GAO Urges More Comprehensive REAC Changes

Recommendations include processes to address lead paint hazards.

On July 6, the U.S. Government Accountability Office (GAO) updated its April 2020 list of priority recommendations for HUD. The earlier list outlined 17 “priority open” recommendations—those that warrant priority attention from heads of key departments or agencies because their implementation could:

• Save large amounts of money;
• Improve congressional and/or executive branch decision making on major issues;
• Eliminate mismanagement, fraud, and abuse; or
• Ensure that programs comply with laws and that funds are legally spent, among other benefits.

Priority Recommendations Implemented

According to GAO, HUD’s recommendation implementation rate was 56 percent. Since April 2020, HUD has implemented five out of GAO’s 17 priority recommendations for the department:

• HUD developed and implemented a comprehensive monitoring plan for its 2017 Community Development Block Grant Disaster Recovery grants that identified areas of greatest risk. Using these high-risk areas, HUD developed a monitoring schedule and strategy for fiscal years 2020 and 2021.
• HUD conducted workforce planning for the division that manages Community Development Block Grant Disaster Recovery grants. In fiscal year 2019, the agency assessed organizational functions, work products, and resources to determine the staffing gaps in the division. Since then, HUD has hired 28 staff to fill gaps identified. GAO believes that HUD's identification of the skills and competencies needed and hiring of staff to address gaps will help its oversight of the growing number of those grants.
• HUD conducted workforce planning for the Moving to Work demonstration in January 2020. It assessed organizational functions, work products, and resources to determine the staffing gaps in its Moving to Work office. Since then, HUD has hired nine staff to fill gaps identified.
• HUD developed and implemented a process to monitor Moving to Work agencies’ reserves. As of May 2021, HUD had implemented a process to monitor how existing Moving to Work agencies planned to use unexpended Public Housing and Housing Choice Voucher funding and limited the ability of new agencies to build large reserves. GAO believes that by having such plans in place, HUD will be able to provide reasonable assurance that the Moving to Work agencies have sound plans for expending their reserves.
• HUD completed a technical assessment to identify gaps in its information technology (IT) environment and systems and, subsequently, developed an implementation strategy and approach for modernizing its IT environment. HUD’s overall modernization approach also includes scope and a schedule. In February 2021, HUD provided draft performance measures established for overseeing these modernization efforts.

Open Recommendations

HUD currently has 125 open recommendations from GAO, of which 13 priority recommendations fall into six major areas:

• Improving the Real Estate Assessment Center's (REAC) physical inspection process.
• Addressing Ginnie Mae's risk management and staffing-related challenges.
• Strengthening processes to address lead paint hazards.
• Enhancing oversight of the Moving to Work program.
• Improving cybersecurity risk management and workforce planning practices.
• Improving IT management.

REAC inspection process. With respect to improving REAC’s inspection process, GAO recommended HUD improve the identification of physical deficiencies at HUD multifamily properties in 2019. GAO noted some contract inspectors were conducting inspections that didn’t meet REAC’s quality inspection standards, such as by not reviewing all of the required buildings and units. In addition, some property owners were misrepresenting the physical condition of their properties by covering up rather than addressing deficiencies—such as by using mulch on a building exterior to hide erosion.

While HUD told GAO that the recommendation had been addressed, GAO found HUD’s April 2021 response lacking and not comprehensive. For example, the information REAC provided to GAO didn’t address the physical inspection process or provide documentation of an examination of this process. To fully implement the recommendation, the office stated REAC needs to take additional actions consistent with a comprehensive review and provide the related documentation.

Addressing lead paint hazards. GAO offers three recommendations that would improve the effectiveness of HUD's efforts to identify and address lead paint hazards in low-income housing. In a June 2018 report, GAO made two recommendations for HUD to enhance compliance monitoring and enforcement of lead paint regulations. According to HUD, as of March 2021, it was still developing a monitoring plan to mitigate and address risks with respect to lead paint compliance. In addition, HUD officials told GAO they were internally reviewing draft procedures for staff to enforce lead paint regulations.

In the June 2018 report, GAO found that HUD requires a less stringent lead paint inspection standard for its Housing Choice Voucher program than for its public housing program. Thus, children living in voucher units may be less protected from lead paint hazards than children living in public housing. GAO recommended that HUD request authority from Congress to amend the voucher program inspection standard based on an analysis of health effects for children and other relevant factors.

HUD officials told GAO they plan to continue to request funds from Congress to evaluate an alternative lead paint testing method in HUD's Housing Choice Voucher program. To fully implement GAO’s recommendation, HUD needs to take steps to analyze the effects of alternative lead evaluation methods, and use the results to inform its decisions about requesting new authority from Congress.

Enhanced oversight of Moving to Work. GAO has two recommendations that would enhance HUD's oversight of the Moving to Work demonstration, which gives participating PHAs the flexibility to change rent calculations and impose work requirements and time limits on tenants, among other things. In January 2018, GAO recommended that HUD better track PHA fund usage and assess the effects of policy changes on tenants. As of March 2021, HUD was planning to revise its reporting requirements to better track the use of Moving to Work agencies’ funds in 2021.

GAO says HUD still needs to develop and implement a plan for analyzing the effects of program flexibilities on tenants. Fully implementing these recommendations would help HUD evaluate the performance of Moving to Work agencies and assess the demonstration’s effect on tenants.