Occupancy -- Issue Paper

1.  **Issue Statement:** (What is the specific issue and related
    problem)

> Earned Income Disallowance: the effect of disallowing new earned
> income in theory has merit, but in practice and in the current funding
> situation the negative seems to outweigh the positive. In many cases
> the increase in household income for residents without an increase in
> rent gives them a sense of more disposable income than will actually
> be there when their income disallowance period end. Many times this
> results in the resident not being able to pay their rent once it
> increases and potentially being evicted; be a reason for quitting
> their job once the rent goes up or losing many of the things they have
> worked hard for. Furthermore, the hesitancy to participate in the
> program as a result of not really seeing the benefit of it hinders
> its' success. Additionally, with the reduction in operating subsidy
> many agencies have to make major cuts to services for the resident.
> When working with the resident to help them "move up and out" of
> public housing many times there is no funding available to assist the
> resident.

2.  **Background:** (What is the history of the issue; has it always
    been an issue)

> This regulation is part of the Quality Housing and Work Responsibility
> Act of 1998, more specifically found under 24 CFR Ch IX paragraph
> 960.255 as a Self-sufficiency incentive.

3.  **Proposal:** (Describe your proposal in detail for addressing the
    issues)

> As stated above, in theory the idea of earned income disallowance is
> good, but in practice, it doesn't seem to go far enough. The
> qualifying resident should be required to participate in an individual
> savings account program; eliminate the option of income disallowance
> for rent calculation purposes; allow the resident to choose the
> established flat rent as an alternative to income based rent during
> the disallowance period/s
>
> Alternative proposal: eliminate the earned income disallowance
> altogether and replace with a standard deduction for all earned
> income.

4.  **Outcome/Results: (**What are the advantages and disadvantages to
    your proposal**)**

> In the first proposal above, the outcome should be similar to that
> found in the Section 8 Family Self Sufficiency Program where the
> resident has a pool of money available for buying a home; paying
> education costs of family members: moving out of public housing;
> paying any other expense authorized by the PHA for the purpose of
> promoting the economic self-sufficiency of residents of public
> housing. Requirements set forth in the CFR for the PHA would remain.
> Tracking would still be required but from the position of a PHA trying
> to help the resident "move up and out" the possibilities are greatly
> enhanced. The big difference would be that regardless of the success
> of the resident in maintaining employment the money would be theirs
> and not the PHAs'. If not used for one of the reasons indicated above,
> it would be refunded to the tenant upon leaving public housing.
>
> Under the second proposal, the results would be less administrative
> work for the PHA, less confusion for the resident and with the
> inclusion of a standard deduction for all earned income it would
> affect more families and hopefully provide a self-sufficiency
> incentive to the resident. The PHA would be able to collect more funds
> in the form of rent thus reducing the effect of reduced operating
> subsidy funding by Congress and hopefully reduce the need for
> additional appropriations to operate public housing.

5.  **Program Cost/Savings:** (What is the cost benefit analysis of your
    suggestion; include implementation costs)

> Under the first proposal, I do not expect there to be a real change in
> costs to the PHA, for there would still be tracking required. There
> may be some cost savings related to rent calculation.
>
> Under the second proposal, there should be a significant reduction in
> administrative man hours that are currently required to track
> participants, recalculate rents and encourage resident participation.
> The PHA would be less dependent on Congress for funding and the
> benefit to all working families would be felt.

6.  **Regulatory/Statutory Reference:** What regs/statues/handbooks
    governance would need to been changed to implement your proposal

> Changes would have to be made to 24 CFR Ch IX paragraph 960.255

7.  **Stakeholder Impact:** (Who is impacted +/- by your proposal - PHA,
    Resident, Industry, HUD, Taxpayer)

> All stakeholders benefit under either proposal. The PHA benefits by
> having a tool that can really change the options available for
> participating families or by being less dependent on Congress for
> funding thus impacted to a lesser degree when there are funding
> reductions.
>
> The Resident benefits by either accumulating funds to open up doors
> that are normally not there for them and doing so through their own
> hard work, not another government handout or allowed to keep more of
> their earned income.
>
> The industry benefits as a whole as it encourages participants in the
> program to "move up and out" of public housing in turn giving other
> qualified families an opportunity to obtain housing and do the same.
>
> HUD benefits in that funding for public housing can go farther and
> serve more families. It reduces the complexity of the monitoring that
> is required to ensure public housing agencies are administering the
> programs correctly.
>
> Tax Payers benefit by reducing the amount of funds needed to keep the
> public housing program running and see actual results in their own
> communities.

8.  **Other Factors for Consideration:**

> Pride in accomplishing something positive is always a factor to
> consider. This applies to Residents, PHAs, the Industry, HUD and
> Taxpayers.