Editor's Note: Headline has been changed to reflect the correct number of layoffs.

Faced with a $21 million deficit, the Philadelphia Housing Authority is laying off 126 employees, 14 percent of its workforce, in a major restructuring.

The layoffs, to be announced Tuesday, come as the agency has added 3,800 affordable housing units, with more in the pipeline, despite fewer dollars coming in to support that growth, president and CEO Kelvin A. Jeremiah said.

"Our mission is to provide affordable housing, so we believe it was important for us to do exactly that to advance our mission as a housing provider, which means maximizing the number of houses for families who are in need," Jeremiah said.

As Congress has allowed federal funding for affordable housing to decrease, the agency has lost $146 million in housing subsidies since 2008. PHA is expected to lose $14 million more in the next five years, Jeremiah said.

Despite that, the authority has added, not decreased, Section 8 vouchers, which provide rental assistance for low-income families. Once capped at 14,000, the city now has more than 18,000 Section 8 households.

Jeremiah said that with Philadelphia's 26 percent poverty rate, "the demand for affordable housing is just incredible."

"We couldn't in good conscience continue to use that money to augment our operating costs rather than housing so the decision we took is [to] emphasize housing," he said.

Jeremiah said the reductions will allow the agency, which has an annual operating budget of $380 million, to significantly decrease its deficit by $17 million. It will also allow for more funding to go toward housing instead of what Jeremiah called an unnecessarily large staff.

The agency's personnel costs are more than double those of similar-size authorities in New York City, Baltimore, and Washington, he said.

"When we looked at comparable housing authorities we found that PHA total [employee] costs per unit were $570 compared to others at $250 per unit. We know we needed to reduce staffing in order for our costs to come in line with our budget."

Over the last two years, Jeremiah said, the agency had cut 15 percent of non-personnel costs before turning to layoffs.

The total workforce will drop from 1,412 to 1,212. In addition to the 126 layoffs, there were 40 voluntary separations. Thirty-four vacant positions were eliminated.

Layoffs are split evenly between union and nonunion employees. Sixty-four union employees will be laid off in the next 30 days and 62 nonrepresented employees will be laid off Tuesday, Jeremiah said.

The agency is not reducing its police force.

Jeremiah said the reductions will not affect ongoing development projects, including the Sharswood/Blumberg development, a plan for 1,200 homes and a supermarket in North Philadelphia.

Jeremiah said that without the layoffs the agency could have jeopardized development projects already underway and driven the agency into further financial peril.

Standard & Poor's rating service recently downgraded PHA's bond rating from AA-minus to A-plus, which means it will cost the agency more to borrow in the future.

To support those affected by the layoffs, PHA is compiling lists of vacancies in city departments and will look for job opportunities within the agency's development projects.

"The process is extremely difficult for me and for the folks who will be losing their jobs tomorrow and in the next 30 days," Jeremiah said.

"We want to make sure we're not letting go of workers without supporting them. We're setting up outplacement services ... helping them prepare and revise resumés and making sure folks being laid off will get first preference where we can."