FY 99 Budget
I. A Two-Step Strategy

Shortly after taking office in February of 1997, Secretary Cuomo announced that to survive, the Department of Housing and Urban Development would have to reinvent itself. To fulfill its mission of helping revitalize America's communities, HUD would have to demonstrate that it is a competent steward for taxpayers' investments - HUD would have to restore public trust.

In one year, HUD has made great strides in proving that it can be reformed, to show that it can competently deliver programs and services to communities. HUD's organization is changing - consolidating within and across our programs, creating new functions to better serve the taxpayers and communities, streamlining our operations.

In 1997, HUD initiated a historic Management Reform effort, cracked down on waste, fraud, and abuse, averted a national housing crisis, created more affordable housing opportunities for Americans, and revived HUD's historical commitment to fair housing.

HUD's FY 1999 budget begins to reap the rewards of this commitment, as HUD shifts its focus from management reform to enhancing program design and resources to serve communities.

• Reorganizing to Deliver Results. Based on private sector practices, HUD has fundamentally restructured its operations by consolidating routine functions into "back office centers" and improved customer service by establishing "storefronts" to present a user-friendly HUD to communities. HUD has created new cross-cutting real estate assessment and enforcement centers to protect its investment of billions of federal dollars in public and assisted housing. And the Department has taken steps to consolidate its program structure and streamline the program application process to improve customer access to the full range of HUD resources.

• Streamlining HUD's Workforce. Through unprecedented employee personnel actions such as buy-outs and personnel reorganization, the Secretary has been able to streamline operations. HUD's workforce is now 9,050, down from 10,600 at the end of 1996. To date, HUD has posted and filled 1,100 positions in the new organizational structure, has 90 percent of new managers in place in the new structure, and executed 1,000 buyouts. The Secretary negotiated a historic agreement with HUD unions to work cooperatively to staff the new streamlined HUD with no layoffs before 2002. Virtually all personnel actions will be complete by March 1, 1998.

  More importantly, HUD is deploying staff where they are needed most, to provide effective monitoring and oversight of troubled housing projects and troubled PHAs, and to provide value-added front-line services to HUD customers in their communities.

• Changing HUD's Culture. Zero Tolerance for Waste, Fraud and Abuse. When Secretary Cuomo took office, he vowed that precious Federal resources would no longer be squandered. HUD and the U.S. Department of Justice have launched a "Get Tough" campaign to crack down on FHA-insured and Section 8-assisted property landlords who abuse federal housing programs to enrich themselves while failing to provide safe and decent housing for those in need. HUD's beefed-up enforcement has resulted in over 100 debarments in 1997, more than three times the 1996 total. The ensuing investigations have led to total cash recoveries for taxpayers of over $20 million in 1997, compared with about $15 million in recoveries in 1996.

  In July 1997, Secretary Cuomo appointed an FBI agent to oversee the new Enforcement Center. Its mission: protect the taxpayers' investment and restore the public trust. Working cooperatively with the Department of Justice, the FBI and other law enforcement teams, the new Enforcement Center will take action against those found abusing HUD programs. The Enforcement Center will also proactively generate an ongoing Fraud Control Strategy that identifies potential fraud situations and develops appropriate policy responses to ensure that fraud is stopped before it occurs.

• Using Technology to Improve Services. Inside and out, HUD is incorporating the benefits of new technology to more efficiently manage and deliver services. Using state-of-the-art technology, HUD is integrating the 89 financial systems into a single, user-friendly system that helps managers make decisions and clearly shows how communities invest their HUD dollars. New technology has made it possible to consolidate FHA single family processing from 81 field offices into four regional processing centers, and reduce processing time from 4 to 6 weeks to 2 to 4 days. HUD is introducing computerized kiosks across the country to provide the public with useful information, such as tips on buying a home and descriptions of how HUD helps create jobs in their community. The kiosks will use inter-active software and video, including mapping software that shows how HUD funds are invested in each neighborhood.

HUD's management reform is not complete. In 1998, we will continue to keep our focus on broadening and deepening the roots of reform to ensure that new systems are brought on line, new centers are opened and operating, and HUD's ways of doing business are changed. HUD's zeal for eliminating waste fraud and abuse will not diminish. By September 30, 1998, our major implementation efforts will be substantially complete.

Already, HUD's commitment to reform has paid dividends with the public and with the Congress. Last year, Congress passed the first major housing legislation in five years, solving a potential Section 8 crisis facing the agency and the public. This legislation ended excessive subsidies to private landlords and will save taxpayers $562 million this year, nearly $1.6 billion over five years, and billions of additional dollars in the future. Also at HUD's urging, Congress increased HUD's 1998 budget to renew expiring Section 8 contracts assisting 4.4 million Americans, and provided sufficient resources to renew the growing number of expiring contracts through 2002.

B. Step 2: Close the Opportunity Gap

HUD did not undertake management reforms solely to improve administrative capacities. Rather, HUD has worked to restore public confidence in order to win more resources to create jobs, stimulate economic activity, house low- and moderate-income Americans and end the plague of housing discrimination.

The Clinton Administration has taken note of the progress that HUD has made in reforming itself. The result: the smartest, strongest budget in a decade. New funding for HUD is up by $1.8 billion, a significant increase for program activities.

Virtually all program areas receive increases under HUD's FY 1999 budget proposals. But HUD's budget is not simply about spending more money in the same old programs. Where programs have proven track records - like, HOME, CDBG, and the Homeless Continuum of Care - HUD is investing more resources.

But HUD's budget also enhances and improves its programs. The budget invests in several reinvented programs:

• new flexible vouchers targeted to meet the needs of welfare recipients making the transition to work and to homeless families ready to leave shelters or transitional housing;

• a Community Empowerment Fund which enhances the existing Section 108 and Economic Development Initiative programs to provide capital to businesses and to create jobs in city neighborhoods;

• a new HOME "bank" allowing communities to leverage private sector resources with their HOME dollars to produce more housing; and

• using CDBG funds to stimulate better regional cooperation between cities and counties.

  

Funding for initiatives to produce Jobs and Economic Development is increased by a billion dollars, including $400 million for a new Community Empowerment Fund; $50 million more for CDBG, combined with reduced set-asides, effectively increases CDBG funds by $238 million; 50,000 new Welfare to Work vouchers designed to help welfare recipients find and retain jobs; and a doubling of funds for Brownfields redevelopment. In addition, the budget includes $150 million per year for 10 years for a second round of urban Empowerment Zones, funded on the mandatory side of the budget.

This budget also puts HUD squarely back in the housing business. In addition to renewing all 2 million units with expiring Section 8 contracts, the budget provides:

• 100,000 new vouchers used for targeted purposes, including the 50,000 for welfare to work and 34,000 for permanent housing for homeless individuals and families;

• increased FHA loan limits, which allows 600,000 more hard-working American individuals and families to qualify for FHA mortgage insurance each year;

• a new HOME Bank, which combines increased funding for HOME and a new HOME loan guarantee feature that will allow communities to borrow up to five times their HOME grant funds;

• $25 million for Homeownership Zones;

• enhanced funding for public housing, with full funding of operating subsidies and HOPE VI revitalization efforts, along with an increase of $50 million in capital subsidies; and

• a 73 percent increase in funding for fair housing activities to help meet the Secretary's pledge to double fair housing enforcement actions.

The goal of HUD's FY 1999 budget is to be a better partner for communities to empower them to address their full array of needs. To accomplish this goal, HUD has provided both more resources and better tools for communities.