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Housing Choice Voucher Program Financial Management CY 2012 Funding Implementation

Housing Choice Voucher Program Financial Management CY 2012 Funding Implementation February 10, 2012. Today’s Topics. 2012 Appropriations for Housing Choice Voucher Program HAP Renewal Funding HAP Set-Aside Administrative Fees Net Restricted Assets Reviews and Changes

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Housing Choice Voucher Program Financial Management CY 2012 Funding Implementation

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  1. Housing Choice Voucher Program Financial Management CY 2012 Funding Implementation February 10, 2012

  2. Today’s Topics • 2012 Appropriations for Housing Choice Voucher Program • HAP Renewal Funding • HAP Set-Aside • Administrative Fees • Net Restricted Assets Reviews and Changes • Cash Management Procedures Implemented January 1, 2012

  3. 2012 Appropriations • H.R. 2112, “The Consolidated and Further Continuing Appropriations Act, 2012” (Public Law 112-55) • Enacted November 18, 2011 • www.gpo.gov/fdsys/pkg/BILLS-112hr2112enr/pdf/BILLS-112hr2112enr.pdf (beginning page 125)

  4. 2012 Appropriations

  5. 2012 Appropriations

  6. 2012 Renewal Funding • Re-benchmarking period changed from Federal Fiscal Year (FFY) to Calendar Year (CY) 2011 leasing and HAP costs • No adjustment to cover the costs associated with deposits to family self-sufficiency (FSS) program escrow accounts • NRA Offset - mandated under General Provisions, Section 236 of the 2012 Act

  7. 2012 Renewal Funding • Offset must be collected by 9/30/2012 – spread over 9 months • Elements of Allocations • Validated HAP costs for CY 2011 per VMS reporting, adjusted to omit over-leasing from funding based on average per unit cost • Adjustments for first time renewals, limited to inflation only • Renewal Inflation Factor – Regional

  8. 2012 Renewal Funding • Elements of Allocations: • Adjustment for transfers into or out of the PHA • National Pro-ration, based on national eligibility and funds appropriated • NRA Offset as applicable • Allocations due to be issued by March 1

  9. 2012 Renewal Funding CY 2011 VMS Expenses X Capping % for over-leasing = Capped Expenses X Inflation Factor = Inflated Sub-Total +/- Transfers In or Out = Total Eligibility X National Pro-ration Factor = Pro-Rated Eligibility • Offset = Funding

  10. 2012 Renewal Funding • Eligibility and Allocations were not known in time to determine January thru March HAP obligations • Those HAP Obligations are equal to 1/12 of the preliminary CY 2012 renewal eligibility, less projected mandated offset • HAP Disbursements were determined via cash management procedures effective 1/1/2012

  11. 2012 Renewal Funding • To ensure prompt determination of funding allocations, PHAs were asked to review CY 2011 VMS data by January 17 - no additional formal review opportunity • Data that failed broad edits for completeness and consistency was referred back to PHAs for review and response • No additional data changes will be made for funding purposes other than as directed by HUD

  12. 2012 Renewal Funding Offset • NRA Offset Projections: • Very small PHAs: all NRA exceeding approximately six months of 2012 renewal eligibility • All other PHAs: all NRA exceeding approximately one month of 2012 renewal eligibility • MTW PHAs: same requirements, but applicable only to non-MTW vouchers

  13. 2012 Renewal Funding Offset • For purposes of determining the offset only, calculated NRA as of 12/31/2011 will exclude: • CY 2011 portion of new (non-renewal) increment funding effective in CY 2011 • HAP Set-Aside funding awarded in CY 2011 (new budget authority only) • Funding required to fully lease un-leased vouchers awarded for VASH in CY 2008 thru 2010 and FUP in CY 2008 and 2009

  14. 2012 HAP Set-Aside Categories • (1) To adjust for increased renewal costs due to portability or unforeseen circumstances • Portability: Eligibility and funding will be determined by HUD • Unforeseen Circumstances: PHA must identify the UC, explain its impact on renewal costs, provide a calculation of funds needed – failure to do so will result in no consideration for funding

  15. 2012 HAP Set-Aside Categories • U/C is an unexpected event and one not in the PHA’s control • U/C must have resulted in higher HAP costs for CY 2012 (higher rents/payment standards and/or lower participant income) • Examples: • Natural disaster • Economic event • Government action (e.g. decreased benefits)

  16. 2012 HAP Set-Aside Categories • Situations that are not U/C for funding: • PHA normal increase in payment standards • PHA normal utility allowance increase • PHA misuse of funds / poor management • PHA plan to increase leasing / reach baseline • PHA Administrative needs / reduced fee funding

  17. 2012 HAP Set-Aside Categories • (2) For vouchers not in use during the 12 month period in order to meet a commitment for project-based vouchers • Must provide complete and executed AHAP and schedule of vouchers withheld from leasing each month • Funding is limited to unit months not already funded

  18. 2012 HAP Set-Aside Categories • (3) adjustments for costs associated with VASH vouchers • Adjustment available for those PHAs whose most recent data shows the VASH per unit cost (PUC) exceeds the program-wide funded PUC for CY 2012 • PHA must provide a calculation of funds needed

  19. 2012 HAP Set-Aside Categories • (4) To assist eligible families currently assisted under DHAP or DVP disaster programs; vouchers will not be renewed when these families leave the program – eligible PHAs have already been contacted • Additional Leasing in the final quarter or month of the CY is not an eligible set-aside category in 2012 • This will affect PHA attempts in 2011 to increase leasing • Minimal or no impact on turnover leasing

  20. 2012 HAP Set-Aside • Detailed requirements are in Notice 2012-9 • Follow all submission requirements – we must adhere to them due to competition • Request must be received by the due date • HUD does not plan to adjust eligibility on the basis of NRA • Deadline for receipt of requests at HUD Hq is March 27, 2012 • Awards will be pro-rated if eligibility exceeds funds

  21. 2012 Administrative Fees • Administrative fee appropriation amount will result in a pro-ration of approximately 75 percent of eligibility each month in 2012 • Administrative fees will continue to be advanced on the basis of the most recent month’s eligibility and will be reconciled after the close of each month, based on VMS data • January/February/March fees are advanced at 75% of September 2011 eligibility

  22. 2012 Administrative Fees • Do not assume that the fees advanced are the fees earned – actual earnings based on each month’s leasing, 2012 fee rates, and national pro-ration • 2012 administrative fee rates will be posted to the HUD web within approximately two weeks • Fees on portable vouchers may use 75% pro-ration for CY 2012 – Column B rate x 80% x 75%

  23. 2012 Administrative Fees • Eligible PHAs may request higher fee rates or blended fee rates • Follow submission guidance in the Notice • All requests must be received by March 13, 2012 • Approvals are for Cy 2012 only • Higher fees subject to year-end reconciliation • Admin fees may be used for program administration only • UNA – prior year excess fees – may be used for program purposes only, unless generated pre-2004

  24. Net Restricted Assets • Accurate calculation of NRA is critical for all PHAs • NRA represents resources of the PHA committed to the support of HAP costs that exceed annual budget authority • Must ensure each PHA’s correct portion of the $650 million nationwide to be offset • It is a factor in determining monthly disbursements under the cash management requirements

  25. Net Restricted Assets • NRA began accruing on 1/1/2005 – all PHAs had a $0 balance that date • Consists of budget authority provided by HUD but not used for HAP each CY • Also consists of interest earned on balance and HAP, FSS forfeitures, fraud recoveries and over-leasing costs • Eligible for use only for HAP costs in current and future years

  26. Net Restricted Assets • May not be transferred or loaned for other purposes or programs, including PH and administrative needs • Balance must be supported by cash and available investments

  27. Net Restricted Assets • HUD reconciled each PHA’s NRA balance as of 12/31/2009 • PHAs were to review the calculations, provide any correcting data and concur with the final balance – this process has been completed • Concurred balance to be used to update beginning balance in completion of subsequent FASS submission • PHAs report NRA balance annually in FASS submission and monthly in VMS

  28. Net Restricted Assets • Concern: In many cases, these balances are not matching or even reasonably concurrent • Impact: • PHA’s portion of the $650 million offset may be calculated on an errant base • PHA’s cash disbursements in 2012 may be in error • HUD will transfer NRA to program reserves in 2012 and must have exact balance

  29. Net Restricted Assets • To resolve this, each PHA received an electronic letter from HUD detailing the NRA review process and providing the PHA’s calculated NRA balance as of 9/30/2011 • Each PHA was to review the balance and contact their FMC FA if the PHA did not concur with the balance and why

  30. Net Restricted Assets • HUD has reviewed any information provided by the responding PHAs and is updating data and balances as warranted • All changes subject to further review by the FMC or QAD • Some responses did not evidence needed supporting detail, which PHA must have • Many PHAs with significant discrepancies did not respond re 9/30/2011 balances

  31. Net Restricted Assets • Each PHA will receive a 12/31/2011 calculated balance for review in the very near future • Very brief review time will be available • Without PHA response concerning any changes still needed, HUD will use the HUD-calculated balance to determine the 2012 Offset • NRA balances include a calculation of over-leasing costs – based on UMLs overleased and average program-wide PUC unless PHA provided actual costs to HUD per recent request

  32. Net Restricted Assets • Process will be repeated after the end of each calendar quarter (12/31/2011, 3/31/2012, etc.) • Remember - 9/30/2011 calculated balance was used for preliminary determination of 2012 offset and to initiate offsets in January • But 12/31/2011 calculated balance will be used for final determination of 2012 offset

  33. Cash Management • Definition: Control disbursement of federal funds in such a way that PHAs do not receive federal funds before they are needed • Treasury Issuance: “Advances to a recipient organization will be limited to the minimum amounts necessary for immediate disbursement needs and will be timed to be in accord only with the actual immediate cash requirements of the recipient organization in carrying out the purpose of an approved program or

  34. Cash Management • project. The timing and amount of cash advances will be as close as is administratively feasible to the actual disbursements by the recipient organization for direct program costs and the proportionate share of any allowable indirect costs.” • Requirement is reiterated in the 2012 Appropriations Act • Procedures detailed in PIH Notice 2011-67

  35. Cash Management • Prior to CY 2005: • Voucher funds were distributed to PHAs in accordance with a PHA budget; PHAs were required to revise budgets if disbursements exceeded needs; • HUD held all excess as program reserves • Effective CY 2005: • Voucher renewal funds were distributed 1/12 of total pro-rated eligibility per month; incremental funds distributed based on contract terms; • PHAs held all excess as NRA

  36. Cash Management • Results: • PHAs have received disbursements in excess of their needs • PHAs have accumulated significant levels of NRA • Congress has mandated the offset of approximately $1.5 billion combined in 2008 and 2009 • Congress has mandated the offset of $650 million in 2012

  37. Cash Management • Intent of Cash Management Procedures: • Mitigate PHA accumulation of NRA funds • Reduce Treasury outlays by timing the disbursements based on actual need • Facilitate a more efficient and timely method by which to account for PHA program reserves.

  38. Cash Management • Components: • Monthly disbursement of anticipated HAP needs and a small margin for increases (advances) • PHA option to request additional advances based on demonstrated need • Quarterly reconciliation of actual costs to advances • Year-end final reconciliation of actual costs to advances

  39. Cash Management • Process, effective 1/1/2012: • Each month’s HAP disbursement will be based on most recent quarter’s validated VMS monthly average HAP costs • January to March 2012 disbursements are based on July to September 2011 actual costs • Disbursements include a margin of 3% of monthly allocation, to account for increased costs and leasing since the base quarter

  40. Cash Management • PHAs that require additional funds are contacting their FA at the FMC • PHA provides actual costs for intervening months not yet reported in VMS; known costs for the upcoming month or quarter; and NRA funds available • Disbursements are limited to total funds obligated and available

  41. Cash Management • Disbursements will continue to be made on the first of the month – to ensure PHAs do not receive funds in advance of need • Disbursements will be reconciled to actual HAP expenses at the end of each quarter, once actual costs are validated in VMS • Subsequent disbursements will be adjusted to recoup any excess provided • Additional disbursement will be made to cover any shortage in funds provided

  42. Cash Management • Process will be repeated quarterly • Incremental funds will initially be disbursed based on contract dates • Final reconciliation will be completed at year-end to:

  43. Cash Management • Calculate total HAP expenses incurred by the PHA for the year and compare them to total HAP disbursements to the PHA for the year, in order to determine whether the PHA has received excess or insufficient advances. An additional payment or offset will be provided as needed to complete this reconciliation of funds, if funds available (cash reconciliation)

  44. Cash Management • Compare HAP budget authority provided and other revenue for the year to HAP costs for the year in order to determine the increase or decrease to the program reserve and the new balance (program reserve reconciliation) • Since inception, the process has been running smoothly – thank you for your cooperation

  45. Cash Management • Excess HAP funds, and existing NRA balances, must be maintained by the PHA in an interest-bearing account; interest accrues to HAP • Cash management process will result in the re-establishment of the program reserves • Excess HAP funds will be held by HUD in the Treasury, rather than by the PHAs in the NRA accounts

  46. Cash Management • Moves new budget authority into program reserves if it is not needed for current expenses • Existing NRA balances will be transitioned to cash management and the program reserves, via their use in lieu of HUD disbursing new budget authority

  47. Cash Management • Cash management procedures do not change the annual allocation available to each PHA, just the disbursements • PHA allocations will continue to be calculated per the Appropriations Act requirements – PHA required portion of the total allocation will be disbursed and the balance will be held for the PHA in the program reserves

  48. Cash Management • Transition of NRA balances to the program reserve will not affect their availability to the PHA • PHAs will be able to access both undisbursed budget authority and program reserves as needed through the FMC

  49. Cash Management • Cash management procedures apply to MTW agencies • Planned disbursements will be based on VMS HAP reporting • PHAs must request any additional amounts needed each month from FMC FA, for non-HAP expenditures to be made that month

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