Section 1 The Rent and Income Integrity Problem

3 What Is the Overall Problem? A 2001 Office of Policy Development and Research ( PD&R) study found that HUD:  Overpaid $2.6 billion in annual housing subsidies  $1.7 billion in administrative/component errors  $600 to $900 million in unreported tenant income  Underpaid $634 million in annual housing subsidies

4 HUD Rental Program Excess Subsidy- Unreported Earnings Excess Subsidy- Unreported Unearned Excess Subsidy- POA Error Subsidy Shortfall- POA Error Net Total QC/Income Match Error Public Housing $280$14$431$201$524 HCV/ Mod Rehab $369$49$876$256$1,038 Section 8- Project Based $199$67$362$177$451 Total $848$130$1,669$634$2,013 Error Measurement Estimates from 2001 QC Study and Income Matching This chart includes a breakdown of the various subsidy determination errors by program groupings in $ millions. The first two columns of data come from income matching, the third and fourth from the QC study.

5 Presidential Management Initiative #10 Mandate  HUD mandated to reduce errors by 50% by 2005  HUD’s Annual Performance Plan set interim goals:  A 15% reduction in the dollar amount of error by FY 2003  A 30% reduction by FY 2004

6 Rental Housing Integrity Improvement Project (RHIIP)  Comprehensive approach that identifies the best methods of reducing program errors  Addresses the root causes of income and rent errors in public housing and Section 8 HCV programs  Takes action to ensure the “right benefits go to the right persons”

7 RHIIP Formula for Success HUD and PHAs must work together to reduce errors and ensure fundamental fairness among families.

8 RHIIP Components  Error measurement  Program guidance  Training and technical assistance  Program simplification  Up-front income verification (UIV)  Rental integrity monitoring (RIM)  Consequences and Fraud

Section 2 Update on HUD RHIIP Activities

Section 2A Error Measurement

PD&R Quality Control Rental Assistance Subsidies Study  HUD PD&R measurement of progress in reducing number/dollar amount of rent calculation errors for FY 2003  Data collected from 2,700 households at 600 sites (Section 8, Section 811, Section 202, public housing)  Information from tenant files & in-person interviews

PD&R Quality Control Rental Assistance Subsidies Study  Data collection completed in early Summer 2003 for first half of FY 2003 with results available late 2003 for the Performance and accountability Report and Financial Statement Audit  Additional data collected in the last six months of FY 2003, with results available in mid-2004.

Section 2B Program Guidance

14 PIH Guidance Materials  Pubic Housing Occupancy Guidebook  Housing Choice Voucher Program Guidebook  Program Fact Sheets  Forthcoming Verification Guidance for HUD Field Offices and Public Housing Authorities

15 PIH RHIIP Web Site  Source for information and links to critical documents, HUD regulations, guidebooks, and fact sheets  FAQs on RHIIP, RIM, verifications, and income and rent  Training materials and presentations  PIH RHIIP website location: ph/rhiip/index.cfm

Section 2C Training and Technical Assistance

17 Training—HUD Field Office Staff  Purpose: To Enhance occupancy knowledge and skills of HUD staff  Focus: Basic occupancy with emphasis on eligibility, income, rent, and subsidy calculations  Spring 2002: Field Office basic rent and income training  June 17, 2002: RIM satellite training  May 5-9, 2003: RHIIP Training Conference

18 Training—PHA Staff  PIH Rental Integrity Summits  Orlando, Florida  January 26-28, 2004  January 28-30, 2004  Anaheim, California  February 2-4, 2004  February 4-6, 2004  Look for registration details on RHIIP Web Site!

19 Technical Assistance  PIH has a contract with MDStrum Housing Services to:  Provide technical assistance to challenged PHAs  Identify and address root causes of error  Perform HUD-Form software analysis  To date, onsite TA has been provided to 8 selected sites

Section 2D Program Simplification

21 Simplification Plans  Statutory proposals  Moving-to-Work  Regulatory options

Section 2E Up-front Income Verification

23 Up-front Income Verification  Definition: Verification of income through an independent source making use of income information databases maintained systematically and uniformly, such as those maintained by the State Wage Information Collection Agencies (SWICAs), the Social Security Administration (SSA), and private vendors before and during a family reexamination.  Key strategy for reducing the error rate

24 Current Sources for UIV Data  Social Security (SS) and Supplemental Security Income (SSI) information accessed via a secure Internet facility (TASS)  State Wage Information Collection Agencies (SWICAs)  State TANF systems  Private sector databases (e.g., The Work Number)

25 HUD’s Tenant Assessment Subsystem (TASS)  The system compares tenant-reported information to other HUD systems with income data stored in the SSA and the IRS databases  HUD strongly encourages PHAs to systematically use the system to reduce incidents of undisclosed SS and SSI income  HUD TASS website location:

26 UIV System Pilot  Commenced on August 18, 2003  Participants: Select PHAs in Florida and Texas  The UIV application was deployed as part of the HUD Tenant Assessment Subsystem (TASS)

27 UIV System Pilot (cont.) Objectives:  Obtain feedback on how wage and benefit data is displayed  Identify and assess implications of accessing SWICA data

28 HUD UIV System: Rollout Schedule  August through October 2003: TASS/PASS UIV System Pilot  Late 2003: Selected PHAs will participate in pilot of UIV System  Early 2004: UIV System available to all PHAs within states where HUD received income data

29 Coming Soon: HUD UIV System  Will make integrated income data available to PHAs from one source via the Internet  Allows PHAs to view quarterly wage, weekly/bi- weekly unemployment, and monthly SS benefit information for tenants in their jurisdiction

30 UIV System  Provides wage and benefit information through a data matching process for households covered by a HUD Form  For tenant recertifications, not new admissions, as wage and benefit data is pulled from existing Social Security Numbers (SSNs) in the PIC system  PHAs may not view the tenant data without a signed Authorization for the Release of Information/Privacy Act Notice (e.g., Form HUD-9886) in the household’s file

31 UIV System Discrepancy Reports  Compares total benefits reported by tenant to total benefits reported by SSA and SWICAs  Shows if the tenant’s SSN-date of birth- surname combination does not match SSA records  Shows if tenant’s claim was denied or benefits terminated

32 UIV System Privacy Requirements  Data must only be used for verification of tenant income and eligibility Data must not be disclosed in any way that would violate the privacy of the individuals represented in the system  Tenants must be provided with access to their records and an opportunity to correct or challenge their contents

33 UIV System Security  Ensures that access rights, roles and responsibilities within PHAs are appropriately and adequately assigned and monitored  Quarterly reviews conducted for all User IDs to determine if user still needs access to UIV data  Maintain security-related records  Conduct security awareness training

Section 2F Rental Integrity Monitoring (RIM)

35 Rental Integrity Monitoring (RIM)  In June of 2002, HUD Headquarters directed HUD Field Offices to conduct onsite monitoring of PHAs—RIM reviews—to:  Detect and reduce errors in income and rent calculations at targeted PHAs  Reduce rent underpayments and overpayments by residents  Maximize HUD’s limited housing resources

36 What Is a RIM Review? Onsite monitoring of PHA policies and procedures related to income and rent determinations, performed by Field Office reviewers, including:  Review of randomly selected sample tenant files  Gathering of PHA income and rent information  Assessment of PHA policies and procedures  Identification of income and rent errors  Analysis of income and rent errors to establish root causes/recommended corrective actions  Recording of income and rent findings and errors

37 RIM Review Close-Out  HUD Field Offices will:  Meet and discuss preliminary finds and observations/concerns with PHA staff  Discuss strategies for corrective action  Gives PHAs an opportunity to discuss RIM review finds and observations/concerns

38 Post Review Activities HUD Field Offices:  Issue RIM review reports to PHAs on findings, concerns, observations, and recommended actions  Monitor PHAs’ progress in correcting findings and errors  Provide ongoing technical assistance  Close findings when required actions are completed  Submit error reports to HUD Headquarters

39 Corrective Action Plans (CAPs) Required if a finding is not resolved by the time a PHA responds to a RIM report (within 45 days)  Finding: A condition not in compliance with handbook, regulatory, or statutory requirements  Systemic Finding: A pattern of deficient PHA performance in one or more areas of income and rent determination

40 Baseline for RIM Review Results Report  368 reviews conducted between June 2002 and January 2003  144 of the 368 reviews involved large PHAs that comprise over 25% of HUD’s subsidies  Income and rent errors recorded on Error Tracking Reports for each RIM review formed the baseline results

41 Second Round of RIM Reviews  April 2003 through September 2003  346 targeted PHAs administering public housing and HCV programs, covering 55% of HUD subsidies paid  RIM Review Results Report to be completed early 2004

42 Baseline RIM Review Results  Errors found in Public Housing and Housing Choice Voucher programs in initial 368 reviews divided into two categories:  Component Errors: Errors in specific income and expense components used to calculate rent (e.g., earned income, Social Security, pensions, dependent allowance, etc.)  Administrative Errors: Errors in procedures, including calculation and transcription errors and failure to verify information

43 Top Three Component Errors  Public Housing  Calculation of earned income (wages)  Calculation of pensions, public assistance & other income  Application of allowable deductions  Housing Choice Voucher  Calculation of earned income (wages)  Calculation of pensions, public assistance & other income  Using incorrect utility allowance schedule

44 Top Three Administrative Errors  Public Housing  Improper transfer of data from file to PIC  Lack of quality control  Lack of verification of income/deductions  Housing Choice Voucher  Lack of verification of income/deductions  Lack of quality control  Improper transfer of data from file to PIC

45 Re-reviews  PHAs receiving initial review in the first two rounds will receive a re-review to ensure corrective actions were implemented  Approximately 20 re-reviews completed to date, remaining conducted during FY 2004  Study of 50 PHAs undergoing re-reviews to be included in FY2003 Performance and Accountability Report

Section 2G Consequences and Fraud

47 Consequences of Program Errors RIM  Follow-up by HUD Field Offices and the Inspector General  May impact several performance indicators found under the Section Eight Management Assessment Program (SEMAP)  Expect PHAs to implement CAPs in timely manner to prevent adverse action

48 Consequences of Program Errors (cont.) UIV  HUD will examine discrepancy reports for large numbers of errors in wage and benefit determination  HUD will target PHAs with multiple errors for further action

49 Letter to CPAs  August 26, 2003 letter from PIH Assistant Secretary Liu to CPAs who audit PHAs  Outreach to independent auditors to assess/mitigate PHA program risk and to identify and report improper calculation of subsidy payments  Errors identified during the RIM reviews are being compared to the income and rent findings identified in the PHAs audit reports

50 OFFICE OF INSPECTOR GENERAL U.S. Department of Housing and Urban Development WASHINGTON, D.C HOTLINE COMPLAINT INTAKE FORM COMPLAINT INFORMATION Date:_______ COMPLAINANT CONTACT INFORMATION PHA Name:________________________ Point of Contact Name:______________________ Address:___________________________ (Street) ___________________ _____________ _______________ (City) (State) (Zip Code) Telephone: (Work)___________(Cell Phone)_________________ ___________________________ SUBJECT INFORMATION Subject Name or Name of Business:_____________________________________ Subject Address (If known) __________________, _________, ______ _________ (Street) (City) (State) (Zip Code) COMPLAINT SUMMARY (Attach additional pages if necessary): Loss Amount: Nature of Allegation: Initial Certification:________Recertification:________ U.S. Department of Housing and Urban Development WASHINGTON, D.C Reporting Fraud Hotline: Fax:

51 United States Attorney Southern District of New York FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICE JUNE 3, 2003 MARVIN SMILON, HERBERT HADAD, MICHAEL KULSTAD PUBLIC INFORMATION OFFICE (212) BARBARA GUSS (914) CHARGED WITH FEDERAL HOUSING FRAUD THAT COST THE GOVERNMENT MORE THAN $650,000 JAMES B. COMEY, the United States Attorney for the Southern District of New York; RUTH A. RITZEMA the Special Agent in Charge of the New York/New Jersey Office of the Inspector General of the U.S. Department of Housing and Urban Development (“HUD”); and CHARLES A. COLA, the Commissioner of the Yonkers Police Department, announced that 31 defendants were charged with obtaining private housing rental subsidies to which they were not entitled. Twenty-seven were arrested and 4 others were being sought. The defendants were charged in 14 separate criminal Complaints unsealed in White Plains federal court and were presented in Court today before United States Magistrate Judge George A. YANTHIS. The defendant’ fraud is alleged to have cost the federal government more than $650,000. Reporting Fraud

52 Yonkers housing fraud bust nets charges against 31 By WILL DAVID THE JOURNAL NEWS (Original publication: June 4, 2003) YONKERS — A federal and local investigation aimed at stamping out fraud in the Yonkers Municipal Housing Authority's Section 8 rent subsidy program culminated yesterday with the arrests of 27 people, and four others are being sought in connection with the probe, authorities said. The 31 people charged in the investigation — all but two from Yonkers — are accused of obtaining private housing rental subsidies they were not entitled to because their incomes were too high, said James B. Comey, the U.S. attorney for the Southern District of New York. 

Section 3 PHAs’ Role in RHIIP

54 PHAs and RHIIP HUD is committed to its error reduction goals, but we need PHA cooperation and support to succeed in all our RHIIP initiatives!

55 PHA Action—UIV  Use the TASS system now to verify benefit information and reduce incidents of undisclosed income  Use the UIV system, when it is operational, to ensure all wage and benefit income is disclosed  Implement controls that encourage follow up on significant income discrepancies

56 PHA Action—UIV System PHAs should review policies, practices, and SWICA regulations in preparation for availability of wage information and possibility of increases in cases of undisclosed income. Policies include:  Criteria for repayment agreements  Thresholds for legal action related to fraud  Zero income policies  Interim reexamination thresholds

57 PHA Action—UIV System (cont.)  Maintain, communicate, and enforce standard operating procedures for UIV data  Emphasize to staff the importance of carefully and accurately entering tenant data into PIC HUD Form for accessing wage and benefit information  Ensure all staff accessing UIV System have a current signed user agreement and PIH Access Authorization Form on file  Inform tenants that your PHA has access to wage, SS, and unemployment benefit information

58 PHA Action—RIM  Develop/implement an internal quality control system to ensure income and rent determination policies/procedures are followed consistently and accurately  Address concerns raised during RIM reviews and create and execute corrective action plans to address all findings  Use UIV sources and/or third party verification to verify wage/benefit data

59 PHA Action—RIM (cont.)  Review competency of occupancy specialists and train as needed on income and rent determination  Update policies and procedures and interview forms  Ensure consistency between policy and practice (e.g., occupancy file, Form 50058, administrative plan/ACOP)  Document, document, document!

60 General Recommendations  Know resources available, including:  24 Code of Federal Regulations (24 CFR)  PIH notices and Federal Registers  Public Housing Occupancy Guidebook  Housing Choice Voucher Guidebook  Rental Integrity Monitoring Guide

61 General Recommendations  Bookmark the PIH RHIIP Web Site and check it often for program updates, new guidance, and new FAQs  Keep in contact with your HUD Field Office

62 Conclusion Working together, HUD and PHAs can reduce income determination and rent calculation errors and ensure that there’s more housing money for those who need it the most.

63 Questions and Answers