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Welcome to Your Housing Help Session!

Welcome to Your Housing Help Session!. Today’s Topics: Managing Your HCV Funding Session Host: Sammie Szabo. Financial Management and Program Utilization. 3. Financial Management and Program Utilization. HCV managers need an understanding of: How the program is financed

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Welcome to Your Housing Help Session!

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  1. Welcome to Your Housing Help Session! Today’s Topics: Managing Your HCV Funding Session Host: Sammie Szabo

  2. Financial Management and Program Utilization 3

  3. 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 4

  4. 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. 5

  5. 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. 6

  6. 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 7

  7. 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 8

  8. 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. 9

  9. 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). 10

  10. Monitoring Your HAP Funds 11

  11. 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 . 12

  12. 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. 13

  13. 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 14

  14. 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. 15

  15. Tracking PUC Your 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. 16

  16. 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. 17

  17. 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 18

  18. 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. 19

  19. 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) 20

  20. 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. 21

  21. 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 22

  22. 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 23

  23. 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 24

  24. 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. 25

  25. 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 26

  26. 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 27

  27. 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 28

  28. 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. 29

  29. 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 30

  30. 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 31

  31. 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 32

  32. 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 33

  33. 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) 34

  34. 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) 35

  35. 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 36

  36. 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 37

  37. 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 38

  38. 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 39

  39. 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 40

  40. 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 41

  41. 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 42

  42. 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: 43

  43. 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 44

  44. Status of Admin Fee Reserves 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 45

  45. Status of Admin Fee Reserves 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 46

  46. Estimating and Calculating HAP Needs 47

  47. 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 48

  48. Potential Problems & Solutions Over spending Actions – In PIH 2004-7 and 2005-9 For increases in PUC: Review subsidy standards Payment standard is the lower of the voucher size or the actual number of bedrooms 49

  49. 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% 50

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