Budget Cuts to Low-Income Senior Housing “Penny-Wise and Pound-Foolish”

Lawmakers may have temporarily averted the “fiscal cliff” and cuts to Medicare funding from occurring with a last-minute agreement reached early in January, but affordable senior housing programs receiving federal funding aren’t out of the woods yet.

Budget cuts are still a very real possibility for many government programs, including Project-Based Section 8 housing, which generally serves senior and disabled populations and could be subject to across-the-board 2% sequestration cuts as Congress tries to shave down the country’s massive debt deficit. 

Finding ways to reduce budgets will be necessary to get the national deficit under control, but cutting funding to low-income housing isn’t the way to go—especially as it would likely increase Medicaid-dependent census in far more expensive settings such as nursing home, says Michael Bodaken, president of the National Housing Trust, in an opinon piece published recently in Roll Call

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The National Housing Trust represents private and nonprofit landlords who provide affordable housing to more than 1 million low-income tenants who through the Section 8 program are required to pay 30% of their income for rent with the rest subsidized by the government. A majority of those tenants—more than 60%—are elderly or disabled, according to Bodaken. 

He writes:

There is a severe shortage of affordable housing in this country. As it is today, we’re providing decent housing for only about a quarter of the low-income households who qualify for them. So, if you cut Section 8, the option for low-income elderly becomes Medicaid-funded nursing homes, which cost four to six times the expense of these rent subsidies, or homeless shelters. In addition, these properties are owned and maintained by private businesses, which face the real possibility of default on their mortgages if Congress and the administration break their contracts.

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Many of the [Section 8] tenants—even though they’re independent today—will be forced to seek refuge at nursing homes funded through Medicaid at $50,000 per year (compared to $8,000 for rental assistance).

…The Federal Housing Administration insures more than half of all Project-Based Section 8 properties. If owners default on their mortgages, the FHA will need to foreclose. The total amount insured by FHA is $13.5 billion.

These proposed cuts to Section 8 truly are penny-wise and pound-foolish. They cost the taxpayer money, drastically reduce affordable housing, hurt small business and ultimately lead down a path unfit for a caring nation.

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Congress and the administration need to find some way to preserve this housing. Any fiscal cliff deal must give the appropriations committees enough flexibility and resources that they can fully fund investments that save money like Project-Based Section 8.

Read the full piece at Roll Call. 

Written by Alyssa Gerace