HUD 2020 Management Reform Plan: Executive Summary

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"For HUD to fulfill its mission, it must have credibility — with Congress, with local government and with the customer. They must all believe that HUD has the competence and capacity to perform its functions. It's time HUD put its own house in order."
Secretary Andrew Cuomo

RESPONDING TO CHANGE

Since HUD was created in 1965, economic and social conditions in the United States have changed dramatically. Yet, in many ways, the Department has not kept pace with that change. Over the years, Congress, the General Accounting Office, and HUD's own Inspector General have recognized this mismatch and criticized the Department for failing to modernize itself by updating its systems, improving accountability and performance, and reducing red tape.

Given these chronic problems, a priority for HUD in the next few years must be its management. Specifically, is the agency taking significant steps to clean up its act? Are new systems in place to better steward HUD's funding? Are agency operations better coordinated across functions? Is the agency defining a clear mission with clearly delineated organizational roles? Is it managing workforce and workload? Is it using new technology? Are its employees acquiring new skills?

This plan presents a fundamental management overhaul that, when carried out, aims to bring HUD in line with the times, ensuring its relevance and effectiveness into the 21st Century. The reform package focuses on getting HUD's own house in order, on managing its programs and people more efficiently and responsibly. It is a combination of significant organizational changes, as well as proposed legislative reforms, that HUD has submitted to Congress over the past few months, including: the Housing Management Reform Act of 1997; Housing 2020: Multifamily Management Reform Act of 1997; and the Homelessness Assistance and Management Reform Act of 1997.

Compassion without competence has failed America and HUD; it has let too many landlords profit without providing adequate service, left too many public and assisted housing residents living in squalor, and abandoned too many neighborhoods to decay. HUD is just over 30 years old and it is time that we prepare HUD for the next 30 years. This plan says that management must come first, that a new empowerment policy for a new century requires a new HUD, a HUD that works.

Five major forces have combined to create the need and urgency for the Department redesign proposed here. Those forces include: the groundshaking economic shift as the U.S. transitions from an industrial to an information society; passage of the welfare reform Bill, the most significant change in American poverty policy in 30 years; the economic and moral imperative to rein in an explosive national debt and balance the budget; the discrediting of top-heavy, Washington-driven government; and the legacy of mismanagement at HUD, which has made it dangerously vulnerable to waste, fraud, and abuse of taxpayer funds.

America's Economic Transition

Despite the fact that America's economy is booming, too many neighborhoods and communities are being left behind in the current revolutionary economic transition. This transition has supplanted the national market with a global market, and is replacing industry with information and knowledge as the prime economic drivers. Yet because so many of our urban economies were built on industry, their transition into this new era has been particularly tumultuous and is still far from complete — and far from successful. Throughout the 1970s, as our economy moved into the earliest stages of deindustrialization, cities were hit hard — population and incomes fell, poverty and unemployment increased, crime and social problems became more intense and intractable.

To succeed in this economic transition will require new skills, new strategies, and new cooperation, not just between government and business, but between cities and suburbs. HUD must marshal all its resources to help cities thrive in the new economy.

Making Welfare Reform Work

President Clinton made good on his promise to end welfare as we know it, and now the hard work begins: moving millions of our fellow citizens from welfare to work at a time when global competition for lowskill jobs is great. HUD cannot escape the spotlight of welfare reform. We are the Department responsible for housing more than a quarter of the families on welfare today; the agency with potentially the largest economic development portfolio in the federal government; and the branch that deals most directly with the fate of cities, where most people on welfare live. We must recognize that our long-term success as a Department will largely depend on the degree to which America can make welfare reform work for all our citizens.

Balancing the Federal Budget

Both President Clinton and Congress have committed to balance the federal budget by the year 2002, the first time the budget would be in balance since 1969. The need to cut funding to meet that vital goal pressures all federal agencies to get the most bang for every taxpayer buck. In short, we are forced to find ways to do even more to meet the demands of a society in transition, ensuring that everyone coming off welfare can find and hold a job, while downsizing staff and saving money in every way possible. That means HUD must be leaner and smarter, meeting its mandate in a creative, competent, commonsense way.

A New Model of Government

While most of America's major institutions have changed dramatically over the past few decades, government — particularly government inside the Washington beltway — has often resisted reform. At times, we act as if we are insulated from the powerful forces reshaping the American economy and society.

But that is wrong. Government must change — and change dramatically — if it is to remain relevant. Vice President Gore has led the way for this Administration through his effort to reinvent government. As he wrote in the Blair House papers, a small but powerful handbook for organizational change, "The need to reinvent was clear. Confidence in geovernment — which is simply confidence in our own ability to solve problems by working together — had been plummeting for three decades. We either had to rebuild that faith or abandon the future to chaos."

Former HUD Secretary Henry Cisneros recognized this need for change. Under his leadership, HUD began that task a few years ago, proposing sweeping and broad changes to many of its policies and programs. However, Congress failed to enact changes in any authorizing legislation. Indeed, no comprehensive housing authorizing legislation has been enacted over the past six years.

" … Government has become distant from the people it is supposed to serve and, occasionally, lost touch with what it was created to do nearly 220 years ago. Our nation began with a psalm covenant: that the government that we were establishing would be the people's servant — not their master. We need to renew that covenant for the next century. That's what reinventing government is all about." Vice President Al Gore, Common Sense Government

This plan says that we can — we should — retain our core goals, but we must change how we carry out those goals, making HUD run less like a 30-year-old bureaucracy and more like a smart, new business. The HUD Legacy Finally, and most importantly, HUD itself has been plagued for years by scandal and mismanagement. It is the only federal agency cited by the General Accounting Office (GAO) as being at "high risk" for waste, fraud, and abuse. Congress regularly raises concern over the efficiency and soundness of its programs. And its Inspector General still questions HUD's basic ability to provide "reasonable stewardship" over the billions of taxpayer dollars we administer. These failings have made HUD the poster child for inept government. That view is damaging to the agency's ability to fulfill its vital goals — goals strongly supported by the public, such as ending homelessness, investing in cities, and moving people from welfare to work — at a time when Americans have a deep distrust and disgust with the way government tries to meet those worthy goals. When over five million people cannot afford decent housing, and hundreds of thousands go homeless, we cannot afford to waste even one dollar on inefficiency or corruption. This plan says that enough is enough, that the era of an inept HUD must end. It proposes to change the negative perception of HUD by changing the reality — by making HUD work well.

REVITALIZING HUD'S MISSION

This changing context demands a shift in HUD's mission. While our traditional goals remain the same — fighting for fair housing, increasing the supply of affordable housing and opportunities for homeownership, reducing homelessness, promoting jobs and economic development — our mission must be updated, renewed, and focused.

If HUD is going to be a significant, value-added player, helping America's communities move from an industrial to an information economy, with welfare reform hanging in the balance, we must strive to empower people, giving them the tools they need to succeed. HUD must be an ally to communities, not a bureaucratic adversary; a creator of opportunities, not obstacles.

At the same time, in a balanced budget environment — and with the storm clouds of mismanagement still hovering over the agency — HUD must refocus its energy, ingenuity, and resources on eliminating waste, fraud, and abuse in all our programs.

Therefore, two distinct, yet interrelated missions for HUD are evident as we approach the new century:

Mission #1: Empower people and communities to improve themselves and succeed in today's time of transition.

Mission #2: Restore the public trust by achieving and demonstrating competence.

Mission #1: Empowering People and Communities

The empowerment mission is a dramatic philosophical and paradigm shift for the Department.

• Rather than top-down programs with inflexible mandates, the Department must move to bottom-up, communitydriven partnerships that demonstrate a comprehensive community development strategy.

• Rather than long-term dependence, we must nurture self-sufficiency and self-reliance; the helping hand of government must help people and families become productive, taxpaying citizens. Whenever possible, we must strengthen mainstream values of work, family, responsibility and opportunity.

• Rather than work in isolation, we must collaborate with other federal agencies, each of which provides vital community resources.

• Rather than creating a new bureaucracy for every program, we must seek out community partnerships breaking the habitual link between the need for federal action and the growth of federal bureaucracy.

• Rather than working against the free market, we must harness market forces wherever possible, using them to help people lift themselves up.

Empowerment is the right role for the federal government, a role that says "Washington can help communities thrive, but the decisions and power must be closest to the people." HUD's plan will do just that, getting a greater portion of our resources out of Washington and into communities, investing more in people and less in overhead.

As President Clinton said in his Urban Policy Report, "I believe in a government that promotes opportunity and demands responsibility, that deals with middle-class economics and mainstream values; a government that is different radically from the one we have known here over the last 30 to 40 years, but that still understands it has a role to play in order for us to build strong communities that are the bedrock of this Nation."

Mission #2: Restoring the Public Trust

The public trust mission will restore public confidence in HUD by instilling an ethic of competence and excellence at the agency.

Our goal must be performance and product rather than process and perpetuation. We must have zero tolerance for waste, fraud, and abuse — and have the institutional courage to demand accountability from both our private- and public-sector customers. For everything we do, we must ask two questions. First, how can we do it better, cheaper, and more effectively? And second, are we taking all reasonable precautions to protect the public trust and ensure that every tax dollar is used properly?

Unfortunately, HUD continues to suffer from management troubles that have long plagued the agency. Recent reports by the GAO highlight essential steps we must take if we are going to permanently improve HUD's management. These include:

• Consolidating programs and reorganizing and retraining staff to align the agency's resources with its long-term mission;

• Developing and implementing stringent internal controls;

• Integrating financial and information management systems Department-wide; and

• Increasing program monitoring and measurement to ensure higher performance.

The agency's problems have been long in the making. We recognize that it will take a tremendous commitment of time, energy, discipline, and focus to reinvent the systems and the values that have undermined HUD's credibility and capability.

We also recognize that we cannot fulfill our empowerment mission if we fail to protect the public trust. The American people and the Congress will only have faith in an empowerment approach to urban policy if they believe we can make that approach work.

REINVENTING HUD'S MANAGEMENT

"It seems to me that HUD is at a crossroads. Either it can continue down the same path, or it can change directions and recreate itself into an effective agency that meets its primary missions to build and sustain strong neighborhoods and provide affordable housing opportunities for the people that we purport to want to serve." Congressman Jerry Lewis, HUD and Independent Agencies Subcommittee Hearing

Recognizing both the historic need and the recent forces that demand change, HUD undertook a comprehensive effort to fundamentally redesign our mission, programs, and organization. We asked outside experts — and ourselves — one question: how do we organize ourselves to ensure that we effectively and efficiently fulfill our twin missions of empowerment and public trust? This sweeping reform was based on some basic, commonsense premises: Start with no "givens." Everything about the way we do business is on the table for discussion. Analyze core purposes and organize by clearly defined responsibilities, in effect creating separate "businesses." Match workload and workforce, skills and services. Measure and reward performance. Focus on changes that create the most leverage. Question whether the task is better performed by the private sector. Live in the 21st Century: master and utilize new technologies.

Driven by these principles, we assembled teams of "change agents" from all parts of the agency, challenging them to rethink every aspect of our management. This HUD team was then complemented with advice and assistance from the private sector, including Ernst & Young LLP, David Osborne, and James Champy, among others.

"The process we went through in developing the HUD 2020 Management Reform Plan was one of the most important efforts in my twenty years with the agency. Not only was it an empowering experience for the change agents and other employees at HUD, but it produced significant results. I believe the plan holds a new promise for HUD." Joseph Smith, Change Agent Team

Our process revealed several deep-seated, structural dysfunctions: Proliferation of a number of small "boutique" programs which are highly labor-intensive. HUD is organized strictly by program (i.e., Office of Housing, PIH, CPD) rather than function. A functional realignment would regroup some program lines by mission and responsibility, and eliminate duplication. HUD is driven by process rather than performance. Workload and workforce are mismatched. While the Department has downsized, the workload has increased and the necessary skills for specific services in some cases do not exist within the agency. Management information systems have developed parochially rather than in an integrated fashion — they need a complete overhaul. The Department's structure is an outdated pyramid, and the headquarters/field relationship is inefficient. HUD's workforce has not been given a clear mission, but rather schizophrenic mandates: on the one hand, to provide assistance to communities and help them meet their needs; while on the other, to police the actions of those same communities. The Department's culture lacks the work ethic and ability to make stewardship of public funds a priority.

"To be blunt, Mr. Secretary, we challenge you to make the necessary administrative, management and fiscal reforms that will justify Congress's continued support of the agency and the role of the Federal government in providing affordable low income housing and programs targeted for the economic development of our States and localities." Senator Christopher Bond, HUD and Independent Agencies Subcommittee Hearing

HUD addresses these breakdowns in several ways: The new HUD will be reorganized into discrete functions to serve distinct customer groups, rather than solely along program lines. These common functions will then either be performed within HUD or contracted out if HUD does not have the expertise or if the private sector can perform the work more efficiently. The culture will more clearly reward performance rather than perpetuate process. The structure will change from a rigid, bureaucratic headquarters/field operation into two distinct parts: 1) "storefront," customer-friendly local offices that aim to provide hands-on service to communities; and 2) "back office" processing centers to consolidate and expedite routine processing and paperwork. HUD's technological systems will evolve from Jurassic-era to state-of-the-art. HUD's workload and workforce will be better matched according to size and skills. This will entail critical shifts in organizational structure, positions, and personnel to reflect the aims of the new HUD. Everything in HUD will be driven by the twin missions: empowering people and communities and protecting the public trust.

In short, we will reduce staff from 10,500 employees to 7,500, restructure our operations, and dramatically consolidate HUD's current 300-plus programs and activities. Meanwhile, our long-term budget for programs rises — which means that the new HUD will truly be doing more with less. We will be investing a greater portion of our funding into strengthening America's communities.

HUD's transformation is clustered around six reforms.

REFORM 1: Reorganize by function rather than strictly by program "cylinders." Consolidate and privatize where needed.

REFORM 2: Modernize and integrate HUD's outdated financial management systems with an efficient, state-of-the-art system.

REFORM 3: Create an Enforcement Authority with one objective —to restore public trust.

REFORM 4: Refocus and retrain HUD's workforce to carry out our revitalized mission.

REFORM 5: Establish new performance-based systems for HUD programs, operations, and employees.

REFORM 6: Replace HUD's top-down bureaucracy with a new customer-friendly structure.

"It is futile to try to guess what products and processes the future will want. But it is possible to make up one's mind what idea one wants to make a reality in the future, and to build a different business on such an idea." Peter Drucker, Managing for Results

REFORM 1 — Reorganize by function rather than program "cylinders." Where needed, consolidate and/or privatize. Historically, HUD was formed by integrating several existing departments: the Office of Housing, the Public Housing Administration, the Urban Renewal Administration, and the Community Facilities Administration. These historic entities were never shed. Consequently, the Department never achieved operational efficiency, mission clarity, or organizational unity. The "stovepipes" of the Office of Housing, Public and Indian Housing, Fair Housing, and Community Planning and Development operate essentially independently. Accordingly, they often duplicate each others' efforts and at times work at cross-purposes, making it exceedingly difficult for communities to make sense of HUD services. Compounding this situation, the recent workforce reduction has exacerbated the performance problems of these separate areas — and further downsizing from 10,500 employees today to 7,500 by the end of the year 2000 will increase the strain.

To eliminate these duplications, and in anticipation of even more downsizing over the next four years, this plan reorganizes the Department by function — maintaining the distinct business lines of public housing, single and multifamily housing, community planning and development, fair housing and others — but making significant connections across these business lines (i.e. the "stovepipes" or "cylinders") to maximize efficiency and dramatically improve customer service.

Having identified the common, cross-cutting functions, we then asked: How best do we meet our goals —through consolidation, privatization, or both?

Consolidation

Program Consolidation:

HUD currently operates over 300 programs and activities, as cited in a recent Inspector General audit. After reorganization, and if Congress passes HUD's legislative proposals for program and activity consolidation and elimination, HUD will consolidate and eliminate to about 70.

Functional Consolidation:

Under this plan, several major functions are consolidated, such as financial systems and enforcement (discussed in reforms #2 and #3). Several administrative functions are also consolidated, including:

• Real estate management system

  Neither of HUD's twin missions — empowerment and public trust — is well served by how PIH and the Office of Housing currently operate. PIH and the Office of Housing now operate independently under separate real estate management operations, yet portfolio management for the Office of Housing's multifamily stock and for the Public Housing Authorities (PHAs) is a common function of asset management.

  Public Housing now assesses its portfolio through the Public Housing Management Assessment Program (PHMAP) system. Despite recent reforms, PHMAP is often criticized for failing to provide an accurate measure of PHA portfolios.

  Similarly, the Office of Housing's multifamily portfolio experiences substantial fraud and abuse in its Section 8 program, with an estimated 5,000 troubled properties nationwide.

  To address these issues, the assessment of all PIH and Office of Housing properties will be consolidated and radically redesigned. For the first time in HUD's history, all properties will be physically inspected and financially audited by outside contractors using a comprehensive and uniform protocol. Portfolios will then receive a risk assessment based on these reports. HUD staff can thus focus on the most troubled and neediest properties.

• Contract procurement

  At the Secretary's direction, a top-to-bottom assessment of the FHA procurement system was conducted by the National Academy of Public Administration (NAPA). The study found that the current system neither responds efficiently to Department needs nor adequately ensures accountability.

  As a result, the Department has asked NAPA to help improve HUD's procurement system to ensure accountability, while responding flexibly to changing program needs. The aim of reform is for staff to have the resources they need to serve their customers, while safeguarding taxpayer dollars with a system that ensures quality and value.

• Section 8 Payments

  Both PIH and the Office of Housing currently operate Section 8 payment functions, often in disparate field offices; these functions will be consolidated into one Section 8 Financial Processing Center.

• Economic Development and Empowerment Service

  A number of economic development and jobs skills programs now exist throughout the Department. These will be consolidated into the new Economic Development and Empowerment Service, which will target these resources to empower people and communities. Programs to be consolidated or coordinated include Economic Development Initiative, Section 108, Empowerment Zones, and job training and skills programs in PIH and the Office of Housing.

Privatization

While many of the common functions will be consolidated, some will also be privatized where efficiency or expertise dictates, in accordance with OMB Circular A-76 and Dole Amendment requirements.

Privatized functions include physical building inspections for the PIH and Office of Housing portfolios; financial audits of Public Housing Authorities, as well as multifamily project owners and mortgagees; HOPE VI construction management supervision; legal and investigative services for the Enforcement Authority, where appropriate; and specific expertise required by the grantees through technical assistance.

"Don't automate the process, reengineer." Vice President Al Gore, The Blair House Papers

REFORM 2 — Modernize and integrate HUD's outdated financial management systems with an efficient, state-of-the art system. The single most glaring deficiency of the Department — and the single greatest shortfall of a Department organized by program rather than function — is the financial management systems. Currently, every program cylinder operates its own financial systems: the number of management information systems within the Department totals 89.

Compounding redundancy, many of the systems can't talk to each other. This is the chief reason why the Department is on the GAO "high risk" list and why HUD's Inspector General says that HUD's future is "dim."

The new HUD will have a common, consolidated financial management information system. Fully implemented by mid-year 1999, this system will also facilitate communication between HUD, its grantees, and communities across the country. With these improvements and enhanced financial management, HUD's goal is to be removed from the high risk list.

HUD's award-winning mapping software — which HUD will soon launch in an innovative, joint public-private marketing venture — will ultimately be incorporated into the new financial system for one seamless communication and financial management system.

With the ease of an ATM, this cutting-edge mapping software will provide a graphic display of HUD funding in virtually every community in the country — helping communities better plan their future. In the system of the future, HUD employees will know the workings of the entire Department on a real-time basis. By using the best technology, we will provide faster, higher-quality service to communities, while recognizing and cracking down on problems in HUD programs.

REFORM 3 — Create an Enforcement Authority with one objective: to restore the public trust.

The greatest breach of the public trust at HUD is the waste, fraud, and abuse in HUD's existing portfolio of millions of housing units. Currently, each of HUD's program offices — PIH, the Office of Housing, FHEO and CPD — operates independent enforcement functions, with different standards and procedures.

PIH, for example, considers enforcement action when a property fails its annual assessment. Solutions for troubled housing authorities have been ad hoc, ranging from judicial receiverships to HUD partnership agreements with the local housing authority. Housing, on the other hand, takes enforcement actions against landlords infrequently, as a last resort. The Department's critics note that the financial interests of the FHA insurance fund can be at odds with the social interests of the tenants.

The new HUD will combine enforcement actions for PIH, CPD, FHEO (non-civil rights compliance), and the Office of Housing into one authority. The Enforcement Authority will be responsible for taking legal action against all PHAs that receive a failing score on their annual assessment. The Enforcement Authority will also move against all Office of Housing properties that fail physical and financial audit inspections, cleaning up the historical backlog of 5,000-plus troubled Office of Housing properties. The Authority will also crack down on all CPD and FHEO grantees who fail audit standards or who engage in waste, fraud, and abuse.

HUD is also seeking new tools to strengthen its enforcement ability, such as a one-year mandatory trigger to move troubled large PHAs into judicial receivership; a performance evaluation board to help develop an improved annual assessment system for PHAs, including an expanded PHMAP; broad waivers of reporting requirements for high-performing and smaller PHAs; increased funding for multifamily enforcement; and reform of the bankruptcy laws to prevent multifamily owners from hiding behind the law to avoid prosecution by HUD and the Department of Justice (DOJ).

The Enforcement Authority will consolidate existing employees and will contract with outside investigators, auditors, engineers, and attorneys where necessary and appropriate. Lastly, this division will serve as liaison with the Inspector General, and coordinate its work with the FBI, DOJ, and the IRS.

"In a learning organization, leaders are designers, stewards and teachers. They are responsible for building organizations where people continually expand their capabilities to understand complexity, clarify vision, and improve shared mental models — that is, they are responsible for learning." Peter Senge The Fifth Discipline

REFORM 4 — Refocus and retrain HUD's workforce to carry out our revitalized mission. Under the new HUD, no matter what area an employee works in, his or her primary mission is either to empower communities and people or to enforce the public trust. In the past, employees were too often charged to do both at the same time. After the HUD scandals in the 1980s, all emphasis was on monitoring and enforcing regulations. At other times, the emphasis was to help the grantee do whatever it wanted. Too often, employees were asked to be facilitators as well as monitors. These charges were inconsistent and often contradictory. The new HUD realizes that both roles have a place in the Department but that they truly differ. They are distinct functions and must be performed by different individuals — and in different divisions — within the organization.

• Community Resource Representatives: One function is to empower the community by bringing in technical expertise, knowledge of finance programs and economic development. The culture of this position is cooperative, helpful, and accommodating, and this service will be performed by a new group of HUD employees called "Community Resource Representatives." These employees will provide the first point of contact for our customers and will be the Department's "front door," helping customers gain access to the whole range of HUD services.

• Public Trust Officers: The public trust function requires many different skills in relation tothe community. Public Trust Officers must have absolutely zero tolerance for waste, fraud, and abuse; their mission is to ensure that federal funds are used appropriately and in compliance with laws and regulations. They will work in the field as the front line for monitoring and will refer significant problem cases for enforcement to HUD's new Enforcement Authority. HUD will increase the number of staff devoted to this monitoring work by directing all facilitation to the Community Resource Representatives and placing all routine processing work in processing centers, thus freeing up a number of HUD staff to work on protecting the public trust.

HUD will create training programs for each of these two new categories of employees. Training will include a broad overview of all HUD programs, while emphasizing general community development skills for the Community Resource Representatives and program monitoring for the public trust officers. Both employee categories will receive specialized training at universities, beginning in the fall of 1998.

"Growth, or striving for it, is, I believe, essential to the good health of an enterprise. Deliberately to stop growing is to suffocate." Alfred Sloan, My Years with General Motors

REFORM 5 — Establish new performance-based systems for HUD programs, operations, and employees. Today, HUD uses an employee evaluation system that has some, but not significant, connection to program and agency long-term goals. We will explore changes to that system, as well as implement effective and meaningful Government Performance and Results Act (GPRA) performance measures designed to hold HUD staff and grantees accountable for results. We are also seeking to change — in large part through legislation — programs to emphasize performance. For example, inflexible, labor-intensive competitive grants will instead shift to performance-based formula grants; high-performing housing authorities will be subject to fewer onerous reporting requirements; a new board will design more effective and comprehensive measures for evaluating PHA performance; and new incentives will be developed in joint venture agreements to share financial risk and rewards for disposing of defaulted FHA mortgages.

The new HUD will emphasize product over process, performance over paperwork. Encouraging achievement, giving staff the tools they need to be accountable, and rewarding results is the new culture HUD embraces.

REFORM 6 — Replace HUD's top-down bureaucracy with a new customer-friendly structure.

With a new mission driving HUD's purposes and organization, we must redesign our structure. The top-down headquarters/field structure is outdated and outmoded; while many private sector companies reorganized and restructured a decade ago, HUD has not kept pace.

Particularly compelling — and relevant — models of this kind of reorganization can be seen in the financial services field. Over the past decades, many banks, like Citibank and NationsBank, consolidated routine functions into centralized "back office" processing centers and established "store-front" customer offices closer to their markets. Using this plan, HUD will adopt a similar model over a four-year period.

Organized by function instead of by program, our newly consolidated operations will be located in processing centers, while HUD's public and grantee outreach will be conducted in community-friendly locations. It is paramount that HUD retain its scope and presence in communities across the country; HUD's 81 field offices will remain and be better focused in serving their constituents.

STEPS TO IMPLEMENTATION

Following the release of this management plan to all HUD employees, Congress, and the public, the agency will launch an aggressive implementation strategy.

That strategy includes:

• Creating new entities detailed in this plan, including a new Enforcement Authority and a national assessment center for all HUD housing stock;

• Designing, with the help of the Office of Personnel Management, a new performance planning and management program that:

  • Links performance requirements to specific objectives of the Management Reform Plan;

  • Creates incentives for meeting specific performance objectives; and

  • Establishes new performance rating levels (e.g., "pass" or "fail") and separates performance appraisal from performance awards to tie awards to achievement of major goals.

• Continuing to request Congress to pass legislation that makes this plan work, including a public housing bill, a multifamily "Housing 2020" bill, and a homeless assistance programs consolidation bill;

• Contracting out such plan elements as Hope VI oversight, PIH and Office of Housing site inspection, and certain enforcement activities;

• Partnering with financial systems experts in the Treasury Department to modernize and integrate HUD's financial systems;

• Shifting organizational structures and personnel to reflect the plan's broad changes, then conducting a national talent search for new senior personnel where needed; and

• Implementing a targeted buyout plan.

"…making an organization work has everything to do with keeping things understandable for the tens or hundreds of thousands who must make things happen." Tom Peters, In Search of Excellence

Because the Management Reform Plan calls for numerous cross-program consolidations and deep-seated changes in HUD's administrative structure, HUD will assign a project manager to each of several specific reform targets. These project managers will take charge of putting these reforms in place: Enforcement Authority Real Estate Assessment Center Section 8 Financial Management Center Financial Systems Integration Technology Enhancements Community Resource Representatives/Store-fronts

Finally, the Senior Executive Service (SES) anticipated mobility and movement within the organization and in keeping with that expectation, there will be major changes throughout the Department. This plan will initiate a shift in virtually all senior management in the SES positions in PIH and Housing including: Jose Cintron will become the General Deputy of PIH, Eleanor Bacon will become DAS for HOPE VI in PIH, Joe Smith will become the Deputy for Operations in Housing and Karen Miller will become Acting DAS for Multifamily in Housing. Both Mr. Cintron and Mr. Smith will be charged with implementing the management reforms and transformation of their respective business lines.

CONCLUSION

"Our goal must be to create a future unlike any that has come before — a future open to all — in which no person is left behind and in which no community is forgotten. A future in which everyone willing to do his or her part will be empowered with the tools to reach as high as their talents and hard work will take them. A future in which the bright sun of opportunity will reach those who have lived too long in the shadows. We can do it — together." Secretary Andrew Cuomo, Statement before the Committee on Senate Banking, Housing and Urban Affairs

A few years from now, the new HUD will be judged positively if we have corrected our most basic problems. Lessons from management reform and reengineering show that you can't do it piecemeal — the success of each individual piece of this plan is dependent on the success of the whole. To create a new HUD, we will need the full range of changes set out in this plan. The success of this reform commitment will, in part, rise or fall not just on HUD's efforts but on the efforts of its partners in Congress and communities across the country. In its overall framework, this plan adopts a business-like structure to achieve a public purpose. It defines a clear mission divided into identifiable functions for each separate business line. It centralizes some operations for economies of scale while decentralizing other operations to improve service and innovation. It uses technology to improve efficiency — both in front-line service delivery and in the creation of back-office processing centers. It puts a new stress on enforcement and economic development, while making information on HUD's resources more widely available through computers. And it implements a broad set of performance measures to best target resources to communities in need. We know the American people consistently support the goals of the federal government, particularly those of HUD — helping homeless people become self-sufficient, strengthening our cities, helping empower people through work. The American people see our nation's problems — they desperately want a solution and are frustrated because we haven't been able to give them one. Americans don't want to see human beings lying in the street. They don't want to see one in five American children living in poverty. They don't want to see hungry children. Because they know we can do better. If we demonstrate that we can solve these problems, if we show them solutions that work, we will unleash a power greater than we've ever seen.

We can make that change. If we put our own house in order, showing people that HUD has both the competence and capacity to perform its vital role, we can help America make the transition into the 21st Century. We will give people a reason to believe again.

HUD's new direction matters to America. Without HUD, millions of Americans could not become the proud owners of a new home, could not lift themselves from welfare to work, could not walk safely through their own neighborhood, could not escape a life on the streets to a new beginning.

What is at stake is more than just the survival and success of one agency. When we reinvent HUD, one of the most historically troubled government departments, we will have begun to restore the promise and purpose of government itself.

These coming decades, the first of a new millennium, will be both an exciting and challenging time for all Americans. We hold our fate in our own hands: neither friend nor foe will determine our national destiny — it belongs to us alone.

This plan affirms HUD's role in that new world, in charting that destiny. It affirms a place at the national table and a piece of the economic pie for all our communities. It recognizes the urgency of creating opportunity for all Americans — and the importance of accounting for every single dollar entrusted to us by millions of taxpayers.

It says that a renewed and reinvented HUD will work — if we, and our partners in Congress, are prepared for change.

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