National Housing Law Project Housing Law Bulletin

Housing Provisions in Senate Welfare Reform Proposal

Despite a groundswell of support on both sides of the aisle for a major overhaul of welfare, Senate Majority Leader Robert Dole (R-KS) withdrew his proposal¹ from Senate consideration after debate commenced in early August and consensus could be not immediately reached before the recess.

In the face of a more restrictive House-passed measure,² the Senate leadership had hoped to push through its bill³ before the August recess. The Dole measure is characterized by turning welfare programs over to the states in block grants, or lump-sum payments, requiring 50 percent of all adult recipients to go to work by the year 2000, and limiting recipients' benefits to a maximum of five years over a lifetime. Senator Phil Gramm (R-TX) is promoting his own proposal which would fold virtually every social welfare measure into a single block grant and cut off payments to unwed teenage mothers, to noncitizens and to welfare mothers who have additional children while receiving benefits.⁴ An alternative proposal, introduced by Sen. Minority Leader Tom Daschle (D-SD), would also impose work requirements and time limits on benefits although it would provide more funding to states to assist welfare recipients in moving into the workplace.⁵

The various welfare reform measures have obvious implications for the federal low-income housing programs. By far the most drastic is Senator Gramm's proposal that would block grant all federal means-tested housing assistance to the states and eliminate the Department of Housing and Urban Development's role in those programs. The public housing, Section 8, assisted housing, Indian housing and the full range of rural housing programs, among others, would be repealed. Under the Gramm proposal, the amount of the new "State Housing Assistance" grant would be

the amount that bears the same ratio to the total amount authorized for grants under this title for the fiscal year in which the grant is made as the total amount of Federal funds received by the State and residents of the State under the programs repealed or terminated under section 604 for fiscal year 1995 bears to the total amount of Federal funds received by all States and the residents of all States under the programs repealed or terminated…

Aggregate amounts of grants [for FYs 1996 through 2000] made to the States … shall equal the total Federal spending for FY 1996 for the programs repealed or terminated. . . .⁶

That is, each state would receive a proportionate amount of the funding that it would have received under the repealed or terminated programs. Though this would appear to ensure a constant level of block grant funding for housing through the year 2000, albeit based on FY 1996 funding levels, there is a provision that only 70 percent of the grant actually needs to be spent for the intended purpose. Up to 30 percent of any block grant could be transferred among several block-granted programs. Thus, housing assistance, already cut by 1995 rescissions, could suffer additional severe reductions. Welfare-work requirements, intended to result in 75 percent of all able-bodied welfare recipients working within eight years, would also apply to people receiving housing assistance.

Senator Connie Mack (R-FL), Chairman of the Senate Banking Committee's Subcommittee on Housing Opportunity and Community Development, used the Dole welfare proposal as the vehicle for carrying several housing amendments nominally designed to remove work disincentives for public housing residents. His measure would authorize public housing authorities to establish ceiling or maximum rents. These would permit working residents to avoid paying 30 percent of their income as rent, when that amount would be an unreasonably high rent in the applicable market.⁷ In addition, Sen. Mack's amendments to the Dole proposal make changes to the definitions of adjusted income and clarify exclusion of some earnings from the rent calculations of partipants in certain employment training and supportive service activities.⁸

The Dole proposal would retroactively repeal the current statute which imposes an annual limitation on rent increases of no more than 10 percent each year for three years following commencement of a public or subsidized housing resident's employment.⁹ The proposal would also retroactively repeal a 1992 amendment which mandated that HUD proceed with implementation of existing rent-increase limitations.¹⁰

These amendments, if ultimately adopted, will subvert recent federal litigation in which low-income residents of the Macon, Georgia, Housing Authority, successfully averted HUD's motion to dismiss their challenge to a rent increase as violative of statutory rent limitations.¹¹ HUD motion to dismiss claimed that implementation of the rent-increase limitation is subject to appropriations that Congress has never provided. The court noted that, nevertheless, Congress had already directed in 1992 that HUD proceed with implementation of the statutory provision limiting rent increases.

Finally, the Dole welfare reform measure would require that if a family receives a sanction in a cash assistance program — for example, for failure to enter a work program, as required — the family's housing assistance would not increase to make up the loss of cash assistance income. The result of this measure, if adopted, would be that housing authorities would not have to reduce rents of residents whose welfare was reduced as a penalty. If the family could not pay the rent with its new, lower income, it would be evicted.

The Senate is scheduled to resume consideration of welfare reform after the August recess.

1. S. 1120, 104th Cong., 1st Sess. (introduced Aug. 3, 1995).
2. H.R. 4, 104th Cong., 1st Sess. (Mar. 24, 1995).
3. S. 1120, supra note 1.
4. Senator Gramm's draft proposal, "The Work, Family and Community Welfare Replacement Act" is already supported by 22 Republicans, although it has yet to be introduced.
5. Senate Amendment 2282 to H.R. 4 (offered Aug. 8, 1995).
6. "The Work, Family and Community Welfare Replacement Act," supra note 4 (Aug. 1995 discussion draft), at 2 and 3.
7. Section 3(a)(2) of the United States Housing Act of 1937, as amended by S. 1120, supra note 1, § 1001.
8. Section 3(c)(3) of the United States Housing Act of 1937, as amended by § 1002(b) of S. 1120, supra note 1.
9. Section 957 of the Cranston-Gonzalez National Affordable Housing Act of 1990 (42 U.S.C. § 12714), as amended by § 1002(d) of S. 1120.
10. Id. at § 1002(d)(2), repealing § 923 of the Housing and Community Development Act of 1992 (42 U.S.C.A. § 12714 note (West 1994)).
11. Releford v. United States Department of Housing and Urban Development, 874 F. Supp. 1388 (M.D. Ga. 1995). See also McKinley v. Cisneros, No. 95-02495 (Tex. Dist. Ct., Travis Cnty., Feb. 28, 1995) (Clearinghouse No. 50,567).