PA Lawmakers Cite PHFA Audit Concerns

Lawmakers Sound Alarm Over Oversight Failures

A newly released performance audit of the Pennsylvania Housing Finance Agency (PHFA) is raising serious concerns about transparency, accountability, and the stewardship of taxpayer dollars — prompting swift responses from state Reps. Kristin Marcell and Jim Struzzi. The audit focused on PHFA’s PennHOMES program, a taxpayer-funded initiative designed to support housing development, and uncovered multiple shortcomings in oversight and documentation.

For Marcell, the findings validate questions she raised during her first term in office while serving on the House Appropriations Committee. At the time, she pressed agency officials on transparency and financial controls, particularly in light of concerns surrounding the management of COVID-era funding. With PHFA having gone decades without a formal performance audit, the release of this report marks a rare and consequential moment of scrutiny for the agency.

What the Audit Found

The audit reviewed only PHFA’s 2022 and 2024 application cycles, yet still identified two formal findings and 24 recommendations for improvement. While auditors did not flag issues with the timeliness or completeness of applications that received funding, they did uncover significant gaps in documentation supporting funding decisions and ongoing monitoring of projects.

Among the most concerning findings were failures in recordkeeping and oversight. Auditors reported that PHFA purged hard-copy documents for unfunded projects without first digitizing them, potentially erasing important records. Scoring sheets used in funding decisions did not reflect all of the factors considered, and documentation supporting financial capacity and project viability was found to be lacking. The audit also noted concerns about properties being unable to repay PennHOMES loans, raising questions about how financial risk is assessed.

Breakdowns in Monitoring and Repayment

Beyond documentation issues, the audit highlighted breakdowns in PHFA’s monitoring of funded properties. Supervisory review of financial performance was not documented for 37 properties, and monitoring was not performed for five properties as required by policy. Auditors also found inaccurate rent and income information at six properties, suggesting weaknesses in compliance and reporting.

Perhaps most striking, 58% of loan recipients reviewed were not billed for loan repayments in 2023 due to low surplus or cash deficits. In one instance, a housing development project received funding in 2022 despite a PHFA staff member recommending against it. Taken together, the findings paint a picture of inconsistent oversight at a time when housing affordability and responsible use of public funds are top of mind for many Pennsylvanians.

Lawmakers Call for Accountability

Marcell said the audit reinforces the importance of legislative oversight, emphasizing that even well-intentioned programs must be managed responsibly. Struzzi, chairman of the House Appropriations Committee, credited Marcell’s persistence for helping bring the audit to fruition and warned that mismanagement ultimately drives up the cost of government for taxpayers.

The audit’s limited scope also raises broader questions. If such issues were uncovered in just two application cycles of one program, lawmakers argue, more comprehensive reviews could reveal additional weaknesses across the agency’s operations.

What Comes Next

Despite the seriousness of the findings, PHFA has not yet formally responded to the audit, according to Marcell. She said taxpayers deserve clear answers about how the agency plans to address the recommendations and prevent similar problems moving forward. As lawmakers await that response, the audit is likely to fuel renewed calls for reform and ongoing oversight of how public housing funds are administered in Pennsylvania.