FY 1998 - 2003 Strategic Plan
The Need for Change
Since HUD was created in 1965, economic and social conditions in the United States
have changed dramatically. Urban areas throughout the Nation have deteriorated. Many
communities suffer from an aging infrastructure, loss of businesses, increasing violence, and
dilapidated housing. Yet, in many ways, the Department has not kept pace with that change.
As these problems have grown, the value of the Federal dollar has decreased through
inflation, without an increase in Federal funding for urban programs. The Department has
been beset with numerous problems: its programs tainted with fraud, waste and abuse; and
its management plagued with chronic problems over the years. The Department has set a
dual course of action to improve its management and to focus the Department on its mission.
To improve its management, HUD's Management Reform Plan focuses on getting
HUD's house in order, on managing its programs and people more efficiently and
responsibly - a fundamental management overhaul. The Plan represents a combination of
significant organizational changes, as well as proposed legislative reforms. These reforms
are designed to help communities thrive - getting HUD's resources out of Washington and
into communities. These reforms are based on a new policy designed to empower people,
giving them the tools they need to succeed, to help communities move from an industrial to
an information economy. It is a dramatic shift in HUD's approach to its mission.
To help the Department focus on its mission, HUD's Strategic Plan contains the
goals and objectives, performance measures and indicators, and timetables for tracking
program priorities and accomplishments - all within the context of a sound management
structure and reasonable stewardship over billions of taxpayer dollars. Meeting our strategic
goals and objectives, as measured by our performance indicators, will continue to ensure
better housing opportunities and better communities for all Americans.
Both Plans say "enough is enough", that there is a high degree of urgency in
putting HUD's house in order and creating zero tolerance for waste, fraud and abuse.
Both Plans propose to change the perception of HUD by changing the reality - by making
HUD work well as it carries out its mission - to be a value-added player, helping America's
HUD's Legislative Proposals for 1997 support both its management reforms and its
strategic objectives. This Strategic Plan covers the period FY 1998 through FY 2003.
Measures listed in Appendix I, unless otherwise noted, are for FY 1998.
Revitalizing HUD's Mission
In 1949, Congress defined the agency's mission simply as:
"to create a decent home and suitable
living environment for every American family."
The Department of Housing and Urban Development Act (Public Law 89-174), which
established HUD as a department, expanded that role to:
provide assistance for housing and for the development of the Nation's
communities; ... to encourage the solution of problems of housing, urban
development and mass transportation through State, county, town, village, or
other local and private action, . . . to encourage the maximum contributions
that may be made by vigorous private homebuilding and mortgage lending
industries to housing, urban development and the national economy; and to
provide for full and appropriate consideration, at the national level, of the
needs and interests of the Nation's communities and of the people who live
and work in them."
The Department's mission was further amended in the Housing Act of 1974 to include:
" the development of viable urban communities, by providing decent housing
and suitable living environment and expanding economic opportunities,
particularly for persons of low- and moderate income."
While HUD's goals follow Congressional intent -- fighting for fair housing,
increasing opportunities for affordable housing, especially for the Nation's poor and
disadvantaged, reducing and preventing homelessness, and promoting jobs and economic
development to help individuals achieve self-sufficiency -- HUD's approach to its mission
must be updated and renewed. The Department must become an ally of communities, not a
bureaucratic adversary; a creator of opportunities for Americans, not an obstacle for them to
At the same time, with scarce Federal resources, HUD must focus its energy and
ingenuity on programs that address America's housing and community development needs by
maximizing partnerships with businesses, non-profits, and local Governments and targeting
Federal resources to those most in need.
Thus, HUD's mission as we approach the new century must become to:
Empower communities and their residents, particularly the poor and
disadvantaged, so that, together with HUD, they can develop viable urban
communities, provide decent housing and suitable living environment for
all citizens, without discrimination, in order to improve themselves, both
as individuals and as a community, to succeed in today's time of
In addition, Secretary Andrew Cuomo has made it his personal mission to
public trust by achieving and demonstrating competence. This "mission" permeates the
Department and is an integral part of each and every objective in the Strategic Plan.
HUD's Mission - Empowering People and Communities
The empowerment mission is a dramatic shift for the Department. Rather than
issuing directives and over-regulating communities, HUD will provide them with the tools to
implement their own, home-grown revitalization strategies. HUD can assist local officials,
community leaders, businesses, and citizens to address their needs and ensure conditions
under which all families can flourish. HUD is uniquely qualified with its vast resources --
mortgage insurance, rental housing assistance, community and economic development tools --
to partner with local governments, businesses and organizations to build stronger
communities. Empowerment is the right role for the Federal Government, a role that says
"Washington can help communities thrive, but the decisions and power must be closest to the
No one city works like the rest, no one solution will work for all of them. And, the
challenges facing America's communities are not limited to certain geographic regions or
cities. Cities and suburbs -- especially older suburbs -- must tackle many of the same issues.
The broad national economic resurgence has had benefits for both cities and suburbs,
and economic growth and social health in cities bring greater strength to both their
surrounding suburbs and to the entire national economy. HUD must help to ensure that
revitalization and economic opportunity reach those who have been too long in the shadows.
As much as America has changed since World War II, our cities and their suburbs
remain home to almost 80 percent of the American people and contain more than 80 percent
of America's jobs. Their economies and residents are the engine that drives the National
The Secretary's Personal Mission - Restoring the Public Trust
While most of America's major institutions have changed dramatically in the past few
decades, Government has often resisted reform. That is wrong. Government must change --
and change dramatically -- if it is to remain relevant. HUD itself has been plagued for years
by scandal and mismanagement. It is the only Federal agency cited by the General
Accounting Office as being at "high risk" for waste, fraud and abuse.
These views are damaging to the Department's ability to fulfill its vital goals. When
over four million people cannot afford decent housing and hundreds of thousands go
homeless, we cannot afford to waste even one dollar on inefficiency. Former HUD
Secretary Henry Cisneros began the task of overhauling the Department in 1994. Working
with Congress, some broad changes in policies and programs, notably public housing, have
begun. Secretary Cuomo has proposed a sweeping reorganization plan designed to reinvent
the systems and the values that have undermined HUD's capability -- and credibility -- for so
HUD's Management Reform Plan outlines the essential steps HUD will take to
improve its management. These include:
- Consolidating programs and reorganizing and retraining staff to align the
Department�s resources with its long-term mission.
- Developing and implementing stringent internal controls.
- Integrating financial and information management systems Department-wide.
- Increasing program monitoring and improving data on program outputs to
increase capacity to carry out "management by results."
The Department's management reforms are designed to ensure that tax dollars are
used properly and effectively, that programs accomplish what they promise, and that HUD
will truly do more with less and do it better than ever. These reforms are keyed to work in
tandem with HUD�s strategic plan and legislative initiatives. Further, they will improve
HUD's delivery of programs and services to its customers so that performance measures can
demonstrate how well these programs meet their stated objectives.
REFORM #1 Reorganize by function rather than program "cylinders".
Where needed, consolidate and privatize.
REFORM #2 Modernize and integrate HUD's financial management
systems with an efficient, state-of-the-art system.
REFORM #3 Create an Enforcement Authority.
REFORM #4 Refocus and retrain HUD's workforce to carry
out our revitalized mission.
REFORM #5 Establish new performance-based systems for HUD
programs, operations and employees.
REFORM #6 Replace HUD's top-down bureaucracy with a new
While these reforms reflect sweeping changes throughout the Department,
each Program Office (HUD's business lines) will also undergo specific
legislative, programmatic, organizational and management changes
geared to their programs and operations.
HUD's Strategic Plan builds on the foundation of sweeping
management reforms and legislative proposals. Throughout the fabric
of HUD's Strategic Plan are management reforms, legislative changes
and strategic objectives which must be met in order for HUD to
be a significant, value-added player in the new century.
To create a new HUD, we will need the full range of approaches
set out in this Strategic Plan and the Management Reform
Plan. The success of these efforts is dependent on the success
of the whole. The third leg of HUD's commitment is its Legislative
Proposals. HUD's legislative proposals include: the Public
Housing Management Reform Act of 1997; Housing 2020: Multifamily
Management Reform Act of 1997; and the Homelessness Assistance
and Management Reform Act of 1997. Highlights of these proposals
- Privatizing HOPE VI construction
management and development process, as appropriate.
- Consolidating six Homeless Assistance
- Merging Section 8 Certificate
and Voucher Programs.
- Reforming FHA Single Family Property
- Extending FHA note sales authority
- Strengthening FHA's enforcement
authority to minimize fraud and abuse and to pursue negligent
- Converting competitive grant programs
into performance-based formula grants.
- Deregulating smaller Public Housing
Authorities (PHAs) by mandating fewer reporting requirements.
- Creating an advisory Public Housing
Authority Performance Evaluation Board to recommend improvements
in HUD's evaluation of PHAs.
- Mandating a judicial receivership
for all large PHAs on the troubled list for more than one year.
- Reducing excessive rent subsidies
on assisted housing to market levels.
HUD is adopting a business-like structure to achieve a public
purpose. It defines a clear mission divided into identifiable
functions for each separate business line. It centralizes some
operations for economies of scale while decentralizing other operations
to improve service delivery and innovation. It uses technology
to improve efficiency - both in front-line service delivery and
in the creation of back-office processing centers. It puts a new
stress on enforcement and economic development, while making information
on HUD's resources more widely available through computers. And
it implements a broad set of performance measures to best target
resources to communities in need.
HUD's credibility and competence will be viewed in terms of how
successfully we accomplish our mission. Key indicators are presented
in this Strategic Plan which will create a total picture
of how well HUD is delivering its programs and accounting for
every single dollar entrusted to us by millions of taxpayers.
As we move towards the next millennium, our strategic objectives
reflect our core business functions:
- Empower communities to
meet local needs.
- Help communities and States
establish a full continuum of housing and services designed
to assist homeless individuals and families in achieving permanent
housing and self-sufficiency.
- Increase availability of
affordable housing in standard condition to families and individuals,
particularly the Nation's poor and disadvantaged.
- Reduce the isolation of low-income
groups within a community or geographical area.
- Provide empowerment and selfsufficiency
opportunities for lowincome individuals and families,
particularly the Nation's poor and disadvantaged.
- Increase homeownership opportunities,
especially in Central Cities, through a variety of tools, such
as expanding access to mortgage credit.
- Promote equal housing opportunities
for those protected by law.
Organization of the Strategic Plan
The first section of this plan summarizes the Strategic Performance
System and resulting process developed in FY 1994. It also details
consultation with Congress and other stakeholders.
The next seven sections are divided by each objective. Each of
these sections includes the following:
The Department has an on-going program of program evaluation,
the results of which have informed the development of this strategic
plan. Within the Department, the individuals both in program offices
and in the Office of Policy Development and Research (PD&R)
who have carried out the key evaluations have contributed to the
strategic plan, such that the findings of evaluative research
are reflected in the plan.
There is a discussion of recent evaluation studies in support
of each of the seven strategic objectives, which illustrates the
role of the evaluation program in the development of the strategic
Role of Evaluations in Assessing Progress with Regard to the
Annual Performance Plan
The Department anticipates conducting evaluations related to performance
in much the same way as it has selected evaluation projects in
the past. That is, the Office of Policy Development and Research,
in consultation with HUD's leaders and program offices, will select
the most important projects that can be funded from each year's
appropriation. We expect that as we refine performance measures
and interpret the results, the process will suggest specific topics
that need to be addressed.
Currently, we have underway or plan to begin soon, a number of
studies related to performance measurement. For example, it is
likely that we will begin in FY 1998 a survey of the quality of
public housing, a study of the extent of housing discrimination,
and a new round in the evaluation of HOPE VI, but decisions on
these and other projects are not yet final. Specific future evaluations
related to performance measurement will be selected from a similar
process within the Department because the consensus within the
Department is that these evaluations are one of the best uses
of limited resources.
Addressing HUD's Financial Management Issues
Integrated Financial Management System
The implementation of an integrated financial management system
is a key component of HUD's Management Reform Plan. It provides
management with the timely, accurate and reliable information
necessary to manage HUD's programs. One of HUD's major deficiencies
- and a shortfall of a Department organized by program rather
than function - is its financial management systems. Currently
every program cylinder operates its own financial management systems
to support its business requirements. Compounding this redundancy,
many of the systems cannot talk with each other.
To implement this reform, the Department established the Financial
Systems Integration Team under the leadership of the Deputy Secretary.
Team membership includes representatives from all program offices,
as well as from the Offices of the Inspector General, the Chief
Financial Officer (CFO), Information Technology, Administration,
Policy Development and Research, and General Counsel. In addition,
the team includes representatives from the Department of the Treasury's
Center for Applied Financial Management.
The objective of the Financial Systems Integration Plan is to
implement an integrated financial management system, consisting
of both financial and mixed systems, that provides the information
necessary to carry out the financial and programmatic mission
of the Department. HUD's vision and conceptual design for its
integrated financial management system is:
HUD's integrated financial management systems provide HUD management
and customers with a common, single view of HUD's financial and
programmatic operations. The components of the integrated financial
management system include:
- Core Financial System which conforms with the requirements
included in the Core Financial System Requirements document issued
by the Joint Financial Management Improvement Program (JFMIP).
The Core System can be one or more systems which provide the required
general ledger, funds control and other financial functionality
necessary to support financial management. It will enable the
Department to maintain a high level of internal controls through
integration with program systems and effective audit trails.
- Program Systems which support the requirements necessary
to manage and operate HUD's programs. This includes grant management
systems, subsidy systems, mortgage insurance systems, loan systems,
mortgage securities systems, administrative systems, etc. Program
Systems will be integrated with the Core Financial System to record
financial events in a timely and accurate manner.
- Data Warehouses will be used to consolidate and standardize
data from multiple systems to enable the Department to produce
timely, accurate, and reliable information to the Department and
- Management Information Systems will be used to access HUD's
data and produce information necessary to manage HUD's programs.
Information will be displayed in a format appropriate to support
the requestor's needs. Information could be displayed in a graphic
format, in a map, in spreadsheets, etc. The Management Information
System will enable the user to summarize information, as well
as providing the capability to "drill down" to more
In order for the information generated by the integrated financial
management system to be timely, accurate, and consistent, the
Department must ensure that the data in its systems is correct.
HUD will undertake a project to clean-up existing data and develop
appropriate internal controls to ensure that the data remains
clean. HUD will also standardize its data architecture to facilitate
data integration and information retrieval. As a result of integration,
data will be entered one time, at the source of the initial activity.
Data will then flow to other systems in accordance with HUD's
A key component of HUD's integrated financial management system
plan is the requirement that all of these systems will be compliant
with OMB Circular A-127 and reported as conforming under the Federal
Managers' Financial Integrity Act (FMFIA). In addition, these
systems will be compliant with Year 2000 requirements. Plans are
being developed to either renovate or replace existing systems
to make them Year 2000 compliant.
Audited Financial Statements
HUD's Federal Financial Management Status Report and Five Year
Plan submitted last year included two goals relating to the FY
1996 audit, as follows: (1) address the issues which precluded
the Department from receiving an audit opinion on its consolidated
financial statements for the prior 5 years, and (2) submit the
Accountability Report to OMB by
March 31, 1997, a full 5 months earlier than the prior year.
Addressing Disclaimer Issues
For the FY 1996 consolidated audit, the Department was successful
in addressing issues which precluded the auditors from rendering
an opinion on prior year financial statements. Based on a statistical
sample of Section 8 and Public Housing households, the Departmentwas able to estimate the amount of subsidy overpayments under
these two programs. This process was a concerted Departmental
effort and removed this issue as a disclaimer item from the auditor's
In addition, the Department was able to fully reconcile its fund
balance with Treasury (0164 appropriation) as of September 30,
1996, and was able to remove this as a disclaimer issue. Failure
to fully reconcile this account was another disclaimer issue in
the FY 1995 auditors report (this was the only year in which this
issue existed). The Department was unable to effectively address
the other disclaimer issue relating to complying with the credit
reform accounting requirements as stated in Statement of Federal
Financial Accounting Standards No. 2, Accounting for Direct Loans
and Loan Guarantees.
As a result of the above efforts, the auditors rendered a qualified
opinion on the FY 1996 consolidated financial statements. The
two areas of qualification were lack of compliance with credit
reform accounting, and an inability to apply sufficient audit
procedures with regard to the estimate of subsidy overpayments.
Plans to address these issues for the FY 1997 audit are discussed
in greater detail below.
Accelerating Delivery of Accountability Report to OMB
The Department was also successful in significantly accelerating
the submission of the Accountability Report to OMB. The FY 1996
report was provided to OMB on April 15, 1997, a full 5 months
earlier than the prior year.
Fiscal 1997 Goals
The Department has two goals relating to its FY 1997 financial
statements: (1) make progress in addressing the qualification
issues discussed in the auditors FY 1996 report, and (2) deliver
the FY 1997 Accountability Report to OMB by
March 1, 1998.
Addressing Qualification Issues
As discussed above, the two audit opinion qualification issues
relating to the Department's FY 1996 financial statements, and
planned action to address these issues, are as follows:
- The FY 1996 estimate of subsidy overpayments did not include
a matching of tenants supplemental security income (SSI) with
the Social Security Administration database.
Planned Action: SSI income will be included in the statistical
sampling income matching project covering the FY 1997 consolidated
- The FY 1996 estimate only addressed instances where tenant
income differed by $1,000 or more from that per the matched databases.
Planned Action: The Department maintains that the $1,000
threshold is too small a difference to investigate, and will result
in significant additional time to complete the matching process
with little increase in accuracy. However, the FY 1997 statistical
sampling income matching project will use a matching difference
threshold of $1,000.
- The databases from which the sample of households were selected
for income matching only included 76 percent of all assisted households.
Accordingly, the sample results could not be extrapolated to the
entire population of assisted households.
Planned Action: An additional 200,000 households were added
to the databases during the current fiscal year (the percentage
of total households now included in the databases should be above
80%). We do not believe that at this late date, we can more fully
populate the databases to increase the current percentage by a
significant amount. However, we will be discussing with the Office
of the Inspector General the percentage of the population which
needs to be included in the databases to fully address this issue.
After this discussion we will be in a better position to determine
what efforts, if any, can be undertaken to address this issue
for the FY 1997 audit.
Complying with credit reform accounting. The Federal Housing
Administration has developed a preliminary plan to provide the
information required by SFFAS No. 2 for the FY 1997 consolidated
financial statements, based on estimated information. KPMG, FHA's
auditors, will be asked to audit this information. This plan is
in the process of being finalized.
Accelerating Delivery of the FY 1997 Accountability Report to
As stated above, the prior year report was delivered to OMB by
April 15, 1997. We have developed a workplan to deliver the FY
1997 Accountability report to OMB by
March 1, 1998.
Material Internal Control Weaknesses
The Department continues to do a good job of both identifying
significant management deficiencies and correcting material weaknesses.
Four new material weaknesses were declared at the close of FY
1996, and one of these material weaknesses has already been corrected.
At the end of FY 1996, there were no significant differences between
material weaknesses identified by the FY 1996 financial statement
audit process and the FMFIA process.
Quality Assurance Plans
In previous years, certification from responsible staff was our
main means of assuring quality of performance measure data. We
are strengthening quality assurance by requiring that the program
offices develop comprehensive quality assurance plans subject
to CFO review and approval. A requirement that quality assurance
be applied to performance measures has been added to the Secretary's
Performance Report and quality assurance will be a permanent part
of the development and verification of performance measure data.