Housing Assistance and Welfare: Background and Issues
CRS Report for Congress
Housing Assistance and Welfare:
Background and Issues
Updated January 19, 2005
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress
Housing Assistance and Welfare:
Background and Issues
The 1995-1996 debate over creation of a block grant to states for cash aid to
needy families with children (Temporary Assistance for Needy Families — TANF)
focused on reducing welfare rolls by promoting work. Except for child care costs,
it gave scant attention to other living expenses of low-income parents. The issues of
housing cost and affordability were essentially absent from the debate, although rent
is the largest expense for many low-income families.
The important role housing plays in families’ lives has been recognized through
a system of programs, administered by the Department of Housing and Urban
Development (HUD), that subsidize the housing costs of low-income families. The
three major direct housing assistance programs are the low-rent public housing
program, the Housing Choice Voucher program (also known as Section 8 vouchers)
and project-based rental assistance.
Both housing programs and TANF are designed to serve the needs of low-
income households. As a result, many low-income families who receive TANF cash
assistance or services, or have in the past, also qualify for housing assistance. It is
estimated by CRS that possibly half a million households were receiving both cash
welfare assistance and housing assistance in 2001. Although the two programs, in
many cases, serve the same populations, the structures and rules of the two programs
are often in conflict. This inconsistency in program rules can lead to inefficiencies
for dual program participants. Some changes have been made to enhance the
compatibility of housing and welfare programs. Further changes to one or both of
the programs to enhance coordination have been considered as a part of the debate
surrounding both welfare reauthorization and proposed housing reform measures.
This paper will introduce the reader to federal housing assistance and welfare
programs, the people they serve, how the programs interact and current issues. It will
be updated to track relevant legislation.
In troduction ..................................................1
The People Served.............................................7
How the Programs Interact.......................................9
The Interaction of Program Rules.............................9
Conflicting Program Rules.................................14
Additional Housing Assistance?.............................15
List of Tables
Table 1. Comparison of TANF and Housing Programs....................6
Table 2. Characteristics of Housing Assistance Recipients, 2000............8
Housing Assistance and Welfare:
Background and Issues
This country has long debated how best to meet the needs of the poor. Some
argue that income supplements that allow families to participate in the consumer
market are the most effective and efficient means for the government to ensure that
the basic needs of the poor are met. Others argue that poor people cannot effectively
participate in the free market for a variety of reasons beyond income, and, as a result,
society has a responsibility to provide them with the goods and services they need to
survive. The social welfare programs run by the federal government have shifted
from time to time in their relative emphasis on providing cash welfare versus
subsidizing the costs of goods and services. Looking at the changes in welfare and
housing programs over time helps to illustrate this tension.
During and after the Great Depression, the government created a number of
programs that provided both cash welfare and subsidized goods and services to the
poor. The Social Security Act of 1935 offered grants to states to help fund cash aid
for three groups of needy persons: children (Aid to Dependent Children), aged
persons (Old-Age Assistance), and blind persons (Aid to the Blind). The Housing
Act of 1937 created a federal construction program both to create jobs and to
stimulate the economy, as well as to build low-cost housing for the poor. By the late
1930s and early 1940s, the federal government was providing surplus food to the
poor in select cities. In 1964, the Food Stamp program was enacted both to eliminate
surplus food as well as supplement the food needs of the poor. In 1965, the Medicaid
program, which provided access to health care for the poor was created.
By the late 1960s, the children’s cash welfare program (renamed Aid to Families
with Dependent Children (AFDC)) had become the target of widespread criticism.
Some argued that cash welfare programs for single mothers promoted out-of-wedlock
childbirth and dependency while discouraging work. At the same time, critics
attacked federal housing programs, citing rising crime in publicly constructed
housing developments and chronic fraud and abuse in their management. In 1969,
President Nixon proposed a radical change to the federal social welfare system, a
guaranteed minimum income in the form of a negative income tax. Nixon’s plan was
not adopted, but some reforms were made to the cash welfare program. By 1973,
Nixon declared a moratorium on all federal housing construction programs. In their
place, a number of programs were developed, the largest being a system of rental
subsidies which families could use in the private market.
Since the 1970s, federal social welfare policies have not resolved the debate
between cash and services. Instead, a hybrid of both has developed and been
maintained. The Earned Income Tax Credit (EITC) was created in the late 1970s and
provides income supplements to working families. Market-based housing vouchers
have grown to the point where more people are now served by vouchers than live in
public housing. AFDC was abolished in 1996 and replaced by a state block grant
called Temporary Assistance to Needy Families (TANF). This last change, from
AFDC to TANF, has been one of the most dramatic. Whereas AFDC provided
ongoing cash payments for poor families, TANF was designed to provide families
with a temporary cash benefit while they transitioned into work. Under TANF, states
have new flexibility, which, paired with a large reduction in the welfare caseload in
the mid-1990s, has made it possible for them to use their TANF funds to provide a
wide range of services including child care and job-search assistance. Spending on
services now accounts for a larger portion of TANF spending than does spending on
cash benefit payments.
Given the array of federal support for both cash aid and goods and services,
questions can be raised as to whether the existing programs are well-coordinated for
the purposes of effectiveness and efficiency. This paper explores the overlapping
areas of housing assistance and welfare, their areas of alignment and disconnect and
proposals that have been made to encourage coordination between them.
TANF.1 Enacted as a part of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (PRWORA) (P.L. 104-193) as a replacement for the
former welfare program, Aid to Families with Dependent Children (AFDC), TANF
provides fixed grants to states for time-limited and work-conditioned aid for low-
income families. The goals of TANF are to:
!Aid needy families so that children may be cared for in their homes
or those of relatives;
!End dependence of needy parents upon government benefits by
promoting job preparation, work, and marriage;
!Prevent and reduce out-of-wedlock pregnancies and establish goals
for preventing and reducing their incidence; and
!Encourage the formation and maintenance of two-parent families.
States have the flexibility to use their TANF grants not only for cash assistance,
but for a wide range of services that seek to advance any of the goals of the program.
States have used that flexibility to fund, for example, child care, transportation, job
search assistance, and, in some cases, even housing assistance. States have
implemented their TANF programs very differently and some states provide a wider
array of services than others.2 In addition to greater flexibility in using funds, the
1 The statutory authority for TANF expired at the end of FY2002 and has been extended
through a series of temporary measures. For more information on the current status of
welfare reauthorization, see CRS Issue Brief IB10140, Welfare Reauthorization: Overview
of the Issues, by Gene Falk.
2 For the purposes of this paper, TANF assistance will primarily be discussed in the context
of TANF cash assistance, since little data are available about how TANF funds are spent
conversion to TANF has brought a combination of policies to promote work,
including stronger sanctions for nonparticipation in work, “Work First” policies and
financial work rewards.
Since TANF was enacted, the goal of moving families off of cash assistance and
into employment has been largely met, as caseloads now are one-half their historic
peak size. However, it is less clear whether the incomes of the families who have left
the caseloads (or not entered them) provide “self-sufficiency.” Studies indicate that
most families who have left cash assistance still require some form of public
assistance. According to studies funded by the Department of Health and Human
Services (HHS), about two-thirds of families who leave welfare receive food stamps
within the first year and three out of five adults leaving welfare and 60-90% of their
children are enrolled in Medicaid.3
Funding for the TANF block grant was originally set to expire on September 30,
Several bills were introduced in the 108th Congress to reauthorize TANF through
FY2008. The House passed the Personal Responsibility, Work, and Family
Promotion Act of 2003 (H.R. 4), on February 13, 2003. The Senate Finance
Committee reported the Personal Responsibility and Individual Development for
Everyone (PRIDE, H.R. 4) on October 3, 2003. Both bills contained proposals
similar to the Administration’s welfare reauthorization proposals, such as requiring
states to engage more families in work, and requiring families to work more hours.
Neither was enacted before the end of the 108th Congress.
Housing Assistance.4 The argument for some form of subsidy to offset
housing costs for certain families is often justified by looking at the percentage of
income that these families pay for housing. The general rule used by HUD is that
housing is “affordable” if it costs no more than 30% of a low-income family’s annual
gross income. Many low-income families pay much more than 30% of their incomes
towards housing costs. According to the 2003 State of the Nation’s Housing,
released by the Harvard Joint Center for Housing Studies, there were over 14 million
households who were severely rent-burdened, meaning that they paid more than half
of their income towards rent. Almost 75% of these 14 million severely rent-burdened
households were in the bottom income quintile. The poorest are the most rent
burdened, with almost half of all households in the bottom income quintile facing a5
severe rent burden.
outside of cash assistance and who receives those benefits.
3 Gregory Acs and Pamela Loprest, Final Synthesis Report of Findings from ASPE
“Leavers” Grants, U.S. Department of Health and Human Services, Office of the Assistant
Secretary for Planning and Evaluation, Nov. 27, 2001. (Hereafter cited as Final Synthesis.)
4 For a current list of federal housing programs, see CRS Report RL32443, The Department
of Housing and Urban Devleopment: FY2005 Budget.
5 Joint Center for Housing Studies of Harvard University , The State of the Nation’s
Housing, 2003 at [http://www.jchs.harvard.edu/publications/markets/son2003.pdf].
Many argue that “affordable” housing is simply unavailable for low-income
families. The National Low Income Housing Coalition conducted research looking
at wages and housing costs and found that, in most major cities, it is highly unlikely
that households with earnings from the minimum wage of $5.15 per hour up to nearly
$10 per hour could find an “affordable” apartment.6
In order to address the need for “affordable housing,” a number of direct
housing assistance programs have been developed. These programs are administered
by the Department of Housing and Urban Development (HUD) and authorized under
the Housing Act of 1937 (P.L. 93-383), as amended. According to the 1937 Act:
It is the policy of the United States ... that our Nation should promote the goal of
providing decent and affordable housing for all citizens through the efforts and
encouragement of Federal, State and local governments, and by the independent
and collective actions of private citizens, organizations, and the private sector.
The three major forms of direct7 housing assistance currently administered by
HUD are: the low-rent Public Housing program, the Housing Choice Voucher
program and project-based assistance programs.
Public Housing is rental housing that was constructed using federal funds and
is publicly owned and managed by local, quasi-governmental Public Housing
Authorities (PHAs). Low-income families who live in public housing pay
approximately 30% of their incomes for rent. The costs of maintaining the buildings,
beyond what can be supported by tenant rents, are subsidized by the federal
government. In FY2003, there were 1.2 million public housing units under
Originally referred to as the Section 8 voucher program, the Housing Choice
Voucher program8 provides federally funded subsidies, administered by local
PHAs, to low-income families and individuals to lease housing from private
landlords. Families who receive vouchers pay between 30% and 40% of their
incomes towards rent and the federal government subsidizes the remainder. In
FY2003, there were approximately 2.2 million authorized vouchers.
Project-based rental assistance programs include privately-owned buildings
for which the tenant rents, and in some cases construction costs, are subsidized by
HUD. Although these programs are not generating new contracts, they were initially
6 National Low Income Housing Coalition, Rental Housing for America’s Poor Families:
Farther Out of Reach Than Ever, 2002 at [http://www.nlihc.org/oor2002/index.htm].
7 This paper focuses on direct housing assistance programs; however, there are a number of
other indirect housing programs, including the HOME and Community Development Block
Grant (CDBG) programs, and a number of tax-based programs, such as the Low Income
Housing Tax Credit and the Mortgage Revenue Bond program.
8 CRS Report RL31930, Section 8 Housing Choice Voucher Program: Funding and Related
authorized under multi-year contracts, many of which have not yet expired.9 Tenants
who live in these buildings pay approximately 30% of their incomes towards rent and
the federal government pays the remainder to the landlord. In FY2003, there were
approximately 1.6 million project-based rental assistance units under government
cont ract . 10
Currently, only about one quarter of eligible low-income households actually
receive housing assistance, mainly due to funding limitations.11 Anecdotal evidence
indicates that waiting lists for housing assistance, especially in major cities, are years
long and many are not accepting additional names.
Table 1 compares some of the key aspects of TANF and HUD’s housing
assistance programs. Note that the programs are administered by different levels of
government (state vs. local) and that, in most cases, states have greater flexibility in
administering TANF than do the PHAs and local agencies that administer housing
9 These programs include the Section 101, Section 236 and Section 8 Existing, New
Construction and Moderate Rehabilitation programs.
10 According to HUD FY2004 budget documents, an estimated 1.2 million project-based
Section 8 units, 370,000 Section 236 units and 17,000 Section 101 rent supplement units
would require payment in FY2003.
11 Barbara Sard and Margie Waller, Housing Strategies to Strengthen Welfare Policy and
Support Working Families, The Brookings Institution and the Center on Budget and Policy
Priorities, Apr. 2002.
Table 1. Comparison of TANF and Housing Programs
Financial eligibilitySet by states.Federally determined, based
on local area median
incomes; preferences set at
Population servedFamilies with children.Low-income households
including families with
children, elderly and disabled
households and some single
AdministrationAdministered at the stateMostly administered at the
level, by state welfarelocal level by quasi-
agencies, but states cangovernmental bodies; some
contract out administration.state-level administration,
usually by state housing
Time limitsFederal time limits; states canNo federal time limits,
impose more stringent limitsadministrators can choose to
or can use state funds toset local time limits.
extend aid beyond the federal
Benefit levelsSet by the state.Set using federal guidelines
based on local market
conditions as roughly the
difference between 30% of a
family’s income and local
Earnings disregardsSet by the state.Earned income is statutorily
required to be partially
disregarded in the public
housing program. This
disregard does not apply to
the voucher program or
Work requirementsFederal law sets workFederal 8-hour community
participation rates that statesservices/employment
must meet, defines countablerequirement for public
work activities, and setshousing residents, no work
required work hours.requirement for other
Source: Prepared by the Congressional Research Service, based on federal statutes.
The People Served
TANF.12 States use TANF funds to provide cash assistance as well as programs
and services to eligible households. While states are required to report the number
of people who receive direct cash assistance from TANF, they are not required to
track the number of people who participate in TANF funded services.
Approximately 2.2 million families received cash assistance from TANF in13
In FY2003, 24% of adults who received cash assistance from TANF were
employed in paid jobs. Their average monthly earnings were $621 while on the
TANF rolls. This amount is well below the poverty level and low enough that most
families working and on the TANF caseload would be eligible for housing assistance.
However, only approximately 20% of the caseload reported receiving some form of
States are not required to track those who have left the TANF cash assistance
caseloads. Although national data are unavailable, some researchers have tried to
study this population, referred to as “welfare leavers.” HHS-funded leaver studies
have found that, for most leavers, year-round work paid more than welfare.
However, the average monthly income for leavers from all sources, including
income, generally lies near the poverty line. Many leavers come back to welfare; the
leaver studies found that between one-quarter and one-third of all families who left15
welfare returned within one year.
Housing Assistance. It was estimated that in FY2004, approximately 5
million housing units were eligible to receive some form of direct housing16
assistance. Because housing assistance is provided through multiple programs, data
on the entire population of housing assistance recipients are not readily available.
However, data are available on the characteristics of the populations of the individual
programs. This program specific data can be used to make some generalizations.
As Table 2 illustrates, a large percentage of the housing assistance caseload is
elderly or disabled. This portion of the housing assistance caseload is much less
12 Data used in this report come from CRS analysis of FY2003 TANF National Data Files.
13 For purposes of this paper, families receiving TANF cash assistance includes both
families receiving federal TANF cash assistance as well as families receiving cash
assistance through separate state programs.
14 Data reported by states under TANF might under report the receipt of housing assistance,
especially in those states where housing assistance receipt is not used for eligibility
determination or benefit calculation.
15 Final Synthesis.
16 Statistics are not readily available on the number of households receiving subsidies, since
HUD generally reports on units rather than on households. As HUD does subsidize some
units that are vacant, the actual number of households served is some number lower than the
number of units eligible for payment. Number are taken from the FY2005 HUD
Congressional Budget Justifications, p. T-2.
likely to be eligible for TANF cash assistance.17 Families who might qualify for
TANF — non-elderly, non-disabled households with children — constitute over half
of the housing voucher caseload, more than one-third of the public housing caseload,
and a little over a fifth of the Section 8 project-based caseload. Of the non-elderly,
non-disabled portion of the housing assistance caseload, more than half reported
some income from work; less than 10% reported combining welfare18 and work.
About one-fifth of these households were receiving income from welfare but not
from work. Given that the caseload is approximately 5 million households, that
around half of those households are non-elderly, non-disabled (2.5 million), and that
about one fourth of those households are receiving welfare, we can very roughly
estimate that around half a million households are receiving both TANF assistance
and housing assistance. This estimate was confirmed in conversations between the
author and staff in the Policy Development and Research division of HUD.
Table 2. Characteristics of Housing Assistance Recipients, 2000
Elderly Households (HH)32%17%60%
Non-elderly, non-disabled HH50%61%26%
Source of income
(non-elderly, non-disabled households)
Income from work52%57%65%
Income from welfare but not work22%21%16%
Income from other sourcesb 26%22%19%
Amount of earnings
Non-elderly, non-disabled HH$11,648$12,074$11,050
With no welfare$11,960$12,506$11,360
With some welfare$7,693$8,580$7,920
17 Some elderly and disabled-headed households may receive a child-only TANF benefit if
they are caring for the child of a low-income parent. They may also be receiving TANF-
18 Housing data defines welfare to include both TANF cash assistance as well as state-
funded General Assistance. HUD estimates that only about 1-2% of the housing assistance
caseload receives General Assistance. Since the vast majority of families who report
receiving welfare receive TANF cash assistance, for the purposes of this paper, welfare will
be defined as TANF cash assistance.
Source: CRS reproduction of data found in Work Participation and Length of Stay in HUD-Assisted
Housing, by Jeffrey M. Lubell, Mark Shroder, Barry Steffen, Cityscape, vol. 6, no. 2, 2003. Authors
used HUD 2000 data.
Note: HH stands for Head of Household. A family is defined as elderly or disabled based on whether
the head of the household is elderly or disabled.
a. The data in this column only represent recipients of Section 8 project-based rental assistance, not
Section 101 rent supplements or Section 236 rental subsidies. Section 8 project-based rental
assistance recipients make up the vast majority of project-based rental assistance recipients.
b. This category includes income sources such as child support and/or gifts as well as reports of zero
inco me .
How the Programs Interact
The interaction of TANF and direct housing assistance can be assessed in two
ways. First, one can look at how the rules of the two types of programs either
complement each other or conflict and the implications that may have for households
who receive both benefits. The conflict in these rules has been discussed both by
housing and welfare advocates. Second, one can look at how the provision of
services under one program can help further the goals of the other program,
regardless of whether a family is participating in both. Both housing research and
welfare research have attempted to measure the impact of these programs on family
The Interaction of Program Rules. For families who receive benefits from
both TANF and HUD housing assistance programs, the different features of the two
programs can create unintended consequences. The emphasis of TANF on work,
sanctions, and time limits could have implications for the cost of housing assistance
programs. Additionally, the benefit structure of housing assistance programs may
undermine the work incentives built into TANF.
TANF Rules. While the TANF goals do not explicitly include increasing
families’ incomes, the program’s emphasis on work, sanctions and time limits has
the potential to significantly impact the incomes of welfare recipients. When TANF
was enacted, some low-income housing advocates were concerned that, since
housing assistance benefit levels are based on family income, if TANF caused
fluctuations in family incomes, it could have serious impacts on the federal housing
For example, if under TANF, more families are working and states are
maintaining generous earnings disregards, it is possible that families’ incomes will
rise. If families’ incomes rise, they require less housing assistance and the housing
assistance programs could cut their costs or serve more families. If under TANF,
many families are sanctioned from cash assistance or reach their time limit, it is
possible that families’ incomes will drop. If families’ incomes drop, they require
more housing assistance, and PHAs could either request additional federal funds or
cut the number of people they serve.
Preliminary research findings have shown that TANF, while promoting work,
has not significantly increased or decreased the incomes of current or former
recipients.19 Housing research that sought to monitor the influence of TANF on
housing assistance recipients has similarly found few changes in income.20 As a
result, welfare reform has not had a major impact on the housing budget. However,
to the extent that TANF, or changes made to TANF, raise or lower the income of
families in the future, the housing budget could be impacted.
Housing Rules. While one of the major goals of the TANF program is to
promote work, the benefit structure of the HUD housing assistance programs may
undermine TANF work policies. The amount of housing assistance a family receives
fluctuates with the family’s income. If a family’s income falls, the family’s housing
assistance will typically rise to make up for that fall in income. As a result, the
family may be cushioned from the full impact of sanctions and time limits and,
therefore, might have fewer incentives to meet work requirements. In the other
direction, if a family’s income rises as a result of work, then the amount of housing
assistance a family receives is typically reduced. The family may not feel the full
impact of an increase in earnings, and as a result, might have fewer incentives to
increase earnings under TANF. Furthermore housing assistance is targeted at
extremely low-income households, putting less-poor, potentially working households
at a disadvantage when it comes to receiving housing benefits.
Compatibility. Several policies have been adopted to help improve the
compatibility of TANF and housing assistance program rules.
QHWRA. The Quality Housing and Work Opportunity Reconciliation Act of
1998 (QHWRA) (P.L. 105-276) required PHAs to adopt several policies designed
to encourage families living in public housing to work.21 QHWRA required PHAs
to adopt flat rents as a policy to promote work. Flat rents are market equivalent rents
that a family can opt to pay in lieu of an income-based rent. Under a flat rent
structure, if a family’s income rises to a point where 30% of its income is higher than
the flat rent, it can switch to the flat rent and further income increases will not be
offset by increases in rent.
Second, QHWRA directed PHAs to adopt an earned income disregard. Under
the earned income disregard for public housing, certain amounts of a qualifying
adult’s verified earned income are not counted toward rent. Specifically, income due
to earnings are completely disregarded in calculating rent for 12 months, after which
half of any increased earnings are excluded for an additional 12 months. A PHA can
also choose to set up Individual Savings Accounts (ISAs) in addition to earned
income disregards. When a PHA has set up an ISA program, a family can opt to pay
increased rent rather than take the disregard, but the increased amount is deposited
into a savings account on the family’s behalf.
19 Final Synthesis.
20 Sandra J. Newman, ed., and Joseph Harkness, “TheEffects of Welfare Reform on
Housing: A National Analysis,” by Sandra J. Newman and Joseph Harkness, in The Home
Front: Implications of Welfare Reform for Housing Policy, Sandra J. Newman, eds.
(Washington: The Urban Institute Press, DC 1999).
21 CRS Report 98-868 Public Housing and Section 8 Reforms: The Quality Housing and
Work Responsibility Act of 1998, by Richard Bourdon.
Another rent policy dictated by QHWRA attempts to prevent rent changes from
undermining TANF sanctions. For voucher-holders and residents of public housing,
decreases in income resulting from non-compliance with TANF rules (or fraud)
cannot be offset by rent reductions or increases in housing subsidies. Therefore,
families are not cushioned from rent increases if their incomes fall as a result of non-
compliance. However, reductions in TANF assistance resulting from time limits or
failure to find a job do not count as non-compliance for this purpose. Therefore, if
a family hits a time limit or loses TANF because they cannot find a job, their housing
benefits will increase to reflect the family’s loss of income.
In addition to changes in rent determination policies, QHWRA introduced a
community and self-sufficiency requirement to public housing. Under these rules,
non-elderly, non-disabled adults who live in public housing are required to work or
participate in community service at least 8 hours per month. This provision was
suspended in FY2002, but upon passage of the FY2003 appropriations law (P.L. 108-
The Family Self Sufficiency and the Resident Opportunities for Self
Sufficiency Program. Under the Housing Choice Voucher program, some families
are able to participate in a work incentive program entitled the Family Self
Sufficiency Program (FSS).23 PHAs employ FSS program coordinators who link
housing assistance recipients to the supportive services they need to achieve
economic self-sufficiency. Families who wish to participate in the FSS program must
sign an FSS contract. The contract requires that the family comply with the lease,
that all family members become independent of welfare, and that the head of the
family seek and maintain suitable employment within five years. An interest-bearing
FSS escrow account, similar to an ISA, is established by the PHA for each family
that participates in the FSS program. Any increases in rent resulting from increases
in earned income are credited to the account during the term of the FSS contract. The
PHA may make a portion of this escrow account available to the family during the
term of the contract to enable the family to complete an interim goal such as
education. If the family completes the contract and no member of the family is
receiving welfare, the amount of the FSS account is paid to the family. If the PHA
terminates the FSS contract, or if the family fails to complete the contract before its
expiration, the family’s FSS escrow funds are forfeited.
The Resident Opportunities for Self Sufficiency Program (ROSS) is designed
to link public housing residents with supportive services, resident empowerment
activities, and assistance in becoming economically self-sufficient. ROSS grants may
be made to PHAs, resident associations or non-profits operating programs that
benefit public housing residents. The grant money can be used to fund a range of
activities including resident self-sufficiency initiatives, resident small business
development, other job training and support and service coordinators.
22 CRS Report RS21591, The Community Service Requirement for Residents of Public
Housing, by Maggie McCarty.
23 FSS was established in 1990 by Section 554 of the National Affordable Housing Act (P.L.
Welfare to Work Vouchers. To address a perceived lack of housing available
to families attempting to transition from welfare to self-sufficiency, in 1999 Congress
authorized HUD to award approximately 50,000 additional housing choice vouchers
to housing authorities throughout the country through its Welfare to Work (WtW)
Voucher Program. WtW vouchers target families who have a critical need for
housing in order to obtain or retain viable employment. In order to be eligible for a
WtW voucher, a family must be both eligible for housing assistance and for TANF
cash assistance. In order to be eligible to administer WtW vouchers, PHAs must
develop plans in partnership with welfare and workforce development agencies to
ensure that the housing assistance is combined with job training, child care, and other
services families need to make the successful transition from welfare to economic
independence. No new WtW vouchers have been authorized by Congress since
TANF Funding and Housing. States have wide flexibility under TANF to
fund programs designed to better coordinate and fulfill the service needs of families
transitioning from welfare to work. As of 2002, 12 states 24 were using their TANF
block grant funds to provide some form of housing assistance to families, ranging
from home buyer support to rental assistance.25 While TANF funds can currently be
used for one-time or ongoing housing-related assistance, housing aid lasting beyond
four months counts as “assistance,” which triggers time limits, work requirements
and child support reporting requirements for recipients. Some advocates have
proposed that the welfare law be changed to allow housing benefits to count as “non-
assistance,” thus not triggering time limits, work requirements or child support
reporting requirements. While this change may prompt more states to use TANF
funds for housing, states feel pressure to use TANF funds for many competing
purposes, including for funding for child care.
Research Findings. Several studies have been conducted to test whether and
how the receipt of housing assistance impacts low-income families, including
families who have or are receiving cash assistance. These studies have looked at the
impact of housing assistance on a number of outcomes, including employment and
According to a study by the Brookings Institution,26 poor families who had left
welfare but maintained housing assistance experienced higher employment rates and
incomes than welfare leavers without housing assistance. Similar findings resulted
from a study of Minnesota’s welfare reform initiative (MFIP); the Manpower
Demonstration Research Corporation (MDRC) found that residents of public and
subsidized housing benefitted more from MFIP than similar families without housing
24 Barbara Sard and Tim Harrison, The Increasing Use of TANF and State Matching Funds
to Provide Housing Assistance to Families Moving from Welfare to Work, The Center on
Budget and Policy Priorities, Feb. 2002, at [http://www.cbpp.org/12-3-01hous.htm].
25 Data are not available to indicate how much in TANF funds is being spent on housing
26 Sheila Rafferty Zedlewski, The Importance of Housing Benefits to Welfare Success, The
Brookings Institution, Apr. 2002.
assistance.27 Despite these positive findings on the relationship between housing
assistance and income and earnings, other studies have demonstrated a lack of clear
relation between housing assistance and employment and/or earnings.28 The
Department of Housing and Urban Development conducted a study of housing
assistance recipients who received welfare in two states. While no statistically
significant differences were found in earnings and employment outcomes between
welfare recipients with and without housing assistance, the non-experimental
component of this analysis indicated a possible positive interactive effect between
welfare reform and housing vouchers.29
Although studies have been ambiguous regarding the impact of housing
assistance on employment and earnings, the relationship between neighborhood
poverty rates and employment and earnings is well documented. A number of studies
have found that neighborhoods with high poverty rates negatively impact families’
employment, earnings and earnings growth and increase welfare recidivism and the
length of a family’s stay on welfare.30 While public housing is often located in areas
of high concentrations of poverty, the portable voucher program allows families the
flexibility to move to housing virtually any place in the U.S.31 While voucher
families typically live in areas with lower concentrations of poverty than do families
in public housing, families with vouchers still often live in neighborhoods with high
poverty. An experiment undertaken by HUD, the Moving to Opportunity (MTO)
Fair Housing Demonstration, was designed to test the impact on families of requiring
them to move from areas of high concentrations of poverty to areas with low
concentrations of poverty. Preliminary findings indicate that families who used
vouchers to move to low poverty areas had improved health outcomes, improved
educational test scores, and lower rates of juvenile crime. These preliminary findings
have not yet shown any wage or employment effects.32
27 Cynthia Miller, Explaining the Minnesota Family Investment Program’s Impacts by
Housing Status, MDRC Working Paper, Dec. 1998.
28 Mary Corcoran and Colleen Heflin, “Barriers to Work Among Recipients of Housing
Assistance”, Cityscape, vol. 6, no. 2, 2003.
29 Wang Lee, Eric Beecroft, Jill Khadduri, and Rhiannon Patterson, Impacts of Welfare
Reform on Recipients of Housing Assistance: Evidence From Indiana and Delaware, Abt
Associates, for the Department of Housing and Urban Development, at
[http://www.huduser.org/ Publications/PDF /impacts_of_welfare_reform.pdf].
30 Margery Austin Turner and Ingrid Gould Ellen, “Does Neighborhood Matter? Assessing
Recent Evidence,” Housing Policy Debate, vol. 8, issue 4, 1997.
31 While mobility is not an option in public housing, a major demonstration has been
undertaken to study whether employment and training services, financial work incentives
and community support for work can improve employment and earnings for public housing
residents. The implementation of the Jobs-Plus Demonstration has been slow and faced
some difficulties, and, as a result, definitive findings are not yet available.
32 John Goering, Judith Feins and Todd Richardson “A Cross-Site Analysis of Initial Moving
to Opportunity Demonstration Results,” Journal of Housing Research, vol. 13, issue 1,
The research seems to indicate that, at the least, housing assistance does not
appear to hurt the employment and earnings efforts of families leaving welfare;
instead, housing assistance may actually improve their outcomes. Furthermore,
housing assistance that provides for families to move to areas of lower poverty may
actually improve other aspects of the families’ lives including health and education
After observing the ways in which federal housing and welfare programs do and
do not work together, possible changes may be considered to the programs to help
improve their coordination. Several program changes have been considered in past
Congresses that may be introduced again. These changes fall into two broad
categories: adjusting program rules, and increasing the amount of housing assistance
Conflicting Program Rules. There are several areas in which existing
housing and welfare program rules are in conflict and adjustments could be made to
alleviate that conflict.
Enhance Existing Program Features that Promote Employment. As
noted earlier, housing assistance programs, for the most part, do not have the same
emphasis on work as do welfare programs. This difference in focus may lead to
conflicting messages for dual program participants who eventually see benefits
reduced as income increases. However, housing assistance program features which
promote employment, such as the Family Self Sufficiency (FSS) program, may
enhance the effectiveness of welfare-to-work programs.
Currently, FSS funds, which are issued by HUD to PHAs, can be used only for
families who live in public housing or receive tenant-based Section 8 housing choice
vouchers; some have argued to allow PHAs to use FSS funds for families with
project-based Section 8 vouchers. FSS funds can be used to provide case
management and services to assist families in attaining educational and employment
goals. Similarly, ROSS funds, which are also issued by HUD to PHAs, are only
available to public housing residents; proposals have been made to make ROSS
funds available to PHAs for use with Section 8 voucher recipients.
One concern that has been raised is that by expanding the use of these funds
without expanding the amount of funding available would result in greater
competition for the existing funds.
Change the Way Housing Assistance Programs are Administered.
Housing programs and welfare programs are administered at different levels of
government, which may contribute to the difficulty in coordinating these two sets of
programs. As a result, some have proposed to make changes to the administration
of housing programs in order to enhance compatibility with welfare programs.
A “superwaiver” was proposed by the Administration, and a version of this
proposal was included in the Administration-based welfare reform bills. The
superwaiver would enable states to request waivers of the statutory or regulatory
rules for a wide range of work support programs, including housing assistance
programs.33 The superwaiver provision has several potential implications for
housing. Advocates of the superwaiver provision assert that it will foster greater
coordination among work support programs and will allow localities to better adjust
programs to meet the special needs of their population. One potential use of the
superwaiver, cited by The Midwest Welfare Peer Assistance Network (WELPAN),
could be to override the six-month restriction on follow-up and supportive service
assistance to recently housed homeless families that exists in the Supportive Housing
for the Homeless Program. WELPAN asserts that a superwaiver would allow
administrators to extend follow up and supportive service assistance to meet the
needs of individual families beyond the current six-month cap.34 Those who oppose
the expanded waiver authority express concern that states would have too much
authority to undermine the goals of programs for the poor, as established by
Congress. For example, the Center on Budget and Policy Priorities has expressed
concern that superwaiver authority could allow a state to sell off a large public
housing building that currently serves extremely low-income families and then use
the money for housing assistance for moderate-income individuals.35
Additional Housing Assistance? If housing assistance helps improve the
outcomes of families transitioning from welfare to work, low-income housing
advocates argue, then more housing assistance should be made available to these
families. There are two ways to do this: one, increase the amount of housing
assistance provided; or two, prioritize these families for existing assistance. The first
is difficult because housing assistance is very expensive. The second is difficult
because of the competing needs of the elderly and disabled. The following strategies
have been suggested for creating additional housing assistance for welfare families.
Use TANF for Housing Assistance. While new housing assistance money
can be difficult to obtain in a tight budget year, states can use their existing TANF
funds to support housing, both in the form of ongoing housing assistance as well as
rehabilitation of the housing occupied by TANF recipients. As noted earlier, while
TANF funds can currently be used for one-time or ongoing housing related
assistance, housing aid lasting beyond four months now counts as “assistance,” which
triggers time limits, work requirements and child support reporting requirements.
Proposals to redefine housing as non-assistance were included in the Senate Finance
Committee’s welfare reauthorization bill from the 107th Congress, which was not
33 The following housing provisions are NOT included under the superwaiver authority:
rental assistance under Section 8; provisions that designate public housing units for the
elderly and disabled; provisions that govern the development and content of public housing
agency plans; provisions that require the establishment of resident advisory boards. For
more information, see CRS Report RS21219, “Superwaiver” Proposals in Current Welfare
Reform Debate, by Karen Spar.
34 Midwest Welfare Peer Assistance Network, Recreating Social Assistance: Or, How to
Use Waiver Authority to Eliminate Program Silos, May 2002.
35 The Center on Budget and Policy Priorities, “Superwaiver” Would Allow Fundamental
Changes to Public Housing and Homeless Programs, Sept. 16, 2002, at
[ h t t p : / / www.cbpp.or g/ 9-16-02hous.pdf ] .
enacted. It is thought that such changes to the law would entice more states to use
TANF funds to provide housing assistance.
Prioritize TANF Recipients for Housing Assistance. Local
communities can set local preferences for distributing housing assistance. If
preference is given to families leaving TANF, more assistance may be available to
this population. However, PHAs face a tension between prioritizing working families
moving off of welfare and prioritizing the elderly and/or disabled. One way to avoid
this tension is to create and fund vouchers specifically for families moving from
welfare to work.
Fifty-thousand Welfare-to-Work (WtW) housing vouchers were authorized and
funded in the 1999 Veterans Administration-Department of Housing and Urban
Development and Other Independent Agencies (VA-HUD) appropriations legislation
(P.L. 105-276). None has been funded since then, and the program has never been
authorized. The WtW voucher program targets families who have a critical need for
housing in order to obtain or retain viable employment. In order to participate in the
WtW program that was appropriated in 1999, housing authorities were required to
develop Welfare-to-Work Voucher plans that demonstrated how housing assistance
is combined with job training, child care, and other services families need to
transition from welfare to work. Some low-income housing advocates have argued
on behalf of authorizing the WtW housing voucher program. However, it is
expensive to create new vouchers. Congress has not created any new vouchers since
2002. In fact, in the face of recent budget constraints, Congress has placed funding
restrictions on the voucher program in both FY2004 and FY2005 that have led to
reductions in the number of available vouchers in some parts of the country. For
more information on current issues in the voucher program, see CRS Report
RL31930, Section 8 Housing Choice Vouchers: Funding and Related Issues.
Because the populations that are served by HUD housing assistance and welfare
programs overlap, the pressure to ensure that the programs are well-coordinated will
likely continue to face Congress. While several changes have been made in recent
years to improve this coordination, the differences inherent in the two sets of
programs, such as the high proportion of elderly and disabled households served by
housing programs, the different levels of government that administer housing and
welfare programs, and the costs associated with providing additional services, may
make further changes difficult to enact.