Reducing Work

Disincentives in the

Housing Choice

Voucher Program:

Rent Reform Demonstration

Baseline Report

LEXINGTON

LOUISVILLE

SAN ANTONIO

WASHINGTON, D.C.

U.S. Department of Housing and Urban Development | Office of Policy Development and Research

Reducing Work

Disincentives in the

Housing Choice

Voucher Program:

Rent Reform Demonstration

Baseline Report

Prepared for

U.S. Department of Housing and Urban Development

Office of Policy Development and Research

Submitted by

James Riccio

Victoria Deitch

Nandita Verma

MDRC

October 2017

Acknowledgments

This report reflects contributions from many people.1 We are

at several other housing agencies participated in initial design

especially grateful to the families who are participating in the

discussions and thereby contributed ideas and insights that

Rent Reform Demonstration, whose experiences have informed

influenced the early formulation of the new rent policy: Greg

this report, and to the housing specialists and supervisors at

Russ and Carolina Lucey, formerly of the Cambridge Housing

the District of Columbia Housing Authority, Lexington-Fayette

Authority; Tim Veenstra and Deanna Wheeler of the Chicago

Urban County Housing Authority, Louisville Metro Housing

Housing Authority; Thomas Graham and Joanne McKenna of

Authority, and San Antonio Housing Authority, who implemented

the Massachusetts Department of Housing and Community

the new rent rules and research procedures. We also appreciate

Development; Joyce Stewart of the Housing Authority of Baltimore

the assistance of staff members at these housing agencies who

City; and Katherine Harasz and Louise Hofmeister of the Housing

were deeply involved in designing the new rent policies and

Authority of Santa Clara County.

in determining how best to implement them (and the study

We thank those reviewers who serve on our expert panel and

procedures), including in Washington, D.C., former Executive

have given us comments on the new rent rules, the study’s

Director Adrianne Todman, with Kimberley Cole, Lori Parham,

design, and this report: Greg Russ of the Cambridge Housing

Ronald McCoy, Anissa Jones, Jannie Lebby, and Rani Joseph;

Authority, Barbara Sard of the Center on Budget and Policy Pri-

in Lexington, Executive Director Austin Simms, with Andrea

orities, Amber-Lee Leslie of the Council of Large Public Hous ing

Wilson, Aldean Pleasant, and Tonya Christopher; in Louisville,

Authorities, Janelle Beverly of the Fairfax County Redevelopment

Executive Director Tim Barry, with Lisa Osanka, Sarah Abplanalp,

and Housing Authority, Michael Wiseman of George Washington

Deborah Gilbert, and Cheryl Butler; and in San Antonio, former

University, Lawrence Katz of Harvard University, Tushar Gurjal

Executive Director Lourdes Castro Ramirez, with Richard Milk,

of the National Association of Housing and Redevelopment

Brandee Perez, Gary Baxter, and Priscilla Salazar. We also thank

Officials, Sarah Mickelson of the National Low-Income Housing

Rajan Girdhar and Lorraine Jones of Yardi and Kevin Schworm

Coalition, James Armstrong and Jonathan Zimmerman of the

of Emphasys, who worked with MDRC and the participating

Public Housing Authorities Directors Association, Andrew Lofton

housing agencies to implement the new rent reform calculations

of the Seattle Housing Authority, and Larry Orr (a consultant).

in their respective housing authority software programs.

At MDRC, Nina Castells and Stephen Freedman reviewed

We appreciate the support from many staff members at the

drafts of the policy and evaluation design papers and provided

U.S. Department of Housing and Urban Development (HUD)

guidance on the approach for calculating retrospective income.

for their collaboration on the design of the new rent policy and

Steve Freedman also provided data-management advice. Gordon

the selection of the demonstration sites, for offering valuable

Berlin, Stephen Freedman, Cynthia Miller, Stephen Nuñez, and

thoughts on the evaluation design, and for reviewing drafts of

Alice Tufel provided comments on drafts of the report. The

this report. These staff members include, from the division of

following current and former MDRC staff members contributed

Public and Indian Housing, Jemine Bryon, Laurel Davis, Alison

by processing or analyzing quantitative data either for the design

Christensen, John Concannon, and Ebony Gayles; and from the

of the rent rules or for this report: Zakia Barnes, Daniel Gallagher,

division of Policy Development and Research, Todd Richardson,

Leila Kerimova, Tim Moreland, and Sarah Schell. Jonathan Bi-

Mark Schroder, Carol Star, and Lynn Rodgers (who was partic-

gelow and Keith Olejniczak worked with the housing agencies to

ularly helpful on the use and interpretation of HUD data). Our

implement the new rent rules and the research design. Crystal

HUD government technical representatives have been a source

Ganges-Reid, Makenzi Sumners, Kemar Taylor, and Audrey Yu

of steady guidance on all phases of this work. In that capacity,

prepared the exhibits and assisted with fact checking. We also

Jennifer Stoloff helped launch the demonstration and oversaw

appreciate the support of our resource managers, Stephanie

the initial design phase. Marina Myhre, who joined during the

Rubino and Crystal Ganges-Reid. Joshua Malbin edited an

site-selection phase, has been a careful and insightful reviewer

earlier draft of the report, and Carolyn Thomas helped prepare

of all subsequent design and implementation activities, includ-

it for HUD’s editor.

ing the production of this report. The following staff members

1 The acknowledgments list the institutions with which individuals were affiliated at the time they contributed to the work reflected in this report.

Finally, we acknowledge our research partners from other

the City University of New York, Don Davis and Jessica Porter

organizations who played a crucial role in the design of the rent

of the Bronner Group, Ingrid Gould Ellen of New York Univer-

rules and the evaluation, worked directly with the housing

sity, Roberta Graham of Quadel, Marty Abravanel and Diane

agencies to implement the new rent rules and research pro-

Levy of the Urban Institute, and Barbara Fink (a consultant).

cedures, and offered comments on the report: John Goering of

Disclaimer

The contents of this report represent the views of the authors and do not necessarily reflect the views or policies of the U.S. Department of Housing and Urban Development or the U.S. government.

Reducing Work Disincentives in the Housing Choice Voucher Program

iv

Preface

In 1969, a landmark piece of national affordable housing

This demonstration is currently under way, with field testing in

legislation, sponsored by and subsequently named for U.S.

progress. This baseline report provides background information

Senator Edward Brooke, was enacted into law. Senator Brooke

on the status and progress of the demonstration, including

was responding to community and tenant organizing and

preliminary baseline information on families in the four PHAs

advocacy, national press attention, and a clearly identified

participating in the demonstration. Overall, the demonstration

policy need—to ensure that federal affordable housing

sample is like the national HCV population in terms of age and

programs actually lived up to their intended affordability. The

family size, but demonstration participants are more likely to

Brooke Amendment protected families and individuals in

be female; are more likely to have a Black, Latino, or Hispanic

federally assisted housing from being charged rents that were

household head; are less likely to have earned income; and have

unaffordable to them. Initially, the amendment limited rent

a lower total tenant payment than the national HCV population.

charges to 25 percent of the assisted family’s income. Over

The baseline survey provided information on employment

time, numerous changes were made to the basic rent-setting

status, education, the extent and range of barriers to employ-

policy, raising the threshold to 30 percent (enacted in 1981 as

ment, and hardships experienced by the study participants.

a budget offset measure) and adding numerous adjustments,

About 47 percent of survey respondents indicated that they

exclusions, and deductions, and also adding minimum and

were currently employed, and only about one-half of those (or

ceiling rent options.

24 percent of all respondents) were employed full time. Slightly

Over time, critics have suggested that the Brooke Amendment,

more than one-third of households had a high school diploma

although safeguarding affordability, creates a disincentive to

or equivalent (35 percent), and few had 2-year (9 percent) or

work by dampening tenant motivation to earn more income.

4-year (less than 3 percent) college degrees. More than one-half

In response, The U.S. Department of Housing and Urban

of survey respondents (54 percent) reported a problem that

Development has undertaken the Rent Reform Demonstration

limited work, with physical health (28 percent) and childcare

to comprehensively test alternatives to the current rent-setting

costs (21 percent) listed as the top two barriers to employment

requirements in one of its key programs: Housing Choice

overall. Among the participating Rent Reform Demonstration

Vouchers (HCV). The demonstration is testing three key goals;

sites, San Antonio (21 percent) and Louisville (17.5 percent)

specifically how to—

have the highest rates of respondents who cannot work because

of the need to care for a sick or disabled family member.

•  Incentivize employment for work-eligible individuals.

Future reports will assess the impact of the alternative rent model,

•  Reduce the complexity and administrative burden for public

at 12 and 36 months after random assignment, on employment,

housing agencies (PHAs).

earnings, and hardship for the study sample and on administrative

•  Avoid unnecessary hardship on assisted families.

efficiencies for the PHA. Another future report will provide a

process evaluation of the demonstration implementation.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program

v

Contents

Executive Summary  ..........................................................ES-1

Appendixes

A  The Housing Agency Selection Process .......................... 63

Chapters

B  Supplementary Table for Chapter 2 ............................... 65

1 Introduction .................................................................... 1

C  Families in Louisville Who Opted Out of the New

2  A Closer Look at the New Rent Policy ............................. 9

Rent Policy .................................................................... 66

3  Evaluation Approach ..................................................... 19

D  Calculating Retrospective Income When There Is a

Gap in Income Verification ............................................ 70

4  Characteristics of Families Enrolled in the Study ........... 25

E  An Example of Safeguards in the New Rent Policy ........ 71

5  Making the Transition to the New Rent Policy and Its

Implications for Housing Subsidies ............................... 41

F  Letter Sent to Families Who Qualified for Hardship

Remedies ...................................................................... 72

6  Looking Ahead .............................................................. 61

References ........................................................................... 73

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program

vi

List of Exhibits

Tables

5.5   Total Tenant Payment (TTP) at Initial Study

Recertification, by Public Housing Agency (PHA)

ES.1  Total Tenant Payment (TTP) at Initial Study

and Subgroup .............................................................. 57

Certification, by Public Housing Agency (PHA) ........ ES-7

5.6  Eligibility for and Receipt of Safeguard Rents at the

2.1  Comparison of Traditional and New Rent Policies ......... 9

Time of Initial Recertification, by Subgroup and

4.1  Number of Sample Members Whose New Total

Public Housing Agency (PHA), New Rent Rules

Tenant Payments (TTPs) Became Effective Each

Group Only ................................................................. 59

Month, at Each Public Housing Agency (PHA) ............ 30

B.1  Existing Rent Policies of Housing Agencies

4.2  Characteristics of Families in the Impact Sample

Participating in the Rent Reform Demonstration .......... 65

and the National Housing Choice Voucher Program

C.1  Comparison of Initial Total Tenant Payment (TTP)

Population ................................................................... 32

Estimates for Opt-Out Families in Louisville, New

4.3  Characteristics of Heads of Household in the Impact

Rent Policy Versus Existing Policy ............................... 66

Sample and the National Housing Choice Voucher

C.2  Characteristics of Louisville Families in the Impact

Program Population ..................................................... 33

Sample, by Opt-Out Status .......................................... 67

4.4  Characteristics of Families in the Impact Sample, by

C.3  Estimates From a Logistic Regression for the

Public Housing Agency (PHA) ..................................... 34

Probability of Louisville Families Opting Out of the

4.5  Characteristics of Heads of Household in the Impact

New Rent Rules ........................................................... 69

Sample, by Public Housing Agency (PHA) ................... 35

4.6  Characteristics of Families in the Impact Sample, by

Figures

Public Housing Agency (PHA) ..................................... 37

4.1  Enrollment Flow Chart ................................................ 28

4.7  Characteristics of Heads of Household in the Impact

4.2  Sample Buildup and Enrollment Timeline ................... 30

Sample, by Public Housing Agency (PHA) ................... 38

5.1  Illustration From the Rent Reform Video for

4.8  Material Hardship During the 12 Months Preceding

Par ticipants .................................................................. 43

a Respondent’s Interview, by Public Housing

Agency (PHA) .............................................................. 40

5.2  Rent Reform Flyer........................................................ 44

5.1  Comparison of Income Considered in Determining

Total Tenant Payment (TTP) Under the New

Boxes

Rent Rules and Existing Rent Rules at Initial

Recertification, by Public Housing Agency (PHA) ........ 45

1.1  Important Concepts in Determining Housing Sub sidies... 2

5.2  Tenants’ Costs and Housing Subsidies at Initial

2.1  Illustration of Rent Calculation Under New and

Study Recertification .................................................... 48

Existing Rent Rules ...................................................... 13

5.3  Tenants’ Costs and Housing Subsidies at Initial Study

3.1  Data Sources for the Evaluation ................................... 20

Recertification, by Public Housing Agency (PHA) ........ 49

4.1  Sample Eligibility Criteria at the Time of Random

5.4  Eligibility for and Receipt of Safeguard Rents at

Assignment .................................................................. 26

the Time of Initial Recertification, New Rent Rules

5.1  Total Tenant Payment and Family Share ...................... 47

Group Only ................................................................. 55

5.2  Safeguards Built Into the New Rent Policy ................... 54

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program

ES-1

Executive Summary

Government rent subsidies for low-income families are a vital

Washington, D.C.; and (4) the San Antonio Housing Authority,

component of the nation’s social safety net. The traditional

in Texas. To be considered for the demonstration, PHAs had

rules for calculating and administering rent subsidies, however,

to be part of HUD’s Moving to Work initiative, because those

can be burdensome and costly for public housing agencies

agencies have special statutory authority to change many housing

(PHAs) to follow and difficult for families to understand. They

policies, including rent rules (provided they notify the public

can also discourage, rather than support, families’ efforts to

and receive approval from their boards of directors and HUD).2

work. To try to find a better way, the U.S. Department of

The PHAs that joined the demonstration were interested in

Housing and Urban Development (HUD) is sponsoring the

trying an innovative rent policy for voucher holders, but had

Rent Reform Demonstration, a randomized controlled trial to

not yet done so in a substantial way by the time recruitment for

test an alternative rent policy for working-age, nondisabled

the demonstration began. The demonstration also appealed to

recipients of tenant-based Housing Choice Vouchers (HCVs).

them because it would provide strong evidence on the effective-

HCVs are provided directly to qualifying families to subsidize

ness of the innovation.

the rent and utilities they pay for housing units they rent from

private landlords. The design phase of the demonstration got

How the New Rent Policy Differs From

underway in 2013, and the experimental policy took effect for

participating voucher holders in four cities in 2015.

HUD’s Traditional Rent Policy

This report is the first of several that will be issued over the

Currently, the majority of HCV families are expected to contribute

course of the project. The purpose of this report is to establish

30 percent of pretax income (after certain income exclusions)

a foundation for future assessments of the implementation,

toward their housing costs.3 A family’s rent contribution and

impacts, and costs of the new rent policy. It describes the new

utility payments are referred to as its  total tenant payment (TTP).

policy, the rationale behind each of its critical elements, and

Because the TTP is set at a percentage of family income, it is

the manner in which it is being evaluated. This report also

intended to vary with a family’s ability to pay. Furthermore, the

sets out the process for identifying and enrolling families into

rules for calculating a family’s TTP allow a number of de ductions

the study, the background characteristics of those families,

from gross income (including a deduction for some childcare

the amounts the families have begun paying for their rent

costs for working parents), yielding an “adjusted income” estimate.

and utilities under new rent rules compared with the existing

The calculation also looks forward in time, basing the adjusted

rules, and the housing subsidies they initially received. Future

income estimate on the amount of income a family  currently

reports (to be released in 2018 and 2019) will examine the

receives and  anticipates receiving  during the coming year (which PHAs’ implementation experiences, the relative burden of the

this report refers to as “current or anticipated” income). The

new policy on PHAs and the costs they incurred to administer

PHA provides a subsidy for the difference between the family’s

it, and the policy’s effects on families’ contributions toward

rental payment and the allowable rent, called a “payment

their rent and utilities, employment, earnings, and receipt of

stand ard,” based on an area’s fair-market rents. PHAs are also

housing subsidies and other government benefits.

permitted to establish a minimum TTP, commonly referred to

as a “minimum rent,” of up to $50 per month, although not all

Four PHAs agreed to join the Rent Reform Demonstration:

have done so.

(1) the Lexington-Fayette Urban County Housing Authority, in

Kentucky (generally referred to as the Lexington Housing Au-

The existing “percentage-of-adjusted-income” approach builds

thority); (2) the Louisville Metropolitan Housing Authority, in

a strong safety-net feature into the rent subsidy system; if a

Kentucky; (3) the District of Columbia Housing Authority, in

family’s income falls, the family pays less toward its housing

2 Moving to Work is a special HUD demonstration program that grants selected PHAs exceptions to many provisions of the U.S. Housing Act of 1937 in order to allow them to design and test innovative ways of providing federal housing assistance more efficiently, improve work and self-sufficiency outcomes for assisted families, and increase housing choices for low-income families.

3 Throughout this report, mentions of HUD’s “current” or “traditional” rent policy for voucher holders refer to the national rent policy in effect for non-Moving to Work PHAs before the passage of the Housing Opportunity Through Modernization Act of 2016.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program

ES-2

costs. However, some experts contend that it also implicitly

HUD and the four participating PHAs agreed on a single general

“taxes” or penalizes tenants for increasing their earnings, which

policy that also permitted some local variation. The general

can depress work effort. This implicit penalty is a common

policy framework includes the following features.

tension facing means-tested income transfer programs, includ-

•  Extends, from 1 year to 3 years, the period after which

ing welfare and food stamps. Although many families with

a family must “recertify” its continued eligibility for the

housing assistance work, some empirical evidence supports the

voucher program, report its income to the housing authority,

hypothesis that receipt of housing assistance may be associated

and have its TTP recalculated.7

with a modest reduction in employment and earnings.4

•  Eliminates all deductions from income and bases a family’s

The traditional rent policy also requires PHAs to make

TTP and housing subsidy on 28 percent of its average gross

continuous and administratively burdensome readjustments

monthly income during the last 12 months (“retrospective

in TTPs and housing subsidies as a family’s income changes.

income”).8

The complex rules governing the calculation of income

and rent have been criticized by many policymakers, PHA

•  Ignores income from assets when the total value of a family’s

officials, interest groups, and others as being administratively

assets is less than $25,000.

burdensome to implement and prone to errors that can lead to

improper payments.5

•  Simplifies how utility costs are determined.

With these concerns in mind, HUD established four major

•  Includes a mandatory minimum TTP (minimum rent) as a

goals for the Rent Reform Demonstration; the new rent policy

direct landlord payment, which ranges in value from $50 to

should (1) simplify the administration of the rent system to

$150 per month across the four PHAs.9

reduce PHAs’ administrative burden and costs; (2) create a

•  Limits  interim recertifications (those that occur before the

stronger financial incentive for families to increase their earned

next required triennial review) to a maximum of one per

income; (3) continue to provide a safety net for families who

year, to be conducted only when a family’s retrospective

cannot readily increase their earnings; and (4) minimize

income falls by at least 10 percent.

increases in PHAs’ average housing-subsidy expenditures per

family—and, ideally, reduce those expenditures. Because these

•  Establishes additional safeguards (hardship remedies) to

goals can sometimes involve opposing strategies, achieving the

protect families from excessive rent burdens, including

right balance is a policy challenge.

temporary (and, in some cases, renewable) TTP reductions

for families who meet specified criteria.

MDRC’s study team collaborated with HUD, the four PHAs

participating in the demonstration, other Moving to Work

From the perspective of rewarding families’ work efforts, the

agencies, and housing experts to consider the pros and cons of

policy’s most important feature is the shift from an annual to

various policy options.6 After an extensive development phase,

a triennial recertification period. During that 3-year period,

4 See Shroder (2010) for a discussion of the theory and evidence concerning work incentives and housing assistance.

5 These and other criticisms are described in Abt Associates, Inc., the Urban Institute, and Applied Real Estate Analysis, Inc. (2010), Government Accountability Office (2012), and Public Housing Authorities Directors Association (2005).

6 The study team includes the Urban Institute, the Bronner Group, Quadel Consulting, Branch Associates, and professors Ingrid Gould-Ellen (New York University) and John Goering (City University of New York).

7 The review of a family’s eligibility and income is referred to as a recertification. A recertification that occurs every 3 years is called a  triennial recertification, which contrasts with the annual recertification required under HUD’s traditional rent policy.

8 The study team conducted a statistical modeling exercise using data obtained from some PHAs and from HUD’s national database (called the Inventory Management System or Public and Indian Housing Information Center) to estimate how a family’s TTP and the PHA’s housing-subsidy expenditures would change under different policy scenarios. These scenarios included alternative assumptions regarding the percentage of income to use in the rent formula (20 percent, 27 percent, and 28

percent). Although the 20- and 27-percent scenarios were more advantageous for tenants, they were more costly from the perspective of PHA subsidies, especially when combined with a 3-year recertification. The PHAs settled on 28 percent of gross income in an attempt to balance the elimination of deductions with the need to limit increases in Housing Assistance Payments (the subsidy payments PHAs make to landlords). Further details on the modeling exercise and the options considered can be found in MDRC (2015), available on request from MDRC.

9 The PHA in Lexington established a $150 minimum rent independently, before joining the Rent Reform Demonstration. As mentioned previously, since the enactment of the Quality Housing and Work Responsibility Act in 1998, PHAs are also permitted (but not required) to establish minimum TTPs, typically referred to as

“minimum rents,” of up to $50 per month. A family subject to a minimum rent would pay at least that amount unless it received a hardship exemption from the PHA. The Rent Reform Demonstration differs in that it  requires the PHAs to set minimum TTPs and that families pay this minimum amount directly to the landlord.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program ES-3

families do not report earnings increases to the PHA and do

to their rent-calculation computer software to accommodate

not pay any more toward their rent and utilities, no matter

the new rules. Their housing specialists needed to understand

how much their earnings grow. The policy change effectively

the policy intent behind the new rent rules and the operational

reduces the implicit marginal “tax” rate on earnings from 30

details of those rules; they also needed to learn how to use the

percent (under traditional rules) to 0 during that period.

new software and how to describe to families the ways in which

the new rules would affect their housing subsidies. In addition,

Although some of the changes introduced by the new rent

staff members needed to understand and comply with a number

rules simplify the process of determining a family’s TTP (for

of special requirements and procedures associated with the

example, by eliminating deductions, ignoring most asset

random assignment evaluation of the new policy, and they

income, and streamlining the utilities policy), other features

had a short time to enroll and recertify the number of families

can be administratively demanding to implement—for

needed to meet the evaluation’s sample-size requirements.

example, computing and verifying retrospective income when

Furthermore, they had to do all these things while continuing

a family’s income is volatile and not well-documented or is

to operate the existing rent rules for the control group.

only partially captured by the administrative records data on

families’ income, to which the PHAs have access from other

The study team had no direct operational role in the adminis-

government sources.10 (Of course, such situations also present

tration of the new rent rules. However, as the overall manager

challenges under the existing policy, which requires estimating

of the demonstration, technical-assistance provider, and evaluator

future income.) Adopting a 3-year recertification period is

of the new policy, team members worked closely with the four

intended to reduce the overall burden on PHAs and families by

PHAs to specify the processes required to implement the new

reducing the volume of TTP recalculations PHAs must perform

rent policy. It helped the agencies think through what their staffing

and the number of times they must interact with families, but

needs would be, how they would integrate research procedures

the advantage may be partly offset by the new rules’ provisions

into recertification meetings, and how staff members would be

for interim recertifications and hardship reviews.

trained to apply the new rent rules. The technical- assistance

team prepared a procedures manual for each PHA, conducted

It is important to note that the policy environment in which

staff training, observed recertification meetings, monitored

the demonstration is operating has not remained static. In

implementation practices, and provided other forms of technical

particular, in July 2016, the federal government enacted a

assistance intended to ensure that the new rules were implemented

new law, the Housing Opportunity Through Modernization

correctly. In addition, the study team and the PHAs worked

Act of 2016, to address some of the perceived shortcomings

closely with HUD on policy decisions and interpretations that

of HUD’s traditional rent policy for voucher holders.11 Still,

affected the implementation of the new rent rules.12

the alternative policy being tested as part of the Rent Reform

Demonstration represents a substantially larger departure from

The study team also collaborated with the PHAs and their soft-

HUD’s traditional policy than does the new law (which has not

ware vendors to identify the modifications the vendors would

yet been implemented).

need to make to the agencies’ existing software to support the

new rules. The vendors then wrote computer code to incorporate

Preparing To Implement the New Rent  the new rules into their proprietary software. After the demonstration launched, the PHAs shared their experiences with the

Policy

vendors and requested changes or adjustments, and the vendors

Implementing the new rent policy placed substantial new

made a number of refinements. Throughout the study’s enroll-

demands on the four PHAs. All of the agencies had to institute

ment period, both the study team and the software developers

new procedures for calculating rents and completing the recer-

continued to support the PHAs as staff members learned to

tification process. They had to implement major adaptations

navigate the modified software and use it to implement the new

rent policy.

10 “Administrative records” are data collected in the course of administering a program. These data are available to PHAs through the HUD Enterprise Income Verification system, which provides such information as earnings reflected in unemployment insurance wage records, unemployment insurance compensation, and Social Security and Supplemental Security Income benefits.

11 The new law includes a 3-year, rather than annual, income recertification for families on  fixed incomes (such as Social Security) and the use of family income in the prior calendar year to calculate TTPs and rent subsidies (except at initial eligibility). It also eliminates the requirement for families to report increases in earned income between annual recertifications and eliminates interim recertifications to reduce a family’s TTP when that family’s income drops by less than 10 percent.

12 For each PHA, the technical-assistance team includes two staff members who coordinate training in the new rent policy, monitor progress, and address problems.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program ES-4

Evaluating the New Rent Policy

it, drawing comparisons with the existing policy. The field

researchers will also conduct two rounds of indepth interviews

The evaluation of the new rent policy will use a mixed- methods

with families, in person or by telephone.

approach, drawing on a variety of qualitative and quantitative

data sources. The study will assess the implementation, effects

Finally, the implementation analysis will use PHA administra-

(or “impacts”), and costs of the new policy. The evaluation

tive records to examine how the new rent policy affects families’

uses a randomized controlled trial, one of the most rigorous

TTPs and housing subsidies at the beginning of the new policy

methods for determining the effectiveness of an intervention.

and throughout the demonstration. It will also measure how

Because households are assigned at random to a “new rent

many families use the policy’s various safeguards, and how

rules group” or to an “existing rent rules group,” any differences

often.

in outcomes that emerge over time can be confidently attributed

to the new rent policy. Early implementation and impact

Impact Analysis

findings will be available in 2018, and longer-term results,

An underlying hypothesis of the Rent Reform Demonstration

including findings on costs, will be available in 2019.

is that by helping to “make work pay” (that is, by allowing

families to keep more of their earnings when those earnings

Implementation Analysis

increase), the new rent rules will lead tenants to increase their

The implementation analysis will examine how each PHA

efforts to find work, to increase their work hours, to remain

operates the new rent policy. PHA staff members’ experiences

employed longer, or to seek higher wages. If tenants do increase

in calculating TTPs using the new rules will be of particular

their earnings, their reliance on rental assistance and other

interest. The analysis will track the effort involved in estimat-

public subsidies may eventually decline. The impact analysis

ing retrospective income; determining utility allowances; and

will test these hypotheses by exploring questions such as the

administering interim recertifications, the hardship policy, and

following, using various types of administrative records.13

other safeguards. The analysis will also examine how PHA staff

•  Do families in the new rent rules group achieve higher rates

members and voucher holders view the various features of the

of employment and earnings than the existing rent rules group?

new policy with the following questions.

•  Do families in the new rent rules group rely less on housing

•  How do staff members communicate the new rules to families,

subsidies and other government benefits, such as welfare

and how well do families seem to understand them?

cash assistance (Temporary Assistance for Needy Families)

•  Overall, which elements of the new rent policy are easier or

and food stamps (the Supplemental Nutrition Assistance

more difficult to administer?

Program), than the existing rent rules group?

•  In practice, in what ways are the new rules more burden-

•  Is the new rent policy able to improve families’ employment

some or less burdensome for agency staff members?

and earnings from work, while also protecting them from

financial harm and material hardship (for example, excess

•  Are common tensions and conflicts between families and

rent burdens, rent arrears, and homelessness)?14

the PHAs less evident under the new policy?

•  Does the new rent policy have different effects for various

The technical-assistance team’s observations of PHA housing

groups of voucher holders?

specialists as they conducted initial recertification meetings

and calculated TTPs are one important source of information

Cost Analysis

for the implementation analysis. In addition, the study team’s

The cost analysis will use PHA financial and staffing data, along

field researchers will visit each PHA to interview the housing

with data from the impact analysis, to assess whether the new

specialists and their supervisors about their perspectives on

rent policy is more cost-effective than the existing rent policy.

the new rent policy and their experiences in implementing

13 The data sources will include unemployment insurance wage records (obtained through the federal National Directory of New Hires) for information on employment; records on families’ receipt of welfare cash assistance and food stamps benefits from states’ public benefits records; records from the Homelessness Management Information System on families’ use of homeless shelters; and HUD 50058 administrative records for TTPs and housing subsidies, arrears, and evictions. (Each voucher family completes or updates a HUD 50058 form as part of its initial or recertification interview.) 14 The evaluation does not include a followup survey of families, limiting the extent to which it can measure the effects of the new rent policy on material hardships and other types of family outcomes not available in administrative records.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program ES-5

It will focus both on the costs of administering the new rent

year-by-year and cumulative expenditures of PHAs on housing

policy relative to the existing policy, and any increases or

subsidies, and combine these totals with estimates of any effects

decreases in expenditures on Housing Assistance Payments.

on administrative costs, to arrive at an overall assessment of the

costs of the new rent rules relative to the existing policy.

Several factors could contribute to reductions in administrative

costs. For example, under the new policy’s triennial recertifica-

tion feature, PHA housing specialists will not have to complete

Characteristics of Enrolled Families

two of the annual recertifications that would otherwise be

required during each 3-year period that a family receives a

During the 10 months from February 2015 through November

housing subsidy. The staff might also complete fewer interim

2015, the four PHAs and the study team identified a total of

recertifications because of the one-per-year limit, and should

7,255 voucher holders who were scheduled for annual income

spend less time computing utility allowances, and calculating

reviews and recertifications and who were likely to qualify for the

and verifying complicated income deductions (especially those

demonstration. Within each PHA, these families were then ran-

for childcare). On the other hand, some administrative cost

domly assigned to a program group that would be subject to the

savings may be offset to the extent that calculating retrospec-

new rent rules, or to a control group that would continue to be

tive income for families takes more time than calculating

subject to the existing rent rules.16 Families were enrolled into

current or anticipated income. Administrative cost savings may

the research sample before they began the annual recertification

also be offset by the time that staff members spend processing

process. However, a number of families were subsequently

requests for hardship remedies.

found to be ineligible for the study and were excluded from the

sample, yielding a final sample size of 6,660 families.

The new policy’s effects on PHAs’ expenditures for housing

may be especially important to the policy’s overall cost-

In order to have national policy relevance, the study must

effectiveness. The statistical modeling exercise described in an

test the new rent rules with voucher holders who are broadly

earlier footnote suggests that during the first 3 years (before

similar to (rather than substantially atypical of) the population

families in the new rent rules group reach their first triennial

of working-age, nondisabled voucher holders across the country.

recertifications), PHAs may spend more on subsidies for

Of course, with only four PHAs in the demonstration, it is

families in the new rent rules group than they would under the

impossible to create a research sample that strictly represents

traditional rent policy. Unlike the traditional rules, for the first

this population. Still, the PHAs involved were chosen to yield a

3 years the new rules will not reduce subsidies for families who

sample that would broadly reflect that population. To assess how

earn more from work. Once families with more earned income

closely the demonstration sample aligns with the national sample,

complete their triennial recertification, however, their rent

the study team compared the families in the demonstration with

contributions will increase, allowing PHAs to reduce subsidies

the national population of working-age, nondisabled voucher

for those families and thus recoup some of the extra subsidy

holders.

payments the PHAs had to forgo earlier.

The families in the study sample are roughly similar to

The modeling exercise suggests that if the new rent policy

working-age, nondisabled voucher holders nationally, but

has little effect on tenants’ earnings, the PHAs may end up

may be somewhat more disadvantaged.

spending—cumulatively—about the same amount in housing

Although some differences in background characteristics are

subsidies for the new rent rules group as for the existing rent

evident, the two groups have roughly similar profiles overall.17

rules group. If the policy has a substantial positive effect on

According to administrative records, the vast majority of house-

tenants’ earnings, PHAs’ cumulative subsidy expenditures

holds in the study sample and in the relevant national voucher

may be lower for the new rent rules group, because after

population are headed by women (94 percent and 89 percent,

the triennial recertification, families who are earning more

respectively), and, on average, household heads in both groups

from work will be making greater rent contributions.15 The

are about 39 years old. The average household size in both

evaluation will measure the new rent policy’s effects on the

groups is slightly more than three family members. In addition,

15 See MDRC (2015), which is available on request from MDRC.

16 In Louisville, a special agreement with the PHA enabled families in the new rent rules group to opt out of the new policy, an option that about 22 percent of families took (although, as described in the body of this report, most did not opt out of the evaluation).

17 The estimates for the national population are for tenant-based HCV families at Moving to Work and non-Moving to Work PHAs who would meet the study’s eligibility criteria. They are based on data obtained from HUD’s Public and Indian Housing Information Center.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program ES-6

only about one-third of families in both groups have more

Almost 70 percent of baseline survey respondents said that

than one adult living in the household, and about one-quarter

they had experienced a financial hardship at some time in the

overall have no children under the age of 18. The study PHAs

last year, such as an inability to pay utility bills (46 percent),

vary considerably among themselves when it comes to children

telephone bills (34 percent), or rent (20 percent). About 28

in the household; however, in Washington, D.C., 35 percent

percent indicated that they sometimes did not have enough

of families have no children under the age of 18, compared

money to buy food.

with 14 percent to 22 percent of the other PHAs’ families. The

discrepancy with children in the household may partly reflect

Families’ Housing Payments and Sub-

the fact that the heads of households in Washington, D.C.,

are older; over 40 percent are 45 or older compared with 18

sidies Under the New Policy

percent to 22 percent of the heads of other PHAs’ households.

The initial TTPs calculated after study enrollment were

More differences can be seen between the study sample and

somewhat lower for families in the new rent rules group

the national voucher population when it comes to racial and

than in the existing rent rules group. Consequently, their

ethnic composition. Although the majority of household heads

housing subsidies were somewhat higher.

in both samples are Black or African-American, the group

For families subject to the new rent rules, the average new

is more highly represented in the study sample (69 percent

initial TTP under the new policy ($289 per month) was about

versus 59 percent nationally). Hispanic or Latino heads of

$20 lower than the average new TTP for the existing rent rules

households of any race also make up a somewhat higher

group calculated at the same time after entering the study

proportion of the study sample (23 percent versus 19 percent).

($310 per month), or about 6 percent lower. (See table ES.1.)

The study sample itself also varies among PHAs. For example,

The lower TTP means that the average housing subsidy for the

in Lexington, Louisville, and Washington, D.C., the majority

new rent rules group was higher, by about 2.6 percent ($834

of heads of households are non-Hispanic/Latino Black or

compared with $813 for the existing rent rules group). This

African-American, compared with 22 percent in San Antonio.

pattern held for three of the four PHAs. Louisville’s pattern is

Three-quarters of San Antonio’s heads of households (of any

somewhat different. For that PHA, the average monthly TTP

race) are Hispanic or Latino.

was slightly higher for the new rent rules group (by $12), and

Economically, the study sample appears to be somewhat more

the average housing subsidy was lower (by $10). The difference

disadvantaged than the national voucher population, and is

reflects the fact that in Louisville, the average base income for

less likely to be working. A smaller proportion of study fami-

calculating a family’s TTP was higher for the new rent rules

lies have any income from wages than families in the national

group than for the existing rent rules group.

voucher population (42 percent compared with 58 percent

The new rent rules have reduced the proportions of

nationally). However, the proportion of families receiving cash

families paying very low and very high TTPs at the time of

welfare payments is fairly comparable—and low—across the

the initial recertification.

two groups (14 percent compared with 12 percent nationally).

The study sample’s average monthly TTP ($256) is somewhat

For all PHAs combined, the new rent rules group had lower

lower than that of the national voucher population ($326).

proportions of families paying no TTP at all and families

paying more than $700 per month than was the case in the

Many families were contending with significant barriers

existing rent rules group (table ES.1). Most of the reduction in

to employment and material hardships.

the proportion paying no TTP came from two of the PHAs—

According to a brief survey of study families at the time of sam-

Louisville and Washington, D.C.—where, unlike Lexington

ple enrollment, 26 percent of household heads reported having

and San Antonio, the existing rent rules do not include a

no high school diploma or equivalent, and only 12 percent had

minimum TTP. Because of the minimum TTP provision in the

2- or 4-year college degrees. In addition, 54 percent of survey

new rules, zero-income families in the new rent rules group

respondents reported facing potential impediments to employ-

would be expected to pay $50 per month in Louisville and

ment, such as physical, emotional, or mental health problems

$75 in Washington, D.C., unless they applied for and received

they believed limited their ability to work or the kind of work

hardship remedies. (As noted in the following, few families had

they could do (31 percent of all respondents), or difficulty

received hardship remedies at the time this report was written.)

affording childcare (21 percent of all respondents).

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Reducing Work Disincentives in the Housing Choice Voucher Program ES-7

Table ES.1.  Total Tenant Payment (TTP) at Initial Study Certification, by Public Housing Agency (PHA) Outcome

New

Existing

Existing

Rent Rules Rent Rules

Difference

Outcome

New

Rent Rules Rent Rules

Difference

All PHAs

San Antonio

Average TTPa ($)

289

310

– 20

Average TTPa ($)

279

311

– 32

TTPa (%) $0

1.9

9.1

– 7.2

TTPa (%) $0

0.0

0.0

0.0

$1–$50

5.8

11.5

– 5.7

$1–$50

0.2

10.5

– 10.2

$51–$75

9.7

4.1

5.7

$51–$75

0.0

6.2

– 6.2

$76–$100

9.0

3.3

5.7

$76–$100

23.0

5.3

17.7

$101–$150

13.4

11.1

2.3

$101–$150

10.7

8.6

2.1

$151–$300

25.3

20.9

4.4

$151–$300

30.9

25.4

5.5

$301–$700

27.5

29.5

– 2.0

$301–$700

31.2

37.2

– 6.0

$701 or more

7.4

10.5

– 3.1

$701 or more

4.0

6.8

– 2.8

Sample size (total = 6,208)

3,118

3,090

Sample size (total = 1,720)

857

863

Lexington

Washington, D.C.

Average TTPa ($)

265

321

– 56

Average TTPa ($)

376

392

– 15

TTPa (%) $0

0.0

0.0

0.0

TTPa (%) $0

0.6

16.1

– 15.5

$1–$50

0.0

0.2

– 0.2

$1–$50

0.0

12.4

– 12.4

$51–$75

0.0

0.0

0.0

$51–$75

28.2

2.9

25.3

$76–$100

0.0

0.0

0.0

$76–$100

5.5

3.7

1.8

$101–$150

44.2

38.3

5.9

$101–$150

6.0

4.5

1.5

$151–$300

26.8

19.9

7.0

$151–$300

16.9

14.0

2.9

$301–$700

26.0

34.9

– 8.9

$301–$700

24.6

24.6

0.0

$701 or more

3.0

6.7

– 3.7

$701 or more

18.2

21.9

– 3.7

Sample size (total = 951)

473

478

Sample size (total = 1,808)

897

911

Louisville

Average TTPa ($)

225

213

12

TTPa (%) $0

6.1

16.1

– 10.0

$1–$50

19.9

17.9

2.0

$51–$75

5.7

5.5

0.2

$76–$100

3.9

2.7

1.2

$101–$150

7.1

5.3

1.8

$151–$300

27.6

24.5

3.1

$301–$700

27.5

23.9

3.6

$701 or more

2.2

4.2

– 1.9

Sample size (total = 1,729)

891

838

a TTP is the minimum amount a family must contribute toward rent and utilities regardless of the unit selected. Under the new rent rules TTP is 28 percent of prior-year income, and under the existing rent rules TTP is 30 percent of adjusted income.

Notes: Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. Statistical tests were not performed.

Source: MDRC calculations using PHA data

A substantial proportion of the families facing high TTPs

from 24 percent in San Antonio to 35 percent in Lexington.

relative to their current or anticipated incomes at the

At the end of the 6-month grace period, rent for these families

time of their initial recertifications automatically received

would be reset based on the retrospective incomes they reported

“grace-period” reductions.

at the recertification interview. If a family had not mostly restored

its average monthly income to its prior-year level, however, it

If, at the initial income recertification interview, a family’s

could request an interim recertification or a hardship remedy

current or anticipated income was more than 10 percent lower

and continue paying a lower TTP.

than its income in the previous year, the family automatically

received a 6-month grace-period TTP based on 28 percent

Some families in the new rent rules group are paying initial

of its current or anticipated income (or the minimum TTP—

TTPs that are more than 40 percent of their current or

unless a hardship remedy was requested and received). About

anticipated incomes. The proportion would be lower if more

29 percent of families were granted grace-period TTPs, ranging

families received hardship waivers of the minimum TTP.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program ES-8

The new rent policy defines a family as having an “excessive

their procedures and mailed letters to all potentially eligible

rent burden” if its TTP is greater than 40 percent of its current

families (that is, those whom the PHA knew had TTPs that

or anticipated gross income. Across the PHAs, 18 percent of

exceeded the 40-percent threshold) that reminded them of the

families met this definition, ranging from 8 percent in San

hardship provision. In addition, the PHAs mailed a separate

Antonio to 30 percent in Lexington. In most cases, the rent

flyer to all families in the new rent rules group reminding them

burden resulted from the requirement that families pay a

that they might qualify for reduced TTPs if their incomes fell

minimum TTP.

before their 3-year recertifications. The flyer also reminded

families of the “opportunity” side of the new policy—that is,

Such families meeting the 40-percent threshold may request a

that if they increased their earnings, they would not have to

hardship remedy, which may result in a lower TTP. Less than

report those increases to the PHA and would not have to pay

1 percent of the families across all four PHAs who potentially

higher TTPs during the 3-year period. Families’ responses to

qualified for hardship remedies at the start of the new rent

these communications will be explored in a later report.

policy actually received them, however. This fact suggests that

a more extensive use of the hardship policy would lower the

proportion of families paying TTPs that exceeded the 40-percent

Next Steps in the Evaluation

threshold (except in Lexington).18

It is too soon to draw conclusions about the extent to which the

It is not clear why families who potentially qualified for hardship

new rent policy is achieving its important objectives for families

remedies did not request them. Perhaps they did not remember

and PHAs. As previously noted, reports scheduled for 2018 and

the hardship provisions of the new rent policy or did not realize

2019 will examine the PHAs’ experiences in operating the new

that they might qualify. Some may have simply chosen not

policy and the costs of administering that policy. They will also

to apply, perhaps because they wanted to minimize further

present findings on the policy’s effects on how much tenants

interactions with the housing agency (such as those required

work and earn, how much families rely on rent subsidies and

to request a hardship remedy), or perhaps some experienced

other government benefits, and how much the PHAs spend on

a change in circumstances soon after their new TTPs were set.

housing subsidies. This report sets the stage for those analyses.

As evidence of this pattern began to emerge, all PHAs modified

18 In Lexington, a family is not exempt from paying the $150 minimum TTP even if it meets the demonstration’s hardship threshold. As mentioned previously, the minimum TTP predates the demonstration there.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 1

Chapter 1. Introduction

Government rent subsidies for low-income families are a vital

than the new law (which has not yet been implemented). The

component of the nation’s social safety net. With funding from

findings from the study are therefore expected to contribute evi-

the U.S. Department of Housing and Urban Development (HUD),

dence that is very relevant to continuing conversations about the

approximately 2.2 million low-income households across the

best ways of providing rent subsidies to low-income families.

country receive housing assistance from tenant-based Housing

The process of designing the demonstration began in 2013.

Choice Vouchers (HCVs)—“portable” subsidies for families

The process of selecting PHAs to participate was completed in

living in privately owned housing units—that are provided by

2014,23 and eligible families were selected for the study sample

2,243 public housing agencies (PHAs).19 For decades, however,

in 2015. Four PHAs are taking part in the demonstration.

the ways rental subsidies have been calculated and administered

have been controversial. Critics have assailed the traditional

•  Lexington-Fayette Urban County Housing Authority in

policy as administratively complex and expensive for PHAs to

Lexington, Kentucky (generally referred to as the Lexington

administer and difficult for families to comprehend. They have

Housing Authority).

also said that they discourage, rather than support, families’

efforts to increase their employment and earnings.20

•  Louisville Metropolitan Housing Authority in Louisville,

Kentucky.

As one step toward addressing those problems, HUD launched

the Rent Reform Demonstration, a new initiative to design

•  San Antonio Housing Authority in San Antonio, Texas.

and carefully evaluate an alternative rent-subsidy policy using

•  District of Columbia Housing Authority in Washington, D.C.

a randomized controlled trial. HUD selected MDRC to lead

the initiative, working closely with a small number of local

These 4 PHAs are a subset of the 39 agencies that, at the time

PHAs and HUD.21 The demonstration focuses on recipients of

the project was launched, were part of HUD’s Moving to

tenant-based HCVs.22

Work demonstration.24 Only Moving to Work agencies were

considered for the Rent Reform experiment because they are the

It is important to note that in July 2016 the federal government

only PHAs authorized by Congress to make changes in many

enacted a new law, the Housing Opportunity Through Modern-

housing policies, provided they notify the public and receive

ization Act of 2016, to address some of challenges imposed by

approval from HUD and from their boards of directors. They

HUD’s traditional rent policy for voucher holders. In a number

have the administrative flexibility to change certain policies,

of important respects, however, the new rent policy that the

which extends to rent rules, that would otherwise require

Rent Reform Demonstration is testing remains a bolder approach

changes in legislation or regulations.25

19 HUD (2015). The total number of PHAs nationally is 3,895. Formerly referred to as Section 8 vouchers, HCVs are portable in the sense that if a family moves, it can take its subsidy with it and use the voucher with a new landlord of its own choosing, as long as the housing unit meets the PHA’s quality standards. HCVs differ from project-based Section 8 assistance, in which a subsidy is attached to a particular housing unit through a contract between the PHA and a private landlord.

20 See Abt Associates, Inc., the Urban Institute, and Applied Real Estate Analysis, Inc. (2010). See also Government Accountability Office (2012) and Public Housing Authorities Directors Association (2005).

21 The study team includes technical-assistance housing experts from the Bronner Group and Quadel Consulting, research experts from the Urban Institute and Branch Associates, and professors Ingrid Gould-Ellen (New York University) and John Goering (City University of New York).

22 Families receiving types of vouchers other than tenant-based HCVs were not eligible for the Rent Reform Demonstration.

23 For more information on the process of selecting PHAs to participate in the demonstration, see appendix A.

24 Many of the 39 agencies were not suitable candidates for the demonstration because they had already broadly implemented new rent policies, making it difficult or impossible to identify families who were still subject to HUD’s traditional rent rules and could serve as an appropriate control group for the new policy. Also, some Moving to Work agencies had qualifying voucher populations that were too small for the purposes of the evaluation. Other agencies had other priorities that made it difficult to take on the demands of a new demonstration project.

25 According to the Moving to Work Agreement, Moving to Work agencies have the authority to adopt and implement any reasonable policies to calculate tenants’

contributions toward their rents that differ from the program requirements as mandated in the 1937 Act and its current implementing regulations. The four PHAs in the Rent Reform Demonstration were still largely following HUD’s traditional rent policy at the start of the demonstration, with some exceptions that are discussed later in this chapter and in chapter 2. Appendix table B.1 illustrates some of the variations in existing policies that the four PHAs in the Rent Reform Demonstration had already adopted before the demonstration began.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program

2

This report is the first of several that will be issued over the

voucher program, before deducting the TTP. (Box 1.1 illustrates

course of the study. It describes the new rent policy, the rationale

this and other important concepts in determining a family’s

behind each of its critical elements, and the manner in which

TTP and housing subsidy.) More specifically, the payment stan-

the policy is being evaluated. It also describes the process for

dard refers to the maximum cost of a rental unit of a given size

identifying and enrolling families into the study, those families’

(based on the number of bedrooms) that HUD will cover with a

background characteristics, the amounts they have begun paying

subsidy. Payment standards are intended to ensure that families

for their rent and utilities under the new rent rules compared

have access to safe and decent housing, while also limiting the

with the existing rules, and the housing subsidies they initially

amount of the subsidy provided to any given family (to limit

received. Future reports to be released in 2018 and 2019 will

examine the PHAs’ implementation experiences and the costs

of administering the new rules; the new rules’ effects over

Box 1.1. Important Concepts in

Determining Housing Subsidies

time on families’ rent and utility payments; and their effects

on families’ employment, earnings, and receipt of housing

Payment standard: The maximum monthly assistance

subsidies and other government benefits (including welfare

payment for a family assisted in the voucher program (before

and food stamps).

deducting the total tenant payment by the family).

Contract rent: Full rental cost charged by landlord (may or may

This chapter sets the stage for the remainder of the report. It

not include utilities).

briefly reviews why rent reform has emerged as an important

Gross rent: Total contract rent + utilities (if not included in

public policy issue and, in general, how the new rent rules are

contract rent).

intended to respond to criticisms of the traditional rent policy.

TTP: Total tenant payment for rent and utilities (used in com-

(Chapter 2 includes a more indepth discussion of the new

puting housing subsidy).

rules and the rationales behind them.)

Family share: TTP + any extra housing cost above the pay-

ment standard, paid by family.

The Rent Reform Debate

HAP: Housing Assistance Payment (that is, total subsidy for

rent and utilities).

To understand the rent policy controversy, it is important to

understand some basic features of HUD’s traditional rent rules

as these apply to voucher holders.26 These rules establish how

much of its income a family is normally expected to contribute

toward its housing costs (that is, toward rent and utilities),

and how expensive a housing unit a family is permitted to rent

with a government subsidy.

Most families receiving a HCV are expected to contribute 30

percent of their “adjusted monthly incomes” toward their

housing costs. This contribution is referred to as a family’s  total

tenant payment (TTP). Adjusted income refers to  net income

after taking into account certain deductions from a family’s

pretax income.27 The PHA provides a subsidy for the difference

between a family’s TTP and the PHA’s “payment standard,” which

is the maximum monthly assistance payment for a family in the

26 Throughout this report, mentions of HUD’s “current” or “traditional” rent policy for voucher holders refer to the national rent policy in effect for non-Moving to Work PHAs before the passage and implementation of the Housing Opportunity Through Modernization Act of 2016.

27 HUD rules specify what resources count as income. For example, earnings and cash payments from welfare and other government benefit programs count, but food stamps and Earned Income Tax Credit payments do not. Deductions include a standard deduction of $480 per child and $400 if the household is “elderly” or

“disabled,” as defined in the Code of Federal Regulations (see chapter 2). Households can also receive deductions for documented childcare expenses, expenses for the care of people with disabilities, and medical expenses (for elderly family members or those with disabilities). The household’s TTP is calculated as the largest of the following: 30 percent of adjusted income, 10 percent of gross income (that is, income before deductions), the welfare rent (that is, the amount of a family’s public assistance or welfare payment that is earmarked for rent and utilities), or the minimum rent (if the PHA has established a minimum rent). A family is also allowed to lease a unit that would require it to pay up to 40 percent of its adjusted income for rent and utilities when it first receives a voucher or moves to a new unit. For a full explanation of the HUD’s existing rent rules, see HUD (2001).

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 3

government costs).28 In the HCV program, a family is allowed

admin istrators have reported that the current system sometimes

to pay an additional amount, at its own expense, for rent in

confuses voucher applicants and recipients with respect to what

a housing unit that has a rent above the payment standard.

rents they are expected to pay from year to year, and that it has

However, at the beginning of a new lease, the family’s total

adverse effects on morale of PHA staff who have to (invasively)

expenditures for that unit must not constitute more than 40

collect and verify households’ incomes. These and other criti-

percent of its adjusted income. A family can also choose to pay

cisms are described in Abt Associates, Inc., the Urban Institute,

additional rent above the payment standard if it must do so to

and Applied Real Estate Analysis, Inc. (2010), Government

remain in its current housing unit (for example, if the landlord

Accountability Office (2012), and Public Housing Authorities

raises the rent); in such cases, the family is allowed to pay

Directors Association (2005).

more than 40 percent of its adjusted income.

Rent Subsidies and Tenants’ Labor Force

Since the enactment of the Quality Housing and Work Respon-

Participation

sibility Act in 1998, PHAs have also been permitted to establish

minimum TTPs, typically referred to as “minimum rents,” of

Among the challenges of designing a rent policy, one of the

up to $50 per month. A family subject to a minimum TTP

most complex is how to encourage tenants to increase their

would pay at least that amount, regardless of its income, unless

earnings, while ensuring that families with lower incomes

it received a hardship exemption from the PHA.

(and higher need) will receive larger subsidies. This tension

is inherent in means-tested benefit programs in which benefit

The primary rationale that HUD and Congress have embraced

amounts rise and fall as incomes change. Facing a reduction in

for the “percentage-of-income” rent policy is protecting low-

benefits if their earnings increase, some benefit recipients may

income and very low-income families from paying an “excessive”

choose to work less or not at all to avoid losing benefits.

proportion of their incomes for rent. Under this rent policy,

the amount that a family contributes toward its housing costs

Although it is widely assumed that housing subsidies, like other

will be higher or lower, depending on its income. Although

means-tested transfer benefits, have a negative effect on labor

this policy means that a family will pay more if its income

supply, the theoretical rationale is not obvious. Because housing

grows, it will also pay less if its income falls—an important

subsidies are an in-kind benefit, tenants may view the subsidy

safety-net feature. Low-income housing advocates have staunchly

more like a price cut to a commodity that allows them to consume

defended this policy as essential to protecting vulnerable families

more housing or other goods and services with the same level

and children (Abt Associates, Inc., the Urban Institute, and

of earnings. As such, they may see no reason to reduce their

Applied Real Estate Analysis, Inc., 2010).

earnings simply because they are receiving housing assistance.

Thus, from a theoretical standpoint, one might argue that

At the same time, percentage-of-income system has been criticized

housing assistance would not necessarily depress earnings.29

by public housing industry groups and others as allegedly

having unintended negative consequences for: (1) tenant labor

Evidence from several U.S. studies, however, offers support for

force participation (see below), (2) tenant turnover (which, when

the hypothesis that housing subsidies do indeed lead to a reduc-

low, limits the number of similarly needy households that can be

tion in work effort. They show that although many recipients of

offered subsidies, raising questions of fairness or horizontal

housing subsidies do work, housing assistance is associated, on

equity), (3) intrusiveness in tenants’ lives, (4) accuracy of

average, with modest reductions in employment and earnings.30 A

reported income, (5) the inclusion on the lease of additional

number of studies have found also evidence that some reduction

working adults, (6) PHA finances, and (7) PHA administrative

in labor supply is associated with receipt of cash welfare and

complexities and costs (Abt Associates, Inc., the Urban Institute,

food stamps.31 The reduction is hypothesized to occur through

and Applied Real Estate Analysis, Inc., 2010). Also, PHA

a work disincentive (substitution) effect or an income effect.

28 Payment standards are tied to local Fair Market Rents. An area’s Fair Market Rent represents a point on the distribution of all rents charged by private landlords for standard housing units. It is typically set at the 40th percentile, meaning that 40 percent of all housing units in the area would rent for no more than that amount (see the Code of Federal Regulations, 24 CFR 888.113). As specified in the Code of Federal Regulations (24 CFR 982.503), a PHA may set its payment standards, for units of varying sizes, from 90 percent to 110 percent of the published Fair Market Rents for its area, and may adopt higher or lower levels with HUD approval.

29 See Shroder (2010) for a discussion of the theoretical perspective.

30 Shroder (2010) summarizes the findings from these studies, which include an evaluation of the effects of offering housing vouchers to families exiting welfare (Mills et al., 2006); a study of the effects of housing voucher receipt using a housing lottery in Chicago (Jacob and Ludwig, 2012); and a propensity score analysis of voucher holders in Wisconsin (Carlson et al., 2012).

31 See Hoynes and Schanzenbach (2010) for a discussion of work incentives in the food stamp program that draws comparisons to the broader literature on labor supply and other transfer programs.

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Reducing Work Disincentives in the Housing Choice Voucher Program 4

The disincentive effect can occur because the benefit reduction

Additional evidence comes from the Jobs-Plus evaluation, which

acts as an implicit tax on earnings, so that every extra dollar

tested an employment intervention in public housing. Jobs-Plus

earned yields less than a dollar of extra income. The higher the

included changes in rent rules that held down the increases in

benefit reduction rate, the lower the increase in net income

residents’ TTP amounts when they increased their earnings. A

derived from an extra dollar of earnings. In the case of housing

number of patterns in the data from that study suggest that the

subsidies, under traditional rent rules, families face an implicit

alternative rent policy contributed to the positive effects of Jobs-

marginal tax rate of about 30 percent for each extra dollar they

Plus on tenants’ earnings. However, because that rent policy

earn. If they also receive other means-tested benefits, such as

was tested in combination with other services and supports

Temporary Assistance for Needy Families, or TANF, or the

offered to residents, it is impossible to know for sure how much

Supplemental Nutrition Assistance Program, or SNAP, they

of the earnings effect was attributable to that feature of the

face an even higher combined marginal tax on earnings. At

program (Bloom, Riccio, and Verma, 2005; Riccio, 2010). The

some point, individuals may decide that it does not “pay” to

Rent Reform Demonstration will provide the first direct evi-

work, or to increase the hours they work, because the extra

dence from a randomized trial of how tenants’ employment and

effort may not lead to a meaningful improvement in their standard

earnings are affected solely by introducing a new rent policy that

of living. Moreover, some recipients whose income is close to

rewards work, without any other work-related interventions.

the threshold at which they would no longer qualify for benefits

(often referred to as a benefits “cliff”) may strive to keep their

Proposals for Reform

earnings below that threshold, especially for benefits like

Numerous policymakers and stakeholders have advocated

housing subsidies, which may be difficult to regain once lost.

reform of the traditional rent system to reduce adverse impacts

An income effect can depress work effort through a different

on families, to simplify the administration of the system, or

mechanism. It can occur if an individual views a means-tested

to address the financial condition of PHAs. Policy reform

income subsidy as a way to maintain the  same standard of

has been elusive, however, because moving to a new system

living with less work effort.

involves fundamental tradeoffs that have made it hard to achieve

agree ment and because of a lack of evidence concerning the

Supporters of rent reform have argued for a variety of changes

effects of alter native approaches. For example, simplifying the

in rent rules that would reward work, as the next section shows.

rent structure (for example, by basing subsidies on unit size)

Little direct, rigorous evidence, however, exists on how such

may make it more difficult to ensure that families with the

reforms would actually affect tenants’ labor supply. A number

greatest need receive the most assistance. At the same time,

of welfare reform experiments offer suggestive evidence showing

offering deep subsidies for an unlimited term makes it difficult

that employment interventions that included special financial

to serve equally needy families on waiting lists—given that

incentives conditioned on work (particularly full-time work),

HUD’s housing subsidies are not an entitlement (that is, are not

which were designed to help “make work pay,” had positive

available to all families who qualify for them), but are limited

effects on participants’ employment rates and average earnings.32

by the amount of money Congress chooses to allocate for them.

Other relevant evidence comes from a study of voucher hold-

Also, the advantages of standards and protections built into

ers in New York City that tested an earnings supplement for

a generally common or consistent federal approach must be

full-time work that was offered separately from the normal rent

weighed against the benefits of allowing local agencies to set rent

rules. That study found no effects on labor market outcomes

rules based only on local needs, conditions, and philosophies.

when the incentives were offered alone (that is, without any

Another source of tension arises from the need to find the right

employment-related services). However, when offered as part

balance between a strict focus on providing decent affordable

of a Family Self-Sufficiency (FSS) program, the incentives and

housing and meeting other objectives, such as family self-suf-

employment-related services had substantial positive effects on

ficiency. These tradeoffs have been discussed and debated for

tenants’ employment and earnings, although these effects were

years, with little produced in the way of definitive new evidence

limited to tenants who were not already working when they

about the consequences of changing current rules.

entered the study (Nuñez, Verma, and Yang, 2015).

32 See Michalopoulos (2005) for a summary of findings from four experiments that tested financial work incentives in Connecticut, Minnesota, Wisconsin, and Can-ada. The incentives took the form of an increase in the amount of earnings that were disregarded when calculating welfare benefits (thus letting welfare recipients keep more of benefits along with their earnings), or in the form of special wage supplements conditioned on full-time work.

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Other new rent systems have been contemplated, and several

excluded from the Rent Reform Demonstration; allows PHAs

have already been adopted by some Moving to Work agencies.

to use family income in the calendar year just past to calculate

These new systems include (1) modifications to the percent-

TTPs and rent subsidies (except at initial eligibility); eliminates

age-of-income calculation (either to income adjustments

the requirement for families to report increases in earned

involving deductions or disregards, or to the percentage itself,

income between annual recertifications (codifying an option

for example, by tying different percentages to different income

that had previously been left to local PHA discretion); and

bands); (2) modifications to the payment standard system;

eliminates interim recertifications for families’ whose incomes

(3) various versions of stepped or tiered subsidies, such as a

drop by less than 10 percent.

stepped-down subsidy with a subsidy floor; (4) flat subsidies;

Although many ideas have been proposed for reforming the tra-

(5) rent ceilings; (6) variations in the amount of the minimum

ditional rent system, little evidence exists on these ideas’ effects

TTP; and (7) various hybrid models, such as applying a flat

on subsidized households, on PHA administrative practices and

subsidy until a household reaches an income threshold and

costs, or on housing-subsidy expenditures. HUD intends for the

then applying a percentage-of-income rent.33 Discussions of

Rent Reform Demonstration to help fill that knowledge gap.

rent reform have also considered time limits on households’

rent subsidies in conjunction with other changes in rent

policies. Evidence on the effects of these policies on tenants’

Designing the New Rent Policy

employment and other outcomes is quite limited, and the

policies have not been tested in randomized trials or strong

The goals of the new rent policy are to—

quasi-experimental research designs.

(1)  Simplify the administration of the voucher rent system to

A number of proposals have been suggested explicitly to reduce

improve transparency, reduce the burden on PHAs and

the administrative burdens and costs of the rent-setting process.

households, and reduce administrative costs.

The proposals include less frequent collection and verification

(2)  Increase the financial incentive for tenants to work, increase

of income (because rent calculations are time con suming and

their earnings, and advance toward self-sufficiency.

complex to complete) and eliminating deductions that can be

complicated to calculate. PHAs have also expressed a desire for

(3)  Continue to provide a safety net for tenants who cannot

simpler ways of estimating utilities costs when utilities are not

readily work or who lose jobs.

already included in a unit’s rent. It is often quite difficult for

(4)  Minimize any increases in PHAs’ average housing-subsidy

PHAs to estimate utilities costs, with payments varying across

expenditures, and, ideally, reduce those costs.

households, according to differences in the types of dwellings,

the number of bedrooms, and other factors.

Savings in average subsidy and administrative costs may make

it possible to offer housing assistance to more low-income

In March 2016, HUD sought to address some of these con-

families, many of whom spend years on waiting lists and, in

cerns by issuing a number of “streamlining” rules that apply to

many cases, never receive assistance.

all PHAs.34 Various legislative proposals over the last few years

have also included recommendations along these lines for the

To develop a new rent model, the study team worked closely

voucher program, and a number of these and other provisions

with HUD and, initially, with 10 PHAs that had expressed

were included in the Housing Opportunities Through Modern-

interest in joining the demonstration, and then more intensively

ization Act of 2016, signed into law in July 2016. The new law

with the final group of 4 agencies that actually joined.35 It was

includes a 3-year, rather than annual, income recertification

vital to design a policy in close partnership with PHAs because

for families on  fixed incomes (such as Social Security), who are

they brought real-world expertise to the process, and also

33 For a discussion of these options, see Abt Associates Inc., the Urban Institute, and Applied Real Estate Analysis, Inc. (2010).

34 Among the rules HUD issued in March 2016 are changes that allow for streamlined recertification for families living primarily on fixed incomes (such as Social Security benefits); allow a family to declare without verification that its assets do not exceed $5,000; allow quarterly payment of utility reimbursements that are less than $45 per quarter; allow for the inspection of units every 2 years, rather than every year; allow for the use of alternate inspection methods; and eliminate the requirement to reexamine income when a new family member is added. For the full set of streamlining rules, see 81 CFR 12353 and HUD Office of Public and Indian Housing Notice PIH 2016-05 (HA).

35 As previously noted, only Moving to Work agencies were eligible for the demonstration. Very small Moving to Work agencies and those that had already implemented substantial rent reform policies were eliminated from consideration because they could not meet the conditions for a random assignment evaluation. Other potentially eligible PHAs were contending with a variety of other priorities or issues that made it difficult for them to participate in the demonstration.

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because it was unlikely any PHA would implement a new rent

all four PHAs in the demonstration agreed to implement, while

policy and participate in an evaluation if it had little or no say

leaving some room for PHAs to adapt those features to local

in the policy design and no sense of ownership over the policy.

conditions.

As part of the policy design process, the study team, HUD,

and the 10 PHAs reviewed a range of possible rent reform

Overview of the New Rent Policy

ideas, including those discussed in Abt Associates Inc., the

Urban Institute, and Applied Real Estate Analysis, Inc. (2010) .

The new rent policy applies only to working-age, nondisabled

That study collected perspectives on rent reform options from

voucher recipients.39 It includes the following core features

voucher recipients, residents of public housing, waiting-list

(which are discussed in more detail in chapter 2).

applicants, and PHA staff members. During the consultation

Changes in rules for recertifying families’ continued eligibility for the

process, the study team sought to identify a common set of

voucher program and recomputing their TTPs—

approaches all the candidate PHAs would be willing to adopt.36

•  Replacing the annual recertification schedule with a triennial

The study team also conducted a variety of statistical analyses,

schedule, so that a family is only required to review its

using national data from HUD and data from a subset of the

income with the PHA every 3 years. This change means that

candidate PHAs, to assess the possible implications of how

if a family increases its earnings during that period, it is not

new approaches might affect households’ rents, households’

required to report the increase to the PHA and its TTP will

net incomes, and PHAs’ housing-subsidy expenditures.37 In

not be raised.

addition to these planning efforts, the study team and HUD

conferred with representatives of the low-income-housing

•  Limiting interim recertifications for reductions in income

advocacy community about various design options as they

(before the next required triennial review) to a maximum of

formulated the new policy.38 Leading up to the launch of

one per year, and only when a family’s average  gross  monthly

the demonstration, the study team also worked with each

retrospective income over the previous 12 months) falls by

PHA to integrate details of the new rent policy and the Rent

at least 10 percent. This change limits the volume of TTP

Reform Demonstration into its draft annual Moving to Work

adjustments the PHA makes (because normally they must be

activity plan, which the PHA then made available for public

made whenever families report income gains or losses of any

comment. Once public comments were addressed, each PHA

amount), while still protecting families when their incomes

board approved the plan, which was then submitted to HUD’s

drop substantially.

Moving to Work office for final approval.

Changes in the formula for calculating a family’s TTP and subsidy—

The result of those consultations, analyses, and reviews is an

•  Eliminating all deductions from income, so that gross

alternative rent model that includes several core features that

income, rather than adjusted income, is the basis for

calculating a family’s TTP.

36 One popular reform, a tiered rent structure, was among the options given serious consideration. However, it was ultimately rejected, in part out of concern that a small number of wide income bands with large differences in TTP rates from one band to the next could create sizable work disincentives as tenant income approached the top of a band (that is to say, a small jump in income that resulted in a shift from the top of one income band to the bottom of a higher income band could result in a big increase in TTP); conversely, a large number of narrow bands might not offer much relief from the burden of repeatedly recalculating TTPs when families’ incomes changed. Furthermore, the overall process of administering the rent system would not be much simpler if other reforms in the basic TTP calculation process and recertification period were not also addressed.

37 For details on these analyses, see MDRC (2015), available on request from MDRC.

38 These representatives included the Center on Budget and Policy Priorities and the National Low Income Housing Coalition. These organizations are also represented on an Expert Advisory Panel that HUD has commissioned to review the evaluation. Other expert panel members included representatives from the Public Housing Authorities Directors Association, the National Association of Housing and Redevelopment Officials, and the Council of Large Public Housing Authorities; the executive directors of the Cambridge and Seattle Housing Authorities; and several academic experts. In March 2015, that panel met to discuss the new rent policy and offer guidance on the evaluation design. None of these experts is responsible for final decisions pertaining to the policy or the evaluation.

39 Eligible sample members included only voucher holders with vouchers that were administered under the Moving to Work demonstration. Non-Moving to Work Vouchers (that is, Veterans Assisted Special Housing, Moderate Rehabilitation, and Shelter Plus Care), Enhanced Vouchers, and project-based Section 8 vouchers were excluded from the study. Additionally, the study did not include elderly households, disabled households, and households headed by people older than 56

(who would become seniors during the course of the long-term study). Households participating in FSS and homeownership programs before sample enrollment began were also excluded from the study, as were families who held vouchers but were receiving no housing subsidy. The eligibility criteria are more fully described in chapter 4.

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Reducing Work Disincentives in the Housing Choice Voucher Program 7

•  Calculating TTP at 28 percent of gross income, rather the

(although the conditions defining a hardship and the remedies

normal 30 percent of adjusted income.

for them do not). The design team attempted to strike an

effective balance between the extent of standardization that

•  Using a family’s average  gross  monthly retrospective income  in would be required in a national policy and the need to permit

setting its TTP and housing subsidy, rather than the traditional

some local flexibility that may also be reasonable to include

practice of using the monthly adjusted income that the

in a national policy. The evaluation will explore the tradeoffs

family currently has and expects to have in the coming year.

associated with these different choices.

•  Ignoring a family’s income from assets when the total value

of its assets is less than $25,000 (and not requiring docu-

How To View “Simplification” Under the New

mentation of those assets).

Rent Policy

•  Simplifying the policy for determining utility allowances

Although some of the changes introduced by the new rent

to a streamlined standard schedule based primarily on unit

rules may simplify the process of determining a family’s TTP

size, with some adjustments.

(for example, by eliminating deductions and streamlining the

utilities policy), other changes may be burdensome to imple-

•  Establishing a minimum TTP of at least $50 per month and

ment with some families (for example, computing and verifying

requiring families to pay at least the specified minimum

retrospective income when a family’s income is volatile and not

TTP directly to their landlords. All tenants would thus have

documented or captured well by the administrative records

rent-paying relationships with their landlords, as they would

on families’ income to which the PHAs have access from other

in the unsubsidized rental market.40

government sources).41 Adopting a 3-year recertification period

Safeguards for families (in addition to interim recertifications)—

is intended to reduce the overall burden on PHAs and families

by reducing the volume of TTP recalculations and the number

•  A “grace-period” TTP at the start of the 3-year period, allowing

of contacts families have with the PHA over several years, but

for a temporary (6-month) TTP reduction when a family’s

whether those outcomes are actually achieved depends on the

current or anticipated gross income is more than 10 percent

frequency with which families request hardship remedies and

lower than its average monthly retrospective gross income

interim recertifications and PHAs approve them. It remains

over the last year.

to be seen, therefore, whether the new rent rules—taken as a

whole over several years—achieve the goals of simplification

•  A hardship policy that covers a standard set of conditions

and reduced administrative costs. The evaluation will attempt

and includes a standard set of remedies that permit TTP

to answer this important question.

reductions at any time during the 3-year period, in order to

protect households from excessive rent burdens.

The Importance of Communicating the New

Local Variation in the Features of the New Rent

Rules to Families

Policy

It is also important to note that the new rent rules impose extra

communication burdens on the PHAs in at least two ways.

As previously indicated, the PHAs participating in the demon-

First, if families are to respond to the work incentive built into

stration helped to develop and support a common framework

the new rules, they must be aware that such an incentive exists

for the new rent policy. However, they also saw a need to

and understand how it functions. Second, if the safeguards

adapt the model in some ways in response to local consid-

built into the new policy are to have their intended protective

erations. In particular, minimum TTP levels vary among the

effects, families must be aware of those safeguards, understand

PHAs, ranging from $50 to $150 per month (see chapter 2).

how they work, and take advantage of them when needed. The

The process for determining hardship remedies also varies

40 Although most voucher holders pay some rent directly to their landlords, in some cases, the housing authority pays the entire amount to the landlord. Requiring all families in the new rent rules group to pay at least some amount to their landlords was perceived by some HUD officials as a way of helping to prepare those families for the arrangement they would face if they increased their incomes and received lower housing subsidies or moved to different housing and were no longer receiving housing subsidies.

41 “Administrative records” are data collected in the course of administering a program. These data are available to PHAs through the HUD Enterprise Income Verification system, which provides information such as earnings reflected in unemployment insurance wage records, unemployment insurance compensation, and Social Security and Supplemental Security Income benefits. One known issue with the Enterprise Income Verification system is that it is not considered complete—or current—because of reporting lags in some of its data sources. The National Directory of New Hires, for example, has a 6-month reporting lag.

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PHAs must also implement them properly. To implement the

The Scope of This Report

new rent policy, therefore, PHAs must undertake regular and

active communication efforts, beyond the initial explanations

The purpose of this report is to set the foundation for a future

they offer to families at the time of recertification. To that end,

longer-term assessment of the implementation, impacts, and

with the study team’s guidance and HUD’s support, the PHAs

costs of the new rent policy. Chapter 2 describes the central

have begun to send additional mailings to remind families of

features of the new rules, and the rationale for them, in greater

the new policy’s work incentive and safeguards, and to invite

detail. Chapter 3 describes the planned evaluation of the new

them to make contact with a housing specialist if they believe

rent policy. Chapter 4 describes the steps by which families

they may qualify for a TTP reduction. The PHAs will send

were enrolled into the study, including the random assignment

these reminder notices to families at least three times over the

process. It also describes the characteristics of the participating

course of the demonstration. The evaluation will attempt to

families. Chapter 5 explores the PHAs’ initial progress in institut-

determine whether these communication efforts are adequate.

ing the new policy. It also presents findings on the new rent

policy’s initial effects on families’ TTPs and housing subsidies.

Chapter 6, the final chapter, points to the next steps in the

evaluation.

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Reducing Work Disincentives in the Housing Choice Voucher Program 9

Chapter 2. A Closer Look at the New Rent Policy

In keeping with the goals of the Rent Reform Demonstration,

As mentioned in chapter 1, many of the concepts incorporated

the new rent policy was designed with an eye toward reducing

into the new rent policy draw on ideas that have been debated

the complexity and burden (and thus the cost) experienced by

for years by housing experts. Some are also currently being

public housing agencies (PHAs) in administering rent subsidies

tried by a number of Moving to Work PHAs independently of

for Housing Choice Voucher (HCV) recipients; increasing tenants’

the Rent Reform Demonstration. Thus, although the particular

employment and earnings in order to help them become more

package of reforms that is being tested as part of this demon-

self-sufficient; protecting families from excessive rent burdens;

stration is unique, the demonstration offers an opportunity to

and achieving these outcomes without increasing (and possibly

learn about the practical application of a number of broadly

even reducing) total housing-subsidy expenditures relative to

discussed ideas.

the expenditures under the traditional rent system.

This chapter discusses the features of the new rent policy in

It is important to recognize the inherent difficulty of achieving

greater detail and compares them with the existing rent policy

all of these goals simultaneously. For example, protecting

for the control group. Although the PHAs in the demonstration

tenants from excessive rent burdens may add more complexity

had already adopted some modifications of HUD’s traditional

to the policy than would be the case if increasing the incentive

rent rules under their Moving to Work authority before the

to work were the only goal. The study team adopted the features

study began, the rules for the existing rent rules group largely

of the new rent policy with this consideration in mind. See

mirror the traditional rules in effect for families receiving

table 2.1 for a side-by-side comparison of the main features of

vouchers from non-Moving to Work agencies.42 (For a summa-

the new and existing rent policies.

ry of the few modifications in existing rules undertaken by each

PHA before the demonstration began that affect the control

group in each location, see appendix table B.1.)

Table 2.1. Comparison of Traditional and New Rent Policies (1 of 2)

Component

Traditional HUD Policy

New Rent Policy

Total Tenant Payment

30 percent of adjusted monthly

28 percent of gross monthly retrospective income (that is, gross monthly income

(TTP)

income (that is, total countable

over the previous 12 months), with no deductions or allowances.

anticipated income, minus

deductions) or 10 percent of gross  Countable income estimate for setting a family’s TTP and housing subsidy are income, whichever is higher.

based on 12-month retrospective income.

Minimum TTP

Up to $50 per month, at public

$50 to $150 per month, depending on the PHA.

housing agency (PHA) discretion.

All families pay a minimum amount of rent directly to their landlords, to mirror the landlord-tenant relationship in the unsubsidized rental market.

Assets

Family income from assets is counted  Family income from assets is ignored when total asset value is less than $25,000, in determining a family’s TTP.

and families do not need to document those assets.

Recertification period

Annual recertifications.

Triennial recertifications.

Interim recertifications  At an agency’s discretion, families

Earnings gains do not increase TTP for 3 years (that is, until the next triennial when income changes

report any income increases

recertification.

when they occur, before the next

scheduled recertification. Families

Interim recertifications are limited to a maximum of one per year, and only when

may request interim recertifications  a family’s average gross income over the most recent 12 months drops by more whenever their incomes fall by any  than 10 percent from the retrospective estimate that was used to establish the amount.

initial TTP.

Utilities

Where the contract rent does not

A simplified utilities policy that tailors allowances to a standard base rate for utility include utilities, a utility allowance

costs that varies according to the voucher size, with additional payments available is provided based on a detailed

to families paying higher costs due to the type of heating (for example, electric or schedule that takes into consid-oil heat) and water and sewer charges.

eration voucher size (the number

of bedrooms covered by a family’s

voucher) and various other aspects

of the type of housing unit.

42 The traditional rent rules referred to in this report are those in effect before the July 2016 passage of the Housing Opportunity Through Modernization Act of 2016.

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Reducing Work Disincentives in the Housing Choice Voucher Program 10

Table 2.1. Comparison of Traditional and New Rent Policies (2 of 2)

Component

Traditional HUD Policy

New Rent Policy

Hardship policy

If the PHA has a minimum TTP,

Families qualify for consideration of a hardship-based remedy if—

it must suspend that minimum

•  The family’s monthly TTP exceeds 40 percent of its current or anticipated

TTP for families who are unable

monthly gross income.

to pay it due to specified financial

•  The hardship cannot be remedied by the one interim recertification permitted

hardships. Short-term hardships

each year.

(lasting 90 days or less) require

•  The family faces eviction for not paying rent or utilities.

the suspended minimum to be

•  The family meets other criteria determined by the PHA.

reinstated after the hardship

period ends and to be repaid

Hardship remedy options include the following standardized list.

according to a reasonable pay-

•  Allowing an additional interim recertification beyond the normal one per year.

ment plan.

•  Setting the family’s TTP at the minimum level for up to 180 days. (This remedy can be renewed at the end of that period if the hardship persists.)

•  Setting the family’s TTP at 28 percent of its current gross income (which may

be less than the minimum TTP), for up to 180 days (except in Lexington). (This

remedy can be renewed at the end of that period if the hardship persists.)

•  Offering a “transfer voucher” to support a move to a more affordable unit.

Grace period

Not applicable. TTP is always

At the triennial recertification, if a family’s current gross income is more than 10

based on current income.

percent lower than its average gross retrospective income over the last 12 months, the family will have its TTP calculated at that time based on current income rather than retrospective income, and this TTP will remain in effect for 6 months. During this grace period, families can still qualify for a hardship-based remedy.

Notes: The Traditional HUD Policy column shows the national policy in existence for the non-Moving to Work tenant-based Housing Choice Voucher population before the enactment of the Housing Opportunity Through Modernization Act of 2016. With a few exceptions, the PHAs participating in the Rent Reform Demonstration have continued to implement these policies. For each of the four demonstration PHAs, details on its existing policy and how it varies from the traditional HUD policy are available in appendix table B.1.

New Rent Policy Details

changes in how family income is calculated, a new minimum

TTP requirement (also commonly referred to as a “minimum

From the traditional rent policy, the new rent policy retains a

rent”), a set of safeguards to protect families from an excessive

“percentage-of-income” approach in which a family’s contribu-

rent burden, and a simpler way of determining utility costs.

tion to its rent and utilities—its total tenant payment (TTP)—is

The following section discusses each of these features and its

a percentage of its monthly income. The new policy modifies

rationale in more detail.

that approach in substantial ways, however.

From the perspective of rewarding work, the most important

Waiting 3 Years Before the Next Required

change is allowing 3 years to pass before families are required

Recertification

to have their eligibility for the voucher program and their

The new rules cap a family’s TTP for 3 years (unless its income

TTPs redetermined—a process commonly referred to as

falls) and do not require the family to report any increases in

“recertification.” This change in the recertification timeframe

income to the PHA during that period. These changes should

from  annual to  triennial means that, because families do not

offer families a greater incentive to increase their earnings,

have to report income increases when they occur, they are

because they will not have to contribute any part of those

allowed to earn as much as they can during that 3-year period

increases toward their housing costs (rent and utilities) for up

without having any of their increased earnings “lost” to higher

to 3 years.43 It may also encourage some heads of households to

contributions for rent and utilities (as would be true under

add new spouses or domestic partners to their leases (or at least

traditional rules). Beginning in the fourth year, families whose

it may not discourage them from doing so), because until the

earnings had increased would begin paying a higher TTP,

next triennial recertification, adding another person’s earnings

but the new TTP would then be capped for another 3 years,

to a house hold’s income would not necessarily increase the

allowing them to keep subsequent earnings gains until the

household’s TTP.44

next triennial recertification. Other important features include

43 The policy design team settled on 3 years for the new recertification period in the hope that, with this amount of time between recertifications (1) tenants would view it as a compelling work incentive, (2) it would substantially reduce the amount of resources that PHAs would need to devote to recalculating TTPs and rent subsidies, and (3) it would not excessively increase PHAs’ HAP expenditures prior to the next recertification. (An even longer recertification period would mean that PHAs would forego for a longer period of time the opportunity to reduce subsidies for families who increased their earnings.) 44 An exception would be a case in which a higher payment standard is applied, which can happen if the household receives a larger voucher to move to a larger unit.

A family may qualify for a larger voucher if, for example, the added spouse or partner also brings a child or another family member to the household.

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Of course, some employed tenants may lose their jobs, which

The process for computing a household’s TTP under these rules

would make it difficult for them to pay their expected TTPs if

is widely considered to be complex, cumbersome, and difficult

they were to remain unchanged. To protect against that possibil-

for tenants—and often PHA staff members—to understand,

ity, the new policy allows a family one interim recertification per

which increases the risk of errors during calculation. According

year, at which its TTP could be lowered.45 To keep the PHA

to HUD’s  Housing Choice Voucher Program Guidebook,  for

from having to make frequent adjustments for relatively small

example,

changes in income, an interim reduction is only permitted

There are two major sources of most errors in

when a household’s average income from the most recent 12

calculating annual income. Those are: 1) applicants

months falls more than 10 percent below the retrospective

and participants failing to fully disclose all income

income previously used to compute its TTP.

information; and 2) incorrect allowance calculations

Scheduling income recertifications every 3 years is also expected

often resulting from failure to obtain third party

to reduce the administrative burden and costs incurred by

verification.46 (HUD, 2001: 34)

PHAs by greatly decreasing the number of one-on-one sessions

Under the new rent policy, no deductions are used in cal-

they have with tenants—potentially by thousands of sessions

culating a family’s TTP. To partially offset the elimination of

per year in larger PHAs. The policy should also reduce the

deductions and the use of gross rather than adjusted income,

burden on families, who will spend less time having to docu-

the rate applied to that income is set at 28 percent (rather than

ment and report their incomes to the PHA if they increase their

the 30 percent applied to adjusted income under traditional

earnings. Of course, if a high proportion of families require

rules). In cases where 28 percent of gross income results in

once-per-year interim recertifications, and if many families

an estimated TTP that is less than the minimum TTP, the

request hardship adjustments (described below), the reduction

minimum TTP applies unless a family requests and receives a

in sessions may be fewer than anticipated.

hardship remedy. (See section below on safeguards to protect

Calculating TTP Based on 28 Percent of Families’

families from excessive rents.)

Gross Income

Before the PHAs and HUD agreed to adopt the 28-percent rate,

Under traditional rent rules, a voucher-holder family gen-

the study team conducted a modeling exercise using 4 years

erally pays 30 percent of its “adjusted” income (after certain

of data from certain PHAs and from HUD’s national database

deductions from its pretax income) or 10 percent of its gross

(called the Inventory Management System or Public and Indian

income, whichever is higher, for rent and utilities. Under those

Housing Information Center). The analysis compared how the

traditional rules, the amount of annual income counted toward

TTPs and net incomes of certain types of families might change

the TTP is reduced using the following deductions: $480 for

if TTPs were calculated using different percentages of family

each dependent; $400 (total) for having one or more elderly

income (20 percent, 27 percent, and 28 percent), after taking

family members or family members with disabilities; varied

into account families’ housing costs, earnings, work-related

dollar amounts for reasonable childcare expenses that enable a

expenses, taxes, and government benefits. The analysis also

family member to be employed, to actively seek employment,

showed how those different rates might affect each of the four

or to further his or her education; and varied dollar amounts

PHAs’ total Housing Assistance Payments (HAPs) on behalf

for disability assistance or medical expenses for elderly family

of families over a 4-year period and the possible effect on

members and those with disabilities.  (As previously noted,

national housing assistance expenditures. The 28-percent rate

households defined as elderly or disabled by HUD were not

was selected because a lower rate was at greater risk of being

eligible for the Rent Reform Demonstration.)

considerably more expensive than the existing policy.47

45 Each year is defined as the first 12 months, the second 12 months, and the third 12 months relative to the beginning of the 3-year period when the family’s new TTP takes effect.

46 Concerning third-party verification (that is, documentation where the source of the information is a party other than the tenant), the guidebook explains that “The tenant file must include third party verification of the following factors: Reported family annual income; the value of assets; expenses related to deductions from annual income; and other factors that affect the determination of adjusted income. If third party verification is not available, the file must document efforts to obtain it and why they were unsuccessful” (HUD, 2001: 34).

47 Further details on the modeling work are available in MDRC (2015), available on request from MDRC, or in MDRC (2016), available on request from HUD.

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Relying on gross income is one way to simplify the rent calculation

For the purposes of the Rent Reform Demonstration, all house-

process. For working-age, nondisabled families, the difference

holds already receiving childcare deductions at the time of

is most relevant when it comes to childcare deductions, which

random assignment were excluded from the study so that they

can be difficult to administer accurately.48 Although eliminat-

would not have to forfeit an existing benefit. Families who were

ing childcare deductions could represent a substantial loss to

enrolled in the study and assigned to the new rent rules group

families with high childcare costs, only a small percentage of

do not have access to the childcare deduction as long as the

households make use of the existing childcare allowance under

study continues; however, the 3-year cap on their TTPs may

traditional rent rules—fewer than 9 percent of working-age,

leave them with more resources to help cover at least some of

nondisabled voucher holders assisted by non-Moving to Work

their future childcare expenses.

agencies nationally and fewer than 11 percent in the PHAs par-

ticipating in the Rent Reform demonstration.49 In part, these

Excluding Income From Assets When Total Asset

low rates reflect the fact that many families who might have

Value Is Less Than $25,000

benefited from the deductions were not employed. It is also

Under the traditional rent policy, if a family has assets (such

possible that some employed parents relied on family members

as bank accounts, stocks, and bonds), the income from those

or friends to care for their children while they worked.

assets (such as interest or dividends) must be reported, verified,

Under the traditional rent rules, childcare deductions are based

and included in the income base used to calculate the family’s

on  anticipated  unreimbursed childcare expenses for the

TTP.50 Typically, however, few voucher holders have assets that

coming year (or until the next scheduled review of income).

produce enough income to have a meaningful effect on their

However, actual costs can be difficult to anticipate, particularly

TTPs. Under the new rent policy, if a family has assets worth

for parents who move in and out of jobs, whose childcare

less than $25,000 in total, any income generated by those assets

providers change, whose childcare needs change (for example,

is ignored for the purposes of computing the family’s TTP.

if their work shifts change), whose children make a transition

Moreover, the families are not required to document their assets

to a free preschool program, or who become eligible for an

that they attest are worth less than that amount. Ignoring assets

external childcare subsidy during the course of the year. It is

below $25,000 can reduce the administrative burden on PHAs

not clear how reliably these types of changes—some of which

and families. The change may also encourage families to try to

might result in rent increases or decreases—are reported to

increase their assets through increased earnings and savings.

PHAs between scheduled reviews of income. It would be

considerably more difficult for families to estimate anticipated

Using Income From the Last 12 Months To

childcare expenditures (and for PHAs to assess the reasonable-

Determine TTP

ness of those estimates) under the new rent policy for the entire

Under the new rent policy, a family’s TTP is calculated using

3 years until the next triennial recertification and challenging

its reported and verified income   during the 12 months just

for PHAs to monitor.

past (unless the family qualifies for a safeguard option)—the

48 As an illustration of the difficulty of childcare deductions, it is helpful to note that chapter 5 of HUD (2001) describes the childcare allowance as follows: “Reasonable child care expenses for the care of children including foster children, age 12 and younger, may be deducted from annual income if all of the following are true:

•  The care is necessary to enable a family member to work, look for work, or further his/her education (academic or vocational);

•  The expense is not reimbursed by an agency or individual outside the household; and

•  The expenses incurred to enable a family member to work do not exceed the amount earned.

When more than one family member works, the PHA must determine which family member is being enabled to work because child care is provided. This is necessary because the child care allowance cannot exceed the income that family member earns. A good general rule is to assume that the child care expenses enable the lowest paid individual to work, unless this is obviously not the case.

When a family member works and goes to school, the PHA must prorate the child care expense so that the portion of the total child care expense that is specifically related to the hours the family member works can be compared with the amount earned.

PHAs must determine whether child care costs are ‘reasonable.’ Reasonable means reasonable for the care being provided. Reasonable costs for in-home care may be very different from reasonable day-care center costs. Families may choose the type of care to be provided.”

49 This estimate is based on the study team’s calculations using 2011 HUD national data from PHAs included in the modeling exercise.

50 HUD guidelines state that when assets are $5,000 or less, the actual income from assets is counted. When assets exceed $5,000, the PHA determines income from assets as the greater of the actual income from assets or an imputed income from assets, based on a passbook savings rate established by HUD (HUD, 2001). However, as previously noted, HUD streamlining provisions issued in 2016 allowed PHAs to accept families’ certification without third-party verification that they did not own assets valued at $5,000 or more.

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Reducing Work Disincentives in the Housing Choice Voucher Program

13

“look-back” period. The average monthly income during the

from the voucher program is also excluded (for example, income

previous 12 months is multiplied by 28 percent to determine

from a spouse or other adult who died, who was incarcerated,

the TTP. The calculation excludes   any nonwage sources that

or who was removed for other reasons during the previous 12

stopped providing income by the end of that period, because

months).

the family can no longer count on them. For example, if a

Using prior income contrasts with the traditional policy of

family was receiving Temporary Assistance for Needy Families

cal culating a family’s TTP based on the annual current or

(TANF) or unemployment insurance benefits, but is no longer

anticipated   income reported by the household. (See box 2.1

receiving them, the income from those benefits would be

for a comparison of the calculation steps under the existing

excluded.51 Income from family members who were removed

Box 2.1. Illustration of Rent Calculation Under New and Existing Rent Rules

Step 1: Calculate Income

Under existing rules, Total Tenant Payment (TTP) is based on current or anticipated income for the upcoming year. The calculation allows deductions for dependents, childcare expenses, and the care of a disabled family member. Under the new policy, TTP is based on gross income from the 12 months just past (or retrospective income).

Existing rules (adjusted current/anticipated income)

Example: Sally is currently working at a job making $600 a month. This job is her only source of income. She also has two children who live with her, so she will receive a deduction from her income of $480 for each child.

Current or anticipated gross income = $600 x 12 months = $7,200

Current or anticipated adjusted income = $7,200 – (480 x 2) = $6,240

New rent policy (retrospective income)

Over the previous 12 months, Sally only had income from earnings, but her earned income fluctuated, and she had no income in some months.

Sally’s Income ($) Last Year (February 2014–January 2015)

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

Jan

0

200

500

500

400

400

300

0

0

600

600

600

Income from the last year (retrospective income) = $4,100 ($200 + $500 + $500 + $400 + $400 + $300 + $600 + $600 + $600). No deductions are allowed.

Step 2: Calculate TTP and Housing Subsidy

Under traditional rules, rent is usually based on 30 percent of

adjusted current or anticipated income. Under the new rent policy,

rent is usually based on 28 percent of gross monthly income from

the year just past. Sally’s contract rent is $800 and includes all

utilities. Her contract rent is under the payment standard. Here’s

how her TTP and housing subsidy compare under both sets of

rules.

Traditional rent (30 percent of adjusted income)

TTP = $156 (0.30 x $6,240 / 12 months)

Housing subsidy = $644 ($800 – $156 or contract rent – TTP)

New rent rules (28 percent of last year’s income)

TTP = $96 (0.28 x $4,100 / 12 months)

Housing subsidy = $704 ($800 – $96 or contract rent – TTP)

51 Imputed welfare income—that is, TANF income forfeited when a parent does not meet her or his TANF work requirement—is still counted if the family is still enrolled in TANF.

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Reducing Work Disincentives in the Housing Choice Voucher Program 14

and new rent policies.) It is difficult to predict anticipated

future years—could leave some families with too high a rent

income accurately, because individuals’ employment and other

burden, creating financial hardship for them and even putting

circumstances are likely to change over time; the traditional

them at risk of eviction.

rent policy addresses that problem by scheduling income

For these reasons, the new rent policy includes a number of

reviews annually and having families report changes in their

safeguards (discussed later in this chapter) to protect families

incomes. At the PHAs’ discretion, families can be required to

when their incomes fall. These provisions are intended to

report income increases, which would lead to higher TTPs,

accommodate the fact that some losses in household income

between annual income assessments. Families can also have

will be permanent or long lasting, whereas others will last

their TTPs lowered through interim recertifications whenever

only a short while, although it is not necessarily easy to tell in

their incomes drop. The traditional approach aims to adjust a

advance which will be which.

family’s TTP routinely as its income rises or falls, so that the

family’s contribution to its housing costs, and the government’s

housing subsidy, remain roughly in alignment with the family’s

Requiring a Minimum TTP of $50 to $150 and

changing resources and ability to pay its rent and utilities.

Direct Tenant-to-Owner Payments

The new rent policy includes a minimum TTP, but each PHA

Under the new rent policy, the goal is different, and relying on

set the level of its own minimum TTP. The Louisville Metro

anticipated  income to calculate a family’s TTP would be problem-

Housing Authority selected a $50 minimum, which is the same

atic. For one thing, the goal of the new policy is to encourage

nominal value of the minimum that all housing authorities are

increases in future earnings by not raising a family’s TTP as its

already authorized to establish under the Quality of Housing

income grows (at least for 3 years). Moreover, offering families

and Work Responsibility Act of 1998. The District of Columbia

the opportunity to lock in for 3 years a TTP based on anticipated

Housing Authority implemented a $75 minimum, which is

income would give a family an incentive to lower its income

roughly equivalent to the current inflation-adjusted value of

just before its scheduled recertification. In theory, some family

the $50 minimum permitted when that law was enacted. The

members who were working or capable of working might be

San Antonio Housing Authority introduced a $100 minimum,

tempted to quit their jobs or reduce their hours of work, or if

which is double the $50 minimum that the PHA had already

they had recently been laid off, they might avoid looking for

implemented for its general voucher population before the Rent

new jobs, so that the family’s base income used in calculating

Reform Demonstration began. (The $50 minimum will apply to

its TTP is as low as they can manage it to be. The result could

the existing rent rules group at that PHA.) The Lexington Housing

be unnecessarily low rents and unnecessarily high public

Authority implemented the highest minimum TTP— $150—

subsidies. The extent to which voucher holders would actually

which it had adopted before joining the demonstration (and

resort to such practices is unknown. In any case, using retro-

which, as a result, applies to the existing rent rules group there

spective income to calculate TTPs is intended to avoid creating

as well as the new rent rules group).

that financial incentive.

If families paying the minimum TTP early in the 3-year period

Simply relying on retrospective income, however, could put

steadily increase their incomes, they will continue to pay only   the

some families at risk of excessive rent burdens. For example, if

minimum TTP for the remainder of that period. The minimum

a family member has been working steadily but is then laid off

TTP is a substantial financial benefit for such families but also a

just before the family’s recertification to set its TTP for the next

reason not to set the minimum too low; it will remain in place

3 years, the family may not be capable of paying a TTP based

for a long time, even as families’ earnings rise, thus potentially

on its retrospective income. Furthermore, that family member

increasing the agencies’ housing subsidy expenditures (relative

may have difficulty finding a new job quickly, or finding a new

to traditional rent rules). The hardship remedies described

job that pays as much as the old one, no matter how hard the

subsequently in this chapter are intended to protect families

person tries, especially during a weak economy. Alternatively,

unable to afford the minimum TTP. It should also be noted that

a voucher holder may have recently suffered a disability, or

the inclusion of a minimum TTP will not necessarily create an

may have retired from work and moved to a lower, fixed

added rent burden for the majority of families, because most

income. Thus, simply setting a family’s TTP on the basis of its

were already paying above the minimum level before being

prior income—income that may be impossible to restore in

enrolled in the Rent Reform Demonstration.52

52 Using HUD 50058 data from December 2012, the study team estimated that about 69 percent of households in non-Moving to Work agencies paid $100 or more in rent, and 85 percent paid at least some amount to owners. (Each voucher family completes or updates a HUD 50058 form as part of its initial or recertification interview.)

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Under the traditional rent policy, the PHA pays landlords

burden   while it tries to restore its income to its prior level. It

the entire housing subsidy owed on behalf of some families,

will only be available at the beginning of the 3-year period (and

leaving families to make payments only to their utility compa-

at the time of subsequent triennial recertifications).

nies (if utilities are not included in the lease). In these cases,

At the end of the 6-month grace period, the temporary TTP expires,

families and landlords have no direct financial relationship.

and the family is switched  automatically  to the “regular” TTP

Under the new rent policy, all families are required to pay at

amount that was previously determined based on its retrospec-

least the minimum TTP amount to their landlords (unless they

tive income. No additional review of income is required or

have received a waiver of the minimum TTP as a hardship

offered—unless the family qualifies for an interim recertification

remedy). The policy is intended to mirror normal practices in

or hardship option (see the section on “Hardship Remedies”

the unsubsidized rental market and to prepare families for a

below).

responsibility they will face when they exit the voucher program.

To a voucher holder who has been working but who is no

The provision does not put families at any additional risk of

longer working or who is earning substantially less money at

not paying or underpaying their utility bills because it does

the time of recertification, the grace period offers a period of

not change the total subsidy amount that the PHA pays on

time to find new work before the regular TTP (based on prior

a family’s behalf. Rather, part of the subsidy that the agency

income) is applied. The chosen grace period was 6 months to

would normally pay a landlord is redirected to the family in

align with the normal period allowed for recipients of federal

the form of a higher utility allowance reimbursement payment

unemployment insurance benefits to find new work. Because

(UAP), allowing the family to meet its utility costs.

some tenants will have difficulty replacing lost earnings within

Including Safeguards To Protect Households

6 months—or, perhaps, ever—other protections are necessary.

From Excessive Rent

These protections are provided in the form of an interim recer-

tification or hardship remedy at the end of the grace period.

The new rent rules include several important exceptions to the

policies outlined so far to protect a family from unreasonable

Interim Recertifications. If at the end of the grace period

increases in its TTP and from the excessive rent burden (and

the family has not restored most of its income to its original

possibly eviction) that might result from basing its TTP on

prior-year level, it may request and would be granted a new

retrospective income, or from imposing the minimum TTP.

recertification.55 The new 12-month look-back period used

to calculate the family’s TTP (counting back from the end of

TTP Adjustment When a Family Member Becomes Dis-

the grace period) would take into account the more recent

abled. If a family becomes designated as a disabled household

period of low income, and the new TTP would apply until the

(based on HUD’s definition), the PHA will recalculate its TTP

next triennial recertification (unless the family qualified for

based on its current or anticipated gross income immediately,

another interim recertification or hardship remedy). One interim

without waiting for its next triennial recertification.53

recertification (not counting the grace-period TTP) is permitted

A Grace-Period TTP.  If, at the beginning of a new 3-year

per year.

period, a family’s current or anticipated   gross   monthly income

Hardship Remedies. If a family’s TTP based on its retrospec-

for the coming year is substantially less than its average gross

tive income ever exceeds 40 percent of its current or anticipated

monthly retrospective income (that is, more than 10 percent

income—at the time its TTP is initially calculated or later

less), the PHA will set a temporary TTP based on the family’s

during the 3-year period when that TTP is in effect—it may

current or anticipated income (or the minimum TTP, which-

qualify for a hardship remedy. Such a family would be deemed

ever is higher) for a full 6-month “grace period.”54 This grace

to have an  excessive rent burden and may be eligible to have its

period will temporarily protect the family from a high rent

TTP reduced. (See the following section for further details.)

53 According to the Code of Federal Regulations (24 CFR 5.403), a “disabled family means a family whose head (including co-head), spouse, or sole member is a person with a disability. It may include two or more persons with disabilities living together, or one or more persons with disabilities living with one or more live-in aides.”

54 Anticipated monthly income (without deductions) will continue to be defined and calculated according to current HUD guidelines for the voucher program. In certain cases, those guidelines use past earnings to estimate anticipated earnings. For example, if a tenant works as a school aide during the school year and has lower expected earnings during the summer months, the tenant’s earnings during the past school year and summer months are used to estimate anticipated earnings for the coming 12 months.

55 Specifically, the family would be granted a new recertification if its income from the most recent 12-month period is more than 10 percent less than the retrospective income that had been calculated at its original income review.

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Reducing Work Disincentives in the Housing Choice Voucher Program 16

The Hardship Policy in More Detail

that prompts the staff member to offer the voucher holder

the hardship request form. Families must request a hardship

The hardship policy adopted for the Rent Reform Demonstra-

remedy in writing by completing the hardship request form and

tion attempts to strike a balance between (1) minimizing or

must supply information and documentation that supports a

ameliorating harm to voucher holders resulting from the new

hardship claim.59

rent rules and (2) minimizing administrative burdens on and

costs to PHAs.

Each of the four PHAs participating in the Rent Reform Demon-

stration determined its own process for reviewing hardship

A family will be considered for a hardship remedy if at least

requests based on its normal procedures for addressing

one of the following criteria is met.

tenants’ grievances. All of them agreed that this process would

•  The family’s total monthly rent exceeds 40 percent of its

at minimum include an adequate opportunity for families to

monthly current or anticipated gross income (including

appeal if their hardship requests were denied.60

imputed welfare income).56 The situation may occur because

When a hardship request is approved, the staff responsible for

of the family’s income level at the time the TTP is calculated,

administering the hardship process determines which remedy

or because it experiences a loss of income or a rent increase.

to apply from a limited list of preapproved options. In addition

(This provision differs somewhat in Lexington.)57

to the remedies offered (in the following list), the family may

•  The family faces a risk of eviction for nonpayment of rent—

be referred to federal, state, or local assistance programs to

including utility shutoffs for nonpayment of utility bills that

apply for assistance, or to obtain verification that it is ineligible

could lead to eviction.

to receive benefits. All four PHAs offer the following options,

and the agencies’ staffs determine which to apply in any given

•  Other exceptional circumstances, as determined by the PHA

situation.

(expected to be rare).58

(1)  Allowing an additional interim recertification beyond the

The PHA’s staff will first determine whether the hardship can be

normal one-per-year option. This additional recertification

remedied by the one interim recertification permitted each year

could lower a household’s TTP (but only as low as the

(which would not reduce a family’s TTP below the minimum

minimum TTP) until the next triennial recertification.

level). If an interim recertification remains an option, that process

would be completed instead of having the family request a

(2)  Setting the household’s TTP at the minimum for up to 180

hardship remedy.

days.

When a PHA staff member enters a family’s income information

(3)  Setting the household’s TTP at 28 percent of current

into the rent-calculation software system, the system indicates

income (which may be less than the minimum TTP, except

whether the family’s TTP is greater than 40 percent of its current

in Lexington) for up to 180 days.61

or anticipated income. If it is, the system produces a warning

56 To put the amount of monthly current or anticipated gross income needed for a hardship remedy in context, it is worth noting that Supplemental Nutrition Assistance Program (SNAP) rules include excess shelter costs in calculating SNAP benefits when an applicant’s shelter costs exceed 50 percent of net income.

57 The PHA in Lexington implemented a minimum rent of $150 per month before joining the Rent Reform Demonstration. To remain consistent with its existing policy, the hardship criterion under the new rent policy that applies in Lexington specifies that a family will be eligible for a hardship waiver if its monthly TTP exceeds 40 percent of its current or anticipated gross income  and is greater than the $150 minimum rent. The hardship policy does not include a waiver of the minimum rent (unless the family becomes disabled).

58 The evaluation will identify how the PHAs interpret and apply this criterion in practice. At the time this report was written, no hardship remedies had been issued under this criterion.

59 For example, a family must provide proof of the following: loss of eligibility for a federal, state, or local assistance program; loss of employment or reduction in work hours; an eviction letter; a document indicating utilities may be shut off; or a document indicating the family is at risk of eviction. To request a hardship remedy based on the risk of eviction for nonpayment of rent or utilities, a family must provide to the PHA a notice from the landlord of nonpayment of rent and the landlord’s intent to terminate the family’s tenancy, or a notice from a utilities company warning of a utilities shutoff. PHAs may set a time limit within which they must receive a copy of this notice from the tenant (for example, no more than 10 business days from the date that the tenant received the notice from the landlord or utility company). A hardship waiver (or the process of applying for a hardship waiver) does not exempt families who claim zero income from a PHA’s regular reporting requirements for zero-income households. Such households must still provide a detailed accounting of the funds used to cover their basic costs of living (food, personal or family care necessities, and so on) every 90 to 180 days, depending on the PHA’s policy.

60 Details of each PHA’s grievance process are included in its Moving to Work Plan, which is available on its website.

61 In Lexington, a hardship remedy may include lowering the TTP to $150 for families who are paying above this amount, or to $50 for households that become disabled.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 17

(4)  Offering a “transfer voucher” to support a move to a

For example, the PHA in Washington, D.C., includes an add-on

more affordable unit (including a unit with lower utility

payment for units relying on electric heating, which is more

expenses).

expensive than gas heating. It includes another add-on for

water and sewer costs when the tenant is responsible for these

At the end of the hardship remedy period, the family’s regular

expenses.63

TTP is reinstated, and the family is not required to repay

the amount they would have paid otherwise. If the hardship

The new utility policy should result in fewer errors in calcu-

continues, the family may submit a request for an extension

lating utility allowances, primarily because it requires housing

of the hardship remedy. The hardship remedy period cannot

specialists to gather and take into account much less informa-

be scheduled to end after the family’s next scheduled triennial

tion about the characteristics of a rental unit.

recertification.

During the hardship period, when the TTP is reduced, the

Predicting the Possible Effects of the

PHA increases its payment to the landlord to cover the portion

New Rent Policy

of the rent previously paid by the family directly to the

landlord. It also notifies the landlord of the change and how

Once the HUD officials and PHAs involved at the early stage

long it is likely to last.

agreed on a preliminary approach to a new rent policy, the

study team initiated a set of statistical analyses to assess possible

A Simplified Utilities Policy

financial consequences of the new model for families and for

PHAs. The analyses examined not only how the new rules

Utility expenses are a crucial component of shelter costs

might affect how much families would pay for rent and utilities,

and calculating them is a complex issue for PHAs. For many

but also the possible effects on their overall net income (taking

voucher holders, some or all of those expenses are part of the

into consideration their earnings, tax obligations, Earned

contract rent paid to the landlord, but for others, utilities are

Income Tax Credits, welfare benefits, Supplemental Nutrition

a separate cost. Under traditional federal rules, PHAs help to

Assistance Program benefits, childcare costs, and transportation

cover these expenses through a “utility allowance.”

costs, in addition to their housing assistance) using the Urban

PHAs incur considerable administrative costs to review and,

Institute’s Net Income Change Calculator for a set of hypo-

if necessary, update their utility-allowance tables annually

thetical families (for example, families where the number and

(through market surveys and analyses that take into consider-

ages of children varied). It yielded estimates of the TTP, “family

ation the type of dwelling), and to apply them in determining

share” (as defined by HUD), and total housing subsidies under

each family’s rent. The process is widely viewed as complicated

the different options that were being considered for the new

and error-prone. The PHAs in the Rent Reform Demonstration

rent policy. For PHAs, the analysis focused on the possible ef-

therefore agreed that the new rent policy should include a

fects on their housing-subsidy costs. The study team estimated

more streamlined (and less error prone) approach to calculat-

these effects by modeling the potential new rules using 4 years

ing the utilities component of a family’s TTP.62

of real data from potential study PHAs and national data from

HUD. In both sets of analyses, different assumptions were made

The simplified utilities policy adopted for the Rent Reform

regarding what percentage-of-income rate would be applied to

Demonstration is based on an approach previously developed

gross retrospective income, what minimum TTP would be set,

by the District of Columbia Housing Authority. Using local

how utilities would be calculated, and how much wage income

area utility rates, each PHA in the demonstration specified

the families would receive.64

a standardized utilities  base rate that varied only according

to the size of the voucher (that is, the number of bedrooms

The results helped to reveal tradeoffs among different options

covered by a family’s voucher). It then specified a few “add-on”

and informed the final specifications for the new rent model.

amounts for units that were dependent on more expensive

Overall, the results showed that under the new rent rules (with

utilities. The particular add-ons varied from agency to agency

the percentage-of-income rate, minimum TTP, and utilities

depending on the types of utilities more common in the area.

policy that were ultimately adopted), when families increased

62 The study team considered several different utility-allowance policies. This report only discusses the utilities policy adopted in the demonstration. For more information about other options considered, see MDRC (2015), available from MDRC on request.

63 The Washington, D.C. PHA estimated that its new approach cost the agency about the same as the existing utility allowances.

64 For full details on the data, methods, and results of this modeling exercise, see MDRC (2015), available from MDRC on request.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 18

their incomes from earnings (especially through full-time

expenditures for the first 4 years of the policy could be some what

employment), their net household incomes were likely to

higher under the new rent policy compared with the traditional

increase  more than they would under traditional rent rules.

policy. However, if the new policy has a modest employment

These increases would be achieved primarily by holding

impact, those subsidy expenditures may reach (or come very

families’ TTPs constant in the face of earnings gains during

close to) a “break-even” level, achieving the cost-neutrality goal

the 3 years before their next triennial recertification. In other

of the new policy.

words, under the new policy, families could keep more of their

Of course, given data limitations and the number of assump-

increased earnings rather than having to pay more toward their

tions required, it is difficult to predict with certainty from this

rent and utilities during that period.

statistical modeling exercise what will really happen under

The analysis also explored more deeply how PHAs’ subsidy ex-

the new rent policy. The exercise was helpful to the policy

penditures might change over time under the new rent policy

designers, however, because it illustrated possible tradeoffs

at the national level and for selected PHAs.65 It predicted that

among different options considered for the demonstration. The

the new rent policy would cause the agencies’ total housing-

randomized trial now under way will provide more definitive

subsidy expenditures (that is, HAPs) to be higher during the

evidence on how the new policy affects families and PHAs.

first 3 years than they would be under traditional rent rules.

This increased expenditure occurs largely because families

Conclusion

who increased their earnings, and who would therefore have

had their subsidies reduced under traditional rules, would

Designing the new rent policy for the Rent Reform Demonstra-

instead receive the same level of subsidy until their triennial

tion was a challenging process, because the policy sought to

recertifications took place. The analysis predicted that in year 4,

balance multiple, sometimes competing, objectives. Moreover,

housing-subsidy expenditures under the new rent policy

the process had to contend with a variety of perspectives on

would be somewhat lower than under the traditional policy,

how those objectives could be achieved. It is thus noteworthy

even assuming that the new policy did  not  have a positive effect

that, despite some differences in perspectives, all four PHAs

on families’ earnings. This prediction reflects the fact that, on

and HUD reached a consensus on the core elements of the new

average, TTPs recalculated in year 4 would be based on higher

policy. Some variation does exist among the four agencies re-

average earnings because of normal increases in work and

garding some features of the model, particularly the minimum

earnings over time (that is, increases that would have occurred

TTP threshold and procedures for reviewing and approving

even in the absence of the new policy). It is at the point of that

hardship remedies. For the most part, however, all of the

triennial recertification that PHAs would begin to recoup the

agencies are implementing the same model. This consistency

housing-subsidy reductions they forwent during the previous

will allow the evaluation to assess how well that model achieves

3 years, when TTPs were capped.

the demonstration’s various objectives when operated under

The modeling exercise also showed that in the absence of

different local conditions.

an employment impact, the  cumulative housing-subsidy

65 The national estimates are based on several years of national housing-subsidy expenditure data, obtained from HUD, covering all non-Moving to Work housing authorities in the country. The individual PHA estimates are based on similar housing-subsidy expenditure data, covering several years from a number of Moving to Work PHAs that were being considered for the Rent Reform Demonstration, which included the four agencies that finally joined the study.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 19

Chapter 3. Evaluation Approach

The Rent Reform demonstration includes a rigorous research

technical assistance, monitoring efforts, and structured imple-

design and comprehensive evaluation agenda. It uses a ran-

mentation research; (2) quantitative data from the PHAs and

domized controlled trial, one of the most rigorous methods for

other administrative agencies; and (3) relevant PHA documents

determining the effectiveness of an intervention (Berk, 2005;

and reports.

Bloom, 2006). The evaluation includes a careful assessment of

the implementation, impacts, and costs of the new policy, and

Research Design and Data Sources

it examines results from the perspective of the public housing

agencies (PHAs) implementing the new policy and the voucher

The Rent Reform Demonstration is structured around a two-

holders. It uses a range of methods and data sources to support

group randomized controlled trial. The random assignment

the comprehensive research agenda.66

process was incorporated into the regular recertification process

From the perspective of PHAs—and HUD and policymakers—

through which PHA staff members normally review whether

one of the primary goals of the new rent policy is to reduce the

families continue to meet the voucher program’s income

burden and costs incurred in administering the rental subsidy

require ments and other requirements. During this process, staff

system. The evaluation will thus assess the extent to which

members recalculated how much each family was expected to

the new rent rules simplify the administration of housing

contribute to its rent and utilities and determined how much

subsidies, and whether they do so without placing undue

of a housing subsidy it would receive. Eligible voucher holders

housing cost burdens on families. Simplified rules may result in

who were scheduled for a recertification between February

ad ministrative cost savings that could help PHAs stretch their

2015 and November 2015 were enrolled in the study.67 They

budgets to serve more families in need of housing assistance.

were randomly assigned either to a program group that was

PHAs may also achieve savings in average housing-subsidy ex-

subject to the new rent policy or to a control group that remained

penditures per family, although any such savings are likely to

subject to the existing rent rules. (Tables and exhibits in this

occur after the initial 3-year recertification ends and probably

report refer to the study groups as the  new rent rules group and

only if the new rent policy increases families’ earnings.

the  existing rent rules group, respectively.) The recomputed total

tenant payment (TTP) obligations and housing subsidies for

For families, the critical evaluation question is whether the

families in each research group took effect between June 2015

new rent policy increases their labor-force participation rates

and March 2016. (The exact dates varied among families and

and incomes, reduces their reliance on housing subsidies and

the four PHAs, as shown in chapter 4.)

other government benefits, and, in general, helps them become

more self-sufficient. It is also critical to determine whether

The power of this research design comes from the fact that,

the new policy can achieve these goals while protecting those

with an adequate sample size, random assignment ensures that

families who cannot increase their wage incomes from financial

the intervention and control groups will be similar in their

harm and material hardship, as the new rent policy’s hardship

distributions of observed and unobserved characteristics when

provisions and other safeguards are intended to do.

the study begins. Thus, differences between the two groups

that emerge later on can be attributed with confidence to the

This chapter provides a broad overview of the breadth of the

intervention.

evaluation and outlines the topics that it will explore, including

those that will be examined in its later years (that is, outcomes

The effects of the new rent policy will therefore be determined

that the new rent policy is unlikely to affect early on, but may

by comparing over time the new rent rules group’s labor-market

affect in the longer term). The chapter also introduces the

outcomes and other outcomes with the outcomes of the existing

various data sources at the core of this evaluation: (1) qualitative

rent rules group. The current evaluation work plan and budget

data gathered from observations conducted as part of ongoing

will allow for a followup period covering approximately 2.5 years

66 For a more detailed discussion of the evaluation scope and methods, see MDRC (2016), available on request from HUD.

67 Under traditional HUD rules, these recertifications were held annually. Before joining the Rent Reform Demonstration, the District of Columbia Housing Authority had used its Moving to Work authority to switch to a biennial recertification schedule for working-age, nondisabled families. The other three PHAs in the demonstration were on an annual schedule.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 20

for the full sample, and a longer period for participants who

Research Topics

enrolled in the study early on. (Chapter 4 describes the study

eligibility criteria, enrollment, and random assignment process

The evaluation includes three main study components: imple-

in more detail.)

mentation and process research, impact research, and a cost study.

The evaluation of the new rent policy will use a combination

Implementation and Process Research

of quantitative and qualitative data sources: a baseline survey

administered at the time participants enrolled in the study;

The implementation study will document how each PHA

PHA and HUD administrative records (that is, data collected in

operates the new rent policy. The evaluation team is particularly

the normal course of administering PHA and HUD programs);

interested in understanding how the processes of calculating

PHA financial data; unemployment insurance wage records;

retrospective income, establishing utility allowances, conduct-

administrative records on Temporary Assistance for Needy

ing recertifications, and administering the hardship policy and

Families (TANF) and Supplemental Nutrition Assistance

other safeguards are operated in practice. The team also aims to

Program (SNAP) benefits; administrative records on stays in

assess the experiences, understanding, and perspectives of PHA

homeless shelters; onsite observations of PHA practices; and

staff members and voucher holders. This study component

indepth interviews with PHA staff members and tenants. Box

will use PHA administrative records to examine how the new

3.1 describes these data sources in greater detail.

rent policy affects families’ TTPs and housing subsidies at the

beginning of the new policy and throughout the demonstration,

and to what degree families use the policy’s various safeguards.

Box 3.1. Data Sources for the Evaluation

•  A baseline survey.  A voluntary survey completed by study

of PHAs not participating in the demonstration, and to explore

participants with PHA staff members when they enrolled

the possible effects of the new rent rules on the national

in the study, the baseline survey provides information on

population of voucher holders.

a broad range of demographics and other characteristics,

including family composition, income, employment status,

•  PHA financial data.  Data obtained from each PHA’s financial

perceived barriers to employment, and education level. The

statements and other administrative records, including

survey includes items that have been used in other national

HUD’s national database mentioned previously, its Financial

surveys or similar baseline surveys in other program evalu-

Assessment System, and PHAs’ own databases, will be used

ations. It provides information generally not available in the

to assess whether the new rent policy is more cost-efficient to

agency administrative records. This report uses the baseline

administer than the existing rent policy. It will also attempt to

survey data to describe the characteristics of the families in

identify which aspects of the new rent policy may be leading

the demonstration when they enrolled in the study.1

to or offsetting any cost savings.

•  PHA records.  Each voucher family completes or updates

•  Implementation and process data.  As part of the implemen-

a HUD 50058 form as part of its initial or recertification

tation and process study, the study team will interview PHA

interview. The study team is collecting this information for all

managers overseeing the new rent policy, housing specialists

study participants, along with historic HUD 50058 data, for

recertifying households under the new rent rules, and housing

one to three years before study enrollment, depending on the

specialists working with families subject to the current rules.

PHA. These data (along with the baseline survey data) are

The team will document families’ initial recertification experi-

used to describe the characteristics of families participating

ences during an early round of visits; a later round will focus

in the study, their incomes and income sources, their TTP

on interim recertifications (in the period following the initial

amounts, their subsidy levels, and their monthly rent pay-

recertification) and the triennial recertification. The evaluation

ments to landlords. The same data source will provide similar

also includes two rounds of structured interviews with a few

information over the followup period. The study team is also

tenants at each PHA to learn about their experiences with and

collecting additional data from each PHA’s internal reporting

perspectives on the new rent policy, including any hardships

system that are not available in the 50058 data files, such

that appear to be created by the new policy.

as information on total housing-subsidy payments, families’

actual TTPs, and the reasons families are terminated from

•  Wage records.  Employment and earnings data, crucial for the

the voucher program. For families who are subject to the

demonstration, will be obtained from the National Directory of

new rent policy, the study team is collecting information

New Hires, a national database of wage and employment in-

on grace-period TTPs, interim recertifications, hardship

formation that was established by the Personal Responsibility

remedies, and retrospective income.

and Work Opportunity Reconciliation Act of 1996.

•  HUD data.  The study team is analyzing data from HUD’s

•  Public-benefits data.  In addition to housing and wage

national database (called the Inventory Management System/

records, the study team will obtain data on other public

Public and Indian Housing Information Center) to describe

benefits, such as TANF cash assistance and SNAP. Data on

the national population of families receiving vouchers, to

homelessness (stays in homeless shelters) will be collected

obtain information on families who move to the jurisdictions

from the Homelessness Management Information System.

1 A copy of the baseline survey is included in supplementary Appendix G of this report, which is available at huduser.gov and www.mdrc.org.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 21

The Alternative Rent Model in Practice. The four PHAs par-

experience substantial drops in income may have the most

ticipating in the Rent Reform Demonstration are all imple menting

difficulty affording the higher minimum TTP, putting them at

the same core features of the new rent model, but as discussed

increased risk of eviction or having their utilities shut off. The

in earlier chapters, some features of the model, such as the

hardship remedies are intended to offer them protection.

level of the minimum TTP, vary among the PHAs. Moreover,

Other families may find that it is easier to meet their housing

the agencies may have different operating experiences because

expenses under the new rent policy, particularly if the new

of differences in their administrative systems, organizational

policy leads them to increase their earnings over time. The

capabilities, and local housing markets. Consequently, it will

extended recertification period, which can hold their TTPs

be important to compare the experiences of the PHAs across

constant for up to 3 years, may help many families increase

locations and over time.

their disposable incomes, reducing their risk of falling behind

Three types of data will shed light on how each agency puts the

on rent and making it easier for them to pay their full utility

new rent policy into practice: (1) observations from technical-

bills. Overall, only a small proportion of families is likely to

assistance monitoring efforts, (2) structured implementation

experience large increases in their share of rent payments and

research, and (3) quantitative data from the PHAs on the recerti-

utility payments under the new rent policy (relative to existing

fication process, including the number of recertifications and

rent rules) during the 3-year recertification period, and the in-

hardship exemptions that take place. The process analysis will

terim recertification and hardship policies are intended to help

describe and analyze how each PHA puts the features of the

those who do. TTPs are expected to increase after the triennial

policy into practice, and will explore staff perspectives on how

recertification, reflecting increases in household income during

well they are functioning. In addition, it will document PHAs’

the previous 3 years. It will be important to assess the use of the

efforts to help tenants understand how the new system creates

various safeguards after that recertification as well.

a stronger financial incentive for them to increase their earnings,

If the new rent policy leads to a sizable number of hardship

and will investigate whether staff members and tenants find the

cases, it will increase the amount of administrative work PHAs

new system to be more transparent and easier to comprehend.

have to do and reduce any administrative cost savings that arise

To assess whether the new rent rules are simpler and easier

from other aspects of the new policy. As described below, the

to administer, the analysis will compare PHAs’ experiences

evaluation will assess the new policy’s impacts on the number

operating the new policy with their experiences operating the

of hardship cases. It will also assess the costs associated with

existing policy. Specifically, the analysis will compare how

administering the new hardship policy.

much work it takes under the existing policy and the new policy

How Well Families Understand the Work Incentives and

for PHAs to verify families’ incomes and to calculate TTP amounts,

Safeguards in the New Rules. How well families understand

utility allowances, and utility-allowance payments. It will also

the new rent rules will in large part dictate whether those rules

compare how often PHAs undertake interim recertifications

influence their labor-market behaviors while protecting them

and hardship-related actions for the new and existing rent

from excessive rent burdens. The study team will conduct

rules groups.

indepth interviews with tenants at each of the PHAs to explore

The study team hypothesized that the new, simplified system

their awareness and comprehension of the triennial recertifica-

will reduce the number of errors PHAs make in computing

tion feature, the minimum TTP requirements, the new interim

TTP and subsidy amounts (including those made in the

recertification and hardship policies, and the simplified utilities

calculation of utility allowances), the number of disputes that

policy. These interviews will provide insights into how well

arise with families over subsidy amounts, and possibly even

families understand the new policy and their responses to its

the frequency and complexity of Inspector General investi-

incentives. They will also reveal why families do or do not seek

gations.68 The evaluation will assess whether the new policy

hardship remedies when their incomes fall. The interviews will

yields such changes.

explore whether tenants view the new rent policy as more fair

and transparent than the existing policy and which features of

Rent Burden and the Use of the Hardship System. The

the new rent rules they find most or least appealing.

new rent policy is likely to increase the rent burden some

families experience and reduce it for others. In particular,

These topics will be further explored in interviews with PHA

larger families, families with lower incomes, and families who

housing specialists. The specialists will be asked how well

68 Inspector General investigations look into possible violations in the administration of HUD programs and activities, or misconduct on the part of HUD employees or the recipients of HUD funds.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 22

families seem to understand the new rent policies, what

The evaluation’s process research will document PHAs’ existing

aspects of those policies are the most difficult to communicate

rent rules, including any changes in those rules that may affect

effectively, the ways the new rent rules are easier than existing

the existing rent rules group, especially in light of the recently

rent rules for staff members and families to understand, and

passed Housing Opportunity Through Modernization Act of

the ways staff members communicate with families about the

2016. That information will reveal the larger policy context at

enhanced work incentives and safeguards of the new rent policy.

each PHA where the new rent policy is tested.

Effects on Landlord Responses and Tenant-Landlord Rela-

Service Context and Other Local Conditions. The demon-

tionships. Under the existing rent rules, for some families, the

stration PHAs differ in some ways that are not directly related to

PHA pays the entire housing subsidy to the landlord, and the

rent policies but that may influence the effects of the new rent

family’s TTP is used entirely to pay for utilities not included in

policy. For example, voucher holders in some cities might have

the lease. In these cases, tenants and landlords have no direct

greater access to employment-related services than those in oth-

financial relationships. Under the new rent policy, all families

er cities. Some housing authorities are located in environments

are required to pay at least the minimum TTP amount to their

with many such public services available, whereas others are

landlords directly (unless the minimum TTP has been waived

located in areas with service deficits. The new rent policy might

under a hardship remedy). This policy is intended to mirror

be more effective in a community with lots of employment

normal practices in the unsubsidized rental market and to help

services, because families who are inspired by the new policy’s

prepare families for a responsibility they will face when they

stronger incentives to work may have more opportunities to get

exit the voucher system.

help through job-search or training programs, for example.

The evaluation will examine the extent to which families have

It is also possible that the new rent policy will have larger

difficulty meeting their obligations to landlords, and whether

impacts in areas where jobs are more plentiful and possibly

they are having more disputes or fewer disputes with their land-

where affordable rental housing is more available. People may

lords over rent or property maintenance. The evaluation will

be more willing to act on the incentive to increase earnings if

try to assess landlord-tenant relationships through interviews

they are more optimistic about being able to find jobs (because

with tenants and, because landlords who are dissatisfied are likely

of a stronger job market), and if they are less fearful about

to have communicated that fact to the PHAs, with PHA staff.

finding affordable housing should they earn their way off their

housing subsidies. (Voucher holders lose their eligibility for the

The Control Context: PHAs’ Current Rent Policies. The

benefit should their incomes rise above a certain level.)

current rent policy at each of the participating PHAs will serve

as the counterfactual condition or control context against

Ideally, the new rent policy would produce its hoped-for effects

which the new rent policy will be assessed. These existing rent

regardless of local contexts, in diverse conditions. However, if

policies largely reflect HUD’s traditional rent policy, operated

results vary among the PHAs, it will be important to consider

by non-Moving to Work agencies across the country. As

whether local context might be part of the reason. Although it

described earlier, however, the participating PHAs had already

may not be possible to answer this question definitively with so

implemented some changes from HUD’s traditional policy

few PHAs in the study, and with limited evaluation resources

before they joined the demonstration, and the evaluation

available to document their local contexts, it may be possible to

will need to take those changes into account in interpreting

observe patterns among the PHAs that offer suggestive insights.

the impact findings. For example, the PHA in Washington,

The evaluation will explore the issue of local context affecting

D.C., had already instituted a simplified utilities policy and

results by drawing on information obtained during site visits;

had also adopted a biennial recertification policy. (Under this

in interviews with PHA staff members; and from published data

policy, a working-age or nondisabled family who increased its

sources on labor-market conditions, poverty, and the availability

anticipated income from the same income source by no more

of low-cost housing in the metropolitan areas served by the four

than $10,000 per year would not have its TTP recalculated

PHAs.

until its next biennial recertification. The policy was changed

in 2016 to eliminate all income-reporting requirements during

The Impact Analysis

the 2-year period.) Existing rent rules group families in San

The impact analysis will test whether the new rent policy led

Antonio face a $50 minimum TTP, those in Lexington face a

families to increase their earned incomes, and whether this

$150 minimum TTP, and those in Washington and Louisville

increase was achieved without causing a sustained increase in

have no minimum TTP. Thus, the precise nature of the control

PHAs’ housing-subsidy payments (in fact, ideally while achieving

condition differs to some extent among the PHAs.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 23

some decrease in those expenditures). Put simply, it will

implementation factors may be generating that variation. Even

deter mine whether the families randomly assigned to the new

though it would be impossible to identify those causes definitively,

rent rules group had better outcomes than those assigned to

it may be possible to generate empirically grounded hypotheses

the existing rent rules group. For example—

about the possible causes and to rule out certain explanations.

•  Do families in the new rent rules group achieve higher rates

The pooled impact estimates will provide a summary assessment

of employment and earnings than those in the existing rent

of the overall effects of operating the new rent policy under a

rules group?

variety of conditions, as would be the case if it were expanded

to a national scale. The larger sample size for the pooled analysis

•  Do families in the new rent rules group rely less on housing

will increase the precision of the impact estimates, which will

subsidies and other government benefits (such as welfare

become especially relevant when estimating the policy’s effects

and food stamps) than those in the existing rent rules group?

on subgroups of the full sample. The evaluation will seek to

•  Is the new rent policy able to generate positive labor-market

determine whether the new rent policy has more pronounced

outcomes while protecting families from financial harm

or different effects on: (1) subgroups of tenants who were and

and material hardship (such as excess rent burdens and

who were not working at the time of random assignment,

homelessness)?69

(2) tenants who had more and less work history at that time,

(3) households headed by single parents who were also not

•  Does the new rent policy have different effects on different

employed (with no other adult in the household) as opposed

types of voucher holders?

to other types of families, (4) families who were and were not

The basic estimation strategy used to assess the impacts of the

receiving SNAP benefits, and (5) families who were and were

new rent policy is analogous to the method researchers have

not receiving TANF benefits.

used in many social experiments over the last few decades

to generate credible results. The analysis will compare the

The Cost Study

average outcomes of the new and existing rent rules groups,

The cost analysis will test two core assumptions of the Rent

using regression adjustments to increase the precision of the

Reform Demonstration. First, if the new rent rules simplify the

statistical estimates.70

process of determining families’ TTPs and housing subsidies,

The impact evaluation will assess the effects of the alternative

and reduce the amount of engagement between PHA staff

rent policy on tenants’ lives and on outcomes that can be orga-

members and families, they may reduce PHAs’ costs of admin-

nized into a few main clusters: work behaviors (employment

istering the rent subsidy system. Second, if the new rent policy

and earnings), household income and rent burden, homeless-

increases families’ earnings substantially and causes average

ness, evictions, housing subsidies, and other public benefits.

household subsidy levels (eventually) to fall, and if it hastens

The evaluation will assess effects for all PHAs combined

exits from the voucher system by boosting employment, then

(pooling the study samples from the four PHAs) and for each

PHAs may eventually save on their average Housing Assistance

PHA separately; the sample sizes for the study PHAs provide

Payment expenditures per family.

adequate statistical power to produce policy-relevant impact

Administrative Reforms and Housing Authority Cost

estimates for each PHA, as well as for the pooled sample (that

Savings. A primary goal of the new rent policy is to reduce the

is, the sample that includes the study participants from all four

burden and costs of administering the Housing Choice Voucher

PHAs combined).

(HCV) program by reducing the time and effort staff members

If the results show that the model’s impacts are positive and

have to put into meeting with tenants, calculating household

consistent across the PHAs, it would provide evidence that the

TTPs, and operating other aspects of the rent policy. The cost

model can succeed in a variety of locations and for different

analysis will use PHA financial and staffing data to assess whether

types of tenants. Alternatively, if large and statistically significant

the new rent policy is more cost-effective to administer than

variations emerge in the impacts when comparing PHAs, it will

the existing rent policy. For the cost analysis, the study team

be important to try to understand what local conditions or

will estimate the labor costs and relevant direct costs associated

69 The evaluation does not include a followup survey, which limits the extent to which it can measure the new rent policy’s effects on material hardships and other types of family outcomes not available in administrative records.

70 In making these adjustments, an outcome, such as “employed” or “moved,” is regressed on an indicator for intervention group status and a range of background characteristics.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 24

with meeting with tenants and calculating families’ TTPs, and

PHAs’ Use of Administrative or Housing-Subsidy Savings.

other activities involved in operating the rent system. The team

If PHAs do achieve administrative or housing-subsidy savings,

will then compare them with the costs of operating the existing

what will they do with those extra resources? They may use the

rent system (measured in similar ways and over the same time

money to increase the number of vouchers they make available,

period, within the limits of available data) to determine the net

or to avoid having to reduce the number of vouchers they make

costs or savings attributable to the new rent policy.71 Attempt-

available if federal funding for the voucher program is cut.

ing to identify which aspects of the policy may be leading to

They may instead use the extra resources to accomplish some

or offsetting any savings (but in a less detailed way) is another

other goals. During implementation and process research, the

goal of the cost analysis.

study team will explore how the agencies use such savings by

interviewing agency staff members and examining pertinent

Effects on Housing-Subsidy Expenditures. The new rent

fiscal and administrative documents.

policy is intended to reduce the length of time during which

families receive vouchers, the average subsidy amount per

Possible Effects on PHAs’ Finances Nationwide. Once the

household, or both, by encouraging tenants to increase their

effects of the new rent policy are determined for the four PHAs

employment and earnings (primarily through the incentive

participating in the Rent Reform Demonstration, it may become

created by the delayed recertification period). If the new policy

important to consider how much it may cost the federal govern-

does reduce families’ reliance on housing subsidies, that effect

ment to operate the new policy nationwide.  The study team

is unlikely to occur during the 3-year extended recertification

can adapt the statistical modeling exercise that it conducted

period (unless tenants in the new rent rules group exit the

when designing the new rent rules to shed some light on that

subsidy system more quickly within that period, which is

question. As discussed in chapter 2, the model estimated the

not anticipated). Because increases in tenants’ earnings will

new rent policy’s potential effects on housing-subsidy expen-

not increase their TTPs, any savings in housing-subsidy

ditures nationally and for the four PHAs in the demonstration.

expenditures are unlikely to occur until after the next triennial

To estimate what the effects of the new policy would be

recertification (that is, in year 4). At that point, tenants who

nationwide, the evaluation will adapt that statistical model to

have increased their earnings will have their TTPs reset at high-

incorporate estimates of the policy’s actual impacts on families’

er levels, allowing PHAs to recoup the extra housing-subsidy

incomes and housing subsidies for different types of households

expenditures they are likely to have made during the previous

in the random assignment experiment, and refine the assump-

3 years. It is also possible that, by year 4, a higher proportion

tions used in the model about interim recertifications, hardship

of tenants under the new rent policy will have increased their

remedies, utility costs, and other factors.

earnings to the point that they are no longer eligible for the

voucher program than the proportion that would normally

Conclusion

have done so under the existing rent policy, further contribut-

ing to housing-subsidy savings.

Chapter 1 outlined a number of long-standing criticisms of

On the other hand, the new rent policy could also have little

HUD’s traditional rent policy for recipients of HCVs. The Rent

or no impact on tenants’ earnings. Tenants who do earn more

Reform Demonstration’s new rent policy attempts to address

during the 3-year period before their next recertification

some of those criticisms. It aims to simplify the rent subsidy

interviews might have done so anyway. The boost to their

system to reduce administrative burdens and costs. It also

net incomes from the new policy may improve these families’

aims to support families’ efforts to work by allowing them to

standards of living, but meanwhile the PHA would have paid

keep any earnings increases they are able to achieve during a

more in subsidies than it would have done under existing rent

3-year period (rather than pay more for rent and utilities). At

rules, and could not expect to recoup any additional savings

the same time, the policy is designed to protect families from

when the families’ TTPs reset at recertification. The minimum

excessive rent burdens if they cannot work or if they suffer a

TTP and the elimination of deductions and allowances in the

loss in income. The new policy is also expected to be roughly

new rules are intended to counter these potential losses to

cost-neutral over time, relative to the traditional policy. The

some extent.

evaluation strategy described in this chapter will assess how

well the new policy achieves these ambitious objectives.

71 The evaluation does not include a detailed time-use study, which will limit the precision with which it can determine whether the new rent rules alter how staff members allocate their time.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 25

Chapter 4. Characteristics of Families Enrolled

in the Study

To permit a rigorous evaluation of the new rent policy, each

at the national level and provides an opportunity to test the

of the four public housing agencies (PHAs) participating in

new rent policy for different types of voucher holders and in

the Rent Reform Demonstration agreed to modify its normal

different contexts.

processes for determining whether recipients of Housing Choice

This chapter begins by describing the criteria that families had

Vouchers (HCVs) remained eligible for the program and for

to meet in order to be eligible for the demonstration, and the

recalculating the housing subsidies they would receive.72

procedures the PHAs followed to enroll families into the study.

Between February and November 2015, voucher holders who

The chapter then compares the study families with the relevant

were approaching their redetermination (or “recertification”)

national population of working-age, nondisabled voucher

dates and who met the eligibility criteria for the evaluation

holders, using administrative records data available from PHAs

were enrolled in the study. They were randomly assigned

and HUD. It next explores the ways the four study PHAs differ

either to a program group that was subject to the new rent pol-

from each other, as shown in these data. Finally, it presents the

icy or to a control group that remained subject to the existing

results of a baseline survey administered to families as part of

rent rules. As explained in chapter 3, the effects of the new

the study enrollment process. These survey data provide a fuller

rent policy will be determined by comparing the labor- market

picture of the families participating in the study.

outcomes and other outcomes of the two research groups over

a followup period lasting at least 2.5 years for the full sample

(and longer for families who enrolled in the study early on).

The Eligible Sample

Ideally, the evaluation of a new rent policy would be tested on

Because it was important to test whether the new rent policy

a nationally representative sample of the HCV population. It

would improve tenants’ employment and earnings, families had

was not possible to do so, of course, because only Moving to

to meet the following core criteria to be eligible for the Rent

Work PHAs were eligible to participate in the demonstration,

Reform Demonstration.

and only a small number of those agencies could be included.

Still, the selection process was intended to recruit agencies that

•  A family could not be classified as an  elderly household and

would yield a sample of voucher holders who broadly reflected

could not become elderly (age 62, according to HUD’s

the relevant national population.

definition), over the course of the study. In other words, the

head of household, spouse, and co-head had to be 56 years

This goal was largely achieved. As this chapter shows, families

old or younger at the time of study enrollment.

in the demonstration PHAs, taken as a whole, have charac-

teristics that, although not strictly representative, are roughly

•  A family could not be defined as a  disabled household (that is, similar to those of the national population of working-age,

one in which the head, co-head, or spouse is disabled).

nondisabled voucher holders. Among the most important dif-

The study also excluded a number of other types of voucher

ferences are that the study sample appears to have somewhat

holders (see box 4.1 for the complete list of reasons for exclusion).

lower incomes and to be somewhat less likely to be working.

For example, some families were not eligible because they held

It is also important to note that some important differences are

special vouchers governed by some regulations that did not apply

evident among study PHAs, such as in families’ employment

to the vast majority of regular voucher holders. Families who

rates, rates of receiving welfare, household compositions, races

were already participating in HUD’s Family Self- Sufficiency (FSS)

and ethnicities, rates of experiencing certain material hardships,

and homeownership programs were also excluded, because

and other characteristics. The variation in this demonstration

the new rent rules would change some of the terms that those

captures some of the diversity that can be found across PHAs

families had agreed to when they enrolled in those programs.73

72 See chapter 12 of HUD (2001) for guidelines on the recertification process.

73 The FSS program is a voluntary case-management and asset-building program that provides incentives to work. It enables families to increase their earnings and build savings while paying more in rent—the increase in a family’s share of rent is deposited into an interest-bearing “escrow account” maintained by the housing authority and paid to the participant when he or she completes the program. Under the new rent rules for the Rent Reform Demonstration, families are not required to report changes in their earned incomes, which would limit their ability to build escrow savings during the first 3-year period when TTP increases are capped. The Homeownership program enables a family to use its housing subsidy for a mortgage payment so that it can buy a home rather than rent a unit.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 26

In addition, the demonstration excluded families who were

currently receiving childcare deductions so that those families

Box 4.1. Sample Eligibility Criteria at

would not be forced to give up deductions they had come

the Time of Random Assignment

to rely on (childcare deductions are not a feature of the new

policy). Most of the remaining families who were scheduled

•  The household had a voucher administered under the

Moving to Work program. Veteran Affairs Supportive

for a recertification during the study’s enrollment period were

Housing, Moderate Rehabilitation, and Shelter Plus Care

selected for the study.74

vouchers were excluded.

•  All members of the household had legal working status in

the United States.

Enrolling the Sample

•  The household was not classified as disabled.

The procedures for enrolling families into the study sample

•  The household was not classified as elderly, and the

for the Rent Reform Demonstration were incorporated into the

household would not become elderly over the course of

the study. In other words, the head of household, spouse,

regular recertification process used by each of the four PHAs,

and co-head were 56 years old or younger.

with some adaptations. Once the study’s eligibility criteria were

•  The household’s voucher was not an Enhanced Voucher

set, the PHAs and the study team identified qualifying families

or a Project-Based Voucher.

who were being scheduled for upcoming recertifications. Ran-

•  The household was not participating in the Homeowner-

dom assignment procedures were then used to allocate those

ship program.

families either to a new rent rules group that would be subject

•  The household was not participating in the Family

to the new policy for the duration of the demonstration, or to

Self-Sufficiency Program.

an existing rent rules group (the study’s control group) that

•  The household was not receiving a childcare deduction.

would continue to be subject to the traditional rent rules for

•  The household had not moved to another PHA’s jurisdic-

voucher holders. With the exception of Louisville, enrollment

tion. Households are allowed to move to another jurisdic-

in the demonstration was mandatory. Families had their total

tion, and the new PHA that is responsible for vouchers in

that new jurisdiction will do the household’s scheduled

tenant payments (TTPs) for rent and utilities and their housing

income reviews and calculate rent according to that PHA’s

subsidy amounts calculated according to the rules of the rent

rules. In this case, a household that moved to another

jurisdiction would not have rent calculated according to

policy group to which they were assigned, and remained

the new rent rules.

subject to all of the rent rules applicable to their group for the

•  The household was not participating in any of the PHA’s

duration of the demonstration. Although families could not opt

special programs with partner agencies.

out of the rent policy group to which they were assigned, they

•  The household did not have a zero housing subsidy.

could refuse to allow their individually identified data to be

Typically, a household can hold on to its voucher for six

shared with the researchers. However, only 14 families—or 0.2

months after achieving an income level high enough that

the PHA does not pay any housing subsidy on its behalf.

percent of the sample—across the four PHAs chose to do so.75

Waiting lists to receive vouchers from most PHAs are

typically long.

The reason for not asking recertifying voucher holders to

choose which rent policy would apply to them was to mimic

the ways the new policy would be likely to operate in practice

if it were to be adopted as a new government policy—in prac-

example, volunteers might have been much more likely to be

tice, voucher holders would not be able to choose whether the

employed already.) If that were the case, the results of the study

new policy would apply to them. This decision ensures that

might not have accurately represented the policy’s effects on the

the results of the study are not based on a sample of voucher

broader group of voucher holders to whom the policy could be

holders who had volunteered for the new policy. Those who

applied in the future. The fact that the new rent policy includes

would have volunteered might have differed substantially from

safeguards to minimize the risk of harm, while also creating

the types of families who would not have volunteered. (For

opportunities for substantial benefits for those who are subject

74 The study did not include new voucher holders because it was expected that a substantial number would not successfully “lease up”—that is, find appropriate housing for which they could use the voucher within the time the PHAs gave them to do so. Because such families would forfeit their vouchers, they could not be subject to either the new or existing rent rules and, consequently, would not contribute to the goals of the evaluation.

75 Appendix table I.1 shows the number of families who opted out of data collection by PHA and research group. Supplementary appendix I is available at huduser.

gov and www.mdrc.org.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 27

to it, was among the reasons why this random assignment

meetings. The recertification packets included limited

design was deemed to meet recognized ethical guidelines for

information about the demonstration, but covered the

human-subject research.76

documentation requirements for each rent rules group (for

example, the new rent rules group families were told to

As discussed later in this chapter, in Louisville, community

bring pay stubs or other documents showing their incomes

concerns led to an agreement with the PHA that families

for the prior 12 months). Each family was also assigned a

assigned to the new rent rules group would be allowed to opt

date and time for its recertification interview.79

out of that policy and have their rent calculated using existing

rules. The PHA, HUD, and study team entered into that agree-

4.  Additional eligibility verification.  To account for changes

ment recognizing that, if many families made that choice, the

that could affect a family’s eligibility for the study, the staff

findings from the evaluation’s analysis might not represent the

reverified a family’s eligibility at the scheduled recertifi-

new policy’s effects very accurately. In this case, the estimates

cation interview. For example, some families had “ported

of the effects of the new rules may be watered down, because

out” (that is, they moved to a new location that was the

some members of the “new rent rules group” would not

responsibility of another PHA). If this move occurred be-

actually be subject to the new policy.

tween the time a family’s recertification packet was mailed

and the time its recertification interview was scheduled

Figure 4.1 outlines the enrollment processes for the study

to take place, the family would become ineligible for the

PHA. In general terms, the enrollment process involved a series

demonstration. Also, in some instances, updates to the

of steps.

PHA data used to identify voucher holders who were

1.  Identification of eligible families.  The PHA identified

eligible for the study revealed that a family initially thought

the pool of eligible voucher families who were due for

to be eligible was in fact not eligible (which could happen,

recertification during the study enrollment period.77

for example, if the family’s preexisting disability status were

not reflected in the data used for random assignment).80

2.  Random assignment.  The study team or the PHA random-

These 566 families (or fewer than 8 percent of families

ly assigned eligible families to the new rent rules group or

randomly assigned) who were found to be ineligible were

the existing rent rules group. The rent-calculation software

dropped from the research sample.

used by three of the four study PHAs (those in Lexington,

Louisville, and San Antonio) included a module that

5.  Income review. During the initial recertification meeting,

supported random assignment. The study team conducted

staff members initiated an income review and discussed

random assignment for the PHA in Washington, D.C., as

additional documents that might be necessary to complete

this module was not incorporated into its rent-calculation

the income-verification and recertification process. At

software.78

this meeting, staff members reviewed with families in the

new rent rules group the features of those new rules and

3.  Advanced notification of study status.  Following random

the opportunities and safeguards they offered. PHAs also

assignment, families were informed of their rent-rules sta-

plan to followup with reminders to families about these

tus in the recertification packets mailed to them by their

opportunities and safeguards over the 3-year period until

respective PHAs in advance of their annual recertification

their next scheduled triennial recertifications.

76 The study team received approval from its Institutional Review Board to implement this research design. In addition, HUD determined that the design was compli-ant with Moving to Work regulations.

77 Families were excluded from random assignment if they did not meet the study’s eligibility criteria or, in the case of some PHAs, simply if too many families were eligible that month for the staff to be able to randomly assign them all. In Louisville, 5,031 families were considered for the study, and 2,136 were randomly assigned; in Lexington, 2,228 families were considered for the study, and 1,031 were randomly assigned; in San Antonio, 5,850 families were considered for the study, and 2,080 were randomly assigned. The number of families considered in Washington, D.C., is not available because of data limitations.

78 The software modifications funded by HUD enabled all four study PHAs to update their systems to implement the new rent rules. The PHA in Washington, D.C., uses a Yardi software program, whereas the other PHAs use one designed by Emphasys.

79 Households enrolling in the study were required to attend the annual recertification meeting (or the biennial meeting in Washington, D.C.) in person. This was a shift for the PHAs that routinely had conducted annual recertifications by mail, but the meeting had to be held in person so that PHAs could complete certain required research procedures (for example, completing the baseline survey and informing families about the data collection) for both study groups, and so that they could orient those in the new rent rules group to the new policy. In Louisville, existing rent rules group households were not required to attend in-person meetings to complete their annual recertifications, and they were allowed to complete their scheduled income reviews by mail. They were, however, required to complete the baseline survey either in person or by telephone.

80 As discussed in supplementary appendix I, a few additional exclusions were applied after sample enrollment ended.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program

28

Figure 4.1. Enrollment Flow Chart

1 In Louisville, households assigned to the new rent rules group received TPP estimates for both the new and the existing rent rules at their recertification meetings and were given 30 days to decide whether they wanted to opt out of the new rent policy.

2 For households assigned to the new rent rules group in Louisville, the 30-day rent change notification letter was sent at the end of the 30-day opt-out period.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 29

6.  Research procedures and orientation to new policy.

The enrollment process took different amounts of time at the

PHAs also used the initial recertification meeting to com-

four PHAs, in part because the agencies had “recertification

plete the required research procedures, which included

cycles” (the periods during which income recertifications had

informing participants about the research and having

to be completed) of different lengths. The recertification cycles

them complete a brief baseline survey. Each agency’s staff

ranged from 90 days in Lexington to 180 days in Washington,

administered the survey using an online data-collection

D.C.82 The study team monitored the random assignment

instrument developed by the study team. Families also

process closely.

received a study information sheet, which they reviewed

with the specialists at the time of the recertification

Enrollment Timeframe

meeting. The information sheet described the study, the

The timeframe for enrolling families into the study was de-

family’s role in the research, and how they could withdraw

signed to ensure that a substantial portion of sample members

from the data-collection effort (and, in Louisville, from the

could be followed in the evaluation (which ends in 2019) for

new rent policy).81 Those assigned to the new rent rules

more than 3 years. That way, the study could capture some of

group also watched a short video that further explained

the new policy’s effects after the new rent rules group com-

the new policy.

pleted its next scheduled triennial recertification. For example,

7.  New effective date and rent notification.  As a last step

a family in the new rent rules group whose initial TTP at the

in the enrollment process, the staff completed the income-

beginning of study went into effect in June 2015 would have a

verification process and confirmed the family’s new TTP

triennial recertification 3 years later, with an updated TTP from

amount and effective date. As required by HUD, the PHAs

that recertification becoming effective in June 2018.

then mailed the new TTP amount and effective date to

Figure 4.2 presents the timeline for sample enrollment and

families at least 30 days before the new TTP went into

TTP effective dates for the overall demonstration and each of

effect.

the four study PHAs individually. As the figure shows, 7,255

In Louisville, the opt-out option required the PHA staff and

families were randomly assigned for the Rent Reform Demon-

families to take some additional steps. Families assigned to the

stration, with the families’ TTP effective dates ranging from

new rent policy were asked to mail their income information

June 2015 through March 2016.83 A number of families were

to the agency before the recertification meeting so that the staff

subsequently found to be ineligible for the study (according

could prepare estimates of their TTPs under the new rent rules

to the criteria described in box 4.1) and were excluded from

and under the existing rent rules. These two estimates were

the sample, yielding a final sample size of 6,660 families. In

then presented to families and discussed at the recertification

Washington, D.C., the effective dates fell between October and

meeting. After the recertification meeting, families were given

December 2015. For the PHAs in other cities, the effective dates

30 days to opt out of the new rent rules. Unless a family

stretched over a longer period, with San Antonio families being

notified the PHA about its decision to opt out (which had to

among the first to begin experiencing the new rent rules (in

be communicated in writing using an official agency form), the

June 2015).

new rent rules would apply. After the 30-day opt-out period

Table 4.1 shows the number of families enrolled by each PHA

ended, the PHA finalized the TTP and subsidy for each family

and the dates when their revised rents took effect. About 90

and notified them.

percent of families (6,034 of the 6,660 families) began paying

their newly calculated rents by December 2015.84

81 An institutional review board approved the research design, research procedures, and materials shared with families about the study, including the study information sheet.

82 Two PHAs, Lexington and Washington, D.C., agreed to recertify some households early (that is, to advance their annual recertifications) to try to meet the study’s sample-size goal within the preferred enrollment timeframe. For San Antonio, the enrollment period was extended by an additional 3 months to meet the study’s sample-size goals.

83 The original plan for this study called for a sample of 7,400 families. Original projections also assumed sample sizes of close to 2,000 families from three of the four PHAs, with the Lexington sample size at about 1,400 families (Lexington operates a smaller voucher program than the other PHAs in the demonstration and agreed to enroll all eligible families). As it turned out, a smaller number of families than the PHAs originally projected met the study’s eligibility criteria and could be processed within the designated enrollment period.

84 This count excludes 17 families (or 0.2 percent of the impact sample—15 families from Washington, D.C., and 2 from Louisville). At the time this report was written, the study team was still waiting to receive data from the PHAs on these cases. Once data on these families are received and verified, these records will be added to the analysis file.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 30

Figure 4.2. Sample Buildup and Enrollment Timeline

Random assignment period

February

November

2015

2015

Period during which new rents became effective

June

March

2015

2016

Public Housing

Random Assignment Period

Agency (PHA)

New Rent Effective Date

Number of Families

Randomly Assigned

Start Date

End Date

Lexington

March 2015

August 2015

July 2015–December 2015

1,031

Louisville

February 2015

August 2015

July 2015–January 2016

2,136

San Antonio

February 2015

November 2015

June 2015–March 2016

2,080

Washington, D.C.

April 2015

June 2015

October 2015–December 2015

2,008

All PHAs

February 2015

November 2015

June 2015–March 2016

7,255

Table 4.1. Number of Sample Members Whose New Total Tenant Payments (TTPs) Became Effective Each Month, at Each Public Housing Agency (PHA)

Month

Lexington

Louisville

San Antonio

Washington, D.C.

All-PHA Total

Cumulative Total

June 2015

—

—

185

—

185

185

July 2015

170

273

187

—

630

815

August 2015

168

293

186

—

647

1,462

September 2015

170

310

199

—

679

2,141

October 2015

171

325

201

787

1,484

3,625

November 2015

175

309

185

792

1,461

5,086

December 2015

125

304

194

325

948

6,034

January 2016

—

94

196

—

290

6,324

February 2016

—

—

174

—

174

6,498

March 2016

—

—

162

—

162

6,660

Sample size

979

1,908

1,869

1,904

6,660

6,660

Notes: The impact sample includes families who were randomly assigned to the new rent rules and the existing rent rules groups and who met the study’s eligibility criteria. This table shows when families were expected to have their initial TTPs become effective. Most families’ TTPs become effective as scheduled. Appendix Table I.1 shows how many families were randomly assigned but were then excluded from the impact sample. Supplemental Appendix I is available at www.huduser.gov and www.mdrc.org.

“—” indicates that enrollment had not yet begun or had ended.

Sources: MDRC calculations using random assignment data and PHA data

Under the current evaluation work plan and budget, followup

Louisville’s Opt-Out Option

data for the impact analysis (which will assess the effects of the

new rent policy on voucher holders’ employment, earnings,

As previously mentioned, families in Louisville who were

and other outcomes) are expected to cover at least 2.5 years for

randomly assigned to the new rent policy group were permitted

all sample members after the effective date of their recalculated

to opt out of that group and continue to be subject to the

TTPs. A full 3 years of followup data (extending through the

existing rent rules. By the end of the enrollment period, a total

triennial recertification date for the new rent policy group) will

of 212 eligible families (about 22 percent of the eligible new

be available for approximately a third of the sample—the third

rent rules group) chose to opt out. Those who chose to opt

that entered the study early on.85

out differed in important ways from those who did not make

85 An even longer stretch of followup will be available for the smaller fraction that entered the study earliest of all.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 31

this choice. For example, they were more likely to have lower

the PHAs (89 percent in Lexington, 82 percent in Louisville, 71

household incomes and were less likely to have any earned

percent in San Antonio, and 79 percent in Washington, D.C.).

income, both statistically significant differences. They also had

The PHAs also made available the data they normally collected

somewhat lower TTPs (and somewhat higher housing subsi-

on study families for the purpose of administering their vouch-

dies) under the existing rules than they would have had under

ers.88 Among other measures, these data (which are available

the new rent rules. In addition, the heads of these households

for 100 percent of the sample) include information on each

tended to be older than the heads of those households who did

household’s family composition and characteristics, income and

not opt out. PHA staff members reported that some families

income sources, TTP, and housing subsidy.89

simply favored whichever policy would leave them paying the

lowest initial rent. Some families may not have expected to

In addition to these data, the study team obtained administra-

increase their earnings so as to benefit from the new policy.

tive data from HUD on the national population of working-age,

See appendix C for a detailed analysis comparing families in

nondisabled families receiving vouchers in September 2015.

Louisville who opted out of the new rent policy with those

The data are used to compare the sample enrolled in the Rent

who did not opt out.86

Reform Demonstration with the relevant national voucher

population.

Characteristics of the Rent Reform

Sample

Comparison of the Study Sample With the

National Voucher Population

The analysis of who enrolled in the Rent Reform Demonstra-

In order for the findings from the Rent Reform Demonstration

tion relies on a combination of data from local and national

to be relevant to the national debate over rent reform, it must test

housing authority records and the voluntary baseline survey

the new rent policy with families who would not be considered

administered to participants at study enrollment. Together,

very different overall from the working-age, nondisabled families

these data make it possible to provide a detailed description

across the country who receive vouchers. At the same time,

of the study sample and an assessment of how these families

some of the differences in family characteristics among the

compare with the broader national pool of voucher holders.

demonstration’s four participating PHAs should reflect at least

some of the kinds of diversity that can be found across PHAs

At their recertification interviews, all families were invited

nationally.

to complete a voluntary baseline survey.87 The study team

created an online system to collect responses to the survey,

Tables 4.2 and 4.3 compare the household-level and individual-

which tenants completed with PHA staff members. The survey

level background characteristics of families enrolled by the four

covered a number of topics, including household composition,

study PHAs with the relevant national population of voucher

income, and well-being, as well as the employment status,

holders.90 Although the national population used for this

perceived barriers to employment, and education levels of the

com parison excludes elderly and disabled households, it is

heads of households. Overall, 79 percent of enrolled families

important to note that other eligibility criteria that were used

completed the survey, and the response rates varied among

to exclude certain types of families from the Rent Reform

86 It is important to note that most families who opted out of the new rent policy did not choose to opt out of the evaluation. In order to minimize selection bias in the impact research sample, the evaluation still treats these families as members of the new rent rules group, although they are subject to the existing rent rules. This decision means that the evaluation’s estimated effects will be unbiased (in the sense that the initial characteristics of the new and existing rent rules groups remain similar), but that the estimated effects of the new rent policy may be somewhat diluted because not all members of the new rent rules group were exposed to the new policy.

87 A copy of the baseline survey instrument is included in supplementary appendix G of this report, which is available at huduser.gov and www.mdrc.org.

88 For every family, a PHA is required to submit certification information to HUD for all fields on the HUD-50058 form. A Moving to Work housing authority is required to submit a Moving to Work-50058 form to HUD that has fewer fields; however, the study team can get information beyond what is on the Moving to Work-50058 form by collecting data directly from the PHAs. In general, the 50058 form includes information about a household’s head, other members, income, rent, and housing subsidy.

89 Housing-subsidy data will be collected throughout the demonstration to describe families’ experiences under the two sets of rules and examine the new rules’ effects on families’ TTPs and housing subsidies. The research team is also collecting additional information on the new rent rules group’s retrospective incomes and use of the grace period, interim recertifications, and hardship exemptions.

90 For the Rent Reform Demonstration sample, the families are described according to the information about that family that was known to the PHAs at the time of random assignment.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 32

Demonstration (shown in box 4.1) could not be applied to

5 years old or younger). As discussed previously, families who

the national database, which may have influenced some of the

were already receiving the childcare deduction under existing

differences discussed below.

rent rules were excluded from the demonstration, and families

with very young children may use the childcare deduction at

The findings indicate that the Rent Reform Demonstration

a higher rate than those with older children. Overall, as table

sample is roughly similar to the relevant national population

4.2 shows, the average family size is slightly more than three

of voucher holders, although some important differences do

in both the study sample and the national voucher population,

exist. For example, a somewhat smaller proportion of families

and about one-third of households have more than one adult

in the demonstration sample (36 percent) than in the national

living in the home. About one-quarter of families have no

voucher population (44 percent) has very young children (those

children under the age of 18.

Table 4.2. Characteristics of Families in the Impact  Sample and the National Housing Choice Voucher  Program Population (1 of 2)

Characteristic

Rent Reform Samplea

National Housing Choice  Voucher Programb

Average number of family members

3.4

3.2

Adults

1.5

1.4

Children

1.8

1.7

Families with more than one adult (%)

36.9

33.7

Number of children in the family (%)

None

22.8

24.7

1

23.0

24.2

2

23.9

24.0

3 or more

30.3

27.1

Among families with children, age of the youngest child (%)

0–5 years

36.2

43.8

6–12 years

41.9

38.5

13–17 years

21.9

17.7

Current/anticipated annual family incomec (%)

$0

6.3

7.4

$1–$4,999

31.7

18.6

$5,000–$9,999

20.0

19.2

$10,000–$19,999

25.0

29.3

$20,000 or more

17.0

25.5

Income sourcesc, d (%)

Wages

42.4

57.6

Welfare

14.1

11.5

Social Security/SSI/pensions

23.5

17.2

Other income sources

40.0

36.8

No earned incomec, d (%)

57.6

42.4

Average annual income from  wages, among families with any

18,275

17,454

wage incomec, d ($)

Annual income from wagesc, d (%)

$0

57.6

42.4

$1–$4,999

4.0

5.5

$5,000–$9,999

6.7

9.6

$10,000–$19,999

15.9

23.0

$20,000 or more

15.7

19.5

Average total tenant payment (TTP)e, f ($)

256

326

TTPe, f (%)

$0

9.6

0.9

$1–$99

22.5

24.4

$100–$299

36.7

29.7

$300–$699

24.6

35.3

$700 or more

6.7

9.7

Average family sharee, g ($)

296

364

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 33

Table 4.2. Characteristics of Families in the Impact  Sample and the National Housing Choice Voucher  Program Population (2 of 2)

Characteristic

Rent Reform Samplea

National Housing Choice  Voucher Programb

Family sharee, g (%)

$0

7.8

1.6

$1–$99

19.0

18.8

$100–$299

35.3

29.2

$300–$699

29.1

37.7

$700 or more

8.8

12.6

Sample size

6,660

1,085,635

a Rent Reform sample data were collected at the most recent recertification before random assignment.

b The national column shows information current as of September 2015 for Moving to Work and non-Moving to Work public housing agencies (PHAs). Elderly and disabled households and project-based vouchers are excluded.

c For the national Housing Choice Voucher Program column, income figures are calculated using earned income after exclusions and only include non-Moving to Work households.

d Income-source categories are as defined on the HUD-50058 form. Wages include one’s own business, federal wages, PHA wages, military pay, and other wages.

Welfare includes general assistance, annual imputed welfare income, and Temporary Assistance for Needy Families. SSI is Supplemental Security Income. Other income sources include child support, medical reimbursement, Indian trust/per capita, unemployment benefits, and other nonwage sources.

e For the national Housing Choice Voucher Program column, TTP and family share for rent and utilities figures only include non-Moving to Work households.

f TTP is the minimum amount a family must contribute toward rent and utilities regardless of the unit selected.

g Family share is the family’s contribution toward the gross rent. It may be the TTP or higher, depending on the unit selected by the family.

Notes: Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences.

Sources: MDRC calculations using PHA and Inventory Management System/Public and Indian Housing Information Center data Table 4.3. Characteristics of Heads of Households in the

The study sample includes more families with low incomes

Impact Sample and the National Housing Choice Voucher

than the national voucher population; 58 percent of the study

Program Population

sample had annual family incomes of $0 to less than $10,000

National

compared with 37 percent nationally. At the same time, the

Rent

Housing

study sample includes fewer families with annual incomes that

Characteristic

Reform

Choice

Samplea

Voucher

exceed $20,000: 17 percent versus 26 percent nationally. The

Programb

study sample also includes a smaller proportion of families with

Female (%)

94.0

89.4

any income from wages (42 percent compared with 58 percent

Age (%)

nationally). However, the proportion of families receiving cash

18–24

2.8

4.7

welfare payments is fairly comparable—and low—across the

25–34

31.2

32.8

35–44

39.9

33.5

two groups (14 percent compared with 12 percent nationally).

45–59

26.1

27.2

The study sample also had a higher proportion of families who

60 or older

0.0

1.8

were paying zero rent (10 percent versus 1 percent nationally),

Average age (years)

38.9

39.0

possibly in part because two of the PHAs in the demonstration

U.S. citizen (%)

97.8

94.9

did not previously have a minimum TTP.

Race (%)

White

30.2

37.2

Families’ average TTP before enrolling in the demonstration

Black/African-American

68.9

59.1

is somewhat lower for the study sample than for the national

American Indian/Alaska Native

0.4

1.1

population of voucher holders ($256 versus $326 nationally).

Asian

0.3

1.6

This difference reflects the generally lower income levels of the

Native Hawaiian/Other Pacific Islander

0.3

1.1

More than 1 race

0.0

0.0

study sample.

Ethnicity (%)

Table 4.3 shows that women head the vast majority of families

Hispanic or Latino

22.5

18.5

in the Rent Reform Demonstration sample and in the national

Not Hispanic or Latino

77.5

81.5

voucher population (94 and 89 percent, respectively). The age

Sample size

6,660

1,085,635

profiles were also similar; on average, household heads in each

a Rent Reform sample data were collected at the most recent recertification

before random assignment.

sample were about 39 years old. Although the majority of house -

b The National column shows information current as of September 2015 for

hold heads in both samples are Black or African-American, this

Moving To Work and non-Moving To Work public housing agencies (PHAs).

Elderly and disabled households and project-based vouchers are excluded.

group is more highly represented in the study sample (69 per cent

Notes: Sample sizes for specific outcomes may vary because of missing values.

versus 59 percent nationally). Hispanic or Latino heads of house-

Rounding may cause slight discrepancies in calculating sums and differences.

Sources: MDRC calculations using PHA and Inventory Management System/

holds (of any race) also make up somewhat higher proportion

Public and Indian Housing Information Center data

of the study sample (23 percent versus 19 percent).

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 34

Comparison of Families Among Study PHAs

had no children under age 18, compared with 14 percent to 22

Tables 4.4 and 4.5 reveal considerable variation in family

percent of the study families served by the other three PHAs.

characteristics at the time of random assignment among the

To some extent, this difference reflects the fact that the heads of

four PHAs participating in the demonstration. For example,

households are older in Washington, D.C. For example, more

the proportion of families with more than one adult in the

than 40 percent are 45 years or older, compared with only 18

household ranges from a low of 27 percent in Lexington to

percent to 22 percent in that age bracket in the other three

high of 50 percent in Washington, D.C. (table 4.4). The fam-

locations (table 4.5). At the same time, more than one-third of

ilies in Washington, D.C., are also the least likely to include

the families with children from all PHAs had children 5 years

children under the age of 18. Among families there, 35 percent

old or younger (table 4.4).

Table 4.4. Characteristics of Families in the Impact Sample, by Public Housing Agency (PHA) (1 of 2) Characteristic

Lexington

Louisville

San Antonio

Washington, D.C.

Average number of family members

3.2

3.3

3.6

3.2

Adults

1.3

1.4

1.4

1.8

Children

1.9

1.9

2.2

1.4

Families with more than one adult (%)

26.6

33.9

32.7

49.5

Number of children in family (%)

None

17.3

21.6

14.0

35.3

1

24.4

22.4

20.3

25.7

2

28.4

24.0

27.7

17.9

3 or more

29.9

32.0

38.1

21.1

Among families with children, age of youngest child (%)

0–2

16.9

16.7

17.8

16.0

3–5

17.9

17.5

21.7

19.3

6–12

47.3

43.0

42.7

35.7

13–17

17.9

22.7

17.8

29.0

No earned income (%)

53.6

61.8

53.0

60.0

Current/anticipated annual family income (%)

$0

1.5

4.0

0.6

16.6

$1–$4,999

38.1

38.6

33.1

20.0

$5,000–$9,999

17.9

18.7

28.3

14.4

$10,000–$19,999

26.5

25.1

29.3

20.1

$20,000 or more

16.0

13.7

8.7

28.9

Income sourcesa (%)

Wages

46.4

38.2

47.0

40.0

Welfare

5.1

5.8

3.2

37.7

Social Security/SSI/pensions

19.4

25.8

23.0

23.9

Other income sources

49.8

44.3

53.1

17.9

Child support

35.2

28.6

38.0

13.7

Unemployment benefits

1.0

1.3

2.1

3.4

Other

17.7

17.0

15.8

1.3

Area median family incomeb ($)

66,100

67,000

62,100

108,600

Average annual income from wages, among families with any wage incomea ($)

16,625

16,741

12,924

26,902

Annual income from wagesa (%)

$0

53.6

61.8

53.1

60.0

$1–$4,999

3.9

3.5

7.3

1.3

$5,000–$9,999

7.8

5.8

11.1

2.8

$10,000–$19,999

19.7

16.3

20.3

9.3

$20,000 or more

15.0

12.6

8.2

26.5

Average total tenant payment (TTP)c ($)

266

212

212

336

TTPc (%)

$0

0.0

17.0

0.0

16.6

$1–$99

0.0

24.5

34.2

20.6

$100–$299

69.7

30.0

41.0

21.9

$300–$699

27.4

25.0

23.1

24.1

$700 or more

3.0

3.4

1.8

16.8

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 35

Table 4.4. Characteristics of Families in the Impact Sample, by Public Housing Agency (PHA) (2 of 2) Characteristic

Lexington

Louisville

San Antonio

Washington, D.C.

Average family shared ($)

304

256

257

369

Family shared (%)

$0

1.2

12.9

0.0

13.8

$1–$99

1.0

21.6

24.2

20.3

$100–$299

60.1

29.4

42.6

21.4

$300–$699

32.4

30.0

29.9

25.6

$700 or more

5.3

6.0

3.3

18.9

Sample size (total = 6,660)

979

1,908

1,869

1,904

a Income-source categories are as defined on the HUD-50058 form. Wages include one’s own business, federal wages, PHA wages, military pay, and other wages.

Welfare includes general assistance, annual imputed welfare income, and Temporary Assistance for Needy Families. SSI is Supplemental Security Income. Other income sources include child support, medical reimbursement, Indian trust/per capita, unemployment benefits, and other nonwage sources.

b The area median family income (MFI) figures are the fiscal year 2016 figures from HUD. HUD calculated fiscal year 2016 MFIs using 2009–2013 5-year American Community Survey data.

c TTP is the minimum amount a family must contribute toward rent and utilities regardless of the unit selected.

d Family share is the family’s contribution toward the gross rent. It may be the TTP or higher, depending on the unit selected by the family.

Notes: Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. Data were collected at the most recent recertification before random assignment.

Source: MDRC calculations using PHA data

Table 4.5. Characteristics of Heads of Households in the Impact Sample, by Public Housing Agency (PHA) Characteristic

Lexington

Louisville

San Antonio

Washington, D.C.

Female (%)

96.8

95.6

93.8

91.0

Age (%)

18–24

3.5

0.9

5.7

1.4

25–34

39.0

32.3

38.9

18.5

35–44

39.8

44.7

35.6

39.5

45 or older

17.7

22.1

19.8

40.5

Average age (years)

36.9

38.7

36.7

42.2

U.S. citizen (%)

99.9

96.7

97.7

98.1

Race (%)

White

18.6

18.2

77.0

2.1

Black/African-American

81.1

80.3

22.2

97.2

American Indian/Alaska Native

0.2

0.8

0.4

0.2

Asian

0.0

0.1

0.2

0.6

Native Hawaiian/Other Pacific

0.1

0.6

0.2

0.1

Islander

More than 1 race

0.0

0.0

0.0

0.0

Ethnicity (%)

Hispanic or Latino

1.9

1.2

74.9

3.2

Not Hispanic or Latino

98.1

98.8

25.1

96.8

Sample size (total = 6,660)

979

1,908

1,869

1,904

Notes: Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. Data were collected at the most recent recertification before random assignment.

Source: MDRC calculations using PHA data

Across the PHAs, a bare majority of families had no earned

As expected, the race and ethnicity of the head of household

income, ranging from 54 percent of families in San Antonio to

varies from PHA to PHA (see table 4.5). In Washington, D.C.,

62 percent in Louisville. Even among families who did have

97 percent of household heads are Black or African-American.

earned income, earnings were generally low; average annual

In Lexington and Louisville, about 80 percent of household

earnings (among families with earnings) ranged from about

heads are Black or African-American, with most of the balance

$13,000 in San Antonio to roughly $27,000 in Washington,

consisting of White heads of households. In San Antonio, 75

D.C. The Washington, D.C., families were the most likely by

percent of the heads of households are Hispanic or Latino, and

far to receive cash welfare payments: 38 percent of them did,

22 percent are Black or African-American.

compared with fewer than 6 percent of the families from the

other PHAs.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 36

When the samples of all four PHAs are combined, only minor

(by about 12 percentage points), according to PHA records

and inconsequential differences can be seen between the

(appendix table J.2), but the opposite was the case in Louisville

characteristics of families randomly assigned to the new rent

(by about 8 percentage points; appendix table J.3). In the other

rules group and those of families assigned to the existing rent

two PHAs, differences on this measure between respondents

rules group. Although a few of those differences are statistically

and nonrespondents were small and not statistically significant.

significant, they are not substantively significant (indicating

In San Antonio, respondents were about 1 year younger than

that, for the pooled sample, the random assignment process

nonrespondents (appendix table J.4), and in Washington, D.C.,

worked as expected). For most characteristics the two groups

respondents were somewhat less likely (by about 6 percentage

differ, if at all, by only a few percentage points. The same

points) to have more than one adult in their families, and they

pattern is evident across the four study PHAs taken separately,

reported lower annual earned income on average than the

although the new rent rules group and the existing rent rules

nonrespondents ($26,416 versus $28,541; appendix table J.5).

group in San Antonio have somewhat larger differences.91

These baseline survey results, and a number of other results

presented in appendix J, suggest that the baseline survey

A Closer Look at the Study Families

sample is not exactly representative of the full impact sample.

Using Baseline Survey Data

Nonetheless, the overall correspondence is high, and, for the

purposes of describing the study sample and comparing the

The baseline survey captures details about the families enrolled

four study PHAs with each other in broad terms, the survey

in the Rent Reform Demonstration that are not captured in

data provide a clear portrait of the families with information

agency records. As previously mentioned, about 79 percent

that is not available from any other data source.94

of enrolled families overall completed the baseline survey.

However, response rates varied considerably from PHA to

According to survey data, families in Washington, D.C., again

PHA, ranging from 71 percent in San Antonio to 89 percent

emerge as distinctive in a number of ways, as they did from

in Lexington.92 A comparison of survey respondents with

the housing authority data. As table 4.6 shows, compared with

nonrespondents using data from PHA records for all families

families from the other PHAs, those in Washington, D.C., were

suggests that the two groups differed in a number of important

more likely to be receiving Temporary Assistance for Needy

ways, although the patterns varied by PHA. (Supplemental

Families benefits, and had held their housing vouchers longer.

appendix J, available at huduser.gov and www.mdrc.org,

In Washington, D.C., more than 59 percent of families had

provides a more complete survey-response analysis.)93 In

held their vouchers for 10 years or more, whereas at the low

Lexington, for example, survey respondents were less likely

end only 23 percent of San Antonio’s families had held their

than nonrespondents to have earned income at baseline

vouchers for that long.

91 A regression analysis was conducted to determine whether background characteristics, taken together, are associated with a family’s likelihood of being assigned to the new rent rules group rather than the existing rent rules group. For the full sample from all PHAs combined, the association was not statistically significant. It also was not statistically significant for the PHAs separately, with the exception of San Antonio, possibly as the result of certain exclusions from the sample that had to be made after random assignment. (See supplemental appendix H, available at huduser.gov and www.mdrc.org.) In future reports, the impact analysis will apply standard statistical techniques to adjust for any measured background differences between the two research groups in estimating the effects of the new rent policy at each PHA and for all PHAs combined.

92 The PHAs implemented various strategies to maximize survey response rates. Staff members were provided talking points to address concerns that families may have had about completing the baseline survey. They were also asked to make sure that families received a $25 gift card for completing the survey. Families who came in for late recertifications or who did not show up to their first appointments were allowed to complete the baseline survey when they did appear for their appointments. PHA staff members were also allowed to administer the baseline survey at another time after the initial interview (either in person or on the telephone), as long as it was completed before a family’s new rent went into effect. In San Antonio, the PHA had a supervisor talk to families who joined the study later in the enrollment period and who were concerned about taking the baseline survey to try to address their concerns. In Louisville, where existing rent rules group households were not required to attend in-person recertification meetings, the families were given the option to complete the baseline survey by telephone. Later in the enrollment period (for those whose rent became effective in December), families were given the option of completing the baseline survey on the phone with the research team. In addition, the study team began calling households directly, offering them another opportunity to complete the baseline survey.

93 See Johnson and Wislar (2012) and Cull et al. (2005) for discussions of alternative methods of assessing survey-response bias.

94 Supplementary appendix J also compares the characteristics of survey respondents in the new rent rules group with survey respondents in the existing rules group.

For three of the four PHAs, very few differences are evident between these two groups. The differences are more pronounced in San Antonio, although here the two groups are much more similar than different. (See appendix tables J.6 through J.13.) Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 37

Table 4.6. Characteristics of Families in the Impact Sample, by Public Housing Agency (PHA) Characteristic

Lexington

Louisville San Antonio Washington, D.C. All PHAs

Receives Temporary Assistance for Needy Families (TANF) (%)

4.6

3.9

1.7

29.0

10.6

Receives food stamps/Supplemental Nutrition Assistance Program (%)

77.2

77.7

73.9

67.7

73.8

Years receiving a Housing Choice Voucher (%)

Less than 1

2.9

7.4

7.7

3.0

5.5

1–3

2.9

7.4

7.7

3.0

5.5

4–6

22.5

15.0

25.2

13.5

18.4

7–9

20.5

21.3

18.5

18.1

19.6

10 or more

36.8

46.1

23.3

59.4

42.5

Annual family income (%)

$0

7.9

10.8

2.7

15.3

9.5

$1–$4,999

29.2

30.5

26.2

23.3

27.2

$5,000–$9,999

21.6

24.2

26.7

17.1

22.5

$10,000–$19,999

29.0

26.0

33.6

18.9

26.5

$20,000 or more

12.4

8.5

10.8

25.4

14.4

End-of-month finances (%)

Had some money left over

5.1

4.0

4.7

4.4

4.5

Had just enough money to make ends meet

50.2

39.2

58.1

36.6

45.1

Did not have enough money to make ends meet

44.6

56.8

37.2

59.0

50.4

Sample size

871

1,559

1,332

1,509

5,271

Response rate (%)

89.0

81.7

71.3

78.9

79.0

Notes: Sample sizes represent respondents to the baseline survey. Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. Percentages may sum to more than 100.0 for questions that allow more than one response.

Source: MDRC calculations using HUD Rent Reform baseline survey data

Table 4.7 shows that about 26 percent of household heads (from

respondents). Only about 9 percent of respondents said that

all PHAs combined) had no high school diploma or equivalent,

they were paying for childcare in order to work, and only

and few had 2- or 4-year college degrees. Full-time work was

4 percent indicated that they received subsidized childcare.

not the norm; although about 47 percent of respondents

Fewer than 5 percent of survey respondents reported usually

indicated that they were currently employed, only about one-

having some money left at the end of the month (table 4.6).

half of those workers (or 24 percent of all respondents) were

Moreover, about 82 of respondents said they had no savings,

employed full time (that is, at least 35 hours per week). Among

and 65 percent reported having some debt, usually in excess of

respondents who were working, average hourly wages ranged

$3,000 (table 4.7).

from $8.91 in San Antonio to $13.95 in Washington, D.C.95

Survey respondents in San Antonio stand out as being the least

Across all PHAs, 54 percent of survey respondents reported a

likely to have any health insurance; 45 percent reported no

problem that limited work. The top two reported barriers to

insurance coverage, compared with no more than 7 percent in

employment were physical health (cited by 28 percent of all

any of the other PHAs.

respondents) and childcare costs (mentioned by 21 percent of

95 The reported wages are not adjusted for inflation since the time the baseline survey was administered.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 38

Table 4.7. Characteristics of Heads of Households in the Impact Sample, by Public Housing Agency (PHA) (1 of 2) Characteristic

Lexington Louisville San Antonio Washington, D.C. All PHAs

Average age (years)

36.9

39.0

36.4

42.3

39.0

Age (%)

18–24

3.3

0.6

5.9

1.8

2.8

25–34

39.6

31.2

40.7

18.8

31.4

35–44

39.0

44.8

33.9

38.2

39.2

45 or older

18.0

23.4

19.5

41.3

26.6

Marital status (%)

Married, living with spouse

3.7

4.1

5.8

3.2

4.2

Cohabitating

0.1

0.3

5.1

0.3

1.5

Single, never married

72.8

70.7

60.0

83.2

71.9

Separated

10.5

10.2

13.6

5.0

9.6

Divorced or widowed

13.0

14.8

15.5

8.4

12.8

U.S. citizen (%)

99.2

98.1

98.1

98.4

98.4

Education

Highest degree or diploma earned (%)

High school equivalency

7.9

7.8

9.5

8.3

8.4

High school diploma

17.3

21.2

25.9

39.1

26.8

Some college

37.0

32.9

22.2

18.9

26.9

Associate’s or 2-year college degree

15.3

13.3

6.0

3.7

9.1

4-year college or graduate degree

3.8

3.0

1.2

3.0

2.7

None of the above

18.7

21.9

35.2

27.1

26.2

Highest degree is a high school diploma or equivalent (%)

62.2

61.9

57.6

66.3

62.1

Has a trade license or training certificate (%)

33.9

29.8

19.9

40.6

31.0

Currently attending college or vocational training (%)

9.9

10.7

8.2

21.1

12.9

Currently taking any training course or educational classes to aid in

8.2

7.9

6.1

18.8

10.6

employment (%)

Currently receiving job-search assistance (%)

8.5

9.8

6.7

20.6

11.9

Employment status

Currently employed (%)

52.2

45.9

52.7

39.9

46.9

Currently working 35 hours or more per week (%)

23.1

21.6

25.6

24.1

23.6

Total weekly earnings (%)

$0

52.9

58.1

49.2

68.2

57.7

$1–$200

13.5

9.7

19.0

3.2

11.0

$201–$400

22.2

20.3

21.5

9.5

18.0

$401 or more

11.4

12.0

10.3

19.1

13.4

Average hours worked per week, among those currently employed

30

31

32

34

32

Average hourly wage, among those currently employed ($)

9.69

10.35

8.91

13.95

10.52

Average weekly earnings, among those currently employed ($)

302

327

277

483

339

Has more than one job (%)

2.9

1.5

2.4

1.1

1.8

Employment during the past year

Average number of months employed, among those who worked in the

8.5

8.2

9.1

9.3

8.8

past 12 months

Number of months employed in the past year (%)

0

32.3

32.3

33.5

52.5

38.2

1–6

21.8

25.1

18.8

12.2

19.4

7–11

16.5

14.6

12.3

7.4

12.3

12

29.5

28.0

35.5

27.9

30.1

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 39

Table 4.7. Characteristics of Heads of Households in the Impact Sample, by Public Housing Agency (PHA) (2 of 2) Characteristic

Lexington Louisville San Antonio Washington, D.C. All PHAs

Financial status

Has an account at a bank or credit union (%)

36.6

37.4

34.0

30.4

34.4

Savings amount (%)

$0

78.1

87.5

75.9

82.6

81.8

$500 and less

20.0

10.9

20.1

14.7

15.6

$501–$1,000

1.1

0.9

1.5

1.2

1.2

$1,001–$3,000

0.6

0.4

1.8

1.0

0.9

More than $3,000

0.1

0.3

0.8

0.6

0.5

Debt amount (%)

$0

25.4

24.0

37.4

52.5

35.5

$500 and less

7.4

7.6

12.5

7.7

8.8

$501–$1,000

4.0

5.4

8.0

4.2

5.5

$1,001–$3,000

6.1

6.6

9.8

5.6

7.1

More than $3,000

57.1

56.5

32.4

30.0

43.1

Health insurance

Health insurance coverage (%)

None

6.7

4.0

44.8

2.3

14.2

Public health insurance

83.2

86.9

41.4

89.1

75.5

Employer health insurance

7.1

8.8

9.7

7.4

8.3

Other health insurance

3.0

0.4

4.1

1.2

2.0

Barriers to employment

Has any problem that limits worka (%)

54.4

62.9

56.2

41.8

53.8

Physical health

27.0

33.1

23.4

25.5

27.5

Emotional or mental health

12.3

15.1

14.4

13.8

14.1

Child care cost

23.0

28.1

25.6

7.2

20.6

Need to care for a sick or disabled family member

11.9

17.5

21.2

11.7

15.9

Previously convicted of a felony

5.9

6.1

3.1

4.8

5.0

Has any physcial, emotional, or mental health problem that limits work (%)

31.2

37.0

27.6

28.8

31.3

Child care

Has a child under age 13 (%)

64.1

58.3

63.3

32.4

53.2

Any nonparental care (%)

24.6

28.9

17.5

12.7

20.8

Paid for any nonparental care (%)

10.6

11.6

7.9

4.6

8.6

Receives subsidized child care (%)

7.8

5.0

2.1

2.7

4.1

Sample size

871

1,559

1,332

1,509

5,271

Response rate (%)

89.0

81.7

71.3

78.9

79.0

a More than one option could be selected, so subcategories may sum to more than the total just below.

Notes: Sample sizes represent respondents to the baseline survey. Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. Percentages may sum to more than 100.0 percent for questions that allow more than one response.

Source: MDRC calculations using HUD Rent Reform baseline survey data

Table 4.8 presents findings on sample members’ reported

indicated that they did not have enough money to pay rent

material hardships. Almost 70 percent of survey respondents

sometime in the past year. For a small but nontrivial proportion

said that they had experienced one or more hardships in the

of respondents, these material hardships were recurring. More

last year. The most commonly reported hardships were an

than 41 percent of survey respondents in San Antonio reported

inability to pay the cost of utilities (mentioned by 46 percent

not being able to see a doctor or get medical assistance in the

of all respondents), telephone bills (cited by 34 percent), and

past year because of cost, a finding related to the lower rates of

food (cited by 28 percent). About 20 percent of respondents

health insurance among families there.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 40

Table 4.8. Material Hardship During the 12 Months Preceding a Respondent’s Interview, by Public Housing Agency (PHA)

Characteristic

Lexington

Louisville

San Antonio

Washington, D.C.

All PHAs

Family experienced at least one material hardship

64.6

77.6

73.0

62.0

69.9

Not able to buy food

18.3

33.8

34.4

23.2

28.4

Not able to pay telephone bill

33.2

35.1

37.2

31.3

34.3

Not able to pay rent

13.8

26.2

22.7

12.8

19.5

Not able to pay utility bill

35.4

54.8

47.8

41.5

46.1

Not able to see a doctor or buy prescription drugs

17.2

19.3

42.1

12.6

22.8

Number of months unable to buy food

0

81.7

66.2

66.0

77.1

71.8

1 to 3

12.5

15.6

19.9

15.9

16.3

4 to 6

3.1

6.6

8.3

4.0

5.7

7 or more

2.7

11.5

5.8

3.0

6.2

Number of months unable to pay telephone bill

0

67.0

65.1

63.1

69.1

66.0

1 to 3

22.7

20.4

22.0

23.3

22.0

4 to 6

8.1

8.5

10.4

5.2

8.0

7 or more

2.2

6.0

4.6

2.4

4.0

Number of months unable to pay rent or utility bill

0

58.5

38.2

46.8

54.0

48.2

1 to 3

34.0

39.1

35.3

33.9

35.9

4 to 6

6.2

13.5

12.2

8.0

10.4

7 or more

1.3

9.2

5.7

4.1

5.6

Not able to pay rent or utility bill

41.5

61.8

53.5

46.7

52.1

Sample size

871

1,559

1,332

1,509

5,271

Response rate (%)

89.0

81.7

71.3

78.9

79.0

Notes: Sample sizes represent respondents to the baseline survey. Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. Percentages may sum to more than 100.0 for questions that allow more than one response.

Source: MDRC calculations using HUD Rent Reform baseline survey data

Conclusion

The baseline survey provides additional insights into the study

population. It highlights substantial variation among the four

Overall, the voucher holders who make up the combined

PHAs and among the families served by each PHA in families’

four-city sample for the Rent Reform Demonstration are

degrees of connection to the labor force, their levels of education,

roughly similar to the relevant national voucher population in

the barriers they face that make working difficult, and their

their basic household characteristics and income levels. The

financial circumstances and material hardships. It is noteworthy

groups are far more similar than different, but, across the four

that even though this segment of the low-income population

study PHAs, the families do vary in a number of areas, such as

is fortunate in having access to housing subsidies, many of the

race and ethnicity, family composition, and income sources.

people surveyed reported substantial difficulty making ends

Both factors make the sample a good one for testing the effects

meet and were contending with important material hardships.

of the new rent policy.

The next chapter examines the initial TTPs for the families

enrolled in the demonstration.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 41

Chapter 5. Making the Transition to the New Rent

Policy and Its Implications for Housing Subsidies

Implementing the new rent policy placed substantial new de mands

new policy’s safeguards, and reminding them of the financial

on the four participating public housing agencies (PHAs). All

benefits the policy offers if they increase their earnings. The

of the agencies had to institute new procedures for calculating

mailing prompted some families to approach the PHAs and

rents and completing the recertification process, while con tinu-

inquire about their eligibility for hardship remedies. Whether

ing to operate their existing rent-subsidy systems. They had to

the number of families requesting and receiving hardship

implement major adaptations to their rent-calculation software

remedies grows over time as families become more familiar

to accommodate the new rules. Staff members needed to

with the hardship process, or for other reasons, remains to be

understand the policy intent behind the new rent rules and the

seen and will be a continuing focus of the evaluation.

operational details of those rules, and they needed to under-

stand how to use the new software and how to describe to

Preparing Housing Agencies To

families the ways the new rules would benefit them and protect

them. In addition, staff members needed to understand and

Implement the New Rent Policy

comply with a number of special requirements and procedures

As the overall managers and evaluators of the demonstration,

associated with the random assignment evalua tion, and they

the study team and its partners worked closely with the four

had a short time to enroll and recertify the number of families

PHAs to specify the processes required to implement the new

needed to meet the evaluation’s sample-size requirements.

rent policy. The study team helped the agencies think through

Taken together, these operational challenges were daunting.

their staffing needs and software modifications, how they would

This chapter describes the main steps undertaken to prepare

integrate research procedures into recertification meetings,

the PHAs to implement the new rent policy, and the ways the

and how staff members would be trained in the procedures for

study team and its partners supported them in this process. It

calculating rent and utilities using a new set of rules. The team

also explores the agencies’ early experiences in applying the

prepared a manual for each PHA describing these procedures

new rules. It shows that, collectively, the PHAs successfully

and helped train housing specialists and their supervisors to

planned for and implemented recertifications for thousands of

apply them.96 In addition, the team observed recertification

families under the new policy. They simultaneously completed

meetings, monitored implementation practices, and provided

recertifications under the existing policy for a comparable

refresher training sessions on the use of interim recertifications

number of families in the existing rent rules group.

and hardship remedies. The team continues to conduct regular-

ly scheduled check-in meetings with managers at each PHA to

The chapter also examines the new rules’ effects on families’

discuss any challenges that the PHA is facing in implementing

expected total tenant payments (TTPs) for their rent and

the new rent policy. The study team had no direct operational

utilities in the first month in which these rules took effect for

role in the administration of the new rent rules, however.

them. The analysis shows that, on average, these initial TTPs

were somewhat lower for families in the new rent rules group

Staffing

than for families in existing rent rules group, which means that

the PHAs were initially providing somewhat larger housing

Leading up to the launch of the demonstration, the PHAs

subsidies under the new policy. The analysis also shows that

confronted the operational complexities and challenges of

during the initial implementation period covered by this

operating dual rent-calculation systems (one for the new rent

report, a sizable number of families qualified for and received

rules group and the one for the existing rent rules group) and

temporary grace period TTPs, one of the safeguard provisions

explored the best way to organize and structure the demonstra-

under the new rent policy. However, few of the families who

tion within their respective agencies. One of the first decisions

might have qualified for TTP reductions under the policy’s

PHAs had to make concerned staffing.

hardship provision had yet received hardship remedies. Aware

Three of the four PHAs dedicated staff members to work

of this problem, the PHAs mailed additional information to the

exclusively with the families assigned to the new rent policy.

families in the new rent rules group reminding them about the

The PHA in San Antonio assigned a team of two housing

96 Copies of these manuals are available on request from MDRC.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 42

specialists to conduct all the recertifications for families in the

Staff members assigned to work with families in the new rent

new rent rules group. The Louisville PHA devoted a team of

rules group were oriented to the new rent policy and trained

four housing specialists, and the PHA in Washington, D.C.,

to use the modified rent-calculation software.98 The software

assigned eight housing specialists to this group. The Lexington

developers and the study team conducted onsite, telephone,

PHA, on the other hand, devoted a team of seven to work on

and web-based training, with the developers focusing on the

the Rent Reform Demonstration overall, with each specialist

technical aspects of the system modifications, helping staff

conducting recertifications for families drawn from both the

members to understand the changes to data-entry screens

new and existing rent rules groups. Staff assignments were

and fields they were familiar with. Integrated into the systems

guided by each agency’s assessment of the projected number

training, the study team’s technical-assistance efforts focused on

of families eligible for recertification in each study-enrollment

helping staff members understand how the modified software

month (described in chapter 3), staff availability, and the

supported administration of the new rent policy. Throughout

desire to contain the number of staff members who would

the study enrollment period, both the study team and the

need to be trained to administer the new rent policy.

software developers continued to support staff members as

they learned to navigate the modified software and use it to

Each PHA assigned a dedicated manager or supervisor for

implement the new rent policy.

the demonstration who worked closely with the specialists

to oversee their day-to-day activities and who coordinated

Communicating the New Policy to Families

demonstration-related activities with the study team.

How the alternative rent model is explained and communicated

Customizing Housing Agency Software Systems

to voucher holders is critical. Families must understand the

new rent rules if they are to change their work behaviors in

Implementing an alternative rent policy meant the PHAs

response to the new policy’s financial incentives. The study

had to modify their existing software to support the income-

team and PHAs reviewed the materials usually shared with

calculation rules of the new rent policy.97 To administer the new

tenants ahead of their recertification meetings and assessed

policy, the existing software systems needed to accommodate

how, if at all, those materials needed to be revised to explain

a 12-month retrospective income period, the elimination of

the new policy to families. A multipronged communication

deductions from income, changes in asset income calculations

approach emerged, with each element of the effort designed

and utility payments, the transition from annual to triennial

both to inform families about the new rent rules and to market

recertifications, and calculations to assess family eligibility

the benefits of the new rent policy. This communication effort,

for a grace-period TTP and other safeguards. The study team

which started with the initial recertification meeting, will

and the PHAs worked with their software vendors to create

continue through the end of the demonstration.

the system requirements and map out the modifications that

would be necessary to their existing software to support rent

A first message, included in the recertification packet, focused

calculations under the new rules. Using these specifications,

on a family’s rent-rules status—that is, whether it would have

the software vendors customized their proprietary software to

its TTP calculated under the new rent policy or the existing

support the project’s needs.

rules—and the documents it needed to submit for recertification.

This language was folded into each PHA’s official communica-

In November 2014, the PHAs were notified that HUD would

tion to families about their upcoming recertifications. It did not

compensate them for the costs associated with the system

carry detailed information—for example, it did not describe

modifications. By March 2015, following initial testing, the

what it meant for the family to have its rent calculated under

software systems for the Louisville, Lexington, and San Anto-

the new rules. The initial recertification meeting became the

nio PHAs were operational. The Washington, D.C., system was

first opportunity to meet with the families in person and to

operational by May 2015, closer to that PHA’s implementation

explain the new policy to them. Reserving the details in this

of the new rent policy. A variety of software refinements

way allowed the housing specialists to clarify the implications

followed the launch of the demonstration, as the PHAs shared

of the new rules for each family’s particular circumstances.

their early implementation experiences and requested changes

or adjustments.

97 The PHAs have contracts with software vendors to use their proprietary software to administer the voucher program and to report data to HUD.

98 Some PHAs had all the housing specialists oriented to the new policy. Doing so made all staff members aware of the basic features of the new rent policy. Even in these PHAs, however, only staff members assigned to work with families in the new rent rules group participated in detailed training to learn the new software.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program

43

Although each PHA conducted its recertification meetings with

during that period to the PHA.100 Families also learned about

families differently, the housing specialist typically began by

the safeguards and hardship protections that might help them

providing a brief synopsis of the Rent Reform Demonstration,

if they experience difficulty paying their rent. While families

pointing to the information on the demonstration that was

watched the video, specialists reviewed the information the

included in the advance letter sent to families. The specialist

families provided.

also referred to the retrospective-income documents that the

Understanding that families might have questions about the

family needed to provide to have its new TTP calculated. The

new rules after their initial recertification meetings, the PHAs

specialist then directed the family to a computer monitor to

prepared an orientation packet for families to take with them

view a 13-minute orientation video that introduced the central

when they finished. The packet included several documents

features of the new rent policy.99 The video described the main

that described the features of the new rent policy in various

ways the rent rules changed for families in the new rent rules

levels of detail. A one-page brochure, for instance, highlighted

group. For example, it explained that their TTPs would be

the core features of the new rent policy. The packet also

based on 28 percent of their gross monthly incomes, that the

included a side-by-side comparison of the new and existing rent

PHA would determine their average monthly incomes using

rules, allowing families to see how the new policy changed the

the income they had earned in the previous 12 months, and

way their TTPs and housing subsidies would be determined.

that they would be required to pay at least the minimum TTP

A detailed Frequently Asked Questions form was designed

to landlords. The video also highlighted the main benefits of

to answer some of the questions that families were likely to

the new rent rules—for example, that families would get to

raise about the new rent policy.101 During the recertification

keep more of their earnings over 3 years (see figure 5.1) and

meeting, specialists generally handed these packets to families

that they would not have to report any increases in income

Figure 5.1. Illustration From the Rent Reform Video for Participants

99 The institutional review board and PHAs reviewed the video script to ensure that the video would be appropriate for their Housing Choice Voucher families. A Spanish-language version of the video was also produced and was provided to Spanish-speaking families on request.

100 Across the PHAs, staff members reported and some study team members observed during onsite training visits that figure 5.1 often prompted the most positive reactions. The study team will provide a fuller assessment of families’ perspectives on the new rent policy in a later report.

101 Documents in the Rent Reform orientation packet ranged from the ninth-grade reading level to the twelfth-grade reading level.

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Reducing Work Disincentives in the Housing Choice Voucher Program

44

and described the contents. Some specialists spent more time

Figure 5.2. Rent Reform Flyer

reviewing specific parts of the packet. The Lexington PHA

made this information more broadly available by putting the

documents on its website (a common practice for this agency)

and also handed out the same documents during the recertifi-

cation meeting.

Beyond these initial communication efforts, the demonstration

partners (the study team, the PHAs, and HUD) recognized the

importance of continuing to market the financial incentives

to families in the new rent rules group. They believed that this

marketing and communication was needed to ensure that families

understood the new rent policy’s incentives and safeguards,

and their own new responsibilities (including the responsibility

to make contact with the housing authority when their incomes

declined, to determine whether they qualified for TTP reduc-

tions). Under the 3-year recertification policy, many families

may have had little or no contact with the agency until their

next scheduled triennial recertifications. The ongoing com-

munication effort was thus considered especially important to

remind them of the policy’s incentives and protections.

Approximately 6 months after families had their TTPs calculated

under the new rules, the PHAs mailed out the first communica-

tions flyer, a simple one-page document (see figure 5.2). The

flyer reminds families that if they increase their earnings they do

not have to inform the PHA, that their TTPs will not increase

because of an increase in earnings (before their triennial

re certifications), and that they should reach out to their housing

pro gram, recalculating its expected contribution to its rent and

specialists if their incomes go down (because they may qualify

utilities, and redetermining its housing subsidy. Under traditional

for TTP reductions).

rules, the process typically begins several months before the

1-year anniversary of the family’s current (soon-to-be-expiring)

In the future, the PHAs will send additional communications

TTP. As explained in chapter 3, housing specialists collect and

materials to families in the new rent rules group. The expec-

verify the information families submit on their incomes and on

tation is that these materials will be mailed to families about

other subjects, enter data into the rent-calculation system, have

once or twice a year, and will be used to emphasize both the

the system estimate the TTPs, and notify families 30 days before

financial incentives and the safeguards in the new rent policy.

their new rent effective dates—that is, the dates when their new

As part of the evaluation, the study team will monitor the

TTPs go into effect.102 These recertification-related activities

communication strategies and mechanisms implemented by

take different amounts of time at different PHAs, from about

the PHAs, the messages and reminders offered to families, and

90 days in Lexington to 180 days in Washington, D.C.

families’ responses to these efforts.

This process was modified under the new rent policy. Families

assigned to the new rent rules group were required to docu ment

Calculating Families’ Contributions to

the income they had received from jobs or other sources during

Their Housing Costs Under the New

a defined 12-month period leading up to their recertification

Policy

meetings. This information was used to calculate the families’

retrospective incomes, which was necessary to determine their

Under traditional rent rules, the recertification process entails

TTPs. Families were also required to report their current or

reassessing a family’s continued eligibility for the voucher

anticipated incomes for the coming year. The retrospective or

102 As noted in previous chapters, the PHA in Louisville included an additional 30-day notification period to allow families the option of opting out of the new rent policy.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 45

12-month “look-back” period ended the month before the

Differences in Estimated Income Under the Two

family’s recertification interview. For example, if a family was

Rent Policies

scheduled for a recertification interview on February 21, 2015,

Families in the new rent rules group provided information on

the 12-month period used to determine retrospective income

their retrospective  gross incomes, and families in the existing

was February 1, 2014 to January 31, 2015.103

rent rules group provided information on their current and

The Rent Reform Demonstration did not change the rules about

anticipated  adjusted incomes for the year ahead. In cases where

what was or was not counted as income (except the amount

certain safeguards were applied, particularly the grace period

of income from assets that was to be counted). Families

rent, families in the new rent rules group had their TTPs

were required to make a good-faith effort to provide proof of

cal culated based on their current or anticipated gross incomes

income for the requested period. When families were unable

rather than their retrospective incomes.

to provide appropriate income documentation, or when the

Table 5.1 compares these two estimates of annual income, which

PHAs were unable to verify past income using their standard

are the foundation for calculating TTPs and housing subsidies

methods,104 the PHAs followed agreed-upon procedures to im-

(except for families required to pay the minimum TTP).105 It

pute gaps in reported household income. The study team and

presents the results for all PHAs combined (top panel) and for

the PHAs anticipated scenarios where families would struggle

each PHA separately. It also includes two panels of information

to obtain the required income documents—for example, pay

for the Louisville PHA, the one where participants could opt

stubs from early in the retrospective period—and developed

out of the new rent policy and have their rents calculated under

rules and guidance for staff members to use in such situations.

the traditional rent rules. For that PHA, the first panel shows

Appendix D contains two imputation scenarios included in the

the income calculations for all the families in the new rent rules

operations guide customized for each PHA.

group, including those who opted out. A second panel shows

By March 2016, the four PHAs had completed income recerti-

the same income calculations but excludes those who opted out

fications for all the families enrolled in the demonstration, both

of the new rent rules. The first panel leaves the participants in

those subject to the new rent rules and those subject to the

their original random assignment groups; it is useful because

existing rent rules.

it shows income calculations for families based on their study

groups. To reflect the fact that some of the families in the new

rent rules group had their rents calculated under traditional

rules, the second panel excludes those families.106

Table 5.1. Comparison of Income Considered in Determining Total Tenant Payment (TTP) Under the New Rent Rules and Existing Rent Rules at Initial Recertification, by Public Housing Agency (PHA) (1 of 2) Outcome

New Rent Rulesa

Existing Rent Rulesb

Difference

All PHAs

Average annual base family income ($)

11,717

12,104

– 387

Annual base family income (%)

$0

10.1

12.7

– 2.5

$1–$4,999

24.5

23.3

1.3

$5,000–$9,999

21.4

18.7

2.7

$10,000–$19,999

25.3

23.4

1.9

$20,000 or more

18.6

21.9

– 3.3

Sample size (total = 6,208)

3,118

3,090

103 When at least part of recertification process was conducted by mail (in Louisville, for example), the retrospective period was the 12-month period that ended the month before the recertification packet was mailed.

104 Retrospective income was verified using the HUD Verification Hierarchy and the guidance provided in HUD Notice PIH 2010-19 (HA) and the PHA Administrative Plan. Although it was a different procedure for PHAs to obtain past income data rather than estimating families’ current incomes, the hierarchy used and types of verification obtained complied with HUD requirements and allowed families to certify that they had or did not have certain types of income (self-certification).

105 At the time of the analysis, PHA administrative data on the first certification under the new rent rules were available for 6,208 of the 6,660 households included in the impact sample. The remaining 452 households may not have data from a first certification because they were in the process of ending their voucher participation with the PHA, they were moving to an area administered by another PHA, or they were experiencing some other issue related to the certification process. Data obtained for future reports will be used to ascertain the initial certification statuses of these remaining households.

106 Other tables in the chapter adopt a similar format and report information for the Louisville sample with and without the families who opted out of the new rules.

However, the results for all PHAs combined always include the families in Louisville who opted out and had their TTPs calculated under traditional rules.

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Reducing Work Disincentives in the Housing Choice Voucher Program 46

Table 5.1. Comparison of Income Considered in Determining Total Tenant Payment (TTP) Under the New Rent Rules and Existing Rent Rules at Initial Recertification, by Public Housing Agency (2 of 2) Outcome

New Rent Rulesa

Existing Rent Rulesb

Difference

Lexington

Average annual base family income ($)

9,472

11,191

– 1,719

Annual base family income (%)

$0

9.7

16.9

– 7.2

$1–$4,999

29.6

20.7

8.9

$5,000–$9,999

21.8

11.3

10.5

$10,000–$19,999

26.8

18.2

8.6

$20,000 or more

12.1

32.8

– 20.8

Sample size (total = 951)

473

478

Louisville (opt-outs included)c

Average annual base family income ($)

9,347

8,496

851

Annual base family income (%)

$0

14.2

19.9

– 5.7

$1–$4,999

24.5

24.7

– 0.2

$5,000–$9,999

22.2

22.2

0.0

$10,000–$19,999

26.5

21.0

5.5

$20,000 or more

12.5

12.2

0.4

Sample size (total = 1,729)

891

838

Louisville (opt-outs excluded)c, d

Average annual base family income ($)

10,189

8,496

1,693

Annual base family income (%)

$0

9.3

19.9

– 10.6

$1–$4,999

23.7

24.7

– 1.0

$5,000–$9,999

24.2

22.2

2.1

$10,000–$19,999

28.4

21.0

7.4

$20,000 or more

14.3

12.2

2.2

Sample size (total = 1,535)

697

838

San Antonio

Average annual base family income ($)

11,488

12,374

– 886

Annual base family income (%)

$0

1.6

1.9

– 0.2

$1–$4,999

25.2

24.2

1.0

$5,000–$9,999

28.6

23.8

4.9

$10,000–$19,999

28.2

29.2

– 1.0

$20,000 or more

16.4

21.0

– 4.6

Sample size (total = 1,720)

857

863

Washington, D.C.

Average annual base family income ($)

15,507

15,647

– 140

Annual base family income (%)

$0

14.4

16.9

– 2

$1–$4,999

21.2

20.7

0

$5,000–$9,999

13.4

11.3

2

$10,000–$19,999

20.5

18.2

2

$20,000 or more

30.4

32.8

– 2

Sample size (total = 1,808)

897

911

a Family income for the new rent rules group shows retrospective income or gross current/anticipated income. Under the new rent rules, TTP is generally based on retrospective income, but households who were under grace-period rents or had approved hardship remedies had their TTPs calculated based on their current/

anticipated gross incomes.

b Family income for the existing rent rules group shows adjusted current/anticipated income.

c Louisville households who opted out (212) are families who were randomly assigned into the new rent rules group and remained in that group but chose to have their rent calculated according to the existing rent rules.

d Louisville families who opted out of the new rent policy are excluded from the results for the new rent rules group in this panel.

Notes: Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences.

Source: MDRC calculations using PHA data

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47

For all PHAs combined, on average, the annual base income

of the new rent rules group ($11,717) is lower than the base

Box 5.1. Total Tenant Payment and

income of the existing rent rules group ($12,104) by $387,

Family Share

or about 3 percent. However, the pattern varies from PHA

Total tenant payment (TTP) is the amount a family must

to PHA. For example, in Lexington, the base annual income

contribute toward its contract rent. TTP is based on 28 percent

of the new rent rules group is lower than that of the existing

of gross income for families in the Rent Reform demonstration.

rent rules group by $1,719, or about 15 percent. The new rent

The Housing Assistance Payment (HAP) is the housing

rules group’s base income is lower in San Antonio by $886,

subsidy (for rent and utilities) paid by the housing agency.

or 7 percent, and in Washington, D.C., by $140, or less than

Family share includes the TTP and any extra housing costs

1 percent. In contrast, in Louisville, families in the new rent

above the payment standard, paid by the family.

rules group have a base annual income that is higher than that

Example: Paige is renting a housing unit that has a $1,200

contract rent. The payment standard for her housing subsidy is

of the existing rent rules group by $851, or 10 percent, when

$1,100. She is responsible for paying a total of $250 (the family

opt-outs are included in the new rent rules group.107 As the

share), which includes her TTP of $150 (based on 28 percent of

next section shows, these differences in base income between

her income) and an additional $100, the amount by which the

contract rent exceeds the payment standard.

the new and the existing rent rules group generate a similar

pattern of differences in TTPs.

Families’ Initial Housing Contributions and

Subsidies

As explained in chapter 1, after computing a family’s expected

TTP, the PHA pays the difference between the contract rent

charged by the landlord and the family’s TTP, up to the payment

standard set for the local area.108 This subsidy is referred to as

the Housing Assistance Payment. If the landlord charges a rent

that exceeds the payment standard, the family is responsible

for that extra amount, in addition to its TTP.109 The TTP plus

that extra amount makes up the family’s total housing cost,

referred to by HUD as the “family share” of rent and utilities.

Box 5.1 offers a simple illustration of these housing subsidy

concepts in the case of Paige, a fictional voucher holder.

Table 5.2 shows the actual initial TTP, family share, and

housing subsidy that the PHAs calculated for the new rent

rules group and the existing rent rules group for all four study

family share is also about $20 lower, although for both the new

PHAs combined. The table shows that the average TTP for the

and existing rent rules group, the family share is somewhat

new rent rules group, at $289 per month, was about $20  less

higher than the average TTP, which indicates that some families

than the $310 TTP paid by families in the existing rent rules

were renting housing units for amounts that exceeded the

group, about a 6-percent reduction. The new rent rules group’s

payment standard.

107 When the opt-outs are excluded from the new rent rules group, the difference between the new and existing rent rules groups is larger (15 percent), because the opt-out families make up an even lower-income portion of the sample. Although the precise reasons for Louisville’s divergence cannot be determined with the data available to this study, it may be due partly to the effect of the new rent rules on the distribution of base income. In the other PHAs, base income for the new rent rules group (which mostly reflects average monthly retrospective income) was less than base income for the existing rent rules group (for whom base income reflects current or anticipated income) at the upper end of the income distribution, which helped to offset the reduction in the proportion of zero-income families under the new rent rules. In contrast, although Louisville’s new rent rules group had fewer zero-income families than the existing rent rules group, it did not have fewer families with base incomes exceeding $20,000. (See table 5.1.)

108 If a family’s gross rent (that is, its contract rent plus utilities not included in the rent) is less than the payment standard, the housing subsidy covers the difference between the family’s TTP and its gross rent.

109 Voucher holders are allowed to rent units for which the contract rent exceeds the payment standard as long as those units do not require them to pay more than 40 percent of their incomes toward rent and utilities when they sign the lease. Under HUD’s traditional rent rules, that 40 percent means 40 percent of their current or anticipated  adjusted incomes. Under the new rent rules, it is 40 percent of their current or anticipated  gross incomes.

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Reducing Work Disincentives in the Housing Choice Voucher Program 48

Table 5.2. Tenants’ Costs and Housing Subsidies at Initial Study Recertification Outcome

New Rent Rulesa

Existing Rent Rulesb

Difference

Average total tenant payment (TTP)a ($)

289

310

– 20

TTPa (%)

$0

1.9

9.1

– 7.2

$1–$50

5.8

11.5

– 5.7

$51–$75

9.7

4.1

5.7

$76–$100

9.0

3.3

5.7

$101–$150

13.4

11.1

2.3

$151–$300

25.3

20.9

4.4

$301–$700

27.5

29.5

– 2.0

$701 or more

7.4

10.5

– 3.1

TTP as a proportion of gross monthly incomeb, c (%)

0%–10%

3.5

12.1

– 8.6

11%–20%

18.9

20.5

– 1.6

21%–30%

54.2

54.6

– 0.3

31%–40%

4.7

6.9

– 2.3

41%–50%

3.5

0.8

2.6

51% or more

7.5

3.1

4.4

Unable to calculate (income = $0)

7.8

2.0

5.8

TTP exceeds 40% of gross monthly incomeb, c (%)

10.9

3.9

7.0

TTP exceeds 50% of gross monthly incomeb, c (%)

7.5

3.1

4.4

Family TTP relative to the local minimum TTPa (%)

Paying below the minimum TTP

3.3

24.5

– 21.2

Paying the minimum TTP

25.5

6.1

19.4

Paying above the minimum TTP

71.2

69.4

1.8

Average family shared ($)

337

358

– 20

Family shared (%)

$0

0.5

5.4

– 5.0

$1–$50

1.7

8.4

– 6.7

$51–$75

9.5

3.9

5.6

$76–$100

6.6

3.6

2.9

$101–$150

11.7

9.2

2.5

$151–$300

26.3

22.2

4.1

$301–$700

33.8

33.9

– 0.1

$701 or more

10.0

13.4

– 3.4

Family share as a proportion of gross monthly incomeb, c (%)

0%–10%

1.7

7.1

– 5.4

11%–20%

15.1

17.2

– 2.0

21%–30%

35.8

36.0

– 0.2

31%–40%

15.6

18.0

– 2.3

41%–50%

8.3

5.3

3.1

51% or more

14.2

10.8

3.5

Unable to calculate (income = $0)

9.2

5.7

3.4

Family share exceeds 40% of gross monthly incomeb, c (%)

22.6

16.1

6.5

Family share exceeds 50% of gross monthly incomeb, c (%)

14.2

10.8

3.5

Housing subsidye ($)

834

813

21

Sample size (total = 6,208)

3,118

3,090

a TTP is the minimum amount a family must contribute toward rent and utilities regardless of the unit selected.  Under the new rent rules, TTP is 28 percent of prior year income and under existing rent rules TTP is 30 percent of adjusted income.

b For the existing rent rules group, gross income is equal to current/anticipated income. For the new rent rules group, gross income is equal to retrospective income, unless the household is paying a grace-period TTP or has a hardship remedy. In these cases the new rent rules group’s gross income is current/anticipated income.

c Households with $0 income and $0 TTP are represented in the “0%–10%” category. Households with $0 income and TTPs greater than $0 are in the “unable to calculate” category. Households with high proportions of their incomes going toward TTP or family share are mostly households with near-zero monthly incomes who have minimum TTP payments. Lexington has a minimum TTP in place for both the existing and new rent rules groups.

d Family share is the family’s contribution toward the gross rent. It may be the TTP or higher, depending on the unit selected by the family.

e Housing subsidy is the full subsidy amount paid by the housing agency, and includes any utility allowance payments made to the tenant in addition to rent paid to the owner by the housing agency.

Notes: Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. Statistical tests were not performed.

Source: MDRC calculations using PHA data

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Reducing Work Disincentives in the Housing Choice Voucher Program 49

Table 5.3 presents findings on the actual initial TTP, family

the existing $50 minimum TTP was raised to $100 for the

share, and housing subsidy for each PHA. It shows that the

new rent rules group, the proportion of families in that group

pattern of somewhat lower average TTPs for the new rent rules

paying TTPs of $50 or less dropped from about 11 percent of

group held for three of the four PHAs. In Louisville, however,

the existing rent rules group to nearly 0 percent of the new rent

the average monthly TTP was slightly higher for the new rent

rules group. In Washington, D.C., where the PHA instituted a

rules group, by $12, and the average housing subsidy was

$75 minimum TTP for the new rent rules group, the proportion

lower. This difference reflects the fact that, in Louisville, as

of families paying a $0 TTP dropped from almost 16 percent of

previously discussed, the average base income for calculating

the existing rent rules group (which faced no minimum TTP) to

a family’s TTP was somewhat higher than the base income for

less than 1 percent of the new rent rules group.

the existing rent rules group.

Table 5.2 also shows that about 26 percent of families in the

Under the new rent policy, TTP is based on 28 percent of average

new rent rules group had TTPs that were exactly the  minimums

gross monthly income from the year just past, whereas TTP

established by their PHAs, and most of the remaining families—

under existing rules is usually based on 30 percent of average

71 percent—were paying amounts that exceeded the minimums.

monthly current or anticipated adjusted income. (Box 2.1 in

A very small proportion of families (3 percent) were paying less

chapter 2 illustrates the main steps involved in calculating

than the applicable minimum TTP. That proportion may have

TTP under the different rent policies.) Families subject to the

been higher, however, if more families had received hardship

new rules have a lower average TTP partly because, as noted

waivers of the minimum TTP, an issue discussed further in the

previously, their average base income was lower than the

next section. It also should be noted that the families paying

existing rent rules group’s base income. Also, some families

minimum TTPs will pay no higher for the remainder of the

received a grace-period TTP (a temporary reduction), further

3-year recertification period. If their earnings increase during

lowering the average TTP for the new rent rules group.

this period, they will not be required to report those increases

to their PHAs and will not have their TTPs recalculated—a

Looking beyond the averages, a comparison of the distribution

substantial financial benefit for the families.

of TTP amounts reveals another pattern. Overall, as table 5.2

shows, a smaller proportion of families in the new rent rules

The new rent policy resulted in a small reduction in the

group had TTPs of $0 than families in the existing rent rules

proportion of families paying very high TTPs (that is, $700 or

group (a reduction of 7 percentage points), and a smaller

more per month). For all PHAs combined, the rate dropped

proportion were paying very high TTPs of $700 or more per

by 3 percentage points (7 percent of families in the new rent

month (a reduction of 3 percentage points).

rules group compared with 11 percent of the existing rent rules

group, as shown in table 5.2). The reduction across the PHAs

At the lower end, the reduction in TTPs of $0 reflects the

ranged from 2 percentage points in Louisville to 5 percentage

institution of a minimum TTP where none existed before—that

points in Washington, D.C. This reflects the fact that the new

is, in Louisville and Washington, D.C. As table 5.3 shows, no

rent rules reduced the proportion of families in the highest base

families in the existing or new rent rules groups in Lexington

monthly income bracket (see table 5.1).

or San Antonio had a $0 TTP. However, in San Antonio, where

Table 5.3. Tenants’ Costs and Housing Subsidies at Initial Study Recertification, by Public Housing Agency (PHA) (1 of 5) Outcome

New Rent Rules

Existing Rent Rules

Difference

Lexington

Average total tenant payment (TTP)a ($)

265

321

– 56

TTPa (%)

$0

0.0

0.0

0.0

$1–$50

0.0

0.2

– 0.2

$51–$75

0.0

0.0

0.0

$76–$100

0.0

0.0

0.0

$101–$150

44.2

38.3

5.9

$151–$300

26.8

19.9

7.0

$301–$700

26.0

34.9

– 8.9

$701 or more

3.0

6.7

– 3.7

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Reducing Work Disincentives in the Housing Choice Voucher Program 50

Table 5.3. Tenants’ Costs and Housing Subsidies at Initial Study Recertification, by Public Housing Agency (PHA) (2 of 5) Outcome

New Rent Rules

Existing Rent Rules

Difference

TTP as a proportion of gross monthly incomeb, c (%)

0%–10%

4.0

3.1

0.9

11%–20%

23.3

17.2

6.1

21%–30%

35.3

42.5

– 7.2

31%–40%

4.0

7.1

– 3.1

41%–50%

4.7

3.6

1.1

51% or more

19.2

18.6

0.6

Unable to calculate (income = $0)

9.5

7.9

1.6

TTP exceeds 40% of gross monthly incomeb, c (%)

23.9

22.2

1.7

TTP exceeds 50% of gross monthly incomeb, c (%)

19.2

18.6

0.6

Average family shared ($)

315

372

– 57

Family shared (%)

$0

0.0

0.0

0.0

$1–$50

0.0

0.2

– 0.2

$51–$75

0.0

0.0

0.0

$76–$100

0.0

0.0

0.0

$101–$150

21.1

19.9

1.3

$151–$300

37.8

29.9

7.9

$301–$700

36.8

39.5

– 2.8

$701 or more

4.2

10.5

– 6.2

Family share as a proportion of gross monthly incomeb, c (%)

0%–10%

3.6

2.3

1.3

11%–20%

20.7

15.9

4.8

21%–30%

20.5

24.7

– 4.2

31%–40%

15.4

20.7

– 5.3

41%–50%

6.1

4.2

1.9

51% or more

24.1

24.3

– 0.2

Unable to calculate (income = $0)

9.5

7.9

1.6

Family share exceeds 40% of gross monthly incomeb, c (%)

30.2

28.5

1.8

Family share exceeds 50% of gross monthly incomeb, c (%)

24.1

24.3

– 0.2

Housing subsidye ($)

599

545

55

Sample size (total = 951)

473

478

Louisville (including opt-outs)f

Average TTPa ($)

225

213

12

TTPa (%)

$0

6.1

16.1

– 10.0

$1–$50

19.9

17.9

2.0

$51–$75

5.7

5.5

0.2

$76–$100

3.9

2.7

1.2

$101–$150

7.1

5.3

1.8

$151–$300

27.6

24.5

3.1

$301–$700

27.5

23.9

3.6

$701 or more

2.2

4.2

– 1.9

TTP as a proportion of gross monthly incomeb, c (%)

0%–10%

9.4

22.6

– 13.1

11%–20%

23.0

20.4

2.6

21%–30%

52.3

52.6

– 0.3

31%–40%

3.6

4.4

– 0.8

41%–50%

1.7

0.0

1.7

51% or more

3.7

0.0

3.7

Unable to calculate (income = $0)

6.3

0.0

6.3

TTP exceeds 40% of gross monthly incomeb, c(%)

5.4

0.0

5.4

TTP exceeds 50% of gross monthly incomeb, c (%)

3.7

0.0

3.7

Average family shared ($)

321

307

14

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 51

Table 5.3. Tenants’ Costs and Housing Subsidies at Initial Study Recertification, by Public Housing Agency (PHA) (3 of 5) Outcome

New Rent Rules

Existing Rent Rules

Difference

Family shared (%)

$0

1.0

3.5

– 2.5

$1–$50

5.8

10.5

– 4.7

$51–$75

6.1

5.3

0.8

$76–$100

5.5

5.4

0.1

$101–$150

9.9

9.3

0.6

$151–$300

26.0

23.7

2.3

$301–$700

38.4

33.8

4.6

$701 or more

7.3

8.6

– 1.3

Family share as a proportion of gross monthly incomeb, c (%)

0%–10%

3.3

5.8

– 2.6

11%–20%

14.4

11.9

2.4

21%–30%

19.4

19.8

– 0.4

31%–40%

22.0

20.9

1.1

41%–50%

11.8

10.6

1.2

51% or more

18.2

18.3

– 0.1

Unable to calculate (income = $0)

11.0

12.6

– 1.7

Family share exceeds 40% of gross monthly incomeb, c (%)

30.0

28.9

1.1

Family share exceeds 50% of gross monthly incomeb, c (%)

18.2

18.3

– 0.1

Housing subsidye ($)

678

688

– 10

Sample size (total = 1,729)

891

838

Louisville (excluding opt-outs)f, g

Average TTPa ($)

243

213

30

TTPa (%)

$0

1.3

16.1

– 14.8

$1–$50

19.8

17.9

1.9

$51–$75

5.6

5.5

0.1

$76–$100

4.0

2.7

1.3

$101–$150

7.5

5.3

2.2

$151–$300

28.8

24.5

4.4

$301–$700

30.8

23.9

7.0

$701 or more

2.2

4.2

– 2.0

TTP as a proportion of gross monthly incomeb, c (%)

0%–10%

4.3

22.6

– 18.2

11%–20%

25.1

20.4

4.7

21%–30%

52.9

52.6

0.3

31%–40%

2.7

4.4

– 1.7

41%–50%

2.2

0.0

2.2

51% or more

4.7

0.0

4.7

Unable to calculate (income = $0)

8.0

0.0

8.0

TTP exceeds 40% of gross monthly incomeb, c (%)

6.9

0.0

6.9

TTP exceeds 50% of gross monthly incomeb, c (%)

4.7

0.0

4.7

Average family shared ($)

334

307

27

Family shared (%)

$0

0.4

3.5

– 3.0

$1–$50

4.7

10.5

– 5.8

$51–$75

5.5

5.3

0.2

$76–$100

5.5

5.4

0.1

$101–$150

9.6

9.3

0.3

$151–$300

25.8

23.7

2.1

$301–$700

40.5

33.8

6.7

$701 or more

8.0

8.6

– 0.6

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 52

Table 5.3. Tenants’ Costs and Housing Subsidies at Initial Study Recertification, by Public Housing Agency (PHA) (4 of 5) Outcome

New Rent Rules

Existing Rent Rules

Difference

Family share as a proportion of gross monthly incomeb, c (%)

0%–10%

2.9

5.8

– 3.0

11%–20%

16.8

11.9

4.9

21%–30%

20.8

19.8

1.0

31%–40%

23.0

20.9

2.1

41%–50%

12.2

10.6

1.6

51% or more

15.6

18.3

– 2.6

Unable to calculate (income = $0)

8.8

12.6

– 3.9

Family share exceeds 40% of gross monthly incomeb, c (%)

27.8

28.9

– 1.0

Family share exceeds 50% of gross monthly incomeb, c (%)

15.6

18.3

– 2.6

Housing subsidye ($)

671

688

– 18

Sample size (total = 1,535)

697

838

San Antonio

Average TTPa ($)

279

311

– 32

TTPa (%)

$0

0.0

0.0

0.0

$1–$50

0.2

10.5

– 10.2

$51–$75

0.0

6.2

– 6.2

$76–$100

23.0

5.3

17.7

$101–$150

10.7

8.6

2.1

$151–$300

30.9

25.4

5.5

$301–$700

31.2

37.2

– 6.0

$701 or more

4.0

6.8

– 2.8

TTP as a proportion of gross monthly incomeb, c (%)

0%–10%

0.0

0.9

– 0.9

11%–20%

20.0

24.0

– 4.0

21%–30%

60.2

64.8

– 4.6

31%–40%

7.2

6.8

0.4

41%–50%

3.6

1.0

2.6

51% or more

7.2

0.7

6.5

Unable to calculate (income = $0)

1.8

1.7

0.0

TTP exceeds 40% of gross monthly incomeb, c (%)

10.9

1.7

9.1

TTP exceeds 50% of gross monthly incomeb, c (%)

7.2

0.7

6.5

Average family shared ($)

321

357

– 36

Family shared (%)

$0

0.0

0.0

0.0

$1–$50

0.1

6.6

– 6.5

$51–$75

0.0

5.8

– 5.8

$76–$100

12.5

4.0

8.5

$101–$150

14.3

8.1

6.2

$151–$300

29.9

25.2

4.7

$301–$700

36.5

39.9

– 3.4

$701 or more

6.7

10.5

– 3.8

Family share as a proportion of gross monthly incomeb, c (%)

0%–10%

0.0

0.5

– 0.5

11%–20%

16.8

21.2

– 4.4

21%–30%

37.7

41.9

– 4.3

31%–40%

20.7

22.2

– 1.6

41%–50%

9.9

6.0

3.9

51% or more

13.2

6.4

6.8

Unable to calculate (income = $0)

1.8

1.7

0.0

Family share exceeds 40% of gross monthly incomeb, c (%)

23.1

12.4

10.7

Family share exceeds 50% of gross monthly incomeb, c (%)

13.2

6.4

6.8

Housing subsidye ($)

665

622

43

Sample size (total = 1,720)

857

863

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 53

Table 5.3. Tenants’ Costs and Housing Subsidies at Initial Study Recertification, by Public Housing Agency (PHA) (5 of 5) Outcome

New Rent Rules

Existing Rent Rules

Difference

Washington, D.C.

Average TTPa ($)

376

392

– 15

TTPa (%)

$0

0.6

16.1

– 15.5

$1–$50

0.0

12.4

– 12.4

$51–$75

28.2

2.9

25.3

$76–$100

5.5

3.7

1.8

$101–$150

6.0

4.5

1.5

$151–$300

16.9

14.0

2.9

$301–$700

24.6

24.6

0.0

$701 or more

18.2

21.9

– 3.7

TTP as a proportion of gross monthly incomeb, c (%)

0%–10%

0.7

17.8

– 17.1

11%–20%

11.4

18.9

– 7.5

21%–30%

60.4

53.0

7.4

31%–40%

3.6

9.2

– 5.7

41%–50%

4.5

0.0

4.5

51% or more

5.2

0.1

5.1

Unable to calculate (income = $0)

14.3

1.0

13.3

TTP exceeds 40% of gross monthly incomeb, c (%)

9.7

0.1

9.6

TTP exceeds 50% of gross monthly incomeb, c (%)

5.2

0.1

5.1

Average family shared ($)

382

398

– 16

Family shared (%)

$0

0.6

15.3

– 14.7

$1–$50

0.0

12.6

– 12.6

$51–$75

27.1

2.9

24.2

$76–$100

5.4

3.5

1.8

$101–$150

6.0

4.3

1.7

$151–$300

17.0

13.8

3.2

$301–$700

25.1

25.2

– 0.2

$701 or more

18.9

22.3

– 3.4

Family share as a proportion of gross monthly incomeb, c (%)

0%–10%

0.7

17.0

– 16.3

11%–20%

11.4

18.8

– 7.4

21%–30%

58.4

51.3

7.2

31%–40%

4.6

9.8

– 5.2

41%–50%

4.6

0.2

4.4

51% or more

6.1

1.0

5.1

Unable to calculate (income = $0)

14.3

2.0

12.3

Family share exceeds 40% of gross monthly incomeb, c (%)

10.7

1.2

9.5

Family share exceeds 50% of gross monthly incomeb, c (%)

6.1

1.0

5.1

Housing subsidye ($)

1,275

1,249

26

Sample size (total = 1,808)

897

911

a TTP is the minimum amount a family must contribute toward rent and utilities regardless of the unit selected. Under the new rent rules, TTP is 28 percent of prior-year income and under existing rent rules TTP is 30 percent of adjusted current/anticipated income.

b For the existing rent rules group, gross income is equal to current/anticipated income. For the new rent rules group, gross income is equal to retrospective income, unless the household is paying a grace-period TTP or has a hardship remedy. In these cases, the new rent rules group’s gross income is current/anticipated income.

c Households with $0 income and $0 TTP are represented in the “0%–10%” category. Households with $0 income and TTPs greater than $0 are in the “unable to calculate” category. Households with high proportions of their incomes going toward TTP or family share are mostly households with near-zero monthly incomes who have minimum TTP payments. Lexington has a minimum TTP in place for both the existing and new rent rules groups.

d Family share is the family’s contribution toward the gross rent. It may be the TTP or higher, depending on the unit selected by the family.

e Housing subsidy is the full subsidy amount paid by the housing agency, including any utility allowance payments made to the tenant in addition to rent paid to the owner by the housing agency.

f Louisville households who opted out (212) are families who were randomly assigned to the new rent rules group and remained in that group but chose to have their rent calculated according to the existing rent rules.

g Louisville families who opted out of the new rent policy are excluded from the results for the new rent rules group in this panel.

Notes: Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. Statistical tests were not performed.

Source: MDRC calculations using PHA data

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 54

With the samples of all four PHAs combined, 77 percent of the

earnings over the 3 years before their next triennial recertifi-

families in the new rent rules group paid a TTP equal to or less

cations. TTPs recalculated in year 4 will be higher if they are

than 30 percent of gross income (see table 5.2).110 Moreover,

based on family incomes that are higher, on average, than those

about 11 percent of families were paying TTPs that exceeded

incomes were at the start of the new rent policy, and housing

40 percent of their incomes, and 8 percent were paying TTPs

subsidies PHAs provide will consequently be lower.

that exceeded 50 percent of their incomes. In the existing

rent rules group, 4 percent of families paid TTPs exceeding

Initial Experiences Implementing the

40 percent of their incomes, due largely to existing minimum

TTP policies in Lexington and San Antonio. When considering

Rent Safeguards

family share (which includes housing costs above the payment

standard), rather than TTP, the percentage of income paid

Grace-Period TTP

toward rent and utilities is correspondingly higher for both

Some families may find that their retrospective gross incomes

groups. For example, among families in the new rent rules

are substantially higher than their current or anticipated gross

group, 23 percent paid family shares that exceeded 40 percent

incomes at the time of their initial recertifications. The new rent

of their current or anticipated incomes, compared with 16

policy includes a number of safeguards and hardship remedies

percent of the existing rent rules group.

(detailed in chapter 2 and summarized in box 5.2 and

The flip side of the lower average TTP for the new rent rules

appendix E) to help protect such families from excessive rent

group is a somewhat larger housing subsidy. For the full

burdens. The grace-period provision is one such safeguard. If,

sample combined (table 5.2), the PHAs paid an initial subsidy

at the initial income recertification interview, a family’s current

of $834 for the new rent rules group, compared with $813 for

or anticipated gross income is more than 10 percent lower

the existing rent rules group. It should be noted that although

than its retrospective income, the family automatically qualifies

PHAs are picking up slightly more of the subsidy in the short

for (and receives) a 6-month grace-period TTP, based on 28

run, they are projected to begin recouping some of those extra

percent of its current or anticipated gross income. The family

expenditures in later years—how much PHAs will recoup

would need to pay the minimum TTP if that grace-period TTP

remains to be seen. The amount will depend on the number

calculation is less than the minimum TTP threshold set by its

of families in the new rent rules group who increase their

housing authority. Only available at the beginning of the 3-year

Box 5.2. Safeguards Built Into the New Rent Policy

Safeguard

Can be used at...

Household is eligible if…

Modified total tenant payment (TTP) will be…

Grace-period  ...triennial certification. ...current or anticipated monthly income

...based on the current or  anticipated monthly

TTP

is more than 10 percent less than

income. The modified TTP lasts for 6 months and

retrospective monthly income.

then automatically switches back to being based on

retrospective income.

Interim recerti-...voucher holder’s

...the household’s retrospective income

...set at 28 percent of income based on the most

fication

request, up to once

at the time of the interim recertification is

recent 12 months.

per year.

more than 10 percent below its previously

established income.

Hardship

...triennial certification  ...TTP is more than 40 percent of current  ...based on an additional interim recertification remedies

or later during the

or anticipated monthly income  or

beyond the normal one-per-year option,  or

3-year period.

the household is at risk of eviction.

set at the minimum TTP for up to 180 days (can be

renewed),  or

set at 28 percent of a family’s current gross income

(which may be less than the minimum TTP, except in

Lexington) for up to 180 days (can be renewed),  or

supplemented with a “transfer voucher” to help a

family move to a more affordable unit.

110 For the existing rent rules group, gross income is equal to current or anticipated income. For the new rent rules group, gross income is equal to retrospective income, unless the family is paying a grace-period TTP or has a hardship remedy. In the latter two cases, the new rent rules group’s gross income is current or anticipated income.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 55

period, and at any subsequent triennial recertifications, the

for a hardship remedy if they meet the 40-percent threshold

grace period temporarily protects the household from a high

while paying TTPs that exceed the PHA’s $150 minimum. In

rent burden while it tries to restore its income to its prior level.

other words, regardless of families’ rent burdens, the PHA in

Lexington does not offer waivers of the minimum $150 TTP as

Table 5.4 shows that, overall, 25 percent of the families in the

part of its hardship policy (except in cases where households

new rent rules group (for all PHAs combined) were granted

become disabled).

grace-period TTPs at the start of the new rent policy, ranging

from 24 percent in San Antonio to 35 percent in Lexington.

Table 5.4 shows that, for all PHAs combined, nearly 18 percent

At the end of the 6-month grace period, the TTPs for these

of families in the new rent rules group were paying initial TTPs

families will automatically revert to the TTPs that their respec-

that exceeded the 40-percent threshold. The rate was 9 percent

tive PHAs initially calculated based on retrospective income.

in San Antonio, 13 percent in Louisville, 24 percent in Wash-

However, if the family cannot restore its current income to

ington, D.C., and 30 percent in Lexington. Nearly all of these

that original retrospective gross income level, it may request an

families (about 99 percent for all PHAs combined) were paying

interim recertification or receive a hardship remedy.

the minimum TTPs established by their PHAs. Furthermore, no

families were paying TTPs that both exceeded the 40-percent

Hardship Remedies

threshold  and were greater than their PHAs’ applicable mini-

mum TTPs. For example, in Louisville, 13 percent of families

As shown in box 5.2, in addition to grace-period TTP, the

had TTPs that exceeded the 40-percent threshold by up to

new policy offers additional safeguards. Under the new

$50, that PHA’s minimum TTP; none were paying TTPs that

rent policy, families whose TTPs exceed 40 percent of their

exceeded the threshold by more than $50.

current or anticipated gross incomes are considered to have

excessive rent burdens and are generally eligible to request a

Had more families received hardship remedies (which included,

hardship remedy, with an important exception in Lexington.

as one option, a waiver of the minimum TTP), the proportion

As previously explained, families in Lexington are only eligible

paying TTPs exceeding 40 percent of their current or anticipated

Table 5.4. Eligibility for and Receipt of Safeguard Rents at the Time of Initial Recertification, New Rent Rules Group Only Outcome

Lexington Louisville

San Antonio

Washington, D.C.

All Public Housing

Authorities (PHAs)

Minimum total tenant payment (TTP) ($)

150

50

100

75

Family TTP relative to the local minimum TTP (%)

Paying below the minimum TTP

0.0

1.7

0.2

0.6

0.7

Paying the minimum TTP

44.2

19.4

23.0

28.2

27.2

Paying above the minimum TTP

55.8

78.9

76.8

71.3

72.2

Paying grace-period TTPa (%)

34.5

13.9

23.6

28.6

24.6

TTP exceeds 40% of current/anticipated incomeb (%)

30.2

12.9

8.6

23.6

17.7

Paying the minimum TTP, among households whose

100.0

97.8

98.6

99.5

99.2

TTPs exceed 40% of current/anticipated income (%)

Amount by which TTP exceeds 40% of current/

anticipated incomec (%)

TTP does not exceed 40% of current income

69.8

87.1

91.5

77.1

82.5

$1–$50

6.1

12.9

5.6

8.8

8.4

$51–$75

3.6

0.0

1.5

14.0

5.3

$76–$100

4.4

0.0

1.3

0.0

1.1

$101–$150

16.1

0.0

0.0

0.1

2.7

More than $150

0.0

0.0

0.0

0.0

0.0

Requested and received a hardship remedy (%)

0.0

1.6

0.2

0.2

0.5

Sample size

473

697

857

897

2,924

a At the initial recertification, families receiving grace-period TTPs have their TTPs calculated based on current/anticipated income for 6 months, rather than retrospective income. The grace-period TTP is used if a family’s current/anticipated income is more than 10 percent lower than its retrospective income.

b If income = $0, any TTP greater than $0 exceeds this threshold. If TTP exceeds 40 percent of current/anticipated income then the family qualifies for a hardship remedy, which could allow the family to have a lower TTP.

c Even in the case of hardship, TTP in Lexington will not go below $150.

Notes: Rounding may cause slight discrepancies in calculating sums and differences. Louisville families who opted out of the study are excluded because their rent calculation is subject to existing rules.

Source: MDRC calculations using PHA data

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 56

gross incomes would have been lower (except in Lexington,

might like. Future reports will examine whether the more active

where the minimum TTP could not be waived, except in cases

approach recently taken by PHAs increased the use of hardship

of disability). It is not yet clear why PHAs and families did

remedies.

not use hardship remedies more often. Early observations of

An analysis (not shown in this report) of baseline survey data

PHA practices and a preliminary review of PHA data, however,

for families in the new rent rules group, just before those rules

revealed that the PHAs initially took a fairly reactive approach

took effect for them, found that those whose initial TTPs were

in implementing the new rent policy’s hardship provision.

set at the minimum level for their PHA were very similar to

The PHAs’ software systems were programmed to identify

those paying more than the minimum TTP, in terms of the

families whose TTPs exceeded 40 percent of their current or

head of household’s background characteristics and the family’s

anticipated incomes and provide a warning for staff members.

material hardships. For example, their household heads were

Unlike the grace-period TTP, however, which was automatically

not less educated or more likely to have health problems that

granted, a family had to initiate a special hardship request and

limited work, and their families were not more likely to have

complete the necessary form to be considered for a hardship

difficulty buying food or paying their rent or utilities. However,

remedy. For the most part, final rent calculations were not

they were considerably less likely to be employed, and their

completed in the presence of the families, so housing staff

families were more likely to be receiving Supplemental

members did not necessarily have the opportunity to explain

Nutrition Assistance Program benefits.

to families in person that they might be eligible for a hardship

Similarly, an analysis of PHA data on families’ income sources

remedy. As a result, the agencies mostly relied on families to

at the time of recertification shows that families deemed to be

initiate a hardship request and usually did not inform specific

potentially eligible for a hardship remedy under the new rent

households that they might qualify. For example, when informing

policy were less likely to be working. Specifically, only 20 percent

families by mail of their new TTPs, they did not point out to

of families (in all PHAs combined) who were paying TTPs

those families whose TTPs exceeded 40 percent of their current

exceeding 40 percent of gross income (the hardship standard)

or anticipated incomes that they might qualify for a hardship

had any wage income. In contrast, more than 44 percent of

remedy. It is unclear why families that qualified for a hardship

families whose TTPs did not exceed that 40-percent threshold

remedy did not request one; they may not have realized that

had at least some wage income.

they qualified or they may have chosen not to apply to avoid

further interactions with the PHA.

Subgroup Variations

When initial findings began to emerge on the number of

families affected, the PHAs discussed this problem with HUD

Economic theory and evidence from other relevant studies

and the study team; they agreed to send letters to all families in

of financial incentives that reward work among low-income

the new rent rules group, reminding them that if they were ex-

populations, including voucher recipients, suggest that different

periencing difficulty meeting their rent obligations, they might

types of families may respond to changes to the rent structure

qualify for hardship remedies or for interim recertifications to

in different ways.111 Tenants who differ in terms of their human

reduce their TTPs, and that they should make contact with the

capital (for example, education and skill levels) and the wages

housing authority to find out. In addition, the agencies mailed

they could command in their local labor markets, who face

a special notice to those families known to have initial TTPs

different costs associated with working (such as childcare), and

that might qualify them for a hardship remedy, encouraging

who differ in terms of other personal and situational barriers

them to make contact with the PHA to see whether they did in

to employment may, for those reasons, vary in their ability to

fact qualify. (See appendix F for a sample version of this letter.)

take advantage of the lower implicit marginal tax on earnings

Of course, it is possible that not all families who qualify for

offered by the new rent rules. For example, tenants who are

a hardship remedy will want to apply for one, because doing

not employed at the time of their initial recertifications may

so may require them to interact with the PHA more than they

respond differently than tenants who are already working

111 The Work Rewards evaluation found that offering voucher holders participating in New York City’s Family Self-Sufficiency program financial incentives for sustained full-time work produced substantial positive effects on employment and earnings for tenants who were not already working when they entered the study, but had no effects on participants who were already employed (Nuñez, Verma, and Yang, 2015). Michalopoulos (2005) summarizes the longer-term results of four welfare reform experiments testing financial work incentives, and reports that, in general, the programs’ effects on employment and earnings were larger and more persistent for long-term welfare recipients with limited education and work experience. See also Hendra et al. (2011) for findings showing different effects on the target group of a services-plus-incentives workforce program for welfare recipients in the United Kingdom and Riccio and Miller (2016) for subgroup effects of a comprehensive conditional cash transfer program for low-income families in New York City.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 57

full time, because it is often easier for individuals to increase

group were roughly similar.) The top panel of table 5.5 shows

their hours in work than for it is for those already working to

that, for all PHAs combined, the new rent policy resulted in

advance to higher-wage jobs. Tenants with young children

somewhat lower initial TTPs for all subgroups than existing

may have a more difficult time working than those without

rent rules. In other words, whether or not a family had earned

young children because of the childcare costs they may face.

income, and whether or not it was caring for a young child,

it paid a somewhat lower TTP than it would have paid under

The level of rent burden on families that the new rent policy

existing rent rules. The reduction was somewhat greater among

imposes may also vary across different types of families. For

families in the new rent rules group who had some earned

example, it may increase the rent burden experienced by

income, for whom the average TTP was lower by $35, or almost

families in more precarious financial circumstances than that

8 percent, than the $458 paid by similar families in the existing

experienced by other families. The evaluation therefore aims

rent rules group. Families in the new rent rules group with no

to track how the new rent rules affect the TTPs that families in

earned income had an average TTP that was $6, or 3 percent,

different circumstances are expected to pay.

lower than the $198 paid by their counterparts in the existing

Table 5.5 shows the initial TTPs for families who did and did

rent rules group. The new rent policy also resulted in a lower

not have income from earnings at the time of random assign-

average TTP both for families with young children and for those

ment, and who did and did not have children younger than

without young children.

5 at that time (families who did may be considered a more

Generally speaking, a similar pattern is evident at all PHAs

vulnerable group).112 Future reports will determine whether

except Louisville. At that PHA, families in the new rent rules

the new rent policy affects employment and other outcomes

group with no earned income had a somewhat higher initial

that vary among these and other subgroups, but the current

average TTP under the new rent policy than under existing rent

analysis shows how the new policy affects these particular

rules, as did families who were not caring for small children.

subgroups’ TTPs.

This pattern is consistent with the overall pattern in Louisville,

Overall, 58 percent of the families in the new rent rules group

where the average annual base income and average monthly

had no earned income at the time of random assignment, and

TTP for the full sample were higher for the new rent rules

about 34 percent were caring for one young child or more.113

group than the existing rent rules group.

(The corresponding proportions in the existing rent rules

Table 5.5. Total Tenant Payment (TTP) at Initial Study Recertification, by Public Housing Agency (PHA) and Subgroup (1 of 2)

Outcome and Subgroup

New Rent Rules

Existing Rent Rules

Difference

All PHAs

Average TTP ($)

Household has some earned income

No

192

198

– 6

Yes

422

458

– 35

Household includes young children

Yes

262

290

– 28

No

299

317

– 18

Lexington

Average TTP ($)

Household has some earned income

No

201

240

– 40

Yes

348

407

– 60

Household includes young children

Yes

246

288

– 42

No

273

333

– 60

112 These groups are defined based on data in the files used to conduct random assignment. Some of these characteristics (income, for example) could have changed between random assignment and the initial recertification meeting.

113 These findings are based on sample sizes presented in table 5.6.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 58

Table 5.5. Total Tenant Payment (TTP) at Initial Study Recertification, by Public Housing Agency (PHA) and Subgroup (2 of 2)

Outcome and Subgroup

New Rent Rules

Existing Rent Rules

Difference

Louisville (including opt-outs)a

Average TTP ($)

Household has some earned income

No

156

129

27

Yes

331

348

– 16

Household includes young children

Yes

215

222

– 7

No

229

210

19

Louisville (excluding opt-outs)a

Average TTP ($)

Household has some earned income

No

169

129

39

Yes

343

348

– 5

Household includes young children

Yes

227

222

5

No

249

210

39

San Antonio

Average TTP ($)

Household has some earned income

No

223

252

– 30

Yes

344

377

– 33

Household includes young children

Yes

236

268

– 31

No

298

336

– 38

Washington, D.C.

Average TTP ($)

Household has some earned income

No

199

201

– 2

Yes

643

678

– 34

Household includes young children

Yes

365

396

– 31

No

379

390

– 11

a Louisville households who opted out (212) are excluded from the second Louisville panel. These are families who were randomly assigned to the new rent rules group and chose to have their rents calculated according to the existing rent rules.

Notes: See Table 5.6 for sample sizes. Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. No tests of statistical significance have been performed. Household characteristics (earned-income status, child status) are determined at random assignment.  Earned income refers to current or anticipated income. Young children refers to those 5 and younger.

Source: MDRC calculations using PHA data

Subgroup Variation in the Use of Rent Safeguards

39 percent of the families with no earnings were paying the

Table 5.6 examines how rent burdens and use of the new rent

minimum TTPs established by their PHAs, and 61 percent were

policy’s safeguards varied among subgroups. It shows, for

paying TTPs above the minimum. In contrast, among families

example, that among families with no earned income from

with some earned income, only 12 percent were paying the

all the PHAs combined, 25 percent had TTPs that exceeded

minimum TTP, and 87 percent were paying TTPs above the

40 percent of their current or anticipated gross incomes.

minimum.

This figure is substantially higher than the 8-percent rate

Whether a family did or did not have a child under 5 did not

among families who had some earned income. Families with

matter as much. For example, among families with young

no earned income were more likely to have excessive rent

children, 16 percent were paying TTPs that exceeded 40

burdens in large part because they had less income overall and

percent of their current or anticipated gross incomes, compared

were more likely to be subject to the minimum TTP. Overall,

with 18 percent of families without young children.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 59

Table 5.6. Eligibility for and Receipt of Safeguard Rents at the Time of Initial Recertification, by Subgroup and Public Housing Administration (PHA), New Rent Rules Group Only (1 of 2)

Outcome

Lexington Louisville San Antonio Washington, D.C. All PHAs

No earned income

Family total tenant payment (TTP) relative to the local minimum TTP (%)

Paying above the minimum TTP

37.2

70.4

71.0

56.5

60.7

Paying the minimum TTP

62.8

27.6

28.8

42.8

38.5

Paying below the minimum TTP

0.0

2.0

0.2

0.7

0.8

Paying grace-period TTPa (%)

41.7

13.8

23.3

29.4

25.9

TTP exceeds 40% of current/anticipated incomeb (%)

45.1

17.8

8.4

35.1

25.2

Paying the minimum TTP, among households whose TTPs exceed 40% of  100.0

97.2

97.4

100.0

99.3

current anticipated income (%)

Amount by which TTP exceeds 40% of current/anticipated incomec (%)

TTP does not exceed 40% of current income

54.9

82.2

91.6

65.5

75.0

$1–$50

7.9

17.8

5.7

13.5

11.5

$51–$75

6.0

0.0

1.1

21.0

8.0

$76–$100

6.0

0.0

1.5

0.0

1.4

$101–$150

25.2

0.0

0.0

0.0

4.1

More than $150

0.0

0.0

0.0

0.0

0.0

Requested and received a hardship remedy (%)

0.0

1.8

0.2

0.2

0.5

Sample size

266

399

459

540

1,664

Some earned income

Family TTP relative to the local minimum TTP (%)

Paying above the minimum TTP

79.7

90.3

83.4

93.5

87.3

Paying the minimum TTP

20.3

8.4

16.3

6.2

12.2

Paying below the minimum TTP

0.0

1.3

0.3

0.3

0.5

Paying grace-period TTPa (%)

25.1

14.1

23.9

27.5

22.8

TTP exceeds 40% of current/anticipated incomeb (%)

11.1

6.4

8.8

6.2

7.9

Paying the minimum TTP, among households whose TTPs exceed 40% of  100.0

100.0

100.0

94.7

98.9

current/anticipated income (%)

Amount by which TTP exceeds 40% of current/anticipated incomec (%)

TTP does not exceed 40% of current income

88.9

93.6

91.4

94.6

92.4

$1–$50

3.9

6.4

5.5

1.7

4.4

$51–$75

0.5

0.0

2.0

3.4

1.7

$76–$100

2.4

0.0

1.0

0.0

0.7

$101–$150

4.3

0.0

0.0

0.3

0.8

More than $150

0.0

0.0

0.0

0.0

0.0

Requested and received a hardship remedy (%)

0.0

1.3

0.3

0.3

0.5

Sample size

207

298

398

357

1,260

Young children in the household

Family TTP relative to the local minimum TTP (%)

Paying above the minimum TTP

51.1

77.7

71.4

74.0

69.9

Paying the minimum TTP

48.9

22.3

27.8

25.5

29.7

Paying below the minimum TTP

0.0

0.0

0.8

0.5

0.4

Paying grace-period TTPa (%)

34.0

14.4

21.4

40.5

26.8

TTP exceeds 40% of current/anticipated incomeb (%)

31.9

13.3

7.9

18.5

16.1

Paying the minimum TTP, among households whose TTPs exceed 40%

100.0

96.0

95.2

100.0

98.4

of current/anticipated income (%)

Amount by which TTP exceeds 40% of current/anticipated incomec (%)

TTP does not exceed 40% of current income

68.1

86.7

92.1

82.7

84.2

$1–$50

7.8

13.3

6.0

15.7

10.5

$51–$75

2.8

0.0

1.1

1.5

1.3

$76–$100

3.5

0.0

0.8

0.0

0.9

$101–$150

17.7

0.0

0.0

0.0

3.2

More than $150

0.0

0.0

0.0

0.0

0.0

Requested and received a hardship remedy (%)

0.0

0.0

0.8

0.0

0.3

Sample size

141

188

268

200

797

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 60

Table 5.6. Eligibility for and Receipt of Safeguard Rents at the Time of Initial Recertification, by Subgroup and Public Housing Administration (PHA), New Rent Rules Group Only (2 of 2)

Outcome

Lexington Louisville San Antonio Washington, D.C. All PHAs

No young children in the household

Family TTP relative to the local minimum TTP (%)

Paying above the minimum TTP

57.8

79.4

79.2

70.5

73.0

Paying the minimum TTP

42.2

18.3

20.8

29.0

26.2

Paying below the minimum TTP

0.0

2.4

0.0

0.6

0.8

Paying grace-period TTPa (%)

34.6

13.8

24.5

25.2

23.8

TTP exceeds 40% of current/anticipated incomeb (%)

29.5

12.8

8.9

25.1

18.3

Paying the minimum TTP, among households whose TTPs exceed 40% of  100.0

98.5

100.0

99.4

99.5

current/anticipated income (%)

Amount by which TTP exceeds 40% of current/anticipated incomec (%)

TTP does not exceed 40 % of current income

70.5

87.2

91.3

75.5

81.9

$1–$50

5.4

12.8

5.5

6.8

7.7

$51–$75

3.9

0.0

1.7

17.6

6.8

$76–$100

4.8

0.0

1.5

0.0

1.2

$101–$150

15.4

0.0

0.0

0.1

2.5

More than $150

0.0

0.0

0.0

0.0

0.0

Requested and received a hardship remedy (%)

0.0

2.2

0.0

0.3

0.6

Sample size

332

509

589

697

2,127

a At the initial recertification, families receiving grace-period TTPs have their TTPs calculated based on current/anticipated income for 6 months, rather than retrospective income. The grace-period TTP is used if a family’s current/anticipated income is more than 10 percent lower than its retrospective income.

b If income = $0, any TTP greater than $0 exceeds this threshold. If TTP exceeds 40 percent of current/anticipated income then the family qualifies for a hardship remedy, which could allow the family to have a lower TTP.

c Even in the case of hardship, TTP in Lexington will not go below $150.

Notes: Rounding may cause slight discrepancies in calculating sums and differences. Family characteristics (income status, child status) are determined at random assignment. Earned income refers to current or anticipated income. Young children refers to those 5 and younger. Louisville households who opted out (212) are excluded from the table.

Source: MDRC calculations using PHA data

Conclusion

less toward their rents and utilities than they would have had to

contribute under their PHAs’ existing rent rules. Not all families

This chapter has shown that the four PHAs involved in the

have had to pay less, however. The new rent rules’ minimum

Rent Reform Demonstration have fully implemented the new

TTP policies increased the TTPs of some of the lowest-income

rent policy and are now operating two systems—one for the

families. Moreover, hardship policies intended to protect those

new rent rules group and one for the existing rent rules group

families from excessive rent burdens have been underused,

(the evaluation’s control group). They will continue operating

prompting the PHAs to undertake new outreach efforts.

these two systems for the duration of the demonstration, and

the evaluation will continue to study the PHAs’ experiences in

Families in the new rent rules group will not report to the PHA

operating the new rent policy as it matures.

any earnings increases they achieve in the subsequent 3 years.

Although those families able to increase their wage incomes

The PHAs have completed the initial recertifications of all

will benefit financially as a result, the PHAs will also be paying

families in the demonstration, and the effect of the new rent

more in subsidies for those families than they would otherwise.

policy on families’ initial TTPs is now clear. As this chapter has

Whether the PHAs are able to recoup those extra expenditures

shown, the families in the new rent rules group began their

in the longer term remains to be seen.

next phase of voucher receipt having to contribute somewhat

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 61

Chapter 6. Looking Ahead

The Rent Reform Demonstration has passed an important mile-

provision, but, for reasons that are uncertain, had not requested

stone, as each of the four participating public housing agencies

those reductions during the early stages of the new policy’s

(PHAs) has fully launched the demonstration. Each agency’s

implementation. In an effort to ensure that lack of awareness

software system was modified so that total tenant payments

was not the cause, all of the PHAs began to make extra efforts

(TTPs) and housing subsidies could be calculated under the

to contact families potentially eligible for hardship remedies,

new rules; agency staff members were trained in the new rules

to remind them of the program’s safeguards and invite them to

and procedures; and staff completed recertifications for the

make contact with the agency. Future reports will estimate how

entire new rent rules group while continuing to administer

many of those families later had their TTPs reduced.

the existing rent policy for the existing rent rules group. TTPs

In general, how well the new rent policy succeeds in promoting

and subsidies under the new rent policy were in effect for all

work and in protecting families from excessive rent payments

families by March 2016.

will partly depend on how well families understand the new

It is too soon to draw conclusions about the extent to which

rules. For that reason, the PHAs have begun to send additional

the new rent policy is achieving its important objectives of

mailings to communicate to families both the incentives the

reducing administrative burdens and costs for public PHAs, in-

new policy offers them to keep increasing their earned incomes

creasing earned income among families, and reducing families’

and the safeguards it has against excessive rent burdens if their

reliance on housing subsidies and other government assistance.

incomes fall. It will be important for the agencies to continue

The evaluation will address those questions in forthcoming

communicating the advantages and protections of the new

reports that are expected to be released in 2018 and 2019.

policy throughout the demonstration.

The findings in this report on the initial TTP calculations show

This report has also described several important ways that the

that, on average, families in the new rent rules group have

new rent policy should make it simpler for PHAs to compute

experienced an immediate benefit; the average TTP for that

TTPs. For example, PHAs no longer need to handle deductions

group is about 8 percent lower than it would have been for

or asset income in most cases, and the utilities policy is simpler.

them under existing rules. Of course, this lower amount also

On the other hand, it could turn out to be onerous for PHAs

means that the PHAs are paying more in subsidies than they

to use retrospective income for their calculations, because

would have for the same families under the existing rules. (As

they will have to verify each family’s monthly income over the

discussed in chapter 5, for all PHAs combined, the monthly

course of 12 months. Of course, the amount of work involved

housing subsidy for the first recertification after study enroll-

depends heavily on how many families have incomes that are

ment was $817 for the new rent rules group compared with

volatile, not fully captured by the Enterprise Income Verification

$790 for the existing rent rules group.) Because TTPs will be

system, and difficult to verify. (A similar challenge may arise

reassessed every 3 years under the new rent rules, families in

with traditional rent rules, because income volatility can make

the new rent rules group who increase their earnings will pay

anticipated income hard to estimate.) Under the new rent policy,

less toward their rent and utilities than they would pay during

PHAs could have additional administrative burdens, should

that time under the existing rent rules. It remains to be seen,

many families make use of the new policy’s interim TTP adjust-

however, whether they recognize this incentive to work and

ments and hardship remedies—or their overall administrative

change their labor-market behavior in response.

burdens may be reduced if the new policy reduces their overall

volume of interim recertifications and staff-family encounters.

Not all families are benefiting equally from the new rent rules

so far. Compared with the existing rules, the new rent policy

Future reports will explore how the agencies implement

has reduced the proportion of families paying high TTPs (that

the new policy as it matures and how families respond to it,

is, more than $700 per month). At the same time, because each

through a series of indepth interviews conducted in each city.

family must pay at least a minimum TTP under the new policy,

The reports will also chart trends in TTP amounts for both

many families who otherwise would have had $0 or very

the new and existing rent rules groups and the frequency with

low TTPs are now paying more. Some of those families were

which TTPs are readjusted.

eligible for TTP reductions through the new policy’s hardship

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 62

A report on the new rent rules’ early effects on families’ out comes

those effects over a longer time, a period of about 1 year after

(using other administrative databases) and on PHAs’ operating

the next triennial recertification, including for the families who

costs and Housing Assistance Payments is scheduled to be

enrolled in the study early on.

complete in 2018. A subsequent report in 2019 will examine

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 63

Appendix A. The Housing Agency Selection Process

The process of recruiting public housing agencies (PHAs)

was issued, the team initially identified 12 candidate PHAs,

for the demonstration began with joint efforts by the U.S.

selected from a list of 14 that HUD’s Moving to Work office had

Department of Housing and Urban Development (HUD) and

recommended. Most of those agencies operated large Housing

the study team to introduce the study through informational

Choice Voucher (HCV) programs and were not in the midst

meetings and conference calls with Moving to Work agencies

of making extensive changes to their existing rent rules. At

that had been identified as candidates for the project. These

the start of the selection process (and with the agreement of

meetings included special informational sessions at conferences

the project’s Government Technical Representative), the study

sponsored in 2013 by the Public Housing Directors Associa-

team excluded the four new Moving to Work PHAs that HUD

tion and the Council of Large Public Housing Authorities.

announced in late 2012, because these agencies served very

small numbers of voucher holders.

Criteria for Housing Agency Selection

Step 2: Phone Reconnaissance With PHAs

The study team’s original proposal set out a number of guide lines

By the end of 2012, following the live conference information

for assembling a group of PHAs to participate in the study.

sessions mentioned previously and a special HUD-initiated

These guidelines gave higher priority to Moving to Work agen-

conference call with selected PHAs, the study team and HUD

cies that had larger voucher programs and thus larger samples

completed a series of one-on-one exploratory discussions by

for a randomized trial, and those that had not progressed too

telephone with the 12 PHAs that were considered potentially

far in implementing alternative rent policies of their own. Such

appropriate for the study. These calls dealt with the PHAs’

agencies would be able to provide a control group that would

current rent-policy reforms and plans and their willingness to

represent the traditional national 30-percent-of-income rent

be part of the demonstration. Based on these calls, the study

policy. In addition, the study team and HUD sought agencies

team identified 8 agencies with which it undertook more

that together would reflect important dimensions of the diversity

indepth planning activities. These agencies served Baltimore,

of voucher holders and local conditions found among PHAs

Cambridge, Chicago, Louisville, Massachusetts, San Antonio,

across the country. It was important to reflect this diversity

Santa Clara, and Washington, D.C.

because one goal in evaluating the alternative rent policy is

to determine whether it can be effective for different types of

Step 3: Initial Planning Sessions

tenants and in different contexts. The study team and HUD

therefore sought to recruit a pool of PHAs with diverse local

The study team conducted two separate daylong planning

housing markets, labor markets, tenant racial and ethnic profiles,

ses sions in Chicago with representatives of the 8 agencies in

and other local or household characteristics that could present

February and May 2013. The HUD Government Technical

different kinds of challenges in finding work. It was also critical

Representative participated in person in both sessions, and

that a PHA be willing to comply with random assignment and

other HUD headquarters staff members joined by phone. These

the other research demands of a rigorous demonstration, and

meetings were used to explore a variety of alternative rent policies

to sustain both the alternative rent policy and its existing rent

and to try to identify a common set of approaches all of the

policy through the end of the demonstration.

candidate PHAs might be willing to adopt.

By the May 2013 Chicago meeting, the Santa Clara PHA withdrew

The Selection Process

itself from consideration for the demonstration. Because of

funding reductions the agency confronted as a result of the

federal budget sequestration process, it chose to adopt a differ-

Step 1: Preliminary Data Collection on Moving to

ent type of rent policy than the one that was gaining support

Work Agencies

from the other candidate PHAs. Santa Clara’s new policy would

Building on discussions with HUD and the study team’s own

increase households’ share of rent and utilities (to 35 percent of

analysis of the 34 agencies with Moving to Work status at

gross income) in an attempt to immediately reduce the agency’s

the time the demonstration’s initial Request for Proposals

housing subsidy per household, which it viewed as the only

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 64

way it could avoid reducing the number of vouchers it could

a large enough staff to take on a rent-reform project while also

offer. Moreover, the agency determined that it could not meet

handling the major capital-planning and resident-relocation

its budget-reduction goals if it had to maintain the traditional

challenges it would face as a new Rental Assistance Demonstra-

rent policy for a control group.114

tion site.

Step 4: PHA Analysis

In the face of these withdrawals, the study team and HUD initiated

conversations with PHAs in Columbus, Georgia; Lexington,

Over the course of the year, the study team conducted exten-

Kentucky; and Philadelphia and Pittsburgh, Pennsylvania.

sive analyses of data on the PHAs and their cities drawn from

Preliminary data analyses were conducted for the PHAs in

the PHAs themselves and from other sources. Several of the

Columbus and Philadelphia, but those agencies did not join the

PHAs subsequently withdrew themselves from consideration.

demonstration. An agreement was reached with the PHAs in

Baltimore’s PHA was contending with vacancies in central

Lexington, Louisville, San Antonio, and Washington, D.C. to

leadership positions for the HCV program, and its officials

join the planning effort and the demonstration.

believed they could not take on the requirements of the

demon stration. The Chicago Housing Authority had advanced

Step 5: Moving to Work Activity Specification and

its plans to introduce a variety of Moving to Work reforms and

Other Approvals

believed that adding the new rent policies to the mix would

Leading up to the launch of the demonstration, the study team

interfere with a smooth implementation of these other reforms.

helped each PHA integrate the details of the new rent policy

The Massachusetts PHA eventually declined to participate

and the basic research design of the Rent Reform Demonstra-

because it was devoting attention to transforming its utilities

tion into its annual Moving to Work activity plan, which was

policy—a transition that would demand large amounts of

then made available for public comment, PHA board review

time from the same agency staff members who would also

and approval, and HUD’s approval, all of which was necessary

have to be responsible for rent reform. Finally, the Cambridge

to finalize the PHA’s participation in the demonstration.

Housing Authority withdrew after it determined it did not have

114 MDRC is conducting a separate evaluation of Santa Clara’s rent-reform policy using a comparative interrupted time-series design, as part of a larger ongoing evaluation of the Moving to Work demonstration that the Urban Institute is leading under contract to HUD.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 65

Appendix B. Supplementary Table for Chapter 2

Appendix Table B.1. Existing Rent Policies of Housing Agencies Participating in the Rent Reform Demonstration Rent-Policy Component

Lexington

Louisville

San Antonio

Washington, D.C.

Percentage of adjusted

30

30

30

30

income for total tenant

payment (TTP)

Threshold of asset value

$5,000; if assets total

None.

None; self-certification of

None; self-certification of

below which asset income  more than this amount,

assets sold for less than

individual assets less than

is ignored

income from the assets is

fair market value.

$15,000.

“imputed” and the greater

of actual asset income and

imputed asset income is

counted in annual income.

Recertification

Working-age or

Working-age or

Working-age or

Working-age or nondisabled:

nondisabled: annual.

nondisabled: annual.

nondisabled: biennial for

bienniala.

some, annual for Rent

Elderly or disabled (on

Elderly or disabled:

Reform Demonstration

Elderly or disabled: biennial.

fixed income): triennial

biennial.

control group.

[proposed].

Elderly or disabled (on

fixed income): biennial

[triennial proposed].

Minimum TTP

$150

$0

$50

$0

Utility policy

Uses the appropriate utility  Current U.S. Department

Current HUD policy.

Simplified by bedroom and

allowance for the size

of Housing and Urban

voucher size [planned].

of dwelling unit actually

Development (HUD) policy.

leased by the family (rather

than the family-unit size

as determined under the

housing authority subsidy

standards).

Hardship policy for

Suspension of minimum

[No minimum rent].

If the TTP calculated at

[No minimum rent].

minimum rent

rent if a household

recertification is lower

experiences an increase

than the minimum TTP, a

in rent as a direct result of

hardship exists, and the

the Moving to Work Rent

family share is calculated

Reform Demonstration;

at the highest of 30

reduction in rent if a

percent of gross income,

household experiences

10 percent of adjusted

a loss of income due to

income, or the welfare rent.

circumstances beyond the

family’s control.

a Under this policy, a family has to report an increase in income even if it occurs before its next scheduled biennial recertification. If the increase is $10,000 or more, then the housing agency calculates a new TTP. If the increase is less than $10,000, then this income is excluded until the next biennial recertification.

Note: Current HUD utility policy is based on typical utilities costs in housing of similar size and type, on community consumption patterns, and on current utility rates.

Sources: Housing authority Moving to Work annual plans and other agency documents Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 66

Appendix C. Families in Louisville Who Opted Out of

the New Rent Policy

As described in chapter 4, families randomly assigned to the

had three or more children, compared with 33 percent of the

new rent rules group in Louisville were given the option of

non-opt-out families. The opt-out families were substantially

not being subject to the new rent rules. If they wanted to opt

less likely to have any earned income (72 percent had no

out of the new rent policy and instead have their total tenant

earned income, compared with 57 percent of the non-opt-out

payments (TTPs) determined using the existing rent rules, they

group). They were also paying lower monthly TTPs, on average,

could do so. To inform that decision, the families were shown

at the time of random assignment ($166 versus $234 for the

what their TTPs would be under each set of rules. Once they

non-opt-out group).

received that information, they had 30 days to make contact

with the public housing agency (PHA) to opt out of the new

Appendix Table C.1. Comparison of Initial Total Tenant

policy; if they did not, they were subject to it. However, families

Payment (TTP) Estimates for Opt-Out Families in

who chose to opt out of the new policy remained part of the

Louisville, New Rent Policy Versus Existing Policy

research sample unless they asked the study team that their

Characteristic

Percentage

data not be used in the study (an option available to families

Opted out of the new rent rules

22.4

served by all housing agencies in the demonstration).

Sample size = 947

Opt-out families whose retrospective income data

In total, 212, or 22 percent, of the families in Louisville

are available

assigned to the new rent rules group chose to opt out—that

Would have paid minimum TTP under the new rent rules,

31.8

assuming no hardship review

is, to have their rent calculated using the existing rules. As

TTP would have been higher under the new rent rules

74.2

shown in appendix table C.1, 32 percent of those who opted

in the first month, assuming no hardship remedy was

out would have been subject to the $50 minimum TTP had

applied

they remained subject to the new rent rules, unless they

$1–$50 higher

68.0

received hardship waivers. In Louisville, the existing rules do

$51–$75 higher

2.1

$76–$100 higher

0.5

not include a minimum TTP. Even if all opt-out families who

$101–$150 higher

1.6

qualified for hardship remedies under the new rent policy had

$151 higher or more

2.1

received them, 46 percent would still have paid higher TTPs

TTP would have been higher under the new rent rules in

46.4

under the new rules than under the existing rules, at least

the first month, even if hardship remedies were applied

initially. (It is possible that, in the long term, they would have

$1–$50 higher

40.2

$51–$75 higher

2.1

paid lower TTPs under the new rent rules than the existing

$76–$100 higher

0.5

rules if their earnings were to increase.) Conversely, 54 percent

$101–$150 higher

1.6

would not have paid higher TTPs initially (again, assuming

$151 higher or more

2.1

that all families who qualified for hardship waivers received

Would have qualified for a grace-period TTP under the

57.7

them). The vast majority of the families who would have

new rent rules

paid more under the new rent rules would have had monthly

Sample size = 189

increases of $50 or less. According to housing agency staff

Opt-out families whose first recertification data are

available

members, some of the families who opted out simply did not

TTP under existing rent rules

want to deal with a new set of rules.

$0

23.2

$1–$99

29.9

As shown on appendix table C.2, the opt-out families had

$100–$299

28.9

somewhat older heads of households, were less likely to have

$300–$699

15.5

children, and were less likely to be working than families who

$700 or more

2.6

chose to remain subject to the new rent rules. For example,

Sample size = 194

the average head of the household in opt-out families was

Notes: For 189 families who opted out of the new rent rules (89 percent of those

who opted out), retrospective income data were available. Those families are

41 years old, compared with 38 years old in the non-opt-out

the ones analyzed in the top panel. For 194 families who opted out of the new

rent rules (92 percent of those who opted out), data on their first recertifications group. Opt-out families were also less likely to have children;

under the study are available. Those are the families analyzed in the bottom

32 percent had no children under the age of 18, compared

panel. In total, 212 eligible households opted out. Rounding may cause slight

discrepancies calculating sums and differences.

with 18 percent of non-opt-out group. Moreover, 29 percent

Source: MDRC calculations using public housing agency data

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 67

Appendix Table C.2. Characteristics of Louisville Families in the Impact Sample, by Opt-Out Status (1 of 2) Characteristic

Didn’t Opt Out

Opted Out

Average number of family members

3.4

3.2 *

Adults

1.5

1.4

Children

2.0

1.7 *

Families with more than one adult (%)

36.5

34.1

Number of children in the family (%)

None

17.9

31.8 ***

1

22.8

19.4 ***

2

26.7

20.3 ***

3 or more

32.6

28.6 ***

Among families with children, age of the youngest child (%)

0–2

16.9

15.5

3–5

16.1

20.3

6–12

43.8

42.6

13–17

23.2

21.6

No earned income (%)

56.7

72.4 ***

Current/anticipated annual family income (%)

$0

3.4

5.1 ***

$1–$4,999

34.8

50.2 ***

$5,000–$9,999

19.4

15.2 ***

$10,000–$19,999

26.2

19.8 ***

$20,000 or more

16.2

9.7 ***

Income sourcesa (%)

Wages

43.3

27.6 ***

Welfare

6.6

6.9

Social Security/SSI/pensions

25.6

24.9

Other income sources

43.4

45.6

Child support

28.9

24.4

Unemployment benefits

1.0

0.5 [   ]

Other

15.5

22.6 **

Average annual income from wages, among households with any wage incomea ($)

17,483

16,438

Annual income from wagesa (%)

$0

56.7

72.4 ***

$1–$4,999

2.7

4.1 ***

$5,000–$9,999

7.1

3.7 ***

$10,000–$14,999

17.7

11.1 ***

$20,000 or more

15.7

8.8 ***

Average total tenant payment (TTP)b  ($)

234

166 ***

TTPb (%)

$0

14.8

19.4 ***

$1–$99

23.5

35.5 ***

$100–$299

29.3

25.6 ***

$300–$699

28.3

16.6 ***

$700 or above

4.1

2.8 ***

Average family sharec ($)

276

218 ***

Family sharec (%)

$0

10.3

13.8

$1–$99

22.1

27.2

$100–$299

29.0

28.6

$300–$699

31.1

25.8

$700 or above

7.5

4.6

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 68

Appendix Table C.2. Characteristics of Louisville Families in the Impact Sample, by Opt-Out Status (2 of 2) Characteristic

Didn’t Opt Out

Opted Out

Head-of-household characteristics

Female (%)

96.9

94.0 **

Age (%)

19–24

0.9

0.9 ***

25–34

33.4

26.3 ***

35–44

47.3

35.5 ***

45 or older

18.4

37.3 ***

Average age (years)

38.1

41.0 ***

U.S. citizen (%)

97.0

94.9

Race (%)

White

15.9

21.7 [   ]

Black/African-American

82.6

77.4 [   ]

American Indian/Alaska Native

0.5

0.5 [   ]

Asian

0.3

0.0 [   ]

Native Hawaiian/Other Pacific Islander

0.6

0.5 [   ]

More than 1 race

0.0

0.0 [   ]

Ethnicity (%)

Hispanic or Latino

1.3

1.8 [   ]

Not Hispanic or Latino

98.7

98.2 [   ]

Sample size (total = 947)

735

212

a Income-source categories are as defined on the HUD-50058 form. Wages include one’s own business, federal wages, public housing agency (PHA) wages, military pay, and other wages. Welfare includes general assistance, annual imputed welfare income, and Temporary Assistance for Needy Families. SSI is Supplemental Security Income. Other income sources includes child support, medical reimbursement, Indian trust/per capita, unemployment benefits, and other nonwage sources.

b TTP is the minimum amount a family must contribute toward rent and utilities regardless of the unit selected.

c Family share is is the family’s contribution toward the gross rent. It may be the TTP or higher, depending on the unit selected by the family.

Notes: Sample sizes for specific outcomes may vary because of missing values. Rounding may cause slight discrepancies in calculating sums and differences. A two-tailed  t-test was applied to differences between research groups. Statistical significance levels are indicated as follows: *** = 1 percent; **= 5 percent; * = 10 percent.

Square brackets indicate that the chi-square test may not be valid due to small sample sizes within the cross-tabulation distribution. Data were collected at the most recent recertification before random assignment.

Source: MDRC calculations using PHA data

The differences in characteristics between the opt-out and non-

earned income and families with older heads of households

opt-out families were also examined using a logistic regression

were more likely to opt out of the new rent rules, whereas

analysis, as used in the baseline survey response analysis (see

families with female heads of households were less likely to opt

supplemental appendix J). As applied here, the analysis shows

out. These findings provide further evidence that the families

whether it is possible to “predict” that a family would opt out

who opted out of the new rent policy in Louisville differ

of the new rent policy on the basis of a variety of those families’

systematically from those who did not opt out. Future reports

background characteristics taken together.

that focus on questions about the new rent rule’s impacts will

address the implications of this pattern for the evaluation’s

The results are presented in appendix table C.3. They show

impact analysis.115

that, with other characteristics held constant, families with no

115 The extent of the differences suggest that estimating the effect of the new rent rules on specified outcomes (for example, average earnings) by comparing the outcomes of only the non-opt-out families with the outcomes of the entire control group would produce biased estimates. However, because very few families who opted out of the new rent rules policy also asked to be removed from the evaluation, it will be possible to include nearly the full sample in Louisville in the analysis.

Doing so will enable the analysis to produce unbiased estimates of the new policy’s effects. However, because not all members of the new rent rules group were subject to the new rent rules, those impact estimates may underestimate the true effects of the new policy in Louisville. The study team will consider a number of exploratory analyses and sensitivity tests to assess the implications of the opt-out pattern.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 69

Appendix Table C.3. Estimates From a Logistic Regression for the Probability of Louisville Families Opting Out of the New Rent Rules

Variable

Parameter Estimate

Odds Ratio

p-Value

Intercept

– 3.017

0.000***

Female head of household

– 0.733

0.480

0.055*

Family income

0.000

1.000

0.314

Family share

0.000

1.000

0.752

Has a child age 5 or under

0.184

1.202

0.367

Number of children in the family

0.042

1.043

0.512

No earned income

0.646

1.908

0.005***

Black/African-American, non-Hispanic/Latino

– 0.257

0.773

0.202

Hispanic/Latino

0.270

1.310

0.671

Age

0.057

1.058

0.000***

Likelihood ratio

57.645

0.000***

Wald statistic

53.163

0.000***

Sample size = 947

Note: Statistical significance levels are indicated as follows: *** = 1 percent; * = 10 percent.

Source: MDRC calculations using PHA data

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 70

Appendix D. Calculating Retrospective Income When

There Is a Gap in Income Verification

Retrospective Period: February 2014–January 2015

In this example, no income information is available for 2 months at the beginning of the retrospective period (February and March 2014).

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

Jan

$?

$?

$900

$900

$900

$900

$900

$900

$900

$900

$900

$900

Enterprise Income Verification (EIV) data for January through March of 2014 show income of $2,850 for that period. The housing specialist asks the head of the household if he or she earned about the same amount each month during that period.

a)  If the head of household responds that the income was about the same in each of those months, $950 is entered as income for the months of February and March ($2,850/3 = $950/month).

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

Jan

a.

$950

$950

$900

$900

$900

$900

$900

$900

$900

$980

$980

$980

Using the income information for the 12-month retrospective period, the software calculates the average retrospective monthly income ($928.33).

b)  If the head of the household says that he or she had a job, but lost it and had no income in March while looking for another job, the income for March is set to 0 (self-certified by the head of household) and, based on the EIV data, $1,425 for February.

In other words—

The EIV for the quarter from January 2014 through March 2014 = $2,850.

The household reports having worked for 2 of the 3 months in the quarter (January and February), for a total income of $2,850.

$2,850/2 = $1,425 for January and February each, therefore $1,425 is counted for February.

Feb

Mar

Apr

May

June

July

Aug

Sept

Oct

Nov

Dec

Jan

b.

$1,425

$0

$900

$900

$900

$900

$900

$900

$900

$900

$900

$900

Using the income information for the 12-month retrospective period, the software calculates the average retrospective monthly income ($868.75).

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 71

Appendix E. An Example of Safeguards in the New Rent

Policy

Grace-period total tenant payment (TTP).  Angela lost her full-time job 3 months before her triennial certification, but her family still has income from her adult son. The average household monthly retrospective income is $875, but its current or anticipated income is only $500 per month. Angela’s family is eligible for a grace-period TTP adjustment because her family’s  current  or  anticipated monthly income for the coming year is more than 10 percent lower than its monthly income for the past 12 months.

12-Month Period for Calculating Retrospective Income ($)

Monthly

Retrospective

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Income ($)

2015

2015

2015

2015

2015

2015

2015

2015

2015

2015

2015

2015

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

1,000

500

500

500

875

•  Monthly retrospective income = $875.

•  Current or anticipated income = $500.

•  Eligibility for grace period: $500 is more than 10 percent lower than $875.

•  Grace-period TTP: $140 (28 percent of $500).

This grace-period TTP temporarily protects Angela’s family from a  high rent burden  while it tries to restore its income to its prior level.

Interim recertification to reduce TTP.  At the end of the 6-month grace period, Angela’s TTP is reset to equal 28 percent of the originally calculated retrospective income (28 percent of $875 = $245). During the grace period, she was unable to replace her lost income and the family’s household income remained at $500 per month. As a result, the original TTP is a burden and Angela can request an interim recertification. The PHA resets her retrospective income based on the most recent 12 months.

New 12-Month Period for Calculating Retrospective Income ($)

Monthly

Retrospective

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Income ($)

2015

2015

2015

2015

2015

2015

2016

2016

2016

2016

2016

2016

1,000

1,000

1,000

500

500

500

500

500

500

500

500

500

625

•  New TTP at interim recertification = $175 (28 percent of $625).

Hardship remedy.  Two months later, Angela’s son’s hours are cut, and the household’s income drops to $400 per month. She has exhausted the one interim recertification allowed for reductions in income. However, the $175 TTP established at the interim is now burdensome. Angela requests a hardship remedy from the housing agency and is found to be eligible because her TTP of $175

is greater than 40 percent of her family’s current income (40 percent of $400 = $160, and $160 < $175). Angela will work with her housing specialist to determine which of the available hardship remedies will be used.

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program

72

Appendix F. Letter Sent to Families Who Qualified for

Appendix  F.  Letter  Sent  to  Families  Who  Qualified

Hardship Remedies

for  Hardship  Remedies

Dear  Rent  Reform  Participant,

As  you  know,  you  are  one  of  the  households  in  the  LMHA  Housing  Choice  Voucher  Program  Rent

Reform  demonstration  program.   Your  rent  has  been  calculated  using  a  new  method.  We  hope  the

program  is  working  wel   for  you.   This  letter  is  a  reminder  of  the  information  you  received  at  your

recertification  about  your  ability  to  request  an  interim  or  hardship  and  if  you  qualify,  receive  a  reduced

rent.

Depending  upon  your  circumstances,  you  may  qualify  for  one  of  the  following:

1.  A  once-‐per-‐year  interim  reduction  in  your  portion  of  rent:   You  may  qualify  for  only  one  (1)

interim  reduction  each  year  if  your  current  household  income  decreases  by  more  than  10%

below  your  past  income  (used  by  LMHA  in  calculating  your  new  rent  portion).

2.  A  hardship:   You  may  qualify  for  a  hardship  rent  if  LMHA  determines  that  your  tenant  portion  of

rent  (i.e.,  your  “total  tenant  payment”)  is  more  than  40%  of  your  current  household  income,  or

if  you  can  provide  evidence  to  LMHA  that  you  are  at  risk  of  court  eviction  because  you  have  not

been  able  to  afford  your  new  portion  of  rent  or  utilities.

Remember  that  you  have  the  opportunity  to  find  out  whether  you  are  eligible  for  a  rent  adjustment  or

hardship  rent.  For  information  about  a  rent  adjustment,  cal   the  LMHA  change  line  at  (502)  569-‐6248.

For  information  about  a  hardship,  cal   your  housing  specialist  at  (502)  569-‐6060.

Sincerely,

Louisville  Metro  Housing  Authority

Rent Reform Demonstration Baseline Report

Reducing Work Disincentives in the Housing Choice Voucher Program 73

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Rent Reform Demonstration Baseline Report

Document Outline

- Reducing Work Disincentives in the Housing Choice Voucher Program: Rent Reform Demonstration Baseline Report

- Title page

- Acknowledgments

- Disclaimer

- Preface

- Contents

- List of Exhibits

- Executive Summary

- How the New Rent Policy Differs From HUD’s Traditional Rent Policy

- Preparing To Implement the New Rent Policy

- Evaluating the New Rent Policy

- Characteristics of Enrolled Families

- Families’ Housing Payments and Subsidies Under the New Policy

- Next Steps in the Evaluation

- Chapter 1. Introduction

- The Rent Reform Debate

- Designing the New Rent Policy

- Overview of the New Rent Policy

- The Scope of This Report

- Chapter 2. A Closer Look at the New Rent Policy

- New Rent Policy Details

- Predicting the Possible Effects of the New Rent Policy

- Conclusion

- Chapter 3. Evaluation Approach

- Research Design and Data Sources

- Research Topics

- Conclusion

- Chapter 4. Characteristics of Families Enrolled in the Study

- The Eligible Sample

- Enrolling the Sample

- Louisville’s Opt-Out Option

- Characteristics of the Rent Reform Sample

- A Closer Look at the Study Families Using Baseline Survey Data

- Conclusion

- Chapter 5. Making the Transition to the New Rent Policy and Its Implications for Housing Subsidies

- Preparing Housing Agencies To Implement the New Rent Policy

- Calculating Families’ Contributions to Their Housing Costs Under the New Policy

- Initial Experiences Implementing the Rent Safeguards

- Subgroup Variations

- Conclusion

- Chapter 6. Looking Ahead

- Appendix A. The Housing Agency Selection Process

- Criteria for Housing Agency Selection

- The Selection Process

- Appendix B. Supplementary Table for Chapter 2

- Appendix C. Families in Louisville Who Opted Out of the New Rent Policy

- Appendix D. Calculating Retrospective Income When There Is a Gap in Income Verification

- Appendix E. An Example of Safeguards in the New Rent Policy

- Appendix F. Letter Sent to Families Who Qualified for Hardship Remedies

- References

Table of Contents

Reducing Work Disincentives in the Housing Choice Voucher Program: Rent Reform Demonstration Baseline Report

Title page

Acknowledgments

Disclaimer

Preface

Contents

List of Exhibits

Executive Summary

How the New Rent Policy Differs From HUD’s Traditional Rent Policy

Preparing To Implement the New Rent Policy

Evaluating the New Rent Policy

Characteristics of Enrolled Families

Families’ Housing Payments and Subsidies Under the New Policy

Next Steps in the Evaluation

Chapter 1. Introduction

The Rent Reform Debate

Designing the New Rent Policy

Overview of the New Rent Policy

The Scope of This Report

Chapter 2. A Closer Look at the New Rent Policy

New Rent Policy Details

Predicting the Possible Effects of the New Rent Policy

Conclusion

Chapter 3. Evaluation Approach

Research Design and Data Sources

Research Topics

Conclusion

Chapter 4. Characteristics of Families Enrolled in the Study

The Eligible Sample

Enrolling the Sample

Louisville’s Opt-Out Option

Characteristics of the Rent Reform Sample

A Closer Look at the Study Families Using Baseline Survey Data

Conclusion

Chapter 5. Making the Transition to the New Rent Policy and Its Implications for Housing Subsidies

Preparing Housing Agencies To Implement the New Rent Policy

Calculating Families’ Contributions to Their Housing Costs Under the New Policy

Initial Experiences Implementing the Rent Safeguards

Subgroup Variations

Conclusion

Chapter 6. Looking Ahead

Appendix A. The Housing Agency Selection Process

Criteria for Housing Agency Selection

The Selection Process

Appendix B. Supplementary Table for Chapter 2

Appendix C. Families in Louisville Who Opted Out of the New Rent Policy

Appendix D. Calculating Retrospective Income When There Is a Gap in Income Verification

Appendix E. An Example of Safeguards in the New Rent Policy

Appendix F. Letter Sent to Families Who Qualified for Hardship Remedies

References