Just Released: Costs and Utilization in the Housing Choice Voucher Program

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HUD's housing choice voucher (HCV) program provides
subsidies to needy families across the country to pay for
housing. Yet many of these vouchers go unutilized every
year, resulting in fewer families receiving housing
assistance.

A new study developed by HUD's Office of Policy
Development & Research titled "Costs and Utilization in
the Housing Choice Voucher Program" provides insights
into the factors that affect HCV program utilization
rates and program subsidy costs in a sample of sites
nationwide.  

Through a better understanding of the conditions that
influence voucher utilization, program administrators
will be able to determine whether controllable factors
(e.g., PHA policies and practices) or uncontrollable
factors (e.g., market conditions or waiting list
characteristics) are at work when allocations are not
fully used. Similarly, understanding drivers of program
subsidy costs can help program operators and policy
makers develop more accurate budget projections and can
help them understand potential trade-offs.  These trade-
offs might include, for example, a decision to increase
the numbers of families served or expand the quality of
the housing they can rent.

The study reported that key factors affecting the
utilization rates include:
o Rental market conditions;
o The condition of the affordable housing stock;
o PHA management;
o The method used to determine voucher issuance;
o Leasing success rates; and
o The frequency of updating wait lists.

A longitudinal review of utilization rates for specific
PHAs, however, showed that the rates tend to fluctuate
over time. An assessment of two similar PHAs with varied
utilization rates showed that programs with higher
utilization rates typically have a few common
characteristics.  First, they tend to show strong
leadership and have the capacity to perform the required
data analysis and the calculations to determine program
flow and appropriately allocate staff.  Second, they
generally have the ability to administer programs more
strategically with an eye to both serving additional
clients and to maximizing administrative income for the
program. In some cases, programs with higher utilization
rates tended to provide more housing search assistance,
concentrated more heavily on outreach to landlords,
and/or offered better service to owners of rental
housing.

The second part of the study examined program subsidy
costs - measured by the amount of government funds spent
for each voucher unit under lease. While the study found
that program operators focused more on administrative
costs than subsidy costs, it did identify a series of
factors that affect normalized subsidy costs (controlled
for local rents and prevailing incomes).  These factors
include:
o Participant income distributions;
o Age/disability status;
o The use of exception payment standards;
o Enforcement of rent reasonableness;
o Standards for assigning bedroom standards; and
o Special programs, such as op-out vouchers, which lead
to higher normalized subsidy costs, the only positive
correlation.

There was no relationship found when comparing costs and
utilization rates.    

The data for the study were derived from existing
computerized HUD files, other secondary data sources, and
primary data collected on site at 48 PHAs. The bulk of
the information was gathered during on-site interviews
with voucher program staff as part of one- to two-day
visits that were made to each of the study sites between
December 2001 and April 2002. While on site, the authors
discussed aspects of each PHA's local housing market,
participant characteristics, and PHA policies to assess
their impacts on subsidy costs and voucher utilization.
The authors also contacted local HUD staff, landlords,
participants, and community representatives regarding the
programs.

The sample was purposively selected to include PHAs with
high and low utilization rates, and PHAs with high and
low costs across a range of program sizes and locations.
A subset of 28 of the PHAs were selected as pairs. A pair
was defined as two PHAs that served either the same or
similar housing markets and had at least a 10-point
difference in utilization rate. By looking at pairs, the
authors were able to separate the factors affecting
utilization from more general, market-related factors.

"Costs and Utilization in the Housing Choice
Voucher Program" is available on the web at
https://www.huduser.gov/portal/publications/pubasst/cost_util_voucher.html
or in printed form for a nominal charge by
calling HUD USER at 1-800-245-2691.
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P.O. Box 23268
Washington, DC 20026-3268
1-800-245-2691
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202-708-9981 (fax)
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