WASHINGTON – Sen. Chuck Grassley today highlighted language he championed that will ensure transparency and promote accountability in public housing authorities’ use of more than $350 million in federal tax dollars.  The Grassley language requires that housing money provided for low income families will retain its federal designation even after it’s transferred to state and local housing authorities.  This makes it harder for so-inclined housing authorities to use federal money to evade a federal salary cap for executives and otherwise find ways to spend federal tax dollars on executive perks instead of safe, affordable housing for people in need.

“The good governance provision … ensures that, in the future, the housing money we appropriate for low income families will retain its federal designation even after it’s transferred to housing authorities,” Grassley said in speech on the Senate floor.  “And this designation is no small matter.  U.S. taxpayers spend about 4.5 billion dollars every year to help low income Americans put a roof over their heads. We can be proud that we do so much for people in need.  We should not let any of that money be wasted or spent to feather the nests of bureaucrats.”  

The Grassley language is included in the committee report that accompanies the housing appropriations bill under debate by the full Senate.  His speech explained why the language is “sorely needed.” 

His speech text follows here.  

Floor Statement of Sen. Chuck Grassley
Delivered May 17, 2016

Mr. President, I rise today to commend the leaders of the Senate Appropriations Committee for accepting transparency language that I requested be included in the fiscal year 2017 spending bill for the Department of Housing and Urban Development.  
 
This “good government” provision, which I championed after years of oversight work, will ensure greater accountability in public housing authorities’ use of the federal money they receive in annual appropriations bills.

For at least six years, I have raised concerns about HUD’s failure to conduct proper oversight of how local housing authorities use federal dollars.

Specifically, my concerns relate to HUD’s practice of allowing local housing authorities to spend hundreds of millions of federal dollars each year with virtually no HUD oversight and no transparency to the public.

We all have reason to be concerned about this lack of transparency because some housing authorities rely on the federal government for up to 90 percent of their funding.
That’s why I want to thank Senator Collins, Senator Kirk, and the other members of the Transportation HUD Appropriations Subcommittee for recognizing that Congress must insist on HUD paying closer attention to the use of taxpayer dollars by housing authorities. 

The good governance provision that the Transportation HUD subcommittee included in this year’s appropriations report ensures that, in the future, the housing money we appropriate for low income families will retain its federal designation even after it’s transferred to housing authorities.  

And this designation is no small matter.

U.S. taxpayers spend about 4.5 billion dollars every year to help low income Americans put a roof over their heads.

We can be proud that we do so much for people in need.

We should not let any of that money be wasted or spent to feather the nest of bureaucrats.  

I’d like to take a few moments to explain why the appropriations language that I championed is sorely needed. 

Some local housing authorities have devoted these limited funds, meant to help the poor find affordable housing, to high salaries and perks for the people who run housing authorities around the country.

For example, 

•At the Atlanta Housing Authority, at least 22 employees earn between $150,000 and $303,000 per year.  

•The former executive director of the Raleigh, North Carolina, Housing Authority received about $280,000 in salary and benefits, plus 30 vacation days.

•The executive director of the Tampa Housing Authority is paid over $214,000 per year and the housing authority spends over $100,000 per year on travel and conferences.

A few years ago, after I called attention to these wasteful practices, HUD limited the executive salaries paid by local housing authorities.  

The salaries were capped at Level Four of the Executive Schedule pay scale, which today amounts to about $160,000. 

Unfortunately, as it turned out, this compensation cap has had little impact in limiting housing authority salaries.  

I’ll explain how this works.

HUD provides over 350 million dollars in operating fees annually to local housing authorities.

Right now, these fees are considered income earned by the housing authorities for managing programs instead of grants given by the government.  

When these fees reach the housing authorities, despite their source, they are no longer considered federal funds.  

Once these federal funds lose the federal designation, housing authorities can use the tax dollars as they see fit, and HUD is not required to conduct oversight of how the money is spent.

And, believe me, HUD hasn’t done much oversight.

This means that many employees of housing authorities can continue to earn annual salaries well in excess of $160,000 without technically violating the federal salary cap.

Sadly, these salaries exceed limits that were imposed by the federal government to ensure the money we appropriate goes to low-income families in greatest need of our assistance.

After I began publicly voicing my complaints about this practice, the Office of Management and Budget in December 2013 issued a government-wide guidance that should have put a stop to it.  

OMB’s guidance called for so-called “fees for services” to be designated as program income so that federal funding would retain its federal designation after it’s transferred into housing authority business accounts.

HUD initially agreed to fully implement the OMB guidance.

But later, the Department quietly requested a waiver that, if granted, would have allowed the housing authorities to side-step the new OMB rule and continue to avoid common sense oversight.  

I might never have learned of this HUD effort to get around the rules but for the good work of the HUD Inspector General.

After I learned from the Inspector General’s staff that HUD was requesting a waiver of the OMB guidance, I sent a letter to OMB expressing my concerns.

But I didn’t hear from OMB until I attempted to include amendment language addressing the fee designation in the Transportation HUD Appropriations bill before Thanksgiving last year.

That bill, as we all know, was pulled from the floor but neither the Inspector General nor I were ready to give up.

Just recently, I received good news which reinforces my belief that congressional oversight works. 

HUD has agreed to implement its Inspector General’s recommendation requiring that funding provided by the taxpayers to public housing authorities will keep its federal designation.

In other words, HUD will be responsible for making sure that federal funding is used as intended – to provide safe, affordable housing for those in need – and not to pay exorbitant executive salaries.

My concern now is the time frame for implementation and ensuring that HUD does not request another waiver.

HUD expects the final rule to be completed by December 2017, more than a year and a half from now.

That’s an awfully long time to finalize the regulations.

I hope HUD isn’t delaying the process in the hope that either the Inspector General or I will forget.  

I can assure you that won’t happen.

We need to ensure this reform is implemented by including language in this appropriations bill to not just to keep salaries in check, but also to ensure that HUD exercises oversight authority over how the funds are used, and more money is actually used for the poor.

I would hope HUD might use that oversight authority to combat waste like the following:

•The Housing Authority of the City of Los Angeles misused over $3.9 million in operating funds for salaries, travel, bonuses and legal settlements.

•The Stark Metropolitan Housing Authority in Canton, Ohio, misused $4 million in operating and capital funds to build a commercial development, and an additional $2 million was misused for salaries and benefits.

•The Hickory, North Carolina, Housing Authority paid over $500,000 in operating funds to a maintenance company owned by the brother of a board member, a clear conflict of interest.

It is also vital that Congress is aware of any effort by HUD to, once again, avoid implementing this rule.

For that reason, the report language I requested requires HUD to notify both the House and Senate Appropriations Committees quarterly during fiscal year 2017 if they request any waiver from implementing these provisions.

I encourage my colleagues to support this effort to ensure that HUD implements these much-needed changes and does its part to provide better oversight of our scarce federal funding. 

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