Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2016

Floor Speech

BREAK IN TRANSCRIPT

Mr. GRASSLEY. Mr. President, I come to the floor 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.

The good governance provision, which I championed after years of oversight work, will ensure greater accountability in public housing authorities' use of the Federal money that they receive in this annual appropriations bill.

For the last 6 years, I have raised concern about HUD's failure to conduct proper oversight of how local housing authorities use those 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 Housing and Urban Development oversight and no transparency to the public. We all have reason to be concerned about this lack of transparency because some local housing authorities rely on the Federal Government for up to 90 percent of their funding.

That is why I thank Senator Collins, Senator Kirk, and other members of the Transportation-HUD Appropriations Subcommittee for recognizing that Congress must insist on HUD's paying closer attention to the use of taxpayer dollars by housing authorities.

The good governance provision that the Transportation-HUD Appropriations 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 is transferred to the housing authorities.

I want to stress that this designation is no small matter. In other words, Federal money is going to be considered Federal money when it gets to the local housing authority, and no games can be played with it as are being played with it now.

U.S. taxpayers spend about $4.5 billion 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 specifically for people of need be wasted or spent to feather the nests of local public housing authority bureaucrats.

I wish to take a few minutes to explain why the appropriations language that I championed and is in this legislation is so sorely needed. Some local housing authorities have devoted these limited funds, which are meant to help low-income people find affordable housing, to high salaries and even for perks for the people who run housing authorities around the country. I will just use three examples, but there are dozens of examples that can be given.

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

The former executive director of the Raleigh Housing Authority in North Carolina 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.

After I called attention to these wasteful practices a few years ago, HUD limited the executive salary paid by local housing authorities. That is good news, right? Well, it didn't work out that way, even after the salaries were capped at level IV of the Executive Schedule pay scale, which today amounts to about $160,000 a year. As I say, it didn't turn out to be good news. Unfortunately, as it did turn out, this compensation cap had little impact in limiting housing authority salaries.

I will explain how this works. HUD provides over $350 million 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 considering them as what they are--grants given by the Federal Government. That is where the Federal money gets mixed up with local money and the Federal money isn't followed by HUD. That is why they get away with the waste of taxpayers' money.

Despite their source, when these fees reach housing authorities, they are no longer considered Federal funds. I say that a second time for emphasis. Once these funds lose Federal designation, housing authorities then can use the tax dollars as they see fit--and they do. Then, when they use it as they see fit, HUD is not required to conduct oversight of how the money is spent. 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 the $160,000 without technically violating the Federal salary cap. You can see the games that are being played to let these local housing people get these massive high salaries and fringe benefits and waste taxpayers' money that should be spent helping low-income people get safe housing. Sadly, these salaries exceed limits that were imposed by the Federal Government to ensure the money we appropriate goes to low-income families in the 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--should have--put a stop to it, but it didn't. But let me tell you what the guidance called for. So-called fees for service would then be designated as program income so the Federal funding would retain its Federal designation after it is transferred into housing authority business accounts. Making sure it kept its Federal designation meant it had to be subject to HUD oversight. HUD initially agreed to fully implement the OMB guidance, but they did not.

Later, the Department quietly--very quietly--requested a waiver that, if that waiver was granted, would have allowed housing authorities to sidestep the new OMB rule and then continue to avoid commonsense oversight because, with that waiver, the Federal dollars would not have Federal designation. They would be considered local money and could be spent any way people wanted to spend it.

I might never have learned of this HUD effort to get around this OMB rule but for the very 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 as so often happens with bureaucrats in this town, 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 of last year, when the issue was on the floor of the Senate. As we all know, that bill was pulled from the floor. But neither the inspector general nor I were ready to give up, and that is why we are here today.

Just recently, I received good news that reinforces my belief that congressional oversight works. HUD has finally agreed to implement its inspector general's recommendations 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, and that is very clear. It is why we have public housing--to provide safe, affordable housing for those in need and, consequently, then, not to use that Federal money to pay exorbitant executive salaries.

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

HUD expects the final rule to be completed by December 2017, more than 1\1/2\ years from now. That is a very long time to finalize regulations. I hope HUD isn't delaying the process in the hope that either the inspector general or this Senator will give up. I can assure you that will not happen. We need to ensure that this reform is implemented by including language in this appropriations bill to not just keep salaries in check but also to ensure that HUD exercises oversight authority over how these funds are used and that more money is actually used for the poor.

I hope HUD uses that oversight authority to combat waste, such as in the following three examples: The Housing Authority of the City of Los Angeles misused over $3.9 million in operating funds for salary, travel, bonuses, and legal settlements. The Stark Metropolitan Housing Authority in Canton, OH, 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, NC, 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 be aware of any effort by HUD to once again avoid implementing this rule the way they tried to get around the OMB rule I just talked about. 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.

BREAK IN TRANSCRIPT

Source