Section 8 Housing Choice Voucher Program: Funding and Related Issues

Publication Date: August 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Social conditions

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Abstract:

The largest federal program designed to provide affordable housing to lowincome families is the Section 8 Housing Choice Voucher program, which serves over 2 million households. Section 8 vouchers are tenant-based subsidies that lowincome families use in the private market to lower their rental costs to 30% of their incomes. The modern program began in the early 1980s and has grown to replace public housing as the primary tool for subsidizing the housing costs of low-income families. Its creation and much of its history are characterized by support from both ends of the political spectrum -- for its use of the private market, on the one hand, and for its deep subsidies for the poorest families, on the other.

Over the past several years, the program has come under fire for its rising cost. From 2001 to 2005, the cost of the program has increased by over 34%, although the number of people served has remained roughly the same. These cost increases can be attributed to a number of factors, not the least of which is the structure of the benefit. The value of a voucher is calculated as roughly the difference between rents in a community and 30% of participating households' incomes. In recent years, rents have been rising faster than incomes, which, along with federal policy changes designed to expand household choice and deconcentrate poverty, has driven up the cost of a voucher and therefore the cost of the program. In FY2005, the overall Section 8 program, at more than $20 billion, accounted for over half of the entire budget of the Department of Housing and Urban Development (HUD). The voucher component alone constituted more than a third of HUD's budget. In order to provide that funding level while remaining within discretionary budget caps, congressional appropriators enacted funding cuts to almost all other HUD housing programs.

To address the rising cost of the program, the Bush Administration proposed to enact a major reform of the Section 8 voucher program in both sessions of the 108th Congress, and an Administration-backed reform proposal has been introduced in the 109th Congress. The State and Local Housing Flexibility Act of 2005 was introduced in the Senate on April 13, 2005 (S. 771) and in the House on April 28, 2005 (H.R. 1999). The first title of the bill would replace the current Section 8 voucher program with a broader-purpose grant program, called the Flexible Voucher Program. It would eliminate most of the current program rules, devolve additional authority to the local level, and increase administrative ease for local public housing authorities (PHAs).

This report, which will be updated, provides an introduction to the Section 8 voucher program, its funding, and current issues and proposals.