Archive

Department of Housing and Urban Development

Recommendations and Actions

HUD06: Streamline HUD Field Operations

Background

The Department of Housing and Urban Development (HUD) organizational structure has been widely criticized by the General Accounting Office (GAO), the HUD Inspector General, and its customers for fragmentation, lack of accountability, and overlapping authority among headquarters, the 10 regions, and the 70 field offices.

Five assistant secretaries at headquarters in charge of policy and program development rely on 10 substantially independent regional offices to implement their programs. The 10 regional offices, which report directly to the secretary, create confused administration and promote a lack of coordination and accountability. The expansion from six to 10 regional offices occurred to comply with a directive from then-President Nixon for all federal agencies to standardize at a 10- region field organization.

Currently, workload among the offices varies widely. For example, the New York regional office monitors 238,000 units of federal public housing while the Seattle regional office monitors 30,000 units of public housing.1

Approximately 10,000 of HUD's 13,500 employees are in the field. With the advanced degree of automation in recent years and the delegation of many application processing and loan monitoring activities to private vendors, there is a very real opportunity for HUD to streamline its field office structure. The emergence of state governments as important partners in the government's effort to provide affordable housing and the potential use of public-private partnerships for large-scale asset disposition contribute to this modernization trend.

An ideal field structure would match workforce with workload and delegate work to states and private vendors or public-private partnerships where possible and economical. It would also delegate authority to the lowest feasible level and centralize and automate back-office functions such as loan monitoring and dormant program supervision wherever possible. The structure should be responsive to the assistant secretaries who are accountable for operating programs. The structure should be flexible so that different HUD functions can be managed in the most economical mode for each function. HUD is not alone among federal agencies in having an oversized and outdated field structure.

Actions

1. HUD should participate in the multiple agency field office restructuring effort.

In that context, HUD should develop a five-year action plan to eliminate duplicative and burdensome layers of review and consolidate and streamline various departmental functions. The current level of review at the regional offices should be shifted to the field offices. Regional offices should continue to provide certain necessary functions such as coordination between the field offices and headquarters. However, most functions and staff should be shifted to the field offices.

2. Program field staff should report more directly to responsible program assistant secretaries.

Each office should have a director whose function would be to represent the department, oversee secretarial priorities, and administer the office. Each assistant secretary should be free to organize his or her field functions efficiently, with emphasis on consolidation of functions to the extent feasible. For example, the Assistant Secretary for Housing may find it necessary to have some functions widely dispersed across the nation, but to have another function--say, multi-family property disposition--managed out of only three offices for the whole country.

3. HUD should accelerate the privatization of single-family insurance application processing and asset management and centralize lender monitoring.

This would, possibly, eliminate the need for up to 29 of the smaller offices.

4. HUD should continue to delegate specific grant award decisionmaking to the states and localities, as is the case with the Community Development Block Grant Program and the new HOME Investment Partnerships program.

Responsibility for dormant programs such as the Urban Development Action Program (UDAG) and 236 subsidy programs should be centralized under the appropriate assistant secretary's office in Washington, D.C.

5. No one should be laid off as a result of this office consolidation. A full attrition program should apply in the field until an appropriate level of staffing is achieved.

Implications

HUD's field structure will be greatly simplified. Personnel and overhead savings will be achieved as the agency moves from a three- tiered, 80-office structure to a two-level structure with a smaller number of offices, staffed on a differential basis dictated by workload.

HUD, its constituents, its customers, and the general public will benefit from these changes, as the cost of doing HUD business will decrease, the appropriate levels of staff skills will be established for field office functions, and accountability of program assistant secretaries will be maximized. HUD employee assignments will become more interesting and the development of career ladders will be facilitated. Money will be saved as the number of field offices and field personnel decline through attrition.

Fiscal Impact

Budget estimates are based on a 15 percent total reduction in the current field staff of more than 10,000 to a 1999 level of 8,500. Average 1993 total full-time equivalent (FTE) cost is estimated at $50,000, with a compounded annual four percent rate of increase. Budget authority reductions are computed at $35,000 per FTE compounded at four percent.

These are budget estimates based on assumed attrition. HUD will require flexibility in introducing the field restructuring. HUD has a growing workload, is severely underautomated and has already been reduced by 4,500 FTEs during the last 12 years.

Budget Authority (BA) and Outlays (Dollars in Millions)

Fiscal Year

             1994    1995    1996    1997    1998    1999    Total
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
BA            n/a   -10.5   -21.5   -33.0   -45.0   -57.0   -167.0

Outlays n/a -8.4 -19.0 -30.5 -42.5 -54.5 -154.9

Change in FTEs n/a -300 -600 -900 -1,200 -1,500 -1,500

n/a = Not applicable (recommendation improves efficiency or redirects resources but does not directly reduce budget authority).

Endnote

1. U.S. Department of Housing and Urban Development. Fiscal Year 1994 Congressional Budget Report, vol. II, pp. Q1-6.

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