COVID-19: Additional Risk Assessment Actions Could Improve HUD Oversight of CARES Act Funds (GAO-21-104542)
Summary
GAO-21-104542, a September 2021 report from the United States Government Accountability Office to congressional committees, titled COVID-19: Additional Risk Assessment Actions Could Improve HUD Oversight of CARES Act Funds. It examines the Department of Housing and Urban Development's oversight of about $12.4 billion in CARES Act funding. GAO reports that as of July 2021 HUD obligated 94 percent of its CARES Act funds and 34 percent had been expended. GAO states that HUD's risk assessment did not include some leading fraud risk management practices. GAO makes two recommendations; HUD agreed with the one on fraud risk and disagreed with the one on program risks.
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“COVID-19: Additional Risk Assessment Actions Could Improve HUD Oversight of CARES Act Funds (GAO-21-104542).”
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United States Government Accountability Office
Report to Congressional Committees
COVID-19
September 2021
Additional Risk
Assessment Actions
Could Improve HUD
Oversight of CARES
Act Funds
GAO-21-104542
September 2021
COVID-19
Additional Risk Assessment Actions Could Improve
HUD Oversight of CARES Act Funds
Highlights of GAO-21-104542, a report to
congressional committees
Why GAO Did This Study What GAO Found
The COVID-19 pandemic and resulting The Department of Housing and Urban Development’s (HUD) oversight of $12.4
economic downturn created housing billion in CARES Act funding included monitoring spending and addressing
instability for many families and reporting requirements, but further action is needed to more fully assess program
individuals. Congress appropriated and fraud risks. As of July 2021, HUD obligated 94 percent of its CARES Act
about $12.4 billion to HUD in CARES funds, and 34 percent had been expended (see figure). The CARES Act
Act funds to prevent, prepare for, and significantly increased funding for some HUD programs—for example the
respond to housing needs related to Emergency Solutions Grant (ESG) program for homelessness assistance
COVID-19. GAO has previously received more than 10 times its fiscal year 2020 funding. GAO previously
reported on HUD’s persistent
reported that programs should update risk assessments when funding or the
management challenges and noted the
operating environment changes. To respond to COVID-19, HUD expedited its
potential for these challenges to affect
the implementation and oversight of
risk assessment process, and concluded the CARES Act funds did not
HUD’s COVID-19 response. substantially affect programs’ risks or existing controls. While HUD’s assessment
identified risk factors and short-term steps to address them, it did not include
The CARES Act includes a provision some leading fraud risk management practices GAO previously identified. For
for GAO to monitor the federal example, HUD did not identify programs’ new fraud risks or evaluate fraud risk
government’s efforts to respond to the tolerance. Additional risk assessment actions could help HUD better identify and
COVID-19 pandemic. This report address potential program and fraud risks of its CARES Act programs.
examines HUD’s actions to oversee its
CARES Act funding and manage risks, HUD CARES Act Funds’ Obligations and Expenditures, as of July 31, 2021
and HUD’s implementation and
monitoring of the CARES Act funds of
selected community development,
homelessness, and rental assistance
programs.
GAO reviewed HUD documentation
and analyzed HUD spending data,
focusing on the four programs that
received the most CARES Act funding.
GAO also interviewed HUD officials
and associations representing HUD
funding recipients.
What GAO Recommends As of July 2021, HUD’s Community Development Block Grant (CDBG) and ESG
programs expended about 15 percent of their CARES Act funds, mostly for
GAO makes two recommendations to
emergency payments that can include rental assistance. HUD officials said
HUD to take additional steps to
assess, document, and mitigate
spending is slow because some grantees have limited capacity to administer the
program and fraud risks for its CARES larger grants, other federal funding is available, and CDBG grantees had until
Act-funded programs. HUD agreed mid-August 2021 to apply for CARES Act funds. HUD is providing grantees with
with our recommendation to take training and support to help them administer and use the CARES Act funds and
additional actions on fraud risk. HUD developing specific monitoring guidance.
disagreed with our recommendation to Almost all of the CARES Act’s $1.25 billion for the Housing Choice Voucher
take additional actions on program program has been expended. To help public housing agencies navigate COVID-
risks. GAO continues to believe the
19, HUD issued numerous program waivers, such as letting owners self-certify
recommendation is valid, as discussed
property conditions in lieu of inspections. To monitor compliance, HUD is
in this report.
developing a portal for public housing agencies to report their use of the funds,
View GAO-21-104542. For more information, which officials anticipate will be operational in December 2021. HUD also
contact Alicia Puente Cackley at (202) 512- awarded a contract to support the program’s CARES Act monitoring, including
8678 or cackleya@gao.gov. collecting information on waiver use.
United States Government Accountability Office
Contents
Letter 1
Background 4
HUD Tracks CARES Act Spending but Has Not Fully Assessed
Risks, Including Fraud Risks 8
HUD is Providing Technical Assistance to Help CDBG-CV and
ESG-CV Grantees Address Slow Spending and Developing
Specific Monitoring Guidance 23
HUD Used Waivers to Assist Rental Assistance Programs’
Pandemic Response and Is Taking Steps to Facilitate
Monitoring 38
Conclusions 48
Recommendations for Executive Action 49
Agency Comments and Our Evaluation 49
Appendix I Objectives, Scope, and Methodology 54
Appendix II CARES Act Funds Summary and Status for Department of
Housing and Urban Development Programs 58
Appendix III Comments from the Department of Housing and Urban Development 59
Appendix IV GAO Contact and Staff Acknowledgments 61
Tables
Table 1: Community Development Block Grant Coronavirus
Response (CDBG-CV) and Emergency Solutions Grants
Coronavirus Response (ESG-CV) Program Descriptions 24
Table 2: Community Development Block Grant Coronavirus
Response (CDBG-CV) and Emergency Solutions Grants
Coronavirus Response (ESG-CV) Grantees’ Spending
Status, as of July 2021 28
Table 3: Department of Housing and Urban Development’s
Housing Choice Voucher (HCV) CARES Act Funds
Program Descriptions 38
Page i GAO-21-104542 HUD Oversight of CARES Act Fund
Figures
Figure 1: HUD CARES Act Compliance Response Team
Organizational Structure 7
Figure 2: HUD CARES Act Funds Obligation and Expenditure
Rates, May 31, 2020–July 31, 2021 9
Figure 3: HUD’s Use of CARES Act Management and
Administration Funding for Administrative Support
Offices, as of July 2021 12
Figure 4: CARES Act Appropriations Compared to Fiscal Year
2020 Appropriations for Programs that Meet HUD’s Risk
Assessment Criteria 16
Figure 5: Obligations and Expenditures for Community
Development Block Grant Coronavirus Response
(CDBG-CV) and Emergency Solutions Grant Coronavirus
Response (ESG-CV), May 2020–July 2021 27
Figure 6: Community Development Block Grant Coronavirus
Response Expenditures by Category, as of August 31,
2021 29
Figure 7: Obligations and Expenditures for Housing Choice
Voucher Program, May 2020–July 2021 41
Figure 8: Status of Supplemental CARES Act Funding for all HUD
Programs, as of July 31, 2021 58
Page ii GAO-21-104542 HUD Oversight of CARES Act Fund
Abbreviations
CDBG-CV Community Development Block Grant Coronavirus
Response
COVID-19 Coronavirus Disease 2019
CPD Office of Community Planning and Development
ESG-CV Emergency Solutions Grants Coronavirus
Response
HCCRT HUD CARES Act Compliance Response Team
HCV Housing Choice Voucher
HUD Department of Housing and Urban Development
Multifamily Housing Office of Multifamily Housing
OIG Office of Inspector General
OMB Office of Management and Budget
PBRA Project-Based Rental Assistance
PHA Public housing agency
PIH Office of Public and Indian Housing
PRAC Pandemic Response Accountability Committee
Treasury Department of the Treasury
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Page iii GAO-21-104542 HUD Oversight of CARES Act Fund
Letter
441 G St. N.W.
Washington, DC 20548
September 30, 2021
Congressional Committees
The Coronavirus Disease 2019 (COVID-19) pandemic uprooted the U.S.
economy, leaving many citizens without stable employment. Millions of
families have had difficulty paying their rent or mortgage. 1 In March 2020,
Congress passed the CARES Act, which provided over $2 trillion in
emergency assistance and health care response for individuals, families,
and businesses affected by COVID-19. 2 To address housing needs, the
CARES Act appropriated approximately $12.4 billion to the Department of
Housing and Urban Development (HUD). 3
The CARES Act includes a provision for us to monitor and oversee the
federal government’s efforts to prepare for, respond to, and recover from
COVID-19. 4 In June and November 2020, we reported on concerns about
the potential for grantee oversight and management challenges in HUD’s
CARES Act-funded programs based on our prior work. 5 In November
2020, we noted additional concerns regarding low expenditures. For
example, as of September 30, 2020, about $2.1 billion (or 17 percent) of
HUD’s CARES Act funds had been expended. 6
1Consumer Financial Protection Bureau, Housing Insecurity and the COVID-19 Pandemic
(Washington, D.C.: Mar. 1, 2021).
2Pub. L. No. 116-136, 134 Stat. 281 (2020).
3Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. 601-13. The CARES Act also appropriated
$5 million to HUD’s Office of Inspector General for audits and investigations.
4Pub. L. No. 116-136, div. B, § 19010, 134 Stat. 579-81. We regularly issue government-
wide reports on the federal response to COVID-19. For the latest report, see GAO,
COVID-19: Continued Attention Needed to Enhance Federal Preparedness, Response,
Service Delivery, and Program Integrity, GAO-21-551 (Washington, D.C.: July 19, 2021).
Our next government-wide report will be issued in October 2021 and will be available on
GAO’s website at https://www.gao.gov/coronavirus.
5GAO, COVID-19: Urgent Actions Needed to Better Ensure and Effective Federal
Response, GAO-21-191 (Washington, D.C.: Nov. 30, 2020); and COVID-19: Opportunities
to Improve Federal Response and Recovery Efforts, GAO-20-625 (Washington, D.C.:
June 25, 2020).
6GAO-21-191.
Page 1 GAO-21-104542 HUD Oversight of CARES Act Funds
In this report, we examined HUD’s (1) actions to oversee its CARES Act
funds and manage program risks, including fraud risk, (2) implementation
and monitoring of the CARES Act funds of selected community
development and homelessness grant programs, and (3) implementation
and monitoring of the CARES Act funds of selected rental assistance
programs. Our selected grant programs are the Community Development
Block Grant Coronavirus Response (CDBG-CV) and Emergency
Solutions Grants Coronavirus Response (ESG-CV) and our selected
rental assistance programs are Housing Choice Vouchers (HCV) and
Project-Based Rental Assistance (PBRA). We selected these programs
because they received the largest of CARES Act appropriations among
HUD programs (all received $1 billion or more).
To examine HUD’s actions to oversee the CARES Act and manage
program risk (including fraud risk), we obtained and reviewed HUD
documentation on its efforts to manage the CARES Act funds and
manage program risks. We compared these efforts against HUD’s
policies on risk assessment and our Fraud Risk Framework. 7 We also
reviewed prior reports by GAO and HUD’s Office of Inspector General
(OIG) on HUD management challenges. In addition, we interviewed HUD
officials on their CARES Act compliance and risk assessment efforts.
Finally, we obtained and reviewed HUD financial data for its CARES Act
funds from May 2020 to July 2021. To assess the reliability of these data,
we interviewed HUD officials, checked the data for outliers and errors,
and relied on our prior data reliability assessments of these data from
November 2020. We determined that the data were sufficiently reliable for
reporting on the status of HUD’s CARES Act spending.
To examine HUD’s implementation and monitoring of selected grant and
rental assistance programs, we analyzed HUD documentation on these
programs, such as notices and guidance. We also interviewed HUD
program offices in headquarters and in selected field offices on their
monitoring and compliance efforts. We selected field offices that generally
received the most CARES Act funding for our selected programs and
7GAO, A Framework for Managing Fraud Risk in Federal Programs, GAO-15-593SP
(Washington, D.C.: July 28, 2015).
Page 2 GAO-21-104542 HUD Oversight of CARES Act Funds
represented different geographic regions. 8 In addition, we interviewed
representatives of six industry associations that represented recipients of
HUD’s CARES Act funds, such as grantees and public housing agencies
(PHAs). 9 We selected associations that had publicly issued guidance or
commentary on HUD’s COVID-19 assistance and been previously
interviewed for prior GAO work. Their views are not generalizable to other
associations or all funding recipients but offered important perspectives.
We also obtained and reviewed information on HUD’s selected CARES
Act performance metrics and reviewed available performance data. We
assessed the reliability of these data by interviewing HUD officials,
reviewing related documentation, and checking for outliers and errors. We
concluded that these data were sufficiently reliable for the purposes of our
review. Appendix I contains a more detailed description of our objectives,
scope, and methodology.
We conducted this performance audit from September 2020 to
September 2021 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives. We
believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
8For CDBG-CV and ESG-CV, we interviewed Community Planning and Development staff
in the Chicago, New York, and Philadelphia Regional Offices and the Los Angeles,
Jacksonville, and Miami Field Offices. For HCV, we interviewed Office of Public and Indian
Housing staff in the Boston, Chicago, and New York Regional Offices and the Los
Angeles and Miami Field Offices. For PBRA, we interviewed Office of Multifamily Housing
staff in the Atlanta, Chicago, New York, and San Francisco Regional Centers. We use the
term “field office staff” to refer to staff in HUD’s regional and field offices.
9A public housing agency is typically a local agency created under state law that manages
housing for low-income residents at rents they can afford. PHAs administer the Housing
Choice Voucher program on behalf of HUD. We interviewed representatives of three
associations representing CDBG-CV and ESG-CV grantees (the National Community
Development Association, Council of State Community Development Agencies, and
National Association for County Community and Economic Development); two
associations representing PHAs (the Council of Large Public Housing Agencies and
Public Housing Authorities’ Directors Association); and the National Council of State
Housing Agencies, which represents the majority of the PBRA program’s contract
administrators.
Page 3 GAO-21-104542 HUD Oversight of CARES Act Funds
Background
HUD’s CARES Act The CARES Act provided 10 existing HUD programs with about $12.4
Funding and Other billion to prevent, prepare for, and respond to housing needs related to
COVID-19. The four HUD programs that received the most CARES Act
Provisions
funds are the following:
• Community Development Block Grant programs (CDBG) provide
grants to states, insular areas, and local governments (known as
grantees). 10 Grantees can use these funds to support a wide variety
of activities, including housing, economic development, and
neighborhood revitalization. Because the CDBG program already has
a mechanism to provide federal funds to states and localities, it is
widely viewed as a flexible solution to disburse federal funds to
address unmet needs in disasters. It is administered by HUD’s Office
of Community Planning and Development (CPD). 11 The CARES Act
appropriated $5 billion to this program. The CARES Act-funded grants
(which HUD refers to as CDBG Coronavirus Response, or CDBG-CV)
can be used for any CDBG eligible activity as long as it is to prevent,
prepare for, or respond to coronavirus.
• Emergency Solutions Grants Program (ESG) provides grants to
states and local governments to support homelessness assistance
and prevention activities. Grantees can use these funds for
homelessness prevention, street outreach, rapid rehousing, and
stabilization services. It is also administered by CPD. The CARES Act
appropriated $4 billion to this program. The CARES Act-funded grants
(which HUD refers to as ESG Coronavirus Response, or ESG-CV)
can be used for any eligible ESG activity to prevent, prepare for, or
respond to coronavirus, along with new eligible uses (discussed in
more detail later in this report).
• Housing Choice Voucher (HCV) provides vouchers for very low-
income families to use in the private housing market. The voucher, or
10Specifically, under the traditional program, the annual CDBG appropriation is allocated
to entitlement communities, states, and insular areas. Entitlement communities are
principal cities of metropolitan statistical areas, other metropolitan cities with populations
of at least 50,000, and qualified urban counties with a population of 200,000 or more
(excluding the populations of entitlement cities). States distribute CDBG funds to local
governments not qualified as entitlement communities.
11CPD manages a number of grant programs that promote community-based efforts to
develop housing and economic opportunities. Other programs in its purview include the
Housing Opportunities for Persons with AIDS and the HOME Investment Partnerships
programs.
Page 4 GAO-21-104542 HUD Oversight of CARES Act Funds
housing assistance payment, generally pays the difference between
the family’s contribution toward rent and the actual rent for the unit.
This program is administered by HUD’s Office of Public and Indian
Housing (PIH) and local PHAs.
The CARES Act appropriated $850 million for PHAs’ administrative
expenses and $400 million for housing assistance payments. The
administrative expense funds could be used for PHAs’ administrative
costs (i.e., not vouchers), including new COVID-19-related activities or
costs (such as personal protective equipment). The housing
assistance payment funds were designated to help PHAs cover costs
related to housing assistance contracts. The housing assistance
payment assistance was only available to selected PHAs that either
(1) experienced significant increases in voucher costs or (2) had
insufficient funding for their vouchers and would otherwise need to
stop families’ rental assistance.
• Project-Based Rental Assistance (PBRA) provides subsidies to
make privately owned multifamily properties affordable to eligible low-
income households. Administered primarily by HUD’s Federal
Housing Administration’s Office of Multifamily Housing Programs
(Multifamily Housing), assistance under PBRA is tied to specific units
rented to eligible low-income households. HUD designated $800
million of CARES Act funds to support housing assistance payments
and $190 million as supplemental payments to reimburse property
owners for COVID-19-related expenses. 12 Ten million dollars in PBRA
funding was allocated for the Moderate Rehabilitation program
administered by PIH. 13
HUD also received $50 million for the management and administration of
CARES Act funding, consisting of $35 million for administrative support
offices and $15 million for program offices ($10 million for CPD and $5
million for PIH). See appendix II for a complete list of HUD programs that
received CARES Act funding and program descriptions.
The CARES Act also provided HUD with broad authority to waive many of
its programs’ statutes and regulations or issue alternative requirements to
12The Office of Multifamily Housing designated the CARES Act housing assistance
payments to help compensate owners for decreased tenant rent payments resulting from
reduced tenant income.
13The Moderate Rehabilitation program was not within the scope of this report as we
focused on programs with CARES Act appropriations of at least $1 billion.
Page 5 GAO-21-104542 HUD Oversight of CARES Act Funds
ensure the safe and effective administration of these funds. 14 For
example, to reduce the risk of COVID-19 exposure, HUD issued a waiver
allowing PHAs to delay an in-person inspection of new units in the HCV
program. HUD issued an alternative requirement that an owner could self-
certify that the property has no life-threatening conditions. HUD also
suspended a requirement for an oral briefing for incoming tenants,
instead allowing PHAs to provide information over video calls or in written
materials.
The CARES Act also required quarterly reporting to the Pandemic
Response Accountability Committee (PRAC). 15 For recipients (such as
grantees or PHAs) who received at least $150,000 in CARES Act funds,
the act required them to report to the Committee:
• the total amount the recipient received from the agency;
• obligations and expenditures by project or activity;
• a detailed list of all projects or activities, including name, description,
and estimated number of jobs created or retained; and
• detailed information on subcontracts or subgrants.
HUD CARES Act In April 2020, HUD established the HUD CARES Act Compliance
Compliance Response Response Team (HCCRT) to provide a unified, agency-wide approach to
HUD’s compliance with the CARES Act. HCCRT is largely composed of
Team
key HUD officials, program managers, and contractor staff (see fig. 1).
HCCRT includes a steering committee of six HUD officials that provides
governance and oversight of program activities, a leadership committee
of departmental staff, and additional support from contractor staff.
14However, the CARES Act specified HUD could not waive requirements related to fair
housing, nondiscrimination, labor standards, and the environment. See, e.g., Pub. L. 116-
136. 134 Stat. at 602 (“Tenant-based Rental Assistance”); at 607 (“Community
Development Fund”).
15Pub. L. No. 116-136, § 15011, 134 Stat. 533 (2020).The CARES Act created the PRAC
as a committee of the Council of the Inspectors General on Integrity and Efficiency to
promote transparency and support oversight of the federal government’s pandemic
response. It is composed of 22 Inspectors General.
Page 6 GAO-21-104542 HUD Oversight of CARES Act Funds
Figure 1: HUD CARES Act Compliance Response Team Organizational Structure
According to its 2020 charter, HCCRT is responsible for
• establishing ongoing monitoring and oversight, including tracking of
CARES Act fund spending levels and deadlines;
• developing and reviewing internal controls and processes;
• ensuring HUD has appropriate systems and human resources in
place to support impactful results and accurate reporting; and
• providing stewardship of HUD resources.
HCCRT’s goals are to (1) safeguard housing by tracking funds to
encourage timely distribution to intended recipients; (2) strengthen
internal controls to maximize effectiveness and programs and minimize
Page 7 GAO-21-104542 HUD Oversight of CARES Act Funds
fraud, waste, and abuse; and (3) enhance capabilities to enable
successful program results.
HUD Tracks CARES
Act Spending but Has
Not Fully Assessed
Risks, Including
Fraud Risks
HCCRT Has Tracked As part of its objective to promote timely distribution of CARES Act
CARES Act Spending and funding, HCCRT tracks spending. According to officials, HCCRT does this
by reviewing data and spending reports, and using data analytics and
Taken Steps to Meet
information from existing HUD systems to monitor CARES Act
Reporting Requirements disbursements and obligation rates. HCCRT officials told us they worked
with program offices to address disbursement issues. For example,
HCCRT officials told us they held regular check-in meetings with CPD
and discussed spending rates when disbursement rates slowed or were
below expectations. HCCRT reviews HUD’s weekly reports on CARES
Act funds spending and, as required by the act, reports spending data
monthly to Congress, the Department of the Treasury (Treasury), and the
Office of Management and Budget (OMB). 16
As of July 31, 2021, HUD had obligated 94 percent of its CARES Act
program funds and 34 percent had been expended (or $4.2 billion of the
$12.4 billion) (see fig. 2). 17 For more information on obligation and
expenditure rates for HUD’s CARES Act funds by programs, see
appendix II.
16The CARES Act required agencies to report monthly to OMB, Treasury, PRAC, and
appropriate congressional committees on any obligation or expenditure of large covered
funds (amounts greater than $150,000), including loans and awards, until September 30,
2021.
17HUD provided us with CARES Act spending and performance measurement data from
different offices and reporting systems. As such, some data may be reported from different
time periods.
Page 8 GAO-21-104542 HUD Oversight of CARES Act Funds
Figure 2: HUD CARES Act Funds Obligation and Expenditure Rates, May 31, 2020–
July 31, 2021
HCCRT has worked with program offices to develop reporting playbooks
that identify how to use existing reporting and data systems to meet
CARES Act reporting requirements. The playbooks also identify where
these requirements cannot be met with existing program data, and interim
and longer-term solutions for addressing these gaps. HUD also
developed an internal coding system to track and report on CARES Act
funds through its existing systems. For example, CPD amended its
reporting system to create reports on CDBG-CV grantees’ financials and
activities, which CPD staff said helped them monitor compliance. In April
2021, the HUD OIG reported that HUD incorporated federal disaster
emergency fund codes into its financial systems for each CARES Act
Page 9 GAO-21-104542 HUD Oversight of CARES Act Funds
program, enabling HUD to track the status of each program’s CARES Act
funds. 18
In the same April 2021 report, the HUD OIG found HUD’s reporting
processes generally supported PRAC reporting requirements. 19 However,
the HUD OIG found HUD’s processes did not support PRAC
requirements for reporting on subrecipient data or the estimated number
of jobs created or retained by a project. The HUD OIG noted HUD’s
subrecipient reporting relied on preliminary data from grantees because
the PRAC quarterly reporting schedule did not align with HUD’s existing
financial reporting schedule. 20 HUD reports corrections to its preliminary
data in the following report after the financial data have been reconciled. 21
OMB stated in a memo that agencies and recipients are not expected to
perform additional reporting to meet the CARES Act requirements. 22 The
memo also stated that OMB anticipated centrally available economic data
would be sufficient to meet the jobs created reporting requirement without
the need for recipients to report the estimated number of jobs created or
retained by a project or activity. In April 2021, HCCRT officials stated they
met the reporting requirement on job creation through OMB’s centrally
available economic reports.
As part of its efforts to monitor the effects of HUD’s CARES Act program
funds, HCCRT leveraged programs’ existing performance metrics and did
18Department of Housing and Urban Development, Office of Inspector General, HUD’s
Use of, Accounting for, and Reporting on CARES Act Funding, 2021-OE-0006
(Washington, D.C.: Apr. 26, 2021).
19HUD OIG, HUD’s Use of, Accounting for, and Reporting on CARES Act Funding.
20HUD relies on grantees to report subrecipient information. According to HCCRT officials,
HUD developed training for program offices and grantees to help improve the quality of
subrecipient reporting, and program offices have worked with grantees to ensure they
understand subrecipient reporting requirements. As of April 2021, HUD was developing a
PIH reporting portal to help address reporting limitations for PIH programs and comply
with CARES Act reporting requirements.
21HUD OIG, HUD’s Use of, Accounting for, and Reporting on CARES Act Funding.
22Office of Management and Budget, Implementation Guidance for Supplemental Funding
Provided in Response to the Coronavirus Disease 2019 (COVID-19), OMB Memorandum
M-20-21 (Washington, D.C.: Apr. 10, 2020).
Page 10 GAO-21-104542 HUD Oversight of CARES Act Funds
not develop any new performance metrics. 23 The CARES Act did not
require HUD to establish specific performance metrics to measure the
effectiveness of its CARES Act programs. In its quarterly PRAC report
covering January–March 2021, HUD included performance metrics for the
first time and plans to do so going forward. Specifically, it included metrics
for CDBG-CV, ESG-CV, Multifamily Housing, Fair Housing Assistance
Programs, and technical assistance programs.
HUD Used CARES Act HUD used the $35 million its administrative support offices were
Funds to Address Staffing appropriated in the CARES Act for management and administration on
contractor support, information technology (IT), and staffing to support its
and Technology Needs CARES Act oversight (see fig. 3). 24
• Contractor support. HUD spent about $16 million on HCCRT
contractor support. According to HCCRT officials, the contractors
manage communication with programs and offices, provide and share
CARES Act guidance within HUD, and complete HCCRT’s
compliance activities. Officials said they planned to maintain HCCRT
contractor support as long as funding was available, as HCCRT would
remain in place to monitor and report on its CARES Act programs.
• IT needs. HUD used around $12 million to support telework during
COVID-19 and CARES Act reporting, including nearly $2 million for IT
infrastructure related to CPD.
• Staffing and supplies. HUD used around $5 million to support
CARES Act-related staffing needs in the Office of Housing, Office of
General Counsel, and for department-wide technical assistance. HUD
also spent around $2 million for COVID-19-related supplies and
equipment.
23Performance metrics are a component of performance measurement, the ongoing
monitoring and reporting of program accomplishments conducted by program or agency
management. Performance metrics may address the type or level of program activities
conducted (process), the direct products and services delivered by a program (outputs), or
the results of those products and services (outcomes).
24The CARES Act appropriated $50 million to HUD for management and administration,
consisting of $35 million for administrative support offices and $15 million for program
offices ($10 million for the Office of Community Planning and Development and $5 million
for the Office of Public and Indian Housing).
Page 11 GAO-21-104542 HUD Oversight of CARES Act Funds
Figure 3: HUD’s Use of CARES Act Management and Administration Funding for
Administrative Support Offices, as of July 2021
Note: The CARES Act appropriated $50 million to HUD for management and administration
purposes, consisting of $35 million to HUD administrative support offices and $15 million to program
offices. The funds are available for obligation until September 30, 2021.
a
Includes $1.8 million for Office of Community Planning and Development information technology to
support CARES Act reporting needs.
HUD reserved the remaining $100,000 of $35 million for unplanned needs.
b
In April 2021, HCCRT officials said that the CARES Act funding was
generally sufficient to meet the agency’s short-term staffing and IT needs
for implementing and overseeing the CARES Act. Data from June 2021
showed the agency had hired 51 temporary employees using its CARES
Act funds to support related activities. However, selected program office
officials told us that implementing and overseeing the CARES Act had
increased their workload and stretched their capacity, even with the
additional temporary staff (discussed later in this report). HCCRT officials
told us they anticipated longer-term staffing and IT challenges, particularly
for CPD’s grant programs, as tracking and reporting would continue after
the CARES Act management and administration funds expire on
September 30, 2021.
Page 12 GAO-21-104542 HUD Oversight of CARES Act Funds
We and the HUD OIG have reported on longstanding IT issues and
human resources constraints at HUD. The HUD OIG identified
management and oversight of IT and human resources management
among HUD’s top management challenges for 2021. 25 One of our priority
open recommendations for HUD addresses its IT management. 26 Further,
the HUD OIG reported in 2020 that HUD’s outdated IT systems cannot be
adapted to handle HUD’s current complex mission and demands for
accountability. 27
The HUD OIG reported that from 2011 through 2021, HUD’s staffing
levels declined while its program responsibilities increased, and staffing
issues affected many of HUD’s mission challenges. 28 In addition, the HUD
OIG reported that CARES Act funding and related hiring needs burdened
HUD’s already overtaxed human resources staff to oversee the use of
funds and hire new staff quickly. 29 The President’s proposed fiscal year
2022 HUD budget includes a 10 percent increase in full-time staff at HUD,
an increase of 788 full-time employees. 30
In 2016, we recommended HUD regularly review, revise, and update its
human capital, workforce, and succession plans. 31 These plans identify
25Department of Housing and Urban Development, Office of Inspector General, Top
Management Challenges Facing the U.S. Department of Housing and Urban Development
in 2021 (Washington, D.C.: Nov. 25, 2020).
26GAO, Priority Open Recommendations: Department of Housing and Urban
Development, GAO-21-558PR (Washington, D.C.: June 21, 2021).This recommendation
from December 2014 is aimed at establishing a process to enable HUD to identify IT
governance actions and projects that are achieving cost savings and efficiencies. HUD
agreed with this recommendations and, as of June 2021, was developing an
implementation plan for a new approach intended to improve and expand the tracking of
IT investments. In addition, HUD developed a new IT cost-savings process that it plans to
initiate in fiscal year 2021. To fully implement our recommendation, HUD needs to finalize
its implementation plan and process for identifying and tracking data on cost savings and
efficiencies from IT governance and projects.
27HUD OIG, Top Management Challenges.
28HUD OIG, Top Management Challenges
29HUD OIG, Top Management Challenges.
30Department of Housing and Urban Development, 2022 Congressional Justifications
(Washington, D.C.: May 28, 2021).
31GAO, Department of Housing and Urban Development: Actions Needed to Incorporate
Key Practices into Management Functions and Program Oversight, GAO-16-497
(Washington, D.C.: July 20, 2016).
Page 13 GAO-21-104542 HUD Oversight of CARES Act Funds
HUD’s strategic goals and objectives for addressing human capital
challenges, assess workforce needs and determine staff resources
required to fulfill HUD’s mission, and describe approaches and strategies
for identifying and preparing employees for future work performance.
HUD agreed with our recommendation, but as of September 2021, HUD
had not fully implemented it. Assessing and updating its human capital,
workforce, and succession plans on a regular basis would help ensure
that HUD has a strategic vision for managing its workforce and
addressing human capital challenges.
HUD Has Not Fully We have reported that COVID-19 relief programs are vulnerable to
Assessed and significant risk of fraudulent activities because they required the
government to provide funds and other assistance quickly. 32 In this
Documented Program
review, we found that HUD’s actions to assess the CARES Act’s impact
Risks, Including Fraud on program risks, including fraud risks, did not align with its own risk
Risks, for Certain CARES assessment policy or best practices for fraud risk management.
Act Programs
HUD’s Rapid Risk Assessment HCCRT led HUD’s risk assessment of its CARES Act program funding.
Documentation Did Not Align One of HCCRT’s goals is to strengthen internal controls to maximize the
with Key Aspects of HUD’s CARES Act programs’ effectiveness and minimize fraud, waste, and
Front-End Risk Assessment abuse. 33 Under regular circumstances, HUD’s risk assessment policy
Policy requires the Office of the Chief Financial Officer and program offices to
work together to develop a front-end risk assessment for new or
significantly revised programs, including programs that receive a
significant funding increase. 34 A front-end risk assessment is a formal,
documented review to determine the susceptibility of a new or
substantially revised program or administration function to waste, fraud,
abuse, and mismanagement. HUD’s policy states that the purpose of a
front-end risk assessment is to detect conditions that may adversely
affect the achievement of strategic, operational, compliance, and
reporting objectives.
32GAO-20-625.
33Department of Housing and Urban Development, Fiscal Year 2020 Annual Performance
Report (Washington, D.C.: Jan. 15, 2021).
34Department of Housing and Urban Development, Office of the Chief Financial Officer,
Front-End Risk Assessment (FERA) Policy (Washington, D.C.: July 1, 2019).
Page 14 GAO-21-104542 HUD Oversight of CARES Act Funds
For a substantially revised program, HUD’s policy states that the
assessment should include identification and ranking of risk factors,
strategies for mitigating the highest scoring risks, and milestones for risk
mitigation. HUD defines a substantially revised program as one that
receives a funding increase or decrease of at least $82 million, and the
percentage change in funding is at least 5 percent more than its normal
budget. 35 Based on our analysis, six of the 10 HUD programs that
received CARES Act appropriations in March 2020 now meet HUD’s
criteria for completing a front-end risk assessment (see fig. 4). 36 HUD
officials said that they had not previously completed front-end risk
assessments for any of these programs prior to the CARES Act because
the programs initially pre-dated the policy and had not yet satisfied HUD’s
criteria for completing one. 37 However, they emphasized that other
program risk information was available for the existing programs to draw
on, including annual OMB A-123 internal controls reviews and improper
payments testing (we discuss these in more detail later in this report).
35HUD’s front-end risk assessment policy also requires a front-end risk assessment for
any new program with annual funding greater than or equal to HUD’s materiality threshold,
which was $82 million as of fiscal year 2019, and for any new or existing program that
HUD’s Chief Risk Officer deems as either posing significant risk for fraud, waste, abuse,
or mismanagement, or exhibiting an enterprise-wide or cross-program impact.
36In addition, in March 2021, the American Rescue Plan Act appropriated an additional $5
billion to HCV, and $5 billion to HUD’s HOME Investment Partnerships program to help
create housing and services for people experiencing or at risk of homelessness, an
increase of 370 percent over its original fiscal year 2021 appropriation of $1.35 billion.
37Our selected programs were initially enacted between 1974 and 1986. HUD revised its
front-end risk assessment policy in 2019.
Page 15 GAO-21-104542 HUD Oversight of CARES Act Funds
Figure 4: CARES Act Appropriations Compared to Fiscal Year 2020 Appropriations for Programs that Meet HUD’s Risk
Assessment Criteria
a
Includes the Native American Housing Block Grants program and Indian Community Development
Block Grant program.
HCCRT adapted its risk assessment approach for the CARES Act
programs to meet the urgency of COVID-19-related housing needs and
quickly implement the programs—completing an expedited assessment
HUD officials refer to as a “rapid risk assessment” in May 2020, 2 months
after the CARES Act’s enactment. In contrast, under HUD’s front-end risk
assessment policy, a formal front-end risk assessment for one program
would typically take longer to complete. According to HCCRT officials,
HUD has a process for completing an accelerated front-end risk
assessment in as little as two weeks, but HCCRT opted not to use this
accelerated approach for its risk assessment of the CARES Act funding
because HCCRT’s contractor staff had expertise in assessing internal
controls. In addition, HUD’s front-end risk assessment policy does not
mention this rapid risk assessment process.
To assess CARES Act program risks, including fraud risks, under
compressed timeframes, HCCRT held facilitated discussions with
program offices and field offices on the impact of and challenges in
implementing the CARES Act that covered topics such as CARES Act
reporting requirements, HUD’s reporting capabilities, and program risks,
including fraud risks, related to implementing the CARES Act. It also
Page 16 GAO-21-104542 HUD Oversight of CARES Act Funds
worked with program offices to review the CARES Act’s potential impacts
on programs’ existing internal controls. According to HCCRT officials,
HCCRT largely focused its risk assessment on internal controls because
it concluded that the CARES Act affected risks associated with
compliance, reporting, and internal controls more significantly than other
program-level or agency-wide risks.
From this rapid risk assessment, HCCRT produced an internal memo in
October 2020 describing its risk management and internal controls
assessment strategy, and a list of the top risks affecting HUD’s CARES
Act programs and short-term actions for addressing them. Specifically,
HCCRT identified 10 risk factors related to monitoring, reporting, staffing,
and technology. 38 HCCRT’s identified risk factors include monitoring
public housing agencies’ use of PIH waivers and increased opportunity
for fraud, waste, and abuse resulting from funding recipients’ use of
administrative relief more generally. The short-term actions did not
include specific timeframes for completion. According to HCCRT officials,
HCCRT discussed short- and long-term action items and timeframes
among its members. However, the documentation HUD provided did not
include long-term actions or specific timeframes for completing them.
Further, HCCRT updated its top risks list in March 2021 but did not
include updated short-term or long-term actions to address the identified
risks. HCCRT’s updated risk list identified eight risks, including increased
opportunities for fraud, waste, and abuse. It also included risks related to
reporting technology, timely distribution of grant funds, and program
offices’ management of waivers. 39 The updated version removed
38The 10 risk factors HUD identified as part of its risk assessment are: (1) monitoring
distribution and use of grant funds to grantees and funding recipients; (2) reporting
challenges for HUD and sub-recipients due to HUD’s legacy reporting mechanisms; (3)
suspended onsite monitoring; (4) increasing opportunities for fraud, waste, and abuse due
to administrative relief; (5) monitoring use of waivers by public housing agencies; (6)
liquidity challenges for servicers and issuers and monitoring the impact of Federal
Housing Administration loans; (7) meeting PRAC and OMB reporting requirements; (8)
funding limitations for staffing, as program office requests exceeded available funding; (9)
inadequate staffing levels to support increased workload; and (10) effectiveness of remote
working arrangements.
39The eight specific risk factors HUD identified in its updated risk list in March 2021 are:
(1) enhancing technological capabilities of CARES Act reporting; (2) impact of executive
actions and economic stimulus legislation; (3) impact of eviction moratorium on tenants
and landlords; (4) timely and compliant distribution of grant funds to grantees and
recipients; (5) suspended onsite monitoring; (6) increasing opportunities for fraud, waste,
and abuse; (7) management of waivers by program offices; and (8) liquidity challenges for
servicers and issuers and monitoring the impact of Federal Housing Administration loans.
Page 17 GAO-21-104542 HUD Oversight of CARES Act Funds
previously identified risks related to human resources and telework.
HCCRT officials stated there were no major unaddressed risks in the
CARES Act programs.
HCCRT’s rapid risk assessment methodology and documentation also did
not include key aspects of a front-end risk assessment. Specifically, the
risk assessment documentation HCCRT provided did not thoroughly
identify program-level risks, rank risks, or identify mitigation milestones—
all of which would have been included in a front-end risk assessment per
HUD policy. In addition, while HCCRT officials stated these items were
discussed in its steering committee meetings, the documentation HCCRT
provided did not mention these discussions or their outputs.
According to HCCRT’s rapid risk assessment and HUD officials, HUD and
program offices generally planned to rely on existing controls and
processes to manage program risks, including fraud risk, for the CARES
Act programs, primarily improper payments testing and A-123 internal
control reviews. 40 For example, HUD officials noted that with respect to
improper payments, HCCRT designed and distributed risk assessment
questionnaires to program offices to identify the CARES Act funds’
potential risk of fraud, and used the results to inform its risk assessment
approach. HCCRT officials noted that they believed existing controls were
sufficient for managing CARES Act program risks, including fraud risks,
associated with funding recipients’ use of waivers and additional expense
types.
For improper payments testing, an agency must identify programs and
activities that may be susceptible to significant improper payments,
estimate the annual amount of improper payments for each of these
40OMB Circular A-123 requires that an agency evaluate its internal controls, summarize
deficiencies, determine the effectiveness of internal controls, evaluate their components,
and conclude an overall assessment of an internal control system. Office of Management
and Budget, Management’s Responsibility for Enterprise Risk Management and Internal
Control, OMB Circular A-123 (Washington, D.C.: July 15, 2016).
Page 18 GAO-21-104542 HUD Oversight of CARES Act Funds
programs or activities, and report the estimates. 41 HCCRT officials told us
improper payments testing and A-123 internal control reviews would
include CARES Act programs as part of their normal processes and CPD
officials confirmed CDBG-CV funds were included in their last reviews. 42
However, the HUD OIG has reported on longstanding issues with HUD’s
compliance with improper payments requirements. 43 In fiscal year 2020,
HUD identified PBRA and Tenant-Based Rental Assistance, which
includes HCV, as susceptible to significant improper payments.
As discussed above, HCCRT has not provided documentation that its
rapid risk assessment process included key components of a front-end
risk assessment, such as identifying and ranking risks by program and
establishing milestones for addressing identified risks. As a result, it is
unclear the extent to which HUD has thoroughly assessed the CARES
Act funds’ effects on program risks and developed a plan for mitigating
them. As of September 2021, HUD had completed many high-priority
tasks to implement the CARES Act, such as issuing guidance and
allocating funding. However, the agency has significant ongoing CARES
Act oversight activities, including monitoring recipients’ use of CARES Act
funds. Reassessing whether to conduct full front-end risk assessments, or
taking and documenting additional risk assessment steps, could ensure
that HUD mitigates any susceptibility of its CARES Act programs to fraud,
waste, and abuse.
HUD Has Not Fully Assessed HCCRT’s rapid risk assessment process did not fully assess the CARES
Its CARES Act-related Fraud Act’s effect on the programs’ fraud risks or incorporate leading fraud risk
Risks management practices previously identified by GAO. We previously
reported that changes in a program’s funding or operating environment in
41Under the Payment Integrity Information Act of 2019, agencies are required to report an
estimate of improper payments. Fraud is distinct from improper payments, as improper
payments are any payments that should not have been made or that were made in an
incorrect amount (including overpayments and underpayments) under statutory,
contractual, administrative, or other legally applicable requirements. Improper payments
include any payment to an ineligible recipient or ineligible service, duplicate payments,
payments for services not received, and any payment for an incorrect amount. However,
not all improper payments are fraud.
42As of July 2021, HUD officials expected HUD would complete its fiscal year 2020
improper payments testing and its A-123 review by November 2021 (its end of the fiscal
year 2021 reporting period).
43Department of Housing and Urban Development, Office of Inspector General, HUD Did
Not Fully Comply with the Improper Payments Elimination and Recovery Act of 2019,
2021-AT-0002 (Washington, D.C.: May 17, 2021).
Page 19 GAO-21-104542 HUD Oversight of CARES Act Funds
response to an emergency situation (like COVID-19) necessitate
conducting a new or revised fraud risk assessment. 44 We also have
reported that the public health crisis, economic instability, and increased
flow of federal funds associated with the COVID-19 pandemic present
new risks to federal programs, including increased pressures and
opportunities for fraud. 45 The CARES Act provided $12.4 billion to HUD
programs to address COVID-19-related housing needs and some
individual programs received a significant percentage increase in funding,
as previously discussed. For example, ESG-CV received a funding
increase of over 10 times its fiscal year 2020 appropriation under the
CARES Act and grantees are expected to spend all these funds by
September 30, 2022.
GAO’s Fraud Risk Framework identifies leading practices in fraud risk
assessments, including identifying and assessing risks to determine a
program’s fraud risk profile, an essential piece of an overall antifraud
strategy that informs the design and implementation of specific fraud
control activities. 46 These steps are: (1) identify inherent fraud risks
affecting the program; (2) assess the likelihood and impact of inherent
fraud risks; (3) determine fraud risk tolerance; (4) examine the suitability
of existing fraud controls and prioritize residual fraud risks; and (5)
document the program’s fraud risk profile. Fraud risk tolerance is the
amount and type of risk an organization is willing to accept in pursuit of its
objectives. 47 We have previously reported that during times of
emergency, such as the COVID-19 pandemic, federal program managers
may need to adjust fraud risk tolerance and related controls as a result of
emergency-related changes to a program or its operating environment
based on an understanding and assessment of how a program is likely to
be defrauded. 48 For example, federal program managers may decide,
based on a robust fraud risk assessment, to accept a higher tolerance for
fraud risk to help implement emergency programs more quickly.
HCCRT’s rapid risk assessment documentation does not have key
information needed to effectively manage fraud risks for its programs—
including identifying inherent or new fraud risks, assessing its program
44GAO-20-625 and GAO-15-593SP.
45GAO-20-625.
46GAO-15-593SP.
47GAO-15-593SP.
48GAO-20-625.
Page 20 GAO-21-104542 HUD Oversight of CARES Act Funds
risk tolerance, and documenting the program’s fraud risk profile. Program
office officials and field office staff we interviewed about the four selected
programs had not identified or documented any changes to programs’
fraud risks in light of the CARES Act. However, as noted earlier, the
CARES Act granted HUD broad authority to waive many of its programs’
statutes and regulations or issue alternative requirements to promote the
safe and effective administration of these funds. HCCRT cited
administrative relief, which includes waivers, as one of the agency’s top
risks associated with the CARES Act funds, noting that they increased
funding recipients’ opportunity for fraud, waste, and abuse, but did not
document risks for specific waivers or by program. 49 For HCV alone, PIH
issued 38 waivers that modified the program, such as allowing HCV
residents to self-certify income and allowing owners to self-certify
property conditions in lieu of inspections.
While HCCRT officials said that their priority was to implement CARES
Act programs quickly to help funds reach intended beneficiaries—which
indicates a higher fraud risk tolerance—this change is not documented in
any of the fraud risk assessment documentation HUD provided. Finally,
although HCCRT officials noted they discussed fraud risks as part of their
rapid risk assessment process, HUD did not thoroughly document fraud
risks. None of the rapid risk assessment documents provided by HCCRT
focused exclusively on fraud. Further, all of the materials had a high-level
focus, and none thoroughly examined program-level fraud risks.
CPD, PIH, and Office of Multifamily Housing officials said that they were
not aware of any instances of fraud in the four largest CARES Act
programs as of July 2021. In addition, CPD officials we interviewed said
they did not consider fraud risk a significant problem because the
programs’ reporting process had internal controls to help prevent fraud.
HCCRT officials noted that although HUD had taken steps to detect
internal control weaknesses that could give rise to fraud, the HUD OIG
was solely responsible for investigating fraud in HUD’s programs. 50
49In their technical comments on our draft report, CPD officials said the CDBG-CV waivers
did not create additional opportunities for fraud, waste, and abuse but did not discuss any
specific reasoning or analysis for this conclusion.
50Offices of inspector general prevent and detect fraud, waste, abuse, and
mismanagement in federal agencies’ programs and operations; conduct and supervise
audits and investigations; and recommend policies to promote economy, efficiency, and
effectiveness. GAO, Inspectors General: Independence Principles and Considerations for
Reform, GAO-20-639R (Washington, D.C.: June 8, 2020).
Page 21 GAO-21-104542 HUD Oversight of CARES Act Funds
However, we have noted that federal managers have a responsibility to
detect fraud. 51 As of September 2021, the HUD OIG was conducting
ongoing work on CDBG-CV- and ESG-CV-related fraud risks. In recent
years, the HUD OIG had identified several cases of fraud involving the
selected programs from prior to the CARES Act. 52 In addition, we have
previously reported that CDBG-Disaster Recovery operates in a
decentralized risk environment that may make it vulnerable to fraud since
funds flow through a number of entities before reaching their intended
recipients. 53 Similarly, CDBG-CV and ESG-CV funds often go through at
least one grantee and one subrecipient before reaching the intended
beneficiary (such as an individual or family receiving assistance).
According to HUD officials, it is generally too early to detect fraud in the
CDBG-CV and ESG-CV programs based on their low spending rates (15
and 16 percent, respectively, as of July 2021). While program spending
may be slow, preventing fraud offers the most cost-efficient use of
resources as it enables managers to avoid the costly and inefficient “pay-
and-chase” model. 54 Programs can incur financial losses related to fraud
that are never identified, and such losses are difficult to reliably estimate.
In addition, identified fraud cases can take many years to resolve. For
example, the HUD OIG closed cases in 2017–2020 resulting from
Hurricane Sandy in 2012.
According to HCCRT officials, although the CARES Act provided a surge
of funding to HUD’s programs, it did not materially alter program offices’
existing controls, activities, processes, or risk profiles. However, we have
previously reported that COVID-19 relief programs are vulnerable to
significant risk of fraudulent activities because they required the
government to provide funds and other assistance quickly. 55 Further, we
51GAO-15-593SP.
52From 2019–2021, the HUD OIG reported on nine cases involving the selected programs
from prior to the CARES Act in which there were convictions or settlements regarding
alleged fraud, These cases included two cases related to CDBG, one for ESG, five for
HCV, and one for PBRA. For example, one CDBG case involved a bribery and fraud
scheme in which a city employee received $65,000 in bribes in exchange for awarding
contractors multiple HUD-funded CDBG rehabilitation contracts totaling approximately
$426,000.
53GAO-21-177.
54“Pay-and-chase” refers to the practice of detecting fraudulent transactions and
attempting to recover funds after payments have been made. GAO-15-593SP.
55GAO-20-625.
Page 22 GAO-21-104542 HUD Oversight of CARES Act Funds
have also reported that once an immediate emergency response has
passed, program managers should reassess fraud risk tolerance,
particularly for programs with significant expenditures. 56 Completing more
comprehensive fraud risk assessments of each of the CARES Act-funded
programs—including identifying inherent or new fraud risks, assessing the
program’s fraud risk tolerance, and documenting the program’s fraud risk
profile—would help HCCRT and program offices identify and respond to
potential program risks, including risks for fraud, waste, abuse, and
mismanagement. By incorporating leading practices into its CARES Act
programs’ fraud risk assessments, HUD may be able to leverage its risk
assessment strategy for other emergency funding now and in the future.
HUD’s actions to implement CDBG-CV and ESG-CV include allocating
HUD is Providing funding and issuing guidance. However, as of July 2021, grantees have
Technical Assistance expended relatively little of their CARES Act funds in part due to limited
capacity to administer the large funding increase from HUD and also
to Help CDBG-CV managing other federal assistance programs, according to HUD officials
and ESG-CV and grantee associations. HUD is providing training and assistance to
help grantees increase spending, as well as developing specific
Grantees Address monitoring guidance for the CARES Act funds.
Slow Spending and
Developing Specific
Monitoring Guidance
HUD Has Allocated The CARES Act appropriated $5 billion and $4 billion to CDBG-CV and
Funding and Developed ESG-CV, respectively. The CDBG and ESG programs cover a wide range
of activities (including rental assistance) to prevent, prepare for, or
Guidance for CDBG-CV
respond to COVID-19 (see table 1).
and ESG-CV
56GAO-20-625.
Page 23 GAO-21-104542 HUD Oversight of CARES Act Funds
Table 1: Community Development Block Grant Coronavirus Response (CDBG-CV) and Emergency Solutions Grants
Coronavirus Response (ESG-CV) Program Descriptions
CDBG-CV ESG-CV
CARES Act Appropriation $5 billion $4 billion
Recipients Funds are awarded to grantees. Grantees are states and localities. Grantees may then work with
implementing partners or subrecipients to develop programs to distribute funds to recipients (e.g.,
families and individuals).
Purpose Support state and local government Prevent, prepare for, and respond to COVID-19, among
activities to prevent, prepare for, and individuals and families experiencing homelessness or
respond to COVID-19. receiving homeless assistance and support homelessness
prevention activities to mitigate the impacts of COVID-19.
Examples of eligible Wide range of uses, including certain Emergency shelters and street outreach, rapid rehousing,
activities types of business assistance and and rental assistance. Waivers also allowed new eligible
emergency payments that can help with activities, such as temporary emergency shelter,
housing and other expenses. handwashing stations, and landlord incentives.
Expenditure deadlines Grants are available for 6 years. September 30, 2022b
Grantees had until August 16, 2021, to
apply for their grants.a
Source: GAO analysis of Department of Housing and Urban Development (HUD) documentation. | GAO-21-104542
a
CPD officials noted that they have the authority to extend the period of performance for a CDBG-CV
grantee.
b
The CARES Act states that HUD must obligate the ESG-CV funds by September 30, 2022. HUD
also established that date as the deadline by which grantees must expend funds to promote the
timely use of funds.
Shortly after the CARES Act was enacted in March 2020, HUD began
implementing the CDBG-CV and ESG-CV programs by allocating funding
to grantees and issuing guidance and waivers.
• Funding allocations. Beginning in April 2020, HUD allocated CARES
Act funds to grantees who had already previously received CDBG and
ESG grants in fiscal year 2020. HUD allocated CDBG-CV funds to
prior grantees in three rounds. The first round of CDBG-CV funding
allocated in April 2020 used the same formula that determined CDBG
fiscal year 2020 allocations. 57 The CARES Act mandated that HUD
allocate the second and third rounds based on a locality’s risk of
transmission of COVID-19, number of COVID-19 cases compared to
the national average, and economic and housing market disruptions.
HUD determined a specific allocation formula based on these criteria
57The CARES Act required the first round of funds to be allocated within 30 days of
enactment using this formula.
Page 24 GAO-21-104542 HUD Oversight of CARES Act Funds
for the second round and allocated these funds in May 2020. 58 The
agency allocated the third round in September 2020 and refined its
allocation formula to include additional data, such as overcrowded
households, which is considered a risk factor for both COVID-19
transmission and housing instability.
ESG-CV funds were allocated in two rounds in April and June 2020.
As prescribed in the CARES Act, the first round was allocated based
on the same formula used to determine grantees’ fiscal year 2020
allocation and the second round was allocated based on factors that
reflected grantees’ populations experiencing or at risk of
homelessness. As with CDBG-CV, HUD developed a specific
allocation formula based on metrics that reflect these criteria,
including grantees’ populations experiencing homelessness,
populations experiencing unsheltered homelessness, and very-low-
income renter populations.
• Guidance and communication. In April 2020, CPD released
guidance on how grantees could apply for CARES Act funds using a
substantial amendment to grantees’ existing annual plans. 59 However,
HUD did not issue official notices (which included program rules and
waivers) for CDBG-CV and ESG-CV until August and September
2020, respectively. 60 It also issued additional information through a
58Department of Housing and Urban Development, Methodology for Round 2 Allocations
of CDBG CARES Act Funds – revised 5/15/2020 (Washington, D.C.: May 15, 2020). CPD
selected specific metrics including the grantees’ count of low-income elderly and changes
in unemployment insurance claims.
59Department of Housing and Urban Development, CARES Act Flexibilities for CDBG
Funds Used to Support Coronavirus Response and plan amendment waiver,
(Washington, D.C.: Apr. 9, 2020). An annual plan provides a summary of grantees’
planned actions, activities, and the specific federal and non-federal resources that will be
used each year to address grantees’ priority needs and specific goals identified through
grantees’ consolidated planning process. The consolidated planning process serves as
the framework for a community-wide dialogue to identify housing and community
development priorities that align and focus funding from the CPD formula block grant
programs: CDBG, ESG, HOME Investment Partnerships Program, and the Housing
Opportunities for Persons with AIDS Program.
60In November 2020, we reported that a grantee association attributed its members’ initial
slow spending to HUD’s delays in releasing official guidance. GAO-21-191. Notice of
Program Rules, Waivers, and Alternative Requirements Under the CARES Act for
Community Development Block Grant Program Coronavirus Response Grants, Fiscal
Year 2019 and 2020 Community Development Block Grants, and for Other Formula
Programs, 85 Fed. Reg. 51457 (Aug. 20, 2020); and Department of Housing and Urban
Development, Waivers and Alternative Requirements for the Emergency Solutions Grants
(ESG) Program Under the CARES Act, Notice CPD-20-08 (Washington, D.C.: Sept. 1,
2020).
Page 25 GAO-21-104542 HUD Oversight of CARES Act Funds
variety of materials, such as frequently asked questions on both
programs and guides on various aspects of CDBG-CV and ESG-CV
program implementation, such as eligible activities to support
infectious disease response. CPD officials stated that they had
released over 100 resources to assist communities in responding to
the challenges of serving people experiencing or at risk of
homelessness during COVID-19. They also hosted weekly office
hours to present best practices and address grantee questions in a
timely manner.
Two grantee associations we interviewed reported that some of their
members had received conflicting information from CPD on CDBG-CV
and ESG-CV, which initially impeded their implementation of the
programs. For example, the National Community Development
Association found almost half of its 71 members who provided
feedback on their experiences with CDBG-CV and ESG-CV had
received inconsistent information between CPD headquarters and
field staff. However, representatives from the Council of State
Community Development Agencies said this appeared to be more of a
challenge early in the pandemic. 61
• Waivers. The CARES Act specified several waivers for the CDBG-CV
and ESG-CV programs, and CPD issued additional waivers to
facilitate program implementation. 62 There were also waivers to allow
ESG-CV funds to be used for additional eligible activities associated
with preventing and responding to COVID-19 among individuals
experiencing homelessness or at risk of homelessness, including
handwashing stations and temporary emergency shelter. In total,
there were 50 waivers for both CDBG-CV and ESG-CV, including
those in the CARES Act. CPD officials and two grantee association
representatives said grantees had found the waivers useful to
facilitate the use of CARES Act funds. For example, HUD officials said
a number of grantees used a waiver shortening the required period of
public comment on an action plan (which describes intended use of
the grant) from 30 days to 5 days. In addition, CPD officials said many
61The National Community Development Association is a nonpartisan national nonprofit
organization comprised of more than 400 local governments across the country that
administer federally supported community development, economic development, and
affordable housing programs, including HUD programs. The Council of State Community
Development Agencies represents states in advocating for and promoting community
development and affordable housing, eliminating homelessness, and in providing
technical assistance and increasing collaboration among state partners.
62Waivers in the CARES Act included allowing grantees to shorten the mandatory public
comment period on action plans and allowing virtual hearings to receive public input.
Page 26 GAO-21-104542 HUD Oversight of CARES Act Funds
CDBG-CV grantees used a waiver removing the 15 percent cap on
spending for public service activities (this category includes
emergency payments to a provider, such as a housing provider, on
behalf of a family or individual).
As many of the waivers were administrative, such as those about
applying for funds, and some waivers were included in the CARES
Act, and thus enacted into law, CPD officials stated they were not
tracking their usage. In addition, CPD officials noted that grantees are
required to keep records on their compliance with program
requirements, such as waivers.
Grantees Have Expended As of July 31, 2021, HUD obligated $4.5 billion in CDBG-CV funds and
Relatively Little of Their $4.0 billion in ESG-CV funds, meaning HUD and a grantee had signed a
grant agreement, making funding available to a grantee to spend directly
CDBG-CV and ESG-CV
through its own programs or by working through implementing partners,
Funds such as a service provider or contractor (see fig. 5). However, grantees
had expended $747 million (15 percent) of appropriated CDBG-CV funds
and $623 million (16 percent) of appropriated ESG-CV funds.
Figure 5: Obligations and Expenditures for Community Development Block Grant
Coronavirus Response (CDBG-CV) and Emergency Solutions Grant Coronavirus
Response (ESG-CV), May 2020–July 2021
Page 27 GAO-21-104542 HUD Oversight of CARES Act Funds
HUD data showed that about 20 percent of CDBG-CV grantees and
about 9 percent of ESG-CV grantees had not spent any of their grant
funds, as of July 2021. 63 A few other grantees had not entered into grant
agreements (see table 2). Less than 10 percent of grantees in each
program had spent over 50 percent of their grants. CPD field staff and
grantee associations we interviewed said grantees were concerned about
meeting ESG-CV spending deadlines, including expending 20 percent of
funds by September 30, 2021, and all funds by September 30, 2022.
Funds not expended by these deadlines may be recaptured by HUD.
HUD has the authority to extend the expenditure deadline. As of July
2021, CPD officials stated they were continuing to monitor grantee
spending as the deadline approaches.
Table 2: Community Development Block Grant Coronavirus Response (CDBG-CV) and Emergency Solutions Grants
Coronavirus Response (ESG-CV) Grantees’ Spending Status, as of July 2021
CDBG-CV ESG-CV
Number of Number of
grantees Percentage grantees Percentage
Grantees 1,239 n/a 362 n/a
Grantees with expenditures
Expended over 50 percent of their 89 7 18 5
grant
Expended less than 50 percent of 843 68 292 81
their grant
Grantees with no expenditures
Grantees with grant agreement 248 20 33 9
but no expenditures
Grantees with no grant agreement 59 5 2 1
Source: GAO presentation of data from the Department of Housing and Urban Development. | GAO-21-104542
Of the $844 million in CDBG-CV funds expended as of August 31, 2021,
HUD data showed that 64 percent had been spent on public services,
which include emergency payments that can be used for rental or
mortgage assistance. 64 CDBG typically limits each recipient to three
63In July 2021, HUD provided us with recent data on CDBG-CV and ESG-CV grantees’
obligations and expenditures.
64While rental or mortgage assistance is not a specified use of CDBG funds, these funds
can be used for emergency payments to help pay for rent, mortgages, or utilities. The
payments must be made to the provider (such as a landlord) on behalf of a family or
individual. Examples of other types of public service activities include food assistance and
daycare.
Page 28 GAO-21-104542 HUD Oversight of CARES Act Funds
monthly emergency payments, but HUD issued a waiver allowing CDBG-
CV funds to be used for up to 6 months of emergency payments. Twenty-
five percent of CDBG-CV funds had been spent on economic
development activities, such as assistance to businesses with five or
fewer employees or larger businesses creating jobs in low- to moderate-
income areas (see fig. 6). According to HUD officials, as of June 2021,
almost 58 percent of ESG-CV funds had been spent on shelter; 17
percent on homelessness prevention; 16 percent on rapid rehousing; and
remaining funds spent on administration, street outreach, and data
collection.
Figure 6: Community Development Block Grant Coronavirus Response
Expenditures by Category, as of August 31, 2021
Note: August 31, 2021 was the most recently available data that HUD provided.
HCCRT and CPD officials stated they plan to rely on existing metrics to
assess the performance of CDBG-CV and ESG-CV funds because they
already capture relevant indicators, such as number of persons directly
assisted and jobs created or retained. In addition, grantees report their
annual performance metrics on a rolling basis from January to October,
enabling CPD to provided updated information quarterly to the PRAC.
HCCRT and CPD identified other key performance metrics for CDBG-CV
such as the number of jobs created or retained, number of housing units
rehabilitated, and number of housing units created. According to HUD’s
Page 29 GAO-21-104542 HUD Oversight of CARES Act Funds
August 2021 performance data, CDBG-CV funds had directly assisted
about 5.7 million individuals and supported the creation or retention of
12,080 jobs. Key performance metrics identified for ESG-CV are number
of persons or households served in (1) rapid re-housing, (2) emergency
shelters, and (3) homelessness prevention. CPD officials reported that
from October 2020–June 2021, the CARES Act funds had been used to
support emergency shelter for 697,885 people, homelessness prevention
for 115,768 people, rapid rehousing for 106,091 people, and street
outreach for 98,560 people.
Reasons for Low HUD officials and grantee associations we spoke with attributed the low
Spending Include Grantee expenditures of CDBG-CV and ESG-CV funds to grantee capacity
challenges stemming from the large increase in HUD funding and the
Capacity Challenges and
availability of other federal COVID-19 relief funds.
Availability of Other
Federal Funds, According
to Stakeholders
Capacity Challenges Many grantees were having difficulty scaling up their capacity to
administer the large increase in federal funding, according to grantee
associations and CPD officials, and this has limited their ability to expend
their CDBG-CV and ESG-CV grants. The CARES Act provided CDBG
with an increase in funding of 146 percent over its fiscal year 2020
appropriation, and provided ESG with an increase in funding of 1,379
percent over its fiscal year 2020 appropriation. Many grantees also
received new federal funding from Treasury (discussed in more detail
below), which further compounded grantees’ capacity challenges as
grantees had to manage a large influx of funding from multiple federal
programs, each with their own rules and regulations. HUD officials said
grantees needed additional time to plan how best to use the HUD grants
compared to other federal funding sources, including seeking input from
the public and stakeholders on how funds should be used. CPD officials
noted that CDBG-CV grantees had until August 16, 2021 to apply for
funding, and that the additional time was to help grantees design
compliant programs for the new funding. However, CPD officials also
noted that this later application deadline contributed to lower
expenditures.
Further, some grantees are using the funds to develop new programs,
which requires additional time for program design. The National
Community Development Association reported a majority of its members
reported they were developing new programs with the CARES Act
Page 30 GAO-21-104542 HUD Oversight of CARES Act Funds
grants. 65 In addition, CPD officials and two grantee associations said
some states or localities are under hiring restrictions, meaning they
cannot easily hire additional staff to help administer the increased federal
funding. The three grantee associations we interviewed reported that
grantees’ implementing partners also had capacity challenges, or they
were having trouble finding new implementing partners. 66
To help grantees use their CARES Act funding and address capacity
challenges, CPD officials stated they have been providing grantees with
technical assistance such as training and additional guidance. 67 The
CARES Act appropriated $10 million to CDBG-CV and $40 million to
ESG-CV for technical assistance. As of July 2021, 12 percent of CDBG-
CV and 33 percent of ESG-CV technical assistance funds had been
expended. 68 Since the CARES Act’s enactment, CPD has shared
information to help grantees design and implement the CARES Act funds
on HUD Exchange, an online platform providing a variety of support
materials to grantees and their partners. CPD has also held online
training webinars and made technical assistance providers available to
grantees. In May 2021, CPD officials we interviewed told us they are
planning a series of grantee clinics for CDBG-CV and ESG-CV to span
the next several years. In preparation, CPD staff are working with the
technical assistance providers to identify grantees’ issues. CPD staff said
that they are planning to focus the first clinic on grantees with low
expenditures or difficulty launching their programs. In addition, in July
2021, HUD organized a two-day conference to help CARES Act grantees
implement their CARES Act funding that included sessions on financial
management, reporting, and program design. 69
CPD officials also said they were in the process of conducting hands-on
assistance workshops for ESG-CV grantees and had provided such
65The National Community Development Association solicited input from its 459 members
on their experiences with CDBG-CV and ESG-CV and 71 responded.
66Grantees may work with subrecipients, such as direct service providers, to implement
programs.
67Technical assistance refers to programs, activities, and services provided by federal
agencies to strengthen the capacity of grant recipients and to improve their performance
of grant functions.
68As of June 2021, all of the technical assistance funds for both programs were obligated.
69The conference and clinics will also address the needs of grantees who received
CARES Act funds through CPD’s Housing Opportunities for Persons with AIDS program.
Page 31 GAO-21-104542 HUD Oversight of CARES Act Funds
assistance to 56 grantees as of May 2021. CPD officials also said that for
ESG-CV, they developed a targeted technical assistance strategy to
provide access to technical assistance coaches for grantees with the
most money or those that had potential risks based on past ESG
spending. CPD also developed an administrative review checklist for staff
to document technical assistance provided to CARES Act grantees as
part of its CARES Act Administrative Review process. The checklist
documents the issues to be addressed by technical assistance, the
grantee’s successes or challenges in program implementation, and
provides a structure to discuss goals and obstacles. 70 In June 2021, CPD
published a CDBG-CV Toolkit that aims to assist grantees in identifying
and implementing CDBG-CV program activities that best serve their
communities.
Other Available Federal A number of CDBG-CV and ESG-CV grantees also received funding from
Assistance two new Treasury programs that can be used for similar purposes,
according to CPD officials and grantee associations. The CARES Act
created the Coronavirus Relief Fund, which directed Treasury to disburse
$150 billion to state and local grantees to offset costs incurred from
COVID-19, and the program’s eligible expenses included housing
assistance and small business assistance. 71 In December 2020, the
Consolidated Appropriations Act, 2021, appropriated $25 billion to
Treasury for the Emergency Rental Assistance Program, which provided
rental assistance funding to state and local grantees. 72 In March 2021,
Congress appropriated this program an additional $21.55 billion in a
second round of funding through the American Rescue Plan Act of
70The checklist is used for CDBG-CV, ESG-CV, and Housing Opportunities for Persons
with AIDS program CARES Act grantees.
71Payments from this fund can be used to cover costs that (1) are necessary expenditures
incurred due to the public health emergency with respect to COVID-19; (2) were not
accounted for in the budget most recently approved as of March 27, 2020 (the date of
enactment of the CARES Act) for the State or government; and (3) were incurred during
the period that begins on March 1, 2020, and ends on December 31, 2021. Pub. L. 116-
136, div. A, tit. V, §5001(a), 134 Stat. 281, 501 (2020), as amended by Pub. L. 116-260, §
1001, div. N. tit. X, 134 Stat. 1182, 2145 (2020) (codified at 42 U.S.C. § 801(d)).
72Pub. L. No. 116-260, div. N, tit. V, § 501, 134 Stat. at 2069. The act directed Treasury to
disburse $25 billion in funds to eligible state and local grantees primarily based on
population by January 26, 2021. Emergency Rental Assistance program funds are
reserved for households experiencing financial hardship that can demonstrate a risk of
housing instability and have income no greater than 80 percent of the area median
income. Grantees also must prioritize funds for households with income no greater than
50 percent of the area median income or that are experiencing extended unemployment.
Page 32 GAO-21-104542 HUD Oversight of CARES Act Funds
2021. 73 Grantees must use Emergency Rental Assistance funds for
financial assistance—generally through direct payments to property
owners and utility providers—and eligible costs include rent and accrued
rent, utilities, and other housing expenses.
CPD field staff and representatives from two grantee associations said
grantees found the Treasury funds to be more flexible than the HUD
grants because they had fewer requirements. For example, recipients do
not need to submit a plan to Treasury about how they intend to use the
funds, while HUD grantees must submit an amendment to their action
plans before they can receive funds. Additionally, each CDBG-CV
grantee must ensure that at least 70 percent of their CDBG-CV grant
funds are used to benefit low- to moderate-income persons, while the
Treasury funds do not have a similar requirement. Representatives from
all three of the grantee associations we interviewed said their members
also prioritized Coronavirus Relief Fund funds because these funds had
an earlier deadline of December 31, 2021. 74 In contrast, CDBG-CV
grantees have 6 years to expend funds. Thus, if a grantee who received
funding from both CDBG-CV and the Coronavirus Relief Fund wished to
use the funding for emergency payments to households, the grantee
would likely opt to first use the Treasury funding because it could be used
for the same purpose, had fewer requirements, and an earlier deadline.
CPD officials stated they thought the CDBG-CV and ESG-CV expenditure
rates would increase as grantees exhausted other funding—for example,
if a grantee first established a program with Treasury funds and then used
the HUD funds when the Treasury funds expired. In May 2021, Treasury
announced it was finalizing an interagency agreement with HUD to
73Pub. L. No. 117-2, 135 Stat. 4, 54 (2020).
74The Coronavirus Relief Funds were originally set to expire on December 31, 2020.
Congress subsequently extended the deadline to December 31, 2021. The CARES Act,
as amended, requires that qualified expenses be incurred during the covered period which
ends on December 31, 2021. Treasury’s initial guidance provided that a cost was incurred
when a recipient had expended funds to cover the cost. It later clarified that for a cost to
be considered to have been incurred, performance or delivery must occur during the
covered period but payment of funds need not be made during that time (though it was
generally expected that this would take place within 90 days of a cost having been
incurred). 86 Fed. Reg 4182, 4183 (Jan. 15. 2021). The Emergency Rental Assistance
Program’s first round of $25 billion remains available through September 30, 2022, and
the second round of $21.55 billion remains available through September 30, 2025.
Page 33 GAO-21-104542 HUD Oversight of CARES Act Funds
coordinate their emergency rental assistance funds. 75 In July 2021, HUD
officials said that the agreement would focus on coordinating technical
assistance for the Emergency Rental Assistance Program.
CPD field staff and the three grantee associations noted that eviction
moratoriums also limited the use of ESG-CV funds for rental assistance.
The federal government and a number of states, territories, and local
governments have implemented moratoriums to limit evictions during the
COVID-19 pandemic. 76 An individual covered by an eviction moratorium
does not meet the eligibility criteria for ESG-CV homelessness prevention
assistance, according to CPD officials. Grantee associations said their
members are therefore limited in the extent to which they can use ESG-
CV funds for rental assistance while the eviction moratoriums are in
place. 77 For example, one grantee said it had planned to use most of its
ESG-CV funds for homelessness prevention (such as rental assistance),
but the state extended its eviction moratorium to August 30, 2021, so the
grantee had to reallocate those funds to another use.
Finally, some grantees also received funds from the Federal Emergency
Management Agency, which assists persons experiencing homelessness
and provides up to 2 months of rental assistance to individuals displaced
75Department of the Treasury, Fact Sheet: The Biden-Harris Administration Announces
Enhanced Efforts to Prevent Evictions and Provide Emergency Assistance to Renters,
accessed July 19, 2021, https://home.treasury.gov/system/files/136/FACT_SHEET-
Emergency-Rental-Assistance-Program_May2021.pdf.
76GAO, COVID-19 Housing Protections: Moratoriums Have Helped Limit Evictions, but
Further Outreach Is Needed, GAO-21-370 (Washington. D.C.: Mar. 15, 2021).
Specifically, the CARES Act included an eviction moratorium that prohibited property
owners from initiating actions to evict tenants for the nonpayment of rent, which expired on
July 24, 2020. Subsequently, the Centers for Disease Control and Prevention issued an
eviction moratorium that was extended several times, but was struck down by the
Supreme Court in August 2021. Alabama Association of Realtors v HHS, 594 U.S. __
(2021), 2021 WL 3783142. There have also been limited federal eviction moratoriums for
certain residents of single-family properties in foreclosure.
77In addition to the National Community Development Association, the National
Association for County Community and Economic Development solicited input from five of
its members about their experiences with CDBG-CV and ESG-CV. The National
Association for County Community and Economic Development was established to
develop the technical capacity of county government practitioners that administer federally
funded affordable housing, community development, and economic development
programs benefiting low- and moderate-income households. It provides information,
training, and representation to counties receiving direct assistance from CPD.
Page 34 GAO-21-104542 HUD Oversight of CARES Act Funds
by presidentially declared disasters with no documentation of income. 78
Grantee associations noted the availability of these funds further limited
grantees’ need to expend CDBG-CV and ESG-CV funds.
CPD is Developing In May 2021, CPD officials told us they were planning to start monitoring
Specific Monitoring CDBG-CV and ESG-CV funds in fiscal year 2022. Because of the
complexity of pandemic response and programs’ low expenditures,
Guidance for CDBG-CV
officials said they were initially focusing on reviewing grantees’ plans and
and ESG-CV helping grantees launch programs. CPD officials said they are updating
Requirements their existing monitoring processes to prepare for monitoring CDBG-CV
and ESG-CV funds. First, they are developing a version of their grantee
risk-rating rubric, which determines grantees’ level of monitoring. 79 For all
CPD programs, field office staff rate grantees’ risk level on factors such
as grant management and financial management. CPD staff said they are
developing a rubric with specific risk factors for the CARES Act-funded
programs. While CPD officials did not identify those factors, they said
they anticipate releasing the rubric and assessing grantees’ risk in the
first quarter of fiscal year 2022. In addition, CPD officials said they are
developing monitoring guidance and related forms for the CARES Act
programs. They anticipate releasing these materials around January 2022
when they plan to begin monitoring programs (after CPD’s grantee risk
assessment).
In the meantime, in February 2021, CPD provided staff with guidance on
initial monitoring activities to identify grantees with slow spending and
provide them with targeted technical assistance as part of CPD’s CARES
Act Administrative Review process (discussed above). The guidance also
notes that if a grantee is selected for financial management compliance
monitoring as part of CPD’s regular annual program oversight processes,
then that grantee’s financial management of its CARES Act funds will also
be considered in the monitoring.
78In June 2020, HUD guidance recommended that recipients prioritize using Federal
Emergency Management Agency funds to support non-congregate shelters during
COVID-19 before using ESG-CV or CDBG-CV funds. The guidance then recommended
that recipients prioritize using ESG-CV to transition individuals out of non-congregate
shelters, and then use CDBG-CV if ESG-CV funds were not available. Department of
Housing and Urban Development, Federal Funding Priority Order For Non-Congregate
Shelter During COVID-19 (Washington, D.C.: June 23, 2020).
79This method ranks program participants in descending order, from highest to lowest risk.
Based on these risk levels, field staff determine a monitoring plan for grantees they
oversee.
Page 35 GAO-21-104542 HUD Oversight of CARES Act Funds
CPD officials said they needed to develop specific CARES Act monitoring
guidance because program rules for CDBG-CV and ESG-CV differ from
those of traditional CDBG and ESG grants. First, the CARES Act requires
that HUD have adequate procedures to prevent duplication of benefits for
CDBG-CV funds (for example, someone receiving rental assistance from
both Treasury and HUD the same month). HUD is requiring CDBG-CV
grantees to require that any person or entity that receives duplicative
benefits agree to repay them and develop a method to assess whether a
use of CDBG-CV funds will duplicate other financial assistance. CPD has
provided guidance and other resources to help grantees meet this
requirement. However, CPD field staff and two grantee associations told
us grantees are concerned about complying with the requirement, in part
because of the availability of other federal funds. Two grantee
associations said their members are meeting this requirement by having
beneficiaries sign a non-duplication of benefits affidavit and cross-
checking beneficiaries’ names with other assistance programs when
feasible, among other methods.
In addition, to comply with the CARES Act, HUD requires grantees to
demonstrate their CDBG-CV and ESG-CV expenditures are related to
preventing, preparing for, and responding to COVID-19. 80
Representatives from two grantee associations noted their members are
concerned about meeting this requirement as the pandemic improves. To
help address these concerns, HUD issued a guide in April 2021 on how to
link various activities back to the pandemic. 81 For example, the guide
described how assistance to small businesses can be cited as helping
redress damage to local economies from COVID-19. CDGB-CV and
ESG-CV monitoring will also need to reflect some of the waivers
modifying the programs from the traditional versions. For example, for
ESG-CV, the CARES Act waived a cap that grantees could not spend
more than 60 percent of their grant on street outreach and emergency
shelter.
As discussed previously, CPD’s staff capacity is stretched, and this can
affect its ability to monitor grantees. For example, one field office
representative told us the field office went from overseeing about $380
million in CPD grants to about $1.1 billion after the CARES Act. The
CARES Act included $10 million for additional salaries and expenses to
8085 Fed. Reg. 51457, 51467 (Aug. 20, 2020); and Notice CPD-20-08.
81Department of Housing and Urban Development, Using CDBG and CDBG-CV to
Support Pandemic Recovery (Washington, D.C.: Apr. 30, 2021).
Page 36 GAO-21-104542 HUD Oversight of CARES Act Funds
support CPD’s CARES Act programs, but CPD had expended just 18
percent of these funds as of July 2021. HUD data from June 2021
showed these funds were supporting 22 temporary staff. The funds and
temporary employees are set to expire on September 30, 2021, and the
workload will then shift back to permanent CPD staff.
CPD headquarters and field staff we interviewed expressed concerns
about managing their increased oversight and administrative workload
without the temporary staff. In 2020, the HUD OIG expressed concern
about grantees’ capacity to manage and spend CARES Act funds. It
further noted that CPD faced substantial challenges in monitoring its
grantees, which might be amplified by the increase in funding to these
grantees. 82 The President’s proposed fiscal year 2022 HUD budget
includes an increase of $22.5 million for CPD personnel to support 110
more full-time equivalent staff, specifically citing the increased workload
from the CARES Act and other recent funding increases. 83
As part of our ongoing oversight of CARES Act funding, we will continue
to monitor CDBG-CV and ESG-CV programs’ spending rates and HUD’s
ongoing and planned efforts to assist and provide oversight of program
grantees.
82HUD OIG, Top Management Challenges. In addition, in 2018, the HUD OIG found that
CPD did not have assurance that it correctly assessed grantee risk or monitored grantees
in compliance with requirements because headquarters staff did not have effective
supervisory controls of field staff’s monitoring risk assessments and work plans. The HUD
OIG recommended that headquarters staff have more substantive involvement in field
offices’ risk assessment and monitoring, and CPD implemented these recommendations
in 2021. Department of Housing and Urban Development, Office of Inspector General,
CPD’s Risk Assessment and Monitoring Program Did Not Provide Effective Oversight of
Federal Funds, 2018-FW-0001 (Fort Worth, TX: June 26, 2018).
83Department of Housing and Urban Development, 2022 Congressional Justifications. In
March 2021, another CPD program—HOME Investment Partnerships—received $5 billion
in the American Rescue Plan, further adding to CPD’s workload.
Page 37 GAO-21-104542 HUD Oversight of CARES Act Funds
HUD Used Waivers to
Assist Rental
Assistance Programs’
Pandemic Response
and Is Taking Steps to
Facilitate Monitoring
HUD Allocated HCV’s The CARES Act appropriated $1.25 billion to the HCV program to help
CARES Act Funds and public housing agencies (PHAs) maintain normal operations and respond
to COVID-19-related challenges. The CARES Act designated $850 million
Issued Guidance to Assist
for administrative funds and $400 million for housing assistance
PHAs payments (see table 3). For each of these CARES Act funding streams,
the Office of Public and Indian Housing (PIH) allocated funding to PHAs
and issued guidance.
Table 3: Department of Housing and Urban Development’s Housing Choice Voucher (HCV) CARES Act Funds Program
Descriptions
Housing assistance payments Administrative expenses
CARES Act appropriation $400 million $850 million
Recipients Selected public housing agencies (PHAs) with All PHAs in the HCV program.
housing assistance payment contracts (in which
property owners provide tenant-based rental
assistance).
Purpose Provide assistance to selected PHAs who either Can be used for existing administrative expenses
(1) experience unexpected increases in their or for new COVID-19-related expenses.
voucher payments (for example, because of
tenants’ decreased income); or (2) have a
shortfall in funds and would otherwise have to
terminate rental assistance.
Eligible activities and uses Funds limited to housing assistance payments. Wide range of uses, including personal protective
equipment, costs related to retention of property
owners, and transportation to vaccination sites.
Allocation methodology Eligible PHAs, which either have significant All PHAs automatically received supplemental
increases in per-unit costs or have insufficient administrative fees. Award amounts were based
funds, had to submit applications. Award on unit months leased.
amounts were based on unit expenses and
voucher utilization.
Expenditure deadlines Available until expended
Source: GAO analysis of Department of Housing and Urban Development documentation. | GAO-21-104542
Page 38 GAO-21-104542 HUD Oversight of CARES Act Funds
To implement the HCV program’s CARES Act funds and help PHAs
navigate COVID-19, PIH issued notices allocating funding, determined
new eligible expenses, and provided guidance, among other activities.
• Funding allocations. Shortly after the CARES Act was enacted in
March 2020, HUD began allocating HCV CARES Act funds to PHAs.
PIH issued two notices, in April 2020 and July 2020, notifying PHAs of
the two disbursements of the $850 million in administrative expense
funds and describing the formulas used to allocate funding to PHAs. 84
In July 2020, PIH issued a notice about the CARES Act housing
assistance payment funds that described which PHAs were eligible to
receive these funds and how PHAs could apply for them. 85
• Eligible uses. In its April and July 2020 notices announcing the
administrative expense fund allocations, PIH also described new
eligible uses for the CARES Act funds. 86 The new eligible uses
included costs related to PHAs’ maintaining public health, such as for
personal protective equipment, and costs to retain or increase
property owner participation in the HCV program. In April 2021, PIH
further expanded the list of eligible uses to include other uses, such
as transporting tenants and PHA staff to vaccination sites and one-
time utility payments for tenants.
84Department of Housing and Urban Development, CARES Act – HCV Program
Administrative Fees – Second Award, Notice PIH-2020-18 (Washington, D.C.: July 31,
2020); and CARES Act – HCV Program Administrative Fees, Notice PIH-2020-08
(Washington, D.C.: Apr. 28, 2020). PIH provided $378 million in the first round of
administrative funding and PIH allocated it to PHAs using a formula based on a PHA’s
administrative funding from 2018 through 2019. PIH provided $472 million in the second
round of administrative funding using a formula based on PHAs’ administrative fees and
leasing, as of August 2020.
85Department of Housing and Urban Development, CARES Act – Housing Choice
Voucher (HCV) Program Housing Assistance Payments (HAP) Supplemental Funding,
Notice PIH-2020-17 (Washington, D.C.: July 31, 2020). The application process and the
specific allocation formulas for the funds depended on why a PHA needed support for its
housing assistance payment. If a PHA was applying because of increases in voucher
costs, the PHA had to resubmit its 2020 funding applications with updated data showing
the increase in costs. The specific allocation formula is based on per-unit costs and
leasing information. If a PHA was applying because of insufficient funding, the PHA must
submit application materials to determine eligibility under two scenarios. PIH uses a
funding forecasting tool to determine the level of funding. PIH officials noted that because
HUD was authorized, pursuant to the CARES Act, to issue significant adjustments to
housing assistance payments for Mainstream vouchers (which assist non-elderly persons
with disabilities), additional units were leased throughout 2020 and into 2021.
86Notice PIH-2020-18 and Notice PIH-2020-08.
Page 39 GAO-21-104542 HUD Oversight of CARES Act Funds
• Communication. PIH communicated CARES Act and COVID-19
information to PHAs in a number of ways, including official notices,
frequently asked questions documents, a mailbox for email inquiries,
and webinars. PIH updated its frequently asked questions multiple
times to include current information about eligible uses, inspections,
reporting, and other topics. PIH also created an email mailbox for
PHAs to submit questions about waivers and eligible uses. PIH also
administered webinars for PHAs to learn about new CARES Act
reporting guidance.
In interviews with PHA associations in September 2020,
representatives told us PHAs received conflicting information from
field offices. 87 When we followed up with these associations in April
2021, representatives said that consistency of communication has
improved. In April 2021, PIH officials told us that to share accurate
information with PHAs, they worked closely with field offices to ensure
consistent information is communicated across all methods, including
through newsletters, webinars, and town hall meetings.
As of July 31, 2021, 100 percent of CARES Act funds for HCV programs
were obligated and over 99 percent were expended (see fig. 7). For the
HCV program, HUD defines expenditures as payments made to PHAs for
housing assistance payments and administrative expenses. Therefore,
expenditures could include funds unspent by PHAs. HUD established
December 31, 2021, as the deadline for most of the HCV CARES Act
funds.
87We interviewed representatives from the Public Housing Authorities Directors
Association, which represents over 1,900 PHAs throughout the U.S., and the Council of
Large Public Housing Agencies, which represents 70 of the largest PHAs in the U.S.,
which collectively manage almost 40 percent of the nation’s public housing stock.
Page 40 GAO-21-104542 HUD Oversight of CARES Act Funds
Figure 7: Obligations and Expenditures for Housing Choice Voucher Program, May
2020–July 2021
Note: HUD defines expenditures as payments made to public housing agencies; they may include
unspent funds.
PIH and HCCRT officials told us they are relying on existing performance
metrics to assess the effectiveness of the HCV CARES Act funds. PIH
officials said they considered the goal of the CARES Act funds to be
maintaining leasing and voucher utilization levels while helping PHAs to
sustain their operations. The relevant performance metrics HUD identified
include the number of utilized vouchers, leasing potential, and HCV
budget utilization. 88
In April 2021, PIH field staff stated they have generally observed no
changes in the rate that HCV vouchers have been used during COVID-
19, likely because during this period, tenants were less mobile and
88HCV budget utilization is measured using a PHA’s calendar year-to-date housing
assistance payment expenditure as a percentage of budget authority.
Page 41 GAO-21-104542 HUD Oversight of CARES Act Funds
landlord participation was stagnant. 89 However, in July 2021, PIH staff
told us COVID-19 had placed a strain on PHAs and they had provided
PHAs with additional resources to help them maximize their use of
authorized vouchers and spend HCV funds during the pandemic. These
resources included a new notice summarizing tools available to PHAs to
help them optimize their HCV programs and new tools, such as a landlord
engagement guidebook. 90 PIH officials also stated they will obtain
additional performance information through a new CARES Act reporting
portal and a contractor that will provide monitoring support for gathering
this information.
PIH Issued Numerous From April 2020 through May 2021, PIH issued 38 waivers modifying the
Waivers to Assist HCV HCV program in an effort to help PHAs navigate challenges resulting from
the COVID-19 pandemic. 91 For example, PIH issued waivers allowing
Program Implementation
owners to self-certify property conditions in lieu of inspections and
and Plans to Track Their suspended the requirement that new tenants receive an in-person oral
Use briefing. PIH shared information about HCV waivers through notices, PIH
resource webpages, and frequently asked question documents. PHA
associations we spoke to said many of their members found the waivers
useful, particularly those allowing owners to self-certify property
conditions in lieu of inspections and allowing residents to self-certify
income. As of May 2021, PIH had extended the period of availability of
most waivers to December 31, 2021, to provide administrative relief to
89In September 2021, the HUD OIG reported that the number of unused vouchers has
increased each year since 2016, and in November 2020 (during the COVID-19 pandemic)
there were 319,917 unused vouchers, or 12 percent of total vouchers. Department of
Housing and Urban Development, Office of Inspector General, HUD’s Oversight of
Voucher Utilization and Reallocation in the Housing Choice Voucher Program, 2021-CH-
0001 (Chicago, Ill.: Sept. 15, 2021).
90Department of Housing and Urban Development, Guidance for Running an Optimized
Housing Choice Voucher Program, PIH-2020-29 (Washington, D.C.: Oct. 16, 2020). HUD
defines an optimized HCV program as one that maximizes the number of families served
while minimizing rent burden within a given PHA’s financial constraints.
91This count includes 29 waivers specific to the HCV program and 9 waivers for the HCV
program and other PIH programs. Department of Housing and Urban Development,
COVID-19 Statutory and Regulatory Waivers and Alternative Requirements for the Public
Housing, Housing Choice Voucher (including Mainstream and Mod Rehab), Indian
Housing Block Grant and Indian Community Development Block Grant programs,
Suspension of Public Housing Assessment System and Section Eight Management
Assessment Program, Revision 3, Notice PIH-2021-14 (HA) (Washington, D.C.: May 4,
2021).
Page 42 GAO-21-104542 HUD Oversight of CARES Act Funds
PHAs and to allow for alternative approaches for implementing the HCV
program. 92
PIH officials stated they were not currently tracking PHAs’ waiver use and
the CARES Act did not require PHAs to obtain HUD’s approval or notify
HUD before applying a waiver. However, in June 2021, HUD awarded a
contract that will provide support for PIH’s CARES Act activities, including
monitoring PHAs’ waiver use. According to the planned performance work
statement, a PIH contractor is to develop a tracking tool to collect waiver
use information from PHAs, including the specific waivers each PHA used
and the timeframes the waivers were in place. The contractor is also to
develop a handbook with best practices for maintaining operations during
a future emergency that will include examples of waivers to use when
encountering challenges. PIH officials stated the contractor is to provide
these deliverables over the next year. In the interim, PIH required PHAs
to keep written documentation detailing which waivers they used and the
waivers’ associated effective dates. 93
HUD Is Creating a New As of April 2021, PIH staff said they had conducted limited monitoring of
Reporting Portal and Has the HCV CARES Act funds because they are awaiting the release of a
new PHA reporting portal. HUD’s Office of the Chief Information Officer is
Enlisted Contractor
developing a new reporting portal—the Coronavirus Aid, Relief, and
Support to Facilitate Economic Security Act Reporting System—for PIH’s CARES Act funds,
Monitoring which will help HUD comply with the CARES Act PRAC quarterly
reporting requirements. Currently, PIH collects the required information
from PHAs annually.
The portal was mentioned in a September 2020 PIH notice detailing
PHAs’ CARES Act reporting requirements. 94 In July 2021, PIH officials
told us HUD put a hold on the portal’s development because of issues
with the IT contract. As of September 2021, PIH officials said that the
vendor had addressed major technical issues and they anticipated the
portal would be operational in December 2021. PHA associations told us
that PHAs have concerns about the portal and that PHAs would have
92Notice PIH-2021-14 (HA).
93Notice PIH-2021-14 (HA). PHAs also must publicly post or make information publicly
available to their tenants on the waivers they used. Additionally, PHAs must notify
residents and owners of any impacts of the waivers to the program.
94Department of Housing and Urban Development, Extension of Period of Availability for
CARES Act Supplemental Public Housing and Housing Choice Voucher Funds, Guidance
on CARES Act Financial Reporting Requirements (FDS and Quarterly Reporting), and
Other CARES Act Provisions, Notice PIH-2020-24 (Washington, D.C.: Sept. 14, 2020).
Page 43 GAO-21-104542 HUD Oversight of CARES Act Funds
benefited from additional communication from HUD during the portal’s
development. For example, representatives from the Public Housing
Authorities Directors Association said some PHAs are concerned they will
not have sufficient information and documentation about CARES Act
spending when the time comes to report using the portal. In April 2021, a
PIH official said PHAs will have to do some level of back-reporting for the
portal, but it was not clear how far back PHAs would need to document.
PIH officials said they cannot fully monitor the CARES Act funds until the
portal is available, as they have not collected sufficient information from
PHAs to monitor compliance. According to PIH staff, the portal will help
them fully review how CARES Act funds were spent, as the current data
system does not allow for comprehensive reporting on CARES Act
activities. When the web-based portal is active, PHAs will be required to
use the system to report quarterly on each expenditure using CARES Act
funds and classify the expense as for normal operations, COVID-related
purposes, or housing assistance payments. PIH staff will then be able to
create reports in the portal to summarize and report on quarterly PHA
activity using CARES Act funds.
In the meantime, PIH staff said they have used fiscal year-end reporting
data shared by PHAs annually and periodic checks of PHA drawdown of
CARES Act funds as pre-monitoring activities. Specifically, PIH amended
its existing financial reporting mechanism to include new data entry fields
for PHAs to input information on CARES Act funds. PIH described these
changes in a September 2020 notice and provided information for PHAs
on how they should enter the data. 95 PIH also noted this interim reporting
mechanism will help PHAs have a single record of CARES Act expenses.
In July 2021, PIH staff said that CARES Act reporting in its existing data
systems provides detailed information on how PHAs had spent CARES
Act funds, but the main limitation is that PHAs report this information
annually. However, as PHAs have different fiscal year ends, PIH receives
some new information on CARES Act spending from different groups of
PHAs each quarter.
For example, PHAs with a March 2021 fiscal year end reported that they
had spent about half of the administrative funds they received in the
95Notice PIH-2020-24.
Page 44 GAO-21-104542 HUD Oversight of CARES Act Funds
CARES Act. 96 Of these administrative funds, PHAs had used about 11
percent for COVD-19-related costs (such as purchasing personal
protective equipment) and about 83 percent for operating expenses
(including providing hazard pay for PHA staff). 97 Additionally, the data
showed that these PHAs had spent about 83 percent of the housing
assistance payment assistance they received from the CARES Act.
PIH staff said the CARES Act has increased their monitoring and
oversight workload and the office will rely on contractor staff to assist in
these activities. PIH staff we interviewed in headquarters said that despite
funds being almost entirely expended, they anticipate monitoring activities
will increase their workload going forward. As of July 2021, PIH had
expended just 5 percent of the $5 million provided by the CARES Act to
cover additional salaries and expenses. HUD data showed that the
CARES Act funds had supported two PIH temporary employees as of
June 2021. Officials stated that most of the remaining funds would be
spent on a contract that will support CARES Act oversight and
management.
The contract was awarded in June 2021 and one of the expected
activities is for the contractor to develop monitoring and oversight plans
for PHAs. Specifically, the contractor will assess PHA activity and risk
using information on a PHA’s expenditure levels and frequency of
ineligible expenses. The contractor will also develop methods to identify
high-risk PHAs that warrant additional oversight. These additional
monitoring activities will supplement the information from the portal. The
contractor will also provide support for other CARES Act-related activities,
such as developing training and technical assistance sessions and
assisting with remote video inspection plans.
PIH officials told us that they are seeking more in-house staff for its work
related to the CARES Act and the American Rescue Plan Act, which
96Specifically, these data come from PIH’s Financial Data Schedule System that PHAs
use for financial reporting. The data come from 628 PHAs out of 696 with a fiscal year end
of March 31, 2021 (3,775 PHAs received CARES Act funding, according to PIH). These
PHAs were awarded a total of about $285 million out of the $1.25 billion in HCV CARES
Act funds. This was the most recently available data as of August 2021.
97The remaining 5 percent was spent on miscellaneous costs including purchasing IT
equipment to allow PHA staff to work from home.
Page 45 GAO-21-104542 HUD Oversight of CARES Act Funds
appropriated PIH $5 billion for emergency housing vouchers. 98
Specifically, the President’s proposed fiscal year 2022 budget for PIH
requests an increase of $32.2 million to support 136 more full-time
equivalent staff to address these needs. 99
As part of our ongoing oversight of CARES Act funding, we will continue
to monitor PIH’s oversight of its CARES Act funds, including development
of the reporting portal.
PBRA Has Expended Multifamily Housing implemented the $1 billion the CARES Act
Most of Its CARES Act appropriated for the PBRA program by allocating funding as housing
assistance payments and supplemental funds for COVID-related
Funds and Continues to
expenses and issuing guidance.
Award and Monitor
Supplemental Payments • Funding allocations. Multifamily Housing allocated $190 million for
COVID-19 supplemental payments to reimburse property owners for
COVID-related expenses, and $800 million for housing assistance
payments. 100 The office announced CARES Act funding allocations in
four rounds starting in May 2020. In May 2020, Multifamily Housing
announced that CARES Act funding to support housing assistance
payments—the amount property owners receive for rental assistance
vouchers—would automatically be added to existing contracts for
approximately 16,500 properties. Starting in July 2020, Multifamily
Housing issued three notices notifying property owners of the three
rounds for reimbursement supplemental payments for COVID-19-
related expenses. 101 These notices also describe application details
and eligible uses.
• Guidance. Multifamily Housing used notices and frequently asked
questions documents to provide guidance to property owners, such as
on eligible uses of the supplemental payment funds. Multifamily
98Pub. L. No. 117-2. § 3202, 135 Stat. 4, 58 (2021). In June 2021, HUD announced that
626 PHAs will receive 70,000 emergency housing vouchers. See Department of Housing
and Urban Development, HUD Awards $1.1 Billion in American Rescue Plan Funds for
Emergency Housing Vouchers, accessed July 26, 2021,
https://www.hud.gov/press/press_releases_media_advisories/HUD_No_21_099.
99Department of Housing and Urban Development, 2022 Congressional Justifications.
100HUD allocated $10 million for the Section 8 Moderate Rehabilitation program
administered by PIH.
101Department of Housing and Urban Development, Availability of Funds for COVID-19
Supplemental Payments for Properties Receiving Project-Based Rental Assistance Under
the Section 8, Section 202, or Section 811 Programs, Notice H 20-8; Notice H 2020-11;
and Notice H 2021-01.
Page 46 GAO-21-104542 HUD Oversight of CARES Act Funds
Housing staff said they worked closely with field offices to
communicate guidance and publicize the supplemental payment
rounds to property owners through public notices, meetings with
property owners, and frequently asked questions documents. A
representative from the National Council of State Housing Agencies,
which represents PBRA contract administrators, told us its members
were generally satisfied with HUD’s administration and oversight of
CARES Act funds, including guidance and communication.
• Waivers. Multifamily Housing issued one waiver that extended a
financial reporting deadline (the waiver has since expired and the
program has no active waivers). Multifamily Housing officials said they
designed CARES Act program implementation to align with existing
program requirements, and thus additional waivers were not needed.
While the CARES Act funds for housing assistance payments were
generally administered similarly to the regular program, Multifamily
Housing made some changes to facilitate program operations during
the pandemic. For instance, property owners could inspect units
through video technology instead of in person.
As of June 2021, 84 percent of CARES Act funds for PBRA were
obligated and about 83 percent were expended. HUD performance data
showed that the CARES Act funds assisted almost 197,000 units from
January–March 2021 (the first period for which performance data were
available). Multifamily Housing staff also worked with members of HCCRT
to make modifications to monitoring processes to ensure they met the
CARES Act PRAC quarterly reporting requirements. According to
Multifamily Housing officials, the remaining available funding was all
designated for the COVID-19 supplemental payments. Multifamily
Housing officials told us requests for reimbursements have been lower
than expected. Subsequently, in April 2021, Multifamily Housing
expanded eligible uses of the funds to include hosting COVID-19
vaccination and testing clinics. 102
Multifamily Housing representatives stated they monitor the COVID-19
supplemental payments as requests for reimbursement come in. To
receive a reimbursement, property owners apply to HUD and must
provide documentation to support the requested reimbursement. Field
staff then review the application, including proof of expenses for larger
requests (those over $500). Multifamily Housing staff said they monitor
the housing assistance payments under existing monitoring processes as
these funds are awarded as part of normal processes. For instance,
102Notice H-2021-01.
Page 47 GAO-21-104542 HUD Oversight of CARES Act Funds
Multifamily Housing staff monitor these funds by reviewing financial
statements and monthly fund vouchers.
HUD’s CARES Act Compliance Response Team (HCCRT) and program
Conclusions offices have made progress in implementing and overseeing HUD’s
CARES Act funding, which significantly increased the size and scope of
key programs. HUD took steps to respond quickly to address pandemic-
related housing needs, including expediting its risk assessment of the
CARES Act funds. HCCRT’s rapid risk assessment identified risk factors
and short-term actions, but did not thoroughly document how HUD
assessed risks or its longer-term plans for mitigating identified risks,
including fraud risk. As of September 2021, HUD has completed many
major tasks to establish its CARES Act programs. At this time, additional
risk assessment actions and documentation to align its rapid risk
assessment with key components of front-end risk assessments—such
as developing plans to mitigate identified risks—or completing front-end
risk assessments for programs that received substantial funding
increases from the CARES Act would help HUD identify factors that could
hinder its ability to achieve its programs’ objectives. In addition, such
actions would help HUD manage programs’ risks as the agency continues
its implementation and oversight of its funding from the CARES Act and
other recovery legislation, such as the American Rescue Plan Act of
2021.
As HUD considers next steps for its CARES Act risk assessments, it is
important to incorporate leading practices for fraud risk management from
GAO’s Fraud Risk Framework. 103 Identifying and assessing fraud risks in
light of the CARES Act funding and the pandemic, including the extent to
which these changed the programs’ fraud risk tolerances, would help
HUD as it begins monitoring the CARES Act rental assistance programs
and community development and homelessness grants. These
assessment and documentation steps would help HUD develop more
robust antifraud strategies for its CARES Act programs. Further, two of
these programs—CDBG-CV and ESG-CV—have expended relatively
little of their CARES Act funds, and thus more thorough assessments of
their fraud risks could help HUD take steps to prevent fraud before a
majority of the funds are expended. Additional fraud risk management
actions and documentation would help inform HUD’s fraud risk
management strategies for other emergency funding to address
103GAO-15-593SP.
Page 48 GAO-21-104542 HUD Oversight of CARES Act Funds
pandemic-related housing needs, such as the American Rescue Plan Act
of 2021, and for future pandemics or other emergencies.
We are making two recommendations to HUD:
Recommendations for
Executive Action The Office of the Chief Financial Officer and HCCRT should work with
relevant program offices for each of the six CARES Act programs that
meet HUD’s front-end risk assessment criteria to reassess the need to
either (1) conduct a full front-end risk assessment; or (2) take and
document additional risk assessment steps to align with key aspects of
the front-end risk assessment process, such as ranking risks and
developing plans to mitigate identified risks. (Recommendation 1)
The Office of the Chief Financial Officer and HCCRT should work with
relevant program offices to identify inherent or new fraud risks, assess the
program’s fraud risk tolerance, document the program’s fraud risk profile,
and take appropriate action to mitigate identified potential risks for each of
the six CARES Act-funded programs that meet the front-end risk
assessment criteria. (Recommendation 2)
We provided a draft of this report to HUD for review and comment. In
Agency Comments written comments, which are summarized below and reproduced in
and Our Evaluation appendix III, HUD disagreed with the draft report’s first recommendation
and agreed with the second recommendation.
HUD disagreed with the draft report’s first recommendation that the Office
of the Chief Financial Officer and HCCRT should work with relevant
program offices for each of the six CARES Act programs that meet HUD’s
criteria to reassess the need to complete a front-end risk assessment for
each program, and either conduct a full front-end risk assessment or take
and document additional risk assessment steps to align with key aspects
of the front-end risk assessment process, such as ranking risks and
developing plans to mitigate identified risks. In its response, HUD
reiterated steps it took as part of its governance and control of the
CARES Act funds, including establishing HCCRT, conducting rapid risk
assessments with all program offices that received CARES Act funding,
and conducting its regular internal control A-123 and improper payments’
testing reviews, which HUD said it leveraged in its evaluation approach.
We recognize HUD needed to act quickly to respond to the pandemic and
that it took steps to analyze new risks and has conducted annual reviews
of existing programs. However, HUD’s response did not cite additional
CARES Act risk assessment activities nor did HUD provide
Page 49 GAO-21-104542 HUD Oversight of CARES Act Funds
documentation to support some of the risk assessment activities it cited
during the audit. For example, while HCCRT officials told us they
discussed long-term actions and timeframes to address identified risks of
the CARES Act funds—key aspects of HUD’s front-end risk assessment
policy—HCCRT has not provided documentation of such discussions or
plans to address identified risks. Further, HCCRT has not provided
documentation that it thoroughly analyzed the risks posed to each
individual program and actions for mitigating them.
As HUD’s response stated it disagreed with our recommendation to
complete a front-end risk assessment and did not specifically address the
other option to take and document additional actions, we made minor
edits to the recommendation language to further emphasize the flexibility
it provides HUD. The recommendation does not prescribe front end-risk
assessments. It provides the Office of the Chief Financial Officer and
HCCRT, in consultation with program offices, with the flexibility to
reassess what further actions are needed to supplement the CARES Act
programs’ rapid risk assessments. For example, HUD could incorporate
and document further actions as part of HCCRT’s fiscal year 2022
internal controls evaluation strategy that it mentioned in its response.
Further, better documentation of these steps would help HCCRT, the
Office of the Chief Financial Officer, and program offices ensure they are
in agreement on each CARES Act program’s risks and actions to mitigate
them. We continue to believe the recommendation is valid as it would
help HUD more thoroughly understand the CARES Act’s effects on its
programs’ risks and position it to better manage these risks as it
continues its implementation and oversight of its funding from the CARES
Act.
HUD concurred with the second recommendation that the Office of the
Chief Financial Officer and HCCRT work with relevant program offices to
take additional steps to assess and mitigate fraud risks presented by the
CARES Act funding. Actions HUD takes to address this recommendation
may also be responsive to our first recommendation.
HUD also provided technical comments, which we incorporated as
appropriate.
We are sending copies of this report to the appropriate congressional
committees and the Secretary of Housing and Urban Development. In
addition, the report is available at no charge on the GAO website at
https://www.gao.gov.
Page 50 GAO-21-104542 HUD Oversight of CARES Act Funds
If you or your staff have any questions about this report, please contact
me at (202) 512-8678 or cackleya@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs are listed on the last
page of this report. GAO staff who made major contributions to this report
are listed in appendix IV.
Alicia Puente Cackley
Director
Financial Markets and Community Investment
Page 51 GAO-21-104542 HUD Oversight of CARES Act Funds
List of Committees
The Honorable Patrick Leahy
Chairman
The Honorable Richard Shelby
Vice Chairman
Committee on Appropriations
United States Senate
The Honorable Ron Wyden
Chairman
The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate
The Honorable Patty Murray
Chair
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Gary C. Peters
Chairman
The Honorable Rob Portman
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Rosa DeLauro
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Cathy McMorris Rodgers
Ranking Member
Committee on Energy and Commerce
House of Representatives
Page 52 GAO-21-104542 HUD Oversight of CARES Act Funds
The Honorable Bennie G. Thompson
Chairman
The Honorable John Katko
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives
The Honorable Richard Neal
Chairman
The Honorable Kevin Brady
Ranking Member
Committee on Ways and Means
House of Representatives
Page 53 GAO-21-104542 HUD Oversight of CARES Act Funds
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
In this report, we examined the Department of Housing and Urban
Development’s (HUD) (1) actions to oversee its CARES Act funds and
manage risks, including fraud risk, (2) implementation and monitoring of
the CARES Act funds of selected community development and
homelessness grant programs, and (3) implementation and monitoring of
the CARES Act funds of selected rental assistance programs. The
selected programs for the second and third objectives received CARES
Act appropriations of at least $1 billion: Community Development Block
Grant Coronavirus Response (CDBG-CV), Emergency Solutions Grants
Coronavirus Response (ESG-CV), the Housing Choice Voucher program
(HCV), and Project-based Rental Assistance (PBRA).
To examine HUD’s actions to oversee its CARES Act funds and manage
risk (including fraud risk), we obtained and reviewed documentation from
the HUD CARES Act Compliance Response Team’s risk assessment
efforts, including a memo on internal controls, a list of potential CARES
Act impacts, a summary of program office discussions, and two lists of
top risks. We then compared these documents to HUD’s risk assessment
policy and our Fraud Risk Framework. 1 We also interviewed HUD officials
to more fully understand their risk assessment steps. We obtained and
reviewed HUD documentation regarding HUD’s CARES Act
implementation and oversight activities, such as HUD’s submissions to
the Pandemic Response Accountability Committee and reporting
playbooks on how HUD was meeting the CARES Act’s reporting
requirements. We also reviewed prior reports by GAO and HUD’s Office
of Inspector General (HUD OIG) on HUD risk management, staffing, and
technology challenges to identify those that were relevant to HUD’s
CARES Act oversight. In addition, we interviewed HUD officials leading its
CARES Act compliance efforts. Finally, we obtained and reviewed HUD
financial data for its CARES Act funds from May 2020–July 2021. We
used these data to analyze CARES Act obligation and expenditure rates
over time. We assessed the reliability of these data by reviewing a prior
data reliability assessment from November 2020, checking the data for
outliers and errors, and interviewing HUD officials. We determined that
the data were sufficiently reliable for reporting on the spending status of
HUD’s CARES Act funds.
To examine HUD’s implementation and monitoring of the CARES Act
funds for selected grant and rental assistance programs, we analyzed
1GAO, A Framework for Managing Fraud Risk in Federal Programs, GAO-15-593SP
(Washington, D.C.: July 28, 2015).
Page 54 GAO-21-104542 HUD Oversight of CARES Act Funds
Appendix I: Objectives, Scope, and
Methodology
HUD documentation on these programs, such as notices and guidance.
We reviewed the CARES Act to identify the act’s requirements for these
programs and obtained HUD documentation and interviewed officials on
how the agency and programs addressed these requirements. Finally, we
reviewed prior GAO and HUD OIG reports on these programs to identify
any management or oversight challenges that could affect the CARES
Act programs.
We also reviewed information on these programs’ CARES Act funds’
performance metrics. For the grant programs, we obtained and reviewed
HUD data on (1) CDBG-CV and ESG-CV grants’ status, obligations, and
expenditures as of July 2021; and (2) CDBG-CV and ESG-CV programs’
performance metrics. For HCV, we reviewed May 2021 data from HUD’s
Financial Data Schedule reporting system on how public housing
agencies had spent their HCV CARES Act funds. We assessed the
reliability of these data by interviewing agency officials, checking the data
for outliers and errors, and reviewing related documentation. We
determined these data were sufficiently reliable for the purposes of our
review. We also obtained and reviewed HUD documentation related to
the new CARES Act reporting portal for HCV and other Office of Public
and Indian Housing (PIH) programs.
We also interviewed six selected industry associations representing
funding recipients for our selected programs to obtain their views on
HUD’s administration and oversight of CARES Act funds. We selected
these associations because they had publicly issued guidance or
commentary on HUD’s COVID-19 assistance and been previously
interviewed for prior GAO work. 2
• For CDBG-CV and ESG-CV, we interviewed three associations
representing grantees: the National Community Development
Association, National Association for County Community and
Economic Development, and Council of State Community
Development Agencies. In response to our questions, the National
Community Development Association solicited input from its 459
members and 71 responded. The association provided us with a
summary of these responses. The National Association for County
2We interviewed three of these associations (National Community Development
Association, Council of Large Public Housing Agencies, and Public Housing Authorities’
Directors Association) in September 2020 as part of our work for GAO, COVID-19: Urgent
Actions Needed to Better Ensure an Effective Federal Response, GAO-21-191
(Washington, D.C.: Nov. 30, 2020).
Page 55 GAO-21-104542 HUD Oversight of CARES Act Funds
Appendix I: Objectives, Scope, and
Methodology
Community and Economic Development also solicited input on our
questions from its members, and provided us with the responses from
five members representing counties in different regions of the U.S.
• For HCV, we interviewed two associations representing public
housing agencies: the Council of Large Public Housing Agencies and
Public Housing Authorities Directors Association.
• For PBRA, we interviewed the National Council of State Housing
Agencies, which represents 33 of the program’s contract
administrators (organizations that assist in HUD’s administration of
the PBRA program by providing direct oversight and monitoring of the
financial and physical condition of properties).
The views provided by these associations and their selected members
are not generalizable to other associations or all funding recipients, but
they offered important perspectives.
For all three objectives, we interviewed HUD officials from the Office of
Community Development (CPD), which administers CDBG-CV and ESG-
CV; PIH, which administers HCV; and Office of Multifamily Housing
(Multifamily Housing), which administers PBRA. We also interviewed
CPD, PIH, and Multifamily Housing staff in selected field offices. 3 We
generally selected field offices that received the most CARES Act funding
and that represented different geographic regions. We interviewed:
• CPD field staff in the Chicago Regional Office, New York Regional
Office, Philadelphia Regional Office, Los Angeles Field Office, and the
Jacksonville and Miami Field Offices in Florida;
• PIH field office staff in the Boston Regional Office, Chicago Regional
Office, New York Regional Office, Los Angeles Field Office, and
Miami Field Office; and
• Multifamily Housing staff in the Atlanta Regional Center, Chicago
Regional Center, New York Regional Center, and San Francisco
Regional Center.
We conducted this performance audit from September 2020 to
September 2021 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives. We
3In general, HUD’s field office structure includes offices that oversee entire regions that
include smaller field or satellite offices.
Page 56 GAO-21-104542 HUD Oversight of CARES Act Funds
Appendix I: Objectives, Scope, and
Methodology
believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Page 57 GAO-21-104542 HUD Oversight of CARES Act Funds
Appendix II: CARES Act Funds Summary Appendix II: CARES Act Funds Summary and
Status for Department of Housing and Urban
and Status for Department of Housing and
Development Programs
Urban Development Programs
Figure 8: Status of Supplemental CARES Act Funding for all HUD Programs, as of July 31, 2021
a
The CARES Act also appropriated $5 million to the Office of the Inspector General for audits and
investigations. As of July 31, 2021, the office had expended approximately 38 percent of its
appropriation.
b
Funding for permanent supportive housing competitive grantees ($10 million) is to remain available
until September 30, 2022.
c
Includes $35 million for the Office of the Chief Financial Officer, $10 million for Community Planning
and Development, and $5 million for Public and Indian Housing.
Page 58 GAO-21-104542 HUD Oversight of CARES Act Funds
Appendix III: Comments from the
Appendix III: Comments from the Department
of Housing and Urban Development
Department of Housing and Urban
Development
Page 59 GAO-21-104542 HUD Oversight of CARES Act Funds
Appendix III: Comments from the Department
of Housing and Urban Development
Page 60 GAO-21-104542 HUD Oversight of CARES Act Funds
Appendix IV: GAO Contact and Staff
Appendix IV: GAO Contact and Staff
Acknowledgments
Acknowledgments
Alicia Puente Cackley, (202) 512-8678 or cackleya@gao.gov
GAO Contact
In addition to the contact named above, Allison Abrams (Assistant
Staff Director), Miranda Berry (Analyst in Charge), Heather Chartier, Dahlia
Acknowledgments Darwiche, Heather Dunahoo, John McGrail, Marc Molino, Shenandoah
Sowash, and Farrah Stone made significant contributions to this report.
(104542)
Page 61 GAO-21-104542 HUD Oversight of CARES Act Funds
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