USDA REDUCES COSTS, IMPROVES EFFICIENCY OF RURAL RENTAL PROGRAM
WASHINGTON, December 3, 1997 -- Agriculture Under Secretary Jill Long Thompson today announced that USDA is reducing operating costs and improving customer service with a new "Industry Interface" computer software package for a rural housing program that offers rental subsidies to 450,000 low-income rural American families. By reducing the need for duplicative data entry and paperwork transactions, USDA estimates the new system will save $34 million in operating costs for its Rural Rental Housing Program during the next five years.
"Turning paperwork mountains into molehills is one of the goals Vice President Gore set in his directive to reinvent the federal government," Long Thompson said. "This data automation project is an excellent example of how we at USDA are doing just that to save taxpayer dollars and improve customer service to rural America."
In its quest to eliminate the blight of substandard housing from rural America, USDA has helped finance the construction of over 18,000 apartment buildings or other multifamily housing complexes in rural communities that lack decent, affordable rental housing. It also offers rent subsidies to the low-income families and senior citizens who live in these units.
The amount of the subsidy is based on such factors as a tenant's income and number of dependents in their household. These factors must be recertified frequently to ensure that no excess taxpayer subsidy is provided. On average, both USDA and the apartment complex owners update a two-page tenant certification form for most families at least twice annually -- or nearly 1 million paper transactions per year.
"Under the old system, our borrowers (the apartment owners) first had to enter the data into their records then mail it to a USDA Rural Development office, where our staff had to sort the mail and re-enter the data into our computers. It was a slow, costly system," said Jan Shadburn, administrator of USDA's Rural Housing Service. "Now the apartment complex owners can enter the data onto their own computers and electronically transmit it directly into USDA's computer, reducing staff time needed for data entry and increasing accuracy."
USDA housing staff will no longer be tied up handling and sorting mail and doing repetitive data entry for the program. Their time will instead be redirected to such activities as enhanced portfolio analysis, timely site visits and prompt document review, all of which should result in improved protection of the government's investment and a reduction in fraud and waste.
Shaburn estimates that the new system will save USDA 29 staff years annually while borrowers will save 64 staff years. When the Industry Interface is fully installed in January 1998, the costs savings should reach about $6.8 million annually. The savings estimate is conservative, he said, because such automation programs typically also result in improved program compliance and management efficiencies, the cost benefit of which can be sizable but is difficult to estimate.
Borrowers not only save mailing and handling expenses, they will have additional time to meet filing deadlines and should be better able to avoid penalties for late submission of data. USDA can also respond more quickly -- the next day in most cases -- to inform a borrower of any errors or additional information needed for a filing.
This project represents another step in modernizing USDA Rural Housing Service programs to make them more user-friendly and efficient. Earlier this year, USDA also centralized and automated the system it uses to originate and serve $18 billion in single family home loans held by 565,000 rural Americans. That effort will reduce operating costs for USDA by $250 million over a five-year period, and by $100 million per year thereafter.
Contact:
Clark Ray, (202) 720-5579
Dan Campbell, (202) 720-6483