slide #1 © 2007 nan mckay & associates annie stevenson common rent calculation errors: earned...
TRANSCRIPT
Slide #1©2007 Nan McKay & Associates
Annie Stevenson
Common Rent Calculation Errors: Earned Income
©2007 Nan McKay & Associates
Slide #2©2007 Nan McKay & Associates
Welcome to Lunch N Learn!
Upcoming topics for the occupancy series:• 5/4/07: VAWA• 6/7/07: HCV Denials and Terminations• 6/8/07: PH Denials and Terminations
Slide #3©2007 Nan McKay & Associates
Welcome to Lunch N Learn!
Today’s Topics:• Error-prone rent components, part 1
Employment IncomeTraining incomeEarned income disallowance
Slide #4©2007 Nan McKay & Associates
HUD’S Rental Housing Integrity Improvement Project (RHIIP)
Priority Secretarial initiative designed to reduce income and rent errors and improper subsidy payments
Comprehensive strategy to correct program errors in HUD’s high-risk rental housing subsidy programs
HUD’s objective: ensure the correct amount of assistance is provided to the families who need it
Slide #5©2007 Nan McKay & Associates
Statistics from 2001 Quality Control for Rental Assistance Subsidies Study
HUD overpaid rental subsidy by $2.6 billion (QC Study – 2001)
Estimated 60% of all subsidy and rent calculations contained some type of error:• Calculation errors• Failure to verify income • Incorrect deductions
Slide #6©2007 Nan McKay & Associates
2001 Quality Control Report
Most error-prone components of rent calculation (PHA and tenant error)• Earned income• Social Security benefits• Allowances and deductions
Slide #7©2007 Nan McKay & Associates
Employment Income
Slide #8©2007 Nan McKay & Associates
Employment Income
PD&R report found a 68% error rate for families with earned income (employment income)• 88% for families with more than 1 source of
earned income• Employment income is single strongest
predictor of errors in rent calculation
Slide #9©2007 Nan McKay & Associates
Employment Income
Annual income from employment includes full amount, before payroll deductions, of:
• Wages and salaries• Overtime pay, commissions, fees, tips and
bonuses• Other compensation for personal services
Slide #10©2007 Nan McKay & Associates
Employment Income
Reported income will usually be in amounts over a period of time that are less than annual (hourly, weekly, bi-weekly, semi-monthly, monthly, etc.)• Hourly/full time: rate X 2080• Weekly: amount X 52• Semi-monthly: amount X 24• Bi-weekly: amount X 26• Monthly: amount X 12
Slide #11©2007 Nan McKay & Associates
Seasonal Employment People in some occupations regularly work less
than 12 months per year• School employees• Agricultural workers• Construction trades
Two acceptable calculation methods are described in HUD’s HCV Guidebook
Page 4-7
Slide #12©2007 Nan McKay & Associates
Seasonal Employment
Method 1: Annualize current income• Interim reexam when income changes
Method 2: Calculate anticipated income from all known sources for the entire year• No interim reexam• History of income from past years is needed
Not useful when future income source is “unknown” or “none”
Slide #13©2007 Nan McKay & Associates
Seasonal Employment: Example
Meg Wells is currently employed as a teacher’s aide, earning $800 per month
For the last 3 years, she has worked this job for 9 months per year during the school season
3 months of each year, she works part-time at Subway, earning $500 per month
Slide #14©2007 Nan McKay & Associates
Calculation: Sample Method 1
Multiply current income ($800/month) times 12 months• $9,600 per year
When school ends, conduct an interim reexam• Multiply income from Subway ($500/month)
times 12 months• $6,000 per year
Slide #15©2007 Nan McKay & Associates
Calculation: Method 2 Calculate anticipated income from all known sources for the
entire year• School:
$800 x 9 months = $7,200• Subway
$ 500 x 3 months = +$1,500• TOTAL: $8,700
NOTE: There is no interim reexam when the participant changes jobs
Slide #16©2007 Nan McKay & Associates
Incorrect Calculation of Method 1
If the PHA counted only the current income ($800/month) times the anticipated length of the job (9 months), annual income would be calculated as $7,200• Family would pay less than TTP required by
regulations• Common error
Slide #17©2007 Nan McKay & Associates
Seasonal Employment
PHA needs a written policy for this situation• Policy should be implemented consistently• Families with seasonal employment should be
informed of policyIf PHA adopts Method 1, family needs to
know interim reexam will be conductedIf PHA adopts Method 2, family needs to
know interim reexam will not be conducted
Slide #18©2007 Nan McKay & Associates
Training Program Income
Slide #19©2007 Nan McKay & Associates
Income ExclusionsTraining Program Income
HUD-Funded Training Program• Exclude all amounts received under the
training program while they are in the program
Slide #20©2007 Nan McKay & Associates
HUD-Funded Training
The head of a tenant family receives $550 mo. in TANF. She enrolls in a HUD-funded training program operated by the PHA. TANF benefits stop. She receives $700 mo. while in the training program. Upon completion, she receives a job at the PHA earning $900 per month.
What monthly income is counted during training?
How long is income excluded?
What is counted after completion?
Slide #21©2007 Nan McKay & Associates
Income ExclusionsTraining Program Income
5.609(c)(8)(v)• Exclude all incremental earnings and benefits
resulting from participation in a qualifying State or local employment training program includes programs not affiliated with a local
governmentno specific programs cited
Slide #22©2007 Nan McKay & Associates
Income ExclusionsTraining Program Income
Incremental income: Increase in total amount of benefits and
earnings of family member prior to enrollment in training program versus after enrollment
PIH 98-2 states welfare and earnings
Slide #23©2007 Nan McKay & Associates
Income ExclusionsTraining Program Income
5.609(c)(8)(v)• Exclude incremental earnings and benefits
only while the family member participates in the employment training program
Slide #24©2007 Nan McKay & Associates
Income ExclusionsTraining Program Income
Definition of training program for 5.609(c)(8)(v) income exclusion:• Clearly defined goals and objectives
Slide #25©2007 Nan McKay & Associates
Income ExclusionsTraining Program Income
Training may include, but is not limited to• Occupational classroom training • Subsidized on-the-job training • Basic education
PIH 98-2
Slide #26©2007 Nan McKay & Associates
Training Program Income (c)(8)(v)
A family head receives $600 per month in TANF. He then enrolls in a qualified State employment training program and receives $750 per month in training income. TANF benefits stop.
What income is counted?
How long will income be excluded?
Slide #27©2007 Nan McKay & Associates
Training Program Income Issues When new employment is reported, PHA needs to
determine whether employment is part of a training program• Notice PIH 2001-15 identified frequent errors in this
componentRecommends educating participants on eligible
types of training programs• Check data-gathering forms for questions
Slide #28©2007 Nan McKay & Associates
Earned Income Disallowance
Slide #29©2007 Nan McKay & Associates
Earned Income Disallowance
HCV: 24 CFR 5.617
Effective date 4/20/01• Technical
Amendments 2/13/02
PH: 24 CFR 960.255
Effective 10/01/99• Final Rule
–Effective date 4/28/00
Slide #30©2007 Nan McKay & Associates
PH and HCV earned income disallowance regulations are similar, except:• Section 8 EID only applies to family members
with disabilities• PH EID is not restricted to persons with
disabilities
Earned Income Disallowance
Slide #31©2007 Nan McKay & Associates
Earned Income Disallowance
EID excludes increases earned income from:• New employment• Increased earnings
Slide #32©2007 Nan McKay & Associates
EID Qualifications
To qualify for the EID, a family must be receiving assistance under the HCV/PH program.• Applicant families are not eligible for the EID
Family must experience an increase in annual income as a result of one of the following reasons . . .
Slide #33©2007 Nan McKay & Associates
Qualifications1. Employment by a (HCV: disabled) family
member who• Was “previously unemployed”* for one or more
years prior to employment* definition includes a person who has earned not
more than could be earned working 10 hrs/week, 50 wks/year, at established minimum wage
or…or…
Slide #34©2007 Nan McKay & Associates
Qualifications
2. Increased earnings by a (HCV: disabled) family member:• Whose increased earnings occurred during
member’s participation in an:economic self-sufficiency program job-training program
Slide #35©2007 Nan McKay & Associates
HUD Definition of Economic Self-Sufficiency Program
Any program designed to encourage, assist, train or facilitate economic independence of assisted families or to provide work for such families
Slide #36©2007 Nan McKay & Associates
HUD Definition of Economic Self-Sufficiency Program
Economic self-sufficiency programs can include:• job training• employment
counseling• work placement• basic skills training• education OR……...OR……...
• English proficiency• workfare• financial or household mgmt• apprenticeship• activity necessary for work
Slide #37©2007 Nan McKay & Associates
EID Qualifications
3. New employment or increased earnings by a (HCV: disabled) family member who has received TANF benefits or services within past 6 months
No minimum amount if TANF is received in form of monthly maintenance
If TANF is received in form of one-time payments, wage subsidies, or transportation assistance, total received over 6 month period must be at least $500
Slide #38©2007 Nan McKay & Associates
Determining the Incremental Increase
Determine the annual income of the EID-qualified person prior to the qualifying change (earned and/or unearned)
Calculate the annual income of the EID-qualified person after the qualifying change
The difference is the incremental increase
Slide #39©2007 Nan McKay & Associates
Example #1
Alice Brahm had $6000 in TANF benefits at the time she became employed. She is earning $13,600 at her new job, and her TANF benefits have stopped.
How much is the incremental increase?
Slide #40©2007 Nan McKay & Associates
Example 1: Think it Through
TANF $6000Empl $ 0Total $6000
TANF $ 0Empl $13,600Total $13,600
Did we exclude all of her earned income?
How much did we exclude?
Why didn’t we exclude the $13,600?
Slide #41©2007 Nan McKay & Associates
Example #2
Art Baker had no income at the time he became employed at $9800 per year.
How much is the incremental increase?
Slide #42©2007 Nan McKay & Associates
Example 2: Think it Through
Other Inc $ 0Empl $ 0Total $ 0
Other Inc $ 0Empl $9800Total $9800
Did we exclude all of his earned income?How much did we exclude?Why?
Slide #43©2007 Nan McKay & Associates
EID Initial 12-Month Exclusion
During initial 12 month exclusion period: • Exclude the full amount of increase in income
attributable to employment or increased earnings
Slide #44©2007 Nan McKay & Associates
EID Initial 12-Month Exclusion
Initial full exclusion period begins on date qualified family member is:• employed; or• first experiences increase in income due to
employment Initial full exclusion extends for a total of 12
cumulative months (don’t have to be consecutive months)
Slide #45©2007 Nan McKay & Associates
EID Second 12-Month Exclusion and Phase-In
Exclusion is 50% of any increase attributable to employment or increased earnings
Slide #46©2007 Nan McKay & Associates
EID Second 12-Month Exclusion and Phase-In
Second 12-month exclusion period begins after qualified family member has received 12 cumulative months of full exclusion
Phase-in period extends for a total of 12 cumulative months (not needed to be consecutive months)
Slide #47©2007 Nan McKay & Associates
EID Maximum 4 Year Disallowance
4 year lifetime maximum disallowance period• Starts at beginning of initial exclusion period
and ends exactly 48 months later• No exclusion may be given after this lifetime
limit has been reached
Slide #48©2007 Nan McKay & Associates
EID Maximum 4 Year Disallowance
EID regulations call for a maximum of 12 cumulative months for each of the two exclusion periods• Thus, an individual can “max out” after receiving
the EID for only two years12 consecutive full-exclusion months followed by12 consecutive phase-in exclusion months
Slide #49©2007 Nan McKay & Associates
EID Issues
How will you document – what evidence will you provide:• That the family is a “qualified family”?• The income exclusion in the family’s file?
How will you track the number of months income has been excluded and when the exclusion must end?
Slide #50©2007 Nan McKay & Associates
EID Issues
Tracking can be complex• In an ideal world, a person with disabilities
who qualifies for the EID will receive:The full exclusion for 12 consecutive monthsThe phase-in exclusion for the next 12
consecutive months• Tracking would be easy
Slide #51©2007 Nan McKay & Associates
In an Ideal World
1212 2424 3636 4848
100% of increase
100% of increase
50% of increase
50% of increase
Count all incomeCount all income
12 24
Slide #52©2007 Nan McKay & Associates
EID Issues
Tracking• In reality, the exclusion may stop and start
more than once, making it a challenge to figure out how much to disallow when there is a break during an exclusion period
Slide #53©2007 Nan McKay & Associates
Reality may be….
9 months9 months 6 months6 months 9 months9 months
100%100%
100%100% 50%50%50%50%
It’s over…It’s over…
1212 2424 3636 4848
Slide #54©2007 Nan McKay & Associates
EID Issues
Tracking• Or . . . The four-year maximum may be
reached before the full 12 months of phase-in (or even initial full exclusion) have been “used up”
Slide #55©2007 Nan McKay & Associates
Or…….Reality may be
9 months9 months 3 months3 months
100%100%100%100% 50%50%
It’s over…It’s over…
2 months2 months
1212 2424 3636 4848
Slide #56©2007 Nan McKay & Associates
Public Housing Only:Individual Savings Accounts
If PHA puts into policy… Instead of the disallowance, the family may elect
to have the PHA deposit in an Individual Savings Account an amount equal to the total amount that otherwise would have been excluded from annual income
PHA releases for rule-specified reasons
Slide #57©2007 Nan McKay & Associates
Earned Income Disallowance
Learning Activity: Doria’s EID Calculation Part 1: Calculate the prequalifying income and
the exclusion amount and wages for EID member
Parts 2-4: Recalculate for changes
Slide #58©2007 Nan McKay & Associates
NMA Lunch ‘n’ Learn
NEXT TOPIC…
Slide #59©2007 Nan McKay & Associates
Thank You for Attending!Upcoming lunch ‘n’ learns:
April 20th – WASS & PIC for New and Old Users
for HCV Management hosted by Bob Harmon
May 4th – Violence Against Woman Act
for PH/HCV Occupancy hosted by Emily Wilcox
May 25th – The New Procurement Handbook *Just Released*for PH/HCV Management hosted by Carrol Vaughan