The Department of Housing and Urban Development, the federal executive branch agency that shapes affordable housing and rental policy in the U.S., once again can’t say whether its two largest programs are spending money improperly, or how much is being wasted.

It’s the seventh straight year officials haven’t been able to estimate incorrect funds paid out of two housing offices that comprise more than two-thirds of the department’s total annual expenditures. And officials don’t anticipate having an estimate for another three years, according to an inspector general report published Jan. 25.

“If left unaddressed until then, hundreds of billions of dollars in HUD rental assistance payments will continue to be at heightened risk of waste, mismanagement and fraud,” according to the watchdog. “HUD leadership must act immediately to break the cycle of noncompliance with improper payment laws.”

The two agencies, both rental assistance programs for Public and Indian Housing, and Multifamily Housing, distribute HUD money to non-federal public housing agencies and contract administrators, who pass it on to landlords to subsidize low-income tenants. These “middlemen” determine eligibility, and therein lies the greatest risk for improper payments, according to the IG.

HUD hasn’t been able to estimate what exactly happens between the payments that it makes to the public housing agencies and contract administrators and payments these two delegates then make. For 2016, the last year for which a compliant audit was completed, some $1.7 billion was spent on improper payments.

Governmentwide, improper payments in general have decreased in recent years and hovered around 5% in 2023, according to the Office of Management and Budget. Exclude some pandemic-relief programs and the rate falls even further to 4% — the lowest level since 2014. Improper payments include those that are more than authorized, less or paid to the wrong recipient. They’re not always a result of fraud since sometimes they can arise from clerical errors. Other times, there may be instances when payments have been deliberately misrepresented.

“As the President said, ‘We have to prove democracy still works, that our government works and can deliver for our people’ — and that means continuing to make sure that we safeguard taxpayer dollars in a manner deserving of public trust,” OMB said in a November statement.

Generally, though, improper payments are the result of seemingly benign mistakes. About 58% of improper payments in this category were made because officials couldn’t access the information they needed to determine whether someone should be paid, and how much, per the Government Accountability Office.

Still, since 2003, the federal government estimated a cumulative total of $2.4 trillion was spent on improper payments, per GAO’s latest quarterly report.

In its response to the IG report, HUD said it requested money last year and this year to improve its systems for managing payments, but it’s uncertain whether this funding will come through as some of it is held up by Congress. Agency leaders vowed that by late next month, they will provide a plan outlining what IT investments are needed to roll out a better system.

Molly Weisner is a staff reporter for Federal Times where she covers labor, policy and contracting pertaining to the government workforce. She made previous stops at USA Today and McClatchy as a digital producer, and worked at The New York Times as a copy editor. Molly majored in journalism at the University of North Carolina at Chapel Hill.

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