United States General Accounting Office

GAO Testimony

Before the Subcommittee on VA, HUD, and Independent

Agencies, Committee on Appropriations

U.S. Senate

Not To Be

Released

Before

9:30 a.m. EST

Thursday

March 12, 1998

HOUSING AND URBAN

DEVELOPMENT

Comments on HUD’s Fiscal

Year 1999 Budget Request

Statement for the Record by

Judy A. England-Joseph, Director,

Housing and Community Development Issues,

Resources, Community, and Economic

Development Division

GAO/T-RCED-98-123

Mr. Chairman and Members of the Subcommittee:

We are pleased to have the opportunity to comment on the Department of

Housing and Urban Development’s (HUD) fiscal year 1999 budget request.

HUD has proposed a fiscal year 1999 appropriation of approximately $25

billion to support a variety of housing and community development

programs. As you requested, we reviewed the reasonableness of selected

aspects of HUD’s fiscal year 1999 budget request. Our statement today is

based on our recently completed and ongoing work and will discuss

(1) actions HUD has taken or plans to take to improve its budget estimates,

(2) the reasonableness of HUD’s estimate for Section 8 tenant-based

assistance,1

 (3) HUD’s justification for its Section 8 project-based

amendment request, (4) HUD’s request for funding to assist the homeless,

(5) HUD’s request for $100 million to fund its new Regional Connections

Initiative, and (6) the future budgetary implication of welfare reform.

Appendix I contains the scope and methodology of our review.

In summary, we found the following:

• Recognizing the need to improve its budget estimating process with

better oversight and documentation, HUD has started to improve its

process by modifying its organizational structure to increase oversight

among the staff responsible for formulating budget estimates. However,

many of HUD’s planned improvements—such as Office of Budget’s analysis

of program office submissions—were not implemented in time to affect

the Department’s fiscal year 1999 budget estimate but, according to HUD

officials, will be in place to enhance the fiscal year 2000 process.

•HUD’s request for $4.7 billion to renew Section 8 tenant-based assisted

housing contracts for fiscal year 1999 could be reduced by $439 million.

This is the amount of excess budget authority in the Section 8 moderate

rehabilitation program that could be used in place of new budget authority

to renew expiring housing assistance contracts. In addition, because this

excess budget authority exists, HUD may not need the $70 million it has

requested for Section 8 moderate rehabilitation amendment funding.

•HUD’s budget request for $1.3 billion in Section 8 project-based

amendment funding—funds needed to cover shortfalls in long-term

Section 8 contracts—substantially exceeds the amounts that HUD’s

1

The Section 8 housing assistance program, named for the revised section 8 of the U.S. Housing Act of

1937, was originally established by the Housing and Community Development Act of 1974 (P.L.

93-383). It includes tenant-based assistance for specific households and project-based assistance for

specific properties.

Page 1 GAO/T-RCED-98-123
analyses indicated are needed. According to HUD officials, the excessive

amount reflects a policy decision by the Office of Management and Budget

and HUD to augment the request due to the long-term need for amendment

funding.

•To help address the needs of the nation’s homeless, HUD has requested

34,000 new Section 8 vouchers. Congressional concern exists over the high

proportion of funding for assistance for the homeless that was spent on

supportive services instead of on direct housing. Although these new

vouchers will increase the amount of direct housing assistance for the

homeless, HUD has not developed the eligibility standards or other planning

criteria for these new vouchers that would facilitate implementing the

program.

•HUD’s budget request for $100 million for the Regional Connections

Initiative (RCI), a new set-aside within the Community Development Block

Grant program to address key regional issues, does not provide enough

detail to indicate whether this is a reasonable funding level for the

program. The additional support that HUD provided, however, does not

recommend a significant federal effort to address regional problems.

Nevertheless, HUD officials believe the funding level is a manageable

set-aside. Because of the work required to initiate a new program like this,

we question whether the funds can be awarded in fiscal year 1999.

•Welfare reform may have a substantial future impact on HUD’s spending

for assisted housing for low-income households. However, estimating the

impact may not be possible because the states’ differing welfare reform

provisions will create varied state-by-state and year-by-year impacts.

HUD’s Fiscal Year

1999 Budget and

Programs

Established in 1965, HUD is the principal federal agency responsible for

programs in four areas—housing assistance, community development,

housing finance, and regulatory issues related to areas such as lead-based

paint abatement and fair housing. To carry out its many responsibilities,

HUD was staffed by 9,885 employees as of January 1998.

•Housing Assistance: HUD provides (1) public housing assistance through

allocations to public housing authorities and (2) private-market housing

assistance through rental subsidies for properties, referred to as

project-based assistance, or for tenants, known as tenant-based assistance.

In contrast to entitlement programs, which provide benefits to all who

Page 2 GAO/T-RCED-98-123
qualify, the benefits of HUD’s housing assistance programs are limited by

budgetary constraints to only about one-fourth of those who are eligible.

•Community Development: Primarily through grants to states, large

metropolitan areas called entitlement areas, small cities, towns, and

counties, HUD provides funds for local economic development, housing

development, and assistance to the homeless. The funding for some

programs, such as those for the homeless, may also be distributed directly

to nonprofit groups and organizations.

•Housing Finance: The Federal Housing Administration (FHA) insures

lenders—including mortgage banks, commercial banks, savings banks,

and savings and loan associations—against losses on mortgages for

single-family properties, multifamily properties, and other facilities. The

Government National Mortgage Association, a government-owned

corporation within HUD, guarantees investors the timely payment of

principal and interest on securities issued by lenders of FHA-insured and

VA- and Rural Housing Service-guaranteed loans.

•Regulatory Issues: HUD is responsible for regulating interstate land sales,

home mortgage settlement services, manufactured housing, lead-based

paint abatement, and home mortgage disclosures. HUD also supports fair

housing programs and is partially responsible for enforcing federal fair

housing laws.

HUD’s programs are supported through annual appropriations

(discretionary budget authority) that are subject to discretionary spending

limits under the Budget Enforcement Act, as amended. For fiscal year

1999, HUD requested about $25 billion in discretionary budget authority,

which, in combination with available budget authority from prior years,

will help support about $33.2 billion in outlays.2

 This request represents a

4-percent increase in budget authority and a negligible increase in

estimated outlays over fiscal year 1998.

2

Budget authority is the authority provided by federal law to incur obligations that will result in

outlays. Appropriations are the most common means of providing budget authority. Outlays are the

measure of federal spending and are payments to liquidate obligations.

Page 3 GAO/T-RCED-98-123
HUD Plans

Management Reforms

to Improve Budget

Estimates

As we reported in February 1998, accurate budget estimates are essential

for federal agencies to meet their fiscal responsibilities because such

estimates facilitate sound policy decisions and effective funding trade-offs.3

 Unfortunately, for years HUD had difficulty submitting accurate budget

estimates. Recognizing the need to improve its budget process with better

oversight and documentation, HUD has developed and begun implementing

corrective actions.

HUD recently placed all departmental budget operations under the Office of

the Chief Financial Officer (CFO) to ensure that budgeting is integrated

with financial management oversight. In the past, HUD’s budget operations

have been fragmented and disjointed, preventing clear accountability and

necessary coordination. This problem was the result of the CFO’s inability

to link budgeting with strategic planning and financial management,

according to HUD’s Management Reform Plan. As another improvement,

HUD is hiring a chief financial officer for all program divisions to mirror the

operations of the Department’s Office of the CFO. Previously, the program

division’s budget director and comptroller reported to a deputy assistant

secretary. Under the new structure, the division’s budget director and

comptroller will report to the division’s CFO, who will coordinate with the

agency’s CFO and the division’s program staff to ensure adequate oversight.

In addition to organizational changes, the Office of the CFO plans to

develop budget estimating policies and procedures that build in enough

time for adequate coordination, oversight, and communication. However,

HUD did not implement many of the changes in time to affect the

Department’s fiscal year 1999 budget estimate. According to HUD’s Director

of the Office of Budget, time constraints prevented his office from

performing analytical reviews of program office submissions. He said that

his Office was limited to reviewing the fiscal year 1999 budget estimates

for numerical accuracy and that this Office could not always question the

estimates’ reasonableness or underlying basis. He believes that the

planned improvements should be operational in time for HUD’s fiscal year

2000 budget submission.

3

Section 8 Tenant-Based Assistance: Opportunities to Improve HUD’s Financial Management

(GAO/RCED-98-47, Feb. 20, 1998).

Page 4 GAO/T-RCED-98-123
HUD’s Request for

Section 8

Tenant-Based

Assistance Could Be

Reduced

HUD has significantly improved its budgeting for tenant-based contract

renewals by omitting duplicative contingency allowances and accounting

for excess budget authority in the Section 8 certificate and voucher

programs. However, HUD’s request for $4.7 billion to renew Section 8

tenant-based contracts could still be reduced by the amount of excess

budget authority in HUD’s moderate rehabilitation program, or

$439 million.4

 In addition, because excess budget authority exists in the

moderate rehabilitation program, HUD may not need the $70 million it has

requested for moderate rehabilitation amendments.

In contrast to the Department’s Section 8 tenant-based contract renewal

request for fiscal year 1998, HUD’s request for fiscal year 1999 does not

appear to contain any duplicative contingency factors. Instead, HUD’s

improved budget estimate for fiscal year 1999 is based on actual

expenditure data adjusted for inflation. In addition, HUD used $3.7 billion of

excess budget authority recaptured from the Section 8 tenant-based

program to offset the cost of contract renewals in fiscal year 1999.

Although HUD has improved its budget-estimating process, we believe that

the Department is still overestimating its need for contract renewal

funding because $439 million in excess budget authority in the moderate

rehabilitation program could be used to renew expiring contracts in lieu of

requesting new budget authority. As shown in table 1, HUD determined in

January 1998, that the gross excess budget authority in the Section 8

moderate rehabilitation program was about $814 million. Of that amount,

the Department estimates that it will need $191 million to meet funding

shortfalls in the program and $184 million to cover contingencies, such as

decreases in tenants’ incomes or unexpected rent increases. (HUD believes,

however, that it needs statutory authority from the Congress to use excess

budget authority to cover some of these funding shortfalls.) The remaining

$439 million is the budget authority that HUD considers to be in excess of

the Section 8 program’s needs.

4

For the tenant-based program, HUD contracts with state and local housing agencies to manage the

program’s certificates and vouchers, which assist 1.4 million households. These agencies make

payments to private-sector landlords to subsidize the rents of certificate and voucher holders.

Page 5 GAO/T-RCED-98-123
Table 1: Excess Budget Authority in

the Section 8 Moderate Rehabilitation

Program Dollars in Millions Gross excess budget authority as of 1/15/98 $814

Less: excess budget authority needed to fund shortfalls (191)

Less: reserve for contingencies (184)

Excess budget authority $439

Source: HUD’s Office of Public and Indian Housing.

According to HUD officials, the Department has not decided yet whether to

recapture this budget authority or how much it would recapture. Although

HUD did not complete its analysis of excess budget authority in the

moderate rehabilitation program in time to include this amount in its

initial budget submission for fiscal year 1999, we believe sufficient time

remains before conference for HUD to revise its fiscal year 1999 request to

reflect the $439 million in excess budget authority available to reduce the

cost of renewing contracts.

HUD’s January 1998 analysis also shows that a request for $70 million to

amend Section 8 moderate rehabilitation contracts may not be needed.

Generally, amending contracts refers to changing specific housing

assistance contracts to add more funding. According to HUD officials, the

$70 million was included in the budget as a placeholder until the

Department completed its analysis of excess budget authority in the

moderate rehabilitation program. As noted above, HUD’s analysis shows

that sufficient excess funding exists in the program to make the request

for $70 million unnecessary. If the Congress grants HUD the authority it

believes it needs to use excess budget authority to cover funding shortfalls

in the program, Department officials told us that they would not need this

$70 million in amendment funding.

HUD’s Project-Based

Amendment Request

May Be Overstated

According to HUD, the total amount of Section 8 project-based amendment

funding needed for fiscal year 1999 is $1.7 billion. These total amendment

needs are then reduced by a $463 million offset coming from estimated

“recapture amounts”—that is, balances remaining on expiring contracts

that may be recaptured and used to fund contract amendments.5

 As a

result, HUD’s fiscal year 1999 budget requests $1.3 billion for Section 8

5

The project-based contracts were entered into beginning in the 1970s and 1980s, typically for 15-, 20-,

or 40-year periods. While the funds provided for these long-term contracts have exceeded actual needs

in some instances, they have been insufficient in other instances to make rental assistance payments

through the terms of the contracts. Beginning in the early 1990s, the Department started requesting

amendment funding for the contracts with insufficient funding.

Page 6 GAO/T-RCED-98-123
project-based amendments. We do not believe that HUD’s request for

Section 8 project-based amendment needs is adequately supported.

Furthermore, HUD’s budget request for Section 8 project-based amendment

funding substantially exceeds the amounts that HUD’s analyses indicated

are needed.

The support HUD provided to us for its amendment budget request was an

analysis dated April 1997. The analysis was formulated using a

methodology that HUD refers to as “leveling,” under which funding

shortfalls are spread over the remaining term of the contract rather than

beginning in the year the contract is projected to run out of money. For

example, for a contract costing $1 million a year with 10 years remaining

and $9 million available, the $1 million shortfall would be spread in

$100,000 increments over the next 10 years, rather than being identified as

a shortfall of $1 million in the 10th year. HUD officials told us the goal of the

leveling methodology is to enable the Department to request a consistent

annual amount to fund amendments and to avoid requesting large amounts

in later years.

The April 1997 analysis, derived from the Budget Forecast System, which

the Department uses to estimate its Section 8 amendment needs for

budgeting purposes, indicates a total amendment need of $1.2 billion in

fiscal year 1999, or about $500 million less than the total amount identified

in HUD’s budget request for fiscal year 1999. HUD officials said that this

additional $500 million reflects a policy decision by the Office of

Management and Budget and HUD to augment the request because of the

long-term funding need for amendments.

In addition, an analysis of Section 8 project-based amendment needs that

we obtained from HUD in February 1998 shows that substantially higher

amounts of recapture funds are projected to become available in the next

several years than those that are reflected in the budget. HUD prepared this

analysis at our request to address problems that we identified in HUD’s

previous analyses of its Section 8 amendment needs. Among other things,

we found the previous analyses did not include Section 8 project-based

funding that HUD received in its fiscal year 1997 appropriation and

erroneously excluded about 1,800 Section 8 contracts. The February 1998

analysis indicates that $2.6 billion in recaptures are projected to become

available in fiscal year 1998, compared with the $463 million recapture

amount used to offset the 1999 budget request. We are currently reviewing

this analysis as part of the work we have underway examining HUD’s

Page 7 GAO/T-RCED-98-123
unexpended Section 8 project-based balances.6

 We plan to issue our report

in July 1998.

HUD’s Newest

Homeless Initiative

Increases Direct

Housing Assistance

for the Homeless

For fiscal year 1999, HUD is requesting $958 million to fund its ongoing

programs for the homeless and $192 million for 34,000 new Section 8

vouchers for homeless individuals or families. Although congressional

concern exists about the proportion of homeless funding spent on

supportive services as compared to the amount spent on direct housing

assistance, HUD’s request for 34,000 new vouchers for the homeless would

increase housing assistance for the homeless. However, HUD has not

developed the eligibility standards or other planning criteria for these

vouchers that would facilitate program delivery.

Half of HUD’s Funding for

Competitive Homeless

Grants in Fiscal Year 1996

Was Spent on Supportive

Services

Congressional concern has been expressed about the proportion of HUD’s

homeless funding that is used for supportive services compared to housing

assistance. Moreover, a House bill introduced in 1997 proposed placing a

cap on the percentage of total funding that grantees can use for services

for the homeless. In fiscal year 1996, the latest year for which HUD has

detailed information on the allocation of its homeless assistance funds,

51 percent of the competitive funding HUD awarded to grantees was spent

on supportive services as opposed to direct housing assistance. Table 2

shows the breakdown between services and housing for three of HUD’s

competitive homeless assistance programs.7

Table 2: Proportion of Homeless

Grants Spent on Supportive Services

Versus Assisted Housing in Fiscal

Year 1996

Dollars in millions

Program Total funds awarded

Percentage spent on

supportive services

Single Room Occupancy $47.8 0

Shelter Plus Care 88.7 0

Supportive Housing 576.6 63

Total $713.1 51

Source: HUD’s Office of Community Planning and Development.

6

This review is required by the emergency supplemental appropriations law enacted in June 1997 (P.L.

105-18).

7

HUD’s Homeless Assistance Grants program consolidates the activities of HUD’s six McKinney

homeless assistance programs (Supportive Housing, Single Room Occupancy, Shelter Plus Care,

Emergency Shelter Grants, Safe Haven, and Rural Homeless Housing Assistance) and the Innovative

Homeless Initiatives Demonstration program. Table 2 only includes competitive-based grants that

were funded in fiscal year 1996.

Page 8 GAO/T-RCED-98-123
HUD officials explained that they award the grants on the basis of the level

of demand from grant applicants, and grantees’ requests for services are

high compared to requests for housing. They also speculated that it is

difficult for organizations to obtain needed services through other

agencies, which is why they may be using HUD resources to fill the gap. HUD

officials further commented that funding this need is consistent with the

agency’s Continuum of Care approach that seeks to end homelessness by

bringing together all parts of the community to provide a coordinated

system of care for homeless men, women, and children. In commenting on

a draft of this testimony, the Department said that in all instances it

encourages housing as the end result.

New Initiative Would

Provide Additional

Housing but Might Benefit

From More Detailed

Planning

With its fiscal year 1999 budget request for $192 million to fund 34,000 new

Section 8 vouchers for homeless individuals or families, HUD proposes to

increase the amount of funding for direct housing assistance. These

vouchers will be used to assist families that have achieved a sufficient

level of independence to move to permanent housing that is linked to

services. The vouchers are intended for homeless individuals and families

who would otherwise have the greatest difficulty securing permanent

housing resources, as determined through the approved Continuum of

Care approach.

However, unlike the Department’s fiscal year 1999 budget request for

50,000 new welfare-to-work vouchers, HUD’s request for new vouchers for

the homeless does not describe the criteria that would be used to

distribute the vouchers. For example, under HUD’s welfare-to-work

voucher proposal, any housing agency requesting permission to distribute

vouchers must (1) prepare a plan that includes the criteria to be used to

select the recipients and (2) describe the proposed strategy for counseling

tenants, providing assistance in seeking housing, and reaching out to

landlords. Furthermore, the agency must determine that obtaining

tenant-based housing assistance is critical for the applicant to obtain or

retain employment and that the applicant is not already receiving

tenant-based assistance. If HUD developed similar requirements for the

recipients of vouchers for the homeless, the program’s implementation

could likely begin shortly after the funding is received, strengthening the

program’s efficiency.

We believe that the lack of planning raises concerns about how quickly

and effectively this program can be implemented. HUD, on the other hand,

stated that it has a structure in place through its continuum of care grant

Page 9 GAO/T-RCED-98-123
process as well as public housing authorities that are experienced in

administering the Section 8 voucher program. Nevertheless, further details

by HUD on how such a program will work would be useful in any debate on

expanding the housing assistance provided to the homeless.

Key Report

Underlying HUD’s

Regional Connections

Initiative Does Not

Recommend a

Significant Federal

Effort

HUD’s fiscal year 1999 budget proposal includes $100 million for a new

Community Development Block Grant (CDBG) set-aside—the Regional

Connections Initiative (RCI). RCI is intended to help states and localities

develop and implement strategic plans that address key regional issues

facing the nation’s metropolitan and rural communities. HUD is planning to

award grants under the program to states and localities on a competitive

basis. HUD’s interest in developing a program designed to encourage and

facilitate efforts to address regional issues seems justified in light of the

Department’s mission.

However, given that RCI is a new initiative, HUD’s budget justification does

not provide enough detail to determine whether $100 million is a

reasonable funding level. Moreover, the key study (still in draft form)

underlying this new initiative does not recommend a significant federal

effort to address regional problems because little consensus exists at the

local and state levels for such an effort. In addition, the study concluded

that in the future, emerging regional efforts could raise questions about the

appropriate federal role. According to HUD officials, the RCI funding level

was a judgment call and was considered a manageable set-aside under the

CDBG program.

In addition, HUD officials believe that the $100 million requested for RCI will

be awarded in fiscal year 1999. However, several tasks need to be

accomplished before these funds are committed, including selecting an RCI

advisory board of community development experts, writing program

regulations, developing a notice of funding availability, allowing applicants

time to prepare their proposals, reviewing submitted applications, and

deciding which applicants will receive RCI funds. To accomplish these

tasks, HUD expects to use expertise from outside the Department to help

design and review the RCI grant program in time to allow funds to be

awarded in fiscal year 1999. Because of the tasks and coordination

necessary, however, we question whether such an ambitious schedule is

workable for this new initiative.

Page 10 GAO/T-RCED-98-123
While Potentially

Significant, Predicting

the Impact of Welfare

Reform on HUD’s

Future-Year Budgets

May Not Be Possible

As welfare reform is implemented throughout the nation, it could have

implications for HUD’s future year budgets. HUD estimates that one-third of

the households receiving rental assistance from HUD depend on cash

welfare assistance for some or all of their income. Under welfare reform,

cash assistance programs became time-limited, work-dependent, and

generally less available. Because residents pay a portion of their income

for rent, any reduction in cash assistance without a commensurate

increase in wage income would result in reduced rental payments from

tenants. Managers at most of the 18 housing agencies we visited while

conducting our ongoing work expressed concern about barriers their

residents face in finding employment within their states’ time limits. Under

existing program regulations, reductions in tenant rental payments would

increase the size of the payments that HUD makes to housing agencies and

private landlords on behalf of low-income tenants to make up the

difference between the tenants’ rental payments and the housing units’

operating cost or rent.

While welfare reform may have a significant impact on HUD’s future year

budgets, measuring the potential impact may not be possible. One reason

is that the impact of welfare reform will vary from state to state and from

year to year because states have differing welfare reform provisions,

making the development of national estimates of the impact of welfare

reform on HUD nearly impossible. In Massachusetts, for example,

recipients will begin to hit the state’s time limits for cash assistance in

December 1998, while in Minnesota, recipients will not reach the time

limits until July 2002. A second reason is that conclusions drawn about

welfare reform’s impact on recipients generally may not apply to those

who also receive housing assistance because evidence suggests that

welfare recipients receiving housing assistance may have greater difficulty

finding and retaining employment than other welfare recipients.

Furthermore, HUD does not collect the detailed data on recipients’

education, work, and welfare histories needed to assess likely outcomes

for its tenants. Finally, while the general health of the economy is a major

factor in the recent decline in welfare caseloads, the future course of the

economy cannot be predicted with any certainty.

Conclusion We believe that HUD is generally moving toward more supportable budget

estimates. For example, HUD recently prepared a new analysis of the

Section 8 moderate rehabilitation program showing that sufficient excess

budget authority exists to cover both program shortfalls and unexpected

costs and still have $439 million remaining in excess budget authority. This

Page 11 GAO/T-RCED-98-123
means that a separate funding request for amendments may not be

necessary. In the Section 8 project-based program, however, HUD’s budget

estimate is not consistent with its analysis of amendment needs. As HUD

continues to refine its analyses in these areas, the Department will have

the opportunity to amend its budget estimate before the Congress votes on

HUD’s appropriation bill in the fall. In addition, we found that for some new

initiatives—such as vouchers for the homeless and the Regional

Connections Initiative—to be effective in fiscal year 1999, HUD may need to

complete appropriate and perhaps ambitious planning.

Matters for

Congressional

Consideration

The Congress may wish to consider reducing HUD’s request for Section 8

contract renewals to account for the $439 million in excess budget

authority in the Section 8 moderate rehabilitation program. Because HUD

has set aside excess budget authority in the moderate rehabilitation

program, the Congress may also wish to consider not funding HUD’s

request for $70 million to amend moderate rehabilitation contracts.

Finally, the Congress may wish to seek assurances from HUD that these

programs will be ready to effectively commit funds and review HUD’s

$192 million request for vouchers for the homeless and its $100 million

request for the Regional Connections Initiative.

Agency Comments We provided a draft of this statement to HUD for its review and comment.

The Department provided comments on several issues, including its

request for new Section 8 vouchers for the homeless and its Regional

Connections Initiative. In response to our concerns about the planning

accomplished for these two programs, HUD said that it expects housing

authorities to compete for and administer the vouchers for the homeless.

For the Regional Connections Initiative, HUD said that it recognizes that a

limited number of localities and states are ready and willing to participate

in this effort, but that the $100 million proposed funding will still

accommodate a meaningful initiative. We made appropriate changes in the

statement to reflect HUD’s concern; however, we continue to believe that

the quality of planning for these new efforts will be critical to their

effectiveness in fiscal year 1999.

Page 12 GAO/T-RCED-98-123
Page 13 GAO/T-RCED-98-123
Appendix I 

Objective, Scope, and Methodology

The Chairman and Ranking Minority Member of the Subcommittee on VA,

HUD, and Independent Agencies, Senate Committee on Appropriations,

requested that we assess the reasonableness of selected aspects of HUD’s

fiscal year 1999 budget request. To accomplish this task, we reviewed

HUD’s February 1998 Congressional Justifications for 1999 Estimates. We

also interviewed appropriate officials in HUD’s Offices of the Chief

Financial Officer, Public and Indian Housing, Housing, and Community

Planning and Development to obtain more information on planned uses

for funding requested. When available, we reviewed this additional

information. Finally, we based portions of this statement on our recently

issued report on HUD’s financial management of its Section 8 tenant-based

program as well as on our current work focusing on HUD’s financial

management of the Section 8 moderate rehabilitation and project-based

programs and the impact of welfare reform on public and assisted

housing.

We conducted our work in February and March 1998 in accordance with

generally accepted government auditing standards.

(385725) Page 14 GAO/T-RCED-98-123
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