Importance of Section 8 Vouchers

The Section 8 Housing Choice Voucher program helps very low-income households, including people with disabilities, obtain affordable housing in the community.  The program works by providing monthly rental assistance payments to private landlords on behalf of Section 8 participants, whose share of the rent is limited to 30-40 percent of their monthly income.  People with disabilities receiving Supplemental Security Income (SSI) benefits typically pay between $150-$200 per month towards monthly housing costs when they are receiving assistance through the Section 8 program.  

Approximately 2.1 million Section 8 vouchers are now in use, including an estimated 460,000 used by households with disabilities.  Many more people with disabilities are on Section 8 waiting lists maintained by the Public Housing Agencies (PHAs) that administer the program.  Others would like to apply for a voucher, but cannot because waiting lists are closed.

The Section 8 voucher program is now the federal government’s largest housing assistance program, which is one reason why it is under attack by those who want to reduce government spending.  The program is the only major HUD program still targeted to assist the lowest-income households below 30 percent of median income, including people with disabilities who rely on SSI and many others living on disability benefits.

During the past few years, more people with disabilities have been able to obtain Section 8 vouchers, primarily as a result of the 50,000 new vouchers created by Congress exclusively for people with disabilities.  This progress will be completely and swiftly reversed if the Administration’s proposals become law.

The Administration's Section 8 Proposals

The Administration’s FY 2005 HUD Budget proposal submitted to Congress this past February has two major components:

• First, the proposal calls for more than $1 billion in spending cuts for the Section 8 program for FY 2005, beginning just seven months from now on October 1, 2004.  These cuts could eliminate 250,000 vouchers currently in use, including an estimated 55,000 vouchers currently assisting people with disabilities.

• Second, the new program proposed by the Administration – which they are calling the Flexible Voucher Program – would eliminate features of the Section 8 program that are vitally important to people with disabilities.  The new program would target higher-income households, raise tenant rents, encourage time limits on assistance, and eliminate policies that currently target over 50,000 vouchers exclusively to people with disabilities.

Cuts in Section 8 Put People with Disabilities at Risk

The Administration’s HUD budget proposal for FY 2005 would cut more than $1 billion from the Section 8 program – almost 10 percent of the program’s total funding.  There are no “easy ways” to absorb a cut in funding of this magnitude.  National Section 8 program experts – including the Center for Budget and Policy Priorities, the National Low Income Housing Coalition, the National Association of Housing and Redevelopment Officials, and the Technical Assistance Collaborative (TAC) – all concur that this deep cut would force PHAs to take one or both of the following steps:

·         Reduce the number of households receiving Section 8 assistance.  A $1 billion cut would mean that 250,000 households, including an estimated 55,000 households with disabilities, could lose their Section 8 assistance within the next year.

·         Raise tenant rents.  To absorb cuts in funding, PHAs could raise rents for Section 8 program participants including people with disabilities.  Currently, people with disabilities typically pay 30 percent of their income towards rent under the voucher program.  PHAs could be forced to raise tenant rents significantly, perhaps as high as 50 percent of their income or more.

During the last week of February, 34 Members of the House of Representatives Finance Services Committee went on record confirming that “housing authorities would have to make either major reductions in the number of [households] …assisted or in the subsidy provided to each [household] …or more likely a combination of the two.”

Both of these eventualities would spell disaster for people with disabilities currently participating in the Section 8 program.  People who lose their housing assistance would soon be evicted by their landlord, or would leave their housing in order to avoid eviction.  With no other affordable housing alternative, they could easily become homeless.  Others would be forced to accept over-crowded and seriously substandard housing as an alternative to homelessness.  Some people with disabilities would undoubtedly be forced to return to restrictive and institution-like settings, including nursing homes and board and care facilities.  It is highly unlikely that even housing owned by service providers – such as group homes – would be available.

If a lack of funding forces PHAs to increase tenant rents, it would not take long for people with disabilities living on SSI or other disability benefits to fall behind in their rent.  Once behind, they would never catch up.  Sooner or later, these households would also face eviction with little hope of obtaining other affordable housing.

Funding Needed for FY 2005

Unfortunately, even if the $1 billion in cuts is restored, there will not be enough Section 8 funding to cover all vouchers leased.  The Center for Budget and Policy Priorities estimates that the Section 8 budget will need an additional $600 million over FY 2004 appropriations levels in order to continue funding all of the vouchers currently being used.  This means that Congress must appropriate approximately $1.6 billion more than the Administration’s budget request in order to maintain the “current services” provided to Section 8 program participants.

The Administration defends its decision to propose these deep cuts in Section 8 funding by citing the “spiraling costs” associated with the program.  It is true that Section 8 spending has increased over the past three years.  For housing advocates fighting to keep the Section 8 program fully funded, it is important to understand why these increases have occurred.  There are several simple reasons:

• In recent years, Congress urged PHAs to lease vouchers that were not being used.  PHAs responded by significantly improving leasing performance (97 percent of vouchers are now being used – the highest percentage in years).  Now that more vouchers are leased, the program costs more.

• Section 8 is a housing market driven program.  If rental housing costs go up, Section 8 costs go up and visa-versa.  During the late 1990s, rental housing costs in the United States rose dramatically as a result of the booming economy.  Because of the recent recession, rents have stabilized and even declined in some parts of the country.

• Some Section 8 households lost their jobs during the recent recession.  This lowers the household’s total income, which in turn lowers their share of the rent under Section 8 laws.  Lower tenant rents mean that Section 8 subsidy payments to landlords have increased.

The “Bottom-Line” on the Section 8 Funding Issue

For many years, the Section 8 program has been the “cornerstone” of the federal government’s housing response the lowest-income households.  The government’s decision to stop building new subsidized housing – which was made during the 1980s – meant that the Section 8 program became the primary federal strategy to address the housing problems of the poorest Americans, including people with disabilities.  Reductions in Section 8 voucher funding mean that the federal government is backing away from its policy to help provide decent, safe, and affordable housing for poor and vulnerable people.

The Section 8 voucher program budget now accounts for more than 40 percent of the HUD budget.  By under-funding the Section 8 program, the federal government is making a clear decision to end its support for housing programs that serve the poorest people, including people with disabilities.  The Flexible Voucher Program proposal submitted to Congress by the Administration along with the budget cuts illustrate a plan to abandon federal housing polices that prioritize the needs of the poorest Americans and replace them with policies that target higher-income households.

The Problems with the Flexible Voucher Program

In addition to funding cuts, the Administration has also proposed to end the Section 8 voucher program as we know it.  In its place would be a new program called the Flexible Voucher Program.  The Flexible Voucher Program would convert the Section 8 voucher program to a block grant administered by Public Housing Agencies primarily for the benefit of higher-income households.

There are many serious problems with the Flexible Voucher Program proposal including the following:

• The new program converts Section 8 to a block grant with a goal of drastically cutting back the federal government’s financial commitment to the voucher program;
• The new program targets higher-income households;
• The new program could raise tenant rents;
• The new program encourages time limits on assistance; and
• The new program would eliminate policies that currently target over 50,000 vouchers exclusively to people with disabilities.

The Administration defends the Flexible Voucher block grant proposal by stating that the flexibility given to PHAs would help to absorb the $1 billion budget cut.  A more realistic assessment would state that this “flexibility” will allow PHAs to take draconian measures – including terminating assistance for some households – in order to stay within the amounts provided under the Flexible Voucher Program block grant.

Converting Section 8 to a Block Grant

If enacted into law, the Flexible Voucher Program would convert the current “unit-based” Section 8 program into a “dollar-based” block grant.  This means that Congress would no longer be responsible for appropriating sufficient funding for all units leased under the Flexible Voucher Program, as it now does under the Section 8 voucher program.

Under a block grant approach, Congress would simply appropriate an amount of money for the voucher program and it would be up to the PHAs that receive this money to “manage it.”  Advocates know that block grants have proven to be a bad idea when used for programs intended to help the poorest people.  Over the years, many federal block grants have failed to keep pace with both need and inflation.  A voucher program block grant would also make it easier for Congress to distance itself from the impact of cuts in federal housing funding, because it would be the PHAs, not Congress, who would make the difficult decisions necessary to manage the program with less money every year.

Under the Flexible Voucher Program proposal, PHAs would likely be compelled to cut their voucher programs year after year.  In budget documents submitted to Congress, the Administration proposes to continue to cut Flexible Voucher Program funding well beyond the $1 billion cut proposed for 2005.  According to the Center for Budget and Policy Priorities, by 2009, voucher program expenditures would be $4.6 billion below what would be needed to maintain the number of vouchers currently in use.  The Center’s analysis projects that by 2009, PHAs would need to eliminate over 600,000 vouchers (30 percent of the total vouchers now leased) in order to live within the proposed funding reductions.

Because of the “flexibility” built into the proposed Flexible Voucher Program design, it would be up to each PHA to decide how to manage the program with fewer dollars.  As stated above, PHAs realistically would only have two options: (1) terminate assistance for some households or (2) raise tenant rents.  It is possible that both options would be implemented by some PHAs in order to ensure that they do not run out of funding.

The Flexible Voucher Program Targets Higher-Income Households

People with disabilities receiving SSI and other disability benefits have greatly benefited from the current Section 8 voucher program’s income targeting requirements.  Under the current program, 75 percent of the Section 8 vouchers administered by the PHA must be given to households below 30 percent of median income.

TAC’s Priced Out in 2002 study documents that virtually all people with disabilities receiving SSI have incomes below 30 percent of median income.  This statistic means that a PHA should not be able to obtain a waiver of this income targeting rule from HUD unless all households receiving SSI needing a Section 8 voucher have received one.

Under the proposed Flexible Voucher Program, these income targeting policies that have greatly benefited people with disabilities would be replaced by new policies that target households that have much higher incomes.  In fact, the new policies would help households up to 80 percent of median income – households that now do not qualify for Section 8 because their incomes are too high.

Other than the funding cuts, this higher-income targeting policy is perhaps the most troubling aspect of the Administration’s proposal.  Currently, there are many other federal housing programs that primarily benefit households with incomes above 30 percent of median, including HUD’s combined $6.5 billion budget for the HOME and Community Development Block Grant programs.  Most housing produced under the federal Low Income Housing Tax Credit program goes to higher-income households who can afford the tax credit rents.  The Section 8 voucher program is the last remaining major HUD program intended by law to primarily assist the lowest-income households, including people with disabilities.

HUD’s own data in a recently released Worst Case Housing Needs report shows that the need for decent and affordable housing is much greater among households below 30 percent of median that any other category.  The Administration does not state how the needs of these households would be addressed once the Flexible Voucher Program funding is re-directed.

Ironically, the Administration’s proposal would likely have negative consequences that this proposal would have on other Administration disability policy objectives.  For example, the stated goal of the President’s New Freedom Initiative is to assist people with disabilities to live in integrated community settings rather than in restrictive nursing homes, public institutions, board and care homes, etc.  It is hard to imagine how this goal can be achieved without access to affordable housing resources, like Section 8 vouchers.

Similarly, the Administration has made a commitment to end chronic homelessness by 2012.  Studies show that most people who are chronically homeless are people with disabilities.  The Section 8 voucher program has become an invaluable resource for communities struggling to develop realistic plans to end chronic homelessness.

Estimated Reduction in Number of Families Receiving
Voucher Assistance under Administration’s Budget