The Philadelphia Housing Authority (PHA) will reduce its workforce by more than 10 percent as it faces a massive budget deficit, the agency announced Tuesday.
Forty employees have applied for and will receive severance payments as they resign or retire, and another 126 will be laid off in a move the agency is calling an "organizational restructuring" that will redirect cash to create more housing opportunities.
The staff cuts come as PHA struggles under a $21 million debt, while adding more than 3,800 homes, with more in the pipeline, since 2013, the agency said. Layoffs will affect all levels of employment and all departments, and also include the elimination of 34 vacant positions.
"While letting employees go is not easy, we are choosing to allocate our dollars in a way that provides the maximum number of residents and neighborhoods with quality homes," PHA President and CEO Kelvin A. Jeremiah said in a news release. "We cannot undertake projects like the rehabilitation and leasing of 500 scattered site homes in improving neighborhoods and serve thousands more households while maintaining our current structure. We have made our mission the priority."
PHA is also bracing for a decline in its federal funding from the Department of Housing and Urban Development (HUD). For fiscal year 2016, PHA received $110 million from HUD. By 2020, that's expected to drop to $96 million.
Since 2008, PHA has lost nearly $150 million in federal housing subsidies. Five years ago, the federal agency halted millions in funding to Philadelphia over allegations of questionable payments by PHA's former executive director Carl Greene, including lavish gifts and parties, vacations and legal fees to combat sexual harassment claims.
Despite a reduction in federal aid, the agency has expanded its services. In 2015, the agency served 1,953 new families, according to its annual report. And the city now has 18,000 households in the Section 8 program, far exceeding the 14,000 federal cap on such households, according to the Philadelphia Inquirer. The city consistently ranks among the top 10 in the nation for deep poverty.
Before deciding on budget cuts, PHA said it looked at all other "nonpersonnel areas for savings," and reduced those costs by 15 percent over the past two years.
"The public has an expectation that we will use the resources given to us in the most efficient way possible. That's an imperative we take seriously and are acting accordingly," Jeremiah said. "We have made incredible progress over the past three years toward increasing the number of families we provide housing for and only by taking these difficult steps can we build upon that progress."