When rights are established by law and the enforcement of those rights is dependent on government resources, effective enforcement requires that strong organizational structures, resources, and policy leadership be dedicated to ensure that enforcement is prompt, effective, and thorough. Passage of a strong law is not enough to preserve rights; without resources and leadership for enforcement, rights will not be protected effectively.

Organizational structures must produce consistent, reliable, impartial outcomes and must do so within reasonable time frames.

Adequate resources must include sufficient staffing to perform statutory obligations and support training, education, and outreach activities, as well as permitting discretionary activities that are necessary to launch new initiatives. Resources also include substantive support to provide expert guidance and legal assistance both internally and externally.

And leadership requirements must include commitments from Congress, from the Department of Housing and Urban Development, and from the Office of Fair Housing and Equal Opportunity to ensure fair and effective enforcement of a major piece of civil rights legislation that passed Congress with strong bipartisan support.

The Office of Fair Housing and Equal Opportunity (FHEO), within HUD, is the only administrative entity with enforcement authority over FHA complaints. It has additional responsibilities for enforcing Section 504 of the 1973 Rehabilitation Act with respect to programs and operations funded with HUD financial assistance. Because it has such significant authority. It must effectively carry out a wide of range of duties:

• It must assist people who believe they have been the victims of discrimination, through education, counseling, technical assistance, and, where appropriate, through the administrative complaint process.
• It must help housing providers and housing-related industries to understand their obligations and rights under the law.
• It must determine whether the government has jurisdiction over complaints.
• It should refer those who feel that they have been discriminated against but who do not have complaints that are within FHEO's jurisdiction to another avenue for assistance if one exists.
• It must conduct fair and impartial investigations and make decisions in cases, in policies, and in guidance that are consistent with the enabling statutes and with judicial decisions that interpret and apply the law.
• It must engage in efforts to resolve complaints through conciliation and settlement.
• It must understand and interpret HUD program requirements consistent with the civil rights laws it enforces.
• It must review factual and legal circumstances that range from the most simple manifestations of egregious discrimination to extraordinarily complex cases raising many factual issues and difficult legal interpretations.
• It must reach conclusions promptly, fairly, and consistently, and it must protect the rights of those who file complaints and those against whom complaints are filed.
• It must do its work quickly, reliably, and effectively.
• When cases cannot be resolved voluntarily among the parties, it must move quickly to a disposition of the complaint, as directed by Congress.
• It must ensure that cases involving criminal activities, those requiring injunctive relief, those involving the violation of a conciliation agreement or a Voluntary Compliance Agreement, those involving a pattern and practice of discrimination, and those under the FHA are referred promptly and with an adequate record to DOJ for further enforcement.
• It must review the operations of recipients of financial assistance from HUD and ensure that federal funds are not being spent in a way that is inconsistent with congressionally imposed civil rights obligations. In doing so, it must engage in a variety of activities, from complaint investigations and compliance reviews to technical guidance and interpretations that will advance compliance with the law to invoking program sanctions when noncompliance with statutory and regulatory obligations exists.
• It must have the resources and the time to identify civil rights issues where no complaint has been filed and address those issues, whether through a Section 504 compliance review or through a Secretary-initiated complaint investigation.
• It must effectively administer two programs authorized by the FHA itself--the Fair Housing Initiatives Program (FHIP) and the Fair Housing Assistance Program (FHAP)--in order to advance the purposes of the FHA.
• It must undertake new initiatives to address and resolve civil rights issues that emerge as it engages in its civil rights enforcement and compliance activities.²³⁵

A well-managed national civil rights enforcement effort requires an organizational structure that delivers and directs enforcement and compliance functions that are consistent, that comply with statutory obligations, and that are directed by substantive interpretations of the law. It requires goals and measures for performance that focus on effective performance within established parameters and that are based on key outcome-based measurements, including prompt investigation or resolution of complaints. It requires monitoring of the activities of field staff assigned to enforcement and compliance tasks to ensure that the projected actions are, in fact, occurring. It requires an adequate number of staff to perform the functions. It requires staff with adequate skills and training to be able to handle a variety of enforcement- and compliance-related tasks effectively and reliably. It requires access to information, guidance, and other mechanisms, including the use of technology, that will ensure that case outcomes are reliable and consistent nationally. It requires the preparation and provision of sound guidance to enforcers, to housing providers and others covered by civil rights laws, and to the public.

An effective national civil rights enforcement effort also needs funding--consistent, adequate funding for effective day-to-day operations, such as funding within HUD's own budget for unusual or special projects that will advance enforcement, for the two special programs that deliver fair housing and civil rights enforcement-related activities outside HUD, and for travel budgets that are sufficient to permit on-site investigations when and where necessary.

Finally, a national civil rights enforcement office needs substantive legal and interpretive guidance to its staff that provides the context for enforcement and compliance activities. It also needs strong substantive leadership to ensure that policy and case decision making are reliable and consistent and that all stakeholders have adequate notice of their responsibilities under the law.

All these requirements must be provided in the context of congressional and departmental leadership. Without congressional leadership and a concurrent commitment from HUD's leadership, civil rights enforcement efforts cannot be successful.

B. Organizational Structures Must Support Enforcement and Compliance Activities

1. Overview of FHEO'S Organizational Structures That Set Enforcement and Compliance Priorities

Management is a key factor in directing civil rights work. Leadership and direction of organizational activities occurs within FHEO in several ways. First, priorities are set through governmentwide and agencywide structures, including a Strategic Plan and an Annual Performance Plan. Performance requirements for field operations are established through a Business and Operating Plan (BOP).

Federal agencies have a governmentwide obligation to establish strategic plans, as required by the Government Performance and Results Act of 1993 (GPRA).²³⁶ GPRA requires each federal agency to prepare a strategic plan for its operations and submit it to the Office of Management and Budget and to Congress. The plans are required to include a broad mission statement, general goals and objectives, a description of how the goals are to be achieved, and performance goals, which are also required by federal law.²³⁷

GPRA requires agencies to prepare five-year plans and to update them at least every three years. The first such plan had to be submitted by September 30, 1997. Political appointees, including the Secretary of HUD and the Assistant Secretary for FHEO, set priorities consistent with directions set by the President and Congress through the Strategic Plan. How those priorities are to be implemented are described in each agency's Annual Performance Plan and implemented on a day-to-day basis through a BOP.

Management and accountability occur through the day-to-day leadership by managers, both in Headquarters and in field offices, including the 10 regional HUB offices, through which most enforcement and compliance activities are conducted. Field offices report to Headquarters about their activities and, in particular, are required to report on their activities as described in the BOP. The BOP does not cover most, or even many, of the day-to-day operations of FHEO, and many of the directions, much of the guidance, and much decision making affecting operations are conveyed through FHEO's Office of Field Management and Oversight through conference calls; through issuance of written guidance on particular issues; and through training, meetings of HUB directors, and informally. While some substantive limitations on conduct relating to enforcement and compliance occur through application of judicial and administrative precedent, many decisions are made on a situation-by-situation basis.²³⁸

Accountability is also structured through position descriptions and elements that describe the performance criteria that are expected for each employee. Because elements describe the actual outcomes that are valued by the office, performance is expected to mimic the expectations described in the elements. Position descriptions and elements applicable to individual employees have a direct impact on performance to the extent that annual performance and subsequent pay increases are tied to these elements.

2. HUD's Strategic Plan Has Only Limited Commitments to Improving Enforcement and Compliance in General and for People with Disabilities

HUD's current Strategic Plan covers the years 2000 to 2006. It has five Strategic Goals:

• Increase the availability of decent, safe, and affordable housing in American communities.
• Ensure equal opportunity in housing for all Americans.
• Promote housing stability, self-sufficiency, and asset development of families and individuals.
• Improve community quality of life and economic vitality.
• Ensure public trust in HUD.²³⁹

The strategic goal that addresses civil rights concerns is HUD's goal to "ensure equal opportunity in housing for all Americans." There are three strategic objectives under this goal:

1. Housing discrimination is reduced.
2. Minorities and low-income people are not isolated geographically in America.
3. Disparities in home ownership rates are reduced among groups defined by race, ethnicity, and disability status.²⁴⁰

HUD's strategic goals and their associated strategies and performance measures fail to focus on improving enforcement of civil rights laws. In particular, the objectives and measures do not address discrimination against people with disabilities. Under its objective describing HUD's efforts to reduce housing discrimination, HUD presents only this performance measure: "Disparate treatment of racial and ethnic minorities in the home purchase market and in the rental market will decrease substantially as measured by a housing discrimination study."

This measure does not at all address discrimination against people with disabilities. It does not provide any measure for reducing discrimination in housing. It does not address enforcement activities or the significant ways in which discrimination occurs in ways other than disparate treatment, including denials or reasonable accommodations or modifications or failing to design and construct housing that is accessible. It proposes to assess performance only by a study that it predicts will find substantial decreases in certain kinds of discrimination.²⁴¹

The text for this objective does mention discrimination against people with disabilities. It says that HUD will toughen enforcement against discriminatory behavior, strive for more rapid responses to initial complaints of discrimination, increase the number of complaints referred for criminal prosecution, and "continue to fight discrimination on the basis of disability."²⁴² HUD also states that it will address the issue of accessible rental housing for people with disabilities, including conducting a major education campaign to inform state and local officials about accessibility provisions of the FHA and conducting a "baseline study of accessibility compliance in newly constructed multifamily housing developments."²⁴³ There are no measures for performance addressing these laudable concepts, so there is no assurance that these activities will, in fact, occur. There is also no way to assess progress toward achieving them. HUD's strategic objective that "minorities and low-income people are not isolated geographically in America" and its performance measure that "segregation of racial and ethnic minorities and low-income households will decline" address neither enforcement nor compliance activities, and they do not mention people with disabilities and the segregation and discrimination they encounter in the housing market.

The final strategic objective--"disparities in homeownership are reduced among groups defined by race, ethnicity, and disability status"--contains one performance measure: "The minority homeownership rate equals or exceeds 67.5 percent of the nonminority homeownership rate." Neither the performance measure nor the accompanying text addresses techniques for increasing homeownership rates for people with disabilities. HUD merely reports that it is developing a measure for homeownership rates for persons with disability status. Enforcement and compliance activities are not discussed.²⁴⁴

HUD's previous Strategic Plan, proposed for FY 1999 to FY 2003, in stark contrast, contained text and several performance measures addressing civil rights enforcement and compliance directly.²⁴⁵ HUD noted that FHEO would "[c]ontinue to investigate all complaints and to take all required enforcement activity action whenever and wherever required."²⁴⁶

Among the performance measures adopted by FHEO were the following:

• Increase the number of Title VI and Section 504 compliance reviews by five per year over five years.
• Increase the number of VCAs (Voluntary Compliance Agreements) executed under Title VI and Section 504 by five per year over the next five years.
• Develop and carry out strategies to achieve commitments to increase visitability and accessibility for people with disabilities.

In addition, measures included increasing in targeted cities the number of housing units accessible to people with disabilities in integrated settings to offset housing lost through designation of public and assisted housing for the elderly, and, by the end of 1999, developing/modifying HUD data systems to capture the number of new and existing accessible/visitable units. These performance measures, if they had been implemented, would have resulted in significant changes that would have improved access and opportunities for people with disabilities.

3. FHEO's Current Annual Performance Plan Lacks a Strong Enforcement and Compliance Direction

HUD further outlines its planned work in an Annual Performance Plan (APP). The APP "links the goals and objectives of the Strategic Plan with HUD's policies, its programs, its budget resources, and its partnerships with and impact on American communities."²⁴⁷ HUD also has established an internal BOP process. It describes the BOP as "the internal, unifying management process all organizations use to establish, coordinate and implement strategies, office goals, and action plans that track measurable results for the year. The BOP identifies how HUD will accomplish the important outcomes for communities contained in the Annual Performance Plan."²⁴⁸

In its FY 2001 APP, FHEO has addressed some enforcement-related activities under the three strategic objectives identified in the Strategic Plan. Under the strategic objective "housing discrimination is reduced," FHEO proposed: "The percentage of fair housing complaints aged over 100 days will decrease by 33 percentage points from FY 1999 levels to 40 percent of the HUD inventory." FHEO also proposed: "The percentage of fair housing complaints aged over 100 days will decrease by 15 percentage points from FY 1999 levels to 45 percent of the inventory of substantially equivalent agencies."²⁴⁹ FHEO stated that at the end of FY 1999, 73 percent of complaints in the HUD inventory were more than 100 days old, and 60 percent of the complaints in FHAP agencies were more than 100 days old.

FHEO's performance plan also contained a performance indicator that it would double HUD enforcement actions to 2,120 during the second term of the Clinton/Gore Administration. FHEO also indicated that it would direct state and local substantially equivalent agencies to improve their enforcement activities by setting a standard that at least 25 percent of FHAP agencies would increase enforcement actions by 20 percent over FY 2000 levels.²⁵⁰ FHEO's 2001 plan also committed to increase the accessibility of newly constructed housing by (1) conducting studies of the degree of compliance with FHA access requirements, (2) funding a project for accessibility training and technical assistance, and (3) establishing a new fair housing training academy to provide accessibility education to housing professionals. FHEO proposed to increase the number of persons who were trained about accessible design and construction requirements by 5 percent over FY 2000 levels.²⁵¹

FHEO's current performance plan does contain measures designed to address (but not resolve) its significant case backlog problem, but fails to address either the systematic inadequacies in the existing complaint processing system or the lack of Section 504 complaint investigation and compliance activity in recent years described earlier in this report.²⁵² In addition, the APP's focus on increasing education about accessibility does not address the significant enforcement issues that exist because of the construction industry's noncompliance in constructing accessible housing, including housing funded with HUD funds, that is covered by both the FHA and Section 504.

In sum, HUD's current Strategic Plan and APP lack detailed outcome-based goals that are directed at improving enforcement and compliance, unlike previous plans. In the absence of goal-setting addressed to high-quality, consistent civil rights enforcement activity and a commitment to outcome-based monitoring and data systems that can meaningfully report and assess performance, FHEO's performance cannot be expected to improve.

Finding VI.B.3.a: HUD's current Strategic Plan and APP do not contain adequate measures to address and correct the enforcement and compliance issues addressed in this study.

Recommendation VI.B.3.a: HUD and its Office of Fair Housing and Equal Opportunity should review and revise both the current Strategic Plan and future APPs to include clearer goal-setting for case-processing issues. Such goals should be outcome-based and subject to monitoring activity designed to improve performance.

Finding VI.B.3.b: HUD's current Strategic Plan and APP lack specific measures and indicators for enforcement and compliance strategies to address housing discrimination against people with disabilities. Current strategies for studies and training about accessible housing only include fair housing violations and not Section 504 violations.

Recommendation VI.B.3.b: HUD and its Office of Fair Housing and Equal Opportunity should develop more focused goals in its Strategic Plan and future APPs that will directly address and increase enforcement of the FHA and Section 504, overall and for people with disabilities.

Finding VI.B.3.c: HUD's current Strategic Plan and APP lack any reference to using Section 504 to address housing discrimination against people with disabilities.

Recommendation VI.B.3.c: HUD should revise its Strategic Plan and improve future APPs by including specific measures and indicators to reduce housing discrimination against people with disabilities using HUD's Section 504 compliance authority.

4. FHEO's Business and Operating Plan Has Only Limited Application to Enforcement and Compliance

As noted previously, FHEO sets standards for performance and implementation strategies for the APP through a BOP. The FY 2000 BOP for FHEO is notable, however, for its limited requirements for outcome-based performance.²⁵³ It had only two performance-based measures for HUD fair housing enforcement: (1) to double enforcement actions²⁵⁴ and (2) to reduce the percentage of HUD cases aged more than 100 days by 30 percent. It had only two performance-based measurements for FHAP agencies: (1) to reduce the percentage of cases aged more than 100 days by 10 percent and (2) to have a 20 percent increase in enforcement actions by 25 percent of the FHAP agencies.²⁵⁵ It contains no measures for performance of Section 504 complaint investigations. It contains no performance requirements for the conduct of compliance reviews under HUD's Section 504 or other civil rights statutes, although it contains some general measures for identifying areas of noncompliance during reviews of applicants for HUD funding.

The commitments made by FHEO for enforcement and compliance lack substance and requirements for actual performance. HUD has missed a valuable opportunity in its current plans for future activities to improve and strengthen its enforcement and compliance.²⁵⁶

Finding VI.B.4.a: HUD has failed to make strong commitments to civil rights enforcement and compliance activities in its current planning and implementation process.

Finding VI.B.4.b: The most recent BOP for FHEO, like the Strategic Plan and the APP, does not establish performance-based measures designed to produce more effective enforcement and compliance.

Recommendation VI.B.4.a: FHEO should develop more performance measures related to improved civil rights enforcement, including measures for improved performance of FHA and Section 504 complaint investigations and Section 504 compliance reviews.

5. Organizational Structure and Accountability

FHEO has gone through several reorganizations during the past 12 years. Its most recent organizational structure, approved in 1997 and implemented in 1998, established a General Deputy Assistant Secretary and two Deputy Assistant Secretary (DAS) positions, one for Enforcement and Programs and one for Operations and Management. The field staff reports to FHEO's Headquarters office through 10 HUBs, to the General Deputy Assistant Secretary.

Functionally, staff performance is overseen by field oversight staff, which monitors performance by the field and reports directly to the General DAS. Substantive support and guidance on enforcement and compliance matters, on disability issues, and on FHIP and FHAP are provided through the DAS for Enforcement and Programs.²⁵⁷ This reorganization was described as requiring, for the first time, that "Field FHEO components will perform all core functions at the lowest organizational levels, thereby empowering field managers to choose from a range of civil rights actions when responding to local needs."²⁵⁸ Previously, FHEO was organized by statutory or functional responsibility. This reorganization was designed to provide "customer satisfaction and results" and to decrease the number of managers. Headquarters offices were redesigned to provide support to field staff.²⁵⁹ The proposal reduced FHEO staffing from 646 to 591 positions.²⁶⁰

Structurally, the reorganization produced, under 10 HUB Directors, a total of 18 program centers. Ten of the program centers are co-located in their specific HUB, and the remainder are dispersed around the country. Designed to make enforcement, compliance, and program functions available to the public at the lowest organizational level, the reorganization also disperses decision making to the lowest levels. (See Chart VI-1.)

The 1998 reorganization did not demonstrably improve enforcement and compliance activities. The average age of open cases increased from 385 days to 497 days between 1998 and 2000. Administrative closures increased from 15 percent to 21 percent of total closures. Cause cases did not significantly increase, and in FY 2000 they dropped. Virtually no Section 504 compliance activities occurred during the period. In comparison, FHAP agencies--with smaller staffs, closer-to-the-ground decision making, and no comprehensive planning process--performed better than HUD.

[D]

One conclusion that can be drawn is that more devolved decision making, at least at the national level, requires greater levels of management oversight and controls to ensure effective management of day-to-day operations of a national enforcement program. As noted, consistency and reliability of outcomes, as well as performance that is consistent with legal standards, policy guidance, and statutory requirements, is an expected outcome for a well-managed national civil rights operation.

Finding VI.B.5.a: FHEO's current devolved organizational structure has not improved the delivery of civil rights enforcement and compliance activities.

Recommendation VI.B.5.a: FHEO's organizational structure should be reevaluated to identify the changes that should be made to improve civil rights enforcement and compliance delivery.

6. FHEO Should Improve Its New Monitoring System by Focusing on Outcome-Oriented Performance by Field Staff

Especially in a devolved management structure, an important mechanism for ensuring ongoing effective performance by a field-based staff is the use of a strong on-site monitoring system. FHEO's performance in conducting investigations was criticized by the HUD Inspector General in 1998 because it lacked an on-site monitoring process for its field officer operations.²⁶¹ FHEO senior management has recently instituted an on-site monitoring process called the Quality Management Review. FHEO reports that it monitored five HUBs in FY 2000. It expected to monitor the remaining five offices during FY 2001.²⁶² The project also identified a total of 17 best practices by its field offices. None of the best practices are explicitly tied to enforcement or compliance activities enforcing disability rights; however, several relate to increased enforcement activity generally. For example, the Chicago HUB was recognized for developing voluntary mediation processes for early resolution of complaints, for testing respondents to ensure compliance with conciliation agreements, and for a "Complaint Investigation How-To Manual." Other best practices were less related to improved enforcement.

The results of the Quality Management Review process were not available for review. FHEO provided a copy of the concept paper and the questions used by members of the Quality Management Review teams to conduct field assessments. Significantly, nether document describes or establishes outcome-based criteria for enforcement or compliance activities. Neither document identifies protocols for file reviews, analysis, or consideration of data, or observation of actual performance. Typical questions address procedures, rather than substance. For example, a HUB director is asked the following series of questions, among others: What are your procedures for monitoring the intake of claims/complaints? How do you monitor the progress of the complaint investigation? What is the process by which a case is submitted to you for concurrence?"

The manager with direct oversight responsibility for investigations is asked questions such as these: "What monitoring systems are in place to ensure that new cases do not age? What mechanisms are in place to ensure that the oldest cases are processed first? Have you revisited or conducted another assessment of your aged-case strategy to determine whether any adjustments/modifications are needed? What is the average time between receipt of cases from intake and assignment to investigators? What are the criteria for assigning a case to a particular investigator? What is the procedure for monitoring investigation status? What is the procedure for conducting conciliation?" Investigators are asked, "What is the procedure for preparing an Investigative Plan? How are cases identified as appropriate for a subpoena? Who is responsible for reviewing and approving an Investigative Plan? How are cases identified and scheduled for on-site investigations?" and so forth.

The questions do not address compliance functions. The process includes procedures for identification and correction of deficiencies, and, as noted above, for identification and recognition of best practices.

It is too soon to measure the effect of the current on-site monitoring process. The recent implementation of an on-site management and operations review process, however, is a positive move by FHEO. Of particular importance is the process for recognition of outstanding or unique contributions to enforcement and compliance activities. Such recognition should include making available the process, outcome, or content of the practices to other offices so they can be replicated.

7. FHEO's Criteria for On-Site Monitoring Should Be Revised to Focus on Improved Substantive Performance, Not Process

The new management review process appears to have serious deficiencies. An effective on-site monitoring process for civil rights enforcement should review both the quantity and quality of performance in all aspects of operations. It should review process, timeliness, and substantive content. It must contain aspects of technical assistance, sanctions to improve operations, and corrective actions. It should include recommendations for changing practices and procedures as well as guidance on best practices. It is just as important that, when deficiencies are found, there should be, wherever possible, corrective actions on individual cases, so that rights of individuals are not impaired by poor performance.

FHEO's on-site monitoring should look at every aspect of enforcement and compliance activities, at both the macro and micro levels. It should look at substantive content and performance, not simply process.

a. Enforcement

FHEO on-site monitoring should do the following regarding enforcement:

• Evaluate how precomplaint intake is handled, whether appropriate interviews are conducted and correct information given, and how long the process takes against a national standard.
• Review sample files from the handling of the claims process to ensure that decisions on whether to file complaints are made appropriately and consistent with legal and policy guidance.
• Reverse decisions that are made erroneously.
• Observe intake interviews and counseling that occurs with potential complainants.
• Evaluate, using an on-site monitoring process, the quality and content of investigations and conciliations through file reviews as well as interviews.
• Ensure that all investigations and conciliations are impartial and fair and the outcomes consistent with legal standards, policy guidance, and outcomes in similar cases in other offices.
• Evaluate the numbers and timeliness of investigations by reviewing open and closed case files against national standards for timely processing, and consider the nature and extent of actual supervisory oversight of cases.
• Evaluate areas where lapses in investigative or conciliation activity or unfocused and inappropriate investigative activity have interfered with the processing of a case.
• Evaluate cases to determine whether all victims of discrimination have received an appropriate remedy and whether resolutions have resulted in changed policies and practices.
• Monitor resolutions of cases and act on failures to comply with conciliation agreements.
• Require field staff to identify properly and take appropriate actions in potential cases or situations where temporary injunctive relief, subpoena issuance, and other relief should be sought.
• Investigate zoning and land use cases in adequate time to allow DOJ to review and act upon cases, because the FHA requires DOJ to file zoning and land use cases within 18 months from the act complained of.
• Have field staff identify cases and situations where a Secretary-initiated complaint should be sought to remedy discrimination where no individuals have filed complaints.
• Have field staff properly identify and promptly act upon cases where patterns and practices of discrimination justify a referral to DOJ for enforcement.
• Establish benchmarks for all aspects of enforcement activity, and monitor activities so as to hold managers and staff accountable for compliance with those benchmarks.

b. Compliance

FHEO on-site monitoring should do the following regarding compliance:

• Start with clear measures for the initiation of compliance reviews, including the number, type, and scope of compliance reviews to be conducted within a given time frame.
• Review the sites already reviewed, the sites scheduled for review, and the basis for deciding to conduct the review.
• Evaluate open and closed files for compliance reviews to ensure that there are no significant lapses in activity, and that remedial and corrective actions have been proposed and taken in a timely fashion.
• Review letters of compliance and noncompliance for consistency with national policy, legal standards, and actions taken elsewhere.
• Take remedial actions, including program consultation, where noncompliance has been identified.
• Make recommendations for suspension or termination of funding promptly and correctly.

c. FHAP-Related Activities

FHEO on-site monitoring should do the following regarding FHAP-related activities:

• Evaluate FHEO staff's review of FHAP agency performance. Establish national benchmarks for consistent performance by FHAP agencies. Objective benchmarks could include areas such as administrative closures, case and inquiry processing time, time for commencement of an investigation, and number of complaints resolved.
• Confirm that FHEO monitors conduct individual case monitoring within 45 days from the date of closure of a complaint by an FHAP agency.
• Examine field staff review cases to ensure that the investigative process has provided an appropriate investigation. If FHAP agency performance is generally acceptable, a specified percentage of cases should be selected for in-depth review, and the remainder monitored only for obvious deficiencies or as a result of complaints about performance. Benchmarks for measuring an appropriate investigation should include evaluating the nature and scope of the investigation to ensure that it investigates each of the respondents' defenses and the complainants' allegations; that similarly situated persons are identified and their treatment analyzed; that appropriate documents are collected and appropriate witness interviews conducted; that policies, practices, and procedures related to the case are reviewed; and so forth. FHEO should use HUD's Title VIII manual standards, and the monitoring of the FHEO field staff should ensure that the standards are being applied. Cases that are inadequately investigated should be remanded to the agency for further work, even though that additional work may require HUD to hold the case open longer than the 45-day monitoring period.
• Examine FHEO's monitoring of relief sought and granted by FHAP agencies to determine whether the relief being sought reflects the nature of the case and the available evidence.
• Evaluate areas such as the issuance of determinations of reasonable cause and the processing of charges after investigation; the use of temporary injunctive relief, subpoenas, and discovery; the criteria on which determinations of no reasonable cause are made; and other related performance issues.
• Monitor its own staff's use of Performance Improvement Plans and suspension and termination of funding to ensure that these corrective actions have been used appropriately and effectively and have been preceded by notice of problems and an opportunity to correct those problems.
• Interview representatives of FHAP agencies to detect any performance, communication, or retaliation in the handling of FHAP matters.
• Offer to FHAP agencies that perform outside the norms for such agencies appropriate technical assistance and training to correct inadequacies, and to FHAP agencies performing exceptionally, the opportunity for additional funding and other recognition for their practices. Criteria for exceptional behavior should be established and monitored nationally.

d. FHIP-Related Activities

FHEO on-site monitoring should do the following regarding FHIP-related activities:

• Monitor FHIP agencies carefully. FHIP agency performance, while harder to quantify them as FHAP activities, should be evaluated by benchmarks as well. Some objective benchmarks for FHIP performance include the time from an initial inquiry to the conduct of tests, if appropriate, and referral to an appropriate entity; use of appropriate testing techniques in a timely fashion; and completion of special enforcement projects in the established time frame.
• Monitor FHEO on its provision of training and technical assistance to FHIP recipients and on its treatment of FHIP recipients. Monitor FHEO's communication with FHIP agencies through interviews with FHIP recipients.
• Monitor FHEO on its ability to provide timely responses to FHIP inquiries and to process or communicate about any problems in processing complaints filed by FHIP recipients.
• Include a review of individual cases and their resolutions.
• Evaluate FHEO's response to complaints about FHIP performance, including nonresponsiveness to inquiries, improper tactics, and nonperformance.
• Establish benchmarks to standardize its basic requirements for private enforcement funding and ensure that field staff review performance according to those benchmarks.

All on-site monitoring should address the relationship between FHEO and legal counsel to ensure that counsel have been involved in case discussions, that legal guidance is provided in a timely and consistent fashion, and that counsel have been consulted where appropriate. In addition, cases should not be delayed by the need to seek legal guidance. A full on-site monitoring process should review the nature and content of training and technical assistance provided to the public, to advocates, to recipients, and to FHAP and FHIP program participants.

All monitoring should require adherence to national policy guidance, BOP and APP standards, and Strategic Plan goals.

Finding VI.B.7.a: FHEO needs to continue and expand its on-site monitoring process. It should monitor more specific BOP and APP goals as recommended above, and it should use its on-site monitoring process as a way of ensuring that performance standards are met and field staff are performing adequately.

Finding VI.B.7.b: An on-site monitoring process should have as its primary goal the assurance of prompt, effective enforcement and compliance outcomes. Benchmarks for performance should be set and monitored. Offices that do not meet these benchmarks should receive direct technical assistance and sanctions, if necessary, to improve performance.

Recommendation VI.B.7.a: FHEO should continue its on-site monitoring process and ensure that it includes adequate benchmarks, actual observation and review of performance, and outcome-based reviews so that the process improves its enforcement and compliance operations consistent with the other recommendations of this report.

8. FHEO's Performance Requirements for Individual Employees Should Focus on Enforcement and Compliance Outcomes

Effective individual performance by federal employees can be directed through the use of position descriptions and performance elements that describe the duties of each employee and the quantity of work that is required, as well as the standards for performance of the duties. Outcome-based measures that address the quantity and quality of work expected of each employee could assist in improving enforcement and compliance activities overall.

For example, if an employee responsible for assisting potential complainants has a performance element that requires all claims handled by that employee to be reviewed, evaluated, and concluded to disposition within 20 days from receipt of the claim by HUD in order to perform at an outstanding level, performance on handling claims would presumably improve. Similarly, if investigators are required to complete 80 percent of the investigations assigned to them within 80 days from the date on which complaints are filed in order to meet performance expectations, investigations could reasonably be expected to be shorter than their current duration. Although HUD's PriceWaterhouse study recommended that new performance-based elements be developed and implemented for individual employees engaged in enforcement activities, such elements were never put into place.²⁶³

Finding VI.B.8.a: FHEO lacks sufficient performance-based criteria for its employees to ensure that they perform at appropriate levels.Recommendation VI.B.8.a: FHEO should implement performance-based elements for staff engaged in enforcement and compliance functions.

9. HUD's Legal Guidance Should Be Compiled and Organized to Support Enforcement and Compliance Activities

The source of FHEO's legal guidance is HUD's Office of General Counsel. Although some of FHEO's staff are attorneys, legal advice comes to FHEO and its staff formally through a separate part of HUD's organizational structure. Legal counsel are responsible to the General Counsel of HUD, rather than to the Assistant Secretary for FHEO.

The portion of HUD's Office of General Counsel responsible for giving legal advice on fair housing issues has remained reasonably consistent in its organizational structure. Its staff has institutional knowledge and, generally, a high level of expertise on civil rights issues. Over the past 10 years, the Counsel's office has had a fair housing division in Headquarters. Elevated in the past year to being headed by an Associate General Counsel, the Headquarters office has two parts, one dedicated to enforcement and the other to programs and compliance. Each HUB has its own field counsel office, with one or more attorneys performing fair housing work. However, these field counsel do not report to the Associate General Counsel for Fair Housing but to the Deputy General Counsel. That means that field counsel lawyers can be assigned other work without any assurance that fair housing work will receive priority. As with FHEO's HUB directors, assistant field counsel have broad latitude in staff assignments and legal decision making.

There is little or no common ground for legal guidance nationally. Aside from occasional legal opinions prepared at the request of the Headquarters Office of Enforcement and a body of case law generated by decisions issued by HUD ALJs, each field counsel office develops its own legal analysis process, its own strategy for cases, and its own internal case management system. There is no single source of information about interpretative opinions that have been issued by any of the counsel offices,²⁶⁴ and there is no single source of information available through HUD about federal or state judicial decisions interpreting the FHA and Section 504 for findings of cause and no cause in FHA cases or findings of compliance or noncompliance in Section 504 cases or compliance reviews handled by HUD, or about conciliations, voluntary compliance agreements, or settlements reached by HUD, DOJ,²⁶⁵ FHAP agencies, or courts in these cases.

Virtually all this information, other than legal guidance on cases that are in investigation, is public information by statute²⁶⁶ or by practice. Access to this baseline information is critical to successful civil rights enforcement work, and HUD should make it a priority to gather this information both from Headquarters and from field counsel offices and make it available to its own staff and to the public.²⁶⁷ Some of this information is already available online; the National Fair Housing Advocate, for example, provides an inexpensive, easily searchable database of fair housing cases that is ADA-compliant, as well as ready reference to HUD resources, statutes, and regulations.²⁶⁸ Access to this information could be made readily available to HUD staff quickly and inexpensively.

Finding VI.B.8.b: HUD lacks legal information resources that are critical to its enforcement and compliance work in enforcing Section 504 and the FHA.

Recommendation VI.B.8.b: At a minimum, HUD should provide access to comprehensive fair housing legal information that is searchable by name of case, issues, or keyword. The information that should be made available includes information on FHA and housing-related Section 504 state and federal judicial decisions, determinations that there is or is not reasonable cause to believe that a violation of the FHA has occurred, determinations by HUD that there is compliance or noncompliance with Section 504, conciliation agreements, VCAs, settlements in FHA cases, and legal and interpretive opinions issued by the Office of General Counsel on significant issues relating to the FHA and Section 504. This information should be made available to HUD staff and to the public, and it should be made available in accessible and alternative formats.

Recommendation VI.B.8.c: HUD should immediately provide access for FHEO and counsel staff to the searchable, ADA-compliant fair housing and civil rights case database available online through the National Fair Housing Advocate.

C. Organizational Resources Supporting Enforcement and Compliance Have Not Been Adequate

1. FHEO Has Not Been Adequately Staffed to Perform Enforcement and Compliance Activities

Adequate staffing is an important component of civil rights enforcement. Enforcement is a staff-based activity. Enforcement tasks require interviews; data collection and analysis; on-site visits; preparation of written materials, including complaints, investigative plans, investigative reports and letters, conciliation agreements, and Voluntary Compliance Agreements; and other related activities, such as counseling, training, advice, and community education.

a. FHEO Staffing Overall Has Dropped Significantly During the Past 10 Years

FHEO's staffing has consistently been reduced over the past 10 years. Overall, FHEO's staff has decreased by 7 percent in the 11 years since the FHA was amended. FHEO's full-time staffing level was at 625.1 full-time equivalent (FTE) positions in 1989; it was down to 584 FTEs in FY 2000. Staff levels overall reached high points in FY 1992 and FY 1994, at 740 and 750 FTEs, respectively, and then began dropping (see Chart VI-2). From 1995 to 2000, FHEO staffing dropped almost 25 percent. In addition, during the years when FHEO staffing reached its highest levels, many of those employees were hired on a temporary basis for a period not to exceed two years.²⁶⁹ This prevented the development of a permanent, skilled workforce within FHEO. Further losses of staff occurred when HUD instituted its Community Builder program. Many senior FHEO staff and mid-level managers were hired into the Community Builder program. As a result, the years of training, experience, and management experience were lost to FHEO.²⁷⁰

[D]

During the most recent two fiscal years, FHEO was staffed below even its HUD-authorized ceiling. In FY 1999 and FY 2000, the maximum number of staff approved internally by HUD for FHEO was 650, but FHEO's actual staffing was at 592 and 584, 91.1 percent and 89.8 percent of the ceiling, respectively.

FHEO has recently been staffed relatively lower than other program areas at HUD. For example, in 1999, FHEO was staffed at 585 FTEs. At that time, FHEO's ceiling for employees (the supposed highest level of staffing permitted for FHEO by HUD decision makers) was 650, so FHEO was 65 FTEs below its ceiling. At that same time, HUD's Office of Community Planning and Development was staffed at 76 persons above its ceiling and the Office of Administration was staffed at 184 above its ceiling. The Office of General Counsel had 78 persons above its ceiling. At the same time, there were 810 Community Builders, more than when FHEO was staffed at its highest level during the 1990s.²⁷¹ In 1999, FHEO was staffed at 10 percent below its ceiling with approval to hire only 10 additional employees. In comparison, HUD's Office of Housing was staffed 4.6 percent below its ceiling and had approval to add 106 employees, which would have brought it to only 1.6 percent under its ceiling.

b. Enforcement Staffing Has Dropped

The number of enforcement staff has also dropped, but not as sharply. From 270 FTEs in 1990 (the first full year that enforcement of the FHA increased as a result of the 1989 amendments), enforcement staffing increased to a high of 406 in 1994 and then dropped again to 319 in FY 2000 (see Chart VI-3).

[D]

The 1996 PriceWaterhouse study of HUD's enforcement of the FHA recommended that FHEO be staffed at a level that permits, on average, each investigator to be required to close no more than 40 cases a year, with a case load of no more than 15 at any given time.²⁷² Staffing resources have not been provided consistent with that recommendation. Because investigators are required to investigate cases other than FHA complaints--including complaints filed only under Section 504, Title VI, or any of the other nine laws and Executive Orders enforced by FHEO--the actual staff levels are even further below the recommended levels.²⁷³

Staffing levels have direct correlations to performance on cases. Especially since FHEO's enforcement staff numbers dropped during the mid- to late 1990s, the average age of open cases has increased, it takes longer to settle cases, fewer charges have been issued, and fewer complaints have been filed. Although staffing levels are clearly not the only factor affecting the processing of cases, they are clearly an important factor.

The PriceWaterhouse study also recommended that organizational units managing investigations have at least one supervisor to every seven to eight employees.²⁷⁴ The 1998 reorganization not only reduced staff numbers overall, it created enforcement branches with an investigative staff-to-manager ratio averaging 1 supervisor to every 9.3 investigators.²⁷⁵ (In HUD's personnel system, investigators have official job titles of Equal Opportunity Specialists with federal pay grades ranging from GS-9 to GS-13.) In addition, staff performing compliance functions were separated from investigative staff and assigned to a separate office in the field, called the Program Operations branch. This reorganization also separated Section 504 enforcement activities from Section 504 compliance activities. It gave HUB directors and program center directors more responsibility in directing operations within their authority.

There is no study comparable to the PriceWaterhouse study of staffing needs for compliance activities. Given other findings of this report regarding the inadequacies in the numbers and performance of compliance work by FHEO, a similar study analyzing FHEO's goals for conduct of timely compliance activities should be conducted, and staffing and supervision numbers should be increased accordingly

Finding VI.C.1.a: HUD's staffing of FHA and Section 504 enforcement activities has decreased significantly over the past 11 years.Finding VI.C.1.b: During the past four years, the Office of Fair Housing and Equal Opportunity has not been given adequate staffing resources to perform its enforcement work.

Finding VI.C.1.c: As staffing increases to appropriate levels, additional supervisors will be necessary to oversee day-to-day activities effectively.Recommendation VI.C.1.a:At a minimum, FHEO should be provided with enough skilled nontemporary staff FTEs to ensure that each investigator carries no more than 15 FHA cases or the equivalent at any time. Additional staffing should be provided to ensure that enforcement activities under Section 504 are conducted at a meaningful level in each HUB.

Recommendation VI.C.1.b: At a minimum, FHEO should be provided with enough supervisory staff to permit a ratio of one supervisor to every seven or eight investigators. An analysis similar to the PriceWaterhouse study of staffing needs for compliance activities should be conducted, and staff should be increased accordingly.

c. Staffing of Compliance Activities Has Dropped Significantly and Is Now Half the 1989 Level

Finally, staffing of HUD's compliance functions (which include Section 504 compliance, as well as compliance activities related to other civil rights laws and executive orders enforced by FHEO) has also dropped to less than half the staff to perform compliance work in 1989. Compliance staff levels in 1989 were 130.1; by FY 2000 the number of all compliance staff was down to 61 (see Chart VI-4).

[D]

Over the past several years, FHEO has been criticized for its performance in conducting compliance reviews. An audit report by HUD's OIG in 1998, for example, found that "FHEO did not always ensure that HUD recipients complied with applicable requirements of Section 504."²⁷⁶ One of the findings of the Inspector General was that HUD should provide consistent supervisory oversight to ensure that compliance reviews are conducted in a timely fashion.²⁷⁷ Among the subsidiary findings were determinations that actions were not taken to ensure the timely completion of compliance reviews and that even when reviews were completed, actions were not taken to ensure that corrections were made.²⁷⁸

NCD's review indicates that inadequate staffing and supervision contributed to this problem. If resources are limited, staff conducting compliance activities are frequently reassigned.²⁷⁹ Unlike other agencies that perform only compliance work, FHEO has a demand-driven system that requires many resources to enforce the FHA. FHEO staff acknowledge that compliance work has not been conducted because staff have been diverted to other priorities, specifically, FHA priorities.²⁸⁰

There is no study comparable to the PriceWaterhouse study of increased effectiveness of compliance activities. Given other findings of this report regarding the inadequacies in the numbers and performance of compliance work by FHEO, a similar study analyzing FHEO's goals for conduct of timely compliance activities should be conducted, and staffing and supervision numbers should be increased accordingly. In addition, compliance activities should be organized and directed on a more consistent basis to ensure that they are not overlooked as other demand-driven priorities use resources.

Finding VI.C.1.d: For at least the past four years, the Office of Fair Housing and Equal Opportunity has not been provided with enough resources to perform a reasonable amount of compliance activity.

Finding VI.C.1.e: HUD's doubling of enforcement activities took valuable staff and resources away from compliance activities.

Finding VI.C.1.f: Compliance activities suffer when staff are reassigned to perform other demand-driven activities.

Finding VI.C.1.g: FHEO's compliance review process has not been the subject of a significant external review in the same way that PriceWaterhouse reviewed the FHA process.

Recommendation VI.C.1.c: FHEO should be provided with adequate staff, in addition to enforcement staff, to ensure that compliance activities are ongoing, consistent, and completed in a timely manner. Organizational structures should ensure that staff are allocated in a way that permits compliance staff to be protected from such demands to ensure that compliance work is an ongoing and consistent process.

Recommendation VI.C.1.d: FHEO's compliance review process should be reviewed and analyzed by an external entity, such as PricewaterhouseCoopers, and its operations revised for greater efficiency and effectiveness.

d. Lawyers in the Field Offices of Counsel Should be Provided in Adequate Numbers to Support Enforcement and Compliance Activities

As noted, the OGC, although it has an Associate General Counsel for Fair Housing and a Headquarters staff with two Assistant General Counsel, does not consistently have attorneys dedicated to fair housing work in its 10 regional, or HUB, offices. Each of the offices has its own structure and staffing patterns, and frequently fair housing attorneys at the field level are required to perform work in areas other than fair housing. HUD's OGC was unable to provide information about the number of attorneys assigned to fair housing enforcement activities during the past 11 years. If there are inadequate numbers of counsel to handle cases, provide advice, offer legal opinions, and even participate in investigations, it will be harder for FHEO to perform its enforcement and compliance activities.

Finding VI.C.1.h: There is inadequate information from which to determine whether staff attorneys have been provided in adequate numbers to support FHA and Section 504 activities.

Recommendation VI.C.1.e: HUD's Office of General Counsel should evaluate its staffing of the fair housing and civil rights enforcement functions to ensure that there are adequate numbers of staff attorneys to support those functions. No case should be delayed and no rights should be jeopardized because of lack of available legal resources.

Consistent and prompt legal advice in support of civil rights enforcement and compliance activities is an important component of effective actions. Generally, interviews with current HUD staff indicate that the relationship between the OGC and FHEO is working reasonably well. Legal counsel should be readily available at every stage of the investigatory process, from evaluating whether or not HUD has jurisdiction over a particular case to planning complex investigations to seeking temporary injunctive relief or subpoenas to evaluating the quality and quantity of the evidence gathered to seeking appropriate remedies to making a final decision on whether or not civil rights laws have been violated.

During the past 12 years, suggestions have occasionally been made that the lawyers working on fair housing and civil rights issues should report to the Assistant Secretary for FHEO rather than to the General Counsel to ensure consistency between policy leadership and legal guidance. This model, which is used at the Equal Employment Opportunity Commission and some other agencies conducting Section 504 compliance activities, should be examined by HUD to determine whether it would improve delivery of enforcement and compliance activities.

Others argue that the separation of the two functions provides a checks and balances system that is properly addressed by leaving determination decisions in FHEO with legal advice by counsel considered in the decision making. If the consistent guidance about legal developments--including legal opinions, judicial developments, and determinations in cases and compliance reviews--is made available as recommended above, merger of counsel staff and fair housing/civil rights staff may not be needed to improve delivery of enforcement and compliance services.

Recommendation VI.C.1.f: HUD should consider whether its civil rights attorneys should report to the Assistant Secretary for Fair Housing and Equal Opportunity, after implementing a more effective legal guidance delivery system.

2. Funding for the Two Major Programs Authorized by the Fair Housing Act to Address Enforcement Has Been Inconsistent and Management Practices Problematic

During the past 11 years, congressional appropriations for the two major FHEO programs, FHIP and FHAP, have increased significantly. In significant areas affecting the enforcement of civil rights, however, funding has diminished. In addition, management issues in the FHIP program have adversely affected enforcement.

a. The Fair Housing Initiatives Program Has Not Been Consistently Funded by Congress

FHIP is the program developed by Congress and advocates in 1988 to provide funding for fair housing-related activities by nongovernmental entities. Organizations that are eligible for FHIP include private fair housing groups, state and local government agencies enforcing fair housing laws, advocacy groups, and other nonprofit organizations. The statutory language in the FHA authorizes the Secretary to fund public or private nonprofit organizations or other public or private entities that are carrying programs to prevent or eliminate discriminatory housing practices.²⁸¹ Eligible activities include "programs or activities designed to obtain enforcement of the rights granted by" the FHA and "education and outreach programs designed to inform the public concerning rights and obligations" under the FHA.²⁸²

HUD administers FHIP as a competitive grant program, giving it little administrative oversight authority.²⁸³ FHIP activities have occasionally been controversial; for example, a study prepared by the General Accounting Office at the request of Senators Larry Craig, Ted Stevens, and Michael Crapo addressed the role of FHIP recipients in collecting information and identifying potential violations of the FHA's design and construction requirements.²⁸⁴ Members of Congress have occasionally criticized FHIP recipients' conduct as advocates for the rights of victims of discrimination, and this criticism has resulted in congressional inquiries and sometime sporadic funding of FHIP.

FHIP recipients provide a range of services and activities that are critical to enforcement of civil rights issues. They are community-based, so they provide education, technical assistance, advocacy, and case-processing levels where federal, state, and local governments lack a civil rights presence. Because they are active in their local communities, they can provide quicker, localized responses to local civil rights concerns. They provide counseling and local referrals to many people who may seek to file fair housing complaints but who do not have claims, and they assist many others in investigating and filing claims and complaints. FHIPs routinely conduct "testing," an investigative technique whereby individuals posing as homeseekers gather information from which others--typically test coordinators and, later, investigative agencies--reach conclusions about whether discrimination may have occurred.²⁸⁵

Funding requests for FHIP have been erratic over the past 12 years, as have congressional appropriations. HUD's funding requests have ranged from $6 million to $30 million. In most years, the congressional appropriation has fallen below the amount requested in the President's budget request. For example, in 1997, the budget request was for $18 million, but Congress appropriated $15 million. In 1998, the request was for $24 million but only $15 million was funded. The highest funding level for FHIP was for FY 1995, when $26 million was requested and appropriated. This budget was passed in 1993.²⁸⁶ Table VI-1 lists the funding for the Fair Housing Initiatives Program from 1990 to 2000.

Table VI-1: Funding for the Fair Housing Initiatives Program, FY 1990-FY 2000

FHIP funds full-service private fair housing organizations to conduct enforcement activities through its Private Enforcement Initiative. Full-service organizations are those that provide a range of education and enforcement activities relating to discrimination on all bases covered by the FHA. In general, people with disabilities are served by the groups funded through the program in the same way African Americans, Latinos, women, and members of other groups are served. FHIP has also historically funded groups that serve people with disabilities exclusively or primarily. Funding for programs that provide fair housing assistance primarily or exclusively to people with disabilities has ranged from 2.01 percent of the FHIP allocation in 1989 to 11.25 percent in 1999 (see Table VI-2). HUD does not maintain records indicating the percentage of applicants that sought funding for programs serving people with disabilities; there is no indication that the variance in funding levels is attributable to any factor other than the number and quality of applications.

Table VI-2 : FHIP Funding Addressing Discrimination Against People with Disabilities, FY 1990-FY 2000

In addition, in the competition for FY 1999 and FY 2000, for the first time, HUD asked applicants for FHIP funding to indicate whether they intended to target discrimination against people with disabilities (among other groups). Recipients indicating that these groups would be targeted for special activities received special consideration during the funding process. FHIP recipients receiving a total of $3,838,957 in FY 1999 indicated that they intended to target people with disabilities. In FY 2000, FHIP recipients receiving a total of $8,257,211 (or 45.9 percent of the total allocated) indicated that they would target discrimination against people with disabilities in whole or in part.

b. FHEO's Administration of the Fair Housing Initiatives Program Does Not Engender Confidence in the Program

HUD's operation of FHIP has been widely criticized. A 1998 Inspector General study of FHIP management operations found that "FHEO did not satisfactorily administer its Fair Housing Initiatives Program. Essentially, FHEO: (1) did not perform and document the FHIP grant award process timely and adequately; and (2) approved and disbursed grant draw downs totaling $6.2 million (73 percent) of the $8.5 million review which were not fully warranted."²⁸⁹

The Inspector General attributed these deficiencies to the following:

1. Lack of adequate supervision over the staff performing the functions.
2. Design flaws in the grants management system program and the grant agreement payment schedule.
3. The inconsistent method used by the staff to document their receipt and review of grant deliverables.²⁹⁰

Other Inspector General audit reports found that the Office of the Secretary "exercised undue influence over the FHEO staff responsible for awarding and administering" a grant made under FHIP,²⁹¹ that FHEO announced its intent to fund the Boston (Massachusetts) Housing Authority through FHIP for clearly prohibited purposes in violation of statutory requirements, and FHEO awarded FHIP education and outreach funds to an organization that did not perform the designated activities.²⁹² In addition, FHIP-eligible organizations have repeatedly criticized HUD for using FHIP funds to support an audit-based research project during fiscal years 1999, 2000, and 2001. ²⁹³

Congress has expressed its displeasure about carryovers in FHIP funds between fiscal years because of late completion of the competitive process and corresponding delays in signing contracts to obligate the funds.²⁹⁴ FHIP recipients have complained about the lengthy competitive process that fails to ensure consistent funding streams for eligible organizations; some organizations have been required to seek bridge loans or to temporarily suspend operations because of delays in completing the competitive process or in negotiating contracts with successful recipients.²⁹⁵ Without contracts, private fair housing organizations cannot even acquire bridge loans to ensure a consistent presence in the community and ongoing staff. Anecdotal information suggests that many FHIP-funded groups have lost experienced staff and have been unable to assist victims of discrimination because of these kinds of funding management problems.

Finally, the products of various FHIP grants are not readily available to the public. FHEO has no organized system to list, categorize, or report about the contents of deliverables of the FHIP. In response to a request made for purposes of this study for model or best practices deliverables from FHIP from grantees that have received funding for programs protecting the rights of people with disabilities, FHIP staff stated that they could not identify or provide them.²⁹⁶ The program produces educational materials, legal summaries, technical assistance materials, case outcomes, and other information that would be important to help programs around the country improve their delivery of fair housing services and to help housing providers understand and comply with the law. In addition, to the extent that there is opposition to the program based on political or other nonmanagement concerns, being able to establish a track record of successful outcomes is a valid way to respond to criticism. And it goes without saying that more information about the outcomes funded by FHIP would rationalize the program by permitting grantees, Congress, and even the FHEO to know what was working in order to assess new funding decisions and new applications for funding.

For similar reasons, FHEO should consider the development of a case-tracking system for use by FHIP recipients to make monitoring of cases and case outcomes easier. Like the TEAPOTS system that has been developed for use in tracking HUD and FHAP complaints, a similar program that is accessible to and usable by FHIP recipients, with appropriate safeguards for case-specific information that is not appropriately contained in an investigative record, could be of great assistance in managing FHIP more effectively. If data are sensitively collected, with read-only access by FHIP monitors, FHIP-funded activities could be monitored more effectively. If carefully developed, the system could also help individual agencies monitor their own intake, case-processing, and related activities.²⁹⁷

Finding VI.C.2.a: The absence of fair housing deliverables and outcomes, the lack of a carefully constructed case-tracking system for cases funded through FHIP, and the absence of institutional knowledge about the best or most effective of the programs funded through FHIP are significant shortcomings in an important program.

Recommendation VI.C.2.a: FHIP should move expeditiously to develop a comprehensive, organized system to identify outcomes, information, and materials developed as a result of the program and to make them available to the public and especially to organizations and individuals that deal with fair housing issues.

Recommendation VI.C.2.b: FHIP should develop a case-tracking system for use by FHIP recipients, with read-only access by FHIP monitors, to collect reportable data to assist in quantifying the activities of recipients funded by FHIP. Such a data system should have the capability of being used by FHIP recipients to track, monitor, and report on their own activities.

Recommendation VI.C.2.c: The changes proposed to FHIP in this report should include input from current and potential FHIP recipients and other interested stakeholders to ensure that the program changes result in a more efficient and effective use of federal dollars.

c. The Fair Housing Initiatives Program Is Critical to Effective Enforcement of the Act and Should Be Revitalized

FHIP is important because the funding permits a variety of education, outreach, technical assistance, and other programs that help people who believe they have been victimized by discrimination and because it provides a focused local presence to organize and support fair housing rights. It has been used to fund important disability-related activities, and a significant amount of its funding has been devoted to projects that protect the rights of people with disabilities. It has been flawed in its administration and execution, however.

Current recipients of FHIP funding recommended to senior FHEO officials last summer that it reorganize the program significantly.²⁹⁸ Their consensus proposal urged that FHIP be reconstituted to serve primarily as a formula grant program, with funding tied to population in the area served by full-service private fair housing groups. They urged FHEO to establish baseline criteria for eligibility and fund through formula grants all qualified fair housing organizations. They also urged that FHEO end the lengthy and controversial competitive funding process for at least the private enforcement component of the program.

This proposal has merit, especially if it is tied to improved grant management and increased training and technical assistance. It would have significant advantages because it would replace the current inefficient competitive process that has been widely criticized and has failed on occasion to deliver funding for activities that are important to the delivery of fair housing services.

It would ensure a consistent budget process, because funding needs could be predicted based on the predicted number of eligible organizations. It would help ensure consistent funding streams for organizations that provide an important presence in enforcing fair housing rights. It would allow limited staff resources in FHIP to focus their attention on performance problems, training, technical assistance, and ensuring that consistent and reliable outcomes are obtained.

A similar approach could be taken to fund organizations that wish to become eligible for private enforcement funding but currently do not meet statutory requirements. Those organizations, rather than competing for limited dollars, should be able to enter into a funded program for a limited time, offered special training and technical assistance, and permitted to develop the skills that would allow them to become effective full-service private fair housing groups. FHAP has provided such funding to new organizations for years under its capacity- building program.²⁹⁹ Funding more new organizations will enable more geographic areas to be served by private fair housing groups, including those that lack an FHAP agency.

If these approaches are followed, FHIP would operate more like FHAP, which, as described later in this report, funds state and local government agencies meeting specified criteria, based on the number of cases handled, and funds new organizations with baseline funding for three years until technical capability is reached. It would free FHEO's limited resources from managing a major competitive program, and it would free more resources to improve the quality and quantity of fair housing activities.

Resources funded for purely education and outreach projects and for national projects should continue to be made available competitively. These funding opportunities permit funding of special, novel, and national/regional projects that advance fair housing purposes. They would also allow, in contrast to the private enforcement initiative, funding of projects designed to identify, educate, and reach out to specific types of housing discrimination, including discrimination based on disability.

Finding VI.C.2.b: FHIP serves an important function in supporting fair housing rights. As currently constituted, however, the program has operated ineffectively and inefficiently.

Finding VI.C.2.c: FHIP does not provide adequate systematic support for an ongoing fair housing presence nationally.

Recommendation VI.C.2.d: FHIP's private enforcement initiative should be reconstituted to provide funding to full-service private fair housing groups based on a formula grant approach. The funding should be tied to eligibility criteria based on the current statute; it should be based on population in the service area served by a group; and it should be tied to increased training and technical assistance and performance monitoring.

Recommendation VI.C.2.e: FHIP should develop a formula-based funding structure that enables new organizations to become qualified to participate in the private enforcement initiative as full-service organizations as FHAP funds new participants in its capacity-building program.

Recommendation VI.C.2.f: FHIP's education and outreach and national initiatives should continue to be funded competitively, with improvements as recommended by the HUD Inspector General.

d. Funding for the Fair Housing Assistance Program Has Been Increased

FHAP funds only state and local government bodies enforcing laws that have been found by HUD to be "substantially equivalent" to the Fair Housing Act.³⁰⁰ Substantial equivalency determinations are a two-part process, requiring an evaluation of the equivalency of the law or ordinance on its face to the provisions of the FHA and an evaluation of the performance of the enforcing agency in enforcing the law. Determinations about the equivalency of the rights and remedies provided by the law are evaluated based on regulatory criteria.³⁰¹ Determinations about the performance of the agency in enforcing the law are based on a review of the information gathered by the agency in investigating and resolving the case and by on-site and remote monitoring. HUD requires FHAP agencies to attend mandatory training.

As a result of restructuring the program in the mid-1990s, FHAP's funding is formulaic; that is, an agency that meets the equivalency criteria receives an established amount of funding based on costs associated with case processing (with HUD reimbursing the agency a set amount of money for each investigation), administrative overhead costs, and reimbursement for expenses related to mandatory training. Each agency in good standing is also eligible for funding for special enforcement-related projects through the Special Enforcement Initiative.³⁰² New organizations receive capacity-building funding, currently set at $115,000 annually. Agencies are eligible to receive capacity-building funding for up to three years. In earlier years, new agencies received capacity-building funding at a higher level--$100,000 per year for up to three years.

FHAP agencies are monitored remotely through review of individual case files by HUD staff. They occasionally receive on-site technical assistance. FHEO requires FHAP agencies to send designated numbers of staff to annual training organized by HUD. FHAP agencies with performance issues are subject to being placed on performance improvement plans and to having their funding suspended. Agencies with significant uncorrected performance problems may lose their certification as substantially equivalent. Criteria and appeal rights for these actions are set forth in HUD's regulations.³⁰³ HUD has used its authority to challenge agencies' certifications, and several agencies have withdrawn themselves from the program after HUD challenged either the adequacy of their law or of their performance.³⁰⁴ Recent information provided to HUD about statutory and performance inadequacies, however, have resulted in no response from HUD and no adverse action against the agencies.³⁰⁵

In contrast to FHIP, Congress has generally funded FHAP at or near the amount contained in the President's budget request (see Table VI-3). Over the past 12 years, the amount appropriated for FHAP has more than tripled, from $6.5 million in FY 1990 to $22 million in FY 2001.³⁰⁶

Table VI-3: Fair Housing Assistance Program Budget Requests and Appropriations, FY 1990-FY 2000

Both FHIP and FHAP have routinely had carryover funding, indicating that all the funds appropriated have not been obligated during the budget year for which they were funded. Congress criticized HUD, in report language associated with the FY 2001 budget, for large carryovers in FHIP and FHAP and directed HUD to put into place mechanisms that would result in funds being dispersed by the last quarter in the fiscal year.³⁰⁷

e. Although FHAP Agencies Have Performed M