Skip Navigation

This year the Congress is considering proposals to modify the system for subsidizing public housing operations and modernization. This paper, requested by the House Budget Committee, describes the mechanisms for setting subsidy levels and discusses current concerns about the level and distribution of assistance. It compares options for addressing these concerns, ranging from incremental adjustments to new methods of determining subsidy levels.

Roberta Drews of the Congressional Budget Office's (CBO's) Human Resources and Community Development Division prepared the paper under the supervision of Nancy M. Gordon and Martin D. Levine. Howard Levine and Ben Steffen provided the computer assistance. Peter Harkins, Maureen McLaughlin, Philip Sampson, Brent Shipp, Raymond Struyk, and Philip Webre reviewed earlier drafts of the report and made helpful suggestions. Many people at the Department of Housing and Urban Development provided data used in the study and reviewed earlier drafts. Francis Pierce edited the paper, assisted by Nancy Brooks. Mary V. Braxton typed the several drafts and prepared the manuscript for publication.

In accordance with CBO's mandate to provide objective and impartial analysis, this paper contains no recommendations.
 

Alice M. Rivlin
Director
June 1983
 
 

SUMMARY

CHAPTER I. INTRODUCTION

• The Development of the Public Housing Program

CHAPTER II. CHARACTERISTICS OF THE PUBLIC HOUSING PROGRAM

• Who Is Served by Public Housing?
• What are the Characteristics of Public Housing?

CHAPTER III. ISSUES IN SUBSIDIZING PUBLIC HOUSING

• Size of the Public Housing Stock
• Standards for Operating Public Housing
• Degree of Federal Control Over the Management of Public Housing
• Broader Implications of Funding Mechanisms

CHAPTER IV. THE CURRENT SYSTEM FOR SUBSIDIZING PUBLIC HOUSING

• Subsidies for Annual Operations
• Subsidies for Modernization
• Projected Subsidy Levels

CHAPTER V. OPTIONS FOR SUBSIDIZING PUBLIC HOUSING

• Setting Subsidy Levels for Public Housing
• Options for Modifying the Performance Funding System
• Options for Modifying the Modernization Program
• Options for Basing Subsidies on Private-Market Rents

APPENDIX A. GEOGRAPHIC REGIONS

APPENDIX B. DETAILED INFORMATION ON PROJECTED FUNDING LEVELS UNDER CURRENT PROGRAMS AND UNDER CBO REESTIMATES OF THE ADMINISTRATION'S PROPOSAL

APPENDIX C. CURRENT LEGISLATIVE PROPOSALS TO MODIFY SUBSIDIES FOR PUBLIC HOUSING
 

TABLES
1.	DISTRIBUTION OF PUBLIC HOUSING BY SIZE OF PUBLIC HOUSING AUTHORITY AND REGION, 1980
2.	COST OF MEETING VARIOUS PUBLIC HOUSING CONSTRUCTION STANDARDS
3.	COSTS OF REPAIRING DISTRESSED UNITS TO MEET MINIMUM PROPERTY STANDARDS
4.	COMPONENTS OF OPERATING SUBSIDIES UNDER THE PERFORMANCE FUNDING SYSTEM, BY SIZE OF PUBLIC HOUSING AUTHORITY, 1982
5.	COMPONENTS OF OPERATING SUBSIDIES UNDER THE PERFORMANCE FUNDING SYSTEM, BY REGION, 1982
6.	PROJECTED FUNDING LEVELS UNDER THE PERFORMANCE FUNDING SYSTEM AND COMPREHENSIVE IMPROVEMENT ASSISTANCE PROGRAM, 1984-1988
7.	FUNDING FOR THE PERFORMANCE FUNDING SYSTEM AND A FORMULA-BASED IMPROVEMENTS PROGRAM UNDER A RANGE OF ASSUMPTIONS, 1984-1988
8.	PROJECTED FUNDING LEVELS UNDER CBO REESTIMATE OF ADMINISTRATION'S PROPOSED FAIR MARKET RENT SUBSIDY SYSTEM AND COMPREHENSIVE IMPROVEMENT ASSISTANCE PROGRAM, 1984-1988
9.	EFFECTS OF THE ADMINISTRATION'S PROPOSAL: CHANGES IN OPERATING SUBSIDIES FROM THE PERFORMANCE FUNDING SYSTEM TO CBO'S REESTIMATES OF THE ADMINISTRATION'S PROPOSED FAIR MARKET RENT SUBSIDY SYSTEM, 1984-1988
FIGURES
1.	NUMBER OF COMMITMENTS THROUGH FEDERAL HOUSING ASSISTANCE PROGRAMS, 1956-1983
2.	GEOGRAPHIC DISTRIBUTION OF PUBLIC HOUSING

The public housing program, administered by the Department of Housing and Urban Development (HUD), is the oldest of the direct federal housing assistance programs and one of the largest, aiding 1.2 million households in 1982. Though funded by the federal government, public housing is owned and managed by local public housing authorities (PHAs) and rented to low-income households, which pay no more than 30 percent of their incomes for their housing costs. Because rents are too low to cover costs, the federal government pays a share of ongoing operating expenses, as well as the entire costs of initial construction and subsequent improvements to physically deficient units. Federal expenditures for all these purposes totaled $2.6 billion in 1982--up from $860 million a decade earlier.

Public housing is an important resource in meeting the housing needs of low-income households, contributing 10 percent of the housing occupied by very-low-income households¹ and as much as 15 percent of the rental housing stock in some cities. Like poor households in general, public housing tenants are far more likely than households renting in the private market to be headed by women and to have above-average numbers of children. About 55 percent of public housing units are occupied by families, most often a single woman with children, and the remaining units are occupied by households with an elderly head, generally a woman living alone. Contrary to many stereotypes, public housing units are, by and large, in reasonably sound condition, though most need some repair. A small subset of units is, however, in very poor condition and would require large expenditures per unit to meet current quality standards.

This document is available in its entirety in PDF.

1. Under statutory definition, low-income households are those with incomes below 80 percent of the area median, and very-low-income households are those with incomes below 50 percent. Up to 10 percent of the units provided before 1982 and 5 percent of those provided since then may be occupied by households with incomes between 50 and 80 percent of the area median; the rest are reserved for very-low-income households.