HUD, Postal Service Shed 'High Risk' Label

They are the ugly ducklings of the government -- programs so vulnerable to waste, fraud and mismanagement that they are dubbed "high risk" by the Government Accountability Office.

But transformation, as in the Hans Christian Andersen fairy tale, can happen.

Yesterday, the GAO announced that two large agencies, the Housing and Urban Development Department and the U.S. Postal Service, had shed their troublesome feathers.

For the first time in 13 years, no HUD program appears on the GAO risk list, which David M. Walker, the head of the GAO, called a "historic achievement."

HUD Secretary Alphonso Jackson said the announcement reflects the progress that HUD has made "to ensure taxpayer dollars are spent wisely and well."

For much of the 1980s, HUD was buffeted by allegations of corruption and influence-peddling that often masked systemic problems caused by poor financial management, inadequate record-keeping and staff shortages.

HUD worked through its problems, and, by 2001, had only two programs left on the GAO list -- single-family-housing mortgage insurance and rental-housing assistance. The GAO said the department has significantly improved its oversight of lenders, appraisers and property management contractors and does a better job of estimating subsidy costs and defaults by borrowers. Walker noted that HUD had cut the amount of improper rent subsidies by 58 percent between 2000 and 2005.

The GAO put the Postal Service on the high-risk list in 2001 because of a bleak financial outlook that included cash-flow problems and heavy debt. But the post office has increased employee productivity while reducing staff -- and saved $5 billion since 2001, the GAO said. A new law, the GAO said, will help the Postal Service address pension and retiree health-care liabilities and should create a more predictable process for setting mail rates for magazine, catalogue, credit card and other companies.

"It's a great day," Postmaster General John E. Potter said. "Going forward, it is incumbent upon us to continue to provide high levels of service" and "make sure every dollar we spend is a dollar that we need to spend."

Still, as a Capitol Hill briefing made clear yesterday, too many ugly ducks in government remain on the high-risk list, which is updated every two years. Even as Walker took HUD and the Postal Service off the list, he added three problem areas, for a total of 27.

The new risk areas are: