An Evidence-Based View on HUD’s FY2016 Budget

An Evidence-Based View on HUD’s FY2016 Budget

Katherine O’Regan, Assistant Secretary for Policy Development and Research. On Monday February 2nd, the Obama administration released its FY 2016 budget. An overarching theme of this budget is investing in America’s future by reversing the harmful cuts of sequestration. Within this budget, HUD would receive an increase of approximately $4 billion over the level enacted in 2015, an 8.7% increase that would provide HUD its largest budget of this administration. Some pundits and bloggers say the administration’s budget is dead on arrival to Congress, and is primarily a communication exercise about the Administration’s priorities; I would disagree. They do, however, go on to correctly note that the details matter. The themes and proposals of this budget will shape subsequent conversations and ultimately the budget that is adopted. With that in mind, I want to discuss some key themes and policy details of HUD’s proposed budget that could shape what is eventually enacted.

Secretary Castro’s emphasis on opportunity, and ensuring that HUD is smart about using its resources to promote security and economic mobility, are very much reflected in our FY 2016 budget. Within these themes, it is worth highlighting policies likely to shape budget conversations and places where evidence is contributing to policy decisions, including the work of the Office of Policy Development and Research (PD&R).

Housing Mobility: Resources for Vouchers. One of the most painful results of sequestration was the loss of vouchers and the harm this caused families, housing authorities, and communities. The 2016 budget would fully restore vouchers, including funding for approximately 67,000 new units. This is a sorely needed infusion into a powerful yet flexible mechanism to support those most in need of affordable housing. Based on preliminary evidence from PD&R’s multi-year time and motion ‘Administrative Fee Study,’ the budget also requests an increase in the administrative fee public housing authorities receive to run voucher programs. Final results of the study will be released early this spring, and provide an empirically informed base for any changes to the administrative fee formula.

It is also worth noting how those additional vouchers will be added. In addition to 30,000 vouchers for targeted uses and populations (including the homeless), 37,000 need-based vouchers are requested along with the ability of the Secretary to determine an allocation formula for those vouchers that reflects relative need. Many have advocated that the existing formula for allocating vouchers should be changed to reflect current needs; this budget could provide an opportunity to develop and apply an updated formula to those new vouchers so as to better serve communities with the greatest unmet needs.

Place: Resources to support communities. The budget includes increases for an array of place-conscious programs to support community improvements, including a $170 million expansion of Choice Neighborhoods to $250 million and a request for $50 million within the Rental Assistance Demonstration (RAD) for projects located in high poverty areas. Among our most flexible funding resources, HOME would receive an additional $160 million. CDBG, however, would actually receive $186 million less than in 2015. This decline is very much a reflection of some hard choices, including recognition that funding for HOME has fallen below a minimal level needed to have impact in many communities. This budget is also proposing to undertake some ‘modernization’ of the 40-year-old CDBG program, based on a process HUD initiated in 2013 and PD&R research. These changes should improve operations and increase program impact going forward. Having those legislative, regulatory and policy improvements precede future expansion of resources may be a hard choice now, but will increase the value of CDBG to communities in the long run.

Economic Mobility and Self Sufficiency. Secretary Castro has emphasized that HUD’s mission is really about opportunity; that our programs are not only meant to improve people’s lives now, but to create the platform for a positive trajectory going forward. The $100 million request for Jobs-Plus is an evidence-based decision to invest in such a program. Job-Plus works to increase employment opportunities and earnings of public housing residents through a three-pronged program of employment services, rent-based work incentives, and community support for work. With funding from HUD and others, MDRC conducted a demonstration of the program in the late 1990s and found promising results: when fully implemented, residents earned an average of $1,141 more per year than residents in the comparison developments, a difference of 14% — and kept earning more even after the program ended.

After the demonstration concluded, others (including the NYC Center for Economic Opportunity via the federal Social Innovation Fund) have taken up the drumbeat - implementing the model, evaluating its efficacy, and strengthening its evidence base. There are now 10 active sites nationwide. The FY 2016 request reflects support for a program with a solid evidence base — and is a testament to the importance of continued investment today in long-term research and demonstrations to build the foundation for future policymaking.

PD&R’s Research Budget: Building Evidence and Knowledge to Support Sound Policies. Research and evidence are needed for HUD to be smart about using public resources, to know which programs merit funding and how to increase program impact. To create such evidence PD&R received a sharp increase in funding, from near $0 to $68 million, to create such evidence in 2010. That infusion permitted the funding of a number of very important research projects and demonstrations that are well underway, some already at or near completion. Very shortly, the final report of the Administrative Fee study referenced above will be available. It will provide final information on how much it really costs to administer a Housing Choice Voucher program. Later this year, the Family Options Study will tell us which interventions are best for ending family homelessness, along with a much better understanding of how housing vouchers impact parent, child and family outcomes. Since that infusion, PD&R’s research budget has been a more modest $15 million annually, but in FY 2015, we again neared $0 with only $4 million for research and demonstrations. To maintain a useful research base for wise programmatic decisions, PD&R needs stable, reliable research funding. The FY 2016 budget makes that request, for $35 million to ensure that HUD has the evidence it needs to make smart policy decisions in the future.

In addition to a stable source of funding, conducting research within the Federal Government also requires some flexibility. Similar to the flexible funding vehicle used by HUD to fund PD&R’s increased research budget from 2010-2014, the President’s budget requests authority for the Departments of Education, Health and Human Services, and Labor to set aside funds for evaluation. The President’s budget also requests authority for these agencies and others, including HUD, to spend research funds over longer periods — allowing us to adapt evaluation resources to reflect changing circumstances and collect the strongest possible evidence. These proposals aim to enhance the Federal Government’s ability to create the type of knowledge it needs for informed policymaking; they are, in fact, about good government – both improving the way the Federal Government operates in the research space, AND increasing the evidence available to support sound decision making.

In sum, the details of the budget are worth a read.