News
May 25 2008
Housing authority rebuked by audit
Millions go unspent while unqualified clients collect
Fort Wayne [Indiana] Housing Authority, which has a waiting list for help paying rent with more than 2,000 families on it, had millions of dollars it failed to spend on the program, a new audit shows.
The U.S. Department of Housing and Urban Development, which contracts with Fort Wayne Housing Authority to run federal programs to ensure the poor have safe, affordable housing, released an audit showing significant problems. The audit was one of many that HUD’s inspector general has performed on housing authorities in Indiana in the past three years, all of which found major problems (see related story).
Among the failures discovered in Fort Wayne were in the Housing Choice Voucher program, formerly called Section 8, which subsidizes rent for those who cannot afford housing.
HUD found more than 1,000 households could have been helped with the $6.2 million the agency failed to use.
Other problems included:
• The agency overpaid clients $73,000 in rent and utility assistance because it failed to verify clients’ income.
• Officials failed to document that clients getting nearly $200,000 in other aid actually needed it. Nearly half the files HUD examined were missing required information.
• Nearly one in every six clients who claimed no income actually did have income, but these clients received the same assistance as those with no income.
• When clients reported income to the housing authority, officials failed to change their assistance level, paying them thousands of dollars in help they no longer needed.
• The agency’s Family Self-Sufficiency Program had less than half the required number of participants, and many of those in the program may not have qualified.
• The agency advertised the Family Self-Sufficiency Program not as a way to become self-sufficient, but “as a way to receive a large sum of money,” the audit said.
Fort Wayne Housing Authority officials blamed a large turnover in staff, cuts in funding from HUD, plus the flash flood of June 2002 for destroying records.
“It makes it difficult to live up to the letter of the law or, in our case, to recover from a catastrophic event. Some of the cuts have been as much as 25 percent a year,” FWHA Executive Director Maynard Scales said. “But things have gotten a lot better, and we make that point clear in the audit.”
Federal help unspent
HUD found the local housing authority failed to spend $6.2 million on the Housing Choice Voucher program, meaning 447 households missed out on help in 2006 and 577 more missed out in 2007.
“Contrary to HUD’s requirements, the Authority maintained its excess program funds in two separate bank accounts, neither of which was an interest-bearing account,” the audit said.
Failure to improve the program could be dire: “If the Authority does not improve its voucher utilization, future housing assistance funded to the Authority to provide for households will be permanently reduced,” the audit says. HUD estimates the housing authority can use at least $3 million of what it has in the bank this year.
Applicants routinely spent up to two years on the waiting list, hoping to get into the taxpayer-funded program.
Among those waiting was John Linser’s family, which needed help with rent after a stroke left him unable to work.
But Linser was one of the lucky ones. He applied for help after the Fort Wayne Housing Authority abandoned the waiting list and went to a lottery system. He applied in February and found out Wednesday he was approved.
“It surprised me that it was that fast,” Linser said. “I’m just tickled to death that we’ve got it already. It’s a Happy Dance day.”
Not many Fort Wayne Housing Authority clients have done the Happy Dance in recent years, HUD’s audit said.
From July 1, 2005, to June 30, 2007, the federal government gave FWHA $29.4 million for the voucher program. But more than $1 of every $5 was never spent, despite thousands of people waiting for help.
Scales, who has been the director for four years, said the agency worked “feverishly” to get people into the program but fell behind, and HUD rules make it difficult to catch up. And the housing authority had to focus on allocating the new money coming in.
“Once you get backed up, they don’t make it easy to use old money,” he said.
At the same time, Scales said, his agency was instituting changes, including adding staff and taking steps to reduce turnover, and working to link clients to landlords who would accept their housing vouchers.
He said the agency was also trying to recover from a flash flood in June 2002. That flood filled the lower levels of its building on South Anthony Boulevard with 9 feet of water, causing hundreds of thousands of dollars in damage and destroying files.
HUD found that while the housing authority tracked the number of people entering and leaving the program, it did not track the number who actually used their vouchers to pay rent, despite federal requirements that at least 95 percent of their vouchers be used. The agency also didn’t know how many applications it had to accept to keep the program full of qualified clients.
“It’s very frustrating,” Scales said. “We’re working as hard as we can to get people in good, quality housing, only to be told” funds may be cut further because of technicalities.
“Why further hamstring programs? All you’re doing is penalizing the people,” he said. “Not one dime has been misused.”
Missing documents
The audit said the housing authority has 2,247 households in its housing and utility assistance programs; auditors statistically chose 66 to examine.
The audit found 49, almost three of four, contained problems: They miscalculated annual income, used the wrong utility reimbursement rates, used incorrect payments and miscalculated income deductions, resulting in overpayments to clients totaling $73,531.
Other errors cost clients help they actually deserved. The audit found the agency underpaid two clients $6,853 because of calculation errors.
The audit also found local files lacked documentation to prove $194,694 in help went to clients who really needed it. Thirty of the 66 files examined were missing documents, from criminal-history checks to Social Security documents and birth certificates.
The audit also reviewed the files for 151 clients who reported having no income and found that nearly one in six did have income that should have affected the amount of assistance that client received.
The agency is supposed to review the files of zero-income households every 90 days but did not, the audit said. That resulted in $28,267 in payments to people who didn’t qualify for them. It also overpaid $12,505 in assistance to households that reported less income than actually received.
When households reported new income, the housing authority failed to act on the information, the audit found. One household reported new income to the agency in November 2004, but its assistance level was not changed until February 2006, resulting in more than $4,288 in overpayments.
Many of the documents auditors said were missing were destroyed in the flood, Scales said. Other problems were caused by a new computer system that did not work well until several expensive fixes were made.
‘Can’t duck’ criticism
The agency’s Family Self-Sufficiency Program failed federal law, HUD requirements and the housing authority’s own guidelines, the audit found, because the housing authority did not properly supervise the program. As a result, auditors said, more than $900,000 in spending is now in question.
The program is supposed to train people to become financially self-sufficient by teaching them job skills and money management. As those efforts pay off and their income rises, the increased money they would normally have to contribute toward housing costs instead go into an escrow account. At the end of the program, that money can be used for things like a down payment on a house.
But the program had less than half the required number of participants, and many of those might not have qualified. The audit found that some clients’ participation contracts were renewed even though there was no documentation to show they wanted to continue or that there was good cause to extend it, and there were issues with tracking the escrow accounts.
Scales acknowledges the program had real problems.
“We don’t deny that. That’s probably where we deserve some criticism,” he said, claiming those problems have since been solved.
He said the program was not well supervised, and many of the people running it had to be let go. But just as things seemed to get better, there was more staff turnover, sending it back to the starting gate.
“It was just an embarrassing kind of problem. We can’t duck from that,” Scales said. “We had to let people go more than once. It was just not acceptable.”
But those days are gone, he said, and the agency is now seeing dividends from a well-run program.
According to the agency’s annual plan, it has an $18 million budget for 2008. The staff is overseen by a seven-member board of commissioners.
Who’s to blame?
Mary Etheart, chairwoman of the Northeast Indiana Interagency Council on Housing & Homeless Issues and executive director of Hope House in Fort Wayne, gasped when she heard Fort Wayne Housing Authority had $6.2 million it failed to spend on housing vouchers.
“If there’s Section 8 vouchers and they’re not being used, that’s awful,” Etheart said.
At the same time, she said, she is certain the housing authority is doing everything it can to help its clients.
“My experience with the current management of Fort Wayne Housing Authority has been very good,” Etheart said.
Others echoed Etheart’s sentiments.
Ann Helmke, executive director of Vincent Village in Fort Wayne, blamed HUD for cutting FWHA’s budget, then targeting the agency for criticism.
“I think they’re not funded at a level where they can function effectively and efficiently,” Helmke said. “We work well with the housing authority.”
Scales said the audits are only a recommendation by the inspector general’s office to the regional HUD office; his agency will have a chance to challenge those recommendations. He plans to challenge any assertions that funding should be cut or sent back to HUD.
“It’s not fair,” Scales said. “It makes no sense.”
dstockman@jg.net
The U.S. Department of Housing and Urban Development, which contracts with Fort Wayne Housing Authority to run federal programs to ensure the poor have safe, affordable housing, released an audit showing significant problems. The audit was one of many that HUD’s inspector general has performed on housing authorities in Indiana in the past three years, all of which found major problems (see related story).
Among the failures discovered in Fort Wayne were in the Housing Choice Voucher program, formerly called Section 8, which subsidizes rent for those who cannot afford housing.
HUD found more than 1,000 households could have been helped with the $6.2 million the agency failed to use.
Other problems included:
• The agency overpaid clients $73,000 in rent and utility assistance because it failed to verify clients’ income.
• Officials failed to document that clients getting nearly $200,000 in other aid actually needed it. Nearly half the files HUD examined were missing required information.
• Nearly one in every six clients who claimed no income actually did have income, but these clients received the same assistance as those with no income.
• When clients reported income to the housing authority, officials failed to change their assistance level, paying them thousands of dollars in help they no longer needed.
• The agency’s Family Self-Sufficiency Program had less than half the required number of participants, and many of those in the program may not have qualified.
• The agency advertised the Family Self-Sufficiency Program not as a way to become self-sufficient, but “as a way to receive a large sum of money,” the audit said.
Fort Wayne Housing Authority officials blamed a large turnover in staff, cuts in funding from HUD, plus the flash flood of June 2002 for destroying records.
“It makes it difficult to live up to the letter of the law or, in our case, to recover from a catastrophic event. Some of the cuts have been as much as 25 percent a year,” FWHA Executive Director Maynard Scales said. “But things have gotten a lot better, and we make that point clear in the audit.”
Federal help unspent
HUD found the local housing authority failed to spend $6.2 million on the Housing Choice Voucher program, meaning 447 households missed out on help in 2006 and 577 more missed out in 2007.
“Contrary to HUD’s requirements, the Authority maintained its excess program funds in two separate bank accounts, neither of which was an interest-bearing account,” the audit said.
Failure to improve the program could be dire: “If the Authority does not improve its voucher utilization, future housing assistance funded to the Authority to provide for households will be permanently reduced,” the audit says. HUD estimates the housing authority can use at least $3 million of what it has in the bank this year.
Applicants routinely spent up to two years on the waiting list, hoping to get into the taxpayer-funded program.
Among those waiting was John Linser’s family, which needed help with rent after a stroke left him unable to work.
But Linser was one of the lucky ones. He applied for help after the Fort Wayne Housing Authority abandoned the waiting list and went to a lottery system. He applied in February and found out Wednesday he was approved.
“It surprised me that it was that fast,” Linser said. “I’m just tickled to death that we’ve got it already. It’s a Happy Dance day.”
Not many Fort Wayne Housing Authority clients have done the Happy Dance in recent years, HUD’s audit said.
From July 1, 2005, to June 30, 2007, the federal government gave FWHA $29.4 million for the voucher program. But more than $1 of every $5 was never spent, despite thousands of people waiting for help.
Scales, who has been the director for four years, said the agency worked “feverishly” to get people into the program but fell behind, and HUD rules make it difficult to catch up. And the housing authority had to focus on allocating the new money coming in.
“Once you get backed up, they don’t make it easy to use old money,” he said.
At the same time, Scales said, his agency was instituting changes, including adding staff and taking steps to reduce turnover, and working to link clients to landlords who would accept their housing vouchers.
He said the agency was also trying to recover from a flash flood in June 2002. That flood filled the lower levels of its building on South Anthony Boulevard with 9 feet of water, causing hundreds of thousands of dollars in damage and destroying files.
HUD found that while the housing authority tracked the number of people entering and leaving the program, it did not track the number who actually used their vouchers to pay rent, despite federal requirements that at least 95 percent of their vouchers be used. The agency also didn’t know how many applications it had to accept to keep the program full of qualified clients.
“It’s very frustrating,” Scales said. “We’re working as hard as we can to get people in good, quality housing, only to be told” funds may be cut further because of technicalities.
“Why further hamstring programs? All you’re doing is penalizing the people,” he said. “Not one dime has been misused.”
Missing documents
The audit said the housing authority has 2,247 households in its housing and utility assistance programs; auditors statistically chose 66 to examine.
The audit found 49, almost three of four, contained problems: They miscalculated annual income, used the wrong utility reimbursement rates, used incorrect payments and miscalculated income deductions, resulting in overpayments to clients totaling $73,531.
Other errors cost clients help they actually deserved. The audit found the agency underpaid two clients $6,853 because of calculation errors.
The audit also found local files lacked documentation to prove $194,694 in help went to clients who really needed it. Thirty of the 66 files examined were missing documents, from criminal-history checks to Social Security documents and birth certificates.
The audit also reviewed the files for 151 clients who reported having no income and found that nearly one in six did have income that should have affected the amount of assistance that client received.
The agency is supposed to review the files of zero-income households every 90 days but did not, the audit said. That resulted in $28,267 in payments to people who didn’t qualify for them. It also overpaid $12,505 in assistance to households that reported less income than actually received.
When households reported new income, the housing authority failed to act on the information, the audit found. One household reported new income to the agency in November 2004, but its assistance level was not changed until February 2006, resulting in more than $4,288 in overpayments.
Many of the documents auditors said were missing were destroyed in the flood, Scales said. Other problems were caused by a new computer system that did not work well until several expensive fixes were made.
‘Can’t duck’ criticism
The agency’s Family Self-Sufficiency Program failed federal law, HUD requirements and the housing authority’s own guidelines, the audit found, because the housing authority did not properly supervise the program. As a result, auditors said, more than $900,000 in spending is now in question.
The program is supposed to train people to become financially self-sufficient by teaching them job skills and money management. As those efforts pay off and their income rises, the increased money they would normally have to contribute toward housing costs instead go into an escrow account. At the end of the program, that money can be used for things like a down payment on a house.
But the program had less than half the required number of participants, and many of those might not have qualified. The audit found that some clients’ participation contracts were renewed even though there was no documentation to show they wanted to continue or that there was good cause to extend it, and there were issues with tracking the escrow accounts.
Scales acknowledges the program had real problems.
“We don’t deny that. That’s probably where we deserve some criticism,” he said, claiming those problems have since been solved.
He said the program was not well supervised, and many of the people running it had to be let go. But just as things seemed to get better, there was more staff turnover, sending it back to the starting gate.
“It was just an embarrassing kind of problem. We can’t duck from that,” Scales said. “We had to let people go more than once. It was just not acceptable.”
But those days are gone, he said, and the agency is now seeing dividends from a well-run program.
According to the agency’s annual plan, it has an $18 million budget for 2008. The staff is overseen by a seven-member board of commissioners.
Who’s to blame?
Mary Etheart, chairwoman of the Northeast Indiana Interagency Council on Housing & Homeless Issues and executive director of Hope House in Fort Wayne, gasped when she heard Fort Wayne Housing Authority had $6.2 million it failed to spend on housing vouchers.
“If there’s Section 8 vouchers and they’re not being used, that’s awful,” Etheart said.
At the same time, she said, she is certain the housing authority is doing everything it can to help its clients.
“My experience with the current management of Fort Wayne Housing Authority has been very good,” Etheart said.
Others echoed Etheart’s sentiments.
Ann Helmke, executive director of Vincent Village in Fort Wayne, blamed HUD for cutting FWHA’s budget, then targeting the agency for criticism.
“I think they’re not funded at a level where they can function effectively and efficiently,” Helmke said. “We work well with the housing authority.”
Scales said the audits are only a recommendation by the inspector general’s office to the regional HUD office; his agency will have a chance to challenge those recommendations. He plans to challenge any assertions that funding should be cut or sent back to HUD.
“It’s not fair,” Scales said. “It makes no sense.”
dstockman@jg.net
