Fund More, Serve More, Save More: Moving to Work and Cost-Effectiveness

Moving to Work (MTW) is a U.S. Department of Housing and Urban Development (HUD) demonstration that gives selected public housing agencies (PHAs) greater flexibility with their spending and the ability to provide innovative housing assistance to low-income households. This article examines the impact of MTW on cost-effectiveness, measured as the total funding PHAs receive from HUD for public housing and housing choice vouchers divided by the number of households assisted by these programs. We use 15 years of historical data, from 2003 through 2017, to measure pre- and post-MTW trends for PHAs that joined or left MTW during the period. We also compare trends for MTW PHAs to traditional PHAs of comparable size during the same period. We find that MTW status has no significant impact on cost per assisted household. Although MTW status is associated with an increase in HUD funding, the agencies use this funding to assist more households, resulting in no significant change in cost-effectiveness. We find no evidence that MTW agencies maintain their cost-effectiveness by shifting their program mix, reducing housing quality or affordability, or serving different households. We also find that MTW agencies experienced a large increase in dollars per household held in reserves while serving roughly the same number of assisted households per dollar of HUD funding as before joining the demonstration. Our analysis does not explore the mechanisms by which this increase occurred, although it can he inferred that MTW agencies were able to realize some cost efficiencies areas other than household assistance.