Mike Pucci faces an unwelcome task. As director of the Alameda Housing Authority in Alameda, Calif., he has to tell 264 families they can no longer receive Section 8 vouchers to help pay their rent. “Some of these people could end up being homeless,” he says.

The federal payments help 1,650 Alameda families keep their housing costs down to no more than 30 percent of their monthly incomes. But as a result of recent changes in the way the U.S. Department of Housing & Urban Development (HUD) calculates the payments, Pucci now must cope with monthly shortfalls of about $250,000. He says it leaves him no choice but to reduce Alameda's Section 8 program.

The Washington, D.C.-based National Association of Housing & Redevelopment Officials (NAHRO) says the policy shift could force many of the nation's 2,500 state and local housing authorities to lower and/or eliminate voucher payments. The shortfalls put more than 90,000 American families at risk of losing homes, says NAHRO Executive Director Saul Ramirez.

The formula, announced in April, freezes local agencies' voucher payments at last year's average rent levels then adds an inflation factor calculated for the region in which the local housing authority is located. The old method relied on average-rent estimates for each local housing authority, says Will Fischer, housing policy analyst for the Washington, D.C.-based Center on Budget and Policy Priorities.

Because the new formula is based on regional, rather than local data, some housing authorities may receive insufficient funds, while others might actually receive more money than they need. Donna Brightman, director of the Woodbridge Housing Authority in Woodbridge, N.J., recently terminated vouchers for 71 residents. The recalculated $727 per unit HUD now sends Woodbridge — where one-bedroom apartments often rent for $1,000 or more — is at least $155 off, Brightman notes.

HUD says Congress mandated the formula in its fiscal 2004 appropriations bill, but critics charge otherwise. “Regardless of what kind of spin you put on it, that bill doesn't require them to implement it in the kind of draconian way they have,” Fischer says, adding that Congress appropriated enough money for all 2004 vouchers.

Housing advocates fear the new method as a first step toward the Bush administration's previously announced Flexible Voucher Program, a controversial 2005 proposal that would slash Section 8 by about $1.8 billion and converts it into a block-grant program. “They're looking to find a way to devolve the program away from HUD and force local governments to pick up any funding shortfall,” Ramirez says.

That could undermine Section 8, which assists an estimated 2 million families, Fischer says. “A block grant sets up a system that is very likely to be cut in the future because block grants do not tend to keep pace with inflation,” he says.

A HUD spokeswoman did not return calls seeking comment. In the past, advocates of Section 8 reform have said the program — projected to cost U.S. taxpayers $19.3 billion in 2004 — promotes dependency. Several housing advocacy groups and government associations are pressuring HUD to scuttle the new voucher policy, and Rep. Barney Frank, D-Mass., recently introduced a bill (H.R. 4263) that would require HUD to do the same.

Jon Heroux, senior legislative counsel for the Washington, D.C.-based National League of Cities (NLC), says HUD seemingly bent to political pressure on May 20 when it gave housing authorities more money to deal with the shortfalls. “HUD is kind of wavering a bit,” Heroux says. “They've moved once. Who knows what will happen as pressure continues.”

Joel Groover is an Atlanta-based freelance writer.