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Section 8 program needs improvement, audit finds

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An audit of the Section 8 Tenant-Based Assistance Program administered by the city finds key deficiencies in several areas but says it generally meets federal requirements.

The Section 8 program provides subsidies for eligible individuals and families and is viewed widely as a key tool in the city’s fight to keep people in housing. The fund received and distributed about $46 million in fiscal 2015, the 86-page report by city Auditor Edwin Young to the Honolulu City Council last week said.

The audit said the Department of Community Serv­ices, which oversees the program, needs to:

>> Improve its active file management system to ensure eligible program participants remain eligible and that ineligible participants are removed.

>> Fill key staff positions, including a fraud investigator, debt collector and a person whose entire focus is information technology.

>> Install a system for tracking complaints.

“The city’s Section 8 program is meeting its federal requirements, but improvements are warranted,” Young said in the cover letter accompanying the audit. “More can be done to achieve program goals by addressing staffing concerns particularly for fraud.”

About 11,211 individuals and 3,999 families are served by the Section 8 program, also known as the Housing Choice Voucher Program. The program involves funding from the U.S. Department of Housing and Urban Development designed to provide rental and housing assistance payments to those in low-income categories.

Typically, those eligible pay a minimum of 30 percent of their monthly income toward rent while Section 8 pays the remainder of the tab directly to the landlord. Vouchers are typically $1,000 a month.

Councilman Joey Manahan requested a performance audit of the city’s program in 2015 asking Young’s office to look into whether it was being administered effectively and appropriately.

Manahan, chairman of the Council Budget Committee, said in a text message Wednesday that Young’s recommendations should be looked at if the city wants to maximize its Section 8 program, and that he intends to put the audit on his committee’s August meeting agenda.

“Improvements in these areas need to happen immediately if we’re to get a clear picture of how effective our efforts have been in dealing with the housing crisis,” Manahan said.

Gary Nakata, director of the Community Services Department, said in an emailed statement that his agency is reviewing the auditor’s recommended measure and “looks forward to working with the Auditor’s Office on successful implementation.”

Nakata said he also appreciates that the report recognized “the ‘high per­form­ance ratings’ that the city’s Section 8 program has historically received, an accomplishment we are proud of in light of the complex regulatory nature of this federal program.”

The audit said the program has no formal fraud program and that delinquent accounts receivables totaled $1,547,627 in fiscal 2016, more than double the $771,181 reported in 2010. The program would benefit from reviewing how housing agencies manage fraud detection, investigation and reporting, the report said.

“In our opinion, DCS should take action to collect the delinquent accounts receivable or write them off as bad debt according to the city’s financial policy,” the audit said. “Absent these corrective actions, we estimate the … $1.55 million will continue to increase.”

As for the agency’s IT duties, the database administrator is essentially a housing specialist who doubles as IT support staff, the report said. A person devoted strictly to IT would make the program less vulnerable to potential fraud, waste and abuse, the report said.

The audit said the city could also improve its landlord outreach efforts. “Barriers for landlords to participate include the inconsistent reporting of landlord statistics, inadequate landlord briefings, and the lack of policies and procedures for the landlord outreach activities,” the report said.

Additionally, “active case management can be improved by maintaining complete documentation and adequate records,” the audit said. “The program’s handling of informal hearings and fraud recovery cases can be improved to ensure qualified participants do not remain in the program.”

The report pointed out that the city stopped accepting applications for its Section 8 tenant-based voucher program in 2005 due to excessive demand and a long waiting list. In May 2014, after the list shrank to 564 applicants, the city reopened the list for a week and received 14,000 applications.

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