For many years, HUD has been the subject of sustained criticism for management and oversight weaknesses that have made it vulnerable to fraud, waste, abuse, and mismanagement. In 1994, we designated all of HUD’s programs as high risk because of four long-standing management deficiencies: weak internal controls; inadequate information and financial management systems; an ineffective organizational structure, including a fundamental lack of management accountability and responsibility; and an insufficient mix of staff with the proper skills. HUD undertook reorganization and downsizing efforts in 1993 and 1994; and its 2020 Management Reform Plan that was announced in 1997, was the effort intended to finally resolve its managerial and operational deficiencies, among other things. HUD also said one of the purposes of its plan was to ensure HUD’s relevance and effectiveness into the twenty-first century. HUD’s 2020 Management Reform Plan was a complex and wide-ranging plan to change the negative perception of the agency by updating its mission and focusing its energy and resources on eliminating fraud, waste, and abuse in its programs. The reform plan presented two interrelated missions for HUD: (1) empower people and communities to improve themselves and succeed in the modern economy, and (2) restore public trust by achieving and demonstrating competence. With these two missions, HUD’s goals were to become more collaborative with its partners; move from process-oriented activities to an emphasis on performance and product delivery; and develop a culture within HUD of zero tolerance for waste, fraud, and abuse. As part of the 2020 plan, HUD was to refocus and retrain its staff to ensure it had the skills and resources where needed. HUD planned to reduce staffing from 10,500 at the end of fiscal year 1996 to 7,500 by fiscal year 2002 through buyouts, attrition, and outplacement services. However, we found that the staffing target was not based on a systematic workload analysis, and we questioned whether HUD would have the capacity to carry out its responsibilities once the reforms were in place. HUD reduced staffing to about 9,000 full-time positions by March 1998, when the downsizing effort was terminated. During fiscal year 1999, HUD substantially completed its reorganization under the 2020 Management Reform Plan. In September 2000, we testified on HUD’s progress in addressing its major management challenges as it tried to transform itself from a federal agency whose major programs were designated “high risk.” In January 2001, we recognized that HUD’s top management had given high priority to implementing the 2020 Management Reform Plan. Considering HUD’s progress toward improving its operations through the management reform plan and consistent with our criteria for determining high risk, we reduced the number of programs deemed to be high risk from all HUD programs to two of its major program areas—single-family mortgage insurance and rental housing assistance. In October 2001, we reported that HUD had some successes in implementing its major 2020 management reforms, but we also identified challenges that remain. We reported that some initiatives, such as consolidating and streamlining operations in new centers, had produced results; other efforts, such as improving efficiency and accountability, had been hampered by inefficient distribution of workload and other issues. Overall, we identified strategic human capital management—of which workforce planning, recruiting, and hiring are significant component—-as the most pressing management challenge facing HUD. Concerned about HUD’s approach to using staff, Congress asked the National Academy of Public Administration (NAPA) to evaluate HUD’s ability to develop staffing requirements based on meaningful measures and received a NAPA report on the issue in 1999. NAPA recommended that HUD adopt a management approach that bases staff estimates and allocations on the level of work and the specific location where it is to be performed. HUD made a commitment to implement this recommendation by developing its REAP in consultation with NAPA. In September 2000, the HUD IG expressed concern that the implementation of REAP had not progressed with the urgency that would have been expected for a priority status project. The human capital management challenges that HUD faces are a concern across the federal government. GAO, OMB, and the Office of Personnel Management (OPM) have challenged agencies to acquire and develop staffs whose size, skills, and deployment meet agency needs and to ensure leadership continuity and succession planning. Last year, we added strategic human capital management to our list of high-risk government programs as an area that needs attention to ensure that the national government functions in the most economic, efficient, and effective manner possible. Several of the key challenges we identified were directly related to workforce planning, recruiting, and hiring. Three of the four “human capital cornerstones” that we identified in our Model of Strategic Human Capital Management relate directly to the challenges at HUD that this report examines. These cornerstones are as follows: leadership commitment to human capital management and recognition that people are important enablers of agency performance; strategic human capital planning in which the human capital needs of the organization and new initiatives or refinements to existing human capital approaches are reflected in strategic workforce planning documents, and decisions involving human capital management and its link to agency results are routinely supported by complete, valid, and reliable data; and acquiring, developing, and retaining talent using strategies that are fully integrated with needs identified through strategic and annual planning and that take advantage of appropriate administrative actions available under current laws, rules, and regulations. In 2001, as part of the President’s management agenda for improving the government’s performance, OMB did a baseline evaluation of executive branch agencies’ performance in five major management categories, including human capital management. It scored 26 executive branch agencies as achieving green, yellow, or red levels of performance in each management dimension. For human capital management, no agency received a green status, which would have indicated that it had met all core criteria. Three of the 26 agencies evaluated received a yellow status, indicating the achievement of some, but not all, of the core criteria; and 23 agencies, including HUD, received red status, indicating that that they had one or more major deficiencies in human capital management. HUD currently has a staff of about 9,000 to meet its mission of promoting adequate and affordable housing, economic opportunity, and a suitable living environment free from discrimination. To meet this mission, HUD has outlined the following eight strategic goals: Make the home-buying process less complicated, the paperwork less demanding, and the mortgage process less expensive. Help families move from rental housing to homeownership. Improve the quality of public and assisted housing and provide more choices for their residents. Strengthen and expand faith-based and community partnerships that enhance communities. Effectively address the challenge of homelessness. Embrace high standards of ethics, management, and accountability. Ensure equal opportunity and access to housing. Support community and economic development efforts. HUD’s PIH office plays a major role in administering HUD’s affordable rental housing programs. PIH has identified five activities to meet its mission of ensuring safe, decent, and affordable housing; create opportunities for residents’ self-sufficiency and economic independence; and ensure fiscal integrity by all program participants. These mission- related activities are listed in figure 1. PIH is responsible for oversight of the public housing program that serves about 1.2 million low-income households and the housing voucher program that serves about 1.8 million low-income households. (See fig. 2.) Public housing authorities administer both programs. Because tenants’ rents typically do not cover the cost of operating public housing, PIH administers subsidies, vouchers, and other federal payments to more than 3,000 local public housing authorities. PIH also provides the housing authorities with oversight, monitoring, and technical assistance in planning, developing, and managing public housing, and intervening if problems arise with public housing authorities’ delivery of services. HUD also provides funds to housing authorities for major modernization projects through the Capital Fund Program that PIH administers. Although HUD has started to do workforce planning and has identified the resources required to do its current work, it does not have a comprehensive strategic workforce plan that identifies the knowledge, skills, and abilities it needs to build its workforce for the future. HUD has done a detailed analysis of its potential losses of staff to retirement; but without a complete workforce plan, HUD is not fully prepared to recruit and hire staff to pursue its mission. In the interim, HUD has begun to hire interns whom it hopes can be trained to fill positions that are likely to be affected by upcoming retirements. Workforce planning steps HUD has taken thus far include completion of a detailed analysis of HUD’s potential staff losses due to retirement and the REAP, which estimates the staff needed to handle the current workload in each office. HUD has analyzed data on retirement eligibility by component office, position, and grade level. Among its findings is that by August 2003, half of its workforce in General Schedule (GS) Grades 9 through 15 will be eligible to retire. Figure 3 shows retirement eligibility by grade level. The REAP study reviews staffing levels by component office and the tasks that staff in various job classifications are assigned. On an office-by-office basis, the REAP study looked at the number of staff on board and assigned a staff ceiling—the number of staff needed for that office based on the work the office is currently performing—and then calculated the resources required to do the work. The REAP also provides a framework for periodic validation of the data. Figure 4 compares the REAP estimated needs for major HUD offices with the staff on board as of September 30, 2001. The compilation of data on retirement eligibilities and the REAP study are important first steps for HUD toward strategic human capital planning, but additional workforce planning steps are necessary.