In changes that would mirror federal welfare reform of seven years ago, the Bush administration wants to hand over the main federal housing program to state agencies, and replace federal vouchers with block grants, a newspaper reports.
The plan was to be introduced in Congress on Tuesday.
The Washington Post says the proposed changes to the Section 8 program, which covers roughly 2 million families, are supposed to increase the flexibility and effectiveness of the program.
But critics contend the initiative could dilute the program's ability to close the gap between rents and what low-income people can afford to pay.
Currently, the government enters contracts with 2,500 housing agencies around the country to provide Section 8 vouchers to low-income people — usually, families with incomes less than 50 percent of the median for the country or urban area in which they live.
Program participants pay no more than 30 percent of their monthly income for housing to an approved list of landlords. They use the vouchers to cover the difference.
The White House considers the program "fundamentally flawed" because it requires the Department of Housing and Urban Development to deal with thousands of local housing agencies. Under the new plan, HUD would contract with 50 state-level departments only.
"Administration by states would better assist low-income households to locate decent, safe, and affordable housing because states could tailor programs to the needs of particular communities," reads a budget briefing document.
Reform is also needed, the administration contends, because the program has a long waiting list but also regularly sees one in ten vouchers unused, because shortages in one area cannot be offset by surpluses in others. The surplus from last year — $1.7 billion — could have covered 200,000 families, the White House says.
Section 8 rates have not kept up with rising private sector rents
But critics of the Bush administration's proposal point out that 17 states do not have housing agencies equipped to handle the program — and where agencies do exist, it might create just another layer of bureaucracy.
Some Section 8 supporters also worry that the effort is a back-handed attempt to shrink the program, or force states into choosing between extending vouchers to the poorest families — who need them most — or moderately poor households that are cheaper to cover.
The Post reports that 42 senators, including 10 Republicans, wrote a letter to HUD criticizing the proposed changes, but it was never posted after the administration requested it not be sent.
Under the plan, states would be required to cover the same number of people they do now.
But according to The Post, the White House plan would allow states to change eligibility requirements and allow nonprofit groups — including religious organizations — to run parts of the program.
All those changes mirror the way federal welfare programs were changed in 1996: the states were given control of the program, which is funded by federal block grants, and non-governmental groups were offered a role.
The Post reports that under the new program — dubbed Housing Assistance for Needy Families, or HANF, which rhymes with TANF, the new name for federally funded welfare — states could also combine housing and welfare programs.
This might be done to encourage more Section 8 recipients to get jobs. However, a 1998 HUD demographic study of Section 8 households found that more families in the program get most of their income from wages than from welfare.
A HUD official, Michael Liu, told The Post that unlike the TANF program, HANF would not impose time limits on benefits or work requirements. States would be free to do so, however.