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Housing Update: Threat to Section 8 Program Continues

May 26, 2004

The HUD Section 8 voucher program – a critical affordable housing resource for low-income people with severe mental illnesses – is currently facing twin challenges that threaten existing rent subsidies in the current fiscal year (FY 2004) and next year (FY 2005). For both this year and next year, decisions being made by HUD and Congress in the coming months will determine whether housing authorities will have sufficient funding to keep rental assistance contacts in place under current rules.

The Section 8 program provides monthly rent subsidies to eligible individuals and families that pay the difference between monthly rental costs and what a low-income tenant can afford (i.e. 30% of the tenant’s income). Since the program was developed in the 1970s, HUD and Congress have always provided sufficient funding to local housing authorities to renew (i.e. keep in place) every existing rental voucher under lease. However, for this year and next year, administrative actions and proposed funding requests have placed this policy into question. If funding for this year or next year is insufficient, local housing agencies will be faced with the prospect of either canceling vouchers, cutting payments to landlords or raising tenant rents.

Section 8: Critical Affordable Housing Resource for Consumers

Recent HUD data indicates that for many housing authorities, non-elderly people with disabilities (including individuals with severe mental illnesses) are among the largest group of Section 8 voucher holders. This results in large part through federal requirements for housing agencies that administer Section 8 to target at least 75% of their vouchers to extremely low-income households (i.e., those at or below 30% of area median income). Likewise, people with mental illnesses and other disabilities would be most as risk of losing rental assistance if HUD and Congress fail to provide agencies with enough funds to meet the full cost of subsidy renewals for FY 2004 and FY 2005.

Last year, the Technical Assistance Collaborative and Consortium for Citizens With Disabilities (CCD) Housing Task Force published Priced Out in 2002, a national report comparing HUD fair market rents to Supplemental Security Income (SSI) as a monthly cash benefit. The findings were alarming, though not surpassing: individuals living on SSI were (on average) at 18.5% of median income and would have to spend (on average) 105% of their monthly income to rent a modest 1-bedroom apartment. Data for each individual housing market is available in the full text of the Priced Out report, which can be downloaded at: 

http://www.c-c-d.org/intro_page.htm

Background on Current Threats to Section 8

1. Section 8 FY 2004 Renewals – Despite expectation in Congress that sufficient funds were appropriated for the current fiscal year to renew all existing Section 8 vouchers under lease, many housing agencies across the country are coping with a shortfall in funding provided by HUD. This is occurring as a result of an interpretation of language in HUD’s FY 2004 appropriation that is preventing housing agencies from receiving funding to cover the actual costs of renewals based on changes in tenant-income and rental costs. Instead, HUD is allocating funding based on an arbitrary figure and has notified agencies more than six months into the current federal fiscal year. The result is that dozens of housing agencies are now short on renewal funds for FY 2004 and are being forced to raise tenant contributions, cut payments to landlords and in some instances, actually cut off rental assistance altogether. People with disabilities are especially vulnerable as housing agencies go through the process of coping with these shortfalls. NAMI urges HUD to withdraw its April 22 Notice to housing authorities on FY 2004 renewals and come back with a proposal to ensure that there are sufficient funds to renew all current Section 8 vouchers under lease.
2. Section 8 FY 2005 Flexible Voucher Proposal – The Bush Administration’s FY 2005 budget contains a proposal to cut Section 8 $1.6 billion below the amount needed to renew all current vouchers under lease. The budget also includes a radical "Flexible Voucher Proposal" that would cap future payments to housing agencies, while granting them unprecedented flexibility to raise tenant contributions and time limit rental assistance. NAMI and dozens of national disability organizations and other groups representing housing agencies, elected officials and low-income housing advocates are opposing this misguided proposal. By limiting future Section 8 funding and delinking federal funding from the actual per voucher costs of providing rental assistance, state and local housing agencies will have enormous incentives to avoid serving extremely low-income households (those at 30% of area median income and below) whose per voucher costs are higher. Likewise, time limits on assistance and higher tenant contributions imposed by housing agencies will fall hardest on people with disabilities living on SSI. NAMI urges Congress to reject the Administration’s "Flexible Voucher" proposal for FY 2005.

More information on the current threats to the Section 8 program is available at:

http://www.nlihc.org/news/042504.html

http://www.c-c-d.org/od-Mar04.htm

http://www.cbpp.org/pubs/housing.htm 

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