The Section 8 Voucher

The federal government's Housing Choice Voucher Program is better known as "Section 8." It's named after the section of the U.S. Housing Act that created vouchers in 1974. It's now the government's largest housing initiative for low-income families with children, the elderly and the disabled. The program is funded entirely by the federal government. It's also extremely complicated. The federal government's Department of Housing and Urban Development administers the program, but it's run by 2400 public housing agencies around the country.

Families with vouchers are required to put 30 percent of their income toward rent and utilities. (If they don't have an income their portion of the rent may fall to zero, although many jurisdictions impose a minimum payment of $20 to $50 a month.) A voucher is essentially an official IOU, and it covers the rest up to a dollar limit based on local rental costs. Most vouchers are used to pay for apartments owned and operated by private landlords. But vouchers can be tapped to make mortgage payments and some are attached to a particular housing development. A majority of vouchers go to the lowest income families, those earning 30 percent or less of an area's median income.

When a family gets a voucher it has 60 days to use it-or lose it. A family can take its voucher anywhere in the country. Vouchers can only be used in apartments that have been inspected and approved by a public housing agency.

The three-part basic formula behind vouchers works like this: A "payment" standard is set every year. It ranges between 90 percent and 110 percent of what HUD says is a fair market rent of moderately priced apartments in an area. The family's 30 percent income contribution is calculated after taking into account various deductions, such as child care. The government makes up the remainder of the cost of rent and utilities, based on what it calculates to be a fair rent for the area. However, it seems that the fair market rent calculation can lag behind market rates, a trend that can make voucher payments less attractive to landlords.

Although the voucher program is largely considered a success, there has been far more demand for vouchers than the federal government is willing to fund. Indeed, a 2004 study showed that waiting lists were so long that 40 percent of public housing authorities had closed their books to new applicants. Congress not only imposed large funding cuts for existing public housing projects in the 1990s to accelerate demolition, it also cut down on the money going to vouchers. For instance, funding for HUD's voucher based HOPE VI program was slashed by 80 percent between 1999 and 2008 - from $625 million to $100 million. The end result: There weren't enough vouchers for public housing residents who were forced to move out of public housing complexes slated for demolition.

DATA: Center on Budget and Policy Priorities; Housing and Urban Development; American RadioWorks

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