policies, memorandums of understanding, or other requirements. Clarity  of roles and responsibilities allows participating agencies to understand  and agree on accountability for the joint effort, and a process for making  and enforcing decisions. In accordance with their memorandum of  understanding, HUD and HHS had clear roles and responsibilities for the  National Center for Health Statistics data linkage effort. For example, the  agreement documented specific data that HUD was to provide to the  National Center for Health Statistics and how the latter would attempt to  link HUD’s data to its survey participant data. It also specified both  agencies’ roles in data access, storage, and disposition.

Collaborating agencies should identify human, information technology,  physical, and financial resources needed to initiate or sustain their  collaborative effort. And it is important that the agencies leverage  sufficient resources to accomplish their objectives. HUD’s and HHS’s  written agreements generally included a description of how they would  leverage each agency’s resources, including staffing, funding, and data.  For the Support and Services at Home demonstration, HUD provided  resources to help evaluate the program model, while HHS funded a  wellness nurse who worked with a service coordinator to perform such  tasks as assessing residents’ needs; identifying and coordinating service  delivery; monitoring receipt and follow-through of services; and building  and sustaining partnerships with providers.

HUD and HHS, including their component agencies and offices, were the  main participants in these collaborative efforts. HUD officials stated that  USDA was not included because these collaborative efforts were pilots  originally intended to better understand the health of households assisted  by HUD. But no current plan exists to include USDA in such  collaborative efforts in the future.

As these collaborative efforts mature, USDA, which provides assistance  to low-income older adults in rural areas, may benefit from inclusion.  Effective collaborative efforts benefit from having participants with the  necessary knowledge, skills, and abilities to contribute to the outcomes of  the collaboration. Officials at HUD and HHS said they were open to  greater collaboration with USDA in the future. And while HUD has a  presence in rural communities, USDA’s participation would allow the  Rural Housing Service to provide input on and help address challenges  that may be unique to rural older adults. By not including USDA in future  collaborative efforts on older adult housing and health services, HUD and  HHS may miss opportunities to identify and respond to the changing  needs of some older adults living in federally assisted housing—such as  by drawing on the experience and resources of the Rural Housing Service  in serving rural populations. In addition, USDA may miss opportunities  to benefit from lessons learned or programmatic improvements that HUD  and HHS might undertake as a result of their collaborations.

Although HUD and HHS have established specific objectives for their  various evaluations and data-sharing initiatives, they have not defined  common outcomes for these collaborative efforts. For example, while  some of these efforts were expected to explore the housing and health  relationship and inform more evidence-based program decisions, the  agencies have not defined common outcomes for their interagency efforts  as a whole. We reported that collaborating entities should determine  whether they have clearly defined short-term and long-term outcomes,  can track their progress, and whether they each have collaboration- related performance standards against which to evaluate individual  performance.

Such common outcomes could include both quantitative and qualitative  information. For example, a set of measures against which to track and  monitor their collaborations (including demonstrations, data matching,  and studies) might include the extent to which hospital stays were  reduced, as noted for the Support and Services at Home and Supportive  Services demonstrations, or program costs saved. Monitoring and  reporting such measures would provide greater transparency to agency  and congressional decision makers about how these collaborative efforts  have resulted in potential cost savings and other benefits across agency  lines. A more long-term common outcome could include developing  proposals for programmatic improvements that would leverage the  lessons learned from the collaborative efforts.

Senior leadership at HUD has said that HUD considers the nexus of  housing and health to be a priority for future work, and that federal  agencies needed to continue finding ways to move beyond their  programmatic scope to engage in more comprehensive, cross-cutting  efforts. The official pointed to data-matching efforts with HHS as low-cost  initiatives that could enhance HUD’s knowledge about the health status of  assisted households and potentially inform cost-saving policies.

Because many of their collaborative efforts began in the last 5 years and  some remain ongoing, HUD and HHS may not have prioritized developing  common outcomes that relate both to older adult housing and health  services. In contrast, HUD and HHS have developed broader goals that  relate to how they serve older adults.However, without defined common  outcomes to help guide ongoing and future efforts, HUD and HHS (and  potentially USDA) lack measures against which to monitor, evaluate, and  report the results of their collaborative efforts.

Federal agencies, particularly HUD and HHS, have found opportunities to  collaborate in meaningful ways on services provided to older adults. But  collaborative federal efforts to address the housing needs of older adults  and tie into health services would benefit from consistent USDA  involvement and from defining common outcomes. Greater USDA  participation would result in a better nationwide assessment of the  housing and health needs of older Americans who live in all federally  assisted housing and leverage USDA’s expertise and resources in  serving rural populations. Outcome information would help the agencies  articulate to stakeholders and Congress the results the collaborations  achieved; activities, strategies, or areas on which to focus in the future;  and how scarce federal resources were leveraged and managed.

We are making a total of three recommendations (one recommendation  each to HUD, HHS, and USDA):  The Secretary of Housing and Urban Development should work with HHS  and USDA’s Rural Development to define common outcomes and identify  opportunities to include USDA in future collaborative efforts on older adult  housing and health services. (Recommendation 1)

The Secretary of Health and Human Services should work with HUD and  USDA’s Rural Development to define common outcomes and identify  opportunities to include USDA in future collaborative efforts on older adult  housing and health services. (Recommendation 2)

The Assistant to the Secretary for Rural Development should work with  HUD and HHS to define common outcomes and identify opportunities to  include USDA in future collaborative efforts on older adult housing and  health services. (Recommendation 3)

We provided a draft of this report for review and comment to HHS, HUD,  and USDA. HHS and HUD provided written comments that are  reproduced in appendixes I and II, respectively. USDA provided technical  comments, which we incorporated as appropriate. All three agencies  concurred with our recommendations. The Deputy Administrator of  Multifamily Housing Programs provided USDA’s concurrence in an e-mail  dated April 11, 2018.

In its comment letter, HUD stated that our recommendation to include an  additional agency in housing and health demonstrations is consistent with  direction provided by the Senate Committee on Appropriations in fiscal  year 2016. The committee directed HUD to partner with other federal  agencies to pursue a service coordination demonstration in non- metropolitan areas. HUD noted that the committee advised it not to delay  existing demonstration efforts while a non-metropolitan component was  being designed. HUD also stated that it convened an expert panel to  better understand challenges to service coordination for low-income older  adults in rural areas, and summarized the findings in a report. HUD said  further action on the panel report was contingent on funding availability  and direction from appropriations committees. HUD stated that, in regard  to our recommendation that additional federal agencies might benefit from  data-linkage projects similar to its project with the National Center for  Health Statistics, it would be pleased to offer assistance, guidance, and  insights to other agencies. Our recommendation is that HUD work with  HHS and USDA’s Rural Development to define common outcomes and  identify opportunities to include USDA in future collaborative efforts on  older adult housing and health services. This would include data sharing,  service demonstrations, research, and other collaborations. Ongoing  housing and health collaborations among HUD, HHS, and USDA would  benefit from greater USDA involvement, which also would serve to  enhance assessments of the housing and health needs of older  Americans in federally assisted housing.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Agriculture, the Secretary of Health and  Human Services, the Secretary of Housing and Urban Development, and  other interested parties. In addition, the report is available at no charge on  the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix III.

Appendix I: Comments from the Department of Health and Human Services

Appendix II: Comments from the Department of Housing and Urban Development

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Paul Schmidt (Assistant Director),  Bernice Benta-Jackson (Analyst in Charge), Abigail Brown, Stephen  Brown, William Chatlos, Charles Culverwell, Kirsten Lauber, John McGrail,  Marc Molino, Dae Park, Nadine Garrick Raidbard, Barbara Roesmann,       Joseph Silvestri, and Jeff Tessin made key contributions to this report.