The Case for More, Not Less: Shortfalls in Federal Housing Assistance and Gaps in Evidence for Proposed Policy Changes

F R O M S A F E T Y N E T T O SO L I D G R O U N D R E S E A R C H R E P O R T The Case for More, Not Less Shortfalls in Federal Housing Assistance and Gaps in Evidence for Proposed Policy Changes Corianne Payton Scally Samantha Batko Susan J. Popkin Nicole DuBois January 2018 Updated October 2018 A B O U T T H E U R B A N I N S TI T U T E The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Copyright © January 2018. Urban Institute. Permission is granted for reproduction of this file, with attribution to the Urban Institute. Cover image by Tim Meko. Contents Acknowledgments iv Executive Summary v Housing Assistance: A Critical Component of the Safety Net v Shortfalls in Federal Housing Assistance vi A Look at Currently Assisted Households vi Precursors to Proposed Reforms vii Lack of Evidence for Proposed Reforms vii Conclusion vii The Case for More, Not Less 1 Housing Assistance: A Critical Component of the Safety Net 1 The Problem Housing Assistance Addresses 1 Positive Impacts of Housing Assistance 3 Overview of Housing Assistance 4 Shortfalls in Federal Housing Assistance 6 Eligibility 7 Waiting Lists 8 Local Preferences 9 Screening 9 A Closer Look at Who Gets Help 10 History of Reform: A Precursor to Current Proposals 12 Lack of Evidence for Proposed Reforms 13 Work Incentives and Supports 15 Rent Increases 17 Sanctions and Time Limits 17 Conclusion 19 Notes 21 References 22 Errata 26 About the Authors 27 Statement of Independence 28 IV A C K N O W L E D G M E N T S Acknowledgments This report was funded by the Robert Wood Johnson Foundation. We are grateful to them and to all our funders, who make it possible for Urban to advance its mission. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Further information on the Urban Institute’s funding principles is available at www.urban.org/support. We thank Barbara Sard at the Center on Budget and Policy Priorities for insightful comments on earlier outlines and drafts. Within the Urban Institute, we thank our colleagues Mary Cunningham, Genevieve Kenney, Elaine Waxman, and Stephen Zuckerman for their guidance and comments throughout the writing process. We also thank Megan Thompson for logistical assistance. Any errors or omissions remain our own. E X E C U T I V E S U M M A R Y V Executive Summary Federal housing assistance programs aim to ensure that those who receive assistance have decent, safe, and affordable housing. Unlike some other key safety net programs, however, housing assistance is not an entitlement, which means it does not provide benefits to all who are deemed eligible. Currently, available assistance falls significantly short of the current and growing need for it: only one in five renter households who qualify for housing assistance actually receive any (Kingsley 2017). Recent proposals, including the recently enacted Tax Cuts and Jobs Act, the administration’s proposed fiscal year 2018 budget, and Speaker of the House Paul Ryan’s A Better Way plan, threaten deep cuts and significant changes to housing assistance. These funding and policy changes will decrease the funds for the preservation and creation of affordable housing, reduce the amount of assistance available, and may undermine the stability of those currently on assistance. This report provides an overview of the current landscape of housing assistance, its central role in the safety net, and the evidence on contemporary policy proposals. We highlight several critical gaps in our knowledge that suggest we need a serious review of our affordable housing policy with a focus on developing a stronger evidence base before attempting large-scale changes to federal housing assistance programs. Housing Assistance: A Critical Component of the Safety Net Housing assistance provides the solid ground that low-income households need to better their lives. Those who need housing assistance but do not receive it face the threat of housing instability and may end up doubled up with family and friends or experiencing episodes of homelessness. In contrast, people who receive housing assistance are stably housed and pay affordable rents. That stability and lessened rent burden allows families to spend more money on other necessities such as food, health care, and education, leading to better positive health and educational outcomes. Some current proposals, such as establishing minimum rents (i.e