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Quality Control for Rental Assistance Subsidy Determinations Final Report for FY 2007 U.S. Department of Housing and Urban Development Office of Policy Development and Research
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Quality Control for Rental Assistance Subsidies Determinations Final Report for FY 2007 Prepared for: U.S. Department of Housing and Urban Development Office of Policy Development and Research Prepared by: Macro International Calverton, MD
October 15, 2008 Acknowledgments This report was prepared by Macro International of Calverton, MD and could not have been done without the deep expertise and hard work of the following: JoAnn Kuchak, Officer in Charge; Mary K. Dent Sistik, Project Manager; Sophia Zanakos, PhD., Deputy Project Manager; Analysts and Programmers Pedro Saavedra, Ph.D., Francine Barrington, Gary Huang, Ph.D., Michelle Wilson. Cecille Witt, and Martin Wulfe; Expert Consultants Judy Lemeshewsky, Judy Payne and Frank Wann; Survey Managers Jagruti Patel, Karen Smith and Laura Webb; Field Supervisors, Data Quality Specialists and Support Staff Meagan Canali, Brian Connolly, Ebele Ebonwu, Safal Khatri, Helene Mulligan, Diana Oresky, Wilma Samuels-Reeves, Rebecca Villagomez, Andrew Walton, and Caren Williams.
The contents of this report are the views of the contractor and do not necessarily reflect the views or policies of the U.S. Department of Housing and Urban Development or the U.S. Government.
Table of Contents Executive Summary ................................................................................................................. ES-i I. Introduction.....................................................................................................................I-1 A. Purpose of the Quality Control for Rental Assistance Subsidy Determinations Study for FY2007..............................................................................I-1 B. Background of the Study ............................................................................................I-1 C. Organization of This Report .......................................................................................I-2 D. Definitions of Key Terms ...........................................................................................I-2 II. Methodology .................................................................................................................. II-1 A. HUD Requirements and Study Standards.................................... .............................II-1 B. The Sample....................................................................... .........................................II-1 C. Data Collection.................................................................. ...................................... .II-2 D. Field Data Collection Time Periods......................................................................... .II-5 E. Constructing the Analysis Files.................................................... ........................... .II-6 F. Rent Formulae.................................................................................. ........................ .II-7 G. Calculation of Rent Error......................................................................................... .II-8 H. Quality Control Rent................................................................................................ .II-8 I. HUD Requirements Complicating the Analysis....................... .............................. II-10 III. Study Objectives and Analytic Methods................................................................... III-1 IV. Findings.........................................................................................................................IV-1 A. Overview.................................................................................................................. IV-1 B. Rent Error................................................................................................................. IV-2 C. Sources of Error ..................................................................................................... IV-12 D. Errors Detected Using Information Obtained From Project Files ......................... IV-15 E. Occupancy Standards............................................................................................. IV-23 F. Project Staff Questionnaire Analysis ..................................................................... IV-25 G. The Relationship between Characteristics and Practices, and Error...................... IV-25 H. Rent Reasonableness.............................................................................................. IV-25 I. Utility Allowance Analysis.................................................................................... IV-31 J. Payment Standard Analysis ................................................................................... IV-34 K. PIC/TRACS Analysis ............................................................................................ IV-39 V. Recommendations……………………………………………………………………..V-1 A. Modifying the Quality Control Process…………………………………………….V-1 B. Policy Actions………………………………………………………………………V-3 iii
Table of Contents Appendices Appendix A: Rent Calculations Appendix B: Weighting Procedures Appendix C: Source Tables Appendix D: Consistency and Calculation Errors Appendix E: Project Staff Questionnaire Descriptive Analysis Appendix F: Multivariate Analysis List of Exhibits Exhibit ES-1 Frequency of Rent Error by Program Type ............................................... ES-iv Exhibit ES-2 Subsidy Dollar Error ....................................................................................ES-v Exhibit ES-3 Estimates of Error in Program Administrator Income and Rent Determinations (in 1,000’s)..........................................................ES-v Exhibit ES-4 Comparative 2000 and FY 2003 through FY 2007 Gross Erroneous Payments................................................................................... ES-vi Exhibit ES-5 Rent Components Responsible for the Largest Dollar Error for Households with Rent Error............................................................... ES-viii Exhibit III-1 PHA-Administered Section 8 Unit Size Standards...................................... III-4 Exhibit IV-1 Percent of Households Fully Verified by Either the PHA/Owner or Macro.................................................................................. IV-3 Exhibit IV-2 Percent of Households with Proper Payment s ............................................. IV-4 Exhibit IV-3 Percent of Households with Error, Average Dollars in Error, and Dollar Error Rate for All Households with Error.................................. IV-5 Exhibit IV-4a Underpayment Households Percent of Households and Average Monthly Dollar Amount of Error ........................................... IV-5 Exhibit IV-4b Overpayment Households Percent of Households and Average Monthly Dollar Amount of Error ........................................... IV-6 Exhibit IV-5 Gross and Net Dollar Rent Error (Monthly) for All Households............................................................................................. IV-7 Exhibit IV-6 Gross and Net Dollar Error Rates (Monthly) for All Households............................................................................................. IV-7 Exhibit IV-7 Certifications and Recertifications by Administration Type ....................... IV-8 Exhibit IV-8a Percent of Newly Certified Households Meeting Certification Criteria .................................................................................... IV-9 Exhibit IV-8b Percent of Newly Certified Households Meeting Certification Criteria by Program Type ..................................................... IV-10 Exhibit IV-9 Average Monthly Underpayment and Overpayment Dollar Amount Averaged Across All Households..................................... IV-10 iv
Table of Contents Exhibit IV-10a Negative Subsidy Households (Tenant Overpayment) Percent of Households and Average Monthly Dollar Amount of Error ......................................................................................... IV-11 Exhibit IV-10b Positive Subsidy Households (Tenant Underpayment) Percent of Households and Average Monthly Dollar Amount of Error ......................................................................................... IV-11 Exhibit IV-11 Average Monthly Dollar Amounts of Error for Negative (Tenant Overpayment) and Positive (Tenant Underpayment) Subsidies Averaged Across All Households.............................................. IV-12 Exhibit IV-12 Rent Components Responsible for the Largest Dollar Error for Households with Rent Error ....................................................... IV-13 Exhibit IV-13 Total and Largest Component Dollars in Error for Households with Rent Error................................................................. IV-14 Exhibit IV-14 Rent Component Error by Payment Type for All Households .................. IV-14 Exhibit IV-15 Elderly/Disabled Allowances and Dependent Allowances........................ IV-15 Exhibit IV-16 Findings With and Without Information Obtained from Sources Other Than the Tenant File.................................................. IV-16 Exhibit IV-17 Percentage of Households with Calculation and Consistency Errors .............................................................................. IV-17 Exhibit IV-18 50058/50059 Rent Calculation Error Compared with QC Rent Error........................................................... .........................IV-18 Exhibit IV-19 Verification of 50058/50059 Rent Components by PHA/Owners.......................... .................................................................... IV-19 Exhibit IV-20 Verification of 50058/50059 Rent Components by PHA/Owner Staff by Program .............................................................. IV-20 Exhibit IV-21 QC Error Households with Missing Verification in the Tenant File ............................................................ ...........................IV-21 Exhibit IV-22 50058/50059 Administrative Error: Percent of Households, Average Dollars in Error....................................................... IV-22 Exhibit IV-23 Administrative Error: Percent of Households Average Dollars in Error For All Households ........................................... IV-23 Exhibit IV-24 Percentage of Households in Units with the Correct Number of Bedrooms According to Study Guidelines ............................................ IV-24 Exhibit IV-24a Percentage of All Households in FY 2006 by Number of Bedrooms and Number of Household Members ....................................... IV-24 Exhibit IV-24b Percentage of All Households in FY 2007 by Number of Bedrooms and Number of Household Members ....................................... IV-25 Exhibit IV-25a PHAs by Predominant Rent Reasonableness Method (unweighted) ......... IV-30 v
Table of Contents Exhibit IV-25b PHAs by Predominant Rent Reasonableness Method Combinations (unweighted)....................................................................... IV-31 Exhibit IV-26a Rent Reasonableness Documentation for New Admissions ...................... IV-32 Exhibit IV-26b Type of Rent Reasonableness Documentation for New Admissions ........................................................................................ IV-32 Exhibit IV-27 Timing of Most Recent Rent Reasonableness Determination—New Admissions ............................................................. IV-33 Exhibit IV-28a Rent Reasonableness Documentation for Annual Recertifications ............................................................................. IV-33 Exhibit IV-28b Type of Rent Reasonableness Documentation for Annual Recertifications Where Documentation of the Rent Reasonableness Determination Was Found ......................................................................... IV-34 Exhibit IV-29 Timing of Most Recent Rent Reasonableness Determination—Annual Recertifications .................................................. IV-34 Exhibit IV-30a Type of Document Used by the PHA to Calculate the Utility Allowance Value ...................................................................... IV-35 Exhibit IV-30b Utility Allowance Worksheet (WS) vs. 50058 (AC) Utility Allowance Comparison Findings ................................................................................. IV-36 Exhibit IV-30c Availability of All Information to Enable QC Utility Allowance Calculation............................................................................... IV-37 Exhibit IV-30d QC vs. AC Utility Allowance Comparison Findings................................. IV-37 Exhibit IV-31 Number and Percent of Households with Payment Standard Discrepancies.............................................................................. IV-40 Exhibit IV-32 Percentage of Households Meeting Payment Standard Requirements When Comparing Payment Standard to Fair Market Rent ........................ IV-40 Exhibit IV-33 Details of Cases Falling Outside the 90-110% of FMR Band ................... IV-41 Exhibit IV-34 Comparison of the FY 2006 to FY 2007 Payment Standard Analysis...................................................................................................... IV-42 List of Figures Figure IV-1 Payment by Program Type........................................................................... IV-6 Figure IV-2 Case Type..................................................................................................... IV-8 vi
Executive Summary The Department of Housing and Urban Development (HUD) Quality Control for Rental Assistance Subsidy Determinations studies provide national estimates of the extent, severity, costs, and sources of rent errors in tenant subsidies for the PHA-administered Public Housing, Section 8 Housing Choice Voucher, and Moderate Rehabilitation programs; and the owner-administered Section 8, and Section 202 and Section 811 programs with Project Rental Assistance Contracts (PRAC) or Project Assistance Contracts (PAC). These programs account for nearly all of HUD&rsqu