Policy Basics: The Housing Choice Voucher Program

Living in a safe, stable, and affordable home— defined as costing no more than 30 percent of a household’s income— is foundational to individual and public health. The Housing Choice Voucher (HCV) program is the nation’s major housing rental assistance program helping families living on poverty-level incomes, seniors, and those living with disabilities afford their homes. Housing vouchers are shown to lift people out of poverty, improve long-term outcomes for families and children, and reduce racial inequality. Today, housing vouchers support 10,595 Montanans—equivalent to the entire population of Carbon County— in households across the state.[1]

Due to insufficient funding, only one in four eligible households receives housing voucher assistance.[2] Chronic underinvestment in federal rental assistance programs prevents 15 million Black, Indigenous, and people of color (BIPOC) eligible for assistance from receiving it.[3] Expanding the HCV program would be an essential step towards reducing housing instability for households living on the lowest incomes and correcting our nation’s deep racial inequities.

Background

Millions of households living on low incomes must pay too high shares of that income on housing costs.   Of the total 10.8 million renter households nationwide with extremely low-incomes, 70 percent— 7.6 million households— face severe housing cost burden, paying more than half of their incomes for housing.[4] Due to a long history and ongoing practice of racism and discrimination that limits economic and housing opportunities for communities of color, housing challenges, such as severe housing cost burdens, overcrowding, evictions, and the experience of homelessness, disproportionately fall on BIPOC households.[5]

This racial disparity reflects the impacts of historical and ongoing racial injustice and discrimination in housing, employment, and educational opportunities that have systematically disadvantaged people of color. A primary driver of our nation’s racial wealth gap is decades of racial discrimination of real estate agents, banks and insurers, and the federal government prevented people of color from purchasing homes. This took the form of federal housing policy denying borrowers access to credit in Black communities, physical violence, and covenants banning home sales to Black people trying to live in predominately white neighborhoods.[6] Even as our nation ended many of these overtly racist practices, including through the passage of the 1968 Fair Housing Act, insidious forms of discrimination persist and lock communities of color out of building wealth through homeownership, educational attainment, and opportunities to make equitable wages.

Program Summary

The Housing Choice Voucher program was established in 1974 in Section 8 of the repeatedly amended United States Housing Act of 1937. The Section 8 low-income housing program is two programs: the Housing Choice Voucher program, which are portable subsidies that families can use to rent housing of their choice in the private market, and the project-based Section 8 program, which is rental assistance that is attached to a unit of privately owned housing. The Section 8 program began primarily as a project-based rental assistance program.[7] By the mid-1980s, project-based rental assistance came under criticism for being too expensive and not equitably serving Black households living on low incomes by segregating them in high-poverty areas. Due to these concerns, Congress shifted to providing direct rental subsidies so that people could decide for themselves where they want to live.

Today, the Housing Choice Voucher program under Section 8 is the largest federal low-income housing assistance program, providing over 2.3 million households tenant-based rental assistance.[8] The program has three primary goals:

  • To provide affordable, stable, and safe housing for households living on very low incomes
  • To reduce concentrated geographic poverty; and
  • To improve housing and neighborhood choice for families.[9]

The Department of Housing and Urban Development (HUD) and a network of about 2,170 state and local public housing agencies (PHAs) administer the HCV program.[10] PHAs distribute vouchers to qualified households who then conduct their own housing search. An individual must find an available rental that meets quality program requirements and whose landlord accepts vouchers as payment. The household pays 30 percent of its adjusted gross income towards housing costs. The value of the voucher covers the remaining rent balance up to a limit (called a payment standard) set by the local PHA that is based on HUD’s Fair Market Rent estimates.[11]  When a household receives a voucher, it usually has 60-120 days to find an apartment, though extensions are sometimes possible, or it loses the voucher.

Unlike public housing agencies, tribal nations are not eligible to apply for housing choice vouchers since the passage of the Native American Housing Assistance and Self-Determination Act (NAHASDA) of 1996. NAHASDA provides block grant funds directly to tribal nations to provide affordable housing-related opportunities for eligible households living on reservations and in other tribal areas but restricts tribal nations from accessing many other HUD programs.

Funding

The Housing Choice Voucher program receives discretionary funding in annual appropriation bills in an amount determined by Congress. Unlike other federal anti-poverty programs, like the Supplemental Nutrition Assistance Program, the HCV program is not an entitlement program, meaning that not everyone who qualifies and applies for assistance receives it.

Most PHAs receive voucher renewal funding each year, adjusted for inflation. That amount is capped at the total number of vouchers an agency has been awarded since the start of the program and the cost of the authorized vouchers in use during the prior year— not based on need.[12] Congress also funds incremental vouchers, which are new vouchers that specifically address the housing needs of a particular group, as opposed to vouchers that add to a community’s overall voucher pool.[13] Examples include the Veteran Affairs Supportive Housing program for homeless veterans and the Family Unification Program for families for whom inadequate housing has caused or threatens to cause a child to be removed from their family or prevents family reunification.[14]

Eligibility

Housing Choice Vouchers serve households living in deep poverty. HUD sets income limits to determine eligibility for housing vouchers based on estimates of median income and fair market rents in an area. By law, 75 percent of all new vouchers each year must go to households living on extremely low incomes, defined incomes no more than 30 percent of the Area Median Income or the federal poverty line, whichever is higher.[15] In addition, state and local PHAs have the flexibility to set admission preferences for households that meet specific criteria such as veterans, working families, families fleeing domestic violence, or on an applicant’s housing needs such as those experiencing homelessness.

Attributes of Voucher Assisted Montana Households

In Montana, a two-person household can make no more than $17,300 to be considered extremely low income.[16] To put into context, someone making minimum wage in Montana at 40 hours a week earns only $18,200.[17] Even so, the average yearly income of a voucher-supported Montana household falls below this standard at $12,360.[18]

Among households that would most benefit from rental assistance would be the one in four Montanans living on extremely low incomes or incomes at or below the poverty level. Understandably, these households must pay very high shares of their income on rent— 68 percent pay more than half of their limited incomes to afford their homes.[19] Severely cost burdened households in this situation are more likely than others who pay affordable levels of rent, including those living on poverty level incomes, to sacrifice meeting other essential needs like healthy food and medicine in order to pay the monthly rent.

Today, 5,728 Montana households, which include tenants living with disabilities, families raising children, and senior citizens who live in these households, use a voucher. When disaggregated by race, voucher assisted households reflect the state’s demographics, with white and American Indian or Alaska Native (AI/AN) individuals and families making up the largest share. The most recent data shows that 79 percent households receiving HCVs are white, and 14 are AI/AN.[20]

Value of Housing Vouchers

Housing vouchers can be a powerful tool to address persistent poverty and longstanding racial inequity by directly redressing affordability problems.  When properly implemented, vouchers can stabilize families and give them greater choices about where they live, access to higher-opportunity neighborhoods, and meet their legal obligation to reduce the housing segregation of Black households  and concentrated residential poverty. Multiple studies have found that the voucher program can deliver important, tangible outcomes.

  • Vouchers reduced the number of people living in crowded housing by half and reduced homelessness by three-quarters compared to similar households without housing assistance.[21]
  • Families that relocated to lower-poverty neighborhoods with the help of vouchers experienced better health, higher incomes, and increased college attendance for children whose families moved before they were 13.[22]
  • Vouchers substantially reduce the number of families living in poverty, allowing them to spend more to meet other basic needs like food and medicine.[23]
  • Expanding vouchers to all eligible households would lift 9.3 million people out of poverty and reduce racial disparities. These gains would be most significant among BIPOC populations expanding vouchers would cut the poverty rate for Latinx households by a third, Black households by a quarter, and Asian, Pacific Islander, and American Indian and Alaska Native households by a fifth.[24]

Barriers to Program Success

There is evidence that the HCV program has fallen short of achieving its intended goals. The way the program is designed and administered contributes to the housing choice and mobility challenges that vouchers are meant to redress. Inadequate funding, an area’s rental market and availability of affordable housing stock, and quality of landlord relations all factor into current usage barriers.

Voucher Availability

Housing vouchers are not an entitlement benefit and Congress does not appropriate the level of funds needed for housing assistance. The number of households that qualify for housing vouchers far exceed the number of vouchers available. Due to a shortage of resources, most public housing agencies maintain long wait lists or use a lottery to determine which households can join the waitlist. Many PHAs have closed their waitlists because applications far exceed the number of vouchers they can administer. Households placed on a waiting list typically wait years before receiving a voucher. In Montana, the average wait times for people on a waitlist for an HCV is 25 months.[25] There are more than 5,000 people on a waitlist in Montana, as of January 2020.[26] Many other families cannot get on a waitlist. According to one 2016 survey, over half of agencies were not allowing any additional applicants on their waitlists. Thus, the number of people on voucher waitlists and the length of time to receive a voucher are incomplete measures of the unmet need for assistance because many eligible households do not make it onto a waitlist in the first place.

Source of Income Discrimination

The “choice” component of the Housing Choice Voucher program is not fully realized. Even when a household receives a housing voucher, they still must find landlords that are willing to accept a voucher as rent payment before the voucher expires and goes to someone else. Federal law does not prohibit landlords from discriminating against renters based on their source of payment. In the absence of federal protections against voucher holders, landlords routinely discriminate against renters with housing vouchers, particularly landlords in higher-rent areas with high-quality schools, jobs, and transportation.[27] Explicit or implicit bias continue to undermine housing options for BIPOC households. Only 12 states and 87 local governments have passed source-of-income laws prohibiting landlords from discriminating against voucher holders; Montana is not among them.[28] 

Rent remains unaffordable

Another problem is that voucher amounts can be too low to move a family out of high-poverty, racially segregated neighborhoods. Housing Choice Voucher rental subsidies are capped by a payment standard based on the Fair Market Rent of an area. Payment standards based on area Fair Market Rents are often too low to cover rent in neighborhoods with low poverty, low crime, and strong schools, which perpetuates the racial and social segregation vouchers are intended to mitigate.[29] In Montana, for example, Missoula County’s payment standards mean that someone looking for a one-bedroom rental needs to find one for $849 or less, a two-bedroom rental needs to be $1,076 or less.[30] The rental market in the city of Missoula is one of the most expensive in the state, as well as having very low vacancy rates, and it is challenging for someone living on a very low income to find a place where they do not pay more than 30 percent of their income on rent.

Federal Policy Interventions 

All Montanans deserve a safe, affordable, and stable place to call home. The federal Housing Choice Voucher program is an important tool that we can use to achieve that ideal. There are several actions Congress, HUD, and public housing authorities should take to improve implementation of the HCV program. Making these comprehensive reforms will be a critical step towards achieving true housing choice and mobility.

  • Make Housing Choice Vouchers available to all eligible households by setting federal funding levels based on need.
  • Prohibit landlord discrimination against voucher holders by enacting federal Source of Income Discrimination laws, and incentive landlords to accept vouchers.
  • HUD and public housing agencies set voucher payment standards that are consummate with the local rental market.

Back to school means better access to meals for many Montana children

As kids across Montana stuff their backpacks with notebooks, pencils, and crayons, there is one thing they won’t have to worry about packing – their school lunch. This year, like last year, children nationwide have been able to receive free school meals.

The pandemic meant extraordinary administrative challenges, frequently changing financial circumstances, and unforeseen stressors, For schools and families alike. Free school meals have provided consistency for millions of children and families, who did not have to navigate a complicated application process in a time of uncertain employment.

Most importantly, they provided students with nutrition and a chance to learn and grow in a time of unprecedented challenges. And while the pandemic surges on, free school meals address a childhood hunger crisis that existed even before the coronavirus made us painfully aware of the schools’ role in keeping students fed.

When schools closed in the spring of 2020, American policymakers realized how many students relied on school meals. Many students living on low incomes were eligible to receive free or reduced-price school meals. Unfortunately, these programs often left out students whose income was a little too high, and families who weren’t aware of the program or didn’t understand the application.

No child in Montana – a state that helps feed the nation – should know what hunger feels like. But too many do. This summer, 29,000 households in the state reported that the children in the household had not received enough food to eat the past week. As children head back to school, free school meals can help address this crisis.

The extension of free school meals is set to expire at the end of the 2021-2022 school year. However, Congress has the opportunity to decrease food insecurity in children for years to come.

The first proposal is expanding the Summer Electronic Benefit Transfer (Summer EBT). In the summer of 2020, Congress provided food assistance for families who received Supplemental Nutrition Assistance Program (SNAP) and/or free and reduced-priced school meals, because those students were unable to receive school meals when the schools closed. The program was extended through the summer of 2020 as many families struggled to utilize summer meal service sites due to the pandemic. In the summer of 2021, the program was again renewed, helping to address the challenge of summer hunger that existed even prior to the pandemic.

Congress should make summer EBT a permanent feature, providing 29 million children with assistance when school meals are not an option. Montana does provide free summer meals at certain sites through the Summer Food Service Program (SFSP), and this year served a record number of summer meals. But while Summer Nutrition Programs, including the SFSP, are an important resource for families, they only reach one out of every five kids who qualify. Summer EBT can help fill the gaps in nutrition many children experience during the summer.

The second change is increasing the Community Eligibility Provision. Community eligibility allows schools to provide free meals to all students in high poverty areas, regardless of their income. This flexibility helps catch families who would normally be eligible, but do not know about it or think they might be ineligible and never apply.

Community eligibility also helps reduce the stigma of free and reduced-price lunches, allowing all children to meet their needs without fear of judgment. The proposed federal budget would increase the share of federal fund for the program, allowing more schools to pursue this option.

The pandemic has taught us that we cannot undervalue the roles that schools play in our towns and cities. Not only are they centers of learning, but sources of safety, community, and nutrition for thousands of Montana children. Congress should act now to help expand schools’ ability to make sure that no child goes hungry during school or the summer. A strong federal budget matters when it comes to keeping Montana’s children hunger free. 

What would help families make ends meet? Make the Child Tax Credit permanent

Congress has an opportunity to help Montanans not only recover from the effects of the coronavirus, but to create a nation that includes everyone in its growing economy. Now is the time to address the challenges faced by Montanans, especially Montanans living on low-incomes and Montanans of color. We have the opportunity now to rebuild a stronger country, if Congress makes permanent its changes to the Child Tax Credit.

The Child Tax Credit (CTC) can drastically and permanently reduce childhood poverty and hunger. It can also begin to address racial injustices in our tax code if the changes made earlier this year become permanent.

This summer, families received much-needed support through a one-time expansion of the CTC. The effects have been immediately noticeable – food insecurity has dropped, and families are better able to afford childcare.

Over 9 out of 10 children in Montana will benefit from the expansion. A permanent expansion of the CTC could reduce childhood poverty by 45 percent, meaning 10,000 fewer children in Montana would live in poverty. For families of color, who have long felt the burden of a discriminatory tax code, the changes could reduce child poverty even more. Up to 55 percent fewer children of color will live in poverty if Congress permanently expands the CTC.

New, temporary changes to the CTC benefit families.

Before the American Rescue Plan Act (ARPA), the CTC was $2,000 for children 16 years and under. For the first time, the CTC includes 17-year-olds. Under the ARP, the CTC amount for children under 6 is $3,600, and for children aged 6 to 17, $3,000. Starting July 15, families began receiving monthly payments and will continue to receive them through the end of 2021. For each child under 6, this means a monthly check of $300 and $250 for those aged 6 to 17.

These credits can help significantly reduce the cost of raising children. For parents with a four-year-old, $300 a month can help cover roughly 40 percent of average monthly childcare costs, or it could equal up to a month’s worth of food for a child. Parents could also pay for other needs and opportunities, like new shoes or music lessons.

But while the dollar increase in the CTC has made the most headlines, it is not the only significant change.

Prior to this summer, the CTC was not completely available to families living on the lowest incomes. In the past, families did not receive the full tax credit if the amount they owed in taxes was less than the total credit. This meant higher-income families received a larger credit than families living on the lowest incomes.

For this year only, however, the tax credit is “fully refundable,” meaning families can receive the full amount, even if the amount they owe in taxes is less than the total credit received. This is a vital change for those families who need it the most and will be able to benefit from the full credit for the first time.

The refundability of the CTC reduces historical racial injustices.

American Indian families have suffered the consequences of discriminatory policies for generations. For example, the forcible transfer of land from American Indians to non-Indians in the late 19th and early 20th centuries destroyed opportunities to build generational wealth, creating lasting impacts today. American Indians have, and continue to be, discriminated against in education, housing, and employment opportunities, pushing many families into poverty. Due to inequitable policies, American Indians living in Montana experience poverty are 2.5 times more likely to live in poverty than white Montanans are.

Our tax code has doubled down on these injustices, as families living on the lowest incomes have not been eligible to receive the full CTC. This discrimination against those living on low incomes has served to perpetuate a cycle of poverty. But because the CTC is refundable for the first time, families living on low incomes can receive the full credit this year.

Refundability of the CTC is essential for families of color. Nationwide, the CTC expansion would lift 124,000 American Indians and Alaska Natives above the poverty line and 156,000 closer to the poverty line. In Montana, poverty for children of color would be reduced by 55 percent each year if these changes in the CTC were made permanent.

The CTC provided immediate impact and helped rural communities.

Food insufficiency in households with children dropped the week after families received the checks. Nearly half of respondents in a Census survey reported spending the credit on food. The CTC also helped families afford childcare – 17 percent of respondents with children under the age of 5 spent the credit on child care. With Montana facing a critical childcare shortage, the changes to the CTC can help more families afford quality care for their children.

As families spend their tax credit on their most urgent needs, they simultaneously stimulate their local economies, generating jobs and state and local tax revenue. The CTC provides a substantial benefit in rural states, like Montana, with smaller incomes and larger family sizes. The total expanded CTC, which brings in over $824 million to the state, could create 2,156 median wage jobs.

Refundability of the CTC should be permanent.

The changes to the CTC, including the increased benefit, expanded ages, and refundability, benefit over 90 percent of Montana children. But while the CTC has long been a source of support for families, the fact that families living on the lowest incomes could not receive the full credit especially children of color.

Allowing the CTC to return its previous state of non-refundability would discriminate against families of color who were driven into poverty by racially motivated discriminatory policies, like the forcible transfer of land and the underfunding of tribal colleges. Congress should act to make the refundability of the CTC a permanent feature to take steps in correcting this historical injustice.

The ARPA Commission needs to make housing an integral part of Montana’s post-pandemic recovery plan

Montana communities across the state are facing significant housing shortages, particularly for households living on lower and moderate incomes. The pandemic brought more attention to this ever-worsening crisis, as families struggle to find a safe, stable, and affordable place to live, employers struggle to hire and keep workers, and communities grapple with growing issues of homelessness. On Wednesday, July 21, the ARPA Economic Transformation and Stabilization and Workforce Development Advisory Commission will meet to discuss upcoming recommendations by the state administration on the use of flexible state COVID relief funds. The Montana Budget & Policy Center, together with 40 organizations, housing providers, and developers as part of the statewide Montana Housing Coalition, submitted a letter urging the state to invest a minimum of $40 million of flexible state fiscal relief funds into the construction and preservation of affordable housing.

Of this $40 million, we urge the Department of Commerce to dedicate at least $30 million in grants for direct financial assistance to fill funding gaps and reduce total development costs for housing projects. These grants will be similar to Community Development Block Grants (CDBG) and Housing Development Partnerships Program (HOME) administered by the Montana Housing Division. The Department can prioritize grants used to:

  • Purchase existing housing to convert to affordable housing; provide preconstruction technical assistance for affordable housing projects; and comprehensive rehabilitation and preservation of existing affordable housing;
  • Match federal, local, and other funding sources; and
  • Provide equity to housing projects that have applied for federal Low-Income Housing Tax Credits but not awarded due to lack of funds and located in communities disproportionately impacted by the pandemic.

Additionally, we urge the Department of Commerce to dedicate at least $10 million in grants to nonprofit housing partners and service organizations for housing and facilities necessary to provide safe shelters and supportive housing. The Department can prioritize grants used to:

  • Rent, acquire, and renovate existing facilities and convert underused hotels, motels, and other properties to shelters and supportive housing; and
  • Provide families at risk of or experiencing homelessness and for survivors of domestic violence.

Check out the full letter here. Montana’s State Fiscal Recovery Funds gives the Department of Commerce an unprecedented opportunity to tackle our state’s acute shortage of available and affordable housing and, by doing so, build stronger, resilient communities. We hope Montanans will make their voices heard and urge the ARPA Commission to make housing production an integral part of Montana’s post-pandemic recovery plan.

Child Tax Credit Awareness Day

The child tax credit is a federal tax credit that provides relief for nearly all working people with children, lifting many families above the poverty line. For 2021, the child tax credit has been increased from $2,000 per child under 17 to $3,000 for each child between the ages of 6 and 17 and to $3,600 for each child under 6.  The credit has also been expanded to be fully refundable, meaning that children whose parents didn’t have enough earnings in a year to claim the full tax credit previously will receive the full credit in 2021. In Montana, 91 percent of children under 18 (209,000 children) will benefit. These changes are expected to reduce child poverty in Montana by 45 percent, by lifting family income above the poverty line.

Beginning July 15, the IRS will begin sending advanced monthly payments of the child tax credit. While payments will differ for different family situations, in general, for each qualifying child under 6, families will receive $300 monthly. For children ages 6 to 17, each family will receive a monthly payment of $250. The remaining half of the credit will be received when 2021 income tax returns are filed.

Am I eligible for the credit?

If you filed a 2019 or 2020 tax return and claimed the child tax credit on the return, live in the US for at least half the year, and have a qualifying child who is under 18 at the end of 2021 with a valid social security number, you are eligible for the credit.

The child tax credit expansion begins phasing out at incomes of $75,000 for single filers, $112,500 for single filers with dependents, and $150,000 for joint filers.

What should I do to receive advanced payments?

If you have filed your 2019 or 2020 taxes, you don’t need to do anything. If the IRS has your banking information on file, they will automatically deposit your monthly advance of the child tax credit. For filers without banking information on file with the IRS, the IRS will issue checks for advanced payments of the credit.

For families that do not file income taxes, the IRS has released a tool to submit your information to receive the automatic payments. Sign up now.

Can I decline the advanced payment?

For families that prefer to wait until they file their 2021 income taxes to receive the additional credit, the IRS plans to release a tool in the coming weeks to unenroll from payments.

How long will the credit expansion last?

The child tax credit expansion is currently only in effect for 2021.