HOUSING CHOICE VOUCHER
PROGRAM UPDATE
Casterline Associates PC
11 Davis Rd, Bldg 2, Ste 225
Valley Forge, PA 19482-0962
www.casterline.net
(800) 337-5088
Final Formula: 2015
Funding for HAP
HAP expenses reported by the PHA to HUD through
the VMS system for the period 1/1/2014 through
12/31/2014 (this information is updated annually and is
referred to as “Re-Benchmarking”)
X
An annual adjustment factor (AAF) for inflation
X
An adjustment for proration
=
2015 HAP Funding
~ No 2015 NRA / Program Reserve Offset/Recapture! ~
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Excess HAP Funding Not
Spent on HAP Expenses,
Accumulates to
Restricted Reserves
 Excess HAP Funding held by the Housing
Authority = Net Restricted Position
(Restricted Equity), formerly known as NRA
 Excess HAP Funding held by HUD = Program
Reserve (a.k.a. HUD-Held HAP Reserve), this
amount does not show up as an asset or
equity on the PHA
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Net Restricted Position / “NRP”
(Formerly Known as NRA)
 Net Restricted Position (“NRP”) = excess
unspent HAP funding
 Most PHAs know this under its former name,
NRA (stands for Net Restricted Assets)
 NRP/NRA = excess unspent HAP funding
disbursed to the PHA since January 1, 2005,
that has not been spent on HAP expenses
incurred since January 1, 2005, plus other
HAP-related revenue (FSS Forfeitures and up
to 50% of Fraud Recovery Revenue)
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HUD Getting Away from
the Concept of NRP
 Beginning 2012, under new so called “Cash
Management” procedures HUD limits the funding
actually disbursed to the Authority to those amounts
immediately needed for HAP/UAP expenses. PHA’s
funding disbursements are based upon HAP expense
reported to HUD in VMS.
 In addition, HUD in conjunction with implementing the
new cash management procedures swept remaining
NRP balances into the HUD-held HAP reserve (a.k.a.
Program Reserve) during 2014.
 The purpose of these two steps is to get away from the
concept of NRP and for HUD (actually the Treasury) to
hold on to any excess unspent HAP funds.
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Understanding the Difference
Between Net Restricted Position
(NRP) and Program Reserve
 Net Restricted Position (“NRP”) = excess unspent
HAP funding on hand at the PHA
 Program Reserve = excess unspent HAP funding
held by HUD
Program Reserve
 HAP Funding that is allocated to the housing
authority but not disbursed to the housing
authority accumulates in a HUD-held Program
Reserve
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Targeting Your Utilization and
HAP Spending
 Determining how much you can afford to lease is more
complicated than ever, especially with the implementation
of so called Cash Management procedures.
 Casterline Associates fears that some PHAs will target the
amount of cash coming in each month, which may limit
you from realizing your full leasing/spending potential.
 In general, you should plan to spend – at a minimum – your
Final Prorated HAP Renewal Funding (before Offset if any),
plus any Set Aside Funding, Non Renewal Funding, Other
HAP-Related Revenue, and Excessive NRP or Program
Reserve that you want to CAUTIOUSLY spend down.
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Three Easy Steps to
Maximize the Use of
HCV Program Resources
Amidst all this confusion, the good news is that
maximizing the number of families you can assist (that’s
why we’re here of course!) can be – in most cases –
broken down into three easy steps:
1) Determine how much money you have available to
use for HAP,
2) Increase or reduce spending to a level equal to this
amount, expressed on a monthly basis,
3) Monitor your cash carefully to ensure it is adequate
and contact your FMC rep if you need more.
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Details
1) Determine how much money you have available to use
for HAP.
 Total Prorated Calendar Year HAP Renewal Funding Eligibility





before offset (trainer will tell you where to obtain this
information, the forms vary by year).
Non Renewal Funding (for new vouchers if you have received
some).
Set aside funding applicable.
Other HAP-Related Revenue (FSS Forfeitures, and up to 50% of
Fraud Recoveries)
A portion of NRP and/or Program Reserve, if you have an
excessive amount, to be used cautiously.
Question: What is an “Excessive” Amount of NRP / Program
Reserve
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2) Increase or reduce spending to a level equal to this
amount expressed on a monthly basis (total of above
divided by 12).
3) Monitor your cash carefully to ensure it is adequate and
contact your FMC rep if you need more (limited to the
amount of your annual funding plus program reserves –
more about program reserves later).
 By the 10th of each month, estimate what your HAP expense will
be for the following month.
 Compare this to the amount HUD has indicated they will give
you for that month on the disbursement schedule.
 If the disbursement does not cover HAP expense, determine if
there is sufficient NRP on hand to make up the difference.
 If not, contact HUD immediately for additional funds (do not wait
until you are near the beginning of the next month!).
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HCV Admin Funding
 Beginning in 2008 the HCV Admin Funding reverted
back to a PUM Fee. Prior to that it was a fixed block of
funds for several years. The Admin Fee is calculated
based upon Unit Months reported in VMS, and then
provided to the PHA.
 More leasing means more Admin Fee! High utilization
is key!
 HUD provides the fee rates on their website:
http://portal.hud.gov/hudportal/HUD?src=/program_
offices/public_indian_housing/programs/hcv
 Note that PHAs are not guaranteed to receive the
HUD Admin Fee rate – it is subject to proration! Cuts
have been very deep in recent years, 20%+!
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New Admin Fee Formula to be
Implemented by HUD?
 HUD has commissioned an Admin Fee Study,
completed by Abt Associates. Final report: early 2015.
 Casterline Associates PC is part of an Advisory Group
known as the EITRG (Expert and Industry Technical
Review Group), to meet periodically and review the
progress of the study, and to make recommendations
on approach and the draft and final reports. At the
date of this writing (Feb 2015), the final meeting is just
one week away.
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 Each member of the EITRG as well as the study team are
under nondisclosure/confidentiality agreements that
were mandated as a condition of participating in this, and
thus there have not been a lot of details disclosed up to
this point regarding the study.
 While final details concerning the study and the proposed
formula are not disclosed at this time, there is language
provided in HUD's budget justifications for 2015 that will
give you a rough idea of what they are trying to
accomplish:
"HUD has recognized the critical need for data regarding the true cost
of administering the voucher program, both in order to budget for
administrative costs and to provide HUD and Congress with
information to support decision-making changes in program policies,
goals, and requirements that consider the administrative cost impacts
(both increases and decreases) and trade-offs of those decisions.”
(continued next page)
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“Consequently, HUD has undertaken an in-depth time-and-motion
study to determine the costs of running an effective and efficient
HCV program. The purpose of the study is to provide comprehensive
and detailed data on the administrative costs and burdens of the
individual components of HCV program administration to better
inform the Department and Congress of funding needs. The study
will also use the findings to propose a new funding methodology for
PHA administrative fees. Intensive time measurement and other data
collection activities took place at approximately 60 high performing
PHAs over the course of calendar year 2013 and the early part of
2014, with a final report due late in 2014.” (note: delayed to 2015)
 Considering the current level of HCV Admin Fee funding,
this is obviously a very important development. Once the
report is officially published we will be providing a lot of
coverage in our seminars and The Casterline Associates
Advisor.
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