Tag Archives: cash assistance

A bold new federal experiment in giving renters cash

Originally published at Vox on September 12, 2023.
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A group of researchers at the Department of Housing and Urban Development have been quietly developing an idea that could fundamentally upend the nearly 50-year-old housing voucher program, which helps more than 2 million low-income families afford apartments in the private rental market every year.

The idea is relatively simple: What if, instead of traditional housing vouchers laden with convoluted red tape that landlords notoriously hate, low-income tenants could pay their rent with cash? Would that make it easier for tenants to find housing or move into better neighborhoods? Could that even save the government money by streamlining the aid?

Right now, due to funding constraints, only a quarter of those eligible for housing choice vouchers (formerly known as Section 8 vouchers) ever receive one. But if you are in that lucky 25 percent and are awarded a voucher, you might not be able to use it. The program is so cumbersome that only around 60 percent of beneficiaries can find a landlord willing to rent to them.

This isn’t the first time the federal government has explored questions around cash rental assistance: In the early 1970s, Congress successfully piloted a program to 14,000 families across 12 cities. That research, however, was largely forgotten about in the following decades. It wasn’t until recently, when some HUD employees stumbled upon old reports buried on an agency bookshelf, that policymakers realized the cash rental assistance model might be more valuable for modern times.

They are building on that older research as well as more recent developments: an ongoing related study in Philadelphia, the Covid-19 experiments with new kinds of cash assistance (including not just housing aid but also stimulus checks, child tax credits, and food subsidies), and dozens of encouraging guaranteed income pilots that have cropped up over the last few years. HUD officials now say it’s time to give federal cash aid a closer look.

The leaders behind this effort held their first official meetings last week, pitching philanthropic groups on the idea and asking for their financial backing. While the two virtual sessions were closed to the press, a HUD official told me “30 to 40 interested funders” came to their Tuesday pitch, and “dozens more” to their Thursday one. The team is convening a third meeting with nonprofits and housing researchers on September 19.

Though the HUD appointees who led the meetings — Brian McCabe and Aaron Shroyer — are framing the idea as a modest research project, officials involved are clear-eyed on where such a study could ultimately go. If, for example, a rigorously designed experiment provides new evidence for changing how vouchers are administered, that could have major implications for the $30 billion annual program and all the low-income families it serves. A small pilot could lead to a larger demonstration study, which could, officials say, then lead to pitching Congress on permanent change.

The wheels of federal policy reform move slowly: It might be 10 years until HUD makes any sort of long-term ask of Congress. But the wheels are turning now, in a way they never have before, to make the idea of cash aid a reality.

How the cash rental assistance policy might work

There are a lot of steps to getting housing with a federal voucher. First, a household has to prove eligibility. Then a public housing agency must issue the voucher subsidy to a landlord on the household’s behalf. For the household to benefit, the landlord must accept that voucher, the unit must pass an inspection, and the landlord must sign a contract with the public housing agency.

These are a lot of steps, and one hope is that by cutting out much of this bureaucracy, more people will be able to quickly move into affordable housing.

The proposed HUD study would look like this: Households selected from existing voucher waiting lists across a handful of diverse cities (ranging from smaller and suburban to dense and urban) would be randomly assigned to receive either the traditional housing choice voucher funded by HUD or a monthly payment for an equivalent value funded by philanthropy. The cash would not be unrestricted; it would need to go toward paying rent.

Researchers would then be able to study and compare the two groups over time (HUD says ideally for four years) to assess key housing policy questions, like whether one group had more success landing an apartment and staying in their unit.

A HUD official, who was not authorized to speak publicly, said they don’t have an exact number of tenant participants in mind, but stressed they’d want to involve researchers from the very beginning so they could design a study capable of providing strong statistical analysis. An example they put forward was studying five cities, with 200 households per city.

Landlords would likely still know if renters were using philanthropic cash to pay their rent, as it’s common to ask prospective tenants for income verification. But this kind of study could help clarify whether landlords are more biased against renting to low-income people who rely on aid at all, or if landlord resistance stems primarily from the logistical hassle of the traditional voucher program.

“The idea — to the degree possible — is to make the [public housing agency] invisible,” explained the HUD official. “So a landlord knows they’re dealing directly with the tenant, and not the tenant and the PHA.”

Jack Landry, who researches guaranteed income programs for the left-leaning Jain Family Institute, said he’s excited about HUD’s proposed idea because it offers something distinct from the rest of the existing evidence base.

“There are a lot of UBI [universal basic income] pilots out there, but only a fraction of them are being rigorously studied, and a lot of them are funded by American Rescue Plan dollars, making it unclear what happens when the money runs out,” he told Vox. “I’m enthusiastic because I think HUD’s idea has really clear policy implications and a fairly clear route to translating to large-scale policy change.”

Congress won’t let HUD distribute cash directly — but philanthropists could step in

Todd Richardson, a longtime HUD staffer whose team inadvertently discovered old federal reports of the cash rental aid program that ran in the 1970s, proposed in a little-noticed blog post in 2017 that perhaps those research findings could inform an existing voucher program known as Moving to Work.

Moving to Work, which allows public housing agencies to spend federal housing funds more flexibly than is permitted under the traditional voucher program, has been around since 1996 but was expanded by Congress in 2016.

Two years ago, in a meeting attended by local and federal housing officials and this reporter, participants discussed the idea of using Moving to Work to test cash subsidies for renters. Attendees expressed enthusiasm for the idea, though Richardson, who was leading the meeting, warned that it might not “pass muster” with the agency’s legal department.

The reason HUD is now pursuing a partnership with philanthropy is HUD’s lawyers ultimately determined it would violate existing congressional law to distribute federal housing dollars as cash, even under the Moving to Work program. Though some renters accessed federal cash rental assistance during the pandemic, officials say that’s largely because the American Rescue Plan was more vague on how funds could be spent, and thus more flexible.

But if HUD isn’t allowed to distribute its vouchers as cash, foundations could step in, and then HUD could study how that goes.

This public-private idea is being tried already in one city: In Philadelphia, researchers are almost one year into a two-and-a-half-year cash rental assistance experiment studying 300 households selected to receive money on a prepaid debit card every month. HUD officials have been in touch with Philadelphia program leaders, but they envision designing their federal study differently, partly because state and local housing agencies have more flexibility on how they spend public funds.

Sara Jaffee, a University of Pennsylvania researcher involved in evaluating Philadelphia’s cash rental assistance program, told Vox they’re just finishing cleaning up data and should be able to share some initial findings within the next month. She said they’re testing a lot of questions related to housing outcomes, including around housing quality and the experience of leasing with landlords.

According to a HUD official involved, the federal demonstration could conceivably get off the ground in the next six to nine months, depending on how fast governments find charitable partners. They’re hoping they can entice local philanthropies interested in putting money back into their communities — like the Pennyslvania-based foundations that are supporting Philadelphia’s study — as well as national tech and progressive groups that might want to grow the evidence base for universal basic income.

Last week’s meetings marked only the first step to potentially changing how billions of dollars in housing aid to low-income renters are spent. But as far as first steps in federal policymaking go, they were serious ones.

What If We Just Gave Renters Money?

Originally published in The Atlantic on October 20, 2021.
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In an obscure but public meeting last week, local and federal housing officials discussed a controversial idea that could transform U.S housing policy: What if the government gave money directly to renters, rather than relying on a complicated voucher system that drives both tenants and landlords up the wall? You’ve heard of universal basic income. What about universal basic rent?

The status quo is not working particularly well. More than half a million Americans experience homelessness on any given night, housing stock is in too-short supply, and rent and mortgage payments consistently rank among the heftiest bills families have to bear. For decades, most federal housing assistance has come in the form of a voucher program known as Section 8. But the program is cumbersome and bureaucratic. Landlords are often reluctant to jump through the government’s regulatory hoops to get the money, so they opt out. Because of funding constraints, only a quarter of those eligible for vouchers even get one, and those lucky few often must scour dozens of ads before finding even one unit that might accept the subsidy.

President Joe Biden promised during his campaign to make these vouchers available to all low-income families who qualify, and Congress is debating a measure as part of his economic package that would add roughly 750,000 more vouchers to the program. If it becomes law, that expansion would surely help some Americans find homes. But it wouldn’t solve the underlying problem: Most landlords don’t want to rent to voucher recipients.

The coronavirus pandemic showed the viability of an alternative path—one that officials in Biden’s administration now seem willing to at least discuss. Congress tried a lot of things to help people struggling with the economic fallout from COVID-19. One initiative, a government-administered eviction-prevention program, has been mired in paperwork and delays, and only one-fifth of the money the feds allotted to it has been distributed. Another program, in which the IRS simply mailed Americans stimulus checks, got money in people’s hands right away.

These recent experiences might inform federal leaders as they research new ways to improve housing assistance. Last Thursday, at a public meeting organized by the Department of Housing and Urban Development, policy experts and housing-authority officials considered new voucher-program ideas that could merit formal study. Making vouchers more like cash for renters, as opposed to subsidies for landlords, was one of the top three ideas that emerged from the meeting, and it will be explored further at a second gathering later this month. The leading proposals could be tested under a HUD program known as Moving to Work, which has been around since 1996 but was expanded by Congress in 2016.

Distributing rental subsidies as cash was the second-most-popular idea discussed at the meeting, and participants acknowledged that it could involve a cost-saving element, too, as it would reduce, or even eliminate, the need for regular HUD inspections of voucher-eligible housing. At the conclusion of the three-hour session, committee members voted to continue their discussion of the idea at their next scheduled meeting, on October 28.

“I think it’s interesting in light of [universal basic income], and I think it would be interesting to decouple the government from trying to figure out the right type and size and quality of housing and leave that up to people,” Chris Lamberty, the executive director of Lincoln Housing Authority, in Nebraska, said at the meeting.

A couple of hours into the virtual call, Todd Richardson, the head of HUD’s research arm, noted that meeting participants seemed relatively excited about the cash-assistance idea. He warned, though, that it might not “pass muster” with the agency’s legal department. Asked for clarification as to what the legal concerns may be, a HUD spokesperson told The Atlantic that the public meeting posted on the Federal Register was not “intended for press” and “I don’t think we had put an invitation to the press.”

Moving to Work isn’t the only vehicle policy makers could use to test the idea of distributing cash-based rental assistance to tenants. Congress could also authorize a pilot study, like it did in 2019when lawmakers approved a new voucher program to help families relocate to richer neighborhoods.

And in Philadelphia, starting early next year, a new study will explore how families fare when they receive rental assistance as cash. “There’s never been a full evaluation of using cash to renters for our tenant-based vouchers,” Vincent Reina, one of the University of Pennsylvania researchers who will assess the program, told me. “There’s been some explorations, but a true, proper evaluation is something that we’ve never really done.” Reina attributes the lack of study to political resistance. “Cash transfers are often more contentious,” he said.

The closest thing to a real test of the idea occurred in the 1970s, when Congress authorized the Experimental Housing Allowance Program. That program, which ran for longer than a decade in a dozen U.S. cities, provided cash assistance for housing directly to more than 14,000 low-income families. In a report filed to Congress in 1976, program evaluators noted that housing allowances were being well-received by their local communities and that the housing payments were being successfully administered to renters.

It’s clear that at least some current HUD staff are considering this old research. In 2017, Richardson published a blog post suggesting that the 1970s housing-allowance experiment could inform the Moving to Work program today.

Public-housing authorities might resist the idea, as it could require them to relinquish some control. Other authorities might lack trust that the funds would go toward rent. The findings from the Experimental Housing Allowance Program also suggested that cash subsidies could lead to lower-quality housing options for renters, though experts caution against drawing firm conclusions from the half-century-old study.

Studying the idea of cash rental assistance has great potential, Phil Garboden, a professor of affordable-housing economics, policy, and planning at the University of Hawaii at Manoa, told me. “I imagine vouchers will continue to exist in their current form for quite some time, but studying it is a terrific idea,” he said. “We absolutely do not have good data on it.” Garboden hopes researchers could tease out whether landlords avoid taking the vouchers mainly because they don’t like to deal with the red tape involved, or whether they’re simply resistant to renting to poor people.

Some renters might prefer the voucher status quo, but for others, cash could prove easier to use. Being able to pay for housing with cash or some dedicated housing subsidy might alleviate some of the administrative hassle that comes with navigating the U.S. welfare system—what the Atlantic writer Annie Lowrey coined “the time tax” earlier this year.

“Different forms of support work differently for different people, and a voucher could be a really effective mechanism for some households and some markets and less effective for others,” Reina told me. “It’s not to say vouchers can’t work, or can’t be improved, or shouldn’t be made universal, but we know through our existing voucher research that elderly households, households with kids, and households where the head is Black are less likely to use vouchers.”

Stefanie DeLuca, a sociologist at Johns Hopkins who was in attendance at Thursday’s meeting, told me that distributing housing assistance as cash could feel dignifying for some tenants. “The research on the Earned Income Tax Credit points to the idea that recipients experienced a sense of agency and dignity when they received a lump sum of money, and I suspect that renters being able to present themselves to landlords as paying like any other potential tenant could feel quite empowering,” she said.

Still, DeLuca’s own research suggests that the existing housing-voucher program could be improved in real ways to entice more landlords to participate, even in competitive markets. Researchers have been studying landlord signing bonuses and ways to get landlords their money faster. Even COVID-19 has helped hasten the digital streamlining of HUD contracts, making them less annoying to manage.

A new bipartisan bill introduced in May by Senators Chris Coons and Kevin Cramer would seek to remove red tape for Section 8 landlords. HUD is also beginning a new, major study of landlord incentives as part of its Moving to Work expansion.

And to be sure, one reason lawmakers have long resisted cash transfers is fear of political blowback. Over the years, Republican and Democratic politicians have embraced the myth that welfare rewards laziness, and that cash benefits in particular will spark public outrage.

But as we emerge from the pandemic, it’s clear that cash assistance to Americans is more politically viable—even more popular—than many in Washington previously thought. The U.S. government has also proved that it can cut checks quickly when it deems it necessary. In fact, distributing money can be easier than administering a byzantine social-insurance program that eligible participants may not even know about. If landlords continue to resist housing vouchers, perhaps the government will take that decision out of their hands and simply give renters cash.