© Copyright 2009 Nan McKay & Associates Earned Income Disallowance © Copyright 2008 Nan McKay & Associates Housing Help Sessions Name of session – date

© Copyright 2009 Nan McKay & Associates

Earned Income Disallowance


Housing Help SessionsName of session – date of session

NMA Host:Trainer Enter your name here


Earned Income Disallowance


Housing Help SessionsManaging Your HCV Funding – April 17, 2009

NMA Host:Trainer Sammie Szabo



Housing Help Sessions

Managing Your HCV Funding – April 17, 2009Slide 2

Welcome to Your Housing Help Session!

Today’s Topics: Managing Your HCV Funding

Session Host: Sammie Szabo




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Financial Management and Program Utilization




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Financial Management and Program Utilization

HCV managers need an understanding of: How the program is financed Funding and leasing utilization requirements How to use tools to track, monitor and forecast

lease-up and funding dollars How lease-up impacts administrative fees




HAP Funding Sources What is HAP Budget Authority?

The annual housing assistance payment budget provided by HUD to a PHA for the 12- month period that begins on January 1 and ends on December 31, based on the congressional appropriations for the federal fiscal year that begins on October 1 and ends on September 30.

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2009 Voucher Funding HAP Budget Authority

The PHA’s HAP budget authority for the calendar year is determined by the HUD Financial Management Center (FMC) based on appropriations. Because the 2009 Appropriations Bill was

delayed in Congress, PHA’s are currently funded based on 2008 funding levels.




HAP Funds Estimated HAP funding amounts were

disbursed for January, February, March and April. They do not represent 2009 eligibility, which based on recent appropriations should be higher than 2008. HUD will issue final funding notices to all PHAs in May. Disbursements received are advances against

the ultimate 2009 eligibility

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Other HAP Funding Sources HAP Equity = HAP funds from prior budget

years Usable HAP Equity – the amount of HAP Equity

the PHA could use if it had fully leased all of its authorized units

Unusable HAP Equity – the amount of HAP Equity not available to a PHA if it is fully leased, since the PHA may not lease more units than it was authorized by HUD




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HAP Fund Provisions HUD is statutorily prohibited from funding

overleasing Similar to 2008, funds provided in 2009 may not be

used to support unit months under lease which exceeds authorized units under contract (ACC)

HAP funds may not be used for any other purpose.




Baseline vs. Budget Authority

A PHA has to comply with two statutory requirements for voucher utilization compliance, and cannot exceed: Baseline - # of unit months available in the year;

or Budget Authority – HAP funds authorized for the

year (plus any HAP funds left from prior year).

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Monitoring Your HAP Funds




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Monitoring HAP Funds

Because HUD is statutorily prohibited from funding overleasing:

To maximize annual Budget Authority (BA) and ensure compliance with overleasing prohibition, the HCV manager must determine how many units their PHA Budget Authority will support .




Monitoring HAP Funds The first step is to determine how many unit

months your budget authority can support. You will need to know your PHA’s HAP Budget Authority for the year.

Example: Anytown PHA has a HAP budget authority of $5,000,000.00, $400,000 in HAP budget authority from 2008, and ACC baseline authority for 1,000 vouchers.

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Tracking PUC

Unit months leased (UML) is the cumulative number of units leased each month in the year to date Example:

A unit month = 1 unit leased for one month If the PHA had one unit leased all 12 months, the

total unit months leased would be 12




Monitoring HAP Funds

$5,400,000 divided by 12,000 unit months equals $450.00 per unit per month available for HAP.

Anytown PHA could fully lease all authorized (1000) baseline vouchers if monthly average HAP cost per unit is equal to or less than $450.00 per month.

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Tracking PUCYour PHA’s actual per unit costs (PUC) may be more or less than the per unit cost available under your budget authority. Tracking the actual PUC and actual lease-up on

a monthly basis is critical to ensure you maximize program utilization and do not exceed your budget authority and baseline.




Tracking HAP Not all PHAs have sufficient BA to fully utilize

baseline. If monthly per unit costs exceed per unit BA, your

PHA cannot fully lease-up Tracking monthly HAP expense is critical if your

PHA’s per unit HAP expense is higher than your BA can support.

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PUC Example – One Month HAP costs for January $473,423.00 Vouchers leased in January 1005 Actual PUC for January $ 471.07 Annual Budget Authority = $5,000,000.00 2008 Excess HAP = $ 400,000.00 Available Annual HAP = $5,400,000.00 Monthly HAP BA = $ 450,000.00




PUC Example – One Month PHA HAP expense in January exceeds

January budget authority by $23,423.00 January PUC ($473,423.00 divided by 1005

units) = $471.07 ($450.00 BA per unit mo) PHA’s budget authority of $450,000.00 can

support 955 vouchers at average HAP of $471.07 – PHA needs to reduce # of units or it will exceed budget authority.

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PUC Example – Multiple Months Total HAP Expense Jan/Mar $1,431,435.00 HAP BA Jan/Mar $1,350,000.00 Families leased

January 1005 February 1020 March 1012 TOTAL 3037 - 1012.33 average

Actual PUC Jan-Mar = $ 471.33 ($450.00 UM BA)




PUC Impact on BA

In this example, the PHA must reduce program size and/or decrease monthly HAP expenses or it will run out of HAP budget authority before the end of the fiscal year.

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PUC Per Unit Cost (PUC) is ever changing.

Analyzing the PUC only at the beginning of a fiscal year is a mistake you cannot afford to make.

As participants enter and leave the program & annual and interim re-certifications and rent increases are processed the PUC can and will change. The # of units your BA can support will change from month to month




Tracking Baseline Units

Because over-leasing is prohibited, in addition to HAP BA, a PHA must stay within baseline

# of ACC baseline units X 12 months equals your Annual Baseline unit months:

1000 units x 12 months = 12,000 AUM 1 unit leased 1 month = 1UM

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Impact of HAP BA on Lease-up An underleased PHA may deliberately overlease

near the end of the year in order to fully utilize annual funding, but will be overleased at the beginning of the next year

An overleased PHA may deliberately underlease not to exceed annual funding, but if underleasing takes place at the end of the PHA calendar your, the PHA risks being underleased at the beginning of the next year




BA vs Baseline Lets Review Attachment 1 - Every PHA should

have a tool to track units and HAP Table 1 tracks Annual Baseline Unit

Utilization to ensure PHA does not exceed 12,000 maximum unit months.

Table 2 tracks monthly HAP expenses to ensure PHA does not exceed annual budget authority.

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Administrative Fees Funding In addition to HAP, HUD also provides the PHA with funds to pay for the administration of the HCV program. These funds are called the administrative fee. Admin fees are the primary source of revenues for the HCV program admin expenses




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Admin Fee Funding 2008 In CY 2009 PHAs admin fees will be earned

based on units leased as of the first day of each month The FMC utilizes the lease-up data reported in

the VMS on a monthly basis to determine admin fees earned by the PHA.

HUD may fund PHAs for units leased after the 1st of the month, utilizing data in PIC




Administrative Fees PHA’s must earn their admin fees Fees are paid by HUD for units under lease

on the 1st day of the month Admin Fee Schedules are set by HUD, and

published annually

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Administrative Fees

Admin Fees are paid to the PHA based on a pre-set table. For the first 600 unit months Column A of the admin fee table is utilized. For the remaining unit months, Column B is utilized. For PHA owned units use Column C

You can find the 2009 Admin Fee table at: http://www.hud.gov/offices/pih/programs/hcv/admfee2009.xls.

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http://www.hud.gov/offices/pih/programs/hcv/admfee2009.xls

http://www.hud.gov/offices/pih/programs/hcv/admfee2009.xls




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Administrative Fee Restriction Admin fees can only be used for activities

related to HCV assistance Admin fees from 2009 funding (as well as 2004

thru 2008) not spent must be used for same purpose in following years




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Tracking Admin Fees

PHA is like any business Can’t continue to spend

more than it receives If you can spot an adverse

trend in time, you can reduce expenses




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Tracking Admin Fees

PHA must track monthly admin fee earnings vs monthly projected earnings

HUD doesn’t require PHAs to provide budget details about admin expenses

But you must know whether the funded admin fees will cover actual expenses




Admin Fees

Example: PHA leases 1000 units in January Column A = $70.00 – Column B = $60.00 and

HUD pro-ration = 100% PHA is paid $70.00 for first 600 = $42,000.00 PHA is paid $60.00 for last 400 = $24,000.00 PHA earns $66,000.00 in Admin Fee for January

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Admin Fees Example:

PHA leases 960 units in February Column A = $70.00 – Column B = $60.00 and

HUD pro-ration = 100% PHA is paid $70.00 for first 600 = $42,000.00 PHA is paid $60.00 for last 360 = $21,600.00 PHA earns $63,600.00 in Admin Fee for January

(loss of $2,400 for the month)

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Admin Fees Example:

PHA leases 935 units in March Column A = $70.00 – Column B = $60.00 and

HUD pro-ration = 100% PHA is paid $70.00 for first 600 = $42,000.00 PHA is paid $60.00 for last 335 = $20,100.00

PHA earns $62,100.00 in Admin Fee for January (loss of $3,900.00 for the month)

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Monitoring Tools

To maintain financial control and make fact-based decisions, you need timely and reliable information

You must monitor: Monthly lease-up Monthly HAP expenses (including FSS Escrow) Financial reports




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Monitoring Tools

Monthly lease-up – best tool tracks: Number of units awarded by HUD Number of units estimated to be funded Actual number of units leased Variance betw HUD-awarded units and leased Variance betw estimated units and leased units Percentage of units leased for each variance




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Monitoring Tools

Monthly financial reports let you monitor: If HAPs are higher than HUD funding due to

PUC or leasing You have less control over PUCs than leasing

If HAPs are higher than advances from HUD If admin fees will cover actual expenses




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Monitoring Tools Monthly financial reports let you monitor:

If actual PUCs are higher than the HUD-funded PUC level Then you look at cost-cutting measures, such as

reducing payment standards and/or subsidy standards

PHA will not receive more funds




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Monitoring Tools Monthly financial reports let you monitor:

The ACC Reserve account balance You don’t want to under spend budget authority by

not assisting eligible families The Admin Fee Reserve balance

This should be used for unanticipated necessary expenses, to avoid a deficit




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FSS Monitoring Report HCV manager should get a monthly report on

FSS escrow deposits Remember that the monthly escrow payments

are paid from HAP funds and must be included in monthly HAP tracking and reporting




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Managing Funding

PHA needs the proper tools to monitor: Actual HAP costs against HAP funding Actual PUC against funded PUC Actual leased units against baseline units and

funded units Then you can look at solutions




Monitoring HAP

In order to track monthly trends in HAP cost and unit months leased, an excel spreadsheet is helpful. It will allow you to input income and expenses and units leased on an ongoing basis, and analyze utilization on a cumulative basis.

Let’s review attachment 2:

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Status of Admin Fee Reserves

Similar to HAP, a PHA may have admin fee reserves from prior years. Changes in the admin fee reserve should be tracked HUD doesn’t cap the amount the PHA can

accumulate PHA can use these amounts to cover future

admin fee deficits




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If the reserve is going down, you should determine whether it’s because of periodic deficits or a long-term trend in deficit spending One-time or period events are what reserves are

for Long-term trends need to be corrected




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The admin fee reserve shouldn’t be used to fund long-term expenses For example, PHA has $100,000 in reserves

PHA added an employee at $25,000 If PHA is running at break-even, adding this

employee would cause a deficit Fee reserves would be gone in four years




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Estimating and Calculating HAP Needs




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Potential Problems & Solutions Over leasing

The sooner utilization is under control, the sooner the “see saw” of over leasing and under leasing will cease to be such a problem

Actions - Stop voucher re-issuance and recall newly issued vouchers and consult with field office




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Potential Problems & Solutions

Over spending Actions – In PIH 2004-7 and 2005-9 For increases in PUC:

Review subsidy standardsPayment standard is the lower of the voucher size or

the actual number of bedrooms




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Over Spending

For increases in PUC: Reduce the payment standards PHA may set payment standards 90%-110% of

FMR Field offices can approve less than 90%




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Over Spending

For increases in PUC: Decrease in payment standard will apply to any

subsequent HAP contract When PS decreased during term of contract, the new

(lower) PS is applied at the family’s second regular reexamination after the reduction

HUD can waive for good cause




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Over Spending

For increases in PUC: If voucher size increases or decreases during the

HAP term New unit size must be used to determine the PS at

the first regular reexamination following the change in unit size

Regardless of the reason for the change in family unit size




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Over Spending

Example: Carla Morris has lived in a 3 BR (3 BR voucher) Then her daughter and daughter’s kids moved Carla’s voucher is now for a 1 BR At Carla’s next regular reexamination, the PHA will

use the 1 BR payment standard, even if the PHA has also reduced their payment standards




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Over Spending

Regulatory waiver requests concerning payment standards must provide justification Include calculation used to project the shortfall:

Anticipated voucher turnover, cost savings measures, actions taken to protect “at risk” families, current rent burden, statement that the waiver will allow PHA to be within budget




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Over Spending

Further actions – Review utility allowances

Must revise if rate changes 10% or more Review rent to owner for rent reasonableness

Owner promotions for unassisted tenants Rents can be reduced as early as next month PHA could request owners to reduce rents




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Over Spending

Further actions – Increase EIV, verification efforts, and other anti-

fraud activities Review policies on interim reexaminations

Consider interims for income increases Review minimum rent policy




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Over Spending

Further actions – PHA can terminate HAP contracts if funding is

insufficient Admin Plan needs to lay this out

How PHA determines which contracts will be terminated

Policies for resumption of assistance




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Further actions – Review moves and portability policy

PHA may deny permission to move if insufficient funding for increased assistance

PHA may deny a move under portability that would require the PHA to pay a higher subsidy cost if PHA does not have sufficient funding and receiving PHA won’t absorb

Over Spending




Problems & Solutions Under leasing

SEMAP measures for: Units leased at 98% (or 95%) or more, or The percent of allocated budget authority expended

during the FY was 98% (or 95%) or more Despite funding at CY, SEMAP measures FY

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Problems & Solutions Under spending

Most PHAs not funded at 100% SEMAP – If unable to meet the 95 - 98% lease-

up, must spent at least 95 – 98% of BA Also, total dollars spent on HAP may affect next

year’s funding for the PHA




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Problems & Solutions

Under spending PHA should determine number of families they

can afford to assist each month and compare to their actual lease-up rate

Then project monthly lease-up thru FYE Consider historical attrition rates, current local

market, and make sure projections don’t exceed CY authorized units




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Voucher Issuance Program (VIP)




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Provides PHAs with An estimate of the number of vouchers to

issue to optimize voucher utilization Ability to enter ‘what if’ scenarios and see

projected utilization results Website address: www.huduser.org/vip

Other ToolsHUD’s VIP Program




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How It Works

VIP estimates the number of vouchers to issue to Replace monthly turnover units Catch-up from any shortfall in year-to-date annual utilization

VIP considers Unit months below target utilization, Number of months remaining in the year, and The PHA’s anticipated success rate




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Planning and Anticipating May anticipate filling 100 “slots” with money

available You call in 100 applicants 90 actually show up 60 lease a unit So, you may have to notify 150 applicants to fill the

100 “slots” – based on statistics




Determined Eligible

Issued Voucher

RFTA

Waiting List

Leased

Page 4-55




Set-Up

PHA begins with setting up a user name and password




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Set-Up PHA then enters

PHA ID PHA name Annual Budget Authority Baseline units

The PHA also establishes “target” budget and unit utilization percents




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VIP PHA will also need to enter, year-to-date

Monthly number of units under lease Monthly HAP payment amounts




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VIP

PHA also enters historical data: Estimated success rate

Success rate: select a period # of vouchers issued within that period # of these that successfully leased a unit Divide the successful voucher holders by the total

number of vouchers issued Convert to a percentage




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Utilize Your Units and Funding For example:

A PHA issued 100 vouchers within the defined period

75 of those vouchers leased up The success rate is 75%




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VIP PHA also enters historical data:

Average time from issuance to lease date Review Chart

Average monthly unit turnover Voucher holders still searching Average anticipated HAP payments

System will calculate based on input history, if desired




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VIP

Success Rate

Avg anticipated HAP

Avg time iss/lease

Avg mo turnovervouchers searching




VIP

Demographic Adj SRMarket Cond Adj SR

Anticipated SR

PHA may adjust success rate for Demographic conditions Market conditions Or just enter an anticipated success rate (SR)




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Available VIP Reports Voucher Issuance Estimation

Reports Archive (you can save them)

Invitations Calculator Will take into account the waiting list factor




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Cautions VIP provides great data PHA must analyze the data

Does it make sense? What is the effect for the entire year? Where will you begin the next year?




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What If? VIP allows the PHA to enter ‘what if’ scenarios

and see an estimated outcome What if HAP is higher? What if we issue more vouchers now? What if we

don’t? PHA still must analyze the data




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Inter-Department Coordination




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Inter-Department Coordination For years,

Finance department dealt with budgeting and year end settlement statements

Program management administered rules related to lease-up, annuals, terminations, inspections




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Inter-Department Coordination Today, these departments must form a new

partnership Understand each other’s rules Communicate!

TOGETHER: Forecast funding utilization




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Maximizing Admin Resources




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Maximizing Admin Resources As with any good business, the HCV program

needs to maximize resources and cut costs Strategies have interconnected goals:

Analyze program administration Identify unnecessary work and simplify Reduce costs




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Administrative Fee Other areas impacting costs

Portability Analyze whether to absorb or administer carefully Meet all deadlines!

Penalties include reduction in admin fees and loss of allocated units




Supporting Data for VMS, Audits and HUD Monitoring

Program Data gathered by the HCV Manager on a monthly basis is utilized by the PHA for: Monthly VMS reporting Annual financial reporting Audits HUD compliance reviews/monitoring

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PHA Reporting Requirements

VMS supports information management needs of HCV program Collects PHA data for HUD to fund, obligate, and

disburse funding based on actual PHA use Electronic submission of monthly and quarterly data




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Reporting Requirements

PHAs must comply with VMS requirements and timelines HUD can impose a 10% penalty against monthly

admin fees for failure to comply This is a permanent reduction




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Financial Audit Requirements

PHAs are subject to independent audit Must submit an unaudited financial data

schedule (FDS) to HUD no later than 2 months following FYE

Must submit audited financial data schedule (FDS) and an Independent Public Accountant’s report no later than 9 months following FYE




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Monitoring Your HAP Funds




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Financial Audit Requirements Sanction

10% penalty against monthly admin fees for failure to comply

Penalty is a permanent reduction for CY and will not be reversed




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HUD Monitoring

HUD will continue Quality Assurance reviews to ensure the integrity of PHA reported data

HUD will monitor both the over- and under- utilization of PHA Budget Authority




Upcoming Housing Help Sessions 05/08/09: Portability (HCV) 05/15/09: Site-Based Waiting Lists (PH) 05/22/09: Physical Needs Assessment and

the 5-year Plan for Capital Improvements

Documents

© Copyright 2009 Nan McKay & Associates Earned Income Disallowance © Copyright 2008 Nan McKay & Associates Housing Help Sessions Name of session – date