The blog of the Urban Institute
May 20, 2020

New Funding Flexibility Is Helping Public Housing Authorities Address Urgent Needs—But Their Long-Term Challenges Could Get Worse

As the COVID-19 pandemic continues to threaten people’s economic security, public housing agencies (PHAs) are using new flexibility to divert resources to address residents’ immediate needs. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, allows public housing agencies to combine a portion of the funds they receive from the US Department of Housing and Urban Development (HUD) to prevent, prepare for, and respond to the pandemic. This permission to shift resources from public housing operating and capital funds through the end of the calendar year gives agencies the flexibility they need to respond to urgent challenges.

But despite this critical flexibility, PHAs’ significant preexisting budget shortfalls—especially for building maintenance and improvements—will get worse as the limited funds available for capital renovations are put toward more immediate needs. The pandemic has heightened the need for increased funding to prevent the even greater crisis threatening the viability of thousands of public housing units and, by extension, residents’ health and well-being.

How the CARES Act gives PHAs more funding flexibility

Under the CARES Act, all PHAs can shift funding from their public housing operating and capital budgets to cover costs for services and supports that address pressing, immediate needs related to the pandemic. This flexibility, combined with the $685 million in financial support from the CARES Act, helps PHAs respond quickly to local needs. The act provides limited guidance on the use of funding, stating that PHAs can use funding flexibility for activities that support and maintain the health and safety of assisted individuals and families, as well as education and child care.

HUD already allows the 39 PHAs in the Moving to Work demonstration (MTW) to use funds flexibly. Although PHAs traditionally receive HUD funding in three streams that they cannot combine—public housing operating funds, public housing capital funds, and housing choice vouchers—MTW agencies may use funds from one stream to cover costs for an activity associated with another stream in efforts to achieve cost efficiencies, increase residents’ self-sufficiency, or increase housing choice. An MTW agency may, for example, shift resources from its operating funds to support public housing renovations. MTW PHAs have used funding flexibility to engage local direct service providers for case management, mental health care, child care, and food access for residents, as well as employment supportive services, such as job readiness and transportation assistance.

Why flexibility alone is not enough

PHAs’ responsiveness to local needs is even more important during the pandemic. Media outlets have highlighted the significant needs of public housing developments and residents. For example, New York City’s public housing developments already had maintenance issues, such as broken elevators, lead paint, and water leaks—problems that exacerbate COVID-19’s health risks. MTW PHAs have been able to respond quickly to provide food assistance and wellness checks, especially for elderly residents.

The additional funding from the CARES Act, along with funding flexibility, has put all PHAs in a better position to respond to the pandemic, but funding remains insufficient. Urban Institute research has shown PHAs had significant financial needs before the pandemic. As of 2010, unmet maintenance and repairs for PHAs cost an estimated $21 billion. By 2018, estimated capital needs had increased to $54 billion and continue to increase by roughly $3.5 billion annually. Existing maintenance and repair issues will worsen over time as PHAs shift funds from addressing capital needs to address immediate needs, and the ongoing deferment of maintenance will worsen budget shortfalls.

The time-limited funding flexibility and one-time financial support helps PHAs now, but it leaves them moving funds around to cover pressing COVID-19-related needs while building-related costs and other deferred issues keep growing. This pandemic has underscored the need to maintain and improve public housing units, and the concomitant need for increased and sustained funding for PHAs, to continue providing much-needed stability to residents.

A man walks by the Farragut Houses, a public housing project in Brooklyn on March 16, 2017 in New York City. (Photo by Spencer Platt/Getty Images)

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