Nationwide, more than 25,000 families were found in violation of the income policy. Of those families, 47 percent “had income that was more than $10,000 greater than the income limits,” according to the HUD audit.

New York has the most over-income families, followed by Puerto Rico, Texas, Alabama, and New Jersey.

In total, the audit estimates that HUD subsidization of over-income families costs $104.4 million.

HUD statues and regulations don’t require the department to evict over-income families, The Washington Post notes, though HUD reversed itself and told The Washington Post that it “is urging housing authorities nationwide to evict tenants who earn too much to qualify for government subsidies” after facing criticism.

In a reply to the audit, HUD dismissed the auditor’s position that those subsidy funds could be put to better use than funding higher-income families and questioned the estimated cost.

“There are positive social benefits from having families with varying income levels residing in the same property,” Deputy Assistant Secretary for the Office of Public Housing and Voucher Programs, Milan M. Ozdinec, wrote in his response.

The Texas Tribune found that many families in the state “make just a few hundred dollars more than the income limit.” Evicting a subsidized tenant for earning $300 above the income limit would create a strong incentive against employment and promotion, encouraging dependency on the public welfare.

The auditor noted that “public housing authorities are required to create rent policies that encourage employment and that do not create a disincentive for continued residency by families who are attempting to become self-sufficient or who have attained a level of self-sufficiency through their own efforts.” Indeed, rooting out families that are marginally above the income ceiling would violate HUD policy.

If HUD stopped subsidizing families that earned more than $10,000 above the income limit, however, that would free up roughly $49 million, not including administrative costs to identify those families.

Nor would that require eviction, as HUD (or the property owner, in the case of vouchers) could charge those families a market-based rent. That would retain the income diversity Ozdinec desires while making HUD more effective in assisting low-income families.

Only 2.6 percent of households in public housing were over-income. The audit does not show mass incompetence in HUD: it is a relatively small, but numerically significant and correctable, issue. Correcting that issue, however, will not be easy.

The audit examined 15 public housing authorities, including the New York City Housing Authority. It found 12,425 over-income families in housing and 579,890 families on the waiting list for public housing assistance. With such a long waiting list, it’s imperative for HUD to cut funding to over-income families.