Detailed Information on the
Public Housing Assessment

Reduce Utility Consumption In Public Housing

Proposals should be considered to further simplify the detailed, complex, and prescriptive regulations and statutes in order to improve management and performance.

More performance measures should be considered to improve self-sufficiency efforts.

Efficiency and cost effectiveness measures should be added when project-based accounting and management data becomes available.

Policy or other changes should be considered to lower the vacancy rate in order to have more public housing units availabe for lease.

In a continuing effort to explore new means of instituting asset-based changes to existing systems, PIH will provide assistance to 7 pilot programs aimed at experimenting with aspects of the delivery of the asset management system to the field.

Understanding that transitioning housing authorities to asset management will require concerted effort over time, the stop-loss incentive program will have enrolled up to 876 PHAs by the end of FY2011

Increase training staff so they will be prepared to assist and monitor PHAs in the transition to Asset Based Management. By 4th quarter 2008, we will have trained 700 Field Office staff in the components of project management; including the requirements of new asset based accounting and management system.

Increase saving from Energy Performance contracting by 5%

Increase PHA Implementation of 'Green' Initiatives

Reduce Utility Consumption in Public Housing

Increase investment in Energy Performance Contracting by 5%

Increase investment in Energy Performance Contracting by 5%

Complete training of staff so they will be prepared to assist and monitor PHAs in the transition to Asset Based Management. By 4th quarter 2008, we will have trained 700 Field Office staff in the components of project management; including the requirements of new asset based accounting and management system.

Increase training of staff so they will be prepared to assist and monitor PHAs in the transition to asset based management. By the 4th quarter of 2007, we will have trained 300 field office staff in the components of project management including the requirements of the new asset based accounting and management system.

Measures and targets for PHAs conversion to project-based budgeting and project-based accounting should be set in the 2007 Annual Performance Plan. By July 1, 2007 seven hundred PHAs will be under project based budgeting representing the first participants in an effort to institute universal project based budgeting.

Measure: The high incidence of program errors and improper payments in HUD's rental housing assistance programs will be reduced.

Explanation:In conjunction with the Improper Payments Information Act of 2002, agencies need to assess improper payment risks and measure and report findings. Public Housing continues to improve on program administration and income verification processes to reduce improper payments.

Measure: By fiscal year 2008, decrease the proportion of active participants who have been in HUD's housing assistance programs for 10 years or more by 10 percent.

Explanation:HUD seeks to reduce the number of participants who have been in public housing or the HCV program for more than 10 years from the 2003 baseline. This enables HUD to serve more families in need of housing assistance.

Measure: The share of public housing units that meet HUD established physical standards will be maintained at 85 percent.

Explanation:HUD requires PHAs to inspect and maintain public housing to ensure compliance with HUD-established standards for physical condition or with local codes if they are more stringent.

Measure: Each year, the Federal cost of public housing per occupied unit will remain less than the Federal cost of voucher per occupied unit.

Explanation:

Measure: The share of units that have functioning smoke detectors and are in buildings with functioning smoke detectors will be 92.8 percentage points or greater for public housing.

Explanation:

Measure: The unit-weighted average Public Housing Assessment System (PHAS) score will increase.

Explanation:This measure summarizes the overall management and conditions affecting public housing units.

Measure: Approve $50 million of leveraged funds through the Capital Fund Financing Program.

Explanation:This indicator reflects the importance of leveraging private sector resources in order to develop and preserve scarce, decent, and affordable housing.

Measure: The conversion to asset management will be certified for 50 percent of PHAs with 250 or more units who applied for assessment.

Explanation:Due to the Department's stramlining of performance goals, this indicator has been revised from 5 percent of PHAs with 250 or more units converting to asset management in fiscal year 2008 to the current indicator for fiscal year 2009.

Measure: Asset-Based accounting will be implemented in 99 percent of PHAs by FY 2008.

Explanation:Asset management includes asset-based budgeting, asset-based accounting, and asset-based management. Of those PHAs required to transition to asset management, 99 percent will implement asset-based accounting procedures by FY 2008.

Measure: By fiscal year 2008, increase the proportion of those who graduate from HUD's public housing and Housing Choice Voucher programs by 5 percent.

Explanation:This indicator tracks the percentage of all people who leave public housing and the housing choice voucher program each year for any reason. The goal is to increase the annual transition percentage by 5 percent from the 2003 baseline. This indicator sunsets at the end of FY 2008.

Is the program purpose clear?

Explanation: The program's purpose is not clear. The original purpose of the public housing program was very clear - to provide decent, safe and sanitary housing for low-income families. The intent was that the provision of adequate, affordable housing would enable assisted families to pursue other activities to enhance their well-being; thus, providing a societal benefit as well. Over the years, the purpose has been redefined and broadened by requirements to connect residents with social services, such as training and employment, to promote progress toward self-sufficiency. The relationship between the program's original purpose and its newer emphasis on economic transitions needs to be clarified. The Program provides funds to approximately 3,100 public housing agencies (PHAs).

Evidence: The broadened role of public housing is exemplified by the Quality Housing and Work Responsibility Act of 1998 (QHWRA) that lists several purposes, including creating incentives and economic opportunities for residents to work, become self-sufficient, and transition out of public housing; leveraging assistance from other sources, facilitating mixed income developments; and decreasing concentrations of poverty (see Section 105 of HUD's basic laws). The operating fund for public housing (Section 9(e) of the United States Housing Act of 1937 (the 1937 Act)) provides grants for the operation and management of public housing. This helps expand access to affordable housing, one of HUD's programmatic strategic goals. The capital fund for public housing (Section 9(d) of 1937 Act) provides grants for modernization, development, vacancy reduction, deferred maintenance, demolition, and security and safety improvements.

Does the program address a specific and existing problem, interest, or need?

Explanation: The program addresses the lack of adequate funds by low-income families to afford decent, safe, and sanitary housing. Eligibility for public housing is limited to low-income families, and rent is capped at 30% of a family's income. The rents paid by assisted families are insufficient to cover the full costs of public housing. HUD makes up the difference with separate grants for operations and for capital needs.

Evidence: The public housing program serves about 1.1 million households and about 2.6 million people. The American Housing Survey has reported that public housing and other HUD rental assistance programs serve roughly half of those eligible. HUD's PD&R report, "Trends in Worst Case Needs for Housing, 1978-1999", published in 2003 with an update on worst case needs in 2001, states that shortages of rental housing affordable and available to renters with very low incomes worsened slightly between 1999 and 2001.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: Public housing was the first of the housing subsidy programs. Other delivery forms have followed, such as housing vouchers, project-based housing, USDA housing. These program share common goals but the combined supply of housing delivered is much less than the demand. Public housing is unique by having 1.2 million units owned by public housing agencies. The funding (Operating and Capital) are the sole source of federal monies to support the operation and maintenance, and capital needs of these units.

Evidence: The demand for low-income housing exceeds the supply from all programs, with only one of two eligible families being served. The public housing program is an integral part of that effort. No other federal, state, local or private program addresses the operating, accrual, and backlog of capital needs of public housing properties.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The design of the program is very prescriptive and lacks incentives for tenants or local management to maximize dollars spent. Tenants pay the same rent and utility cost (30% of eligible income) regardless of the size of the unit. Local management is paid for the number of public housing units rather than the number of occupied units. Capital costs are paid up to a maximum level. Utility costs are reimbursed. Efforts are currently underway to correct major flaws, e.g. the public housing agencies are now required to begin operating the program according to accepted real estate industry practices, including asset-based management which will correct numerous inefficiencies and provide actual costs of running public housing on a development basis. In addition, proposed authorizing legislation (SLHFA) would provide PHAs flexibility for managing in a budget- and asset-based world including rent simplification.

Evidence: Congress, in its last major authorizing act in 1998 (QHWRA), noted that "public housing is plagued by a series of problems, including concentration of very poor people in very poor neighborhoods and disincentives for economic self-sufficiency." These results are due, in part, to flaws in the program that do not adequately promote efficiency and effectiveness and allow limited flexibilities to grantees. The QHWRA described the program design as a "Federal method of overseeing every aspect of public housing by detailed and complex statutes and regulations." Congress made improvements in the QHWRA Act, which HUD is implementing; and HUD has proposed further improvements via regulations and legislation.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: The program delivers targeted resources to the intended beneficiaries. HUD has successfully implemented varous efforts to reduce improper payments, including a new verification system with the National Directory of New Hires. The program has a large number of vacant public housing units (up to 10 percent under one snapshot estimate), and has 1-2 percent of units occupied by over-income families.

Evidence: The amount of improper payments has been reduced by nearly 60 percent between FY 2000 and FY 2004. In the most recent financial audit (2005), HUD's Inspector General recognized the progress on reducing improper payments by deleting it as a material weakness in internal controls and instead listed it as a reportable condition. In the January 2005 update of the High Risk series (GAO-05-207), GAO states that HUD should continue its efforts toward ensuring accurate subsidy payments and "has demonstrated commitment to and progress in addressing weaknesses in its??Rental Housing Assistance program areas." HUD implemented a new rule that gives PHAs the discretion to establish occupancy policies that include eviction of public housing tenants who are over the income limit for eligibility to participate in the program.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: There are specific performance measures relating to housing quality and program delivery, but outcome measures are lacking on how or whether public housing improves families' lives. The housing quality and delivery measures include: measures of the physical condition of the housing stock; the financial soundness of the PHA operation; and whether projects are well-managed, and clients are satisfied. To ensure that funds support the provision of housing as efficiently as possible, HUD has set and begun to achieve goals aimed at reducing improper subsidy payments. HUD has recently set a goal to increase the number of occupants who graduate from rental assistance in 2008.

Evidence: The program lacks outcome measures for families in terms of higher earnings or other metrics of improvements in families' lives. The program has long-term performance measures regarding the housing stock, to improve both the physical quality of its units and the accountability of local managers. The specific goals related to the physical and managerial improvement in the public housing program include, for example, the share of public housing that meets HUD-established physical standards, the percentage of public housing units under management designated as "troubled," the incidence of program errors and improper payments, and the unit-weighted public housing assessment score (PHAS). HUD met its 2005 graduation targets (HUD's FY 2005 Performance and Accountability Report).

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: Requires an automatic "no" answer due to a "no" answer in question 2.1 (a lack of long-term outcome performance targets). HUD's targets and timeframes are set forth in the Annual Performance Plan and recorded in the Performance and Accountability Report. Many of the goals are status quo, lacking ambitious targets or timeframes.

Evidence: The targets and timeframes are not ambitious. Many targets are for status quo. For example, the goal for physical quality is for 86.5% of units to meet HUD's standards. But this level is below previously achieved rates under a previous assessment rating system, and remains substantially below the level in HUD's project-based rental subsidy program (95%). The target for overall ratings of public housing (PHAS) remains unchanged and below previously achieved levels. The ambitious target of increasing earnings of assisted families has been dropped as a measure.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The measures focus primarily on housing in lieu of outcomes for families assisted. The measures include reduction of units under troubled management, increases in overall Financial Assessment Subsystem (FASS) scores, and reductions in gross improper payments. In the 2006 Annual Performance Plan, HUD took the important step of establishing a 2008 numeric targets for its long-term goal of increasing the number of public and assisted housing residents who "graduate" by 2008 to non-subsidized housing and for reducing long-term dependency (decreasing the proportion of active participants who have been in HUD's housing assistance programs for 10 years or more by 10 percent).

Evidence: HUD has a limited number of measures of the quality of the housing stock and operations, but lacks adequate measures on self-sufficiency or expanding access to affordable housing. The only public housing goal under "Help HUD-assisted renters make progress toward self-sufficiency" is the newly added "graduation" rate and reduction in long-term dependency in 2008. The previous earnings measure was deleted this year. Hence, the demonstration of outcomes for families remains a longer term goal without interim measures. There are no public housing goals for reducing the vacancy rate (as much as 10 percent) in order to "Expand access to affordable housing."

Does the program have baselines and ambitious targets for its annual measures?

Explanation: Requires an automatic "no" answer due to the "no" answer in 2.3 (lacks annual performance measures that demonstrate progress toward the long-term goal). The program does not have ambitous targets. The program has developed extensive systems in recent years that benchmark baselines and measure progress of public housing entities in terms of physical condition, financial health, management and client satisfaction. However, it has failed to set ambitious targets for improvement in these measures.

Evidence: The program lacks ambitious targets and performance measures on families assisted. Many targets are modest or status quo. The baseline data on public housing (physical structure, finances, management, and client satisfaction) are extensive and quite good. HUD uses it to classify good performers from bad performers, and to determine rewards and sanctions. While housing baselines are good, targets for improvements are modest or status quo. Baselines and ambitious targets are just beginning on the self-sufficiency goals and associated performance measures for improvements in the lives of tenants.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Requires an antomatic "no" answer due a "no" answer on question 2.1 (long-term outcome performance measures) and question 2.3 (annual preformance measures demonstrating progress toward long-term goals). Partners are supportive of improving public housing and of turning around "troubled" housing agencies (77 troubled out of 3.100) and "substandard" housing agencies (98 substandard out of 3,100). HUD and its partners sometimes disagree on the means and the funding levels.

Evidence: The "no" answers on 2.1 and 2.3 require a "no" answer here. In general, partners are committed to and working toward the goals of the program. Partners are supportive of more flexibility, but garnering support for HUD's proposed authorizing changes to increase flexibility (proposed State and Local Housing Flexibility Act) has been slow.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: A number of mechanisms are available for assessment of the program, including the Single Audit Act (required of all PHAs that receive more than $500,000 in federal assistance), the Public Housing Assessment System, and audits performed by HUD's Office of Inspector General; but these do not constitute evaluations of program impact or effectiveness. The HUD Field Office appropriately intervenes to correct any audit findings and improve program performance. The Public Housing Assessment System independently gauges the physical condition, financial health, management, and client satisfation of residents. There are no regular independent evaluation of outcomes of families assisted by the program.

Evidence: There are adequate assessments of housing quality and service delivery but inadequate evaluations of the effect of the housing on outcomes in assisted families' lives. Recent reports/evaluations have included: The Harvard Cost Study and the Millennial Housing Commission, PHAS ratings of housing-finances-management-client satisfaction, OIG and PHA audits. The REAC Financial (FASS) and Physical (PASS) subsystems are considered "state-of-the-art" throughout the multifamily industry in terms of uniform data collection, data integrity, and completeness. Public housing benefits from the fact that it can be compared against its peers in FHA housing. When PIH moves to project-based accounting in 2007, PIH will also be able to compare the financial performance of each public housing property, and the program as a whole, with FHA housing. There are no regular independent evaluations of program outcomes for families assisted.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The budget for public housing is tied to the overall goal to promote decent affordable housing. In FY 2005, more than $5 billion was made available for this purpose. New long-term performance goals include program milestones to move to project-based accounting and management.

Evidence: The Budget lacks explicit linkages between funding levels and accomplishment of performance goals. The performance goals generally remain unchanged even with substantially different funding levels. The budget requests do not display efficiency measures due to the lack of project-based accounting data.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: In 2004, HUD conducted a negotiated rulemaking to develop a new formula for distributing operating subsidies to PHAs. The final rule which implements a number of recommendations from the Harvard Cost Study was published for effect in 2005. The Department will provide additional guidance through notices on standards and compliance requirements and will make changes to other systems, such as PHAS. HUD has proposed legislation, the State and Local Housing Flexibility Act of 2005 (SLHFA), to address deficiencies including the current rent setting, which penalizes families who work, encourages underreporting of income, and requires complicated deductions and exclusion calculations for rent determinations. The program has adopted one performance measure for self-sufficiency in 2006; other measures of outcomes are still needed.

Evidence: The program has proposed several meaningful steps to correct planning deficiencies: the Operating Fund rule requires project-based accounting allowing efficiency measures and a more equitable allocation formula; the proposed authorization legislation (SLHFA) would shift more responsibilities to grantees for managing to improve outcomes; and the enacted bonus fund would reward grantees for achieving more graduations. The program has adopted one reasonable performance measure for self-sufficiency.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: HUD regularly collects and verifies performance information under the Public Housing Assessment System (PHAS) about public housing authorities. The scores in four basic areas are totaled and can be used to assess the health of public housing authorities in general, or to compare one PHA with other PHAs. In addition, performance information is collected on improper rental payments by PHAs through the Rental Improvement Monitoring (RIM) reviews under the Rental Housing Integrity Improvement Project (RHIIP). The reviews focus on income and rent calculations and occupancy activities (QC) that directly impact the accuracy of these calculations. PHAs that fail to identify and implement corrective actions, rectify errors or comply are sanctioned. Since Operating Subsidy supplements rent, accurate calculation of income and rent is essential for an equitable distribution of the Operating Subsidy. HUD collects financial information on its Capital Funding on a monthly basis through the LOCCS financial system and on an annual basis from PHA annual plans. HUD uses this information to ensure that PHAs are spending Capital Funds in an appropriate and timely manner, and takes management actions regarding expenditure of funds, as applicable.

Evidence: Under the Public Housing Assessment System (PHAS), PHAs are evaluated each year on four basic areas - financial, physical, management, and resident satisfaction. PHAs that receive an overall score of 60 or below, or a score of 60 or below on individual components, are categorized as "troubled" and subject to varying degrees of controls/interventions. Troubled PHAs have two years to improve (50% progress required in the first year) or face receivership. PHAs scoring 90 or above (high performers) are eligible for a 3% Capital Fund bonus and are relieved from physical inspections for one year. High performing agencies may receive a second bonus funded from Capital Funds withheld or recaptured from PHAs failing to meet statutory obligation and expenditure deadlines. Under the Operating Fund, PHAs receive a 3 percent allowence for meeting a threshold level of 97 percent occupancy. The Department recently required PHAs to adopt asset-based management, the scoring and system of measurements will be adapted to the property-level to aid enforcement action on a property-by-property basis. The RIM reviews determine if income is verified and rents calculated properly. Reducing the amount of improper payments will lead to more accurate Operating Subsidy calculations. For the Capital Fund, the LOCCS financial system monitors obligation and expenditure activities, and notifies the PHA and HUD of impending deadlines. If a PHA does not meet its obligation deadline, HUD withholds future funding until obligation requirements are met. The Annual Statement is used as a tool to ensure that PHAs are properly planning for and implementing capital improvements. A PHA without an approved plan cannot access its Capital Funds. PHAs also are held accountable for any ineligible costs or costs exceeding the total development costs as prescribed by HUD.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Performance data are needed at the project level on cost, schedule, and performance; however, such data will not be available until the Operating Fund rule on project-based accounting and management is fully implemented. Currently, data are generally aggregated at the PHA level.

Evidence: In general, data related to the Operating Fund are available at the aggregate PHA level, not at the project level. Each year PHAs are evaluated on performance using the PHAS in the areas of physical, financial, management and resident services. If a PHA receives a low PHAS score, HUD and the PHA develop a remediation plan. HUD Field Offices are graded, in part, on the number of troubled PHAs. PHAs receiving a high score are eligible for additional Capital Funds - the funds withheld or recaptured from low-performing PHAs. PHAs are held accountable for cost, schedule and performance through the Annual Statement/Performance Evaluation Plan that shows planned capital improvements by project, their cost and the implementation schedule. HUD uses this document to grant funds and hold a PHA accountable for expenses and capital activity according to its plan. A PHA must obligate and expend funds according to specific statutory timeframes.

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Funds are generally obligated in a timely manner and are spent for the intended purpose. The timely obligation of funds has improved significantly in recent years. The program is successfully addressing a longstanding weakness on improper payments.

Evidence: Obligations of funds have been timely-- less than 10 percent of the most recent capital appropriation were unobligated at year end. Congress enacted tighter deadlines for both the obligation of public housing funds and required that the funds be returned to the Treasury if not spent promptly. A House Appropriations Report (108-674) noted "...improvements in the timely expediture of these funds." HUD has reduced improper payments in this program by nearly 60 percent from FY 2000 to FY 2004, and continues efforts to lower them further. The HUD Inspector General recognized this progress in the 2005 financial audit by eliminating improper payments as a material weakness.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: The program lacks these procedures. HUD intends to remedy this deficiency through new procedures to conform with project-based management. These changes will account for costs at the property level and identify which properties are operating effectively. HUD is developing efficiency measures in tandem with the transition to asset-based management. The measures for cost effectiveness and efficiency for modernization activity include the following: (1) an upper-bound on costs-per-unit, called total development cost (TDC), and (2) adherence to federal procurement standards requiring fair and open competition of goods and services (24 CFR 85.36). The normal oversight and pressure for efficiency and cost effectiveness by State and local governments is lacking because this is, for the most part, a 100 percent Federally funded program.

Evidence: Efficiency measures and cost effectiveness measures are lacking. The budget requests and other performance plans do not present efficiency or cost effectiveness measures. HUD's proposed Operating Fund rule will begin to remedy this deficiency by collecting project-based data.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The program collaborates and coordinates with related programs, such as housing, training, welfare, and other assistance programs. Recent examples inlcude working with the Department of Energy, Federal Deposit Insurance Corporation (FDIC), and the Department of Health and Human Services.

Evidence: HUD is working with the Department of Energy and the Environmental Protection Agency in a partnership to promote energy efficient affordable housing. The effort includes more widespread use of Energy Star products whenever equipment is replaced or modernized in public housing. HUD and the Federal Deposit Insurance Corporation (FDIC) are working together to promote financial education using Money Smart, FDIC's financial education curriculum. Currently, appoximately 1,000 PHAs are actively involved in the Money Smart program. HUD received statutory authority to work with the Department of Health and Human Services to pursue enhanced computer matching capability using the National Directory of New Hires data base. This verification tool is now available to PHAs to improve the accuracy of eligibility determinations and the rental subsidy calculations. The Capital Fund program collaborates, as needed, with other federal and state housing development programs including: HOPE VI, CDBG, State Housing Trust Funds, Federal Home Loan Bank, State Housing Finance Agency and the Low Income Housing Tax Credit Program.

Does the program use strong financial management practices?

Explanation: The program remains on GAO's High Risk list, but there have been significant improvements. For the past seven years, PIH has strengthened financial management by converting to GAAP-based accounting and introducing electronic submission (and testing) of annual financial statements. A 2002 HUD Inspector General reportable condition on internal controls has been removed. New procedures include new strong Standard Operating Procedures (SOPs) for administering program funds, quality control checks, and various internal controls. Each fiscal year, all PHAs must submit unaudited financial information under FASS, and all PHAs that receive more than $500,000 in federal funds must submit audited financial information in accordance with OMB Circular A-133.

Evidence: Financial management practices have improved; however, audits by the HUD Inspector General still find a large number of misspent funds and the program remains on the GAO's High Risk list (GAO does note significant improvements). HUD has begun to implement sound industry-wide practices of real estate management with project management and accounting. With these project based budgeting, accounting and funding changes as well as changes to the FASS financial indicators, the Department will be able to assess controls at the PHA property level. HUD requires a PHA to submit an approvable budget to receive Capital Funds and monitors the obligation of such funds.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: Management deficiencies were addressed in the negotiated Operating Fund rulemaking in 2004, and as cited in 3.6 to improve financial management. These include a new, more equitable formula for distributing Operating Subsidies to PHAs and adoption of a number of recommendations from the Harvard Cost Study, including the conversion to property based management and assessments. HUD will develop an implementation plan for moving the Office of Public Housing toward asset-based management and put in place measures to effectively oversee project-based management by PHAs. Also, passage of proposed legislation (SLHFA) would provide PHAs with flexibility for managing in a budget- and asset-based world, including rent simplification.

Evidence: Three major initiatives have occurred in recent years. First, through independent REAC/PHAS assessments, the Department has a much better handle on problem agencies. Second, through the adoption of the Operating Fund Rule, the Department is moving to asset-based management, which will provide the opportunity for even greater oversight of (property level) performance. Third, proposed legislation would provide more flexibility to grantees with a potential benefit of simplifying overly complex and error prone procedures.

Does the program have oversight practices that provide sufficient knowledge of grantee activities?

Explanation: The Department has a number of existing oversight mechanisms, including independent assessments, and is moving to improve its oversight through project-based data and management. The Department's existing oversight mechanisms include PHAS independent assessments, RIM reviews, on-site monitoring reviews, a monthly (LOCCS system) and annual reporting system (Annual Statement/ P&E). These systems document PHAs' use of program funds and verify use for the designated purposes. HUD has Field Offices in each state, the District of Columbia and Puerto Rico that work with PHAs at the local level to monitor activities and provide program guidance. PHA performance is assessed each year through the PHAS system and by an independent auditor. The Operating Fund Rule will require project-based budgeting, and accounting in 2007 and asset management by 2011. PHA properties will be evaluated on an individual basis, beginning with FY 2007, under either PHAS or a successor program.

Evidence: The program has sufficient oversight of overall grantee activities for a "Yes" answer but some critical improvements are necessary. HUD has recently adopted industry-wide real estate practices of project-based budgeting and accounting, providing the potential for efficiency and cost-effectiveness measures. When that effort is completed and with improvements in existing data, such as completeness of tenant data, HUD should have much improved tools in place for grantee oversight. Currently, PHAs submission of tenant data is not 100 percent complete with resulting limitations on use, including program assessments. Agency performance data related to finances, management, resident satisfaction and physical condition is collected annually or biannually; Field Office staff conduct onsite and remote monitoring in the RIM process to ensure accurate calculation of tenant income and also during risk-assessment based Management and Occupancy reviews. HUD uses up-to-date, accessible data in the LOCCS financial system to monitor capital obligation and expenditure activity of PHAs.

Does the program collect grantee performance data on an annual basis and make it available to the public in a transparent and meaningful manner?

Explanation: Grantee performance data (e.g., PHAS scores) are collected, although not always at the project level. The data for the most part are available to the public but sometimes not in a transparent and meaningful manner that would permit comparisons among PHAs. As the Operating Fund rule is implemented, project-level data will be available. Each fiscal year, all PHAs submit unaudited financial information to the Department under FASS and all PHAs that receive more than $500,000 in federal funds submit audited financial information pursuant to OMB Circular A-133. HUD posts on its website the Annual Plan for each public housing authority. The Annual Plan contains a PHA's Annual Statement(s), the modernization budget and planning document which is submitted for each open Capital Fund grant. A PHA is required to hold a public hearing prior to its submission of its annual plan. The purpose of the public hearing is to inform the public of the PHA plans for the upcoming year and to solicit comments and evaluations from the citizenry on its plan.

Evidence: Each PHA must post its final PHAS score and status in conspicuous and accessible location. The FASS financial data is not made available publicly or with comparisons to other grantees, but is available if requested under the Freedom of Information Act (FOIA). The Annual Statement shows proposed modernization improvements, as well as the proposed and actual costs of these improvements, and the timeframe in which these activities are to be completed for each open Capital Fund Grant. Through this information, an individual can assess a PHA's modernization and development activities for its entire portfolio or for individual housing developments. The Annual Statement is submitted as a part of a PHA's Annual Plan. Annual Plans can be found at www.hud.gov/pih. Also, PHAs are required to hold public hearings on the annual plan.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: Requires an automatic "no" answer due to a "no" answer on question 2.1 (long-term outcome performance measures). The program has demonstrated progress in several areas, including more units meeting quality standards and far fewer improper payments. Yet, the program lacks outcome measures for assisted families in terms of higher earnings or other metrics of improvements in families' lives.

Evidence: The program lacks outcome measures for assisted families and also lacks ambitious targets and timeframes for its long-term measures (see question 2.1 and 2.2). Therefore, the program cannot demonstrate progress in achieving its long-term goals. The program has achieved significant improvements in the physical quality of public housing, as shown by independent inspection scores, and in lowering improper payments. However, the program has not met its targets for the percentage of units meeting HUD's physical inspection standards the last two years. HUD has shown a 50 percent reduction in gross improper payments and a 71 percent reduction in net annual overpayments, well exceeding HUD's interim reduction goals through 2005.

Does the program (including program partners) achieve its annual performance goals?

Explanation: Requires an automatic "no" answer due to a "no" answer in question 2.3 (annual performance measures demonstrating progress toward long-term goals). The program, while achieving some notable successes, has shown mixed results overall. The program met the annual performance goals in lowering the percent of units under "troubled" management and reducing erroneous payments. The program is committed to maintaining this level of achievement while developing additional goals and benchmarks to show continued program improvement. Goals related to PHAS and the physical qualities of the units were not met at least in part because of changes to the assessment process. For example, building exterior, common areas, and site are now included in the physical assessment score, and smaller PHAs that typically score highly in PHAS have been deregulated so that they receive PHAS scores every other year. Larger PHAs that receive a score of 80 percent or greater on the physical assessment are assessed every other year.

Evidence: The program lacks ambitious performance goals and is just beginning to set self-sufficiency targets (see question 2.4). For the performance goals that were set, the program had mixed results, achieving about half. HUD's FY 2004 Performance and Accountability Report shows 6 performance goals substantially met, 6 not substantially met, and 1 not available. Within these totals, there were some notable successes on some critically important goals, such as lowering the percent of units under management by "troubled" public housing agencies and reducing improper payments.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: HUD will develop efficiency measures to support the transition to asset-based management and accountability. HUD has adopted new regulations to require project-base accounting, budgeting and asset-management which will enable the development of efficiency measures.

Evidence: The program neither collects nor presents adequate efficiency or cost-effectiveness measures.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: Evaluations of the outcomes of families in public housing or across HUD three delivery programs are not available. There have been assessments of the cost of delivering housing through HUD's various delivery programs. These assessments have attributed higher costs to public housing than to HUD's housing vouchers. However, those studies included construction costs, a cost already incurred. Absent these costs, operating public housing is slightly cheaper. The public housing program maintains a large asset of assisted housing stock that is generally in better condition than private, equivalent, housing stock serving the same population.

Evidence: There are no cross-cutting evaluations of performance of public housing in terms of outcomes or in comparison to HUD's other rental subsidy programs. The report on costs of delivering the program by HUD's Planning, Development and Research (PD&R) Office conclude that housing vouchers are the most cost effective and efficient delivery mechanism among HUD's low-income delivery programs. The discounted life-cycle costs are less and more choice is provided to families on where they wish to reside. Public housing, however, is slightly cheaper on an annual per-family-assisted cost. This ignores the previously paid costs of construction. It also assumes comparable units, although 13 percent of public housing units fail to meet HUD's uniform physical condition standards, and ignores the extra value to families of choice in where to reside.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: There are no rigorous independent evaluations to determine whether public housing improves outcomes for residents when compared with those not assisted. The program has just begun to set and track metrics on outcomes of assisted families. The program does assess the services delivered by grantees in terms of quality of the housing provided, the financial management of the public housing agency, and the satisfaction of clients through independent evaluations under the PHAS system. The Rental Housing Integrity Improvement Project (RHIP) and the Rental Integrity Monitoring (RIM) initiative have measured, monitored, and addressed, through national efforts and statistical sampling, the incidence of improper payments in HUD's rental housing assistance programs.

Evidence: No rigorous independent evaluations of the programs outcomes have been conducted. There are independent ratings of grantees services in terms of physical, financial, management and client satisfaction through the Public Housing Assessment System (PHAS). This shows that nearly 87 percent of the public housing meets HUD's standards under PHAS. The protocols to develop the PHAS scores are repeatable and produce meaningful information about the properties according to an independent study (The Berger Team). The protocols, per the Berger Team, are "a comprehensive system that identifies the condition of housing subsidized by HUD. HUD has made a major contribution to the housing industry by providing an objective tool that utilizes modern technology and makes comprehensive inspection possible at relatively low cost." In addition to PHAS scores, other program evaluations -- including independent and IG audits, HUD Field Office onsite and remote monitoring -- indicate that the program is providing decent, safe and sanitary housing for low-income individuals. A February 2003 GAO Report, Information on Receiverships at Public Housing Authorities (GAO-03-363) states, "Whether under administrative or judicial receivers, nearly all of the 15 authorities showed improvement during their years of receivership."