Findings From the Evaluation of the Moving to Work Flexibility Cohort: Year 3 Report

Findings From the Evaluation of the Moving to Work Flexibility Cohort: Year 3 Report

The Moving to Work (MTW) Demonstration is a longstanding HUD initiative that offers selected public housing agencies (PHAs) greater flexibility in using federal funds and implementing locally designed programs to improve housing outcomes for low-income families. The MTW Demonstration's goal is to increase the cost effectiveness of federal housing programs, encourage self-sufficiency among households receiving assistance, and expand housing choice for low-income families. In 2016, Congress directed HUD to expand the MTW Demonstration by adding 100 more PHAs in cohorts and required HUD to evaluate the outcomes of this expansion. In September 2024, HUD published the "Evaluation of the Moving to Work Flexibility Cohort: Year 3 Report," which examines outcomes for the Flexibility Cohort, the first cohort admitted under the MTW expansion. The Flexibility Cohort consists of 31 smaller, high-performing PHAs that began participation in 2021. The Year 3 report, the final annual report in a 4-year evaluation series, focuses on the experience of these smaller PHAs, paying particular attention to the use and effects of MTW flexibility. The report covers MTW implementation activities from January 2021 through December 2023, the 3-year period after Flexibility Cohort PHAs were offered the opportunity to apply for MTW designation and approximately 18 months after most cohort PHAs had implemented their first MTW activity. During this period, PHAs implemented MTW activities primarily focused on improving administrative efficiency and reducing program costs. As noted in the report's foreword:

"Although the evaluation did not find that the PHAs' MTW activities had any significant positive effect on outcomes related to cost effectiveness, self-sufficiency, or housing choice, the evaluation did not differentiate between flexibilities that encourage self-sufficiency and other types of waivers. If it had done so, it may have found such effects from self-sufficiency-focused waivers. In addition, it may be too soon to observe such effects given where PHAs are in implementation. The flip side is that, consistent with other MTW studies, no evidence indicates that regulatory and funding flexibility lead to higher program costs or worse outcomes for tenants. The PHAs in the study welcomed the autonomy and flexibility to better tailor activities to the needs of their communities, although many experienced challenges in implementing program changes."

Research Methodology

The Flexibility Cohort consists of 31 small PHAs that manage fewer than 1,000 units, with most cohort agencies operating between 250 and 700 units. Seventy percent of the cohort PHAs are in metropolitan areas, and the remaining 30 percent are outside of metropolitan areas. Fifty-one percent of cohort PHAs administer both Housing Choice Voucher (HCV) and public housing programs. Slightly more than one-third of the cohort PHAs operate an HCV program only, and 12 percent operate a public housing program only. 

The evaluation includes both a process study and an impact study. The process study focuses on the implementation experience of 28 of the 31 cohort PHAs that, as of December 31, 2023, had a HUD-approved MTW Supplement. The MTW Supplement is an annual report that provides updates on approved waivers and associated activities and identifies waiver activities that PHAs intend to implement in the fiscal year. This component of the evaluation also draws on qualitative data collected through interviews with PHA staff conducted between February and April 2024. The impact study assesses the effects of MTW flexibility on outcome measures representing the three statutory objectives: cost-effectiveness, self-sufficiency, and housing choice, using HUD administrative data from 2020 through 2023 along with data from the National Directory of New Hires and the American Community Survey. To estimate causal impacts, the impact study includes a randomized controlled trial (RCT) and a quasi-experimental analysis. For the RCT, researchers identified 43 PHAs that initially expressed interest in joining the first MTW expansion cohort and that HUD determined were eligible to participate. The researchers randomly assigned these PHAs to either a treatment group or a control group. The treatment group included 33 PHAs that had been invited to apply for MTW designation and participate in the Flexibility Cohort, and the control group included 10 PHAs that had not been offered the opportunity to apply during the first cohort. A total of 31 of the 33 treatment PHAs submitted their MTW applications to HUD, and in January 2021, HUD granted MTW designation to these 31 PHAs, which became the Flexibility Cohort. Two PHAs did not apply for MTW designation but remained part of the RCT sample as treatment PHAs because the treatment is the invitation to join the cohort. In addition, researchers conducted a quasi-experimental analysis that included 33 treatment PHAs and a matched group of 99 comparison PHAs that had not expressed interest in joining the first cohort and had not submitted MTW applications. To reduce potential bias, researchers selected the comparison PHAs based on observable agency and community characteristics similar to those of the treatment PHAs. 

Research Findings

Approximately half of the PHAs interviewed in the process study reported using funding flexibility to support the implementation of MTW activities. By the end of 2023, 15 PHAs had begun using the funding flexibility to finance MTW activities, including resident job training and transportation services, supplementing the salary of an MTW or Family Self-Sufficiency Coordinator, and funding housing construction and renovation efforts. Many PHAs also used the funding flexibility to fill short-term gaps, pay bills, address emergency resident needs, renovate units, or complete housing development transactions while waiting for additional grant or capital funding. 

Of the 31 PHAs in the Flexibility Cohort, 28 had an approved MTW Supplement that allowed them to use waivers and pursue associated MTW activities. Most PHAs took approximately 4 months from the MTW Supplement approval to begin their first MTW waiver activity. HUD approved a total of 279 waivers and associated activities, of which 71 percent were implemented by the end of 2023. Flexibility Cohort PHAs implemented MTW activities aligned with the three statutory objectives of cost effectiveness, resident self-sufficiency, and housing choice, with most waivers focused on cost effectiveness. The most common waiver activities undertaken by PHAs included changes to policies concerning tenant rent, income reexamination, payment standards and rent reasonableness, and housing quality standards.   

Sixty-eight percent of waivers aimed to improve cost effectiveness, often by reducing administrative burden by adjusting the tenant income reexamination schedule to triennial instead of annual, permitting residents to self-certify their assets up to $50,000, and eliminating utility reimbursements. In 2023, neither the RCT nor the quasi-experiment found a statistically significant impact on expenditures per household, the primary measure for cost effectiveness. As a result, the evaluation could not conclusively determine whether MTW participation affected cost effectiveness within the 3-year period, and researchers noted that detecting statistical significance may require a larger sample size.

Forty percent of waivers focused on increasing residents' self-sufficiency. To encourage resident self-sufficiency, eight PHAs increased their minimum rent requirements to reduce their Housing Assistance Payments and compel households to increase their earnings. For example, one PHA in Newnan, Georgia, had the most MTW Self-Sufficiency waivers and associated activities of any PHA in the cohort, including a work requirement of 15 hours per week; the removal of utility allowances for most nonelderly, nondisabled households; and a monthly rent increase from $50 to $130. Overall, the impact analysis found no statistically significant difference in household earnings, the primary measure for self-sufficiency, between treatment and comparison PHAs. Descriptive statistics showed similar employment and income patterns across groups. More than two-thirds of nonelderly, nondisabled households in both treatment and comparison PHAs had at least one employed household member. In 2023, households in the treatment and comparison groups that exited the housing assistance program earned similar average annual incomes of $30,313 and $30,211, respectively.

Thirty-two percent of waivers focused on expanding housing choice. Housing choice activities included higher payment standards and landlord incentives designed to expand access to higher-cost or higher-opportunity units. Landlord incentives included vacancy-loss payments to keep units available for other voucher holders, payments for damage beyond normal wear and tear, and incentive payments for renting a new unit or for agreeing to participate in the HCV program for the first time. The researchers found no statistically significant difference between the treatment and comparison PHAs in the share of HCV households living in low-poverty census tracts, the primary measure for housing choice, which remained at approximately 32 percent in both groups during the first 3 years following MTW designation. 

Overcoming Challenges 

The ease of implementing MTW waivers varied across PHAs and activities. PHAs stressed the importance of using software that supports the tracking and reporting of MTW activities as well as dedicated staff for MTW planning and oversight. Agencies reported that implementation required more time and capacity than expected, especially for staff training and resident communication, leading many to limit the number of simultaneously implemented activities and extend planning timelines. PHAs also highlighted the value of incorporating staff and resident feedback and assessing how individual activities align with broader MTW goals, noting that patience was needed to allow activities to take effect before introducing new ones. PHAs suggested that additional HUD support during implementation, such as Frequently Asked Questions documents, would help clarify new waivers and processes, although peer discussions and engagement with HUD Field Offices helped address common questions in the absence of formal guidance. For many Flexibility Cohort PHAs, 2023 was their first year implementing MTW waivers and associated activities. Many of these PHAs experienced implementation delays as they addressed staff shortages, struggled to upload data into HUD's Inventory Management System/Public and Indian Housing Information Center, and were uncertain about how MTW flexibility affected other HUD program rules. 

Looking Ahead

The evaluation demonstrates how smaller PHAs use MTW authority to tailor program changes to meet their organizational goals, resident needs, and local housing markets. Depending on their unique contexts, PHAs prioritized different activities, such as administrative flexibilities to reduce staff burden and landlord incentives to increase housing choice. The evaluation found no statistically significant impacts on cost effectiveness, self-sufficiency, or housing choice during the study period. However, some features of the study design potentially made isolating the impact of MTW difficult. Future studies can address the small sample size, short post-implementation period, and the heterogeneous effects of specific waiver activities to better isolate impacts. Note that the study found no evidence that MTW flexibility increased program costs or worsened tenant outcomes. MTW flexibility supports PHA autonomy, and the research findings offer valuable lessons for future cohorts about which flexibilities are most effective and how to implement them successfully.