Improving Utilization in the Housing Choice Voucher Program

Report Authors: Christi Economy, Ryan Finnigan, Susha Roy, Jason M. Ward

Researchers from the Terner Center and the RAND Corporation have published a new report that presents findings and recommendations from a national study of the Housing Choice Voucher (HCV) Program. The report highlights strategies public housing agencies (PHAs) are using to best serve as many low-income families as possible, despite facing structural challenges like tight housing markets and resource constraints.

The HCV Program serves more than 2.3 million low-income households. Research has shown that vouchers improve recipients’ housing quality and stability, financial security, and health and well-being.^[1] However, unlike other major federal programs (such as food stamps or Medicaid), the HCV Program is not an entitlement; because of funding scarcity, the HCV Program and other federal housing assistance programs serve between one in four and one in six eligible households.^[2] Despite this scarcity, the program’s financial resources are regularly underused because of myriad challenges.

PHAs administering the HCV Program face two constraints: a limit on the number of vouchers they can issue and a limit on the annual rental assistance budget supporting the program. In practice, for many years, the program’s annual budget has been consistently insufficient to fund the total number of authorized vouchers. Thus, the roughly 2,200 PHAs administering the HCV Program often fail to achieve high voucher utilization because of insufficient budgets. But, perhaps more surprisingly, many PHAs also fail to achieve high budget utilization: 32 percent of PHAs used less than 95 percent of their budget in 2023, leaving more than $1 billion (about 3 percent of the total program budget) on the table. This underutilization of program resources, despite high demand, is the focus of this report.

One primary challenge facing all PHAs is the inherent budget uncertainty associated with the discretionary nature of the program. This is a through line that undergirds many of the persistent challenges faced by PHAs in maximizing their voucher and budget utilization, and we discuss it in detail in this report. The annual level of resources made available to PHAs varies substantially from year to year, and PHAs often lack certainty about their funding levels until months into a given fiscal year. Such uncertainty creates problems that would not exist if the program were funded as an entitlement. PHAs must also confront specific local factors that influence how they implement the program. Although each PHA’s circumstances are unique, common challenges include local rents exceeding voucher payment standards, difficulty recruiting and retaining landlords willing to rent to voucher holders, and staffing and funding constraints that limit expansions of efforts aimed at increasing utilization.

This study focuses on the following question: What factors, policies, and practices maximize resource utilization in the HCV Program? To answer this question, we analyze variation among PHAs according to the two primary measures of program resource use: voucher utilization rate (the share of a PHA’s authorized vouchers that are used to lease housing) and budget utilization rate (the share of a PHA’s expended annual budget for housing assistance payments). PHAs that do not fully utilize their HCV resources help fewer households than they could and risk losing program resources in future years. Using our analysis of quantitative HCV Program data and qualitative data derived from interviews with 8 HCV Program experts and key staff at 31 PHAs, we identify and discuss practices and policies that are associated with achieving high utilization.

In addition to providing specific findings and recommendations, we highlight three overarching themes. First, the HCV Program’s budget is the primary constraint to serving more households. Second, many key factors related to utilization are outside PHAs’ control, including local housing market trends (such as low rental vacancy rates and high rents) and program-related factors (such as difficulty recruiting and retaining landlords willing to lease homes to voucher holders). Third, many PHAs might have the potential to increase voucher and/or budget utilization within their current circumstances. In addition to providing recommendations for PHAs, we recommend ways that the federal government could provide greater flexibility to PHAs to support higher levels of resource utilization. For example, the U.S. Department of Housing and Urban Development (HUD) could allow PHAs wider latitude to implement the HCV Program in ways that align with their communities’ needs, focusing on contexts in which there is relatively low risk to providing such additional flexibility (a trend that has already been on the rise within the program). Finally, we provide recommendations on how outside entities can collaborate with or otherwise support PHAs in effectively serving more low-income families.

Our key findings are as follows:

• Achieving high levels of budget utilization is becoming much more common than achieving high levels of voucher utilization because of changes in how the HCV Program is funded and historic increases in rental costs.
• Although, on average, PHAs’ voucher and budget utilization rates decline as housing markets tighten (i.e., median rents increase and rental vacancy rates decrease), some PHAs are consistently able to mitigate these challenges and achieve high utilization rates.
• The use of increased payment standards (the maximum rent that a voucher can cover) has been a valuable tool for PHAs to keep up with rapid rent increases but has tended to open a wider gap between budget utilization and voucher utilization.
• Many PHAs are experimenting with geographic variations in payment standards that approximate HUD’s growing use of the Small Area Fair Market Rents (SAFMR) policy, which varies rental assistance generosity by Zip code. PHAs that are operating in metro areas and mandated to use SAFMRs express varying levels of enthusiasm for the policy, though, over longer periods, support appears to grow.
• In addition to increased payment standards, many PHAs have allowed longer search times for voucher recipients to find and lease housing to address declining success rates (the share of households that successfully lease homes after receiving a voucher). By increasing success rates, PHAs can also increase voucher and budget utilization while avoiding the need to issue vouchers that PHAs do not receive administrative funding to support and that do not ultimately help eligible families.
• Given that many households that receive vouchers do not successfully lease housing with them, many PHAs issue vouchers to more households than they have the resources to support. Views differ among PHAs on the merits of maximizing voucher and budget utilization through overissuing that can increase the risk of budget shortfall. Although many interviewees suggested that HUD has become increasingly supportive of this approach, since 2024, there has been a sharp rise in PHAs experiencing budget shortfall, increasing the systemwide risk of being unable to sustain existing levels of rental assistance if future program funding does not increase.
• PHAs in our qualitative sample are increasingly undertaking innovations to support voucher holders’ housing searches and landlord engagement, following efforts by PHAs in the Moving to Work and Emergency Housing Voucher programs. The lack of financial resources for these services in the HCV Program limits their adoption, but some PHAs provide these services by partnering with local governments, Continuums of Care, and nonprofit organizations. Interviewees also highlighted progress boosting utilization and voucher holders’ access to higher quality neighborhoods following passage of state or local source of income protection laws, which prohibit landlords from rejecting tenants on the basis of using a voucher.
• PHAs have substantially increased the number of vouchers that they attach to properties rather than issue directly to households. These project-based vouchers are particularly important for facilitating the production and preservation of deeply affordable housing (housing affordable to those with extremely low incomes), including permanent supportive housing projects for people exiting homelessness. However, some PHAs are concerned that project-basing vouchers could lead to serving fewer families with children and reduced residential choice for voucher holders.

We draw on these findings to make the following recommendations:

• PHAs seeking to maximize their budget resources should use HUD’s utilization analysis tools or customized applications that leverage local contextual knowledge to develop data-driven voucher issuance strategies. PHAs might also benefit from considering issuance strategies that allow for a slightly higher risk of shortfall in accordance with HUD guidance on this issue.
• PHAs with low success rates should extend allowable search times to 180 days and allow even longer search times for households facing higher barriers to finding housing.
• PHAs should proactively experiment with variable payment standards, including across-the- board increases or payment standards that vary by geographic location based on higher-quality housing and neighborhood amenities, although these policies generally come at the cost of reducing the number of vouchers that will ultimately be used.
• To maximize utilization, PHAs should adopt a customer-service approach to recruiting and managing landlord relationships and assisting tenants with housing search and other needs; PHAs facing financial constraints on providing these services can seek to establish partnerships with local nonprofits and government organizations to support these efforts.
• PHAs struggling with challenging conditions that are preventing them from achieving consistently high budget utilization—such as high or rising rates of homelessness or very tight local housing markets—should consider project-basing more vouchers if they have not reached their limit for doing so.

Many PHAs are already employing the best practices referenced above: using sophisticated data analysis, extending search times, setting bespoke payment standards, offering more holistic tenant support, fostering collaborative relationships with landlords, and/or contributing to affordable housing development. Despite these efforts, structural barriers (namely resource shortages) persist, underscoring the need for a collective, all-hands-on-deck approach to reaching all households in need. Given this, future research might further explore how non-federal entities can contribute to addressing the affordable housing crisis and supporting critical rental assistance programs.

Access the full report

Additional Terner Center Resources

For more, check out some of the Terner Center’s previous rental assistance research, including:

• analysis and interactive maps with state- and county-level data on households served by the HCV program,
• lessons from the roll-out of Emergency Housing Vouchers to address homelessness,
• housing and neighborhood outcomes for HUD-assisted households,
• considerations for designing a renter’s tax credit, and
• findings on the role of housing assistance in promoting economic security among low-income households.

Acknowledgments

Our thanks to RAND and Terner Center colleagues for their contributions to this work. Thanks also to the study’s external advisory board and report reviewers for their guidance and suggestions.

We gratefully acknowledge the Cooper Housing Institute for funding this study. We would also like to thank Wells Fargo for supporting Terner’s broader efforts to improve rental assistance.

This research does not represent the institutional views of the University of California, Berkeley, or of the Terner Center’s funders. Funders do not determine research findings or recommendations in the Terner Center’s research and policy reports.

Endnotes

^[1] Fischer, W., Rice, D., & Mazzara, A. (2019). “Research Shows Rental Assistance Reduces Hardship and Provides Platform to Expand Opportunity for Low-Income Families.” Center on Budget and Policy Priorities. Retrieved from: https://www.cbpp.org/research/housing/research-shows-rental-assistance-reduces-hardship-and-provides-platform-to-expand; Wood, M., Turnham, J., & Mills, G. (2008). “Housing Affordability and Family Well‐Being: Results from the Housing Voucher Evaluation.” Housing Policy Debate, 19, No. 2: 367–412, https://doi.org/10.1080/10511482.2008.9521639; Basolo, V. (2013). “Examining Mobility Outcomes in the Housing Choice Voucher Program: Neighborhood Poverty, Employment, and Public School Quality.” Cityscape, 15, No. 2: 135–154, https://www.huduser.gov/portal/periodicals/cityscpe/vol15num2/article10.html; Ellen, I.G. (2020). “What Do We Know About Housing Choice Vouchers?” Regional Science and Urban Economics, 80, https://doi.org/10.1016/j.regsciurbeco.2018.07.003.

^[2] McCarty, M. (2023). “The Section 8 Housing Choice Voucher Program.” Congressional Research Service, IF12546. Retrieved from: https://www.congress.gov/crs-product/IF12546.