SUCCESS OF HUD MANAGEMENT REFORMS CONFIRMED BY GAO DEPARTMENT REMOVED FROM HIGH RISK LIST

WASHINGTON - The General Accounting Office (GAO) has taken the Department of Housing and Urban Development off its "high risk" list as a result of significant management reforms set in place under Secretary Andrew Cuomo’s leadership.

"Over the past four years, the staff at HUD has worked tirelessly to ensure that our programs serve the nation’s most vulnerable people more effectively and more efficiently," Cuomo said. "HUD’s department-wide high risk designation is now a thing of the past. We’ve transformed a monolithic government agency into a model of government reinvention."

GAO placed the entire department on its "high risk" list in 1994 citing HUD’s vulnerability to waste, fraud, and abuse. Upon becoming Secretary, Cuomo responded to criticism of the agency by dramatically overhauling HUD's management, governing philosophy and programs.

Now, HUD is clearly back in the housing business. Under Cuomo’s leadership, HUD has won prestigious prizes for government innovation, received bipartisan praise, and won increased budgets in the past three years: $25.2 billion in 1999, $26.2 billion in 2000, and $32.4 billion in 2001 (the best budget for HUD in 20 years).

"When I became Secretary in January 1997, HUD was fighting for its life," Cuomo explained. "HUD's budget was repeatedly cut despite a record-high number of Americans in need of affordable housing. For five straight years, Congress refused to increase the supply of new housing-assistance vouchers. Some members of Congress were even calling for HUD's elimination. But we fought to restore trust in HUD and its vital mission and now we have succeeded in giving the Department and more importantly, the people and communities we serve, a better and brighter future."

Today’s GAO report further validates the success of HUD’s reforms. According to the report:

• "[HUD’s] top management has given high priority to implementing the Department’s 2020 Management Reform Plan. The Department’s reorganization plan is substantially complete, and the Department’s reform efforts have resulted in some improvements."
  
• "During the past two years, HUD has continued to make progress in addressing these [management] problems. . . HUD has since January 1999 implemented new early warning tools, including the first physical inspections and financial assessments of the entire multifamily housing inventory."
  
• "The Homeownership Centers reduced the average time for processing single-family mortgage loans from 4 to 6 weeks to 2 to 3 days, and the Enforcement Center relocated 427 families from substandard housing and recovered $12.6 million from property owners for ineligible costs."

Tom Cochran, Executive Director, U.S. Conference of Mayors praised the agency saying, "Secretary Cuomo probably faced the toughest challenge of any of the Cabinet Secretaries -- taking charge of an agency that was widely regarded as dysfunctional and threatened with elimination. His management reforms are working, and HUD is now a partner with America’s communities, not a roadblock."

"The GAO report is confirmation of the major progress that Andrew Cuomo has made in reforming HUD's administration," said Cushing Dolbeare, Chair, Meeting America's Housing Needs. "He deserves credit for making HUD a true partner with local neighborhoods and residents and a forceful advocate for affordable rental housing and homeownership."

In his four years as HUD Secretary, Cuomo was responsible for a number of innovative measures which helped turn the agency around:

• Cuomo cracked down on waste, fraud and abuse. He brought in the FBI to manage and staff HUD’s new Enforcement Center, which is responsible for eliminating fraud and abuse in HUD’s programs. A new Real Estate Assessment Center (REAC) was created, which monitors and assesses the physical and financial condition of HUD properties. For the first time ever, REAC inspected HUD’s entire housing portfolio -- some 31,000 properties – using handheld computers.
  
  
• Under Cuomo’s leadership, HUD doubled the number of anti-discrimination actions taken under the Fair Housing Act – with 2,700 actions since 1997. Cuomo successfully brought the first Fair Housing case against the Ku Klux Klan, and won the largest fair housing settlement ever on behalf of migrant farm workers. He also took on 21st century forms of discrimination by setting up a task force to crack down on cyberhate on the Internet, while at the same time preserve free speech.
  
  
• Harnessed the power of new technologies. Under Cuomo’s leadership, HUD adopted the latest computer technologies to better serve the public. HUD developed cutting-edge Community 2020 mapping software to help citizens see where and how HUD dollars were being spent in their community. The next generation of this software -- E-Maps -- allows people to locate environmentally sensitive areas in their communities in relation to HUD investments. HUD also set up state-of-the art, touch screen kiosks in 81 locations in 47 states which provide information 24 hours a day about all of HUD programs.
  
  
• Launched the Administration’s successful Empowerment Zone Initiative. Cuomo was responsible for implementing President Clinton’s and Vice President Gore’s Empowerment Zone and Enterprise Communities (EZ/EC) initiative in 89 underserved urban communities. Using a combination of direct federal assistance and tax incentives, these communities reported placing 120,000 persons in jobs, leveraging more than $10 billion in private sector investment, and assisting 30,000 businesses.

Attached are comments made by individuals concerning the HUD reforms.

EXCERPTS FROM INDEPENDENT REVIEWS OF HUD’S MANAGEMENT REFORMS

• Management Expert David Osborne, author of Reinventing Government, wrote in November 2000 "The pace and breadth of the HUD reform effort has been astonishing. Essentially every part of the organization has been significantly and positively impacted in some way." In reaction, Vice President Al Gore, the leader of government reinvention, said in a letter to Secretary Cuomo, "I commend you and all of the hard working people at HUD as you continue down this road of reform and strive to create a Department that will be a model of reinvention in this new century."
  
  
• A report in early 1999 by the General Accounting Office of Congress said: "HUD continues to make credible progress in overhauling its operations to correct its management deficiencies" and called Cuomo’s management reform plan "a major contributor to this progress."
  
  
• The HUD Office of Inspector General issued the first clean audit of HUD’s financial statements in the Department’s history in March 1999. This means that for the first time, the Department’s financial statements are in complete compliance with all applicable federal requirements. While the audit also summarized many of the past criticisms that the Office of Inspector General has made of the Department, the Inspector General wrote that the audit "represents a considerable achievement for HUD, and it further reflects continuing improvements in HUD’s commitment and ability to properly account for the funds entrusted to the Department."
  
  
• A review by management consultants Booz-Allen & Hamilton concluded in 1998 that HUD has made "significant progress towards achieving the many management reforms that are critical to making the Department function effectively."
  
  
• Another outside review of HUD’s reinvention performed by Price Waterhouse Coopers LLP concluded in December 1998 that HUD’s management reform plan is successfully moving forward on schedule. The review said that "implementation of the Community Builders, Enforcement Center, Procurement Reform, Real Estate Assessment Center, Storefronts, and Troubled Agency Recovery Center is well under way. Each project met all or substantially all of the critical milestones that HUD established for completion as of September 1."
  
• A survey found in December 1998 that 70 percent of HUD employees believed the Department has made reinvention an important priority – the highest percentage of any of 22 federal agencies surveyed. The employee survey was performed by the National Partnership for Reinventing Government, which is headed by Vice President Al Gore. The Vice President said: "Through REGO (the reinventing government initiative) – and thanks to the extraordinary leadership of Secretary Andrew Cuomo – we turned HUD around."
  
  

ENDORSEMENTS FROM CAPITOL HILL AND OUTSIDE EXPERTS

"You and the many dedicated public servants that keep HUD working for the country truly deserve our thanks. I am pleased that our nation’s citizens are reaping the benefits of the hard work and dedication you and your staff consistently demonstrate. I commend you on your leadership and wish you and your colleagues at HUD even greater success in the future."
--Senate Democratic Leader Tom Daschle (SD)

"As a result of concentrated efforts by Secretary Cuomo and his top staff, I understand that GAO will announce this afternoon that HUD is now off the high risk list. They achieved this result by working tirelessly to correct the problems in financial, oversight, procurement systems, and the like. It is widely known that Secretary Cuomo has devoted significant time and effort to address these managerial issues."
--Senator Paul Sarbanes (MD), Chairman, Senate Banking Committee

"You have breathed new life into a once-threatened department. You showed extraordinary willingness to work with Congress on this budget. As a result, HUD is more ready than ever to lead American communities into the new millennium."
--House Democratic Leader Richard Gephardt (MO)

"Some years ago there was a movement among some to abolish the Department of Housing and Urban Development. Led by Secretary Cuomo and supporters in Congress, that initiative was turned back. Most importantly, HUD now is considered an agency that’s on its feet, doing well, and doing wonderful public service for people in the housing and urban development arena."
--Representative Jim Leach (IA) Former Chair, House Banking Committee

"The pace and breadth of the HUD reform effort has been astonishing. Essentially every part of the organization has been significantly and positively impacted in some way."
--David Osborne, author of Reinventing Government