Congressional Justifications for 1998 Budget Estimates

Policy Development and Research
Research and Technology

Program Highlights

Summary of Budget Request:

1. Summary of Budget Request

   The 1998 Budget proposes an appropriation of $39 million for research, policy analysis and for work supporting the Department's Transformation Plan. This appropriation is administered by the Assistant Secretary for Policy, Development and Research (PD&R). PD&R will concentrate its efforts on advancing the Secretary's priorities. The 1998 request is $5 million more than the fiscal year 1997 appropriation of $34 million. This additional spending is needed to continue and accelerate the Department's efforts to: (1) develop quantifiable measures of program performance for each major program, including outcome measures and indices of customer satisfaction; (2) develop a process for setting benchmarks, in conjunction with program recipients, for each program, specifying quantifiable goals for program performance by a specific date; and (3) improve the extent to which program performance information is used as part of Departmental management, budgeting, and allocation of staff resources. A strong Research and Technology program is absolutely vital to the Administration's effort to reinvent HUD. It is central to HUD's ability to improve program performance; enhance management effectiveness; and ensure the responsible, flexible and efficient use of our Federal resources.

2. Changes from 1996 Estimate Included in the 1997 Budget

   The funds actually obligated in 1996 ($33.2 million) were $1.4 million less than the $34.6 million estimated. The decrease occurred because funds for a few projects were reserved in 1996 but were not obligated by the end of the fiscal year. Funds for these projects were obligated in 1997. Actual outlays of $35.8 million were more than the estimate of $34.5 million due to contractors billing on a quicker pace than anticipated.

3. Changes from Original 1997 Budget Estimates

   The 1997 Budget requested an appropriation of $45 million. The appropriated level in 1997 was $34 million. The decrease in the 1997 obligation estimate is directly related to the lower level of funds and includes $1,748 thousand of unobligated funds carried over from 1996 which will be obligated in 1997 and an estimated $100 thousand for recoveries. The projected outlays also are lower largely as a result of the lower appropriation.

Explanation of Increases and Decreases

The 1998 obligation level and appropriation request are respectively $3.3 million and $5 million more than 1997. The increase in the outlays estimate is the result of the increased appropriation level, the delayed 1996 obligations and minor timing variances. The increase in Category II C, Housing Markets, provides for the increased costs of surveys, including surveys to obtain measures of customer satisfaction. Increases in all other categories are due primarily to work in developing quantifiable measures of program performance.

HUD's fiscal year 1998 Budget increases funding for the Research and Technology account by $5 million in order to accelerate the development and implementation of useful performance measures, including measures of programmatic outputs, customer service quality, and intermediate and long-term socio-economic outcomes. This effort reflects the Department's proposals to significantly reinvent the Department including dramatic changes in program structure, operations and, in several instances, missions and goals. The Office of Policy Development and Research (PD&R) will take the lead in designing and carrying out a multiyear program of research, data collection, information systems development, and analysis. PD&R will work closely with HUD's program offices, the Office of Administration, and the Chief Financial Officer to ensure that performance measurement is effectively incorporated into the Department's budget process, program management, and information systems.

This investment is essential to enable HUD to meet the requirements of the Government Performance and Results Act (GPRA), which requires Federal agencies to submit strategic plans and annual performance plans and performance reports. In addition, reliable performance measurement tools are essential to ensure State and local accountability, as HUD moves toward the consolidation of categorical programs and gives local decision-makers the flexibility and discretion they need to address local problems.

Over the past 3 years, HUD has made a major commitment to performance measurement and accountability in its programs. But the Department still has a long way to go. Meaningful output and outcome measures still remain to be defined for some programmatic activities; management information systems do not always generate performance data promptly or reliably; collecting performance data will be costly and time consuming in some areas; and key indicators of social and economic outcomes affected by HUD programs are not readily available on an annual basis for individual communities. Taking the next steps in performance measurement will require significant resources and expertise.

PD&R's work plan focuses on three key categories of performance measures:

• Outcome indicators measure changes in physical or socio-economic conditions that HUD programs are intended to address. Examples include poverty rates, homeownership rates, the incidence of substandard or overcrowded housing, the prevalence of homelessness, or the severity of racial and ethnic segregation.
• Output measures quantify the direct, tangible results of programmatic activities. Examples include the number of families participating in homeownership counseling, the number of first-time homebuyers receiving down-payment assistance, or the number of Section 8 recipients using certificates to obtain decent and affordable housing.
• Customer service and customer satisfaction measures reflect the quality of services delivered to HUD's customers. Examples include the average response time to maintenance requests in public housing, the accuracy of information provided by field staff to landlords or mortgage lenders, or the satisfaction among homeless individuals with the services provided by a homeless shelter.

All three types of measures play a critical role in holding HUD programs and staff accountable for results.

The $5 million incremental funding for performance measurement has been allocated across the existing R&T budget categories. This reflects the fact that performance measurement activities will occur in several different substantive areas, and will often be integrated with other evaluation and assessment efforts. Moreover, some performance measurement activities will be closely linked to ongoing monitoring activities, while others will require new market surveys.

Program Description and Activity

1. Legislative Authority Title V of the Housing and Urban Development Act of 1970, as amended, authorizes and directs the Secretary to undertake programs of research, studies, testing and demonstrations relating to the missions and programs of the Department. Work under this authority is a principal source for Departmental program and policy reforms. In order to assure effective use of the results of these activities, the Secretary is authorized to disseminate significant reports, data, and information to Departments and agencies of Federal, State and local governments, to industry, and to the general public.

2. Policy Development and Research The Assistant Secretary for Policy Development and Research is responsible for the development, planning, and execution of HUD research and demonstration programs; for assisting in the formulation of Department policy; and for disseminating HUD research results. In addition, the PD&R organization has principal responsibility for providing economic and policy analysis, and staff assistance to the Secretary in determining national housing and community development goals, program priorities, and objectives.

3. Goals of the Research Program. PD&R's goal is to provide reliable and objective data and analysis to inform policy decisions--today and in the future. PD&R is focusing on providing definitive answers to questions about how transformation efforts can most effectively work.

   	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase + Decrease - 1998 vs 1997
   	(Dollars in Thousands)
   I. Program Evaluation and Monitoring	$4,343	$7,948	$5,422	5,448	+$26
   II. Research and Technology:
   A. Housing Programs	2,073	2,400	2,208	2,250	+42
   B. Safety and Standards	1,000	1,000	1,058	1,100	+42
   C. Housing Markets	20,632	26,500	23,177	26,250	+3,073
   D. Fair Housing	765	2,200	750	950	+200
   E. Local Government Management, Community Urban Development	880	2,300	945	950	+5
   F. Research Support	3,417	2,752	2,288	2,152	-136
   Total a/	33,210	45,100	35,848	39,100	+3,252
   a/ Totals include estimated recoveries.

   	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase+ Decrease - 1998 vs 1997
   	(Dollars in Thousands)
   I. Program Evaluation and Monitoring	$4,343	$7,948	$5,422	$5,448	+$26

   The program evaluation and monitoring initiative has five major objectives:

   • to augment and improve existing management information systems for monitoring and evaluation purposes by examining those data systems for quality, information coverage, and policy relevance;
   • to monitor existing programs more effectively by ascertaining whether they are reaching the intended target populations, whether the programs are being delivered in an efficient manner, and whether the program costs are in balance with program benefits;
   • to build into new programs, monitoring and evaluation criteria and their reporting systems, before programs are implemented;
   • to implement an agenda for the timely and periodic evaluation of all programs to ascertain their impact, efficiency, and effectiveness; and,

   • to bring about demonstrated improvements in the design, implementation, and management of HUD programs.

   The increase is needed to continue the Department's effort to: (1) develop quantifiable measures of program performance, including outcome measures and indices of customer satisfaction; (2) develop a process for setting benchmarks, in conjunction with program recipients, specifying quantifiable goals for program performance; and (3) improve the extent to which program performance information is used as part of Departmental management, budgeting, and allocation of staff resources.

   The need for increased funding is also underscored by the enactment of welfare reform legislation which will have significant impacts on many of HUD's major programs. In addition, increased funding for program evaluation and monitoring is required in areas such as public housing transformation reflecting the substantial resources invested through the Revitalization of Severely Distressed Public Housing and modernization programs, as well as the significant legislative and other policy changes impacting the operations of public housing.

   In the community development arena, the need for increased funding is evidenced by the further development of the Empowerment Zones and Enterprise Communities program, the expanded investment in Economic Development Initiative grants and Section 108 Guaranteed Loans, as well as other key efforts in the areas of affordable housing and community and economic development.

   II. Research and Technology

   	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase + Decrease - 1998 vs 1997
   	(Dollars in Thousands)
   A. Housing Programs	$2,073	$2,400	$2,208	$2,250	+$42

   Research work in this area continues to develop strategies for increasing the efficiency and effectiveness of Federal housing programs for low-income families. Major research areas include the future of the multifamily assisted rental stock, improving the effectiveness of tenant-based housing assistance, and efforts in support of the Department's war on crime, including drug related crime, and developing quantifiable measures of housing program performance.

   	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase + Decrease - 1998 vs 1997
   	(Dollars in Thousands)
   B. Safety and Standards	$1,100	$1,000	$1,058	$1,100	+$42

   The principal goal of this research is to aid in providing safe and sound housing at an affordable cost. Research on building technology, housing rehabilitation, environmental hazards, manufactured housing, and simplification of building regulations are all covered under this category.

   	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase + Decrease - 1998 vs 1997
   	(Dollars in Thousands)
   C. Housing Markets	$20,632	$26,500	$23,177	$26,250	+$3,073

   Housing and financial market data are essential for the formulation of housing and community development policy. As rapid changes in the housing and housing finance markets continue to occur, it is essential for policymakers to keep abreast of these changes and to understand their potential and actual impacts on homebuilding, the affordability and availability of both owner-occupied and rental housing, and on FHA and Ginnie Mae activity and financial soundness. In addition, surveys will be continued to obtain measures of customer satisfaction and to develop indices of program performance.

   The American Housing Survey provides data necessary to evaluate progress made toward achieving the nation's basic housing goals and is mandated by Congress.

   Survey of Market Absorption of New Multifamily Units provides quarterly national data on the absorption of new, multifamily rental units by rent and bedrooms.

   Survey of New Mobile Home Placements compiles data on the number of new mobile homes sold or leased and placed on site by mobile home dealers for residential use, in and out of mobile home parks.

   Survey of New Home Sales and Housing Completions provides monthly and annual data on sales, completions, and prices of new homes. Data are used by HUD and other agencies, and two leading economic indicators originate from these data.

   Several areas will be covered by housing finance research. Priority will continue to be given to determining causes of FHA defaults. Analysis of recent default experience in both FHA's single and multifamily programs will increase HUD's ability to accurately project defaults and identify problem loans and projects at an early stage. Contract resources will also be used to assist FHA in developing new products and improving program management.

   Support also will be provided to the Secretary for certain Government Sponsored Enterprises (GSE's) activities, including: (1) consideration of new program requests; (2) administration of low- and moderate-income housing requirements; (3) administration of fair housing requirements; and (4) writing annual reports to Congress.

   	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase + Decrease - 1998 vs 1997
   	(Dollars in Thousands)
   D. Fair Housing	$765	$2,200	$750	$950	+$200

   The Department's research agenda in the area of fair housing will include the impact of the Section 8 and public housing programs on patterns of segregation and desegregation. Analyses will continue of housing market discrimination by lenders, appraisers, insurers, and other housing market intermediaries; research will also be conducted on Title VI and Title VIII enforcement and to support the Department's expanded fair housing and fair lending initiatives, including developing quantifiable measures of fair housing program performance.

   	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase + Decrease - 1998 vs 1997
   	(Dollars in Thousands)
   E. Local Government Management & Community and Urban Development	$880	$2,300	$945	$950	+$5

   This research agenda will examine and evaluate the Department's efforts to create jobs and economic opportunities and improve urban economies through economic development and revitalization activities. In addition to ongoing analyses of Empowerment Zones and Enterprise Communities, studies will be undertaken on alternative models of community organizing and community building, job creation and job training in low-income neighborhoods, and effectiveness of family self-sufficiencies and empowerment initiatives, and developing quantifiable measures of community and urban development program performance.

   PD&R staff will assist in managing the Bridges to Work demonstration. Bridges-to-Work is designed to assist central city low-income individuals and families, including public housing and Section 8 recipients who are work ready, to become self-sufficient by linking them with suburban jobs.

   	Actual 1996	Budget Estimate 1997	Current Estimate 1997	Estimate 1998	Increase + Decrease - 1998 vs 1997
   	(Dollars in Thousands)
   F. Research Support	$3,417	$2,752	$2,288	$2,152	-$136

   This part of the PD&R budget is absolutely essential to: (1) ensure that our research results are disseminated, and (2) provide administrative support to PD&R, including the funding of short-term, high priority policy analyses and research.

4. Advisory and assistance Services. Advisory and assistance services are included within the activities and funding reported under the seven research categories. As defined in OMB Circular A-120, these services include individual experts and consultants; studies, analyses, and evaluations; and management and professional support services. Estimates of advisory and assistance services are designed to provide PD&R with sufficient flexibility to respond to specific, short-term Departmental requests for policy relevant information where those requests cannot be predicted accurately in advance as to the type of research methodology required. In 1996, $7.5 million of HUD's Research and Technology appropriation was obligated for advisory and assistance services. The estimate for 1997 is $7.5 million and the 1998 estimate is $8 million.