HUD: Noble Motives, Fiscal Disaster
The stated mission of the Department of Housing and Urban Development (HUD) is to “create strong, sustainable, inclusive communities and quality affordable homes for all.” While that goal is laudable, the systemic dysfunction that permeates the department will prove to be a tough challenge for HUD Secretary Ben Carson.
Many of the department’s main failures stem from a lack of internal controls and rampant financial mismanagement. A July 2016 Government Accountability Office (GAO) report found that, “HUD did not follow seven of eight key practices for financial management, including receiving a clean audit opinion on its financial statements and operating in compliance with laws and regulations.” The report also charged that HUD cannot “effectively plan for and manage IT projects,” and that, “HUD has not formalized key practices for program oversight and evaluation.” Worse yet, HUD has ignored 63 GAO recommendations from fiscal years (FY) 2012-2015.
The HUD Office of Inspector General (OIG) has also detailed an extensive litany of fiscal woes. The department has failed to pass an audit for three consecutive years. A March 1, 2017 OIG report noted that HUD had to correct a staggering $513.4 billion in accounting errors in FY 2016 due to, “an inability to establish a compliant control environment, implement adequate financial accounting systems, retain key financial staff, and identify appropriate accounting principles and policies.” The report also found, “11 material weaknesses, 7 significant deficiencies, and 5 instances of noncompliance with applicable laws and regulations.”
Perhaps the most shocking HUD revelation is the April 30, 2017 story by the Daily Caller News Foundation, which reported that HUD’s OIG kept 14 “systemic reports” hidden from the American people. Systemic reports are intended to address the most critical issues with the highest impact facing the department. Because the reports were never released, there is no guarantee that HUD officials ever saw the recommendations. The documents had to be obtained using the Freedom of Information Act. The topics of these reports ranged from felons living in taxpayer-funded housing to unused funding to tax fraud. A 2011 report found that 1,300 fugitives were living illegally in public housing. Another report found that a small Missouri town was not using $78 million in disaster relief funding.
HUD received a $5 billion increase in funding to $49.3 billion in the FY 2016 budget. President Trump’s first budget request proposed a cut of more than $6 billion, including a number of HUD programs that have been serially wasteful. For example, the Community Development Block Grants (CDBGs) would be eliminated entirely, saving taxpayers $3 billion. On top of receiving pork-barrel earmarks for decades, this program was identified as wasteful by the Obama administration because, “the demonstration of outcomes [is] difficult to measure and evaluate.” The Trump proposal would also eliminate the Neighborhood Reinvestment Corporation, which would save $167.7 million. The Congressional Budget Office noted that the program duplicates low-income housing, community development, and homeownership programs that already exist within HUD.
Ensuring that every American has affordable living accommodations is certainly a noble endeavor. But HUD’s perpetual inability to keep its fiscal house in order raises serious concerns about the department’s commitment to wisely spend taxpayer dollars and fulfill its mission. The good news is that the beginning of a new administration provides a natural reassessment period, which is underway. Taxpayers should expect nothing less than stringent accountability and maximum competency from those public officials entrusted with their tax dollars, especially at HUD.
