The Moving to Work (MTW) demonstration program was created by Congress in 1996 to give the U.S. Department of Housing and Urban Development (HUD) and local Public Housing Authorities (PHAs) the flexibility to test alternative policies for providing housing assistance through the nation's two largest housing assistance programs: the Section 8 Housing Choice Voucher program and the public housing program. The alternative policies are meant to increase the cost-effectiveness of assisted housing programs, promote the self-sufficiency of assisted families, and increase housing choices for low-income families. Today, more than 30 PHAs are participating in MTW, and as of 2010, they managed approximately $2.7 billion in Section 8 Housing Choice Voucher funding and $1.1 billion in public housing funding, supporting 13% of all vouchers and 11% of all public housing units. More than a decade and a half since the inception of the demonstration, the future of MTW is uncertain. The current set of HUD-PHA agreements is set to expire in 2018, but calls for earlier changes to the program have emerged. Critics of the demonstration have argued that MTW agencies have been given unprecedented flexibilities, yet there is little understanding of the impacts those flexibilities have had on the lives of the low-income families PHAs are responsible for serving, and some concern that those impacts have been negative. Supporters of the demonstration have argued that the flexibility of the MTW demonstration program has allowed participating PHAs to serve more families in unique, improved, and cost-effective ways. These competing perceptions of the MTW demonstration program have translated to conflicting calls to end the program, change the program, or expand the program. Given the way the demonstration was designed and implemented, it is difficult to evaluate the effectiveness or efficiency of MTW agencies' specific policies, as measured against the program's statutory goals, and thus to assess the claims of critics or supporters. These conflicting views of the MTW demonstration program's success highlight a key point for understanding discussions around the program's future. The MTW demonstration was initially intended to serve as a testing ground for innovations in the provision of assisted housing; some have contended that it should be restructured to better serve that purpose. Others believe that MTW agencies have demonstrated that PHAs can successfully operate outside of the traditional regulatory structure, and thus some version of the program should be considered as the future of assisted housing. Despite the controversy around the future of the MTW demonstration program itself, the policies developed by MTW agencies have informed discussions about reforms to the mainstream assisted housing programs. For example, several of the program reforms being considered for the public housing and Section 8 Housing Choice Voucher programs have been implemented by MTW agencies. As Congress considers future reforms of federal housing assistance programs, policymakers may look to lessons from the MTW demonstration program for insight. This report provides an overview of the history and purpose of the MTW demonstration program, followed by a description of some of the policies adopted by participating PHAs. It concludes by providing some observations about the outcomes of the program and discussing policy options for the future. Congress authorized the Moving to Work Demonstration Program in the FY1996 omnibus appropriations law ( P.L. 104-134 ). The authorizing language directs the Secretary of HUD to conduct a demonstration program providing PHAs with the flexibility to design and test approaches for providing housing assistance to low-income families outside of the rules that govern HUD's primary assisted housing programs: the Section 8 Housing Choice Voucher program and the low-rent public housing program. The intent is to test ways to achieve three policy objectives: 1. reducing costs and increasing cost-effectiveness in the provision of assisted housing, 2. encouraging the self-sufficiency of assisted families, and 3. increasing the housing choices for low-income families. The law directs the Secretary to select up to 30 PHAs for participation through a competitive process, and to conduct detailed evaluations for up to 15 participating agencies in order to identify replicable program models. Legislative guidelines for the MTW demonstration program are broad. The law does not specify the approaches to assisted housing that MTW agencies are to develop and test. Instead, the law allows MTW agencies to develop their own policies to achieve the aforementioned objectives. Examples of the flexibilities provided under the law include allowing PHAs to combine their Section 8 voucher funding with public housing operating and capital funding, creating one funding stream for housing assistance and development, and allowing HUD to waive many of the statutory requirements for assisted housing programs as established by the U.S. Housing Act of 1937, as amended. The law explicitly permits PHAs to design a "reasonable" rent policy, designed to encourage employment and self-sufficiency by participating families. Further, the law directs that participating PHAs be held harmless in terms of funding. However, the legislation also places limits on the flexibility allowed to MTW agencies. MTW agencies are required to serve substantially the same number and size-mix of families, guarantee that at least 75% of assisted families are low-income, and ensure that their assisted housing stock meets HUD-established housing quality standards. Further, the law prohibits HUD from issuing waivers of certain provisions of the U.S. Housing Act, including requirements related to public housing demolition and disposition, labor standards, and public housing community service requirements. The legislation also requires that PHAs seek public input in the development of their MTW policies. The law requires a PHA to hold a public hearing on its proposed policies prior to submitting an application to become an MTW agency. The PHA must then take into account the public comments within its MTW application plan. That plan must spell out how the PHA intends to use its flexibilities under the MTW program. It must be approved by HUD in order for a PHA to participate in the MTW demonstration program and HUD must monitor MTW agencies' compliance with their plans. The law goes on to require that MTW agencies submit annual reports to HUD that describe their use of funds, activities during the prior year, and any data required by the Secretary of HUD to assess the demonstration program. Thus, the statutory authorization for the MTW demonstration program allows MTW agencies to implement a diverse set of policies and activities. To understand the structure of the MTW demonstration program, it is useful to understand the policy context that shaped its development. The administration of public housing was a controversial issue during the 1980s and 1990s, due to concerns about rising costs, a decaying public housing stock, and a perception that public housing developments were pervaded with social ills. Federal policymakers at the time, therefore, took interest in strategies that could reduce the cost of public housing while also improving its management. Major public and assisted housing reforms were debated throughout this period. Several policy debates influenced the consideration of public housing reform and the resulting development of the MTW demonstration program. First, at the time, the concept of "block granting" was being explored in many social programs. Housing practitioners and some federal policymakers wanted to explore the possibility of block granting or otherwise devolving assisted housing programs to the local level so that local officials would have greater autonomy to design programs and target funding to meet local community needs. This strategy was not universally supported, as some federal policymakers and tenant advocates believed that federal regulation of assisted housing programs was necessary to ensure the achievement of federal housing goals, such as desegregation. Second, the welfare reform debates of the 1990s focused the attention of federal policymakers on increasing family self-sufficiency across social welfare programs, including housing assistance programs. Third, federal policymakers and housing practitioners had increasingly come to believe that providing assisted housing through market-based approaches practiced by private industry would reduce assisted housing costs. The MTW demonstration program was a compromise that allowed for the pursuit of all of these varying policy goals while largely maintaining the existing models of assisted housing. HUD announced the demonstration program in December 1996 and received 43 applications for participation from PHAs. From that pool of applicants, HUD selected 30 PHAs for participation. The selected PHAs each entered into an individual negotiation process with various HUD offices to set the terms of their MTW agreements. That initial MTW negotiation process proved to be both complicated and lengthy as each statutory or regulatory waiver was individually approved. The first agreement was reached in February 1998 and the majority of MTW agreements were signed in 1998 or 1999. Perhaps due to the delays in implementation, or perhaps due to the passage of a public and assisted housing reform law in 1998 that provided all PHAs increased flexibility in the administration of assisted housing programs (such as in selecting tenants), six of the selected MTW agencies opted not to participate in the program. In 2000, HUD competitively allocated the remaining six open spaces to housing authorities with more than 2,500 units (see Table 1 ). Additional PHAs have become MTW agencies through acts of Congress and the program has grown beyond the original statutory cap of 30 PHAs (see Table 1 ). Congress specifically directed HUD to add the following PHAs to the MTW demonstration: Charlotte and Pittsburgh through P.L. 105-276 ; and Alaska, San Bernardino, CA, San Jose, CA, and Santa Clara, CA, through P.L. 110-161 . Congress directed HUD to competitively select another three PHAs for participation in MTW through P.L. 111-8 and another three each through P.L. 111-117 and P.L. 112-10 ; all nine of these competitive slots were only available to high-performing PHAs with fewer than 5,000 assisted housing units, and three of the six competitive slots were open only to HOPE VI sites. Several MTW agencies completed their participation in the demonstration program and chose not to renew their agreements. As a result, 35 PHAs are currently participating in the MTW demonstration program (see Table 1 ). HUD recently selected another four agencies to participate in MTW, although they had not yet finalized agreements with HUD at the time this report was last updated. The MTW authorizing language granted HUD broad discretion in administering the demonstration program and there have been criticisms of HUD's implementation. First, some PHAs were selected for participation despite prior poor performance. Second, the design of the program's structure was not uniform, so MTW agencies implemented a variety of policies under a variety of agreements, making it difficult to compare across agencies. Third, HUD's data systems did not allow for variations in PHA income and rent policies and thus could not accommodate data collection from MTW PHAs. As a result, HUD was unable to collect information on tenant characteristics in the early years of the demonstration, which would be necessary to fully evaluate the effects of MTW policies on tenant outcomes and assisted housing program costs. As a result of both data collection issues and the program's design, HUD has not been able to measure and compare the results of different MTW policies. While HUD has issued or contracted for several reports about MTW, these evaluations are largely process-oriented and limited to descriptions of policies adopted by PHAs. HUD was criticized by its Inspector General for insufficient monitoring of the demonstration's implementation, and in April 2012 the Government Accountability Office (GAO) issued a report recommending HUD undertake additional steps to improve its monitoring and oversight of the program. Partly in response to these critiques, HUD executed a standard MTW agreement with each participating agency in 2008. The standard agreement introduced uniform language for the MTW agreements and normalized reporting requirements, but still allowed MTW agencies flexibility to develop their own local policies. The standard MTW agreements extended MTW agencies' participation in the demonstration program until 2018. HUD has stated it believes that the introduction of the standard agreement and the extension of the MTW demonstration program will allow for more systematic evaluation of MTW agencies' policies in the future. However, the standard agreement does not require the standardization of performance data, which limits HUD's ability to evaluate specific policies implemented by MTW agencies. In 2008, HUD also began to collect data on tenant characteristics, which might allow for some evaluation of MTW policies in terms of tenant outcomes and the cost of assisted housing. According to the 2012 GAO review, HUD has recently increased its efforts to monitor MTW agencies' compliance with the program's statutory purposes and requirements. For example, many of the terms in the MTW statute are undefined, including "self-sufficiency," "housing choice," and "comparable mix of families." HUD has announced plans to require MTW agencies to create their own, or to adopt HUD's, definitions of "self-sufficiency" and "housing choice," and plans to provide MTW agencies with a template to collect data on what constitutes a "comparable mix of families." In addition, in 2011 HUD undertook an assessment of whether MTW agencies met two of the statutory requirements of the program: (1) that 75% of individuals served are low-income; and (2) that substantially the same number of families are served. In that review, HUD found that 91% of individuals served by MTW agencies were low-income and that all but one MTW agency served substantially the same number of families (defined by HUD as at least 95% of the number of families served by the PHA before it entered the MTW demonstration program). The GAO report concluded that HUD's recent initiatives were moving in the right direction in terms of ensuring MTW agencies' compliance with statutory requirements, but it also concluded that without standard definitions and a systematic process, HUD cannot effectively evaluate whether MTW agencies are in full compliance with the statute. A HUD IG report issued in September 2013 also noted that while HUD has taken some steps to improve its oversight of the MTW program, the department was still unable to ensure agencies' compliance with statutory requirements, among other issues. The IG report thus recommended HUD add no additional MTW agencies, or delay adding additional MTW agencies, until its administration of the program improved. As stated previously, MTW agencies have adopted a wide range of program activities. Some agencies have used the MTW demonstration program to fully transform their assisted housing programs, while others have made more modest policy changes. Some agencies have applied their MTW policies to all of their assisted households while others have applied their MTW policies to subsets of their assisted housing populations or to select properties. The following section describes three policy areas in which MTW agencies have discretion and provides some examples of the policies that MTW agencies have developed in these areas. The three areas discussed are (1) the merging of assisted housing program funding streams and development activities; (2) the level of assistance provided to program participants and conditions of assistance; and (3) other administrative flexibilities. Given the differences in scope and scale of MTW programs at participating agencies, the policies described in this section may also vary. When possible, this section will note how MTW agencies have altered their policies over time. Given the limitations described earlier, this report does not attempt to evaluate the effectiveness or efficiency of the policies adopted by MTW agencies in relation to the goals of the program. MTW agencies may elect to receive their federal Section 8 Housing Choice Voucher funding, public housing capital funding, and operating funding in one merged form, rather than through the standard set of several assisted housing funding streams. This form of "block grant" assistance departs from traditional program operations, in which each assisted housing program has a dedicated funding stream and there are few allowances for the use of funds across programs. For instance, under the non-merged funding structure, Section 8 voucher funding can only be used for landlord payments; voucher funding cannot be used to fund the PHA's administration of the program (they receive separate administrative fees for this purpose), the PHA's public housing program, or its other low-income housing development plans. In another departure from the traditional funding structure, the amount of MTW block grant assistance a PHA receives is not determined through traditional programmatic formulas but rather through the negotiation of the MTW agreement. At the outset of the demonstration program, only six MTW agencies elected to receive merged assistance funding, but currently the majority of MTW PHAs receive merged funding. A 2004 report showed that MTW agencies used this area of discretion in a limited fashion during the early years of the program. In general, MTW agencies used the merged funding flexibility to smooth financial shortfalls in particular programs and for cross-programmatic purposes that may have been approved by HUD in the absence of the MTW discretion. Although MTW agencies appeared to use the funding flexibility for uses that were available absent merged funding, in interviews officials at MTW agencies stated that they believed that the funding flexibility provided by MTW created a level of autonomy from regulatory processes that encouraged alternative uses of funds. For instance, some MTW agencies developed additional support services for tenants to increase self-sufficiency—these programs might have been possible under the traditional funding structure, but MTW agencies felt that they would not have undertaken them without funding flexibility. Other MTW agencies used the funding flexibility for development uses that would not have been feasible without merged funding. These MTW agencies used their block grant assistance to leverage financing for the development of additional low-income housing units. As noted earlier, more MTW agencies have now chosen to receive block grant funding, and they are using their funding flexibility broadly. Some MTW agencies have undertaken ambitious development activities, including the conversion of their public housing stocks to new forms of assistance. For example, two of the largest MTW agencies, the Chicago Housing Authority and the Atlanta Housing Authority, have used their MTW flexibility to undertake significant redevelopment of their public housing stock. The Chicago Housing Authority used its merged funding stream to attract private investment to its "Plan for Transformation," in which the PHA has replaced large parts of its deteriorating public housing stock with new developments—many of which are in mixed-income communities. When testifying before Congress, an official from the Chicago Housing Authority stated that the fixed 10-year merged MTW funding stream was key in obtaining financing for its transformation plan from private investors. For instance, the committed funding stream allowed the Chicago Housing Authority to use revenue bond financing. Similarly, Atlanta used its merged funding stream to finance the replacement of its distressed public housing stock. Other MTW agencies, such as the Keene Housing Authority and the Housing Authorities of the County of Santa Clara and the City of San Jose, have used the flexibility in their funding to convert public housing to project-based voucher developments, which is generally not possible under standard program rules (see discussion in next section and " Sample Policy: Keene Housing Authority (NH) and Project-Based Assistance " text box). The interest in converting public housing developments into new forms of assistance is generally driven by an interest in leveraging additional outside financing, which is limited in traditional public housing. "Project-basing" of vouchers is permitted in the traditional Section 8 Housing Choice Voucher program, but it appears to be a tool used more widely by MTW PHAs than non-MTW PHAs. In the traditional, HUD-regulated voucher program, a PHA may "project-base" some of its vouchers by signing a contract with a private property owner that reserves a portion of the building for low-income tenants; the voucher is then attached to the reserved units. The law that authorizes the voucher program limits project-basing such that PHAs may project-base only up to 20% of their tenant-based vouchers and cannot project-base more than 25% of the units in any private building, or project-base any units in a building receiving federal assisted housing funds (e.g., public housing units). MTW agencies, however, may receive waivers of these restrictions and can, for instance, use their funding flexibility to: convert the whole of their public housing stock to project-based vouchers or other similar assistance, project-base former public housing properties that have been sold to nonprofit organizations, including PHA-affiliated nonprofits, and project-base an entire building in order to serve special populations. In addition, MTW agencies may adopt their own processes for awarding project-based assistance rather than follow the competitive process required under the standard voucher program regulations. As shown in Table 2 , the majority of MTW agencies (all but three) either currently have housing portfolios that include some form of project-based voucher assistance or they have plans to begin project-basing vouchers. This is a much higher rate of project-basing than undertaken by non-MTW PHAs. According to a 2010 HUD report, only about 15% of all PHAs were engaged in project-basing vouchers. Several MTW activities can affect the level of assistance provided to tenants. Under the standard public housing and the Housing Choice Voucher programs, statutory requirements determine a tenant's eligibility for assistance based on their income and the amount of subsidy they receive (which is related to the amount of rent they pay). Until 2011, MTW agencies had full discretion to experiment with alternative income calculations and alternative rent structures. In 2011, HUD issued guidance stating that, under the terms of the authorizing statute, MTW agencies must determine if families are income eligible for housing assistance based on the statutory income calculation; it is unclear when and how MTW agencies with approved alternative income calculations will become compliant with the new guidance. Although MTW agencies will no longer be granted the discretion to use an alternative income calculation, they continue to have the discretion to implement alternative rent structures. In addition, MTW agencies have the discretion to set additional conditions of assistance for tenants, such as time limits, work requirements, and mandatory participation in self-sufficiency programs. The industry groups that represent PHAs have argued that the statutory income calculations and rent structures for the public housing and Section 8 Housing Choice Voucher programs are overly complicated to administer, deter the reporting of income, and discourage tenants from increasing their income through work (since rent increases as income increases). Thus, some MTW agencies have experimented with alternative income calculations and rent structures. Under the law governing the public housing and Section 8 Housing Choice Voucher programs, "income" is defined as income from all sources and "adjusted income," which is used for the purposes of calculating tenant rent, is defined as income less statutory exclusions. The law requires that income be examined every year. Some MTW agencies have used the flexibility provided by the demonstration to simplify their income calculations by limiting income exclusions and deductions and by not including the income derived from assets below a certain threshold value (e.g., $50,000). As shown in Table 3 , more than half of participating MTW agencies in 2011 were using some form of modified income or asset disregard and over one-quarter were using a modified set of deductions. (As noted earlier, given recent HUD guidance it is not clear whether MTW agencies will be able to continue all of these policies in the future.) Most MTW agencies have experimented with reducing the frequency with which they verify tenants' income, particularly for populations likely to have fixed incomes, such as persons who are elderly or have disabilities. As noted earlier, federal housing law generally requires that tenant income be reexamined every year for rent determination purposes and on an interim basis for changes in tenant income. Some MTW agencies have elected to only reexamine tenants' income every two or three years and/or to eliminate interim reexaminations of income. As shown in Table 3 , 88% of MTW agencies are using an alternate schedule for recertifying tenant income. By adopting simpler income calculations, it is possible that MTW agencies are forgoing additional revenue or increasing their subsidy costs, but they may have concluded that those costs are worth the administrative savings or changes in tenant incentives. However, there are no data available to evaluate the cost-effectiveness of this approach. Under the traditional housing assistance programs, assisted tenants are required to pay no more than 30% of their incomes towards their rent, although PHAs are permitted to adopt low ($50) minimum rent policies, which are subject to hardship exemptions. Given this structure, generally, as tenants' incomes increase (and subsidies decrease), their rents increase; and as their incomes decrease, their rents decrease (and subsidies increase). MTW agencies have used the flexibility provided by the demonstration to experiment with a variety of alternative rent structures. MTW agencies have adopted maximum (or ceiling) and (higher) minimum rents, flat rents (which do not vary with changes in tenant income), delayed and phased-in rent increases, stepped rents (which increase over time and not in relation to income), and alternative subsidies (see the " Sample Policy: MDHCD (MA) Self-Sufficiency Program " text box). As shown in Table 3 , most MTW agencies have adopted their own minimum rent policies, just under a quarter have adopted tiered rent policies, and more than a quarter have adopted flat rent policies. In addition, slightly less than a third of MTW agencies have simplified the utility calculation component of determining a tenant's subsidy. In interviews during the MTW program's initial evaluation in 2004, some MTW agency officials stated that they believed that alternative rent structures encourage work by not penalizing tenants for increases in income and that the alternative rent structures gave tenants exposure to a system more closely mimicking the private market. These MTW agency officials also indicated that they thought the alternative rent structures were easier for tenants to understand and easier for staff to administer. At this time, there are no systematic data to evaluate the assertions that the alternative rent structures adopted by MTW agencies have led to increased tenant earnings. Further, while it is reasonable to assume that the rent changes have decreased administrative work and changed (either increased or decreased) tenants' out-of-pocket payments, due to the lack of available data it is unclear what the magnitude of these outcomes might be. MTW PHAs have also used their flexibility to implement new requirements for tenants receiving assistance. Some MTW PHAs have implemented time limit and work requirement policies; as shown in Table 4 , approximately one-third of MTW agencies have implemented work requirements while half as many MTW agencies have implemented time limit policies. These policies may be designed to encourage self-sufficiency and/or to allow the PHA to serve additional families from their waiting lists. Generally, MTW agencies implementing work requirement and time limit policies also provide families subject to the requirement with supportive services (see " Sample Policy: MDHCD (MA) Self-Sufficiency Program " text box). The specifications of the work requirements and time limits vary across MTW agencies. For instance, time limits adopted by MTW agencies for program participation range from three to seven years. Many of the policies already discussed may result in decreased administrative burdens for MTW agencies (e.g., alternative recertification schedules, streamlined project-basing), but there are additional policies that MTW agencies have adopted that streamline operations without altering the level or type of assistance that families receive. Examples include alternative housing quality inspection schedules and alternative reporting requirements. In the Section 8 Housing Choice Voucher program, each rental unit under contract must be inspected to ensure it meets HUD's physical quality standards annually, based on the date of a family's initial occupancy. These policies are designed to ensure that assisted housing units are of a decent quality. PHA industry groups have contended that the inspection requirements, as currently structured, require a high level of staff resources. They have also argued that in some cases it is not necessary to inspect units every year to ensure housing quality. Reflecting these concerns, some MTW agencies have clustered their inspections based on location and some have alternative inspection schedules, such as risk-based inspections (see " Sample Policy: The Oakland Housing Authority (CA) and Biennial Inspections " text box). The risk-based model of inspection can include, for landlords with good records: less frequent inspections, the self-certification of units, and the inspection of a sample of a landlord's rental units. As shown in Table 5 , only a couple of MTW agencies are clustering inspections, but 38% are conducting inspections less frequently than annually and 19% are allowing owners to self-certify under certain conditions. The authorizing language for the MTW program states that MTW agencies must ensure that assisted housing meets federal housing quality standards (HQS). HUD's 2010 Report to Congress suggests that the alternative HQS inspection procedures adopted by MTW agencies have ensured the quality of the assisted housing stock in a less burdensome and costly way. However, at this time, a full evaluation has not been conducted as to whether the alternative HQS inspection procedures are either more or less effective than the regulated program procedures in ensuring the quality of Section 8 voucher-assisted rental units. Additional research would be necessary to evaluate the effectiveness and efficiency of the traditional inspection procedures compared to alternative inspection procedures. Another area where MTW agencies differ involves how they report program information to HUD (due to the different accountability structure afforded the MTW demonstration program, as discussed previously in the report). MTW agencies are required to submit an Annual MTW Plan, which outlines their activities for the year, and an Annual MTW Report, which describes and evaluates the outcomes of those activities. Non-MTW agencies must also submit plans, but they are more prescriptive than MTW plans and are focused on how PHAs are meeting federal rules and regulations and which among a more limited set of options they are choosing and why. MTW officials interviewed by the Urban Institute in 2004 believed that MTW reporting requirements encouraged program creativity and strategic planning and that, while some of their MTW activities would have been possible outside of the demonstration program, they would not have attempted these activities but for the MTW planning process. These same officials viewed other assisted housing program reporting requirements as merely the fulfilling of an obligation. MTW agencies formerly had additional flexibility to implement activities that were not included in their Annual MTW Plans if those activities were allowable under their specific MTW waivers. However, since the implementation of the standard MTW agreement in 2008, MTW agencies must now include any new MTW activities in their Annual MTW Plans for HUD's approval before implementation; with this change, HUD has more knowledge of MTW agencies' activities and the way in which the agencies plan to measure their outcomes. However, GAO has noted that the current reporting process, which relies heavily on the Annual MTW Plan and Annual MTW Report, allows MTW agencies to self-report on the achievement of their target program outcomes without verification. HUD has also reported that some MTW agencies have struggled with the new reporting requirements after not reporting on activities for up to 11 years. In addition, several of HUD's reporting systems continue to lack the capacity to accept data on MTW-specific activities. As previously stated, there has been no systematic evaluation of the outcomes of the policies adopted by MTW agencies in achieving the goals of the program (reduce costs and increase cost-effectiveness in the provision of assisted housing, encourage the self-sufficiency of assisted families, and increase the housing choices for low-income families). A more systematic evaluation may be possible in the future, as HUD standardizes the program and increases the program's data collection. Despite the lack of verified evidence regarding the effectiveness and efficiency of MTW activities, tenant advocates, PHAs, and HUD have made observations about the way in which the program has affected tenants and the way it has affected PHAs' operations. These observations are neither tested nor quantified, but they do inform policy debates about the future of the MTW demonstration program and about overall reform of assisted housing programs. Since the beginning of the demonstration program, low-income housing advocates have expressed concern that assisted housing tenants will be and have been negatively affected by the policies adopted by MTW agencies. (For example, see " Public Opposition to MTW Participation: The New York City Housing Authority (NYCHA) " text box.) Whether the implementation of the MTW demonstration program has positively or negatively affected assisted housing tenants has not been thoroughly studied and is thus unclear. HUD has suggested that MTW has permitted participating PHAs to provide a greater number of assisted housing units than they would have been able to provide under the traditional assistance programs. This would mean that the MTW program has provided a benefit to low-income individuals more broadly. However, the ability of MTW agencies to assist a greater number of families may be a result of agencies reducing the amount of assistance provided to current recipients, rather than a result of savings from administrative streamlining. For example, some PHAs have implemented policies that reduce the amount of rental assistance that an individual tenant receives (e.g., requiring tenants to pay rent above the affordability standard of 30% of tenant income). Similarly, while the self-sufficiency policies and programs implemented by MTW agencies could potentially benefit some low-income individuals over the long term by facilitating increases in family income, it is unclear if time limit and work requirement policies have resulted in needy families losing access to assistance. Finally, there have been reports that MTW agencies have reduced tenants' access to portability (the ability to move from one PHA's jurisdiction to another's using the same voucher), which would limit tenants' housing choices. Further research would be required to know the net benefit of MTW discretion to low-income individuals receiving or waiting to receive assistance. In addition, the MTW demonstration program has facilitated the large-scale demolition of public housing in some communities, significantly affecting the lives of the tenants in those developments. Although MTW agencies are subject to the same rules and procedures for the demolition and disposition of public housing as non-MTW PHAs, the flexibility of being an MTW agency may make the demolition and disposition of an agency's public housing stock more feasible. As noted earlier, the Atlanta and Chicago PHAs are two MTW agencies that have demolished the majority of their public housing stock, replacing some of the lost stock with vouchers and mixed-income developments. PHAs pursuing this strategy contend that the replacement housing is of better quality than the demolished public housing and provides more opportunities for residents. Tenant advocates have objected to this type of large-scale displacement of public housing residents; they argue that the relocations destroy communities and employment networks and make social services less accessible. The primary research on the effects on tenants of the demolition and disposition of public housing has looked at the results of the HOPE VI public housing revitalization program. HOPE VI has funded the demolition or redevelopment of severely distressed public housing, including public housing owned by MTW agencies. Research conducted by the Urban Institute on the outcomes of HOPE VI has shown mostly positive results for tenants. Tenants who were displaced from severely distressed public housing appear to now live in lower-poverty neighborhoods with improved health outcomes. However, research has also found that some tenants who are considered to be particularly vulnerable (such as very large families, families with disabled members, and families with multiple barriers to self-sufficiency) have not seen the same levels of benefit from public housing revitalization and may require additional services. While the data available are insufficient to know if the discretion afforded to MTW agencies allows for a more cost-effective administration of assisted housing programs, the belief that the program has been a success on this front is generally held by supporters of the program, including PHA industry groups, some assisted housing practitioners, and some Members of Congress. The fact that most participating PHAs have chosen to renew their participation and more PHAs wish to participate than there are advertised slots is evidence of the popularity of the program among assisted housing practitioners. Congress has exhibited some support for the program by taking action to expand the number of agencies participating. Further, HUD officials have suggested that they believe MTW agencies are more cost-effective in their administration of assisted housing. However, this belief that MTW has been successful at improving cost effectiveness and efficiency is not universally held. Some low-income housing advocates have argued that MTW agencies administer assisted housing at a higher cost than non-MTW agencies. Some advocates have also suggested that, in a limited funding environment, the negotiated funding MTW agencies receive negatively affects the funding of other PHAs. While MTW agencies' funding levels are subject to the same across-the-board decreases in funding that apply to non-MTW agencies, it is unclear how MTW agencies' funding levels would have fared if they were subject to the standard funding formulas instead of their negotiated agreements. Supporters of MTW have claimed that the increased discretion afforded to MTW agencies decreases administrative burdens without increasing oversight risk. In the traditional structure of assisted housing programs, PHAs are held accountable through a regulatory structure that monitors if PHAs have delivered assisted housing according to the rules of the specific programs. As a result, PHAs are evaluated based on their ability to follow processes rather than the outcomes of their activities. A traditional regulatory oversight model may be perceived as a necessary tool to guard against waste, fraud, and abuse. MTW agencies are not subject to this form of regulatory accountability, and instead define their own outcome goals and then self-report their effectiveness in meeting these goals to HUD through their annual MTW reports. Supporters of the MTW program argue that this structure allows MTW agencies to pursue innovative strategies and focus on program outcomes and long-term planning. PHA industry groups point to the experiences of MTW agencies as support for deregulation and a move away from traditional, regulatory oversight. However, it is unclear whether the use of program funds by MTW agencies has been monitored closely enough to fully evaluate their outcomes. The current MTW agreements are all scheduled to expire in 2018. If no other actions are taken, the program is slated to continue as-is until that time, and it will be at HUD's discretion whether to renew the agreements again. However, the future of the MTW demonstration remains uncertain. Some supporters have proposed expanding MTW, converting it from a demonstration into a permanent program, and allowing more PHAs to participate in it. Other proposals have called for continuation of the program, with perhaps a limited expansion, but with changes designed to address concerns raised by tenant-advocates and to allow for a stronger evaluation component. Critics of MTW have called for it to be phased out and, in some cases, replaced with targeted demonstrations that would allow for more meaningful evaluations to inform future policy changes. These differences of opinion highlight the outstanding question of whether the MTW demonstration program should be considered a lab for testing new ideas for reforming the primary rental assistance programs or whether some version of the MTW program is the future of assisted housing. Depending on their perspective about the purpose of the program, policymakers may consider changing the MTW program to make it a more effective demonstration, changing the MTW demonstration into a permanent and expanded program, or maintaining the status quo. The purpose of the MTW demonstration program, as articulated in its authorizing statute, is to "design and test various approaches for providing and administering housing assistance" that meet the goals of the program. As noted earlier, those goals involve reducing cost and increasing cost-effectiveness, promoting work and self-sufficiency, and increasing family choice. The statute charged the Secretary of HUD with evaluating participating agencies "in an effort to identify replicable program models promoting the purpose of the demonstration." As discussed throughout this report, the way that the MTW demonstration program was designed and implemented has limited the effectiveness of the program as a true demonstration. While PHAs have used the MTW flexibilities to "test various approaches for providing and administering housing assistance," those models have not been fully assessed in terms of whether they effectively or efficiently meet the purposes of the demonstration. Recognizing the limitations of the MTW program as a demonstration, some have called for changes to MTW to allow it to more clearly serve research-oriented purposes. For example, the Center on Budget and Policy Priorities has argued that a set of targeted, temporary demonstrations would be a more effective mechanism to test specific policy changes. Recently, HUD has proposed expanding the MTW demonstration program to 60 agencies as part of an effort to structure a systematic evaluation. HUD's proposals include a more targeted selection of MTW agencies, which would allow for the study of particular policies (e.g., admitting a subset of agencies that plan to implement a particular rent policy). HUD has also stressed the importance of selecting high-performing agencies that have the capacity to take part in a rigorous evaluation. HUD's intended goal would be to evaluate the policies implemented by MTW agencies for national adoption. Similar proposals have been included in assisted housing reform legislative proposals, such as the Section 8 Voucher Reform Act and the draft Affordable Housing and Self Sufficiency Improvement Act (AHSSIA). As noted earlier in this report, the legislative history of the MTW demonstration program indicates that its creation was a compromise between policymakers who thought that the existing set of rental assistance programs should be transformed into a flexible block grant program and those who thought the existing programs should be retained. The MTW compromise allowed for the creation of a new, block grant-like housing program for a small number of PHAs, and the maintenance of the existing programs for most PHAs. Over time, more PHAs have been added to MTW than originally envisioned and many additional PHAs wish to receive MTW status. The desirability of MTW for PHAs has led to calls to expand and make MTW a permanent program. For example, the Moving to Work Charter Program Act, which has been introduced in each of the past several Congresses, would expand to at least 250 the number of PHAs eligible to participate in MTW and make it a permanent program. Others have called for block granting and deregulating federal housing assistance for all PHAs, along the lines of MTW. For example, in 2004 the Bush Administration proposed the Housing Assistance for Needy Families program, which was modeled on MTW and would have converted housing assistance into a block grant, allowing PHAs many of the same flexibilities provided under MTW. That proposal did not receive wide support. PHA industry groups raised concerns that a block grant funding model could lead to funding reductions down the road, as has been seen with other HUD block grant programs. Tenant advocates raised concerns that deregulation would mean that they would lose protection in the law against policies that would raise tenants' rents and subject them to conditions of assistance they felt would be unreasonable. A differently structured block grant proposal could garner wider support, although some of the same concerns raised in 2004 could be raised again. In addition, HUD has expressed concern about the capacity of some agencies entering the MTW demonstration program. As previously mentioned, some of the PHAs admitted to the current program were considered poor performers prior to entering. HUD argues that high performers are more likely to succeed because they have proven their ability to meet reporting requirements and thus will be able to report on their activities and outcomes as required in the MTW demonstration program. HUD has also recommended that PHAs be selected for the program based on evaluation capacity, previously demonstrated innovation, and the level of local support. Finally, it is unclear if the MTW program as currently designed, or if a fully deregulated block grant program, would be a good program model for small PHAs, particularly those that administer only the public housing program or only the Housing Choice Voucher program. Another option for policymakers is to make no changes and allow the MTW demonstration program to continue as it is currently structured. The existing MTW agencies have agreements through 2018 (with the possibility for extensions beyond that date, at HUD's discretion). Congress may also consider adding small numbers of additional agencies, as it has done the past several years. Further, as noted earlier, HUD has taken some steps to address concerns raised by critics of the existing program, such as increasing MTW reporting requirements, standardizing agreements, and including evaluation requirements for new agencies entering the program. If the program continues as is, participating PHAs will continue to experiment with new policies that may influence the primary assisted housing programs. Even without a full evaluation of the policies adopted by MTW PHAs, it appears that both HUD and policymakers are considering incorporating some of the reforms adopted by MTW agencies into the mainstream programs. Both the Obama Administration and some Members of Congress from both parties have proposed or supported changes to HUD rental assistance programs that would either require or allow PHAs to adopt policies that MTW PHAs have experimented with, including changes to inspection rules, including allowing biennial inspections; changes to income calculation rules, including allowing alternate sources of documentation or definitions of income and a streamlined calculation process; changes to rent policies, including higher minimum rents and/or a limited rent policy demonstration; expanded authority to PHAs to "voucher-out" their public housing and replace it with project-based assistance; and allowance for PHAs to blend their public housing operating and capital funding. While bipartisan consensus seems to be forming in favor of adopting some reforms based on the MTW demonstration, other policies remain controversial, particularly those involving changing the amount of assistance provided to residents and placing conditions (such as time limits and work requirements) on the receipt of such assistance. Tenant advocates and researchers continue to have questions and concerns about the effects of these and other policies on tenant outcomes, as well as the other stated purposes of the demonstration.

Summary: The Moving to Work (MTW) demonstration program was created by Congress in 1996 to give the U.S. Department of Housing and Urban Development (HUD) and local Public Housing Authorities (PHAs) the flexibility to test alternative policies for providing housing assistance through the nation's two largest housing assistance programs: the Section 8 Housing Choice Voucher program and the public housing program. The alternative policies are meant to increase the cost-effectiveness of assisted housing programs, promote the self-sufficiency of assisted families, and increase housing choices for low-income families. The more than 30 PHAs currently participating in the demonstration have adopted a wide range of new policies that would not have been possible under the traditional rules governing assisted housing programs. Participating PHAs have merged their various federal funding streams and used their merged, "block grant" funding to undertake new activities, including supportive services for residents, development of new affordable housing, and the restructuring of traditional public housing. MTW PHAs have also changed their rent policies in ways that may raise rents for some tenants, but may also improve incentives for families to increase earnings. Some PHAs have adopted policies that place new conditions on assistance, such as time limits and work requirements. And PHAs have undertaken changes to streamline administration of the program, such as modifying their quality inspection procedures. The way the demonstration program was designed—allowing for a wide variety of activities—and issues with data collection have meant that no systematic evaluation of the outcome of the policies adopted by MTW agencies has been undertaken. However, HUD has made efforts to increase and standardize data collection within the MTW demonstration program, which may make such an evaluation more feasible in the future. Both supporters and critics of the program have made observations about how the flexibility provided under MTW has been used, and those observations have influenced the policy debate about the future of the demonstration. Critics of the demonstration have argued that MTW agencies have been given unprecedented flexibilities, yet there is little understanding of the impacts those flexibilities have had on the lives of low-income families. Supporters of the demonstration have argued that the flexibility of MTW has allowed participating PHAs to serve more families in unique, improved, and cost-effective ways. These competing perceptions of MTW have translated to conflicting calls to end the program, change the program, or expand the program. To some extent, these conflicting visions of the future of the program reflect different ideas about the program's purpose. Should MTW be used as a testing ground for evaluating innovative policies for the delivery of assisted housing? Or, should something like MTW replace the major housing assistance programs? Regardless of whether Congress chooses to make changes to the MTW program, the policies adopted by participating PHAs appear to be influencing debates about assisted housing programs. Several of the policies adopted by MTW agencies are under consideration as permanent reforms for the public housing and Section 8 Housing Choice Voucher programs. As Congress considers the reform of federal housing assistance programs, policymakers may continue to look to lessons from the MTW demonstration program for insight.