teri robertson

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Teri Robertson

Financial Management for Non-Financial Managers

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Financial Management and Program Utilization

HCV managers need a basic 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

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Annual Contributions Contract

ACC is the primary contract between PHA and HUD

Consists of the:• Funding exhibit – contains a listing of

funding increments• PHA obligations

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ACC

Under the terms of the ACC, HUD makes payments for the operation of the voucher program

For each funding cycle (Jan-Dec), HUD will pay the PHA a set amount to cover:• Housing Assistance Payments• Administrative costs

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ACC

Gives HUD the ability to take possession of all or any PHA property or rights, including funds, if:• PHA failed to comply with ACC obligations• PHA failed to comply with HAP contract• PHA failed to enforce owner requirements• PHA makes misrepresentation to HUD

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2008 HCV Funding (in millions)

2007 2008

HAP Renewals (net) 14,336.300 14,644.506

HAP Set-Aside 100.000 50.000NRA Offset .000 723.257Tenant Protection HAP 150.000 200.000Admin Fees (net) 1,251.000 1,316.000Admin Fee Set-Aside 30.000 35.000

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HCV Funding

Appropriations Bill signed into law 12/26/2007, Public Law 110-161

Act provided HUD with 60 days to issue 2008 allocations to HAs • This was extended to mid-March• PHAs received Monday, 3/17/08

No projected funding letters, just final

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HCV Funding

All data subject to HA review had already been provided for review• VMS data reviews sent to HAs with 1/29/08 due date • New increment files sent to HAs for review• MTW agencies provided unit information for review

and changes • HAs were requested to advise HUD re

Transfers out PBVs

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HCV Funding

Jan, Feb, Mar HAP and fee disbursements have been made, based on Dec 2007 amounts

While re-benchmarking takes place• Based on actuals for FFY 2007 (10/1/06 thru

9/30/07) per HA-verified VMS data

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HAP Renewal Funding

Adjustment for Transfers Adjustment for Project-Based Vouchers

-- 2008 funding will be provided for every unit month a voucher was held from leasing to support a pending project-based contract

-- HUD will not add unit months that would cause funding for more than 100% of baseline

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HAP Renewal Funding

Adjustment for first time renewal of tenant protection vouchers -- New increments effective 8/1/06 and later that expire before 12/31/08-- 12 months of data for these increments will not be in VMS

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HAP Renewal Funding

Adjustment for FSS Expenses-- Additional funding eligibility; HA HAP costs do not decrease as FSS families incomes increase-- Calculation based on number of active FSS participants with progress reports in PIC

-- HAs do not need to request this adjustment

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HAP Renewal Funding Funding Calculations: Actual costs for FFY 2007 from VMS plus DVP adjustments

+ Additional Budget Authority for PBV unit months approved+ Additional Budget Authority for first time renewals+ Additional Budget Authority for FSS adjustments

= Sub-Total

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HAP Renewal Funding Subtotal

X Annual Adjustment Factor+/- Budget Authority for Transferred Vouchers= Total Eligibilityx Pro-ration factor per total appropriation (101.453%)- That portion of the HA’s unusable Net Restricted Assets

that exceeds 7% of the HA’s 2007 HAP renewal funding

= Funding Amount

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Net Restricted Assets

NRA balance for each HA consists of HAP Budget Authority provided for periods since 1/1/2005 that exceeds eligible HAP expenses incurred • HUD disburses all Budget Authority (BA) and HAs

hold this excess balance, rather than HUD holding it in a program reserve

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Net Restricted Assets

NRA may be used in subsequent years to support HAP costs for baseline units that exceed HAP BA provided that year

NRA balance consists of two amounts:• Usable = portion that would be required to support

the use of all unused baseline vouchers• Unusable = portion that would not be required, after

providing for all baseline vouchers

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Net Restricted Assets - Example

1,000 vouchers in ACC baseline for CYUnit Months Available (UMAs): 12,000Unit Months Leased (UMLs): 11,000Unit Months Un-leased: 1,000

NRA Bal (End of Prior Year): $ 900,000

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Net Restricted Assets – Ex (cont.)

HAP CY Budget Authority $ 5,700,000HAP Costs for 11,000 UMLs $ 5,610,000Average HAP Cost: $ 510

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Unit Months Unleased: 1,000 X Average HAP Cost: $ 510= HAP Costs for Un-leased UMAs $ 510,000

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HAP CY Budget Authority $ 5,700,000

HAP Costs for 11,000 UMLs $ 5,610,000+ HAP Costs for Un-leased UMAs $ 510,000HAP Costs to Lease 100% UMAs $ 6,120,000

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HAP to Lease 100% UMAs $ 6,120,000 HAP CY Budget Authority $ 5,700,000BA Shortfall if Fully Leased: $ 420,000

NRA Balance (End of Prior Year): $ 900,000Usable NRA: $ 420,000Unusable NRA: $ 480,000

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Net Restricted Assets – Funding Issue

A portion of each HA’s Unusable NRA, as of 9/30/2007, will be used to offset CY 2008 renewal funding

NRA calculations are based on actual HUD funding and the HA’s validated HAP expenses, per VMS, for 1/1/2005 through 9/30/2007

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Offset amount must total $723,257,000 nationwide, per the 2008 Act

Offset for each HA is equal to the amount by which the unusable NRA exceeds 7% of the HA’s 2007 total HAP renewal funding

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Net Restricted Assets – Funding Example

NRA Balance 1/1/2005 $0

HAP BA CY 2005 $310,440

HAP Expenses CY 2005 $296,922

Difference $13,518

NRA Balance 12/31/2005 $13,518

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NRA Balance 12/31/2005 $13,518

HAP BA CY 2006 $315,060

HAP Expenses CY 2006 $330,198

Cumulative Difference -$1,620

($315,060 – 330,198 + $13,518)


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HAP BA Jan to Sept 2007 $270,477

HAP Expenses Jan to Sept 2007 $211,634

Cumulative Difference $58,843

NRA Balance 9/30/2007 $58,843

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Jan to Sept 2007 UMAs 1,008

Jan to Sept 2007 UMLs 833

Un-leased Unit Months 175

Average PUC $254.06

Un-leased Expenses $44,461

NRA Usable (of $58,843 total) $44,461

NRA Unusable $14,382

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NRA Unusable $14,382

CY 2007 Funding $360,654

7% of CY 2007 Renewal Funding $25,246

No offset

Any NRA Unusable amount in excess of $25,245 would be offset

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Negative differences are raised to 0; subsequent years’ funds do not support prior deficits

Calculated offset amounts for all HAs are projected to total $723,257,000

Offset amount for each HA will be deducted from the HA’s CY 2008 renewal eligibility; balance will be funded

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Each HA received NRA calculation, similar to the example, with the funding allocation letter

NRA calculations do not require HA review because they are based on actual funding data and HA-validated expenses

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This provision should not affect any HA’s ability to achieve lease-up:-- Offset applies only to unusable NRA, which the HA does not need to support its baseline units

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Funding LettersEnclosures A & B

Enclosure A• Calculation of Calendar Year 2008 Renewal

Funding Enclosure B

• Calculation of Net Restricted Assets (NRA) and Usable / Unusable Portions 12/31/07

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Enclosure A – Emerald City

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Enclosure A – Emerald City

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Enclosure B – Emerald City

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Enclosure B – Emerald City

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Enclosure A – Never Land

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Enclosure A – Never Land

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Enclosure B

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Enclosure B – Never Land

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Over-leasing

The 2008 Act continues the prohibition on over leasing. The Act states “…none of the funds provided under this [Act] may be used to support a total number of unit months under lease which exceeds a PHA’s authorized level of units under contract.”

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Over-leasing

HAs may not over-lease using appropriated funds CY 2007 over-leasing will not be known until Oct to

Dec VMS data is validated Initial funding allocations will not consider reduction

of FFY 2007 costs incurred for over-leasing Adjustments will be made for any affected HAs

once over-leasing for the CY is known

Slide #43

$50 Million HAP Set-Aside

Two purposes for adjustments from the set-aside:(1) PHAs experiencing significant increase in renewal

costs due to portability -- HUD will calculate based on PIC data, comparing the average portable voucher cost to the funded rate for 2008

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(2) PHAs that would experience significant decrease due to re-benchmarking -- HUD compares the higher of 12/07 leasing or Oct to Dec 2007 average leasing to the vouchers the HA could lease based on 2008 funding-- If the HA would lose more than 3% of its voucher UMLs, HA is eligible for funding

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In both cases, calculations will be done by HUD HUD will announce when they post on the web

those HAs that appear to be eligible HAs must submit a request for the funds, as

instructed, by the posted deadline Subject to publication of the notice, HUD plans to

award funds by April 30

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Administrative Fees Funding $1,351,000,000

• $1,316,000,000+ to be allocated for on-going fees • Significant change from last 4 years, when flat

amount was paid based on CY 2003 leasing • Fees are to be paid based on vouchers under

contract as of the first of each monthNew HA fee rate tables are being developed –

will be posted as soon as they are availableHAs encouraged to calculate estimated fee

eligibility then

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Administrative Fees

Fee payments will be pro-rated to stay within total appropriation available

Pro-rations will be done quarterly so HAs do not face large year-end adjustment in fees

Monthly disbursements will be based on prior leasing activity

Actual eligibility will be reconciled to estimates and pro-rations every quarter

Slide #48

Administrative Fees

2008 fees have been advanced based on Dec 2007 amounts

HAs should not assume that level of funding will continue, since 2008 requirements are different

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Use of Ongoing Admin Fee Admin fee can only be used for activities

related to providing HCV assistance• Salaries and benefits of employees in HCV• Salaries and benefits of ED and support staff• Legal and accounting expenses• Travel and training• Office rent and utilities…

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Use of Ongoing Admin Fee Admin fee can only be used for:

• Miscellaneous admin expenses – office supplies, postage, telephone, publications, membership dues and fees

• Purchase, maintenance, and operation of nonexpendable equipment

• Insurance costs• Indirect costs where clear benefit to HCV

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Other Provisions

Administrative fees and any excess are restricted to use for Section 8 program

QAD reviews are continuing and downward funding adjustments will be made as warranted

HAP funds may only be used for 2008 and later HAP needs• May not be used for prior deficits or to pay

administrative costs or for any other purposes

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Other Provisions

Vouchers originally provided for FUP or 1 Year Mainstream must continue to be used for those purposes to the extent practicable

MTW agencies will be funded in accordance with their agreements

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Reporting Requirements

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

fee for failure to complyThis is a permanent reduction

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Financial Audit Requirements All PHAs administering HCV program

• Must submit an unaudited financial data schedule (FDS) to HUD no later than 2 months following FYE

PHAs subject to audit • Must submit audited FDS and an

Independent Public Accountant’s report no later than 9 months following FYE

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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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Monitoring Your Funding

Determining units to support:• Can overlease in a given month(s), but you

have to be within annual baseline by CYE• If your actual PUC is higher than the funded

PUC, there won’t be increases to cover costs• Failure to lease all units possible within

baseline may impact future funding…

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Monitoring Your Funding

Determining units to support:• An underleased PHA may deliberately

overlease near the end of the year in order to fully utilize annual fundingBut then you will start the next year

overleased

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Tracking PUC

PHA’s current per unit costs may be more or less than the PUC HUD used to estimate funding• Tracking the actual PUC and actual lease-up

on a monthly basis helps you keep track

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PUC

PHA should compare HAP dollars spent to the funding dollars • By determining what percent of the year has

elapsed and what percent of the funding was used

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Tracking Admin Fees

PHA is like any business – a PHA 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• Using HUD’s total annual admin fee funding

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

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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:• Unit Months Leased monthly and ytd (FY and CY)• HAP Expenditure monthly and ytd (FY and CY)

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Monitoring Tools

Knowing whether you’re leasing the number of units awarded, will help you know whether more units can be leased

If the PHA’s lease-up is greater than the estimated lease-up, costs will exceed what was funded

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Monitoring Tools

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

PUC or leasingYou 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 levelThen 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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Sample Reports

Funding analysis report • Reflects HAP dollars budgeted across each

month Funding analysis report respread

• Reflects actual HAP spread for each month past and remaining HAP funds respread across months remaining in FY

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Monitoring Tools

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Monitoring Tools

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Monitoring Tools

Monitoring port information

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Monitoring

Each month • PHA should determine number of families they

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

• Then project monthly lease-up thru FYEConsider historical attrition rates

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Section 8 Funding Utilization Parameters

PHAs have two utilization rates to administer: • Unit utilization (% of unit months leased as a

percent of unit months available)• Budget utilization (total amount of rental

assistance used as a percent of the budget authority)

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Utilization Parameters

Difference in calculation periods• Funding is allocated on a calendar year basis• SEMAP is rated on a fiscal year basis

Underutilization for both of them has consequences

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Underutilization• Under utilizing dollars

PHA is not assisting as many families as could be assisted with the available money

PHA could ultimately lose program dollars• Recaptures• Future allocation formulas unknown

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Underleasing: SEMAP Leasing Indicator

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SEMAP Leasing Indicator

In the event a PHA has insufficient allocated budget authority to lease 98 or 95 percent of the units under ACC, HUD will consider whether the PHA has used at least 98 or 95 percent of its allocated budget authority

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SEMAP Lease-up Indicator• 20 points If PHA leased 98%+ units, or

expended 98%+ ABA• 15 points If PHA leased 95-97% units, or

expended 95-97% ABA• 0 points If PHA leased under 95% units

or budget authority

Slide #77

Utilize Your Funding and Units

HUD allows you to utilize up to 100% of your funding

HUD allows you to lease up to 100% of your baseline units

You can’t over lease your annual unit month authority (baseline units x 12)• Even if you can afford it

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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

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Determined Eligible

Issued Voucher

RFTA

Waiting List

Leased

Slide #80

HUD’s New VIP Program HUD has a Voucher Information Program (VIP) Provides PHAs with

• An estimate of the number of vouchers to issue to optimize voucher utilization

• An ability to enter ‘what if’ scenarios and see projected utilization results

Website address: www.huduser.org/vip• Instruction Manual is available at VIP home page

Slide #81

How It Works VIP estimates the number of vouchers to issue to

Replace monthly turnover unitsCatch-up from any shortfall in year-to-date annual

utilization VIP considers

Unit months below target utilization, Number of months remaining in the year, andThe PHA’s anticipated success rate

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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 60 vouchers within the

defined period• 30 of those vouchers leased up• The Success Rate is 50%

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VIP PHA also enters historical data:

• Average time from Issuance to Lease Date • Average monthly unit turnover• Average anticipated HAP payments

System will calculate based on input history, if desired

PHA also enters current voucher holders, searching

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VIP

Success Rate

Avg anticipated HAP

Avg time iss/lease

Avg mo turnover

vouchers searching

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VIP

Demographic Adj SR

Market 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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So Many Tools . . .A peek at our newest

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Upcoming Lunch ‘n’ Learns

March 28th – Finance for the Public Housing Director

April 4th – Adjusted Income April 25th – Housing 101: Overview for New

Managers and Directors May 2nd – Verification Issues May 9th – Managing PHAS May 16th – Managing SEMAP

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