Department of Housing and Urban Development (HUD): FY2017 Appropriations

Contents

• Introduction to HUD
• FY2017 Status
• Discussion of Selected FY2017 Funding Issues
• Assisted Housing Programs
• Section 8 Tenant-Based Rental Assistance
• Section 8 Project-Based Rental Assistance
• Public Housing
• Rental Assistance Demonstration (RAD)
• Community Development Block Grants
• The Federal Housing Administration (FHA)
• Offsetting Receipts
• Appropriations and Commitment Authority

Summary

Most of the funding for the activities of the Department of Housing and Urban Development (HUD) comes from discretionary appropriations provided each year in the annual appropriations acts, typically as a part of the Transportation, HUD, and Related Agencies appropriations bill (THUD). HUD's programs are primarily designed to address housing problems faced by households with very low incomes or other special housing needs.

On May 12, 2016, the full Senate began its consideration of FY2017 appropriations for HUD as a part of a substitute amendment to H.R. 2577 that incorporates both the committee-passed version of the THUD bill (S. 2844) and the committee-reported version of the Military Construction, Veterans Affairs, and Related Agencies bill. It would provide $48.4 billion in gross discretionary appropriations for HUD's programs and activities, which is a 3% increase from the FY2016 level. After accounting for savings from offsets and rescissions, the bill includes $39.2 billion in net discretionary budget authority, which is a 2% increase from the FY2016 level. The bill's largest funding increases would be provided to the tenant-based rental assistance (TBRA) account and project-based rental assistance (PBRA) accounts, largely to maintain current services for the roughly 3 million low-income families who receive housing assistance through the Housing Choice Voucher program and the project-based Section 8 program.

On May 18, 2016, the Transportation, HUD and Related Agencies subcommittee of the House Appropriations Committee marked-up its version of a FY2017 THUD appropriations bill. The subcommittee's draft bill includes $38.7 billion in net discretionary budget authority for HUD.

Congressional action followed the release of the Obama Administration's FY2017 budget request to Congress on February 9, 2016. The request included $48.9 billion in gross discretionary appropriations for HUD (4% increase from FY2016) and $39.6 billion in net discretionary budget authority (3.5% increase from FY2016). Like S. 2844, the largest funding increases proposed were for the PBRA and TBRA accounts, the largest accounts in HUD's budget.

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Department of Housing and Urban Development (HUD): FY2017 Appropriations

Introduction to HUD

Most of the funding for the activities of the Department of Housing and Urban Development (HUD) comes from discretionary appropriations provided each year in the annual appropriations acts, typically as a part of the Transportation, HUD, and Related Agencies appropriations bill (THUD). HUD's programs are primarily designed to address housing problems faced by households with very low incomes or other special housing needs.

Three rental assistance programs—Public Housing, Section 8 tenant-based rental assistance (which funds Section 8 Vouchers), and Section 8 project-based rental assistance—account for the majority of the department's funding (more than three-quarters of total HUD appropriations in FY2015). Two flexible block grant programs—HOME and the Community Development Block Grant (CDBG) program—help communities finance a variety of housing and community development activities designed to serve low- and moderate-income families. In addition, in some years Congress appropriates funds to CDBG to assist in disaster recovery. Other more specialized grant programs help communities meet the needs of homeless persons, including those living with HIV/AIDS. HUD's Federal Housing Administration (FHA) insures mortgages made by lenders to home buyers with low down payments and to developers of multifamily rental buildings containing relatively affordable units. FHA collects fees from insured borrowers, which are used to sustain the insurance fund. Surplus FHA funds have been used to offset the cost of the HUD budget.

A Note About the Housing Trust Fund. The Housing Trust Fund (HTF)—a formula grant program administered by HUD—is not funded through the appropriations process; rather, it is funded through contributions from two government-sponsored enterprises, Fannie Mae and Freddie Mac. The HTF received its first annual funding in 2016 and is expected to receive funding again in 2017. Since the program is funded outside of the annual appropriations process, it is not reflected in this report.¹

Table 1 presents total net enacted appropriations for HUD over the past five years, including emergency appropriations, rescissions, offsetting collections, and receipts. (For more information, see CRS Report R42542, Department of Housing and Urban Development (HUD): Funding Trends Since FY2002, by [author name scrubbed].)

FY2017 Status

• On May 12, 2016, the full Senate began consideration of FY2017 appropriations for Transportation, HUD, and Related Agencies. By custom, appropriations legislation originates in the House of Representatives. Because House action on the FY2017 THUD bill has not yet occurred, the Senate has taken up H.R. 2577, which is the House-passed version of the FY2016 THUD bill. The Senate Appropriations Committee substitute amendment (S.Amdt. 3896) to the bill includes as Division A the text of the FY2017 THUD appropriations bill as reported by the committee (S. 2844). The substitute amendment also includes as Division B the text of the Senate Appropriations Committee-reported Military Construction, Veterans Affairs, and Related Agencies bill.
• On April 21, 2016, the Senate Appropriations Committee reported its FY2017 Transportation, HUD, and Related Agencies appropriations bill (S. 2844; S.Rept. 114-243). It would provide $48.4 billion in gross discretionary appropriations for HUD's programs and activities, which is a 3% increase from the FY2016 level. After accounting for savings from offsets and rescissions, the bill includes $39.2 billion in net discretionary budget authority, which is a 2% increase from the FY2016 level.
• On February 9, 2016, the Obama Administration submitted its FY2017 budget request to Congress. It included $48.9 billion in gross discretionary appropriations for HUD (4% more than FY2016) and $39.6 billion in net discretionary budget authority (3.5% more than FY2016). (For more information, see CRS Report R44380, Department of Housing and Urban Development (HUD): FY2017 Budget Request Overview and Resources, by [author name scrubbed].)
• On December 18, 2015, Congress approved and President Obama signed into law a FY2016 omnibus appropriations law (P.L. 114-113). It included $47 billion in appropriations for HUD; $38.3 billion in net budget authority (excluding $300 million in disaster funding). (For more information, see CRS Report R44059, Department of Housing and Urban Development: FY2016 Appropriations, coordinated by [author name scrubbed].)

Table 2 presents account-level funding information for HUD, comparing FY2016 with the FY2017 President's budget request and congressional action. It is followed by a discussion of selected issues and accounts.

Discussion of Selected FY2017 Funding Issues

Assisted Housing Programs

More than three-quarters of appropriations for HUD supports three programs: Section 8 tenant-based rental assistance (which funds Section 8 Housing Choice Vouchers), Section 8 project-based rental assistance, and the Public Housing program. Together, these three programs serve more than 4 million low-income households. The following subsections discuss appropriations for these three programs.

Section 8 Tenant-Based Rental Assistance

The tenant-based rental assistance (TBRA) account funds the Section 8 Housing Choice Voucher program; it is the largest account in HUD's budget. Most of the funding provided to the account each year is for the annual renewal of more than 2 million vouchers that are currently authorized and being used by families to subsidize their housing costs. The account also provides funding for the administrative costs incurred by the local Public Housing Authorities (PHAs) that administer the program. The account is funded using both current-year appropriations and advance appropriations provided for use in the following fiscal year.

Renewal Funding

Arguably, the most contentious issue in the tenant-based rental assistance account every year is the cost of renewing existing vouchers. All of the roughly 2 million vouchers that are currently authorized and in use are funded annually, so in order for families to continue to receive assistance (i.e., renew their leases at the end of the year), new funding is needed each year.

The President's budget estimated that the $766 million increase requested would be sufficient to renew all existing vouchers projected to be in use in 2016. The President's estimate assumes $30 million in savings in renewal costs from a policy change related to medical expense deductions that has been proposed in the past several President's budget requests.

The Senate committee bill, S. 2844, proposes $92 million less for voucher renewals than was requested in the President's budget. As requested, and permitted in FY2016, the bill would also provide the Secretary with the authority to reallocate unused PHA reserve funding. S.Rept. 114-243 states that the amount of funding provided, paired with the reallocation authority, would be sufficient to support all vouchers in use.

Administrative Fees

PHAs are paid a per-unit fee to administer the Housing Choice Voucher program. Thus, the total amount of fees a PHA earns in a year is based on how many vouchers it leases. In recent years, the amount of appropriations provided by Congress has not been sufficient to fully fund all of the fees earned by PHAs under the formula, thus they have received reduced, or prorated, fees.

The President's budget requested an increase of $427 million in administrative fee funding relative to FY2016. HUD's Congressional Budget Justifications contend the requested funding level would be sufficient to fund all fees under a new formula HUD is developing based on the findings of a recent administrative fee study, which the department states it hopes to have in place for 2017.

The Senate committee bill proposes a smaller increase than requested by the President (+$119 million more than FY2016).

New Vouchers

New vouchers—or "incremental vouchers"—are vouchers that are funded by Congress and distributed by HUD to PHAs to serve additional families. In recent years, the primary source of new vouchers has been the Veterans Affairs Supported Housing (VASH) program, which is administered jointly with the Department of Veterans Affairs and provides vouchers paired with supportive services for homeless veterans. In some years, the Family Unification Program (FUP), which provides vouchers for families involved in the child welfare system and youth aging out of foster care, has also received funding for additional vouchers.

The President's budget requested $88 million to fund approximately 10,000 new vouchers for families with children who are experiencing homelessness. Additionally, the President's budget requested $7 million to renew tribal VASH vouchers that were funded for the first time in FY2015.

The Senate committee bill proposes funding two categories of incremental vouchers: $20 million for FUP vouchers and $57 million for VASH vouchers. The committee report directs that HUD prioritize the awards of the new FUP vouchers to PHAs that will target them to youth. The bill also includes provisions designed to improve the program for youth, including a lengthening of the existing 18-month time limit to 36 months (or longer, if the youth is participating in economic self-sufficiency activities) and broadening the age of eligibility up to age 24 (from age 21). (Similar FUP policy changes were proposed in the President's budget request.) Of the funding for VASH vouchers, $7 million is targeted for the renewal of tribal vouchers, as requested by the President.

Mobility Demonstration

One of the key features of the Housing Choice Voucher program is portability; families can move wherever they choose and take their voucher with them. Mobility is a term often used to describe portability moves made by families to communities with lower poverty rates and greater access to educational or economic opportunities. While some older research findings about the impact of mobility moves on family outcomes have been mixed,² recent findings have shown that certain mobility moves may have meaningful impacts for children's outcomes.³

The President's budget requested $15 million for a new mobility demonstration to encourage and support mobility moves by families with vouchers. The funds would be awarded to PHAs to provide mobility services to families, including pre- and post-move counseling, and would also fund an impact evaluation.

The Senate committee bill would provide $11 million to fund the mobility demonstration.

Section 8 Project-Based Rental Assistance

The Section 8 project-based rental assistance (PBRA) account provides funding to administer and renew existing project-based Section 8 rental assistance contracts between HUD and private multifamily property owners. Under those contracts, HUD provides subsidies to the owners to make up the difference between what eligible low-income families pay to live in subsidized units (30% of their incomes) and a previously agreed-upon rent for the unit. No contracts for newly subsidized units have been entered into under this program since the early 1980s.⁴ When the program was active, Congress funded the contracts for 20- to 40-year periods, so the monthly payments for owners came from old appropriations. However, once those contracts expire, they require new annual appropriations if they are renewed. Further, some old contracts do not have sufficient funding to finish their existing terms, so new funding is needed to complete the contract (referred to as amendment funding). As more contracts have shifted from long-term appropriations to new appropriations, this account has grown and become the second-largest account in HUD's budget. This account also funds the cost of performance-based contract administrators or PBCAs, entities contracted by HUD to manage the program (generally, state housing finance agencies or public housing authorities).

Renewals and Contract Administrators

The President's budget request includes $10.581 billion for the cost of renewing PBRA contracts (including $4 million for technical assistance for tenant organizations) and $235 million for the cost of contract administrators. The President's budget documents acknowledge that the amount requested is less than would be needed to fully fund either activity. In the case of PBRA contract renewals, the budget assumes approximately $240 million in one-time savings from providing funding for less than 12 months for some contract renewals as a part of a transition to calendar year funding. Further, the renewal estimate assumes cost savings from a requested policy change in calculation of medical deductions for elderly and disabled residents. In the case of PBCA funding, the budget assumes the use of $60 million in recaptured funding as well as cost savings from issuing new, cost-saving contracts.

The Senate committee bill proposes $10.901 billion for PBRA contract renewals, which is $85 million more than was requested by the President. S.Rept. 114-243 states that the committee increased the funding level because it rejected the medical expense policy change proposed by the President. It funds contract administrators at the requested level.

Public Housing

The Public Housing program provides publicly owned and subsidized rental units for very low-income families. Created in 1937, it is the federal government's oldest housing assistance program for poor families, and it is arguably HUD's most well-known assistance program. (For more information, see CRS Report R41654, Introduction to Public Housing, by [author name scrubbed].)

Although there has not been permanent authority to build new Public Housing developments for many years, Congress continues to provide funds to the approximately 3,000 PHAs that own and maintain the existing stock of more than 1 million units. Public Housing receives federal funding under two primary accounts, which, when combined, result in Public Housing being the third-highest funded program in HUD's budget (following the two Section 8 programs). Through the operating fund, HUD provides funding to PHAs to help fill the gap between tenants' rent contributions and the cost of ongoing maintenance, utilities, and administration of public housing properties. Through the capital fund, HUD provides funding to PHAs for capital projects and modernization of their public housing properties. Choice Neighborhoods is an Obama Administration initiative to provide competitive grants to revitalize distressed public and assisted housing properties and their surrounding communities. It is similar to its predecessor program, the HOPE VI program; however, Choice Neighborhoods expands the pool of eligible applicants beyond public housing properties to include other HUD-assisted properties and their communities.

Operating Fund

Operating fund dollars are allocated to PHAs according to a formula that estimates what it should cost PHAs to maintain their public housing properties based on the characteristics of those properties. When the amount of appropriations provided is insufficient to fully fund the amount PHAs qualify for under the formula, their allocation is pro-rated, or reduced proportionally.

According to HUD's Congressional Budget Justifications, the amount requested in the President's Budget for the Operating Fund for FY2017 (a 1.5% increase from FY2016) would be sufficient to fund an estimated 87% of PHAs' formula eligibility. The Senate committee bill proposes to increase funding for the Operating Fund above the President's requested funding level (+2.3%) and the FY2016 funding level (+4%). As a result, under S. 2844, the estimated proration level should be higher than 87%.

Capital Fund

The President's budget requested $35 million less for the Capital Fund in FY2017 than was provided in FY2016. In terms of formula grants, the reduction is $31 million. The President's budget requested a new set-aside of $5 million for its "ConnectHome" initiative, designed to expand broadband access in public housing. As in past years, the President's budget proposed to eliminate funding for the Resident Opportunities and Supportive Services (ROSS) set-aside, which funds service coordinators in public housing.

S. 2844 proposes a $25 million increase for the Capital Fund relative to FY2016. That amount reflects a decrease of $7 million for formula grants, but it would fund the ROSS set-aside at the FY2016 level. It does not include funding for "ConnectHome," but does include a new set-aside of $25 million for competitive grants for PHAs to evaluate and abate lead-based paint hazards in public housing.

Rental Assistance Demonstration (RAD)

The Rental Assistance Demonstration (RAD) is an Obama Administration initiative, first authorized by Congress in FY2012. Under RAD, a limited number of units funded through other HUD-assisted housing programs may convert to either project-based Section 8 rental assistance or Housing Choice Vouchers. These include the Rent Supplement program, Rental Assistance Payments, Public Housing, and Section 8 Moderate Rehabilitation program. RAD has never received funding, which means that in order to be eligible, projects must be able to undergo a cost-neutral conversion (i.e., receive no increase in federal subsidy as a result of the conversion).

The President's FY2017 budget request included $50 million to fund RAD in order to allow units that cannot undergo a cost-neutral conversion to participate. It also includes proposed program changes to eliminate the cap on the number of units that can convert under RAD and prohibit the rescreening of tenants in public housing units undergoing a RAD conversion. Similar proposals have been included in the past several President's budget requests. Additionally, for the first time in FY2017, the President's budget requests that RAD be expanded to allow for the conversion of units with Project Rental Assistance Contract (PRAC) assistance under the Section 202 Housing for the Elderly program. HUD contends this expanded authority will allow these units to leverage private financing and thus be preserved.

S. 2844 proposes to expand the RAD demonstration to the Section 202 Housing for the Elderly program, as requested by the President, and includes $4 million to help fund PRAC conversions. The bill does not include additional funding to support other RAD conversions. The Senate committee bill would make several additional changes to RAD, including, among others, raising the cap on the number of Public Housing units that can participate from 180,000 to 250,000 and prohibiting rescreening of public housing residents, as proposed in the President's budget.

Community Development Block Grants

The Community Development Block Grant (CDBG) program, funded in the Community Development Fund account, is the federal government's largest and most widely available source of financial assistance supporting state and local government-directed neighborhood revitalization, housing rehabilitation, and economic development activities. These formula-based grants are allocated to approximately 1,194 entitlement communities (metropolitan cities with populations of 50,000, principal cities of metropolitan areas, and urban counties), the 50 states plus Puerto Rico, and the insular areas of American Samoa, Guam, the Virgin Islands, and the Northern Mariana Islands. Grants are used to implement plans intended to address housing, community development, and economic development needs, as determined by local officials.

For FY2017, the President's budget requested $2.88 billion for the Community Development Fund, including $2.8 billion for grants under the CDBG program and $80 million for grants for Indian tribes. The requested funding level is $200 million less for CDBG and $20 million more for Indian tribes than was provided in FY2016.

As in the past several budget requests, HUD's FY2017 budget documents state that the agency plans to advance a legislative package of CDBG reforms. Specifically, the Administration's grant reforms, as outlined in HUD's Congressional Budget Justifications, included proposals that would, if approved,

• reduce the number of small grantees, including removing grandfathering protections for communities that no longer meet the population threshold for entitlement status and establishing a minimum grant amount;
• reduce the administrative burden on grantees by synchronizing critical program cycles for the submission of plans and reports;
• help grantees target funding resources to areas of greatest need; and
• provide more options for regional coordination, administration, and planning.

The Administration also proposed an administrative provision to increase (from 10% to 15%) the percentage of CDBG funds allocated to the states of Texas, California, New Mexico, and Arizona that must be used in colonias; these are blighted and economically distressed unincorporated areas within 150 miles of the border with Mexico.

S. 2844 would fund CDBG at $3 billion, which is even with the FY2016 funding level. It would also provide level funding ($60 million) for the Indian Community Development Block Grant (ICDBG) program; however, the bill would fund ICDBG, along with Native American Housing Block Grants, in a new Indian Block Grant account instead of the CDF account. The bill does not include the colonias set-aside increase that was requested by the President.

The Federal Housing Administration (FHA)

The Federal Housing Administration (FHA) insures private mortgage lenders against losses on certain mortgages made to eligible borrowers. If a borrower defaults on the mortgage, FHA repays the lender the remaining amount that the borrower owes. The provision of FHA insurance helps to make mortgage credit more widely available, and at a lower cost, than it might be in the absence of the insurance.

The FHA insurance programs are administered primarily through two program accounts in the HUD budget. The Mutual Mortgage Insurance Fund (MMI Fund) account includes mortgages for single-family home loans made to eligible borrowers, such as those with low down payments. It also includes FHA-insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs). The MMI Fund is the largest of the FHA insurance funds, and when there is public discussion of "FHA insurance" or "FHA loans," it is usually related to the MMI Fund and the single-family home loans insured under that fund. (For more information on the features of FHA-insured home mortgages, see CRS Report RS20530, FHA-Insured Home Loans: An Overview, by [author name scrubbed].) The second account, the General Insurance/Special Risk Insurance Fund (GI/SRI Fund), includes mortgages on multifamily buildings and healthcare facilities such as hospitals and nursing homes.

Offsetting Receipts

The costs of federal loan guarantees are reflected in the budget as the net present value of all of the expected future cash flows from the loans that are expected to be insured in a given year. (Cash inflows include fees paid by borrowers to the federal government; cash outflows include claims paid by the federal government when a loan is not repaid by the borrower.) If the estimated cash inflows exceed the estimated cash outflows—that is, if the insured loans are expected to earn more money for the government than they cost—then the program is said to have a negative credit subsidy.⁵ A negative credit subsidy results in offsetting receipts, which, in the case of FHA, can offset other costs of the HUD budget.

Historically, the MMI Fund has been estimated to have negative credit subsidy.⁶ The resulting offsetting receipts are usually the single largest source of offsets in the HUD budget. While the President's budget request estimates the amount of FHA offsetting receipts, the Congressional Budget Office (CBO) does its own estimates, and the CBO estimates are the ones that are used by congressional appropriators to determine budget authority.

For FY2017, CBO estimates that the MMI Fund's single-family mortgage insurance programs, excluding FHA-insured reverse mortgages, will earn $7.4 billion. This is a slight increase from FY2016, when the MMI Fund's single-family programs were estimated to earn just over $7 billion. In total, FHA programs are estimated to generate nearly $8 billion in offsetting receipts in FY2017, compared to nearly $7.8 billion in FY2016.

Appropriations and Commitment Authority

Because the loans insured under the MMI Fund have historically been estimated to have negative credit subsidy, the MMI Fund has never needed an appropriation to cover the costs of loans guaranteed in a given fiscal year. However, FHA does receive appropriations every year for salaries (included in the salaries and expenses account for the overall HUD budget) and administrative contract expenses.

The President's budget requested $160 million for FHA's administrative contract expenses, $30 million more than was provided in FY2016. The President's budget proposed paying for this $30 million increase through a fee that would be charged to lenders on FHA-insured mortgages they originate. The Senate committee-passed bill proposes $130 million for administrative contract expenses, the same amount that was provided in FY2016. The bill would not provide FHA with the authority to charge lenders a fee to pay for administrative support expenses; however, the committee report language states that it supports the goal of improving FHA systems and technology and directs funds in the Information Technology account to be used for such purposes.

Annual appropriations acts also authorize FHA to insure up to a certain aggregate dollar volume of loans during the fiscal year. This is referred to as "commitment authority." The President's budget requested the authority to insure up to $400 billion in new mortgages under the MMI Fund and up to $30 billion in new mortgages under the GI/SRI Fund in FY2017, the same amount of commitment authority that was provided in FY2016. The Senate committee-passed bill proposes the same amount of commitment authority.

Appendix. The Budget Resolution and Discretionary Spending Caps

HUD appropriations are included as a part of the Transportation, HUD, and Related Agencies appropriations bill (THUD) each year. That bill, like the other 11 annual appropriations bills, is crafted to comply with limits provided in the annual budget resolution, which is, in turn, influenced by the Budget Control Act and its discretionary spending limits. Thus, it is useful to have a basic understanding of these policies and procedures as context when considering the formulation of HUD appropriations levels.

The Budget Resolution

The annual budget resolution provides a budgetary framework within which Congress considers legislation affecting spending and revenue. It sets forth spending and revenue levels, including spending allocations to House and Senate committees. These levels are enforceable by a point of order. After the House and the Senate Appropriations Committees receive their discretionary spending allocations from the budget resolution (referred to as 302(a) allocations), they divide their allocations among their 12 subcommittees (referred to as the 302(b) allocations). Each subcommittee is responsible for one of the 12 regular appropriations bills. While a budget resolution and subcommittee allocations alone cannot be used to determine how much funding any individual account or program will receive, they do set the parameters within which decisions about funding for individual accounts and programs can be made.

The House and the Senate have not yet adopted a budget resolution for FY2017.⁷ In its absence, the Senate Budget Committee chair has filed budgetary levels in the Congressional Record that are enforceable in the Senate as if they had been included in a budget resolution for FY2017.⁸ Based on these levels, the Senate Appropriations Committee reported their initial 302(b) suballocations on April 18, 2016. They include $56.474 billion for the THUD subcommittee, which is approximately $1 billion less than the comparable FY2016 level ($57.301 billion). In the absence of a budget resolution in the House, the House Appropriations Committee has thus far chosen to adopt "interim 302(b) suballocations" for the appropriations bills as they are marked up in full committee.⁹ These interim suballocations are not procedurally enforceable. A suballocation for the THUD subcommittee in the House is not yet available.

The Budget Control Act and Sequestration

In 2011, the Budget Control Act (BCA, P.L. 112-25) was enacted, which both increased the debt limit and contained provisions intended to reduce the budget deficit through spending limits and reductions. In part, the BCA was intended to accomplish deficit reduction by imposing statutory limits on discretionary spending each fiscal year from FY2012 through FY2021. The BCA specifies separate limits for defense and nondefense spending; HUD discretionary programs are subject to the nondefense discretionary limits.

In addition to the initial spending limits set in the BCA, the law tasked a Joint Select Committee on Deficit Reduction to develop a federal deficit reduction plan for Congress and the President to enact by January 15, 2012. When a plan was not enacted, the BCA required that a one-time sequestration of nonexempt discretionary spending occur in FY2013. (Sequestration is a process of automatic, largely across-the-board spending reductions.) In addition, the BCA required that the discretionary spending limits be lowered further for FY2014 through FY2021.¹⁰ Various amendments to the BCA have been enacted that have altered the discretionary spending reductions that were otherwise scheduled to occur under that law. Most recently, the enactment of the Bipartisan Budget Act of 2015 had the effect of lessening the BCA reductions for FY2016 and FY2017, by establishing higher levels for those fiscal years' limits than otherwise would have been the case. Under current law, those BCA reductions are to resume for the FY2018 limits.

In each fiscal year, if discretionary funding is enacted that exceeds either of the limits (defense or non-defense), then sequestration will be imposed to reduce spending in the applicable category. In terms of mandatory funding, the BCA provided for reductions of nonexempt programs through sequestration each year through FY2021. This has subsequently been amended to occur through FY2024.¹¹

Author Contact Information

Footnotes

1.	For more information on the Housing Trust Fund, see CRS Report R40781, The Housing Trust Fund: Background and Issues, by [author name scrubbed].
2.	For example, see Ludwig, Jens, et al., "Long-Term Neighborhood Effects on Low-Income Families: Evidence from Moving to Opportunity," American Economic Review, American Economic Association, vol. 103(3), pp. 226-231, May 2013, available at http://ideas.repec.org/a/aea/aecrev/v103y2013i3p226-31.html.
3.	For example, see Chetty, Raj, Nathaniel Hendren, and Lawrence Katz. 2016. "The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Project." American Economic Review 106 (4), available at http://scholar.harvard.edu/hendren/publications/effects-Exposure-Better-Neighborhoods-Children-New-Evidence-Moving-Opportunity.
4.	Under the Rental Assistance Demonstration (RAD), units funded through other HUD-assisted housing programs may convert to Section 8 project-based assistance. These include the Rent Supplement program, Rental Assistance Payments, Public Housing, and Section 8 Moderate Rehabilitation program.
5.	Credit subsidy rates do not include administrative expenses.
6.	The credit subsidy rates for loans insured in a given year are re-estimated each subsequent year, taking into account updated assumptions and actual loan performance. Given that estimates of the future performance of loans are inherently uncertain, the Federal Credit Reform Act provides permanent and indefinite budget authority to government loan guarantee programs to cover future increases in the costs of loan guarantees based on these re-estimates.
7.	For a discussion of budget enforcement mechanisms that may be adopted in the absence of a budget resolution, see CRS Report R44296, Deeming Resolutions: Budget Enforcement in the Absence of a Budget Resolution, by [author name scrubbed]; and CRS Report R43535, Provisions in the Bipartisan Budget Act of 2013 as an Alternative to a Traditional Budget Resolution, by [author name scrubbed].
8.	The authority for these actions is provided by Section 102 of the Bipartisan Budget Act of 2015 (P.L. 114-74). The levels were filed by the Senate Budget Committee chair on April 18, 2016. ("Allocation of Spending Authority to Senate Committee on Appropriations for Fiscal Year 2017," Congressional Record, daily edition, vol. 162, no. 59 (April 18, 2016), p. S2121.) No comparable authority for the House Budget Committee chair was provided by the Bipartisan Budget Act.
9.	These interim suballocations are available on the House Appropriations Committee website, at http://appropriations.house.gov/files/?CatagoryID=34785.
10.	For more information about the BCA and its implementation, see CRS Report R43411, The Budget Control Act of 2011: Legislative Changes to the Law and Their Budgetary Effects, coordinated by [author name scrubbed].
11.	A very small amount of HUD funding ($3 million from the Rental Housing Assistance Fund) is considered non-exempt mandatory funding subject to sequestration. Additionally, the Housing Trust Fund, which is funded outside of the annual appropriations process, is also subject to mandatory sequestration. See Office of Management and Budget, OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2016, February 2, 2015, p. 8, https://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/2016_jc_sequestration_report_speaker.pdf.