Radical move

The Bush Administration wants to shift responsibility for the nationšs most common housing subsidies to the states

by Dori Meinert

As a single mother with two kids, Carma Kimber thought her life was tough. When she became pregnant a third time, it got a lot tougher. But with federal housing aid, the 28-year-old Peoria woman has been able to go to college, which gives her a shot at a better-paying job.

“I’d rather struggle for a short period of time and come out with something really amazing than just continue to struggle with no ending,” says Kimber, who is studying full time to become a registered nurse while working 10 hours a week on the campus of Illinois Central College.

With her income and household size, Kimber is eligible to get all of her rent paid through the federal Section 8 program. And because she is part of a family self-sufficiency initiative, the federal government puts additional dollars into an escrow account for her so that, after five years, she will have something for a down payment on a home.

Housing advocates fear, though, that fewer women like Kimber will get this kind of leg up if Congress approves a proposal by President George W. Bush’s administration to replace the popular Section 8 housing vouchers with block grants to the states.

Created in the 1970s, Section 8 was designed to help low-income families, the elderly and the disabled pay for housing in the private market. Under current rules, the nation’s 2,600 state, regional and local housing agencies get federal dollars, which are allocated according to each agency’s administrative expenses and the cost of the vouchers it distributes.

The federal Department of Housing and Urban Development, which oversees the program, determines fair market rents and calculates median incomes across the country. Local housing authorities set income caps for families at between 50 percent and 80 percent of the median income in their areas. (Nationally, 50 percent of the median income is $28,250 for a family of four.) Beyond these parameters, local agencies have lots of flexibility in determining which families they want to focus on — families moving from welfare to work, for instance.

While administration officials say they want to give the states even more flexibility, critics predict the Bush proposal would reduce the amount of money available to help low-income families, even as rents continue to climb across the nation.

“It’s a radical proposal. And it’s a proposal that has the potential for destabilizing a couple of million households for what appears to be no good reason, other than some ideological commitment to devolution and getting the federal government out of local control,” says Sheila Crowley, president of the National Low Income Housing Coalition.

When lawmakers talk of devolution, they mean shifting authority from the federal government to the states. Republicans have been especially vocal on this issue, making it the centerpiece of Newt Gingrich’s 1994 Contract With America. It was the concept behind the 1996 law that shifted responsibility for welfare, the nation’s income assistance program. Under that reform, states get block grants from the federal government and almost complete control to determine eligibility and benefit levels. The Bush Administration would extend the concept to the federal government’s most common type of rent subsidy.

Under Bush’s plan, income requirements would still rest with the federal housing agency, but local agencies could submit waivers for additional flexibility. Because the plan would require states to serve the same number of people no matter how much money they get — current voucher holders would be grandfathered in — they will be encouraged to find ways to stretch the dollars. They might, for instance, reduce new admissions of families with extremely low incomes — nationally, that’s $16,950 for a family of four, or roughly equivalent to the poverty line — to 55 percent of the total population served from 75 percent, which would reduce the cost of vouchers. And this has housing activists worried.

Federal officials, nevertheless, stress effectiveness as well as efficiency. Michael Liu, the federal agency’s assistant secretary for public and Indian housing, has said in Capitol Hill testimony that program administration is balkanized by local jurisdictional boundaries. He suggests states could coordinate housing search efforts on a regional basis and could save money by consolidating administrative duties now performed by the local agencies.

Yet even state officials are concerned. Illinois Gov. Rod Blagojevich wrote Housing and Urban Development Secretary Mel Martinez opposing the proposal, saying the state doesn’t have a system for operating a housing voucher program and, given its fiscal troubles, can’t afford to create one.

Illinois’ 112 housing authorities administer more than 42,000 of the 2 million vouchers that go to local authorities nationwide. And local officials here contend they have more control under the federally run system than they would if a new state agency is created. “Local control is when Mrs. Jones knows that she can call me and say, “This isn’t right, that isn’t right,” says Willis Logan, who runs the Springfield Housing Authority and also heads the Illinois chapter of the National Association of Housing and Redevelopment Officials. “She won’t be able to do that when this program goes to the state.”

Housing advocates emphasize the Section 8 program is not welfare. In fact, only 13 percent of those receiving the housing vouchers are on welfare. Another 35 percent are working at low-paying jobs; the rest are disabled or elderly. And over the past 30 years, the program has become increasingly popular, especially as an alternative to troubled public housing projects in cities that concentrate low-income families in a few neighborhoods. It has gained support from conservatives and liberals alike because of its flexible, market-based approach: Those who qualify can choose to rent from any participating landlord.

But, administration officials reason, states could get more bang for the buck by coordinating housing programs with other services to low-income people, including job training and child care.

Some activists worry, though, that financial support for housing actually would suffer under the plan. After 2005, the year it would take effect, a new distribution formula would weigh performance. If a state can’t use all of its funding, those dollars would be shifted to higher-performing states. Nor are there guarantees on the total amount Congress would appropriate for the program each year. Critics argue that, historically, funding for block grants goes down. They point to a study by the Center on Budget and Policy Priorities that tracked 11 block grants serving low-income people.

It showed funding has fallen, when adjusted for inflation, by an average of 11 percent since 1982. Liu counters that his agency’s HOME block grant has received annual funding increases since 1993. If a program performs well, he says, it stands a better chance of getting future funding increases.

Still, activists note that block grants, typically tied to inflation, would be unlikely to keep pace with escalating rents. Over the past five years, according to Will Fischer, a housing policy analyst with the center, the Consumer Price Index has gone up 12 percent, while fair market rents, based on

federal housing data, have gone up 25 percent. This year, for instance, the average rent in Illinois on a two-bedroom apartment is $808.

Illinois officials have more specific concerns. For instance, administrative expenses in the state’s rural areas could outpace the proposed administrative spending cap. And large cities could be pitted against one another for a piece of this state’s allotment. “I’d hate to see Peoria battle Chicago or Rockford,” says Lynne King, spokeswoman for the Peoria Housing Authority.

Her agency has more than 800 families on a waiting list for vouchers. Currently, 1,400 families in Peoria receive housing vouchers. The Springfield Housing Authority, meanwhile, is allocated 2,005 vouchers and has 350 families waiting. That waiting list would be much longer if housing officials hadn’t stopped accepting applications in March.

However, those figures are dwarfed by the number of vouchers distributed by the Chicago Housing Authority, the third-largest public housing agency in the country. About 33,000 families are lucky enough to have vouchers now; more than 20,000 are waiting. It will take years for them to get assistance.

Further, Chicago is in the midst of a 10-year transformation of its public housing stock. The CHA is steadily demolishing its 1960s-era high-rises and replacing them with mixed-income communities through the help of $1.6 billion in federal money. When the transformation is complete, scheduled for 2010, the CHA will own just 25,000 units compared to 41,000 in the 1960s when there was no Section 8 program.

It’s a trend in public housing across the country. “By concentrating large numbers of very poor people in a relatively small geographic area, all you do is exacerbate the social problems that very poor people tend to be more prone to,” says CHA Board President Sharon Gist Gilliam in explaining the policy shift.

Any shift in the Section 8 program, though, would throw a wrench into Chicago’s long-term plans.

So far, there doesn’t seem to be much enthusiasm for the White House proposal on Capitol Hill, either.

Twenty-eight U.S. senators, including Springfield Democrat Dick Durbin, signed a letter that stated, “We believe that such a proposal could seriously undermine the voucher program and could potentially harm the millions of low-income people assisted with housing vouchers.”

Just prior to Congress’ August recess, the Senate had yet to hold a single hearing on the proposal. A House Financial Services subcommittee had held five. But subcommittee chair Robert Ney, an Ohio Republican who introduced the measure on behalf of the Bush Administration, hasn’t taken a position on it.

There are other hurdles. Members of the House Appropriations Committee refused to make changes in the funding structure that would clear the way for a block grant program as requested by Bush officials. They want to wait until the authorizing committee makes a move. At the same time, they increased funding for the voucher program in the upcoming fiscal year above what the White House sought.

The fate of the plan remains uncertain as Congress returns to business this fall. But Carma Kimber is certain about one thing: She plans to be one of the Section 8 success stories. “I don’t know what I would do without Section 8,” she says. “It gave me a start.”

Illinois Issues, September 2003

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