Research Question 3: What explains exit from the FSS program?

After answering the first two questions, whether and when households leave the FSS program, I wanted to explore some of the factors that may explain FSS program exit. Based on the literature and conversations with HACP staff, I developed two hypotheses for explaining exit from the FSS program. The first hypothesis is that household characteristics can explain the likelihood of an FSS participant leaving the FSS program prior to completing five years in the program. The second hypothesis is that FSS program characteristics that were created by HACP and HUD can explain the likelihood that a participant will leave the FSS program prior to completion. The null hypothesis is that household and program characteristics do not explain exit from the FSS program.

3.5.3.1 Hypothesis 1: Household Characteristics.

There were four variables that were tested in the household characteristic hypothesis:

household income at the time of FSS entry, whether the household moved within HACP housing during the FSS program, and whether there was a change in household composition during participation in the FSS program³.

1. Children under the age of 18 in the household.

Households with children under the age of 18 may be less likely to complete the FSS program because of childcare responsibilities and may have less time to complete the FSS program. These were recorded as a binary variable, either there were children under the age of 18 in the household or there were not. Additionally, I tested variables preschool and school-aged children to see if there was a difference in the likelihood of leaving the FSS program prior to completion in households with preschool children who were under the age of 5 and households with school-aged children between the ages of 5 and 17. This builds off of prior FSS evaluations that tested whether having children in the household impacted the likelihood of FSS completion (Anthony, 2005; Kleit

& Rohe, 2015). There were contradictory findings in the literature, so this variable is included in this study to determine whether having children in the household impacted the likelihood of FSS completion for HACP residents.

2. Changes in household composition

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Similarly, I was also interested in knowing whether households that had family members entering or leaving the household were as likely to complete the program as households that did not have changes in household composition. Households that had an adult leaving the household may be less likely to complete the FSS program because of changes in their household responsibilities. Also, households that had additions to the household may also be less likely to complete the program because of a change in their household responsibilities. The variable “HH change” indicated whether or not there was a change in household composition during participation in the FSS program. Households with at least one change in the number of household members received a “1” while households with the same number of occupants during FSS participation received a “0.”

3. Household Location and Moves

The underlying objective of public housing and housing choice vouchers is to provide stable housing. As discussed in Chapter 2, frequent moves can be disruptive to households and can make it difficult for residents to improve their educational, health, and employment outcomes (Manzo, et al.,2008; Bogle, et al., 2016). Subsidized housing paired with the FSS program aim to create a stable platform for improving the quality of life while providing resources and services needed for residents to achieve their goals (HUD, 2010; Riccio & Babcock, 2014).

While income-based rent payments do provide some stability, it is still not uncommon for public housing and housing choice voucher residents to move within HACP housing while participating in the FSS program. These moves may be voluntary or involuntary. Voluntary moves are done at the residents’ request and may be a move to a community that is closer to family or employment or may be to a housing unit that the resident prefers. Involuntary moves occur

when HACP is redeveloping its property or repairs need to be performed on a particular unit.

While there aren’t any indicators in the dataset about whether the moves are voluntary or involuntary, Addison Terrace was redeveloped during this study period and caused involuntary moves (HACP, 2016). I was interested in understanding whether households that moved within HACP housing were as likely to complete the FSS program as households that remained in the same housing unit for the duration of its FSS participation. This builds off of the Moving to Opportunity and housing mobility literature discussed in Chapter 2. I created a variable named

“moves” by determining whether a household had multiple addresses listed while they participated in FSS. Households with two or more addresses listed received a “1” while households that only had one address listed received a “0”.

4. Income at FSS entry

I wanted to know whether households that entered the FSS program with a higher household income would be more likely to remain in the programs than households that had less income at the time that they entered the program. Participants with higher incomes had some work history and may be more successful in the FSS program than households that did not have any wage income when entering FSS. Households that were working when they entered the FSS program and had employment history may be able to use the FSS program to find their next job, which would be a better paying job or offer more hours than the job that they had at the time of the FSS program entry. Those households may be more likely to remain in the program than households that were seeking their first job. To create an easily testable dichotomous variable, I found the median household income at the time of FSS entry and determined whether the household’s income at entry was above or below the median. Households with an income above the median at

the time of FSS entry were assigned a 1 and households with an income below the median were assigned a 0.

3.5.3.2 Hypothesis 2: Program Characteristics.

The second hypothesis tests two program characteristics to determine whether they explain exit from the FSS program. This builds off the finding from Kleit and Rohe (2015) that program characteristics impacts the participants likelihood of success. The first variable tested is whether the household paid increased minimum rent prior to enrolling in the FSS program. This variable is unique to HACP housing as it is the only housing authority in the country that implemented an increased minimum rent policy to incentivize residents to enroll in the FSS program. The second variable that was tested was the amount of escrow savings that a household had. The escrow savings program was developed by HUD in 1990 as part of the initial FSS program as an incentive for FSS participants to remain in the FSS program.

1. Paid increased minimum rent prior to participating in the FSS program.

The increased minimum rent policy was designed to incentivize households to enroll in the FSS program. This policy may also incentivize those households to remain in the FSS program so that they did not have to pay the increased minimum rent of $150 when they left FSS. To measure this variable, first, I reviewed the administrative data to identify the households that paid the increased minimum rent during the study period. In order to identify those households, I looked for households that had a value in column “TTP_9H” of $150 indicating that the minimum rent for that household was the increased minimum rent of $150. Households that only had a value of

$25 for PH households or $50 for HCV households, were excluded from the study as they were

exempt from the increased minimum rent policy. I confirmed that the households with $150 recorded in the hardship column were not exempt by ensuring that there was a “N” recorded in the column that indicates that the household was not exempt from paying the increased minimum rent due to a hardship.

After I identified the households that could be charged the increased minimum rent during the study period, I identified the households that had a total tenant payment, which is 30% of the households adjusted monthly income, calculated at less than $150, recorded in column “TTP_9F”

which is the total tenant payment based on the adjusted income. Then as a double check, $150 was recorded in column “TTP_9J” which is total tenant payment that was charged.

I then performed the same analysis of the households that participated in the HCV program.

Once I determined whether the household paid the increased minimum rent during the study period, I created a variable to identify households that had paid minimum rent during the study period and assigned a 1 to households that had paid the increased minimum rent of $150 during the study period and a 0 to households that did not. Then I identified the households that paid the increased minimum rent and participated in the FSS program, and finally, I determined whether the household paid the increased minimum rent before or after participating in the FSS program.

I created a variable to identify households that paid the increased minimum rent prior to FSS entry and those who had were coded with a “1” and households that did not were coded with a “0.”

2. Escrow Savings

Escrow savings is the primary incentive for households to remain in the FSS program.

Escrow savings is a standard part of the FSS program that is utilized by most housing authorities.

HACP has not made any changes to the escrow savings incentive. As previously explained, public

housing and housing choice voucher households pay income-based rent, which is roughly 30% of the households’ monthly income. As the household’s income increases, the rent is recalculated to reflect 30% of the current income. One of the benefits of FSS participation is that participants are permitted to divert the would-be rent increase into an escrow savings account and receive it in a lump sum upon FSS graduation. If the household does not graduate from the FSS program, they forfeit the money to the housing authority.

The escrow savings amount for each household was not included in the dataset, but easy to calculate. I used the rent payment at FSS entry as the base rent and then calculated any rent increases during FSS participation and multiplied it by the number of months in order to calculate the cumulative escrow savings amount for each household. Then I calculated the median escrow savings and created a variable “escrow savings above median” and households with escrow savings above the median receiving a “1” and those with escrow savings below the receiving a

“0.” I also used this data to conduct additional analysis to examine the differences among households with differing amounts of escrow savings.

The increased minimum rent policy is an incentive for households to enroll and remain in the FSS program for the households who had annual incomes of less than $6,000. The escrow savings account is an incentive for the households who have increased their earnings, and savings, during the FSS program to complete the program.

The below table summarizes the hypotheses and variables tested, the data source for those variables, and a connection to the literature. These hypotheses are embedded in the literature.

These hypotheses and selected variables further the literature and what is known about the FSS program by testing hypotheses that have been tested in other studies with inconclusive outcomes,

or outcomes from a particular study which may or may not be consistent with the findings of this

Children in the household Field 3h = Y

Lee & McNamara, 2018;

Income at entry Field 7i Lee & McNamara, 2018

Household composition

Calculated field 9j – 9j at FSS entry, multiplied by the