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 communities.

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 overcome.

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 transition.

In addition, Secretary Andrew Cuomo has made it his personal mission to restore the 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 people."

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 economy.

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 long.

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. and,

  • Increasing program monitoring and improving data on program outputs to increase capacity to carry out "management by results."

Management Reforms

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 customer-friendly structure.

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.

Legislative Proposals

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 include:

  • Privatizing HOPE VI construction management and development process, as appropriate.

  • Consolidating six Homeless Assistance Programs.

  • Merging Section 8 Certificate and Voucher Programs.

  • Reforming FHA Single Family Property Disposition.

  • Extending FHA note sales authority permanently.

  • Strengthening FHA's enforcement authority to minimize fraud and abuse and to pursue negligent owners.

  • 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.

Strategic Objectives

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:

  • Introduction summarizing each objective;

  • Strategies to achieve the goals and objectives;1

  • Program Evaluation as it relates to the Strategic Objective (see also section on program evaluation below);

  • Linkage to HUD 2020: Management Reform Plan which provides a cross-reference to the applicable section of that document;

  • How annual performance goals support the achievement of the objective (See also Appendix I); and

  • Key external factors which may affect the achievement of the goals.

    The final two sections address the following:

  • Customer service activities.

  • Partnership activities, generally. Specific instances of interagency coordination are also addressed under specific objectives.

Program Evaluation

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 plan.

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 its customers.

      • 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 detailed information.

    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 business rules.

    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 report.

    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:

      Auditor uncertainties regarding the estimate of the amount of subsidy overpayments in the Department's Section 8 and Public Housing programs.

      The auditors identified the following three sub-issues:

      1. 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 financial statements.

      2. 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.

      3. 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 OMB

    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.

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    Content Archived: December 12, 2011