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Statement for Secretary Andrew Cuomo
Senate Hearing
HUD 2020 Management Reform Plan

Chairman Mack, Ranking Member Kerry, Members of the Subcommittee, I appreciate this opportunity to discuss HUD's 2020 Management Reform efforts. I will begin with some background comments on why reform was needed, and the process we used to develop and implement the reform plan.


Negative External Perceptions

HUD has been plagued for years by scandal and mismanagement. During the 1980s, HUD was the poster child for fraud, waste and abuse. At that time, if you knew HUD at all, you knew it through its failures, For example, Cabrini-Green and Pruitt-Igoe , large, high-rise public housing complexes, in Chicago and St. Louis, respectively, were symbols of tragic failures. Architect Frank Lloyd Wright once said that a doctor can bury his mistakes, but an architect can only advise his clients to plant vines. It's the same at HUD, our failures were spectacular, three-dimensional and out there like an eyesore for all the world to see. And since our job was to help the poor, and there were still poor, then we must have failed.

Internal Realities

As bad as HUD looked on the outside, it looked even worse from the inside. We suffered from a wide-range of management and operational problems, including:

  • Eighty nine (89) separate, financial management information systems in the various program cylinders that didn't communicate with each other. These systems provided data that was generally unreliable, inaccurate and untimely.

  • Eighty one (81) field offices provided different levels of HUD programs and services. Customers and constituents had to guess at what services were available at any given offices. Former Category "A"Offices provided the full-range of services, but the Category "B", "C" and "D" offices did not provide all HUD programs and services.

  • Two hundred and forty (240) programs and Forty (40) Notices of Fund Availability (NOFAs) with separate application processes, different deadlines and different rules caused confusion and excessive application costs for customers and clients and expensive management overhead to the Department. ,

  • Workload that stayed relatively constant over the years while the Department continued to downsize its staff from a high of some 17,000 employees to the current 9,000 employees. Although the number of programs managed by the Department has not declined, the number of staff has substantially declined, often resulting in insufficient program monitoring and oversight.

  • Poor technology that made HUD less efficient and effective, at great expense to the Department, and that made HUD non-competitive with organizations providing similar services. For example, Fannie Mae has some 3,400 employees generating $218 billion in mortgage business annually, while HUD/FHA has some 5, 157 employees generating $76 billion in mortgage business.

  • Two hundred and fifty (250) employees were designated as customer service representatives to service some 900 cities, 30,000 multifamily properties and 3,400 Public Housing Authorities. Needless to say, 250 employees were unable to service a workload of this magnitude. This staff limitation was exacerbated by the lack of an effective system to assess the physical and financial condition of the housing portfolio.
Congressional Concern: An Ultimatum

Recognizing HUD's failures, both internal and external, Congress, in 1996, gave HUD an ultimatum: reinvent or die! Based on promises of reinvention, reorganization, and streamlining-a HUD Transformation-- elimination was avoided-but it was a harbinger of things to come. HUD had been given a reprieve by the Congress, but the clock was still ticking.

Comments from key Senate and House Members were very telling about HUD's conditions and its future, quoting as follows:

  • Chairman Rick Lazio: "HUD is dysfunctional."

  • Chairman Kit Bond: "To be blunt, Mr. Secretary, we challenge you to make the necessary administrative, management, and financial reforms that will justify Congress' continued support of the agency."

  • Chairman Jerry Lewis: " HUD is at a crossroad. Either it can continue down the same path, or it can change direction and recreate itself into an effective agency."

  • Chairman Al D'Amato: " If HUD is to succeed in its mission, it must be reformed."

  • Congressman Joe Kennedy: "There are a number of problems at HUD. I think all of us are looking forward to taking on many of the management issues."

Burdened by these failures, HUD has been unable to fulfill its vital goals - goals that are strongly supported by the Congress as well as the public:

  • Increasing affordable housing and home ownership
  • Reducing homelessness
  • Promoting jobs and economic development
  • Empowering people and communities
  • Fighting for Fair Housing
  • Restoring the public trust

Every time we tried to argue for more resources to meet these goals, the Department's own incompetence was turned against it. As a result, we were always on the defensive, not the offensive. It was time for reform at HUD.


Reform Gets Underway: Two Important Steps Forward

Recognizing both the historic need and the recent forces that demanded change, HUD decided that a comprehensive effort was needed to fundamentally redesign our mission, programs and organization. To accomplish this, it was decided that a two step process would be needed, as follows:

Step 1: Get our own house in order. Restore the public trust. Prove competence. Prove that we can do what we set out to do, that is, make HUD work.

Step 2: Use the new competence and credibility to empower communities, argue for more resources and meet the unmet need.

To initiate Step 1 of the process, we brought in outside experts from the private sector, as well as some one hundred (100) "change agents"--dynamic thinkers, both career and political, from across the Department to assess management operations and systems:

Private Sector Talent

First, we brought in private sector talent to conceptually guide the Department in developing the HUD 2020 Management Reform Plan, by lending additional strength and perspective to refocusing our efforts. The consulting firm of Ernst and Young, as well as outside experts, David Osborne and James Champy provided invaluable advice and input at this stage of development. David Osborne, advised us that:

"The challenge is to find the pivot points, the leverage points, the fewest changes that create the most change. Not just a corporate change, but a culture change…employees must be involved from Day One, because you are not just changing the hearts and minds of people who look at HUD, you are changing the hearts and minds of people who work at HUD."

James Champy, advised us: "Don't do anything small. The larger the scale, the more likely it will be successful. Why? Because if you just try to change part of the organization the corporate antibodies will kill it. And besides, if you change a little or change a lot you are going to pay the same price…so you might as well go for it."

"Think right to left. Create a picture of what you want the new HUD to look like and then find a way. Don't spend your whole time living in the obstacles and don't just create a slightly better version of what isn't working now because you're rearranging the deck chairs on the Titanic. Be ambitious, be radical, and create a clear picture of where you want to go."

"Debate and communicate. Organizations that are too polite never get to the truth. Everyone must be involved, and once involved they must stay involved. Everyone must keep abreast of where the organization is going at all times. Ultimately, the change comes down to: what does it mean to me?"

HUD 2020 "Change Agent" Teams

Next, following the advice of the private sector experts, HUD pulled together experienced, dynamic thinkers from across the Department to question every aspect of our programs and processes. These HUD "change agents" started with no "givens," no constraints, no commitments to bygone structures-their only mandate was to question how HUD should organize itself to effectively fulfill its twin mission of empowering people and communities and restoring the public trust. As Champy said, "everything about the way we did business was on the table for discussion." Principles guiding the process emphasized changes that would match workload and workforce; focus on customers; measure and reward performance; and take advantage of new technologies.

In figuring out what to fix, change agents had to find what was broken. They identified several breakdowns within HUD's structure that prevent optimal fulfillment of our missions. They analyzed core processes and business lines. They questioned whether certain tasks were performed better by the private sector. They focused on management changes that created the most leverage.

The change agents found that HUD is driven by process rather than performance; that we are organized by program rather than function, creating wasteful redundancies; that management information systems aren't integrated; and that the current relationship between headquarters and field office responsibilities makes poor use of resources. The HUD workforce was not given a clear mission, but conflicting schizophrenic mandates: one day, they were expected to be helpers and facilitators. The next day, they were told to be police officers and "gotchas."

Next, the change agents focused on how to fix these fundamental structural flaws. Their recommendations targeted everything from creating a performance-based culture, to overhauling HUD's technological systems, to consolidating or eliminating redundant functions. Perhaps, most importantly, they developed a new structure that emphasizes function, customer service, and commitment to our mission. This new structure was designed to assure that the Department truly operates as "one HUD"---working in concert to address HUD's missions--not a separate, uncoordinated set of program cylinders.

Internal and External Consultation

At every turn, our employees, our customers, clients and stakeholders were consulted and their input was invaluable as the reform effort continued to evolve. On numerous occasions, key HUD staff, including myself, have met with our Congressional Oversight Committees to constantly keep you informed of our reform ideas and implementation plans. All implementation teams, as well as program and project representatives have diligently kept industry and constituent groups informed about reform proposals and considered their input at each stage of the process. Constant meetings were held with HUD's Inspector General, OMB and GAO to keep them informed on our efforts to address material weaknesses and make management improvements.


HUD 2020: A Bold New Plan Emerges

In June 1997, after six months of hard work, we introduced the HUD 2020 Management Reform Plan, a series of bold initiatives to empower communities and restore HUD's credibility by improving the efficiency and effectiveness of the Department's programs and services. Following exhaustive consultations with the Congress, customers, constituents and state and local officials, we decided upon a set of six comprehensive reforms which when implemented would fundamentally change the way HUD works. The six reforms are as follows:

  • Reorganize by function rather than program cylinders. Where needed, consolidate and privatize.
  • Modernize and integrate HUD's outdated financial management systems with an efficient, state-of-the-art system.
  • Create an Enforcement Authority.
  • Refocus and retrain HUD's workforce to carry out our revitalized mission.
  • Establish new performance-based systems for HUD programs, operations, and employees.
  • Replace HUD's top-down bureaucracy with a new customer friendly structure.

Our goal in implementing these reforms is not just to create a smaller HUD, but a better HUD for our clients and our employees. HUD 2020 focuses the Department on two distinct missions --- helping communities rebuild and restoring public trust by protecting the American taxpayer. It combines the new mission(s) with a new structure that separates processing and public trust functions from constituent service operations. It establishes a new management system organized by function instead of program, a new evaluation system for HUD operations and employees that stresses performance over process, new training for the HUD workforce, new technology to integrate HUD management systems, and a new enforcement organization dedicated exclusively to fighting fraud, waste, and abuse.

We took James Champy's advice: propose change everywhere, at every level. Because whether we do it small or large, we will pay the same price. HUD is the poster child of bad government? Change the perception by changing the reality.

And we have changed the reality. We call it our zero tolerance for fraud, waste and abuse. If you do business with HUD, you have to live up to your contract. Last spring, HUD launched a get tough campaign with Attorney General Janet Reno. As a result, debarments have increased by 300% in one year. To institutionalize the new policy, we partnered with FBI Director Louis Freeh to create a new Enforcement Center run by an FBI detailee, working with U.S. Attorneys on loan from the Justice Department. The Enforcement Center is now up and running. Not only have we changed the image, we changed the culture.

A. The New Structure Works

People said the structure doesn't work…change it. So, the HUD 2020 Plan calls for changes in the HUD structure. The current HUD structure is based on corporate models of the 1930s and 1940s, yet while many corporations reorganized and restructured a decade ago, HUD has not kept pace. We asked where were the models for change at HUD? One model comes from the financial services field. Banks like Citibank and Nations Bank have consolidated routine functions into centralized back office processing centers. They have established storefront customer offices closer and more responsive to their markets. HUD has learned from their example.

HUD's goal is to provide integrated delivery of services and products and to offer a single point of service to all customers. We will maintain all 81 existing HUD field offices but turn them into storefront offices with their own unique logo and design. At the same time, we will split the back office processing off to 70 centers and hubs. The first storefront office here in Washington near Union Station was open yesterday. We are on schedule, our Multifamily Hubs and Centers, as well as our four (4) Homeownership Centers are all up and running.

B. Managing the Portfolio

It was often said that HUD could not manage its portfolio. Our critics were right. So, we have created a new Real Estate Assessment Center. Another example of changing the culture. By the end of next year, we will have conducted the first nationwide inspection of 30,000 of our properties. To help us do this, we have created a new system. We are working with non-profits and industry groups to come up with a new scoring system for financial and physical evaluation. Instead of asking landlords to fill out four (4) separate forms four times a year that nobody can read, we will have one simple inspection on a system that everybody can understand.

The Real Estate Assessment Center will standardize the way the Department conducts assessments of its multifamily and public housing real estate portfolio. The Center will generate an overall annual score for over 30,000 properties and projects from over 89,000 separate inputs to determine that projects are being operated in accordance with established standards for physical and financial integrity. The score will also measure management performance and customer satisfaction. Assessment Center operations will improve the quality of life for residents by promptly identifying remedial actions required to correct deficiencies.

The Assessment Center will be an information-intense operation highly reliant on technology to ensure objective and consistent performance assessments and monitoring. The Center's systems will include portable, hand-held computers used by inspectors onsite to record and transmit data on physical conditions of properties and projects, centralized processing and analysis of inspection and financial data, and dissemination of that information for appropriate action. The Center is currently using its new physical inspection protocols on a portion of HUD's portfolio.

C. Dealing With "Bad Landlords":

The greatest breach of the public trust at HUD is fraud, waste and abuse in HUD's existing portfolio of housing units. Each of HUD's program offices - the Office of Housing and Public and Indian Housing both operated independent enforcement functions with different standards and procedures. PIH, for example, considers enforcement action when a property fails its annual assessment. Solutions for troubled housing authorities were ad hoc, ranging from judicial receiverships to HUD partnership agreements with the local housing authority. Housing, on the other hand, takes enforcement action against landlords infrequently as a last resort. Also, critics have noted that the financial interests of the FHA Insurance Fund can be at odds with the social interests of the tenants.

The Enforcement Center is taking aggressive action on troubled housing and public housing portfolios. Working cooperatively with the Department of Justice and the FBI and other law enforcement teams, the Center is taking action against those found abusing HUD's programs by:

  • enforcing all administrative and regulatory business agreements,
  • debarring or suspending individuals in non-compliance,
  • referring criminal cases to the Office of the Inspector General, and
  • submitting civil cases to the Department of Justice.

The goal of the Enforcement Center is to reduce HUD's troubled multifamily housing inventory to a level comparable to or lower than the private sector (5 to 7 percent of its housing portfolio). The 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.

D. Matching the Workload with the Workforce

Our critics have said that our workload and our workforce are mismatched. On top of that, they say that you are reorganizing while you are also downsizing to 7,500 by the year 2002, because when the Department was threatened with elimination, former HUD Secretary Henry Cisneros chose the best of difficult options, and promised to get down to 7,500.

Working toward that goal, we have undertaken the most fundamental reorganization of HUD staff in thirty (30) years. As a part of this effort, we conducted the first nationwide staffing process in the history of HUD. We posted jobs on the Internet and got more than 8,000 applications and made some 1,700 selections. Every job at every location was wide open, as teams of career employees made the job selection decisions-not political appointees.

From the beginning, we said that nobody would be fired. We knew that our employees are our biggest asset. So, we went through two rounds of buyouts, with no Reductions-in-Force and with no directed reassignments. We moved the deadline for reaching 7,500 back to the Year 2002, which is significant-because 60% of HUD's workforce is eligible for retirement by the Year 2002. Implementing such an employee friendly process was the humane thing to do.

For those employees who don't yet have a permanent job assignment in the new HUD, we contracted with the organization that helped the Department of Defense reorganize-a job placement firm which worked with employees to identify their skills and interests, and assisted them in placement in other public and private sector jobs.

Almost one year later, HUD is leaner and stronger. We are now at a 9,000 employee level-down from 10,500 a year ago, and it is the strongest HUD deployment in a decade.

E. Employee Mandates Clarified

In the past, employees were too often charged with both empowering communities and enforcing the public trust…they were given conflicting mandates. Employees were required to play an uncomfortable and difficult job of "good" cop - "bad" cop. This was unfair to our employees and to our customers.

In the new HUD, we will have people trained as public trust officers to make people comply with the law. At the same time, we are creating an entirely new class of customer service representatives called Community Builders-some from inside HUD and some from outside HUD.

HUD 2020 dramatically alters the way HUD manages the Department's external relationships. It recognizes that facilitation and monitoring/enforcement are distinct functions that must be performed by different entities. For the first time, HUD will clearly divide the staffing functions of facilitating community access to HUD programs from those who are monitoring and overseeing programs to ensure compliance with program rules and regulations. Community Builders will be the external face of the Department for HUD clients and customers. Community Builders will be connecting clients and communities to the full range of HUD resources that are available to them.

HUD has had no significant infusion of new talent in a decade, which hurts in two ways: first, industry has changed and we haven't changed with it, and second, when you don't get an infusion of new talent, the whole organization starves. With Community Builders we are seeking the best and brightest. To get there, we have struck up a partnership with Harvard's Kennedy School of Government. We are asking for a commitment of two years and we will send them to Harvard to earn a one-of-a-kind certificate and then deploy them in one of our 81 field offices. Then, after two years they will return to their communities.

Community Builders will change HUD's whole orientation in cities. Rather than multiple points of contact, where a person has to make ten phone calls to get an answer, the Community Builder will be trained to answer all questions. They will be HUD's front door and first point of contact.

Approximately 600 Community Builders in all 81 Field Offices will now provide access to the full range of HUD programs, liaison, and customer service to individuals, community organizations, and governments. Over half of the Community Builder positions have already been staffed. Extensive training for these individuals is underway and will be completed in a few months. The Community Builder function will be enhanced with the establishment of "storefront" operations, electronic kiosks and Community 2020 Connections software. HUD's first "storefront" office was opened earlier this Spring in Washington, D.C. The kiosks will be placed in public places where basic information on HUD programs will be available to citizens 24 hours a day, 7 days a week. The Community 2020 Connections software is on-line and available to inform citizens about government activities in their communities. This tool can assist in the examination of neighborhood characteristics and in planning growth and revitalization.

The remaining HUD staff will be Public Trust Officers who will work exclusively to ensure that Federal funds are used in compliance with laws and regulations. These are the HUD program staff who will serve in the various field offices, hubs and centers-the taxpayer "watchdogs." They will administer program competitions and oversee program operations.

F. Improved Technology

Unlike the days of old, where the highest form of technology at HUD was a rotary phone, we are arming HUD employees with the latest technology to improve client communications. HUD has produced a Community 2020 software, building on an idea of David Osborne's, of government as "profit centers." This is mapping software which shows district-by-district, where all HUD projects are, to help communities plan comprehensively.

Laptop computers and information kiosks will be located in every storefront office where HUD material will be displayed for use by the public.

At HUD, we have partnered with Freddie Mac to bring in new technology, to speed up the processing time for loans by 20,000 times. Under the old system, it would take up to four (4) weeks to get an answer on loan approvals. Under the new system, we can tell a person if they qualify in just two minutes.

We're using the Internet to reduce paperwork for our clients-implementing an automated underwriting system to give people an answer on-line. Also, we are working with Fannie Mae, Freddie Mac and the private mortgage insurers to overcome another problem-that is, we all have different software packages. We are developing a common interface that will provide one-stop shopping for all of our clients.

G. Improved Financial Management Systems The single most glaring deficiency of the Department is its financial management systems. While we are getting our technology in order we are also getting our systems in order. We now have a budget officer who, for the first time, reports to our Chief Financial Officer. We are moving from 89 systems that don't talk to one another-to one integrated financial management system. The integrated system should be on-line by September, 1998. We are continuing our efforts to improve the completeness and reliability of data that are drawn from other special purpose systems. Our initial efforts are already showing results, including more accurate estimates in support of HUD's FY 1999 budget request. HUD submitted its FY 1999 budget justifications on time to OMB for the first time in many, many years.

Two key initiatives for improving our financial management systems are the Financial Systems Integration Project and the Section 8 Financial Management Center:

  • The Financial Systems Integration Project will integrate all of HUD's 89 financial systems into a single, integrated, user-friendly system that helps managers make decisions and clearly shows how communities invest their dollars. The first phase will provide the timely, accurate and reliable information that is useful to managers and others carrying out the Department's financial and programmatic missions. The Federal Financial System (FFS) has been selected as the commercial off-the-shelf (COTS) core of HUD's new integrated financial system. FFS will replace the FHA's general ledger system, and other departmental general ledgers will be consolidated with FFS. The second phase will overhaul the management information of major financial and other specialized systems, including cleaning up and standardizing data.

  • The Section 8 Financial Management Center New (FMC) consolidates a primary business function common to 51 HUD field offices. The FMC will execute all financial management activities for approximately 3 million assisted housing units. It will provide for the electronic payment of housing assistance payments and integrated financial management of all rental assistance programs administered by HUD. This will improve quality control and monitoring of financial and tenant data. Tenant data will also be used to extend the Department's income matching programs that detect under-reporting of tenant income.

Another aspect of HUD's efforts to improve financial management is implementation of a new Management Integrity Program. Program managers will be held accountable for their program's cost, schedule and performance parameters. They will be held accountable for results and rewarded for excellent results. The Management Integrity Program creates a new paradigm for the operating efficiency of HUD programs. Now, managers directly responsible for programs will assume a major role in identifying and managing risks. These new control techniques and methodology will improve efficiency and ensure that program delivery is consistent and reliable. Front-end risk assessments will be conducted to facilitate efficient business practices, and to reduce future fraud, waste and mismanagement risks. It will review corrective action plans to ensure that material weaknesses are resolved. The focus will be on designing fundamentally sound business approaches, and then monitoring the programs to ensure that these practices are followed throughout the life of the program.

A poorly devised acquisition system led to a wide range of problems at HUD in the 1980s. The National Academy of Public Administration was brought in to review our current procurement system. Their review will be completed this August. In addition, we have hired a Chief Procurement Officer who is implementing improvements to our entire acquisition process from needs assessment, through contract award, to successful delivery of the required goods and services. This approach, combined with our improved financial management system, will significantly improve the management of HUD programs.

Finally, we are proposing to consolidate HUD programs from some 240 programs and activities to approximately seventy (70). HUD currently has four major program consolidation proposals pending before the Congress, including: public housing legislation, homeless consolidation, multifamily insurance consolidation and repealer legislation. Under these consolidation proposals, a consolidation of financial systems, administrative systems and enforcement activities will be necessary.

H. Partnership with our Union(s)

From the very beginning, we said that every step in the HUD 2020 Management Reform process would be done in partnership with our Unions-the American Federation of Government Employees (AFGE) and the National Federation of Federal Employees (NFFE).Our union partners have worked arm-in-arm on every aspect of HUD 2020. We came up with a plan and put it out there-and spent two months negotiating, and last August, we signed an agreement on the principles and goals. To our knowledge, this was the first time in federal government history that a federal employee union actually signed on to a downsizing plan.

But signing of that agreement was not the end, it was just the beginning of an ongoing dialogue. Over the past eight months, I held more than a dozen satellite meetings with employees to keep them informed throughout the entire management reform process. We also held meetings with each individual office. Every time the Union(s) had an issue we sat down with them-sometimes, we gave a little, and sometimes, they gave a little. But all in all it has been an extraordinarily successful process.


Independent Review of HUD 2020 Plan

An independent review of our HUD 2020 Management Reform efforts was undertaken by the accounting firm of Booz-Allen and Hamilton. The review was conducted over the period of December, 1997 through February, 1998. Much of Booz-Allen's efforts involved reviewing and analyzing staffing requirements of the new HUD, with the primary mechanism being a review of the HUD 2020 Implementation Plans and an assessment of the adequacy and reasonableness of staff levels proposed in each plan. Based on this review, Booz-Allen reached three principal conclusions:

  • HUD 2020 Plan lays out a solid framework for a sweeping reinvention of HUD and proposes a number of reforms that should help HUD restore the public trust in the agency.

  • HUD's implementation of the plan to date is sound and upon substantial implementation of many of the planned reforms by the end of 1998, HUD will be significantly better aligned to meet its Congressionally-mandated mission. The implementation of the plan is setting the stage for a shift in institutional culture towards an anti-fraud, waste and abuse perspective.

  • Approximately 7,726 FTEs will be adequate for the Department to carry out the responsibilities of the reformed HUD in 2002.

Further, Booz-Allen found that significant progress has been made in implementing the plan, including:

  • Establishment of the critically important Enforcement and Assessment Centers.
  • Establishment of twelve other new centers will define missions and processes.
  • Restructuring the Departmental management processes of FHA, CPD and PIH to integrate with the new center(s) operations.
  • Retraining thousands of staff in the new HUD Establishment of the Community Builder concept and initial training of the first cadre of Community Builders
  • Development of information systems to leverage technology
  • Significant progress on integrating the Department's financial systems.

Booz-Allen concluded that: "HUD appears to have an excellent vision of the new HUD, and in early 1998, appears to have made significant progress towards achieving the many management reforms that are critical to making the Department function effectively."

HUD 2020 Implementation Progress

Enforcement Center

The Enforcement Center, headed by an FBI detailee, is now up and running. The Center is handling jointly with Housing an initial caseload of 88 troubled Multifamily properties.

Real Estate Assessment Center

Real estate financial assessment progress has been substantial, including: defining and presenting financial indicators to industry groups; testing hand-held inspection technology, and development of a centrally managed database for analysis and tracking. There are a number of objective physical inspections already underway.. The Multifamily Housing assessment process has advanced to the stage of pilot testing the financial system, defining the indicators, and reaching agreement with OMB on Single Audit Act issues. Assessment Center staff are in the process of acquiring space and staffing up its operations.

Section 8 Financial Management Center

Start-up operations are underway at the Section 8 Financial Management Center. Staffing, training and space plans are completed for the new center. Operating procedures for management and operation of the Center have been completed.

Community Builders

The majority of the staff (more than 300) for the Community Builders operation has been selected and outside positions have been advertised. Training for the new Community Builders is well underway-two rounds of training have been completed. Orientation of Community Builders in their local offices, regarding local community dynamics and conditions, is well underway.

Financial Systems Integration

The Financial Systems Integration Project has selected a new umbrella, off-the-shelf core accounting system, the Federal Financial System (FFS), by which to integrate all the general ledgers of the Department. The FHA general ledger is the first to be replaced by the FFS. The other program general ledgers will follow. Data clean-up for this system is underway and a new streamlined risk management system has been developed and initiated. This unquestioned progress in financial systems integration addresses one of the most serious, ongoing management challenges posed by the General Accounting Office and the HUD Inspector General.

Financial Management Integrity

Substantial progress has been made in improving financial management integrity in the Department. The HUD Budget Office has been integrated into the Office of Chief Financial Officer. Ten field accounting offices have been consolidated into one office. A Risk Management Unit has been established to conduct front end risk assessments and review corrective actions taken to ensure that material weaknesses are resolved. Front end risk assessments (FERAs) are already underway for HUD's new Centers. This management integrity initiative has already begun to strengthen and enhance internal controls in the Department's programs and operations.

Multifamily Housing

New Multifamily Housing operations are up and running. Eighteen Multifamily Hubs and thirty three program centers are operational, handling 100 percent of the workload. The "fast track" Multifamily development process is in place. The Multifamily Property Disposition Centers are fully operational. In the first year the Property Disposition Centers have exceeded the Department's national sales goals by 125%. The average inventory time for projects sold has also been significantly reduced which has resulted in lower holding costs.

Homeownership Centers

FHA has consolidated all single family processing operations from 81 Field Offices to 4 Homeownership Centers. During the past year, HUD's first Single Family Homeownership Center in Denver has been joined by new Homeownership Centers in Philadelphia, Atlanta, and Santa Ana. Modeled upon the successes in the Denver Homeownership Processing Center, and the structure of Fannie Mae and other private sector organizations, mortgage processing time has been improved from 4-6 weeks to the standard or average of 2 days.

Public Housing

The Office of Public Housing has established twenty seven (27) Hubs and sixteen (16) Program Centers. It has also established four program management and processing centers and realigned field office staff to improve customer service. Staffing, space planning and training are underway for the Hubs and Centers.

Investment in Employees

Over the past year, HUD has accomplished the following actions to invest in its employees:

  • Precedent-setting partnership agreements with HUD unions facilitated employee placement and career planning opportunities.

  • Communication of specific plans of actions, timetables, and milestones to staff through satellite broadcasts, town hall meetings, HUDweb, etc. , to allow employees to make more informed personal and professional decisions.

  • Buyouts separated over 1,000 employees from programs targeted for staff reductions, allowing HUD to consolidate and streamline operations while minimizing impact on employees.

  • The Department merit staffed 1,000 of 1,700 positions advertised in a superposting, and have continued providing job opportunities to employees through voluntary reassignments and additional merit staffing efforts.

  • HUD established New Horizons to provide comprehensive professional outplacement and career counseling services for HUD staff not selected for positions in the new HUD.

  • The Department has tremendously expanded training opportunities for all HUD staff.

We realize that a cornerstone of the HUD 2020 Management Reform Plan is to simultaneously build a results-oriented workforce, promote opportunities for personal development, and provide incentive for creative and superior accomplishment

HUD 2020 has required us to take a close look at all parts of the Department, and create new management entities. We are currently undertaking a very exciting initiative to ensure that all parts of the HUD 2020 organization understand how they support HUD's strategic objectives. We call this initiative the HUD Products, Processes and Protocols Project. The effort incorporates both key top officials and wide participation by field and Headquarters managers for all major organizations. It is a process of deliberate evolution with feedback loops at each step. It will define models of operation for all programs and projects, with descriptions of core processes, products and protocols and how they work together to support HUD's strategic objectives. This will result in models of new business and operating plan approaches. Training will be provided for all key managers on their new leadership role in establishing an effective, unified community focus as they implement HUD strategic objectives and deliver on HUD's business goals. This is an ambitious project and one that will take time to implement fully. Its effect will be new clarity about the parts of HUD work together to make a greater whole, in service to America's communities and citizens.


I trust I have effectively conveyed to you the reasons necessary to undertake the bold initiatives outlined in the HUD 2020 Management Reform Plan, as well as its core elements and the progress made to date. We are proud of our accomplishments. There are times when even we who have dedicated such extensive time and energy to HUD 2020 are amazed at the progress made in just one year . By September 30, 1998 our major implementation efforts will be substantially complete. Although the Plan has not been fully implemented, 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 fraud, waste and abuse and for improving customer service delivery will not diminish.

Thank you for this opportunity to share with you the HUD 2020 Management Reform Plan.

Content Archived: January 20, 2009

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