HUD has work to do, to stop duplication of benefits

It's a program with a long name: Community Development Block Grant Disaster Recovery and Mitigation. It entails a lot of money from Housing and Urban Developmen...

It’s a program with a long name: Community Development Block Grant Disaster Recovery and Mitigation. It entails a lot of money from Housing and Urban Development grants: $82 billion over 10 years. But the HUD office of inspector general has found some oversight challenges in preventing duplication of benefits. For Details, Federal Drive with Tom Temin spoke In Studio with Deputy IG Stephen Begg.

Interview Transcript: 

Tom Temin And just give us the outlines of how this program works, what the money goes to and what its purposes are.   

Stephen Begg The program is designed to provide grant funding to state and local governments to address unmet disaster recovery needs. So HUD’s program works in concert with other federal programs, and it’s designed to come after other programs have provided assistance to states and localities dealing with the aftermath of disasters. And it’s really designed to be a supplemental or gap filling program for long term recovery needs.   

Tom Temin So this is not just 8a housing or HUD overseen housing, but anything housing related in a given area that might need recovery funds.   

Stephen Begg The block grant structure is very broad, and so it can be used for a wide range of activities. It can go towards repairing or rehabilitating homes that were damaged. It can be used for new construction and it can also be used for homebuyer or renter assistance for those who are looking for relocation services in the aftermath of a disaster. It can be used for many things and is designed to be flexible so the communities can really tailor their programs to meet their local needs.   

Tom Temin So what you were looking at was whether HUD oversees the program with an eye toward preventing duplication of efforts, because when it comes to disaster recovery, there’s probably ten federal programs besides this one flowing to those states, plus the state’s own programs.   

Stephen Begg That’s right. We think on the federal side, it’s upwards of 30 programs that are working in concert and in the housing space. Some of the primary players that HUD deals with are the Federal Emergency Management Agency, FEMA and the Small Business Administration. And so, as I mentioned, HUD’s funding comes in after those have taken place. And so what we’re looking at here is how HUD works with its grantees to make sure that if they’re using HUD funds for activities, that’s not a duplication of something that FEMA or SBA has already funded.   

Tom Temin Right. So if ten bay windows were blown out, you don’t want to pay for 30 new bay windows. Correct. Putting it in simple terms. And so what you found is that HUD was okay in overseeing the initial recipient of the grant, which is the state or local government, but not the details of what comes next when they re allocate the money. Is that a fair way to put it?   

Stephen Begg You know, I would say that what we have identified as an opportunity for HUD to enhance its oversight is the timing of when they’re working with grantees on establishing sufficient procedures to prevent the duplication of benefits. And so in terms of the way the grant rolls out. HUD is asking what is required actually by federal law to certify that before it gives grant money to an entity that it has sufficient procedures in place to prevent that duplication. That happens very early on in the process. So we see it about 60 days after HUD announces a grant is going to a state or a locality. That state has to provide documentation about its duplication of benefits procedures, what they’ll do to prevent it. HUD then has to certify that’s sufficient in its eyes to authorize giving them grant money. What ends up happening, though, is that at that point in time, the grantees haven’t fully fleshed out the programs that they’ll operate, so they don’t know the details of their rehabilitation or their construction or their homebuyer assistance programs. So it’s hard to have specifics on how you’ll prevent that duplication if you don’t know exactly what you’re going to do. So HUD ends up certifying a high level approach, a policy level approach of saying we will we will prevent duplication generally. But then what we would like to see and what we recommended HUD do is make sure that before the grantees start providing assistance to applicants. So before a renter comes and says I need rental assistance, that that duplication of benefits processes in place, they’ve assessed it and they believe it’s adequate to prevent any duplication.   

Tom Temin It sounds like these things really need to be in place before a disaster occurs because then you get into that situation where the government wants to get money out fast and we’re learning, like in pandemic relief charitably, 20% of the money was waste, fraud and abuse, probably half of it. But that’s what you want to prevent.   

Stephen Begg Ideally. It would be great if duplication of benefits procedures were standardized across this disaster recovery. Programmatic landscape. HUD’s unique in that way in the sense that their program is not authorized by federal law permanently. And so there isn’t a regulatory framework for how disaster recovery funds flow through HUD’s programs. What that means is that Congress appropriates funds for this program on a disaster specific basis. And then HUD, in turn, creates program requirements through federal registered notices. And so the requirements can change for each one. And there’s a lack of standardization on some of the duplication of benefits side over the course of time. That being said, HUD has taken a lot of proactive steps to consolidate some of the guidance, to streamline it, provide additional training and resources to its grantees, and we think they’ve gone about as far as they can go without Congress stepping in and permanently authorizing a structure so that they can create standard regulations around this.   

Tom Temin We are speaking with Stephen Begg. He is deputy inspector general at Housing and Urban Development. That’s an interesting point. Without a standard long term permanent authorization then the agency, and any agency is constrained by how much regulation it can bring to a program. So it kind of does it ad hoc. Every time Congress authorized funds. It’s like a temporary authorization in effect.   

Stephen Begg That’s right. And what we’ve seen over the course of time is that HUD’s program requirements will change over the course of each of those temporary authorizations. That can create confusion for grantees. Some grantees in Texas, for example are administering grants that cover disasters in multiple years over the course of a large period of time. And if you have to navigate multiple sets of requirements for multiple disasters, that can become quite confusing even for experienced grantees.   

Tom Temin Well, if you have a disaster that takes place in, say, September, it could be till February of the next calendar year before roofs start being repaired and this kind of thing. So you almost need a multi-year approach. It sounds like.   

Stephen Begg Absolutely. You know what we have said over the course of time and the Government Accountability Office has said as well, and HUD recognizes that without a permanent structure and without a regulatory framework that grantees can rely on and plan to in advance, it really delays the funding reaching the local level so the communities and individuals in need wait longer because we’re restarting the program and standing it up each time. Grantees can’t plan their activities until they know what the requirements will be. And if HUD doesn’t have requirements in place until after the money comes, you know, it just really frustrates the timing.   

Tom Temin Well, I mean, they could look at it like someone who makes a smoothie every morning. There’s no recipe. But you have premeasured amounts of this, that and the other that goes into it. Couldn’t they just pull some regulations or some rules off the shelf when there is appropriations following a disaster and then those are ready to roll when Congress if it should authorize this program permanently?   

Stephen Begg That’s a great point. And HUD has really leaned into that type of thinking, Tom. They’ve developed what’s called a consolidated notice where they are trying to pool those standard or repeat type requirements and put them in one place that can be referenced for future disasters.   

Tom Temin It’s a little surprising that this hasn’t come higher in Congress’s kind of estimation, given all this concern about the seeming level of disasters that are happening more and more frequently, more and more people affected, more housing is flooded or burned, you know, now and outside of your scope to tell Congress what to do. But has this been raised to Congress, to your knowledge?   

Stephen Begg Absolutely. Our agency has testified at numerous times. I’ve testified personally a few times on it. GAO has testified on it many times. And we’ve actually reported in our semiannual report to Congress as a legislative recommendation that Congress take up permanent authorization, because in our view, the department has done almost everything in its control to advance this type of consistent framework. And so we’re at the point where the only real source of finalization here is congressional action. In fairness to our stakeholders on the Hill. Bills have been introduced many, many times. It just hasn’t passed.   

Tom Temin Yeah, I would think there would also be pressure, I’m presuming, from at the state level to their individual delegations to maybe take this up because housing becomes more acute as a attention grabber the closer you get to the local level.   

Stephen Begg That’s right. One thing about the BLOCK grant program, though, is that it offers a wide range of flexibilities to states which they enjoy and they want. And so in some ways, everyone is trying to strike a balance between creating that flexibility and creating the standardization so that the timing of the funding getting out gets better over time. The consistency and accountability is there to make sure it gets spent correctly. But then the states and localities have the flexibility to meet their local needs that they know best.   

Tom Temin In the meantime, you do have recommendations for HUD, though, since you can’t recommend to Congress in this context, what are your chief recommendations and does HUD sounds like they agree with them?   

Stephen Begg We worked closely with HUD to craft recommendations that are workable for them, and what we focused on here is making sure that HUD can provide more detailed guidance to grantees on how to develop duplication of benefits procedures. So as they’re working in the early days, HUD can give them more guidance and assistance on putting things in place from the start. And then our other two recommendations centered around making sure that HUD has a process for evaluating those duplication of benefits procedures before the grantees start providing money at the ground level. We really feel like it’s important that that’s in place before the money goes out, rather than having it come in place as the money’s going out.   

Tom Temin By the way, is there any evidence that duplicative benefits have gone out in any circumstances?   

Stephen Begg Absolutely. The GAO recently published a report where they did a study and put together all of the sources of funding that are available in a disaster recovery scenario. And they identified several instances and where there’s evidence of potential duplication of benefits across HUD, FEMA, SBA and then the National Flood Insurance Program. So there’s absolutely evidence out there that that it does happen. And the scope and magnitude of it is something that is hard to quantify.   

Tom Temin Sure. By the way, it is illegal for someone who is a recipient of these funds to take money from several programs for the same purpose.   

Stephen Begg Absolutely. And, you know, it can range from accidental or an oversight in the way that the program is being administered to an individual or an entity purposefully seeking duplicative benefits, which would be fraud.  

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