Rural Housing Service: Additional Actions Would Help Ensure Reasonableness of Rental Assistance Estimates
Published: 2017-09-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: RHS provides about $1.4 billion annually in rental subsidies to owners of multifamily housing for more than 270,000 low-income rural households. RHS's agreements with property owners provide rental assistance payments estimated to last 1 year. In fiscal years 2013–2015, RHS was unable to renew all its agreements because it ran out of funds. For example, in fiscal year 2015, the funding gap was about $97 million. As a result, some property owners' rental assistance payments were delayed.
GAO was asked to examine the reasons why RHS ran out of funds and how RHS plans to improve its budget requests. This report examines (1) reasons RHS ran out of funds for renewing rental assistance agreements in fiscal years 2013–2015 and how it responded, and (2) what RHS has done to help prevent future funding gaps and the extent to which it has addressed related budgetary issues. GAO analyzed RHS budget and rental assistance data for fiscal years 2011–2016, reviewed RHS policies and procedures, and interviewed RHS national office officials and staff from15 (of 47) randomly selected state offices.
section_title: What GAO Found
paragraphs: An interplay of three primary factors contributed to the funding gaps that the rental assistance program of the U.S. Department of Agriculture's Rural Housing Service (RHS) faced in fiscal years 2013–2015:
Fiscal year 2013 sequestration and rescissions. An across-the-board cancelation of budgetary resources in March 2013 decreased the program's approximately $907 million budget by about $70 million.
Unreliable methods for estimating rental assistance costs. RHS used a state-wide, per-unit average cost to calculate rental assistance agreement amounts. This resulted in some properties receiving more funds than needed, tying up funds that could have been used for other properties.
Limited management flexibility. RHS had limited ability to adjust its program management to help prevent funding gaps. For example, RHS does not have authority to fund agreement renewals for less than 1 year.
RHS took steps to mitigate the effects of the funding gaps on property owners, but some had negative consequences. For example, to cover fiscal year 2014–2015 gaps, RHS used unexpended rental assistance funds from properties that had exited the program. But, as a result, the program lost the associated rental assistance units and RHS could not re-assign the units to other properties.
RHS has taken steps under its existing authorities to help prevent future funding gaps but lacks certain plans and controls to help ensure its estimates of rental assistance costs are reasonable. In fiscal year 2016, RHS began using a new cost model integrated with its program information system that more accurately estimates rental assistance agreement renewals. For instance, the model estimates renewal costs based on property-level data rather than state-wide averages. RHS also began including estimates of agreements that would need two renewals in the same fiscal year (a number of which are to be expected) in budget requests. But, GAO found weaknesses in aspects of RHS's budget estimation and execution of rental assistance. Specifically, RHS:
does not have a plan for ongoing monitoring or testing of the new estimation method. Federal internal control standards call for management to establish monitoring activities and evaluate results.
lacks controls to detect misestimates of rental assistance, a problem RHS experienced during early use of the model. Federal internal control standards call for control activities for information systems to respond to risks.
has not used the appropriate inflation rates in its budget estimates since fiscal year 2009. Office of Management and Budget guidance states budgets should be consistent with the economic assumptions it provides.
has not provided staff guidance on their responsibilities for determining whether properties' rental assistance should be renewed. Federal internal control standards call for documenting responsibilities through policies.
The weaknesses may exist partly because RHS continues to refine its estimation method, which has been in effect for about 2 years. By addressing them, RHS would have greater assurance that it will develop the best possible estimates.
section_title: What GAO Recommends
paragraphs: GAO recommends that RHS develop plans for testing rental assistance estimation methods, develop estimation controls, create controls to ensure use of appropriate assumptions in budget requests, and provide guidance on reviews of rental assistance renewals. RHS did not comment on GAO's recommendations.

section_title: Letter
paragraphs: Each year, the Rural Housing Service (RHS) of the U.S. Department of  Agriculture (USDA) provides rental subsidies through the Section 521  Rental Assistance Program for more than 270,000 rural households.  Under the program, eligible tenants pay no more than 30 percent of their  income toward the rent, and RHS pays the balance to the property owner.  With an annual budget of more than $1.3 billion, the rental assistance  program is the largest program within RHS, accounting for more than half  of its budget.
In fiscal years 2013–2015, RHS was not able to renew all eligible rental  assistance agreements because it obligated (legally committed) all its  appropriated funds before the end of the fiscal year, September 30. This  resulted in some owners missing or receiving delayed rental assistance  payments. Additionally, RHS requested and received more than $200  million for fiscal year 2016 above the amount requested in the President’s  budget to cover (among other things) the cost of renewing agreements  that could not be renewed at the end of fiscal year 2015.
You asked us to examine why RHS ran out of funds before the ends of  fiscal years 2013–2015 and how RHS plans to improve the accuracy of its  budget requests. This report examines (1) the reasons RHS ran out of  funds for renewing rental assistance agreements in fiscal years 2013– 2015, and how it responded to the funding gaps in those years; and (2)  what RHS has done to help prevent future funding gaps and the extent to  which it has addressed related budgetary issues.
To address these objectives, we analyzed rental assistance obligation  and expenditure data from RHS’s accounting system for fiscal years  2011–2016 to determine the timing and amount of renewals of rental  assistance agreements in each year. We reviewed RHS policies and  procedures for budget estimation and execution (such as allocating and  obligating funds for rental assistance agreements) and compared them to  federal guidance on budget preparation and federal internal control  standards that apply to these processes. We also reviewed budget  documents showing the amount of budget authority appropriated to the  rental assistance program in fiscal years 2013–2015 and reductions in  appropriated amounts due to sequestration and rescissions (cancelations  of budgetary resources) in fiscal year 2013. We examined the  methodology behind RHS’s obligation tool for estimating rental assistance  agreement amounts and budget requests. We interviewed RHS and  Office of Management and Budget (OMB) officials and staff on RHS’s  budget estimation processes, including the inflation rates RHS used for  fiscal year 2010–2018 budget requests. We interviewed staff who  administer the rental assistance program at a nongeneralizable sample of  15 randomly selected Rural Development state offices (out of 47) about  practices for reviewing and approving rental assistance obligations. To  assess the reliability of data from RHS’s accounting system, we  interviewed Rural Development officials, reviewed related documentation,  and tested the data for missing or erroneous values. We determined the  data we used were sufficiently reliable for purposes of describing the  number and timing of rental assistance agreement renewals and  payments. Appendix I describes our objectives, scope, and methodology  in greater detail.
We conducted this performance audit from November 2015 to September  2017 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Section 521 Rental Assistance Program, started in 1978, is  administered by RHS’s Multi-family Housing Portfolio Management  Division. The program provides rental assistance for tenants living in  properties financed by direct loans from RHS’s Multi-Family Housing  Direct Loans and Farm Labor Housing Direct Loans and Grants  programs. As discussed previously, eligible tenants pay no more than 30  percent of their income toward rent and RHS pays the balance to the  property owner. Tenants must be low-income (with incomes 50-80  percent below area median income) or very-low-income (with incomes  below 50 percent of area median income) to be eligible for rental  assistance. As of the end of fiscal year 2016, the program had 14,308  properties and 282,806 units receiving rental assistance, according to  RHS.
RHS provides the rental subsidies through agreements with property  owners for an amount estimated to last for 1 year as required under the  program’s appropriations acts, which RHS interprets as 12 monthly rental  assistance payments. RHS draws down on this amount for each rental  assistance payment made for the property. The agreements with the  owners expire when the original dollar amount obligated is fully  expended, even if the period covered by the agreement is longer than the  expected 1 year (that is, more than 12 payments are required to exhaust  the obligated dollar amount), or is less than 1 year. The agreements  specify that owners will receive payments on behalf of tenants in a  designated number of units at the property. Each month, property owners  or their management companies must certify the number of rental  assistance units that are occupied and submit a request for payment of  rental assistance to RHS. In addition, property owners must certify  tenants’ incomes annually or when a tenant experiences a substantial  change in income.
RHS automatically renews expiring agreements if funding is available and  the owner is in compliance with program requirements. For fiscal years  2013–2015, the vast majority of rental assistance agreements were  renewals of prior agreements, as opposed to new agreements for  properties entering the rental assistance program. An agreement can be  renewed more than once in the same fiscal year if the obligated funds are  fully expended within the fiscal year. RHS refers to the second agreement  in the same fiscal year as a “second renewal.”
RHS’s national office and Rural Development’s state and local offices  manage the rental assistance program. The Portfolio Management  Division within the national Multi-Family Housing office develops and  implements program regulations, estimates program budgets, and tracks  nationwide program statistics. It also has responsibility for executing the  program’s budget, including allocating funds to properties for rental  assistance agreements and tracking use of the appropriated funds. Rural  Development state and local offices monitor the program and interact with  property owners and property management companies. State office  responsibilities include budget execution duties such as approving and  obligating funds for rental assistance agreements with property owners  and monitoring unused rental assistance units in the state. Local offices  review and approve property budgets and rent increases and review  owners’ compliance with program requirements.
RHS uses the Multi-Family Housing Information System (MFIS) to  allocate funds, calculate obligation amounts for rental assistance  agreements, and maintain data on properties and tenants. Property  owners or their management companies submit tenant information and  monthly requests for payment through an online portal that uploads the  information directly to MFIS. As noted above, properties must be financed  by the Multi-Family Housing Direct Loans or Farm Labor Housing Direct  Loans and Grants programs to receive rental assistance. Because each  owner also must make a monthly mortgage loan payment to RHS for the  property, MFIS calculates the net rental assistance payment due to the  owners each month. That is, it calculates the amount of rental assistance  due to the owner and subtracts the mortgage payment that the owner  must pay to RHS, among other things. If the amount owed to the owner is  greater, RHS makes a cash payment to the owner. If the amount owed to  RHS is greater, the owner must still make a payment to RHS.
section_title: Multiple Factors Caused Funding Gaps and RHS Took Steps to Mitigate Effects
subsections: section_title: An Interplay of Factors Contributed to Fiscal Year 2013–2015 Gaps
paragraphs: An interplay of factors—primarily sequestration and rescissions,  unreliable estimation methods, and limits on RHS’s ability to manage  program funds differently—resulted in the program funding falling short of  the amount needed to renew all eligible rental assistance agreements at  the ends of fiscal years 2013, 2014, and 2015. In those years, RHS used  all that remained of its appropriated funds for agreement renewals by July  or August. According to our analysis of RHS data, the number of  properties whose agreements ran out of funds but could not be renewed  until the next fiscal year was 308 in fiscal year 2013, 401 in fiscal year  2014, and 943 in fiscal year 2015 (of about 15,000 properties). RHS  officials estimated that the program would have needed about $97 million  more in fiscal year 2015 to renew all eligible agreements on time. RHS  did not calculate the amount of funds it would have needed to renew all  expiring agreements in fiscal year 2013 because no funds were available  to the program for renewals, according to RHS officials. The officials  noted that RHS also did not calculate this number for fiscal year 2014  because it addressed the rental assistance needs of the affected  properties by using previously obligated funds associated with properties  that had exited the program, as discussed below.
Sequestration and rescissions. In fiscal year 2013, sequestration and  rescissions cut about $70 million of the rental assistance program’s  approximately $907 million budget. These cuts also had implications for  the rental assistance program in fiscal year 2014 because they pushed  renewals that could not be funded at the end of 2013 into the subsequent  year.
Unreliable estimation methods. RHS’s methods for calculating the  dollar amount for annual renewal agreements and budget requests had  weaknesses. In fiscal years 2013–2015, RHS calculated the amount of  renewal funding each property would receive by multiplying the number of  rental assistance units by a state-wide, per-unit average cost. Because  actual rental assistance costs at each property generally differed from the  state-wide average, this method resulted in some properties receiving  agreement renewals that provided less funds than needed for 1 year  (resulting in the need for an additional renewal within the same 12-month  period) and other properties receiving more funds than needed for 1 year  (tying up funds that could have been obligated to other properties). In the  aggregate, for agreements renewed in fiscal years 2013–2015,  approximately 35 percent of the amounts were sufficient to make 11–13  rental assistance payments—that is, about 1 year (see fig. 1). In  contrast, about 20 percent lasted for fewer than 11 payments, including  17 percent with funding that lasted for 8–10 payments and about 3  percent with funding that lasted for fewer than 8 payments. Further, about  44 percent of the agreements renewed during the 3-year period lasted for  more than 13 payments, including about 26 percent with funding that  lasted for 14–16 payments and about 18 percent with funding that lasted  for more than 16 payments.
In addition to the limitations in agreement estimates, RHS’s methods for  estimating program costs for its budget requests had weaknesses. For  example, RHS did not account for second renewals (which occur when  the same property requires two renewals of its rental assistance  agreement in the same fiscal year) for its fiscal year 2013 and 2014  budget requests. Some second renewals are to be expected because of  the uncertainty involved in estimating rental assistance costs—vacancies  at properties and tenant incomes can change from month to month. Our  analysis of RHS data found that about 2 percent of properties received a  second renewal in fiscal year 2013 and about 8 percent in fiscal year  2014. These percentages would have been higher if RHS had not run out  of funds for renewals in these years.
Limitations on RHS’s ability to manage funds differently. Program  requirements limited the options available to RHS officials to manage  rental assistance funds differently when faced with constrained budgets.  RHS officials said they were aware in April 2013 that the program lacked  sufficient funds to renew all agreements that would exhaust their funding  before the end of fiscal year 2013 due to reductions in appropriations  from sequestration and rescissions. However, they added that they were  not able to adjust their renewal practices to address the funding gap  because of program requirements.
First, the appropriations acts that funded the program in fiscal years  2013–2015 stated that the agreements must be funded for a 1-year  period, which RHS interpreted as 12 rental assistance payments. (As  previously noted, RHS obligates the amount it estimates is needed for  12 payments, and the agreement expires when the funds are fully  expended, even if the period covered by the agreement is longer than  the expected 1 year.)
Second, program regulations require each rental assistance  agreement to be renewed when it exhausts its funding as long as the  owner has complied with all program requirements.
Third, RHS could not move funds from agreements with more funds  than needed for a 12-month period to agreements with less funds  than needed for a 12-month period because doing so might have  breached the agreements, according to program officials. As  previously stated, RHS’s rental assistance agreements specify a  dollar amount of funding that will be available for rental assistance at  the property until fully expended. RHS officials told us that it was their  understanding that RHS did not have the authority to move funds from  agreements for active properties.
RHS requested certain legislative changes that RHS stated would have  provided it more flexibility to manage constrained budgets. These  proposals were generally not enacted. For example, the President’s  budgets for fiscal years 2015 and 2016 requested authorization for RHS  to enter into partial-year agreements so that RHS could renew  agreements for smaller dollar amounts (that is, amounts estimated to  cover fewer than 12 payments) during periods of funding uncertainty. To  help manage constrained budgets, the President’s budgets also sought  authority for RHS to prioritize agreement renewals based on factors other  than the order in which agreements exhausted their funding. RHS  explained that it had no ability to prioritize renewals for properties where  the need might surpass that of other properties. If it had received the  authority, examples of the criteria RHS said it would use to prioritize  renewals included whether the rental assistance units were occupied over  the prior 12 months and whether more than half of the units at a property  had rental assistance.
section_title: RHS Took Steps to Mitigate the Effects of the Funding Gaps but Some Had Negative Consequences
paragraphs: RHS used a variety of approaches in the years it faced funding gaps to try  to minimize effects on property owners, with mixed results.
Fiscal year 2013. RHS offered owners who did not receive rental  assistance payments at the end of the fiscal year several options to  lessen the financial effect. According to RHS, 308 of approximately  15,000 properties (about 2 percent) were affected by the funding gap  that year. The options RHS offered included allowing owners to use  money from the property’s capital reserve account for operating  purposes, suspend payments to the capital reserve account, and  defer payments on their RHS mortgages (loan deferral). However,  according to RHS officials, some owners declined the options RHS  offered and none of the owners were compensated for the rental  assistance payments they did not receive that year.
Fiscal year 2014. RHS used rental assistance previously obligated to  properties that had exited the program due to foreclosure, mortgage  prepayment, or mortgage maturity for properties with agreements  needing renewal. In some cases, RHS funded 1-year renewals.  According to RHS, the program used about $8.5 million in previously  obligated but unexpended funds to renew agreements for properties  currently in the program that had exhausted their funds in September  and October 2014. In other cases, RHS provided enough funding to  cover a property’s September 2014 rental assistance payment. RHS  officials said they used about $315,000 in previously obligated but  unexpended funds in this manner in fiscal year 2014. In these cases,  RHS renewed the rental assistance agreements when the next fiscal  year’s appropriation was available. According to RHS, agreements for  401 properties (about 3 percent) could not be renewed until the next  fiscal year, but due to the use of previously obligated but unexpended  funds, owners received all rental assistance payments they were due  in fiscal year 2014.
Fiscal year 2015. RHS used two main approaches to try to avoid or  lessen the effect of funding gaps on owners of the 943 properties  (about 6 percent) whose agreements RHS could not renew.
RHS tried to decrease the likelihood of a funding gap by asking  Congress to prohibit second renewals—meaning that, if legislation  were enacted, any agreement that fully expended its funding in  less than 12 months could not be renewed another time in the  same fiscal year. Congress enacted legislation containing the  prohibition on December 16, 2014 (about 2-1/2 months into fiscal  year 2015), but any agreements entered into before that date  were eligible for second renewals. According to RHS officials,  this resulted in 573 second renewals in fiscal year 2015 that RHS  had not anticipated. RHS ran out of funds to renew rental  assistance agreements in July 2015.
In December 2015, Congress authorized RHS to use funds  obligated to properties that had since exited the program to  compensate owners for rental assistance payments that RHS  missed at the end of fiscal year 2015 due to the funding gap.
Between December 2015 and early March 2016, RHS made such  payments totaling about $5.4 million, according to RHS data.
In each fiscal year, some or all of the agreements that could not be  renewed on time due to funding gaps were renewed when the next fiscal  year’s appropriation became available. As previously noted, hundreds of  properties fell into this situation each year. Program officials told us that  these renewals happened early in the next fiscal year. Consistent with  this statement, our analysis found that the number of agreements  renewed in October was substantially higher in fiscal years 2014–2016  than in prior years (see fig. 2). For example, 19 percent of agreements in  fiscal year 2014 were renewed in October. Agreements renewed early in  the fiscal year were more likely to need a second renewal later that year,  further increasing the likelihood that RHS would run out of funds before  the end of the year.
However, some of the approaches RHS used to lessen the effects of the  funding gaps at the end of each fiscal year had negative consequences,  as described below:
Loan deferrals. When some property owners chose to defer their  mortgage payments at the end of fiscal year 2013, RHS’s automated  accounting system incorrectly marked the owners as delinquent on  their mortgages. According to RHS officials, this created problems in  the system such as charging owners late fees and remitting rental  assistance checks to local Rural Development offices instead of  owners. In response, RHS waived the late fees and local office staff  forwarded checks to owners. It took RHS longer than expected to  change the accounting system to correct the delinquencies. Since  February 2017, RHS staff have been able to create deferral  transactions that do not mark the owners as delinquent on their  mortgages.
Use of unexpended funds from properties that exited the  program. When RHS uses funds obligated to properties that exited  the program (due to prepayment of, foreclosure on, or maturing of an  RHS mortgage) to address funding needs at other properties, the  rental assistance units associated with the funds from the exited  properties permanently leave the program. RHS officials said that  rental assistance units must have funds obligated to them in order for  them to remain available to the program. RHS can preserve those  rental assistance units only by assigning them to a second property in  RHS’s portfolio before the funds on their current obligation are  exhausted. The previously obligated but unexpended funds RHS  used to mitigate the effects of the fiscal year 2014 and 2015 funding  gaps—$8.5 million and $5.4 million, respectively—were available  because RHS had not assigned the units associated with those funds  to other properties. RHS officials told us they made a policy decision  around the time of the 2013 sequestration to use the unexpended  funds to help mitigate funding gaps rather than re-assign the units to  maintain the number of units in the program. Therefore, a trade-off of  RHS’s strategy is a shrinking portfolio of assisted rental units.
Prohibition on second renewals. Due to the statutory prohibition on  second renewals in fiscal year 2015, agreements for $4.5 million in  rental assistance could not be renewed that year when they  exhausted their funds. While RHS requested this legislative change to  help prevent the program from running out of funds for standard  renewals, it put owners whose agreement funding lasted less than 1  year in a financially difficult position. Additionally, tenants in affected  properties faced the prospect of rent increases to compensate for the  missed payments. In fiscal year 2016, RHS paid the owners the  missed rental assistance—totaling about $191,000—using previously  obligated but unexpended funds from properties that had exited the  program due to foreclosure or mortgage prepayment. RHS also  asked Congress to remove the prohibition on second renewals for  fiscal year 2016, which Congress did as part of the Continuing  Appropriations Act, 2016, and the Consolidated Appropriations Act,  2016.
RHS officials said if they faced funding gaps in the future, they would  implement the same mitigation measures they have in the past—which  have included using unexpended funds from properties that exited the  program and offering relief options to owners. However, RHS officials told  us that as of the end of fiscal year 2016, RHS had only $5.3 million in  previously obligated but unexpended funds remaining. Further, this  method would reduce the number of assisted units that could be  preserved.
section_title: RHS Improved Rental Assistance Estimates but Some Weaknesses Exist in Budget Estimation and Execution
subsections: section_title: RHS’s New Tool Improved Estimates of Rental Assistance Costs
paragraphs: To improve its rental assistance estimates and streamline the obligation  process, RHS in 2014 began developing a “rental assistance obligation  tool” (obligation tool), a model that estimates rental assistance costs  based on each property’s rental assistance payment requests over the  prior 12 months. RHS began using the tool—which is integrated with  MFIS, RHS’s management information system for the rental assistance  program—to renew agreements in fiscal year 2016 and to estimate the  program’s fiscal year 2017 budget request. To calculate the amount of  funding for each agreement renewal, the obligation tool averages the  property owner’s monthly requests for rental assistance over the past 12  months, but assigns increasingly higher weights to more recent requests.  RHS officials said they chose this weighted average approach because it  is more likely that future rental assistance costs at a property will be  similar to the amount needed in the most recent month of the agreement  than in the first month. The obligation tool also takes into account the  effect of any recent or planned rent increases at the property on its future  rental assistance costs.
In addition to calculating renewal amounts, RHS staff use the obligation  tool to allocate and obligate funds for agreement renewals. The tool  tracks the use of rental assistance at every property and determines  which agreements will be renewed next based on estimates that are  updated daily for each property. In general, when the rental assistance  program receives a funding apportionment from OMB, a program official  enters the amount received into the obligation tool, and the tool allocates  the funds to the agreements that will exhaust their funding next, according  to RHS. USDA Rural Development staff in state offices then use the tool  to obligate the funding amount the tool calculated. According to RHS, the  obligation tool was developed partly to improve efficiency, and the tool  has reduced the administrative burden on state office staff of renewing  rental assistance agreements. When asked about the benefits and  challenges of using the obligation tool, staff with whom we spoke from 12  of 15 randomly selected Rural Development state offices told us that it  reduced the amount of time it took them to obligate funds for renewals.
Our analysis of renewal amounts calculated by the obligation tool in fiscal  year 2016 indicates that RHS’s estimation method generally results in  agreements that last for about 12 payments (see fig. 3). For agreements  that fully expended their funds within the fiscal year, 82 percent of the  amounts were sufficient to make 11–13 rental assistance payments  (compared with about 35 percent for agreements renewed in fiscal years  2013–2015). In contrast, about 9 percent lasted for fewer than 11  payments and about 10 percent lasted for more than 13 payments. For  agreements that did not fully expend their funds during the fiscal year, we  projected remaining payments based on the average of the prior 12  payments. We estimated that 77 percent of these agreements had funds  to make 11–13 payments, while about 2 percent had funds for fewer than  11 payments and about 21 percent had funds for more than 13 payments.
In addition to improving agreement renewal estimates, RHS took steps to  improve its budget estimation procedures. Besides calculating renewal  amounts for each agreement, the obligation tool estimates the cost of the  rental assistance program in future years. Program officials have used the  estimates to help develop the program’s annual budget request,  beginning with the fiscal year 2017 budget. More specifically, the  obligation tool calculates the forecasted cost of the program for the  upcoming 12 months, and program officials may apply an inflation rate to  that number. The forecasted cost is based on the rental assistance usage  at each property and is updated generally on a daily basis by  incorporating new data such as utilization of rental assistance, rent  increases, and other information.
This approach is an improvement over the prior budget estimation  method because it is based on the actual usage of rental assistance at  each property and the data are more up-to-date. Also, in developing  requests for the fiscal year 2016 and 2017 budgets, RHS included the  estimated cost of second renewals in those years. RHS officials told us  the estimates were based on prior experience. While the new estimation  methods for calculating agreement renewals and program budgets are an  improvement over the prior methods, we identified some issues that  suggest further enhancements are needed:
Agreements with excess funds. While we found that the large  majority of agreement renewal amounts calculated by the new  obligation tool were sufficient to make about 12 rental assistance  payments, we also estimated that a limited number of agreements— about 91 out of about 11,530 renewals (less than 1 percent) in fiscal  year 2016—had funding sufficient for 20 or more rental assistance  payments. As noted earlier, agreements with funding that lasts for  more than 12 payments tie up program funds that could be obligated  to other properties. According to an RHS official, an agreement may  last substantially longer than 12 months for a number of reasons. For  example, a property may use less rental assistance than the tool  calculated if the owner leaves units vacant in order to rehabilitate  them. However, these cases also could be the result of  methodological problems.
Seasonal farm labor housing properties. The obligation tool may  not correctly estimate renewal amounts for rental agreements at farm  labor housing properties with occupancy levels that vary seasonally  (as demand fluctuates with crop activity). According to an RHS official,  this issue is likely most pertinent to the approximately 12–15  properties that house migrant workers and that use rental assistance  funds as operating assistance. A staff member at one Rural  Development state office told us that she detected a misestimate for a  farm labor housing property because of the way the obligation tool  weights prior rental assistance usage. As previously noted, the tool  puts the most weight on the most recent month’s rental assistance  payment request. Consequently, at a high-occupancy time of year for  a farm labor housing property, the tool would tend to overestimate the  amount of funding needed for an agreement renewal. According to  RHS data, utilization of rental assistance units at the property cited by  the state office official ranged from 1 to 40 units during fiscal years  2015 and 2016, depending on the month. An RHS official said that  they need to adjust the tool to correctly estimate agreement amounts  for these properties and are currently calculating agreement amounts  manually.
Second renewal estimates. Our analysis of RHS data found that the  number of second renewals RHS estimated for its fiscal year 2016  budget request was low. As previously noted, RHS included an  estimate of the cost of second renewals in its fiscal year 2016 budget  estimate (which was calculated before the obligation tool was put into  use). According to program officials, RHS initially estimated that 8  percent of the units renewed in the year would need a second  renewal, and the President’s budget ultimately included an estimate of  6 percent. However, our analysis of RHS data found more than 14  percent of units required a second renewal in fiscal year 2016.
section_title: RHS Lacks Formalized Plans for Ongoing Testing of the New Tool and a Reasonableness Check for Rental Assistance Amounts
paragraphs: Limitations in Initial Testing and Monitoring and No Formalized Plan  for Ongoing Evaluation  RHS had an information technology (IT) contractor test the obligation tool  during its development to help ensure that it performed computations as  intended, but the contractor did not conduct other tests of conceptual  soundness before the obligation tool was put into use in fiscal year 2016.  For example, RHS did not use earlier years’ rental assistance data to  assess whether the obligation tool would have accurately estimated the  amount of funding a property needed in a subsequent year. RHS staff  and IT contractors also did not test whether the assumptions in the tool  were optimal, such as the way in which rental assistance payment  requests from prior months were weighted in making estimates. RHS  officials told us that the tool was a work in progress and that the first year  of use (fiscal year 2016) would provide the best opportunity to evaluate its  performance. They said that they intended to continuously monitor the  obligation tool and make adjustments as needed.
RHS has done some monitoring of the performance of its obligation tool,  but these efforts had limitations. For example, RHS officials provided us  with two analyses they conducted during fiscal year 2016 to estimate how  long the obligations calculated by the tool would last. However, these  analyses used the date of obligation as the starting point instead of the  date on which the obligated funds were first used to make a rental  assistance payment (which could be 1 or 2 months after obligation). An  RHS official said that the date of first use is not in the information system  from which the obligation tool pulled data. Federal internal control  standards call for management to use quality information to achieve  objectives, including relevant data that have a logical connection with the  information requirements. By not using data on the date of first use,  RHS’s analyses may have overstated the length of time the obligations  could be expected to last.
To monitor the tool’s performance, RHS officials also developed a report  showing the obligation tool’s daily forecasts of total program costs. RHS  officials said they check the daily forecasts to detect any unexpected  variances and compare these amounts to amounts appropriated for the  program. During the course of our review, RHS made several changes to  how this forecast amount was calculated. One change in early fiscal year  2017 was prompted by our question to RHS about why the forecasted  cost grew by about $94 million at the end of fiscal year 2016. RHS  officials realized that the estimate in the report was based on rental  assistance costs for 13 months instead of 12 months. RHS subsequently  adjusted the tool to make forecasts based on costs for 12 months.  Additionally, according to RHS officials, IT contractors conducted an  analysis in early fiscal year 2017 of how long agreement amounts  calculated by the tool in early fiscal year 2016 lasted. But, as of June  2017, RHS was not able to provide us with the analysis because officials  said it was in the clearance process.
One reason RHS has not developed plans for ongoing testing of the tool  may be that RHS has been focused on initial testing of the tool’s  performance during its first year. RHS’s obligation tool is the primary  control to ensure that rental assistance allocations and obligations are  calculated correctly and that program budget requests are reasonable.  Federal internal control standards call for management to establish  monitoring activities to monitor controls and evaluate results and for  ongoing monitoring to be built into a program’s operations and be  performed continually. Furthermore, useful practices for managing risks  associated with models, such as the obligation tool, can include designing  a program of ongoing testing and evaluation of model performance along  with procedures for responding to any problems that appear. Without  monitoring and testing activities called for by federal internal control  standards and other guidance, RHS heightens the risk that any problems  with the obligation tool will go undetected.
No Automated Checks or Other Controls for Reasonableness of  Rental Assistance Amounts  While the obligation tool uses an improved method to estimate rental  assistance costs, RHS does not have automated checks in the tool or  other controls to catch unreasonable estimates (for example, excessive  amounts) that may result from unforeseen circumstances or programming  errors. Early in fiscal year 2016, the tool over-allocated about $4 million to  properties that had recently been transferred from one owner to another  because it did not correctly account for changes in rents at the  properties. According to RHS officials, this error affected agreements for  43 properties. RHS did not catch the error through its own monitoring.  Rather, a property manager alerted RHS that the agreement renewal for  one of his properties provided significantly more funds than needed.  Specifically, according to information provided by the property manager,  the amount RHS provided was nearly twice the amount that should have  been obligated (about $175,000 more than needed). RHS fixed the  programming error that caused this particular miscalculation and de- obligated the excess funds.
However, according to the IT contractor who developed the obligation  tool, the tool does not have an automated check to detect such errors. As  previously noted, RHS said that the first year of use would provide the  best opportunity to evaluate the tool’s performance and an opportunity to  identify any needed improvements. In addition, RHS guidance does not  instruct either the RHS national office officials who use the obligation tool  to allocate funds or the Rural Development state office staff who review  and approve obligations to check the amount being allocated to each  property for agreement renewals. Federal internal control standards call  for management to design control activities for entities’ information  systems to respond to risks. Without automated checks or other controls  to catch programming errors or unforeseen circumstances that may result  in incorrect or unreasonable agreement amounts, RHS lacks assurance  that these mistakes will be caught prior to obligating funds.
section_title: RHS Has Not Used Appropriate Inflation Rates to Estimate Its Budget Request in Recent Years
paragraphs: Since fiscal year 2010, RHS either has used no inflation rate or one that  differed from the President’s economic assumptions when calculating  budget request estimates for the rental assistance program (see table 1).  RHS’s current budget estimation process involves applying an inflation  rate to the obligation tool’s estimate of the cost of the program for the  upcoming 12 months. RHS officials said that before they started using the  obligation tool, they generally developed budget estimates by calculating  the number of units expected to be renewed during the budget year,  multiplying that number by the statewide average per-unit cost, and, in  some years, applying an inflation rate.
In our 2004 report on RHS’s budget estimation procedures, we  recommended that RHS use the inflation rate from the President’s  economic assumptions when estimating rental assistance budget costs.  During our current review, RHS officials told us they used the rates  provided by OMB (the President’s economic assumptions) for the fiscal  year 2005–2009 estimates and after that used no inflation rate until the  fiscal year 2015 budget request. However, officials could not explain why  RHS stopped using the rate from the President’s economic assumptions  for the fiscal year 2010 budget, other than that the RHS Administrator at  the time directed the change. RHS officials also did not know the rationale  for using no inflation rate in the budget requests for fiscal years 2010– 2014 and did not offer the reason for using 1.69 percent for fiscal year  2015. For fiscal years 2016 and 2017, RHS officials told us they used an  inflation rate based on changes in housing costs, but the rates differed  from the President’s economic assumptions. According to the Rural  Development Budget Division, RHS used an inflation rate of zero for the  fiscal year 2018 President’s budget.
OMB Circular A-11, Preparation, Submission, and Execution of the  Budget—which provides guidance to agency officials on preparing budget  estimates—states that preparation of agency budgets must be consistent  with the President’s economic assumptions provided by OMB. These  assumptions are listed each year in the President’s budget. Consistency  in budget assumptions across government programs helps clarify trade- offs among competing priorities. OMB staff told us that RHS should use  the inflation rate in the President’s economic assumptions to develop its  budget requests, as stated in the OMB circular. According to OMB staff, if  the agency is preparing its budget prior to the issuance of the President’s  economic assumptions for the forthcoming budget, the agency should use  the prior year’s assumptions when developing its estimates. However,  RHS also did not use the prior year’s assumptions (see table 1). USDA  Office of Budget and Program Analysis officials said that they were not  aware that RHS was not using the inflation rate from the President’s  economic assumptions. Additionally, we could not identify a control  procedure designed to ensure the use of the required inflation rate.  Federal internal control standards state management should design  control activities to achieve compliance objectives.
If RHS had used the inflation rate from the President’s economic  assumptions to estimate its rental assistance budget requests for fiscal  years 2013–2015, the program may have faced somewhat smaller  funding gaps those years. For example, according to RHS, in fiscal year  2015, the agency would have needed about $97 million more in funding  to renew all eligible properties that requested a renewal that year. If RHS  had used the inflation rate in the President’s economic assumptions, its  budget request would have been about $5.5 million higher, although  several factors outside of the program’s control affect the level of funding  it ultimately receives. Without controls for ensuring the use of proper  inflation rates, RHS may continue to be out of compliance with OMB  requirements and use rates that differ from the President’s economic  assumptions.
section_title: State Offices Lack a Common Understanding of Their Role in Reviewing Rental Assistance Renewals
paragraphs: Staff at 15 randomly selected Rural Development state offices with whom  we spoke had different understandings of their roles and responsibilities  for reviewing rental assistance renewal obligations. In addition, their  understanding of their role frequently varied from the role that program  officials in RHS’s national office said they had. Federal internal control  standards state that management should implement control activities  through the documentation of policies, including documenting  responsibilities of different units for control activities.
According to RHS national office officials, state office staff should review  each obligation prior to approval to confirm that renewals of rental  assistance agreements are warranted. More specifically, state office staff  are to review the properties in their jurisdiction that the obligation tool has  indicated are in need of renewal to determine if they are undergoing a  servicing action, such as a prepayment or foreclosure. In these cases,  state office staff are to use their judgment about whether providing a 1- year agreement renewal would be appropriate, according to RHS national  office officials. For example, state office staff may know that a property  owner is in the process of prepaying the RHS mortgage on the property  or if the property has started the foreclosure process, in which case a new  obligation for rental assistance might not be necessary. A program  official in RHS’s national office stated that this review provides a check on  the obligations.
In contrast, state office staff with whom we spoke did not consistently  perform, and in some cases were not aware of, these responsibilities. Of  the 15 state offices that we interviewed, staff in 3 of the offices said that  they check whether properties up for renewal are prepaying their  mortgage or in the foreclosure process before approving renewal  obligations. Staff at 2 of these offices told us that they have found  properties that should not receive a 1-year renewal through this process.  Additionally, staff in 10 offices told us that they did not believe it was their  job to confirm that obligations should be provided to the properties before  approving them; rather, they believed the national office was responsible  for making renewal determinations.
RHS has not clearly articulated and documented expectations for state  office staff reviews, which has contributed to inconsistencies. RHS  officials were not able to provide us with any written guidance on the roles  and responsibilities of state office staff in reviewing obligations. Most of  the state office staff with whom we spoke said they used briefing slides  from the national office (intended as training on the new obligation tool)  as guidance for obligating funds, but the slides do not mention a review  by state staff. Rather, the slides focus on what buttons to click in the  obligation tool to complete the obligation. Also, a national office official  told us that the national office sends e-mails to state offices alerting them  that funds are available to obligate and reminding them to review the  properties. However, an example e-mail provided by the official did not  directly ask for such a review or indicate what the review should consist  of. Furthermore, a chapter in a program handbook that RHS officials said  was the primary guidance for state office staff on the obligation process  does not indicate that a review of the servicing status should be  completed prior to approving obligations. By not documenting staff  responsibilities for reviewing whether rental assistance obligations are  warranted, RHS increases the risk that state offices may be approving  obligations for properties that do not need a rental assistance agreement  renewal—tying up funds that could be used by other properties and  potentially contributing to program funding gaps.
section_title: Conclusions
paragraphs: In recent years, RHS has experienced funding gaps in its rental  assistance program that created challenges for the agency and some  property owners. While the agency took some steps to mitigate effects on  property owners and improve its budget estimates, weaknesses remain in  some of RHS’s budget estimation and execution processes.
First, RHS does not have a plan for ongoing monitoring (including  testing and evaluation) of its new obligation tool and has not always  used the most relevant data for monitoring, contrary to federal internal  control standards calling for monitoring of control activities and use of  quality information.
Second, RHS does not have automated checks in the obligation tool  or other controls to mitigate the risk of misestimates, as RHS  experienced in fiscal year 2016. Federal internal control standards call  for control activities that respond to risks.
Third, RHS has not complied with OMB requirements to use inflation  rates from the President’s economic assumptions in developing  budget estimates. RHS’s lack of a related control procedure, as  required by federal internal control standards, increases the risk that it  will continue not to comply with the OMB requirement.
Fourth, contrary to federal internal control standards on  documentation of policies, RHS lacks written guidance on the  responsibilities of Rural Development state offices for reviewing rental  assistance agreement renewals before obligating funds.
These weaknesses may exist partly because RHS continues to refine its  estimation method, which has been in effect for about 2 years. By  enhancing monitoring and internal controls, RHS could strengthen its  budget estimation and execution processes to help ensure it manages the  program as efficiently and effectively as possible, including during times  of budgetary challenges.
section_title: Recommendations for Executive Action
paragraphs: We are making the following four recommendations to RHS:
The Administrator of RHS should develop and implement a plan for  ongoing monitoring, including testing and evaluation, of the obligation  tool using relevant data. (Recommendation 1)
The Administrator of RHS should develop controls to check the  reasonableness of rental assistance agreement amounts calculated  by the obligation tool. (Recommendation 2)
The Administrator of RHS should develop controls to ensure that RHS  uses the inflation rates from the President’s economic assumptions in  developing budget estimates. (Recommendation 3)
The Administrator of RHS should provide guidance to Rural  Development state offices that specifies that prior to obligating funds,  staff are to review information related to a property’s mortgage  servicing status. (Recommendation 4)
section_title: Agency Comments
paragraphs: We provided a draft of this report to OMB and RHS for their review and  comment. OMB stated that it had no comments on the draft. RHS  provided technical comments, which we incorporated into the report, but  did not provide comments on our recommendations.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Agriculture, the Director of the Office of  Management and Budget, and other interested parties. In addition, the  report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Key contributors to this report are listed in  appendix II.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to examine (1) the reasons the Rural Housing  Service (RHS) ran out of funds for renewing rental assistance  agreements under the Section 521 program in fiscal years 2013–2015,  and how it responded to the funding gaps in those years; and (2) what  RHS has done to help prevent future funding gaps and the extent to  which it addressed related budgetary issues.
subsections: section_title: Data Used in Our Analysis
paragraphs: For both objectives, we analyzed data from RHS’s accounting system— the Automated Multi-Family Housing Accounting System (AMAS)—for  fiscal years 2011–2016. We analyzed data on the dollar amount and date  of obligations to renew rental assistance agreements and the rental  assistance payments (expenditures) associated with those obligations.  We excluded obligations that were canceled, for zero dollars, or had  accounting codes generally associated with supplemental funding rather  than renewal funding. As discussed in the body of this report, RHS  extended the life of some rental assistance agreements by using funds  from properties that had exited the program for properties that could not  receive agreement renewals due to funding gaps.
To assess the reliability of the AMAS data we used, we reviewed  information about the system and the data. We interviewed agency  officials and contractors knowledgeable about the data—including officials  from RHS, Rural Development’s Office of Operations and Management,  and the U.S. Department of Agriculture’s (USDA) National Financial and  Accounting Operations Center—to discuss interpretations of data fields  and patterns we observed in the data. We also conducted electronic  testing, including checks for outliers, missing data, and erroneous values.  Additionally, we compared the data with RHS summary statistics, where  possible. We determined that the data were sufficiently reliable for the  purposes of describing the number and timing of rental assistance  agreement renewals and payments.
section_title: Funding Gaps and How RHS Resolved Them
paragraphs: To examine the reasons why RHS ran out of funds for renewing rental  assistance agreements in fiscal years 2013–2015, we reviewed  documentation from RHS that provided evidence of funding gaps,  including a list of properties whose agreements were due for renewal but  could not be renewed at the ends of the 3 fiscal years. We reviewed  budget documents showing the amount of budget authority appropriated  to the rental assistance program for the 3-year period and reductions to  appropriations from sequestration and rescissions (cancelations of  budgetary resources) in fiscal year 2013. We also examined the methods  RHS used to estimate agreement renewal costs and budget requests for  those years, as explained in greater detail below. Additionally, we  reviewed legislative and regulatory requirements that affected how RHS  managed the program in years with funding gaps, including requirements  in the appropriations acts for fiscal years 2013–2015 and program  regulations.
To assess RHS’s calculations of agreement renewal amounts for fiscal  years 2013–2015, we reviewed RHS documentation on the methodology  behind the calculations and analyzed rental assistance payment data in  AMAS. More specifically, we analyzed AMAS data to count how many full  payments and partial payments RHS made from each of the agreements  it renewed in fiscal years 2013–2015. Our counts also included  agreements for properties that may have been transferred to a new owner  while the agreement was in effect, which may have resulted in some  understatement of the number of payments made. We used the results  of this analysis to determine whether the obligation tool’s estimates  resulted in agreement renewals that lasted about 12 payments (that is,  close to the 1-year period they are intended to last) or for fewer or more  payments. We sorted the agreements into five categories based on the  number of payments they provided (fewer than 8, 8–10, 11–13, 14–16,  and greater than 16) and calculated the percentage of agreements in  each category by year and in the aggregate. To assess RHS’s methods  for estimating its program budget requests for fiscal years 2013–2015, we  reviewed key assumptions, including how RHS estimated the number of  renewals and any second renewals (which occur when an agreement is  renewed twice in the same fiscal year) expected in each year. We used  AMAS data to identify the percentage of properties that had a second  renewal in each year and compared the results to the percentage of  second renewals RHS incorporated in its budget requests. To do this, we  used a variable in AMAS that identifies second renewal obligations.
To examine how RHS responded to the funding gaps in fiscal years  2013–2015, we reviewed RHS documentation on the options it offered to  property owners who could not receive agreement renewals due to the  funding gaps (for example, allowing owners to defer payments on their  RHS mortgages). Additionally, we analyzed AMAS data to assess the  extent to which RHS executed renewals it could not make at the ends of  fiscal years 2013–2015 early in the next fiscal year when new  appropriations became available. Specifically, we compared the number  of renewals RHS made in October of fiscal years 2014–2016 (years  following funding gaps) to the number of October renewals RHS made in  the 3 prior fiscal years (2011–2013). We also reviewed RHS  documentation on obligated but unexpended funds from properties that  had exited the rental assistance program (due to foreclosure or mortgage  prepayment), funding that was then available for use for agreements  needing renewal. The documentation included information on the amount  of funds available and the amount RHS used in fiscal years 2013–2015,  as well as the amount remaining as of the end of fiscal year 2016.  Additionally, we reviewed RHS fiscal year 2015 and 2016 budget  justifications for the rental assistance program to understand legislative  changes RHS sought to give it more flexibility in managing the program in  times of funding uncertainty.
Finally, we interviewed officials from the Office of the Under Secretary for  Rural Development, RHS Multi-Family Housing (including the Portfolio  Management Division), Rural Development Budget Division and Office of  Operations and Management, and USDA National Financial Accounting  and Operations Center and Office of Budget and Program Analysis. The  interviews focused on the reasons for the fiscal year 2013–2015 funding  gaps, including how RHS calculated agreement renewals and budget  requests in those years; how RHS addressed the gaps, including  processes for using previously obligated, unexpended funds; and the data  systems RHS used to manage the rental assistance program, including  AMAS.
section_title: RHS Actions to Prevent Future Funding Gaps and Address Related Budgetary Issues
paragraphs: To examine what RHS has done to help prevent future rental assistance  gaps and the extent to which it addressed related budgetary issues, we  reviewed RHS tools, policies, and procedures for budget estimation and  execution (such as allocating and obligating funds for rental assistance  agreements), including changes made since the fiscal year 2013–2015  gaps. More specifically:
We reviewed documentation on the rental assistance obligation tool  RHS developed in 2015 to estimate rental assistance costs, including  the tool’s methodology and controls and tests conducted on the tool  during development and in its first year of use. We also examined the  extent to which RHS had developed plans for future testing. We  assessed RHS’s development and testing efforts using federal  internal control standards for monitoring activities, use of quality  information, and design of control activities. We also compared RHS  efforts to useful practices found in federal banking regulator guidance  for managing risks associated with models.
We reviewed the inflation rates that RHS officials indicated were used  in budget estimates for fiscal years 2010–2018 and compared them to  applicable inflation rates in the President’s economic assumptions.  We assessed the extent to which RHS’s practices were consistent  with relevant parts of Office of Management and Budget (OMB)  guidance on preparing agency budgets (Circular A-11, Preparation,  Submission, and Execution of the Budget) and federal internal control  standards for designing control activities.
We randomly selected a nongeneralizable sample of 15 Rural  Development state offices (out of 47) and conducted interviews with  officials and staff about policies and practices for reviewing and  approving rental assistance obligations for agreement renewals. We  assessed the extent to which the stated practices of these offices  aligned with expectations of RHS Multi-Family Housing officials and  whether these expectations were documented, as called for by federal  internal control standards for implementing control activities through  policies.
To supplement our review of the obligation tool, we used the AMAS data  previously discussed to analyze how many full and partial rental  assistance payments were made out of renewal agreements calculated  by the tool in fiscal year 2016. This analysis was the same as the one we  did for agreement renewals in fiscal years 2013–2015 with one exception.  Specifically, we split the fiscal year 2016 agreements into two groups— those that fully expended their funds during fiscal year 2016 and those  that did not—because the latter group did not yet have a full payment  history as of the data’s end date (end of fiscal year 2016). For that group,  we projected remaining payments based on the average of the prior 12  payments. We added this number to the number of payments that were  made out of the agreement in fiscal year 2016.
We also reviewed changes to RHS’s budget estimation procedures.  Specifically, for fiscal year 2016, we used AMAS data to calculate the  percentage of second renewals in that year and compared it to the  amount of second renewals RHS included in its budget request. We also  reviewed how RHS used the obligation tool to estimate its fiscal year  2017 and 2018 budget requests and compared this method to its budget  estimation procedures for prior years.
Finally, we interviewed RHS Multi-Family Housing officials and  information technology contractors in Rural Development’s Office of  Operations and Management about the development of and methodology  used in the obligation tool. We interviewed USDA Office of Budget and  Program Analysis, Rural Development Budget Division, and RHS Multi- Family Housing officials about the program’s budget estimation and  execution policies and procedures. We also interviewed RHS Multi-Family  Housing Portfolio Management Division officials about the roles and  responsibilities of state office staff for obligating funds. Additionally, we  interviewed OMB staff with responsibility for reviewing the rental  assistance program’s budget estimates about the inflation rates RHS  used in its budget requests.
We conducted this performance audit from November 2015 to September  2017 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Steve Westley (Assistant  Director); Melissa Kornblau (Analyst in Charge); Hiwotte Amare; Josie  Carver; Stephen Brown; William Chatlos; John McGrail; Barbara  Roesmann; and Jena Sinkfield made key contributions to this report.