Elimination of Redundant Overlapping Bureaucracies

A. Edward Cutting Hadley, MA

Background/Problem

At any given time there are upwards of a dozen different housing authorities administering Section 8 Housing Choice Vouchers within just the small town of Amherst. At the same time the Amherst Housing Authority administers vouchers throughout three counties. As the Inspector, the author made annual visits to one unit that was literally the last left turn before the Vermont state line and another one where the septic tank was in Connecticut.

In part because Massachusetts is organized as a commonwealth and not a state, in part because of a decision of our Supreme Judicial Court that defines the “service area” of each of our 254 independent housing authorities to be the “entire Commonwealth”, and in no small part because of the inherent nature of untrimmed bureaucracies to grow in a manner similar to untended rose bushes, housing subsidies in Massachusetts are currently administered by a tangled quagmire of redundant bureaucracies. And as with untended rose bushes, some pruning is needed.

One observing the functioning of a local housing authority in Massachusetts would see little changed from the days of Franklin Roosevelt. Everything is still essentially done in a labor-intensive manual process that also facilitates fraud. Applicants produce paper documentation of income and assets, highly trained employees manually calculate the extent of the subsidy given to each person, and each month one will often see two senior citizens painfully signing hundreds of checks that will then be mailed to landlords.

Each subsidized family, be they living in publicly-owned housing or having part of their rent to a private landlord paid on their behalf, is required to pay a certain portion of their own income as their share of the rent. The tenant’s share is calculated as a percentage that varies from program to program, less certain deductions and can be understood as similar to a state or federal income tax return. And the current system is based on the presumption that low income households have but one wage earner and one job with a salary that remains constant throughout the year.

Under-reporting of income is as pandemic as it was with the state income tax prior to withholding, as it was with child support payments before the automation of that procedure. Low income tenants often have multiple jobs and report only one, and single mothers often have live-in boyfriends whose income is not reported and who simply produce a driver’s license with a different address when called in for a conference. And the housing authorities are evaluated primarily on the basis of how much money they hand out, with neither the incentive nor resources to address any of this fraud.

While we will never know about cash payments and “under the table” operations, all wages and hires are reported in Massachusetts. Our Department of Revenue (DOR) has a complex data assembly that was established for a variety of reasons including the collection of child support, and I propose that we simply use this to verify tenant income. Computers didn’t exist in 1938 when the Section 8 program was established and manually reviewing pay stubs was the only way to verify income back then – we are now in the 21st Century and things can be done in a better way.

The concept of subsidized housing also came out of the Great Depression when two-parent households had one stable, but low, income and the presumption was that the family would never be earning more and thus that the subsidy would be indefinite. Over time this became single mothers on welfare and a decade ago we made great strides in redefining “welfare” into the concept of “transitional assistance” and changing our philosophy from continued sustenance to a belief (and a demand) that people can improve their station in life. While initially tumultuous, and while we haven’t quite figured out how to assist those with disabilities (and many of the individuals once on “welfare” are now on “disability”), welfare reform worked wonders and improved the lives of many women. More importantly, it inspired their daughters to think seriously about their futures.

We thus now consider poverty to be transitional – bad things happen to people and our caring society has a safety net to catch people when they fall. However, we don’t intend this to be forever and the same caring society not only doesn’t want to see people exist indefinitely on a mere subsistence level, but simply can’t afford it. The untold success story of welfare reform will be the children who don’t become yet another generation on public assistance.

But welfare still exists in the form of subsidized housing. Once one has a subsidy, one can renew it annually for life. In the rare case where conduct is so egregious that the tenant is either evicted from the publicly-owned housing or has a voucher cancelled, the tenant can then just go down the street to the next housing authority and start over again. While there are programs where the tenant’s share of the rent is essentially put into escrow and given back in bulk for the down payment on a house, there is no expectation nor motivation to have the assistance be temporary. In fact, evaluated only on occupancy levels and vouchers issued, the incentive on the housing authority actually is to keep people dependent on the program. These poverty ghettos need to be broken up by expecting that people living there will also be improving their stations in life, and be doing something towards that end.

On the other hand, as with those in nursing homes at public expense, we should look at those with significant assets but for whom we are subsidizing housing. Through the author’s experience, those with significant assets or trust funds are eligible for and often receive taxpayer support for their housing. The current eligibility system based entirely on reported wages ignores the value of in-kind compensation creating a massive loophole for those able to receive goods or services in lieu of wages, and the failure to look at assets (as is done with public assistance for nursing home care) serves to shelter assets which could be used to help pay for the individual’s housing.

A similar related problem is an increasing practice of those whom the Commonwealth, through its Department of Mental Health (DMH) and its Department of Mental Retardation (DMR), pays private entities to provide services to those who, in years past, were institutionalized. These nonprofit corporations, already paid to provide housing for these disabled individuals, increasingly are now also obtaining housing vouchers for the same client with the taxpayer thus paying twice for the same service. In one instance, the corporation became a landlord to receive apartment subsidies for each of the bedrooms of the four clients that it is already paid by the Commonwealth to provide a group home for, and in another instance, at the request of a substance abuse program, an entire publicly-owned apartment building has been declared “women only”, nondiscrimination laws notwithstanding.

While we want to encourage low income people to work their way out of poverty and to celebrate the success of those who do this very successfully, at some point we need to ask people to pay back some of what we have given them. And while looking at the social service industry is outside the scope of this project, we do need to look at the issues as they impact on public housing and subsidies. We also need to look at the plight of the elderly in the so-called Chapter 667 buildings, housing which was built some years back for the so-called “frail elderly” and which subsequently were re-designated as being for the “elderly & disabled.” Statewide, the elderly residing in these buildings are complaining about, and in many cases being terrified by the inappropriate activities of the young individuals with non-mobility disabilities.

But the biggest inefficiency in all of this is the overlapping mosaic of independent housing authorities. While the incorporation of a city includes the housing authority as part of the city government, because Massachusetts is a commonwealth, the housing authorities in towns are literally a separate municipality. Existing essentially as a town without land, these “special municipal corporations” have their own Board of Selectmen and an “Executive Director” who functions in both a role and an expense similar to a Town Manager.

These housing authorities exist largely unsupervised. The boards are either appointed or elected; seats are often unfilled and rarely contested, many an Executive Director literally recruits friends and allies to be on the board. They are somewhat overseen by the Department of Housing and Community Development (DHCD) and they are audited by the State Auditor (who in many ways has more authority over them than DHCD), but they exist as largely insular independent fiefdoms.

Their relationship with the Commonwealth in general and DHCD in particular is very much like that of a town government, which many actually are. And while there is a bit of inter-governmental cooperation, each housing authority must make all of its decisions in-house and thus must have a significant number of highly skilled individuals as, like in the case of a town, “Boston” only serves in an advisory and regulatory role; responsibility rests locally.

This directly results in three things: First, labor costs are much higher than they would otherwise be because highly skilled people must be hired to do what is largely low-skill clerical work, their expertise is needed for the 1%-5% of the job where something otherwise would be handed off to a supervisor. Second, with job turnover, there is a continuing need to train these employees, and as small independent entities, it isn’t possible for them to learn in house from others doing their job. Hence there are expenses in bringing trainers in or (more often) sending them to be trained elsewhere. A significant portion of each Executive Director’s workweek involves going to meetings of housing authority directors and individuals who assist them. And third, because all responsibility and final authority rests in the local Executive Director, DHCD policy has to be communicated individually for individual implementation.

It also indirectly results in a great deal of inefficiency if not outright corruption. While the infamous case of the Springfield Housing Authority is well known, the State Auditor routinely raises lots of questions about things that other Executive Directors are doing, and there are quite a few lesser known scandals and things which, if not outright illegal, would not be accepted if these housing authorities were operating in the sunlight of public accountability.

Instead of 254 housing authorities serving the entire Commonwealth, only one housing authority is necessary. In particular, only one executive director is necessary; the other 253 are simply redundant and something that is not affordable.

Solution

First, abolish all 254 housing authorities. Much as Governor Patrick did with the Turnpike Authority, we should “discontinue” these municipal authorities using the precedent of the towns of Dana, Enfield, Prescott & Greenwich were “discontinued” to form the Quabbin Reservoir. We do this outright – the authorities no longer exist and thus the contracts of all of the directors and the union contracts of the employees are no longer valid because the entity that employs them no longer exists. All property and assets of the housing authorities, including the Section 8 Administrative Fees, becomes the property of the Commonwealth.

Second, each of the 351 towns and cities in the Commonwealth is given the option to own and run any housing authority property located within the municipal borders. In rural areas where doing this is beyond the ability of the municipality, towns are given the option of transferring this right and responsibility to the inter-municipal cooperatives that many formed when county government was abolished. A to-be-determined ongoing revenue stream, from the money currently coming to the existing housing authorities (including the Section 8 Administration Fee revenue) will follow each building, but the municipality will have to promise to maintain the building and agree that the Commonwealth may offset the expenses against its state aid if DHCD has to do it.

Third, and in conjunction with municipal wishes where possible, at least 80% of the existing Chapter 667 housing is re-designated as “elderly only.” It was a well intended effort to include the disabled, particularly before ADA mandates and tax incentives created physically accessible housing elsewhere, and when the elderly consisted of the demographically small generation of the “Children of the Depression.” But this well intended effort has been a failure and frail elderly are being terrified by the inappropriate actions of individuals who either have psychological disabilities or the so-called “dual diagnosis” of both a substance abuse issue and an underlying psychological issue, the combination of which makes them eligible to live in the building while the alcohol/drug abuse alone would not. Furthermore, our need for those units now that the “Baby Boomers” are retiring is going to be even greater than when we built them for their parents.

Fourth, either expand DHCD or split DHCD into two entities with community development going to the other entity. DHCD will be supervised by a Commissioner of Public Housing who will be elected in the manner of the Attorney General and State Auditor. And all public employees who work in public housing – excepting those who will be working in the formerly 667 buildings now being run by municipalities (and hence become municipal employees) – will be employees of the Commonwealth and of DHCD.

Fifth, all financial calculations will be done in a central office, using the electronic income database that we have for child support enforcement. Regional field workers will access this data (much like unemployment workers do) and enter client information, including the rental rate of the apartment. Income information will be taken directly from the database; the client will be given a copy of the information and can appeal it if it is wrong, but that will be no more of a problem than with doing this for unemployment benefits. Both clients and landlords will be tracked by Taxpayer Identification Numbers (TIN) and rather than a blizzard of checks, just one electronic payment each month will be made to each landlord TIN. Both tenants and landlords will be told what the tenant’s share of the next month will be, based on this month’s earnings – of all the adults in the household as we are taking the earnings of all of the TINs in the household.

This will mean that the payment to the landlord will vary each and every month (and HUD approval may be needed for this) but we will be making payments based on actual information about all of the family’s income, modifying them up or down as income changes. State law as enforced by the MCAD requires landlords to make reasonable modifications in their policies to permit people with public assistance to rent, Section 8 policy is that the Section 8 lease supersedes any landlord lease, and while many will not be happy, we can force landlords to accept a variable public payment. And with the other advantages the landlords will be receiving – including not having to deal with a dozen different housing authorities – this may not be that upsetting.

Sixth, any landlord who wishes to do so (and most will) can transfer the landlord’s powers of eviction to DHCD. In cases where the landlord has done this, it will be a combined eviction and termination proceeding where the initial hearing is in front of the judge and where the tenant is represented by one of the public advocacy organizations. This solves three existing problems: it ensures that all of the tenant’s/client’s rights are protected and eliminates the public advocates having to address problems after they have happened; it eliminates the current situation where landlords ignore problematic tenants due to the costs of the eviction, and; it eliminates the current situation where terminating a voucher creates financial hardship for the landlord who isn’t the person causing the problem. (For example, it is nearly impossible to evict a woman with children for anything other than nonpayment of rent, thus the voucher is terminated, no rent payment is made, and while the tenant is eventually evicted, the landlord is short several months rent on a unit that usually has significant damages and will take yet another month to get ready to rent again.)

Seventh, each of the local housing authority offices is initially kept open as a local field office of DHCD, in a fashion similar to a branch of a bank. Clients can go to whichever office they want, and before long a significant number of them are shut down, much like what happened in the past when bank branches merged. In rural areas it will be necessary to keep many of the existing offices open, but they will only be open one or two days a week with staff simply assigned to different offices on different days, as we currently do in the court system. All of the work performed in these offices will be essentially clerical – data entry and initial contact with tenants and landlords with problems, but anything of significance will be sent to the regional office. These would be low skill and thus low-salary jobs. Some of these offices will also serve as locked (non-public) office space for those working out in the field.

Eighth, the people running most of the housing authorities, the directors and top management, started in the 1970’s and are close to retirement. It may be politically necessary to offer some early retirement incentive, there may be a legal requirement of some severance when a job is eliminated, and there is always the unemployment liability that is eliminated with voluntary retirement. There will be expense here, as they will be retiring into county-based retirement systems rather than the state system, and as those employees kept on as DHCD employees have their retirement funds in the same county-based system, there will be significant work involved in transferring funds.

But a significant number of the current employees will retire. Of those that are left, all are permitted to apply for DHCD jobs which essentially consist of three things: regional management in, at most, five areas and central management at both DHCD headquarters and the financial processing center (both of which could be located in an economically depressed area such as Roxbury), the low-skill clerical jobs in the field offices, and individuals working out in the field.

Current housing authority workers will also be given a priority for other positions with the Commonwealth and be considered “laid off state employees” with all the priority rights of such status. If they choose to work for the Commonwealth, either for DHCD or another division, they will be considered to have the seniority of a state employee with similar years of service, and thus they will be able to keep their vacation benefits and the like. They will not be able to retain either their current position or their current salary – all positions with the same category will be paid on the same (new) pay scale, most positions will be downgraded, and redundant positions in upper management eliminated. Hence most current housing authority office employees may be given the opportunity to do the non-management portion of their current jobs but for less money, most maintenance workers likewise, the non-management portions of their current jobs but for less money, a few (but only a few) will be doing all-management portions of their current job, but for a larger region.

Ninth, is to create a division of Inspection & Fraud Detection. This will include inspectors – and the annual routine inspection of all the units in a specific small property or neighborhood is consolidated to just one annual site visit, multi-building small complexes are consolidated to two or three days per year, and for large complexes inspections are consolidated to just one day every other month as it is necessary to have an inspector make frequent visits to the complex itself. This inspection could also be coordinated with landlords who conduct their own inspections so that their maintenance people only have to go into the unit once, thus saving the landlord money.

The inspectors answer to a Fraud Investigator, and landlord failure to comply with 105 CMR 410 is considered to be fraud and dealt with as such. Likewise in cases of malicious tenant damage, and in addition to being the landlord’s witness in court, the new DHCD inspector will be making referrals for client termination/eviction to the legal department – this will help landlords dealing with a tenant that is destroying the apartment, a not uncommon problem in the Section 8 program. These inspectors will also inspect all of the publicly-owned property, which is now being managed out of the regional field offices (which eventually will expand beyond just the current housing authority whose office it once was).

The fraud detectors, some of whom may be sworn law enforcement officers who will be both armed and have powers of arrest, will investigate all of the current fraud and bring either program termination cases or criminal cases. In cooperation with other law enforcement entities and on their own initiative when appropriate, those with power of arrest will make arrests to address a lot of the “quality of life” issues in public and subsidized housing – they will be arresting the individual with the outstanding warrant, those dealing drugs, and possibly being the initial contact for the occasional Chapter 209A restraining order.

This will fill a gap that currently exists between the local police who often lack the probable cause to make arrests and the housing authority inspectors who lack the authority to make arrests for things which are happening in their presence. It will also serve to coordinate information which is confidential to a police officer and information which is confidential to a Section 8 employee; with the dual authority the fraud investigator will be in a situation similar to a university police officer’s ability to access both student and criminal information about the same individual.

Tenth, we amend the law that requires the suspension of a driver’s license for possession of a fake ID to include suspension of the license when used to claim residency elsewhere than in a rented unit (i.e. when the boyfriend claims he doesn’t live there.) We amend the law that requires suspension of a driver’s license for unpaid child support to include failure to pay obligations to DHCD (i.e. tenant’s share of rent, etc.)

And most importantly, a condition of residing in publicly owned housing or receiving a public assistance voucher will be consent to annual drug testing. This will neither be random nor unannounced; it will be by appointment or in a walk-in basis at the convenience of the parent(s) and will apply to all members of the household who have attained their tenth birthday. For those under the age of 18, the testing will also include both tobacco and alcohol as state law prohibits minors from consuming such substances. If possible, this will be done in cooperation with a local DARE program and/or the local schools or police anti-drug efforts. For those under the age of 18, the testing will also include tobacco and alcohol, as both are illegal for persons of that age.

Any person in the household failing a drug test is re-tested within 10 days. Anyone failing the second test is given the opportunity for more accurate (but much more expensive) testing at public expense should the individual (or parent) request it. Any family member (including child over the age of 10) who fails both drug tests and either declines the more expensive testing or also fails that shall be retested every three months. If said person fails a third time, again with the option of immediate re-testing and more accurate testing, the entire family will be both evicted and denied eligibility for any housing assistance program for six months. And the individual’s driver’s license is suspended for six months, in cases where an individual doesn’t have one, the right to apply for a driver’s license is suspended until the 18th birthday or two years, whichever is longer.

The driver’s license of anyone residing in a subsidized unit who is arrested for any “crime against the person”, “crime against property”, or violation of any restraining order, or any juvenile offense that is essentially similar, is suspended for one week on the first arrest, one month on the second, six months on the third and a year on each and every subsequent arrest. Any person who doesn’t have a driver’s license will lose the right to apply for one for one year on the first arrest and an additional year on each additional arrest although they will be able to apply for one upon the 19th birthday.

There will be no penalty against the family when an individual or parent comes forward and asks for assistance with a drug problem, either to DHCD or appropriate medical personnel. All rules of due process in the suspension of licenses will apply here and anyone found innocent or in cases where the local police request it, any license suspended will be reinstated immediately and without cost to the individual.

This may sound draconian, but it is necessary. It is leverage for the single mother to use in her effort to control her son, and it gives her son the ability to avoid the pandemic drug culture in the low income neighborhoods. Opposition to this may not be as vocal as one might expect – and this is scheduled drug testing with the option of the parent to postpone it (like any other appointment) it more empowers the parent in the parent’s own desire to keep their children out of the drug culture and gives the teenager an excuse to use against often overwhelming peer pressure.

Eleventh, I propose adopting the principles and rules of welfare reform to public housing. Tenants will be required to work (or do public service work, such as answer the telephones at the regional field offices) and this will include the physically-able disabled. In many cases we will likely find that the social contact and responsibilities gained in public service work actually has a therapeutic benefit to the individual, and in some cases it may enable to person to eventually become gainfully employed.

Funding/Conclusion

For each month that a Section 8 payment is made to a landlord, the housing authority that issued the voucher receives between $90 and $100 from the US Department of Housing & Urban Development (HUD), this in addition to the money which is then sent to the landlord. Each housing authority also receives state and federal funding in a variety of other ways as well, and hence there is a collective sum of money being distributed to all of the housing authorities to provide a certain level of service. Even with the initial startup costs and the expenses of hiring fraud investigators and beginning drug testing, with the significant savings enjoyed by economy of scale, the existing total sum of money, assuming that HUD agrees to maintain the same level of fee payment, would fund this proposal.

We would then find either that we didn’t need to appropriate as many state dollars as we currently do (DHCD’s end of year surplus would return to the state treasury) or that we could provide more services with the existing budget allocation. In addition, the combination of fraud detection and use of actual earning data to calculate rent would save federal dollars in the Section 8 program; it would save state dollars with the ARVP/MRVP vouchers and similar state-funded programs. Furthermore as all rent paid in the publicly-owned properties is applied directly to the costs of operating said properties, a reduction of under-reported income here would mean more money coming into DHCD and thus reducing the need to allocate state dollars to DHCD.

Massachusetts stands to gain from consolidating these entities and building accountable, efficient authorities to oversee housing, ultimately improving the life of thousands of citizens. This solution will save money and improve services through the elimination of redundant overlapping bureaucracies, introduce of modern technology to both promote efficiency and reduce fraud, and apply the principles of “welfare reform” to subsidized housing, and to address behavioral issues plaguing low income communities.

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