Report 2021-125 Recommendation 7 Responses

Report 2021-125: Regional Housing Needs Assessments: The Department of Housing and Community Development Must Improve Its Processes to Ensure That Communities Can Adequately Plan for Housing (Release Date: March 2022)

Recommendation #7 To: Finance, Department of

To ensure that the household formation rates that it provides HCD are appropriate, Finance should, by February 2023, conduct a comprehensive review of its assumptions about the household formation rates it uses in projections, and it should document that review.

Annual Follow-Up Agency Response From September 2023

As stated in the Department of Finance's 12-month response to CSA's recommendations, DOF fully implemented the recommendation that it review the household formation assumptions and document that review because DOF had established a workgroup, reviewed existing trends, performed preliminary modeling, and prepared a draft of a guiding document for external review. A CSA auditor requested additional information concerning the external review that was not available at the time of the 12-month response. That information will be completed at an October 11, 2023 meeting and DOF will provide the resultant materials and recommendations to CSA shortly thereafter.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

DRU's Household Projections workgroup has discussed and examined a variety of assumptions and trends likely reflected in the next vintage of household formation rates. This includes reviewing existing trends, preliminary modeling, and evaluation of previous headship rates using Census 2020 PL94-171 and American Community Survey data. The workgroup has completed the final assumptions and a guiding document has been sent for external review).

California State Auditor's Assessment of 1-Year Status: Pending

Pending completion of the external review process that the Department of Finance referred to in its response.

6-Month Agency Response

DRU's Household Projections workgroup has discussed and examined a variety of assumptions and trends likely reflected in the next vintage of household formation rates. This includes reviewing existing trends, preliminary modeling, and evaluation of previous headship rates using Census 2020 PL94-171 and American Community Survey data. The workgroup is beginning work on the final assumptions and a guiding document with the goal of sending to external review by mid-October.

While we anticipated the release of the Census 2020 DHC file in late summer 2022, the Census Bureau's decision to delay this file until May 2023 alters the timeline. The file was to provide the data necessary to calculate headship rates from Census 2020 and allow preliminary estimation and projection of household formation rates. With its delay, DRU will examine methods that rely solely on the ACS 5-year data to produce, much like the underlying population projections, interim household projections that will span the gap until the Census 2020 data is available. DRU is in the process of organizing a panel of demographic, housing, and other experts to review preliminary rates and assumptions, and provide feedback. These steps will be documented and compiled in a report that will be available. These modified steps are on track to be completed in early 2023.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

DRU has formed a Household Projections workgroup which will discuss and characterize the assumptions and trends likely reflected in the next vintage of household formation rates. This includes reviewing existing trends. Continued discussion, preliminary modeling, and evaluation of previous headship rates using Census 2020 PL94-171 and American Community Survey data will occur throughout the spring and summer in this workgroup and the final assumptions will be codified in a guiding document.

While we anticipated the release of the Census 2020 Demographic and Housing Characteristics (DHC) file in late summer 2022, the Census Bureau's decision to delay this file until May 2023 alters the timeline. The file was to provide the data necessary to calculate headship rates from Census 2020 and allow preliminary estimation and projection of household formation rates. With its delay, DRU will examine methods that rely solely on the ACS 5-year data to produce, much like the underlying population projections, interim household projections that will span the gap until the Census 2020 data is available. DRU plans to organize a panel of demographic, housing, and other experts to review preliminary rates and assumptions, and provide feedback. These steps will be documented and compiled in a report that will be available on the DRU web page. These modified steps are on track to be completed in early 2023.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2021-125

Agency responses received are posted verbatim.