Given the overlaps between beneficiaries of housing assistance and beneficiaries of welfare assistance, changes in the AFDC/TANF program are likely to have major consequences for housing programs. At the same time, housing policies have significant impacts on current and former TANF recipients. Approximately 2.1 million families with children receive housing assistance. According to HUD data, about 1 million of the HUD assisted families with children (nearly half) received some income from AFDC/TANF in 1996. The Delaware State Housing Authority (DSHA) estimates that approximately one half of the housing assistance clients eligible for the Moving to Work (MTW) Demonstration are welfare recipients.

How Welfare Policy Can Impact Housing Policy and Programs
If tenant incomes fall as families hit TANF (or state) time limits or are sanctioned for non-compliance with TANF work requirements, housing authorities will be faced with losses in revenue and federal dollars will be squeezed. If this occurs, each of the three major federal housing programs will be impacted in somewhat different ways.

Public Housing: PHAs depend on rental payments to meet part of the operating and maintenance costs of their public housing projects. If tenants hit welfare time limits or are sanctioned, and their incomes fall due to loss of cash assistance, their rent payments will decline as well. Some states are taking steps to prevent TANF recipients from becoming homeless following a TANF reduction due to sanctions. Minnesota restricts its most severe TANF sanction to a 30% reduction of the portion of the combined food stamp and TANF grant that remains after a vendor payment for housing costs is deducted. This provides an incentive for PHAs to help tenants become employed or increase their earnings prior to hitting their state’s TANF time limit.

However, other states have enacted housing programs which mirror welfare reform: in time limits, work requirements and sanctions. For example, Delaware, under the Moving to Work Demonstration (MTW), has placed a three year time limit on housing assistance, instituted a sanction process for both ABC and non-ABC recipients, and will match ABC work-related sanctions for welfare recipients (i.e., for every ABC work sanction, the recipient also receives a MTW "strike," their rent is not adjusted to reflect reduced income, and when an ABC recipient loses cash assistance, (s)he also loses housing assistance. MTW applies to both public housing and Section 8 progams.

Tenant Based Certificates and Vouchers: In the tenant based program, PHAs generally pay landlords the difference between a tenant’s required rental payments and the approved rental charge. If the tenant’s income falls due to loss of cash assistance, the subsidy paid by the PHA increases. A PHA may have to reduce the total number of certificates and vouchers it provides to remain within the budget it has been allocated by HUD. But if the PHA reduces the number of vouchers and certificates it provides, it will lose a portion of the administrative fees it receives, which are based on the number of families that the housing authority provides with the certificates and vouchers. Although this would be insignificant for larger PHAs that administer many vouchers and certificates, the income loss could pose problems for smaller PHAs. In addition, a decline in the number of vouchers and certificates in circulation would adversely affect poor families.

Project Based Section 8: In project-based Section 8 housing, owners do not themselves bear the impact of a reduction in tenant income. Rather, HUD is required to increase payments to protect owners when tenants’ rental payments fall. In this case, the federal government would pick up the extra costs resulting from the loss of cash assistance. If HUD payments to the project-based owners rise substantially due to declining tenant incomes as families hit time limits, HUD may have to reduce spending on other housing programs to remain within budgetary limits.

How Housing Policy Can Impact Welfare Policy
Families receiving TANF assistance or working at low-wage jobs are unlikely to be able to rent housing on their own without paying a significant proportion of their incomes. Most states’ TANF grants do not cover basic housing costs. In Delaware, the maximum TANF grant provides recipients with 54% of their rental costs for a two-bedroom unit. Data from the 1995 American Housing Survey indicate that about half of working poor families with children that receive no housing subsidy pay at least half of their income for rent. A mother with two children who works full-time year round at $6 per hour would have to pay over half of her income to rent a two-bedroom apartment at the national median "fair market rent" for metropolitan areas.

High housing costs leave low-income families attempting to move into the workforce with little money for the costs that often accompany employment, such as additional clothing and food costs, child care, and transportation to and from work. By reducing a family’s housing cost burden, housing assistance can free up additional dollars for work-related expenses and other basic needs. Without housing assistance, a significant proportion of TANF families and those moving from welfare to work may be unable to afford housing on their own. The provision of housing assistance to current and recent TANF families can aid those families efforts to move from welfare to work.

TANF families could use tenant-based vouchers and certificates to move to a location from which it is easier to obtain and retain employment. In addition, the provision of public housing or project-based Section 8 units near mass transit systems can help families make the transition to work, as can housing located near (or with) affordable child care. Housing programs could give a preference for "working" welfare recipients, families in job training programs, doing community service work, or otherwise cooperating with welfare-to-work requirements. Those who are receiving unemployment insurance or who have been employed within a defined prior period of time would also be included in a definition of "working."

Research suggests that TANF recipients who also receive housing assistance tend to have received cash assistance for longer periods of time than TANF recipients not receiving housing assistance. As states become subject to increasingly tight work participation requirements under the federal welfare law, they will need to reach out to long-term TANF recipients to put a sufficient number of families to work. If they do not meet these work participation requirements, states will lose a portion of their federal TANF dollars.

Collaboration between housing and welfare administrators is necessary for moving welfare recipients to work, lessening the impact of welfare policy changes on PHAs, and lessening the impact of housing cost burdens on current and recent TANF recipients. Examples include joint applications and/or recertification forms for welfare and housing assistance, admissions priorities that emphasize welfare-to-work efforts, and the Family Self Sufficiency (FSS) program. Despite these examples, welfare and housing administrators and advocates too often operate on separate tracks, without regard to the overlap in families they serve and the mutually beneficial opportunities for collaboration. Awareness of these interconnections is important for understanding how changes in one program can impact the other and how best to serve a common population.

One important example is that state welfare and local housing agencies frequently develop "earned income disregard" policies in isolation from each other. These policies determine how much of a family’s earnings - or of an increase in earnings - is counted when the family’s eligibility for benefits and its benefit level are determined. In Delaware, ABC recipients continue to receive cash assistance while earning up to 75% of the poverty level, through "fill-the-gap" budgeting. DSHA’s earned income disregard under MTW calculates rent at 35% of income, less deductions, capped at $120 for those with lower rents at the beginning of their contract, or at the calculated amount (with no increase) for those with rents higher than $120 at the beginning of their contract.

The value and likely effect on TANF recipients of an earnings disregard in a housing program is dependent upon the benefit levels and disregard policies used in the state’s TANF program. Scarce housing funds may not be spent in the most optimal manner if a public housing agency provided an earned income disregard, the purpose of which is already achieved by a TANF earned income disregard. In addition, welfare agency staff and advocates are generally unaware of the earned income disregards available in the housing programs and often fail to include this information in the advice they give families receiving housing assistance about the advantages of going to work.

Few welfare agencies have recognized the potential of housing programs to provide employment opportunities for current or former TANF recipients. Not many welfare agencies have recognized the value of tenant-based vouchers and certificates in helping families receiving cash assistance move closer to where jobs are located. Due to the nexus between rents and incomes, housing agencies are one of the most likely points of contact with families that have had their welfare grants reduced or terminated. Housing agencies can play an important role in identifying and helping to remedy wrongful or reversible grant reductions and terminations and in helping their tenants comply with TANF requirements.