Texas Weatherization program: need to improve spending, job creation, housing repairs

Yesterday the Texas House Committee on Urban Affairs and the Texas House Select Committee on Federal Economic Stabilization Funding met regarding their joint interim charge to “Review the Texas Department of Housing and Community Affairs’ Weatherization Assistance Program and increased funding from ARRA. Examine the methodology used to distribute funds and the program’s effectiveness at reducing residential energy costs.”

TxLIHIS’s John Henneberger spoke at the hearing and provided the following written comments about the program and ways to improve it.

Testimony before the Urban Affairs Committee and the House Select Committee on Federal Economic Stabilization Funding interim charge #4, the Weatherization Assistance Program (WAP)

Chair Davis, Chair Dunnam and members:

We offer the following comments regarding the Weatherization Assistance Program in Texas.

  1. The Texas program should maximize the creation of jobs in the neighborhoods served by the program. While local jobs are not explicitly required by the federal act, other jurisdictions have implemented local hiring requirements and OMB has directed agencies to support projects that create local jobs.
  2. An advocate for low-income program consumers should be appointed to the state policy advisory council on weatherization activities. Low-income consumer representation on the WAP policy council could have identified the housing need at the time of the adoption of the state plan for WAP activities, however the council does not contain the required low-income consumer representative.
  3. The WAP program alone cannot serve the extensive need in the state for home repair. Caulking a window doesn’t help if there is a hole in the roof.  The State of Texas should examine how to extend assistance to all in need.
  4. The program appears to be falling somewhat behind the production schedule previously announced by TDHCA.  Nevertheless, a balanced scorecard should be used when evaluating the WAP program, not just unit production numbers. Meaningful prioritization and outreach of hard-to-serve populations should not be sacrificed in a quest for speed.

We encourage the Texas Legislature and TDHCA to work to improve this program.  Our recommendations are discussed in detail below.

1) The Texas program fails to maximize the creation of jobs in the neighborhoods served by the program.

Many programs administered by HUD contain a “Section 3” requirement that jobs created by Federal financial assistance for housing and community development programs be filled, if possible, by Low and Very-Low income persons in the area served by the programs.  The Weatherization Assistance Program is funded through the Department of Energy, and as such does not contain explicit federal requirements for local hiring.

Nevertheless, the purpose and intent of the American Recovery and Reinvestment Act (the Recovery Act) is clear: to create jobs in the communities most impacted by the recession. Lower-income households generally experience greater income losses (as a percentage of income) during recessions, and it takes them longer than higher-income households to recover.[1] The “great recession” has proven to be no exception to this rule.[2]

The Federal Office of Management and Budget, in a memo regarding implementation of the Recovery Act, states “Departments and agencies should seek to maximize the economic benefits of a Recovery Act-funded investment in a particular community by supporting projects that seek to ensure that the people who live in the local community get the job opportunities that accompany the investment.”[3]

In some other states WAP administrators have incorporated local hiring requirements into their contracts with local providers.  For example, New Jersey and Delaware both require a percentage of local provider work-hours to be filled by graduates of training programs that serve low-income communities.[4] While local providers can voluntarily meet such requirements, we are not familiar with any such efforts in Texas.

It is not too late for TDHCA to put meaningful local hiring requirements into place in the WAP program.  While much hiring has already occurred, there is ongoing opportunity for local hiring for job openings resulting from turnover in the weatherization workforce and created by future years of funding for this program.

2) An advocate for low-income program consumers should be appointed to the state policy advisory council on weatherization activities.

DOE requires TDHCA to have a state policy advisory council on weatherization activities which “[i]s broadly representative of organizations and agencies, including consumer groups that represent low-income persons, particularly elderly and handicapped low-income persons and low-income Native Americans, in the State or geographical area in question;”[5]

TDHCA’s most recent amended WAP state plan indicates its policy council has a vacancy in its consumer representation, and does not have representation from a “consumer group that represent[s] low-income persons.”  This council is currently comprised completely of providers and state agencies.[6]

We encourage TDHCA to fill this seat.  A low-income consumer representative most likely would have identified the local-hiring shortcoming at the time of the filing of the state plan.

3) This program alone cannot serve the extensive needs in Texas for home repair.

TDHCA’s rules limit non-weatherization repairs to 20% of fund expenditures, and states “If health and safety issues identified on an individual unit (which would be exacerbated by any weatherization work performed) cannot be abated within the allowable WAP limits, the unit exceeds the scope of this program.”

Some local providers leverage additional funds from other sources to meet this need for non-weatherization repair, but not all providers have access to additional resources.  In many, if not most, areas, if a home has structural deficiencies, the family is out of luck.

A common justification for this shortcoming is that WAP is a weatherization program, not a home repair program.  If that is so, then this shortcoming demonstrates the need for a WAP-coordinated home repair program in Texas.

A federal bill currently in the US Senate Energy & Natural Resources Committee, the Energy-Efficient Manufactured Housing Act of 2009, includes a provision to allow weatherization funds to be used to replace mobile homes built prior to 1976.  This bill may be wrapped into one of the “jobs” bills currently under debate in the senate.  The idea behind this bill is that it is not worth investing weatherization funds into a thirty five year-old mobile home, but that getting these families into a energy-efficient home benefits society just as much as caulking a structurally sound home.

Texas should consider a similar program to allow replacement or repair of any home that currently “exceeds the scope of this program.”  All families deserve to be able to live in a decent, affordable home in a quality neighborhood, and the WAP is designed to be able to serve them all.

4) A balanced scorecard should be used to evaluate the State’s performance in administering the WAP program.

Our analysis of provider production reports provided by TDHCA indicates that 28 of 45 providers are more than 20% behind their projected production schedule.  Statewide, we estimate production numbers are approximately 15% behind the production schedule published by TDHCA in January. The State is now further behind schedule than at the start of March, as actual production has ramped up slower than projected production.[7] A copy of our analysis is attached.

TDHCA recently addressed this issue in the publication of rules regarding the de-obligation of under-performing providers.  One important component of the de-obligation rules is the statement “it is the Department’s primary goal to ensure that Deobligated Awarded Funds be expended in the existing geographic service area of the Deobligated Subrecipient or New Provider.”  We support TDHCA’s efforts to ensure that prioritized families in the existing geographic service areas are served by another provider in the case of deobligation.  Eligible recipients in a community should not be punished for the failure of the service provider covering their geographic area.

We also caution observers against encouraging TDHCA to structure the program solely around unit production benchmarks.

While the program rules require that providers “prioritize” elderly, persons with disabilities, families with children, high residential energy users, and households with high energy burden, such prioritization requires more than the ordering of a waiting list.  Meaningful prioritization includes outreach to these vulnerable groups.  If unit production numbers become the only measurement benchmark, outreach to hard-to-reach populations may fall by the wayside in the search for speed.[8]

Rather, we encourage your committees, and TDHCA, to adopt a more balanced scorecard for providers in this program including consideration of the following:

How many jobs have been created in the low-income communities served by the providers?

Is the program meaningfully serving priority groups?

What is the average payback of the weatherization work done by a provider?

Are the end-clients satisfied with their experience with the program?

We agree production and expenditure are important and every effort should be made to ensure that the Recovery Act funds allocated to Texas are spent in Texas, but we must ensure that we do not sacrifice other important aspects of the program in the name of haste.

Summary

We encourage the Texas Legislature and TDHCA to continue to improve this program through the following actions.

  1. A community based jobs component should be immediately established based on standards such as those required under the HUD Section 3 program.
  2. An advocate for low-income program consumers should immediately be appointed to the state policy advisory council on weatherization activities.
  3. Homes of the poor that require more work than the WAP program can provide should be identified and prioritized for receipt of State and local HOME federal block grant funds, CDBG funds and Texas Housing Trust Funds, so that these households are not simply passed over.
  4. A sophisticated approach for evaluation of WAP performance should be put into place rather than relying simply on reports of gross numbers of homes. Recent media accounts focusing on raw numbers have unfairly, in our opinion, criticized the State’s program performance. WAP has undergone a massive program expansion. TDHCA, a competently administered agency, has also received an unprecedented level of additional funding across several programs besides WAP. Our close monitoring of these programs has indicated that TDHCA is generally doing an acceptable job in implementing these programs. We are however beginning to see some signs performance in the WAP program is falling behind. This is largely attributable to the lack of capacity of some of TDHCA’s subcontractors, namely several community action agencies and especially most city and county governments. Rather that simply assessing performance solely through gross numbers, a deeper understanding of the challenges, objectives and potential of this very important program needs to be applied.

Thank you for your consideration of our comments.

John Henneberger


[1] Acs, Gregory “Unemployment and Income in a Recession” Recession and Recovery No. 1, THE URBAN INSTITUTE December 2008.

[2] Sum et al. “Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession: A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most” Center for Labor Market Studies, Northeastern University, February 2010

[3] Orszag, Peter R. “Updated Implementing Guidance for the American Recovery and Reinvestment Act of 2009,” OMB M-09-15, April 2009.

[4] New Jersey and Delaware State WAP plans.

[5] “Weatherization Assistance Program for Low-Income Persons” CFR Title 10, Part 440, Section 440.17.

[6] TDHCA DOE 2009 ARRA WAP State Plan.  Revised, Submitted March 5, 2010

[7] These estimates are based on unit projections, not dollar expenditures. The ability of the State to expend its allocated WAP funds under the production schedule projected in January has been impacted by the fact that production schedule assumes almost exactly an $6,500 average expenditure per home, but providers have indicated that the average spent per home is significantly below that.  The new deobligation rules require that providers create new production schedules by April 1 that account for the actual per-home expenditures.  While TDHCA currently has a $6,500 per home cap on program work, waivers for that cap are allowed, and we encourage providers to maximize the level of investment in each home that meets the payback standards of the program.  The federal regulations require only a statewide average of $6,500 per home, not a $6,500 limit per home.

[8] Safety and work quality could also be impacted by artificially rushed work schedules.