According to Census data, in 2005 an estimated 21.9 million households, or 20 percent of the 111.1 million households nationwide, were “veteran households”—that is, they had at least one member who was a military veteran. Most veteran households—about 80 percent—owned their own homes, a significantly higher percentage than was the case for other (nonveteran) households (about 64 percent). About 4.3 million veteran households rented their homes. Census data also show that renter households were more likely to be low-income than were owner-occupied households; in 2005, about 66 percent of renter households were low- income while 32 percent of homeowners were low-income. VA, through a variety of programs, provides federal assistance to veterans who are homeless, and also provides homeownership assistance, but does not provide rental assistance. One of the agency’s largest programs for homeless veterans is the Homeless Providers Grant and Per Diem program, which provides funding to nonprofit and public agencies to help temporarily shelter veterans. VA also administers eight other programs for outreach and treatment of homeless veterans. In addition to its homelessness programs, VA provides a variety of programs, services, and benefits to veterans and their families. HUD provides rental housing assistance through three major programs— housing choice voucher, public housing, and project-based. In fiscal year 2005, these programs provided rental assistance to about 4.8 million households and paid about $28 billion in rental subsidies. These three programs generally serve low-income households—that is, households with incomes less than or equal to 80 percent of their local area median incomes. Most of these programs have targets for households with extremely low incomes—30 percent or less of their area median incomes. HUD-assisted households generally pay 30 percent of their monthly income, after certain adjustments, toward their unit’s rent. HUD pays the difference between the household’s contribution and the unit’s rent (under the voucher and project-based programs) and the difference between the public housing agencies’ operating costs and rental receipts for public housing. According to our analysis of ACS data, of the 4.3 million veteran households that rented their homes, an estimated 2.3 million, or about 53 percent were low-income in 2005. As shown in table 1, the largest share of these 2.3 million households was concentrated in the highest low-income category—that is, 50.1 to 80 percent of the area median income—with somewhat smaller shares in the two lower categories. The table also shows that other renter households (that is, households without a veteran member) were even more likely to be low-income than veteran renter households. The estimated numbers of low-income veteran renter households in 2005 varied greatly by state, from some 236,000 in California—the most of any state—to less than 6,000 in each of 3 states—Delaware, Vermont, and Wyoming. The percentages of veteran renter households that were low- income in 2005 also varied considerably by state, from about 65 percent in Michigan to about 41 percent in Virginia. Further details on how these figures varied by state, including maps, can be found in appendix I. In addition, a significant proportion of low-income veteran renter households included a veteran who was elderly or had a disability. Specifically, an estimated 816,000 (36 percent of these veteran households) had at least one veteran who was elderly (that is, 62 years of age or older); and 887,000 (39 percent) had at least one veteran member with a disability. According to our analysis of ACS data, an estimated 1.3 million low- income veteran households, or about 56 percent of the approximate 2.3 million such households, had rents that exceeded 30 percent of their household income in 2005 (see table 2). These veteran renter households had what HUD terms “moderate” or “severe” problems affording their rent. Specifically, about 31 percent of low-income veteran renter households had moderate affordability problems, and about 26 percent had severe affordability problems. The remainder either paid 30 percent or less of their household income in rent, reported zero income, or did not pay cash rent. In comparison, a higher proportion of other low-income renter households had moderate or severe housing affordability problems. The extent of housing affordability problems among low-income veteran renter households varied significantly by state in 2005 (see fig. 1). The median percentage of low-income veteran renters with affordability problems nationwide was 54 percent. California and Nevada had the highest proportions of affordability problems among low-income veteran renter households—about 68 and 70 percent, respectively. North Dakota and Nebraska had the smallest—about 37 and 41 percent, respectively. A relatively small percentage of veteran households lived in overcrowded or inadequate housing in 2005. Specifically, an estimated 73,000, or 3 percent, of low-income veteran renter households lived in overcrowded housing—housing with more than one person per room—and less than 18,000, or about 1 percent, lived in severely overcrowded housing— housing with more than one and a half persons per room. In contrast, an estimated 1.5 million, or 7 percent, of other low-income renter households lived in overcrowded housing, and about 423,000, or 2 percent, lived in severely overcrowded housing. Finally, ACS data indicate that a very small share of low-income veteran renters lived in inadequate housing. ACS provides very limited information about the quality of the housing unit; the survey classifies a unit as inadequate if it lacks complete plumbing or kitchen facilities, or both. In 2005, an estimated 53,000, or 2 percent, of low-income veteran renter households lived in inadequate housing. In comparison, an estimated 334,000, or 2 percent, of other households lived in inadequate housing. HUD’s major rental assistance programs are not required to take a household’s veteran status into account when determining eligibility and calculating subsidy amounts. (Consequently, HUD does not collect any information that identifies the veteran status of assisted households.) As with other households, veterans can benefit from HUD rental assistance provided that they meet all of the programs’ income and other eligibility criteria. For example, assisted households must meet U.S. citizenship requirements and, for some of the rental assistance programs, HUD’s criteria for an elderly household or a household with a disability. When determining income eligibility and subsidy amounts, HUD generally does not distinguish between income sources that are specific to veterans, such as VA-provided benefits, and other types of income. HUD policies define household income as the anticipated gross annual income of the household, which includes income from all sources received by the family head, spouse, and each additional family member who is 18 years of age or older. Specifically, annual income includes, but is not limited to, wages and salaries, periodic amounts from pensions or death benefits, and unemployment and disability compensation. HUD policies identify 39 separate income sources and benefits that are excluded when determining eligibility and subsidy amounts. These exclusions relate to income that is nonrecurring or sporadic in nature, health care benefits, student financial aid, and assistance from certain employment training and economic self- sufficiency programs. We found that, based on HUD’s policies on income exclusions, most types of income and benefits that veteran households receive from VA would be excluded when determining eligibility for HUD’s programs and subsidy amounts. Many of the excluded benefits relate to payments that veteran households receive under certain economic self-sufficiency programs or nonrecurring payments such as insurance claims. Of the benefits included, most are associated with recurring or regular sources of income, such as disability compensation, pensions, and survivor death benefits. Of the 39 exclusions, we found that two income exclusions specifically applied to certain veteran households but, according to HUD, these exclusions are rarely used. These income exclusions are (1) payments made to Vietnam War-era veterans from the Agent Orange Settlement Fund and (2) payments to children of Vietnam War-era veterans who suffer from spina bifida. The two exclusions are identified in federal statutes that are separate from those authorizing the three major rental assistance programs. HUD does provide rental assistance vouchers specifically to veterans under a small program called the Housing and Urban Development- Veterans Affairs Supportive Housing program (HUD-VASH). Established in 1992, HUD-VASH is jointly funded by HUD and VA and offers homeless veterans an opportunity to obtain permanent housing, as well as ongoing case management and supportive services. HUD allocated these special vouchers to selected public housing agencies that had applied for funding, and VA was responsible for identifying participants based on specific eligibility criteria, including the veteran’s need for treatment of a mental illness or substance abuse disorder. Under the HUD-VASH initiative, HUD allocated 1,753 vouchers from fiscal years 1992 through 1994. HUD funded these vouchers for 5 years and, if a veteran left the program during this period, the housing agency had to reissue the voucher to another eligible veteran. According to VA officials, after the 5-year period ended, housing agencies had the option of continuing to use their allocation of vouchers for HUD-VASH, or could discontinue participation whenever a veteran left the program (that is, the housing agency would not provide the voucher to another eligible veteran upon turnover). VA stated that after the 5-year period ended, many housing agencies decided not to continue in HUD- VASH after assisted veterans left the program; instead, housing agencies exercised the option of providing these vouchers to other households under the housing choice voucher program. As a result, the number of veterans that receive HUD-VASH vouchers has declined. Based on information from VA, about 1,000 veterans were in the program as of the end of fiscal year 2006, and absent any policy changes, this number is likely to decline to 400 because housing agencies responsible for more than 600 vouchers have decided not to continue providing these vouchers to other veterans as existing participants leave the program. Congress statutorily authorized HUD-VASH as part of the Homeless Veterans Comprehensive Assistance Act of 2001. Under the act, Congress also authorized HUD to allocate 500 vouchers each fiscal year from 2003 through 2006—a total of 2,000 additional vouchers. In December 2006, Congress extended this authorization through fiscal year 2011—allocating an additional 2,500 vouchers or 500 each year. However, HUD has not requested, and Congress has not appropriated, funds for any of the vouchers authorized from fiscal years 2003 through 2007. Currently, HUD’s policies give public housing agencies and owners of project-based properties the discretion to establish preferences for certain groups when selecting households for housing assistance. Preferences affect only the order of applicants on a waiting list for assistance; they do not determine eligibility for housing assistance. Before 1998, federal law required housing agencies and property owners to offer a preference to eligible applicants to their subsidized housing programs who (1) had been involuntarily displaced, (2) were living in substandard housing, or (3) were paying more than half their income for rent. Public housing agencies were required by law to allocate at least 50 percent of their public housing units and 90 percent of their housing choice vouchers to applicants who met these criteria. Similarly, project-based owners had to allocate 70 percent of their units to newly admitted households that met these criteria. The Quality Housing and Work Responsibility Act of 1998 (QHWRA) gave more flexibility to housing agencies and project-based property owners to administer their programs, in part by eliminating the mandated housing preferences. Although it gave housing agencies and owners more flexibility, QHWRA required that public housing agencies and owners target assistance to extremely low-income households. Under QHWRA, housing agencies and owners of project-based properties may, but are not required to, establish preferences to better direct resources to those with the greatest housing needs in their areas. Public housing agencies can select applicants on the basis of local preferences provided that their process is consistent with their administrative plan. HUD policy requires housing agencies to specify their preferences in their administrative plans, and HUD reviews these preferences to ensure that they conform to nondiscrimination and equal employment opportunity requirements. Similarly, HUD policy allows owners of project-based properties to establish preferences as long as the preferences are specified in their written tenant selection plans. While HUD requires housing agencies and property owners to disclose their preferences in their administrative or tenant selection plans, HUD officials said the department does not compile or systematically track this information because public housing agencies and property owners are not required to have preferences. Most of the 41 public housing agencies we contacted used a preference system for admission to their public housing and housing choice voucher programs, but less than half offered a veterans’ preference. As shown in table 3, of the 34 largest housing agencies that administered the public housing program, 29 established preferences for admission to the program and 14 used a veterans’ preference. Similarly, of the 40 housing agencies that administered the housing choice voucher program, 34 used admission preferences, and 13 employed a preference for veterans. According to public housing agency officials, the most common preferences used for both programs were for working families, individuals who were unable to work because of age or disability, and individuals who had been involuntarily displaced or were homeless. Of course, veterans could benefit from these admission preferences if they met the criteria. Some of the public housing agencies we contacted offered veterans’ preferences because their states required them to do so. Other housing agency officials told us they offered a veterans’ preference because they believed it was important to serve the needs of low-income veterans since they had done so much for the well-being of others. Public housing agencies that we contacted that did not offer a veterans’ preference gave various reasons for their decisions. Some officials told us that the housing agency did not need a veterans’ preference because veteran applicants generally qualified under other preference categories, such as elderly or disabled. One housing agency official we contacted said a veterans’ preference was not needed because of the relatively small number of veterans in the community. According to all of the performance-based contract administrators we contacted, owners of project-based properties that they oversee generally did not employ a veterans’ preference when selecting tenants. Ten of the 13 largest contract administrators told us, based on their review of property owners’ tenant selection plans, that owners of project-based properties generally did not employ preferences for any specific population. Officials from the remaining three contract administrators said they were aware of some property owners offering preferences to individuals who had been involuntarily displaced, working families, or those unable to work because of age or disability. However, all the contract administrators we contacted either said that property owners did not use preferences or agreed that the use of preferences, including a veterans’ preference, among owners of properties with project-based assistance was limited. HUD officials to whom we spoke also stated, based on their experience with tenant selection plans, that the use of preferences at project-based properties likely was infrequent. Low-income veteran renter households were less likely to receive HUD rental assistance than other households. As shown in table 4, of the total 2.3 million veteran renter households with low incomes, about 250,000 (or 11 percent) received HUD assistance. In comparison, of the 22 million other renter households with low incomes, 4.1 million (about 19 percent) received HUD assistance. (As noted previously, although HUD is the largest provider of federal rental housing assistance to low-income households, it is not the sole source of such assistance. Thus, these percentages likely understate the actual share of all eligible veteran renter households that receive federal rental assistance.) The reasons why other households were nearly twice as likely as veteran households to receive HUD assistance are unclear. However, based on our analyses and discussions with agency officials, we identified some potential explanations. For example: As previously noted, although a significant proportion of low-income veteran households face affordability problems, an even larger proportion of other (nonveteran) households face more severe affordability problems. Thus, the level of veteran demand for rental assistance may be lower than that of nonveteran households. Also as previously noted, HUD rental assistance programs do not take veteran status into account when determining eligibility, and most public housing agencies and property owners do not offer veterans’ preferences. As a result, these policy decisions likely focus resources on other types of low-income households with housing needs. Although low-income households generally are eligible to receive rental assistance from HUD’s three programs, statutory requirements mandate that a certain percentage of new program participants must be extremely low income. These targeting requirements may lead to a higher share of HUD rental assistance going to nonveteran households because veteran households generally are less likely to fall within the extremely low-income category. The estimated 250,000 veteran households that received HUD rental assistance in 2005 constituted about 6 percent of all HUD-assisted households. The housing choice voucher program served the largest number of veteran households, followed by the project-based program, and public housing (see fig. 3). However, a slightly higher proportion of veteran households participated in the public housing program (6.9 percent) than participated in the voucher (5.7 percent) and project-based (5.2 percent) programs. We found some similarities in the demographic characteristics of veterans and other assisted households we analyzed. For example: Compared with other assisted households, HUD-assisted veteran households were as likely to be elderly. Specifically, in fiscal year 2005, about 75,000, or 30 percent, of assisted veteran households were elderly, and about 1.3 million, or 31 percent, of other assisted households were elderly. HUD-assisted veteran households were more likely to have a disability. In fiscal year 2005, HUD provided assistance to about 88,000 veteran households with a disability, or about 34 percent of assisted veteran households. In comparison, 1.2 million or 28 percent of other assisted households had a disability. Our August 2007 report contains additional information on the demographic and income characteristics of veteran and nonveteran households, as well as the extent to which HUD programs take veteran status into account when determining eligibility and subsidy amounts. Madam Chairwoman, this concludes my prepared statement. I would be happy to answer any questions at this time. For further information on this testimony, please contact David G. Wood at (202) 512-8678 or woodd@gao.gov. Contact points from our Office of Congressional Relations may be found on the last page of this statement. Individuals making key contributions to this testimony included Marianne Anderson, Michelle Bowsky, Daniel Garcia-Diaz, John T. McGrail, Josephine Perez, and Rose Schuville. The estimated numbers of low-income veteran renter households in 2005 varied greatly by state, as shown in figure 4. The estimated median number of low-income veteran renters in any state was about 34,000. California had significantly more low-income veteran renter households than any other state—more than 236,000, or about 10 percent of all such households nationwide—followed by Texas with about 142,000, and New York with about 135,000. The states with the smallest number of low-income veteran households were Vermont, Delaware, and Wyoming with less than 6,000 each. As shown in figure 5, the percentages of veteran renter households that were low-income in 2005 also varied considerably by state. Michigan had the highest percentage—about 65 percent of its veteran renter households were low income, while Virginia had the lowest—about 41 percent.

Summary: Veterans returning from service in Iraq and Afghanistan could increase demand for affordable rental housing. Households with low incomes (80 percent or less of the area median income) generally are eligible to receive rental assistance from the Department of Housing and Urban Development's (HUD) housing choice voucher, public housing, and project-based programs. However, because rental assistance is not an entitlement, not all who are eligible receive assistance. This testimony, based on a 2007 report, discusses (1) the income status and demographic and housing characteristics of veteran renter households, (2) how HUD's rental assistance programs treat veteran status (whether a person is a veteran or not) and whether they use a veteran's preference, and (3) the extent to which HUD's rental assistance programs served veterans in fiscal year 2005. The 2007 report discussed in this testimony made no recommendations. In 2005, an estimated 2.3 million veteran renter households had low incomes. The proportion of veteran renter households that were low income varied by state but did not fall below 41 percent. Further, an estimated 1.3 million, or about 56 percent of these low-income veteran households nationwide, had housing affordability problems--that is, rental costs exceeding 30 percent of household income (see map for state percentages). Compared with other (nonveteran) renter households, however, veterans were somewhat less likely to be low income or have housing affordability problems. HUD's major rental assistance programs are not required to take a household's veteran status into account when determining eligibility and calculating subsidy amounts, but eligible veterans can receive assistance. The majority of the 41 largest public housing agencies that administer the housing choice voucher or public housing programs had no veterans' preference for admission. The 13 largest performance-based contract administrators that oversaw most properties under project-based programs reported that owners generally did not adopt a veterans' preference. In fiscal year 2005, an estimated 11 percent of all eligible low-income veteran households (at least 250,000) received assistance, compared with 19 percent of nonveteran households. Although the reasons for the difference are unclear, factors such as differing levels of need for affordable housing among veteran and other households could influence the percentages.