Housing Choice Vouchers (Section 8)

How It Works

The Housing Voucher Program is a Federal program to assist very low-income families, the elderly and the disabled to afford housing in the private market. Housing choice vouchers are administered locally by public housing agencies (PHAs) who receive federal funds from the U.S. Department of Housing and Urban Development (HUD).

Eligibility for housing vouchers is determined by local PHAs based on family income and size. In general, the family’s income may not exceed 50% of the median income for the area in which the family chooses to live. By law, local PHAs must provide 75% of its vouchers to applicants whose incomes do not exceed 30% of the area median income. Vouchers are limited to U.S. citizens and specified categories of non-citizens who have eligible immigration status.

A family that is issued a voucher is responsible for finding suitable housing where the owner agrees to rent under the program. Rental units must meet a minimum standard of health and safety, as determined by the local PHA. A housing subsidy is then paid to the landlord directly on behalf of the family. The PHA determines a payment standard, the amount generally needed to rent a moderately priced unit in the local housing market, used to calculate the amount of the subsidy. The maximum housing assistance is generally the lower of the payment standard minus 30% of the family”s adjusted monthly income or the actual rent of the unity minus 30% of the monthly adjusted income. The family is responsible for paying the difference between the actual rent charged by the landlord and the amount subsidized.

The Housing Voucher Program is not an entitlement program. Demand for housing often exceeds available housing, therefore long waiting lists are common. In 2000, the average wait for a voucher was 28 months. Local PHAs may even close waiting lists when there are more families on the list than can reasonably be assisted in the near future. There are currently 2.1 million housing vouchers.

Studies indicate that vouchers are more cost-effective than federal programs that build affordable housing for low-income households and families participating in the voucher program have improved outcomes for children (less likely to become involved in violent crime and improved educational outcomes), increased rate of leaving welfare and remaining off welfare, and greater success in the workplace.

History

The Housing Voucher Program, also know as Section 8 after the section of the U.S. Housing Act that authorized it, was established in 1974 under the Nixon Administration. Major changes were made during the Reagan Administration in 1984 and 1988. In 1988, Congress merged the two previous components of the Section 8 program, certificates and vouchers, into a single housing program.

Policy Update

As the nation faces serious budget challenges, funding for low-income housing is also facing significant cuts. Beginning in fiscal year 2005, the President proposed, and Congress enacted, significant cuts in low-income housing assistance. For fiscal year 2006, the amount of funding approved by Congress for affordable housing and community development programs in HUD was nearly $3.3 billion below the 2004 level, adjusted for inflation. These funding cuts are already affecting low-income families. Since 2004, funding shortfalls and policy changes have contributed to the loss of more than 150,000 vouchers.

In addition, these cuts are being made at the worst possible time. In the past 6 years, Congress has recycled $13 billion of previously appropriated but unspent HUD funds back into HUD programs. This has significantly reduced the amount of new appropriations needed. However, there is reason to believe that unspent funds available for recycling are drying up and Congress will soon have to start providing additional new funding each year just to keep total funding at its current level. Funding increases will also be needed in the next few years to renew long-term contracts HUD has signed with private owners of approximately 300,000 units to make these units affordable to low-income tenants.

Links

References