We audited the Chicago Housing Authority’s Moving to Work Housing Choice Voucher program as part of the activities in our fiscal year 2014 annual audit plan.  We selected the Authority based on a request from Congressman Aaron Schock and recent media attention regarding the Authority’s exception payment standards.  Our objective was to determine whether the Authority complied with its Moving to Work agreement, the U.S. Department of Housing and Urban Development’s (HUD) requirements, and its own policies for the use of exception payment standards for its Housing Choice Voucher program.

The Authority lacked documentation to support that its policy increasing the exception payment standards up to 300 percent of HUD’s 50th percentile rents was reasonable and cost effective.  As a result, HUD and the Authority lacked assurance that the housing assistance paid for its program households using the exception payment standard amounts was appropriate.  We estimate that the Authority could pay nearly $5 million in housing assistance over the next year for households that exceed 110 percent of HUD’s 50th percentile rents.

We recommend that the Deputy Assistant Secretary for Public Housing Investments require the Authority to (1) conduct an analysis to determine whether its exception payment standards exceeding 110 percent of HUD’s 50th percentile rents were reasonable and cost effective and provide the results of the analysis, along with support, to HUD for review and approval and (2) reimburse its program from non-Federal funds for the excess housing assistance paid for the households.