Sequestration adds to funding shortages felt by Vermont public housing authorities

by Hilary Niles June 14, 2013 vtdigger.org Vermont’s public housing authorities are being forced to spend down their Section 8 reserves in order to keep rental subsidy programs alive in response to a protracted cycle of defunding.
Most are also choosing to admit fewer low-income Vermonters into the program in the near-term, rather than face the prospect of taking the benefit away down the road.
Nine local housing authorities and the Vermont State Housing Authority administer the Section 8 Housing Choice Voucher Program in Vermont ‘part of a nationwide, federally funded program that subsidizes the cost of rent for low-income families, the elderly and disabled citizens.
The Vermont Association of Public Housing Directors estimated this spring that 774 Section 8 vouchers, or 11.4 percent of the state’s 6,792 authorized vouchers, would not be used in 2013 due to inadequate funding as a result of federal sequestration. The $49.3 million program was expected to run about $5.5 million short.
Joanne Troiano, executive director of Montpelier Housing Authority and chair of the association, explained that ‘for the most part in Vermont, we haven’t had to cut people out of Section 8.’That’s because last fall, when housing authorities understood they would be faced with federal defunding, they stopped re-issuing vouchers when people cycled off the program.
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The housing authorities reasoned that, without sufficient funding, granting fewer subsidies would be the only way to ensure their programs would stay solvent for the tenants who remain enrolled.
‘The worst thing in the world would be to issue a voucher to a needy family and then take it back the next year. That is worse than not issuing it in the first place,’said Charles ‘Chip’Castle, executive director of Barre Housing Authority. ‘We’re not going to let our reserves go down to zero.’
Half-life of Section 8
Troiano echoed that her board of directors in Montpelier ‘has a longstanding policy that we will never throw anybody off the program’for lack of funding.
Housing authorities therefore protect their reserves ‘even at the expense of the number of tenants they serve, which unravels funding in a self-perpetuating conundrum.
‘We’ve been getting less and less funding, so I lease less units, so they give me less funding, so I lease less units, and I can never get back to where I was,’Troiano said.
Federal sequestration has cut even more dollars out of the equation, but it’s hardly responsible for the attrition Vermont’s Section 8 programs are now facing.
Castle said that in Barre, he’s been dipping into Section 8 reserves for four or five years to keep the program afloat. ‘Sequestration is just an unfortunate icing on the cake ‘a bad tasting icing,’he said.
But Castle ‘and the population his agency serves ‘are lucky that Barre has the reserves to spend. ‘Others don’t have a dime,’he said.
Set-aside money
St. Albans Housing Authority is a couple of months from depleting its reserves, according to Paul Dettman, executive director of the Burlington Housing Authority, which also manages the St. Albans agency.
Some emergency funding from HUD is available from a special ‘set-aside’fund, meant to prevent on-the-brink Section 8 programs from having to remove people from the program. St. Albans has applied for the emergency aid.
But as Brattleboro PHA executive director Christine Hart explained, ‘One of the criteria for that is that is you have to spend all your (Section 8) reserves.’
Dettman said that reserves are built up over time if an agency has been ‘lucky enough’to receive more funding than it needed in a given cycle. Reserves are not a matter of management style, he said.
But holding onto them is a management choice. Hart and Castle underscored their reluctance to jeopardize one of their largest programs and the people who rely on it by running down their Section 8 reserve funds.
‘You’ve got to run a housing authority like you run any business,’Castle said. ‘You have to have enough set aside that if something goes wrong, you can keep going.’
Hart is sympathetic to HUD’s own funding woes that the agency must pass on to smaller agencies to keep itself afloat. But she’s experienced first-hand what happens when something goes wrong.
Earlier this year, Brattleboro’s Shelter Plus Care program went two months without receiving scheduled funding. Hart said HUD was good about extending the previous year’s grant to cover one month, and her own agency was able to cover the next. The late money came through and the program is back on track, but it was a lesson in backup plans.
‘HUD is a massive agency, running millions of dollars of programs. There are glitches,’Hart said. ‘That’s why you don’t go to zero reserves.’
Vying for state attention
Currently no state dollars in Vermont flow to the Section 8 Housing Choice Voucher program.
‘The good news is that state of Vermont hasn’t had to pay for that,’Castle said. ‘The bad news is, the state of Vermont may have to step up to the plate in the very near future.’
But Dettman explained that the very fact that Vermont doesn’t contribute to Section 8 makes it hard to convey the impact that the program’s contraction will have on state resources.
‘We’re funded directly by HUD â ¦ so state lawmakers don’t pay as much attention. Nor does the Shumlin administration,’he said.
‘Jim Reardon (state finance commissioner) is talking about the impact of federal cuts on the state budget, and our cuts don’t appear there,’Dettman said. ‘It’s not obvious and visible to them that this loss is taking place. But it has impact. If it means more people are homeless, that means the state of Vermont has to serve (them).’
HUD’s field officer in Vermont, Mike McNamara, could not be reached for comment. According to his voice mail, his office was closed for the day ‘on furlough, due to the federal sequestration.