The Little Housing Program That Could
It should've been a fresh start for Helen Seide. It was 2001, and she had finally escaped her abusive marriage. But as her relationship dissolved, her finances, too, collapsed like a house of cards: Seide, suddenly a single working parent with three young daughters, couldn't afford her rent and lost her apartment. A hotel became their temporary home as Seide struggled to support her family on her earnings as a hospital secretary. But the late shifts were hard to balance with her children's day care. Her paychecks shrank. They needed help.
After months in the hotel, followed by another two years in transitional housing, that help came. A voucher for rental assistance allowed her family to move to their own apartment in Montgomery County, Maryland -- a first step on their move out of poverty. Today, Seide is a proud homeowner with a stable job as a medical coder. Her oldest, now 17, is on track to attend college next year.
Yet, success stories like Seide's are rare. This is because many rental assistance programs are so focused on meeting the immediate needs of families that they may neglect longer-term goals -- like helping families transition out of the program. In some instances, program regulations even hinder the progress of residents -- discouraging them from earning a higher income or from building up the savings.
So, why was Seide's experience so different? Her rental assistance voucher was connected to a tiny, under-the-radar program with the potential to transform the American housing system: The Family Self-Sufficiency Program, or FSS. The FSS program has received only sporadic attention from Congress, but it's time policymakers took notice: After all, the FSS program is positioned to address one of the thorniest problems of our housing system -- one that's spawned in part by the very programs intended to support struggling families.
Understanding that problem means, first, understanding how rental assistance actually works: People getting assistance still have to pay rent -- but their rent is based on how much they earn. That means if their income goes up, so does their rent. Other public benefits are similarly connected to changes in income: food stamps, for example, have a "cliff"-like drop-off -- you reach the income threshold, and boom, your benefits are cut. And you can forget about a parachute landing -- because sometimes, reaching that threshold means you're ineligible for the program entirely.
That's a problem because for many people, reaching that income threshold hardly means they're financially secure: Most haven't saved what they'd need to cope in an emergency (such as an unexpected medical expense or a pricey car repair). Some economists believe this "benefits cliff" creates a disincentive to work, save, and strive for upward economic mobility.
The FSS program shifts this dynamic.
Here's how it works: It simultaneously addresses the "now" and the "later," providing assistance to get families stabilized and then connecting them to employment and education resources. Importantly, it also helps them save money to ensure that future bumps in the road don't throw them off-course. As FSS program participants pay more in rent (due to their increased earnings), they automatically build up a pool of savings in an escrow account. If they successfully graduate from the program, they can use the funds they've saved toward an item or investment of their choosing. Families in the Montgomery County FSS program save an average of $10,000 in escrow accounts, allowing them to buy a home, a car, or invest in education.
Despite this innovative design, the FSS program remains tiny: at its current funding level, it can only help a fraction of eligible families in the U.S. While researchers have evaluated individual programs (at the county level) and reported strong results, there's little data on the program at the national level. And little data gathered means that when Congress considers allocating more money to the program, their hands are tied; they struggle to justify new funding for a program with such a small sample size. But this reticence reflects a dangerous blind spot on housing policy: American rental assistance programs provide safe and affordable housing to millions, but the programs focus more on addressing immediate housing-related needs, and less on strategies to improve the long-term economic prospects of participants.
In order to support this program going forward, we need more information about how the best FSS programs have been able to get participants sustainably into living wage jobs and out of poverty. It's time for Congress to take a serious look at the FSS program and how this model could lift up thousands more struggling families.
And even in our polarized Congress, this shouldn't be a heavy political lift: The FSS program already has bipartisan political appeal -- it promotes flexibility and innovation at the local level, and recognizes the value of individual ingenuity, self-motivation and hard work. And it's rooted in a question that both Republicans and Democrats can agree is critical to answer: How can we ensure that all rental assistance participants have the same opportunity for success that Helen Seide had?
For more information on the FSS program, check out this new policy paper.
Hannah Emple is a policy analyst with the Asset Building Program at the New America Foundation. This piece originally appeared in New America's Weekly Wonk newsletter.