Housing and Welfare Reform
By Barbara Sard and Jennifer Daskal
Although welfare and housing assistance systems are designed and administered separately from each other, their beneficiaries overlap to a substantial degree. Especially in the wake of welfare reform, this intersection presents both opportunities and challenges for welfare recipients, tenants receiving federal housing assistance, housing and welfare advocates, and administrators of both welfare and housing programs.
The sweeping changes in the 1996 welfare law-which replaced the Aid to Families with Dependent Children (AFDC) program with the Temporary Assistance to Needy Families (TANF) block grant-reduce benefits for recipients and therefore threaten to reduce revenues for many housing authorities and assisted housing owners. According to HUD data, about one million, or nearly half, of HUD-assisted families with children received some income from AFDC/TANF in 1996. Of these approximately one million families, about 260,000 lived in public housing, 480,000 received tenant-based vouchers and certificates, and 250,000 lived in project-based Section 8 housing.
In 1996, approximately one-quarter of all AFDC/TANF recipients lived in assisted housing, although this ratio varied significantly from state to state. The reason even more welfare families do not receive housing assistance is not, for the most part, that they have adequate affordable housing, but rather that the supply of housing assistance is so limited.
Welfare Policy's Effects on Housing
If housing authorities are faced with losses in revenue because tenants have hit TANF time limits or are sanctioned for non-compliance with TANF work requirements, each of the three major federal housing programs will be affected in somewhat different ways.
Without an increase in federal public housing operating subsidies, PHAs could be forced to operate with reduced revenues. PHAs depend on rental payments to meet part of the operating and maintenance costs of their public housing projects. If tenants hit welfare time limits or are sanctioned by their state's welfare program, and their incomes fall due to loss of cash assistance, their rent payments will decline as well. This provides an incentive for PHAs to help tenants become employed or increase their earnings prior to hitting their state's TANF time limit.
Tenant-Based Certificates and Vouchers
Small PHAs are at particular risk under the new laws, because of their dependence on revenue tied to the number of families with certificates and vouchers that they house. In the tenant-based program, PHAs generally pay landlords the difference between a tenant's required rental payments and the approved rental charge. If a tenant's income falls due to loss of cash assistance, the PHA must increase its subsidy. A PHA may have to reduce the total number of certificates and vouchers it provides to remain within its budget allocated by HUD. But a reduction in the number of vouchers and certificates provided means a loss of a portion of the administrative fees the PHA receives. Although this loss of fees would be less significant for larger PHAs that administer many vouchers and certificates, the income loss could pose problems for smaller PHAs.
Project-Based Section 8
Other areas of HUD's budget may suffer as more funds are allocated to the project-based Section 8 program, since a net decline in tenant incomes would necessitate a growth in subsidies. Landlords receiving project-based subsidies do not themselves bear the impact of reduced tenant income. Rather, HUD is required to increase payments to project owners when tenants' rental payments fall. In this case, the federal government would pick up the extra costs resulting from the loss of cash assistance. If HUD payments to the project-based owners rise substantially due to declining tenant incomes as families hit time limits, HUD may have to reduce spending on other housing programs to remain within budgetary limits.
To avoid a short-term reduction in revenue, as well as the social consequences that may result from increased destitution among tenants in a development, housing administrators have an incentive to help recipients of both welfare and housing assistance find and retain employment and increase their incomes. Housing agencies have tools such as HUD competitive grant funds to help tenants obtain jobs, improve their skills, or overcome employment barriers such as lack of child care or transportation. Housing providers also can be influential allies in helping tenants learn about welfare policy changes and deal with the obligations the new provisions pose.
How Housing Policy Can Respond to Welfare Policy
Families receiving TANF assistance or working at low-wage jobs are unlikely to be able to rent housing on their own without paying a significant portion of their incomes. Data from the 1995 American Housing Survey indicate that about half of working poor families with children that receive no housing subsidy pay at least half of their income for rent. A mother with two children who works full-time year round at $6 per hour would have to pay over half of her income to rent a two-bedroom apartment at the national median HUD-determined "fair market rent" for metropolitan areas.
Such high housing costs leave low-income families attempting to move into the workforce with little money for the necessities that often accompany employment, such as additional clothing and food costs, child care, and transportation to and from work. By reducing a family's housing cost burden, housing assistance can free up additional dollars for work-related expenses and other basic needs, and thus aid families' efforts to move from welfare to work. TANF families can also use tenant-based vouchers and certificates to move to a location from which it is easier to obtain and retain employment. In addition, providing public housing or project-based Section 8 units near mass transit systems and affordable child care can help families make the transition to employment.
Furthermore, by encouraging housing agencies to admit families receiving TANF and families that have recently left welfare for work, welfare administrators and advocates will not only aid the families themselves, but will be able to reduce their own caseloads and find greater success in meeting work participation requirements.
With many PHAs adopting a preference for working families, advocates should encourage PHAs to use a definition of "working" that encompasses families cooperating with welfare-to-work requirements. Those who are receiving unemployment insurance or who have been employed within a defined prior period of time could also be included in this category. This would enable some families eligible for TANF to retain access to housing assistance.
Linkages with housing administrators and advocates can also help efforts to move the long-term unemployed into both subsidized and unsubsidized employment. Research suggests that TANF recipients who also receive housing assistance tend to have received cash assistance for longer periods than TANF recipients not receiving housing assistance. As states become subject to increasingly tight work participation requirements under the federal welfare law, they will need to reach out to long-term TANF recipients to put a sufficient number of families to work. If they do not meet these work participation requirements, states will lose a portion of their federal TANF dollars. Links with housing authorities could help state welfare agencies better serve long-term TANF recipients with low skills and limited work histories.
Additional funding may be available to provide a range of services to such families through HUD-administered competitive grant funds, which often reward collaborative efforts between PHAs, welfare agencies, and social service providers. In addition, the new federal welfare-to-work formula and competitive grant funds being administered by the U.S. Department of Labor must be targeted on this hard-to-serve group; programs serving TANF families with housing subsidies may have an advantage in competition for such funds.
Where to Go from Here?
Examples of successful collaboration between housing and welfare administrators do exist. Some agencies use joint application/recertification forms for welfare and housing assistance, eliminating the need for families to visit multiple offices and complete sometimes duplicative paperwork. Some housing agencies are, in fact, establishing admissions priorities that emphasize welfare-to-work efforts. In some areas, TANF families who are assisted housing tenants are receiving employment counseling, referrals to training and job opportunities, and supportive services from both welfare and housing agencies. In New Jersey, a pilot program that will provide state-funded housing assistance to 350 families who have recently moved from welfare to work will likely be funded in part with TANF maintenance-of-effort dollars.
Another example of a housing program designed to encourage work is the Family Self-Sufficiency (FSS) program. Approximately 1,200 PHAs-about one-third of all PHAs nationwide-and 60,000 families now participate in this program, which places emphasis on substantially increasing families' earning capacity. As part of the FSS program, PHAs establish savings accounts for tenants in the program who increase their earnings. As tenants' incomes rise due to increased earnings, their rent payments normally rise, and the subsidy the PHA pays normally falls. Under the FSS program, the PHA does not retain the increased rental payments of its public housing tenants, nor does the subsidy amount paid for tenants with vouchers and certificates fall. Instead, the increases in a tenant's rent payments caused by an increase in earnings are placed in a savings account. With PHA approval, tenants can use these savings for work-related expenditures such as car purchase and repair or school tuition during their participation in the FSS program. Families can withdraw funds from this account at the time they successfully complete their FSS contract.
While these and other efforts across the country suggest many possibilities for collaboration, welfare and housing administrators and advocates too often operate on separate tracks, without regard to the overlap in the families they serve and the mutually beneficial opportunities for collaboration. Awareness of these connections is important to understanding how changes in one program can affect the other and how best to serve a common population. Effective collaboration between the administrators and advocates and successful coordination of housing and welfare programs could enhance efforts to move families from welfare to work and better enable families to retain newly found employment.
Welfare Reform Harms Poor
The report, Are States Improving the Lives of Poor Families? scores each state based on their Temporary Assistance to Needy Families (TANF) and Child Care and Development Fund programs. According to the rankings, 42 states have adopted policies under their TANF Block Grants that are likely to worsen the economic security of poor families, and all but one have implemented child care policies that are likely to improve family economic security. Aggregated scores found only 14 states with an overall program that will benefit poor families.
"In the majority of states, poor families are likely to have a more difficult time moving from welfare to self-sufficiency," the report concludes. "The central promise of welfare reform is not being achieved-targeted state investments to achieve the goal of greater economic security among poor households."
The report is available from the Center on Hunger and Poverty, Tufts University, Medford, MA 02155; 617-627-3956.
First, the majority of tenants in nonprofit housing are the working poor, not the very poor. With slightly higher incomes, they likely will not be affected by welfare reform's job requirements and time limits. However, sub-groups may be severely hit. Individuals living on the state's General Assistance (GA) will be hit hard, and soon. California's welfare reform plan allows counties to limit GA to five months each year. Come July, up to 43,000 people in Los Angeles alone are going to lose their only means of subsistence. Some may get jobs, but many will be evicted. Homeless again, the individuals will simply suffer. The units will survive due to long waiting lists, but constant turnover will increase management burdens.
A second group waiting for the next shoe to drop are legal immigrants. No specific numbers exist, but the best guess is that immigrants (from both Latin America and Asia) are the majority of nonprofit housing tenants in the state. Although regulations haven't been implemented at the federal level, California jumped the gun and, in its recent anti-immigrant fervor, is busy drafting punitive regulations that will make it much harder for legal immigrants to stay in nonprofit housing. For the moment, these regulations have been postponed but not completely halted.
One "positive" result of these policies may come from the entrepreneurial spirit that drives most nonprofit community developers. Already providing a wide range of services to tenants, many CDCs are gearing up to provide increased job and economic development training as part of their missions. These services may make the crucial difference for tenants facing the loss of benefits, time limits, and ultimately, evictions.