Evaluating the Expansion of the Moving to Work (MTW) Demonstration Program

Evaluating the Expansion of the Moving to Work (MTW) Demonstration Program

A few weeks ago, HUD’s Office of Policy Development & Research (PD&R) published the first of several evaluation reports documenting the expansion of the Moving to Work (MTW) demonstration program.

Moving to Work (MTW) Demonstration Program

MTW, authorized in 1996, is a demonstration program that provides public housing agencies (PHAs) with the opportunity to design and test innovative, locally designed strategies that use federal dollars more efficiently, help residents find employment and become self-sufficient, and increase housing choices for low-income families. PHAs are local entities that administer HUD’s largest housing assistance programs. These programs, including the Housing Choice Voucher (HCV) program and the public housing program, are designed to provide access to safe and decent rental housing for eligible low-income families through either the provision of a housing unit that the PHA manages (public housing) or a rental subsidy that allows a family to afford a housing unit in the private rental market (HCV). MTW designation exempts PHAs from many of the existing public housing and HCV rules that govern the programs and allows them flexibility in how they can use federal funds to administer these programs.

The MTW demonstration program was a policy response to critics of HUD’s housing assistance programs, who argued that the programs fell short in encouraging self-sufficiency and limited assisted households’ choice of neighborhoods. They also argued that federal regulations dictating the administration of the programs limited innovation and efficiency and prevented PHAs from developing locally tailored solutions to meet housing needs. HUD established MTW to allow more local control over federal housing assistance programs and to serve as a laboratory for testing innovative approaches in housing assistance that further the goals of self-sufficiency, cost effectiveness, and housing choice.

Moving to Work (MTW) Expansion

Since 1996, HUD has designated 39 PHAs as MTW agencies. In 2016, Congress directed HUD to expand the MTW demonstration to an additional 100 PHAs and ensure that this expansion included a rigorous evaluation of the innovative ideas that MTW’s flexibility made possible. The MTW Expansion builds on the legacy of innovations by the initial 39 PHAs by designing rigorous studies to test specific policy innovations.

Congress also required HUD to create a Research Advisory Committee to advise the HUD Secretary on the research topics the department should study under the MTW Expansion. That committee is composed of existing MTW agency leadership, tenant representatives, researchers, and HUD staff. The committee’s recommendations ultimately helped HUD select the policy areas to evaluate in the expansion. Since 2021, HUD has selected 87 PHAs to participate in the MTW Expansion, bringing the PHAs on board in cohorts, each of which is testing one of the following specific policy areas of interest:

• MTW Flexibilities for Smaller PHAs Cohort, which includes 31 smaller PHAs (defined as PHAs administering 1,000 or fewer combined units). This cohort will test the overall impact of MTW flexibilities for smaller PHAs. Examining the impact of MTW designation on these smaller PHAs is particularly important because limited research exists on the impact of MTW designation on smaller PHAs — only one of the initial 39 MTW agencies is a smaller PHA, even though approximately 80 percent of the agencies that administer the HCV and public housing programs are smaller PHAs.

• Stepped and Tiered Rent Demonstration (STRD) Cohort, which includes 10 PHAs that have designed two new rent policies known as stepped and tiered rents. The stepped and tiered rent policies eliminate or delay rent increases stemming from increases in income while allowing hardship rent reductions for decreases in income. The new policies are now being implemented as part of a randomized controlled trial to compare them with the standard Brooke rent policy. Enrollment in the study will continue through fall 2024, and the study is expected to last 6 years.

• Landlord Incentives Cohort, which includes 28 PHAs. Each PHA has promised to implement landlord incentives of some kind, often in the form of providing landlords with small amounts of money — usually up to 1 month’s rent — to encourage them to rent to HCV tenants. Such payments include signing bonuses for landlords who have not recently rented to an HCV tenant, payments to cover the potential costs of renting to HCV tenants, such as tenant damages or rent lost due to waiting for the unit to pass inspection. Other landlord incentives include offering prequalifying inspections — inspecting units before an HCV tenant applies —  which is intended to speed the lease-up process; decreasing the frequency of inspections for certain units; and allowing alternatives to the standard HCV program payment standards, which are intended to help PHAs avoid overpaying for units in poor areas and allow them to adequately subsidize HCV holders seeking units in lower-poverty areas. The evaluation of this cohort investigates whether offering these incentives to landlords increases the willingness of landlords in a PHA’s service area to consider renting to HCV tenants, increases HCV holders’ lease-up success rate, and increases the number of new landlords renting to HCV holders.

• Asset Building Cohort, which includes 18 PHAs that will test asset building programs intended to build households’ emergency savings and increase the use of traditional banks instead of higher cost alternative financial services or improve credit scores. For the savings account programs, the PHA will contribute small amounts of money each month into an escrow account for up to 12 months, after which the balance is turned over to the family with no strings attached. The credit-building programs will report public housing rent payments to credit agencies. Although the MTW Expansion does not require a large-scale rollout of rent reporting, it does require a rigorous evaluation of the impacts of rent reporting on the credit scores of public housing residents together with a qualitative study of how participating families understand the role of rent reporting in their lives.

PD&R has worked closely with the MTW program office within HUD’s Office of Public and Indian Housing to design each cohort to maximize the opportunity for rigorous evaluation. PD&R has contracted with third-party research teams that will independently evaluate the impact of the proposed policies in each expansion cohort. Over the next several years, HUD will publish numerous research reports documenting the findings of these evaluations.

Evaluating MTW Flexibilities for Smaller PHAs

In May 2023, HUD published the first MTW Expansion evaluation report, Evaluating MTW Flexibility for Smaller PHAs: Baseline Report. This report is the first of five annual reports that will be published during the evaluation of the very first MTW Expansion cohort, which is testing the overall impact of MTW flexibilities for smaller PHAs. With the first MTW Expansion cohort, researchers are examining the ways in which MTW regulatory flexibility impacts smaller PHAs. Using data from PHA applications and telephone interviews, the report explores PHAs’ motivations for participating in MTW and the interrelated objectives that these agencies hope to pursue using their new flexibility to improve program operations for tenants. The report also lays the groundwork for future reports by detailing the outcome measures that researchers will use to assess the impact of MTW designation and by documenting and confirming the soundness of the experimental research design for this evaluation.

The 31 PHAs that are part of the MTW Flexibilities for Smaller PHAs cohort are just beginning their tenure as MTW agencies, and this report therefore is largely descriptive in nature, setting the stage for future outcomes reports. The report describes a set of PHAs with ambitious goals to improve their administrative efficacy and meet the needs of tenants. HUD looks forward to learning from their progress, as well as the progress of additional MTW Expansion cohorts, in the coming years, and we look forward to sharing the research findings with you.