Audit Report On The New York City Housing Authority’s Procedures For The Verification Of Section 8 Housing Choice Voucher Program Participant-Reported Information

Audit Report On The New York City Housing Authority’s Procedures For The Verification Of Section 8 Housing Choice Voucher Program Participant-Reported Information

EXECUTIVE SUMMARY

 This audit examined whether the New York City Housing Authority’s (NYCHA) procedures for verifying Section 8 Housing Choice Voucher Program participant-reported information during the annual recertification process were adequate and sufficient to meet federal Department of Housing and Urban Development (HUD) program requirements.  The audit covered all participants who were active as November 19, 2013.  NYCHA provides housing subsidies to more than 96,000 families by paying a portion of the program participants’ rent. Through Section 8, NYCHA subsidizes the rent for qualified low-income families. The families then pay the differences between the actual rents charged by the landlords and the amount subsidized by the Section 8 program.  During calendar year 2013, NYCHA received $1.037 billion in subsidies from the federal government through HUD for the operation of the Section 8 program.

Federal regulations established by HUD require Public Housing Agencies (PHA), such as NYCHA, to conduct initial certifications and subsequent recertification of family income and composition every year. Through annual recertification, NYCHA is required to determine that participants continue to be eligible and recalculate the current amounts of the subsidies to which they are entitled.

As part of the recertification process, participants must accurately report their most current information regarding changes in family composition, income, assets, and other factors used by NYCHA to determine the amount of Section 8 rental subsidies that will be paid on their behalf. NYCHA housing assistants review and analyze the information received from the participants.    Pursuant to HUD requirements, housing assistants validate participant income information through HUD’s Enterprise Income Verification system (EIV), a web-based computer system that contains employment and income information about individuals who participate in HUD’s rental assistance programs.  EIV also verifies participants’ social security numbers and determines if participants owe outstanding debt to any PHA.  In addition, HUD requires NYCHA to periodically utilize different reports to verify the information participants provide, including the Deceased Tenants Report, which is used to identify deceased participants; the Multiple Subsidy Report, which is used to identify participants who may be receiving subsidies in more than one location; and the Failed Verification Report, which is used to identify participants whose personal identifiers, such as social security numbers, do not match the Social Security Administration (SSA) database.

Audit Findings and Conclusions

NYCHA’s existing procedures generally meet HUD’s requirements for verifying participant-reported information and appropriately utilized HUD’s Deceased Tenants Report, Multiple Subsidy Report, and the Failed Verification Report.  Further, in a sample of 100 case files we reviewed closely, we did not identify any instance where NYCHA recertified a participant without obtaining the required documentation to verify reported income or without validating the information through EIV in accordance with its existing procedures.

HUD does not require NYCHA to conduct additional verifications beyond those it presently conducts.  However, HUD’s guidebook states that, “PHAs are ultimately responsible for ensuring that the right people receive the right amount of subsidy, and they must maintain a high degree of accuracy in administering the housing choice voucher program.”  Accordingly, we looked at additional sources of assets, income and family composition data and matched it against all NYCHA Section 8 participants as of November 19, 2013 to determine if there were participants who may have omitted information during recertification. Based on our data matches, we identified discrepancies in records potentially related to 2,041.  The information we found potentially related to household assets and income was not considered during recertification, and may have affected the participants’ entitlement to benefits.  To maintain program integrity, NYCHA should consider implementing, in whole or in part, procedures such as those we employed to ensure that it considers all available information related to Section 8 eligibility during recertification, and to use additional data to verify self-reported information on property ownership and marriage.

Audit Recommendations

This report makes a total of five recommendations to NYCHA, including:

• Determine whether those participants we identified in this audit as possibly having failed to report ownership of real property or marriages have, as a result, received Section 8 benefits to which they were not entitled, whether they are currently entitled to any benefits, and if so, in what amounts.
• Take any appropriate action under the Section 8 program against those participants who have omitted information and/or made false statements to NYCHA in connection with the program.
• Refer any Section 8 participants who appear to have made material omissions or false statements to NYCHA in connection with their recertifications to the New York City Department of Investigation.
• Consider employing additional procedures to verify assets and income, including but not limited to the data matches we performed, to improve its verification of participant-reported information.

NYCHA Response

In their response to the draft report, NYCHA officials were pleased with the report’s conclusion that NYCHA’s existing procedures generally meet HUD’s requirements for verifying participant – reported information.  However, NYCHA officials took exception with the report’s other conclusions.  Specifically, NYCHA stated that the report’s conclusions concerning potential NYCHA subsidy overpayments are overstated and susceptible of misinterpretation, and that the information identified by the Comptroller during the course of the audit concerning unreported household information would have had a minimal impact of NYCHA’s subsidy payments.

We note that NYCHA officials do not appear to have closely reviewed the results of our data analysis and all of the documentation we shared with them during the course of this audit and also did not provide any documentation or analysis to support their conclusion that this unreported information would have a minimal impact on NYCHA’s subsidy payment.

However, NYCHA agreed with four of the report’s five recommendations.  NYCHA officials stated that NYCHA “recognizes the potential benefits of employing additional verification techniques such as the data matching undertaken by the Comptroller’s office, even though not required by HUD.  NYCHA appreciates the Comptroller’s analysis and recommendations, and will conduct a cost benefit analysis to determine whether the expected benefit of the recommended data matching strategies outweighs any added administrative process and costs.”  For the fourth recommendation, that NYCHA refer those participants who appear to have wrongly received property tax exemptions to the appropriate taxation authorities, NYCHA requested the Office of the Comptroller to carry out this recommendation itself.  However, as NYCHA itself points out, this audit identifies apparent discrepancies found through a comparison of multiple databases.  NYCHA needs to perform further analysis to determine if those apparent discrepancies reflect actual failures to report information, misallocation of Section 8 resources, or possibly greater misconduct.  While the Comptroller’s Office routinely refers evidence we find to appropriate authorities, that does not absolve NYCHA of its responsibility for managing its programs and sharing information with other government agencies as appropriate.

The full text of NYCHA’s response is included an addendum to the report.