teri robertson
DESCRIPTION
Financial Management for Non-Financial Managers. Teri Robertson. Financial Management and Program Utilization. HCV managers need a basic understanding of: How the program is financed Funding and leasing utilization requirements - PowerPoint PPT PresentationTRANSCRIPT
Slide #1
Teri Robertson
Financial Management for Non-Financial Managers
Slide #2
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
Slide #3
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
Slide #4
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
Slide #5
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
Slide #6
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
Slide #7
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
Slide #8
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
Slide #9
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
Slide #10
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
Slide #11
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
Slide #12
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
Slide #13
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
Slide #14
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
Slide #15
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
Slide #16
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
Slide #17
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
Slide #18
Net Restricted Assets – Ex (cont.)
HAP CY Budget Authority $ 5,700,000HAP Costs for 11,000 UMLs $ 5,610,000Average HAP Cost: $ 510
Slide #19
Net Restricted Assets – Ex (cont.)
Unit Months Unleased: 1,000 X Average HAP Cost: $ 510= HAP Costs for Un-leased UMAs $ 510,000
Slide #20
Net Restricted Assets – Ex (cont.)
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
Slide #21
Net Restricted Assets – Ex (cont.)
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
Slide #22
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
Slide #23
Net Restricted Assets – Funding Issue
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
Slide #24
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
Slide #25
Net Restricted Assets – Funding Example
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)
NRA Balance 12/31/2006 $0
Slide #26
Net Restricted Assets – Funding Example
NRA Balance 12/31/2006 $0
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
Slide #27
Net Restricted Assets – Funding Example
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
Slide #28
Net Restricted Assets – Funding Example
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
Slide #29
Net Restricted Assets – Funding Example
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
Slide #30
Net Restricted Assets – Funding Issue
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
Slide #31
Net Restricted Assets – Funding Issue
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
Slide #32
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
Slide #33
Enclosure A – Emerald City
Slide #34
Enclosure A – Emerald City
Slide #35
Enclosure B – Emerald City
Slide #36
Enclosure B – Emerald City
Slide #37
Enclosure A – Never Land
Slide #38
Enclosure A – Never Land
Slide #39
Enclosure B
Slide #40
Enclosure B – Never Land
Slide #41
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.”
Slide #42
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
Slide #44
$50 Million HAP Set-Aside
(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
Slide #45
$50 Million HAP Set-Aside
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
Slide #46
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
Slide #47
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
Slide #49
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…
Slide #50
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
Slide #51
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
Slide #52
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
Slide #53
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
Slide #54
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
Slide #55
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
Slide #56
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…
Slide #57
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
Slide #58
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
Slide #59
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
Slide #60
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
Slide #61
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
Slide #62
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)
Slide #63
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
Slide #64
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…
Slide #65
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
Slide #66
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
Slide #67
Monitoring Tools
Slide #68
Monitoring Tools
Slide #69
Monitoring Tools
Monitoring port information
Slide #70
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
Slide #71
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)
Slide #72
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
Slide #73
Utilization Parameters
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
Slide #74
Underleasing: SEMAP Leasing Indicator
Slide #75
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
Slide #76
Utilization Parameters
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
Slide #78
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
Slide #79
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
Slide #82
Set-Up
PHA begins with setting up a user name and password
Slide #83
Set-Up PHA then enters
• PHA ID• PHA name• Annual Budget Authority• Baseline units
The PHA also establishes “target” budget and unit utilization percents
Slide #84
Slide #85
VIP PHA will also need to enter, year-to-date
• Monthly number of units under lease• Monthly HAP payment amounts
Slide #86
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
Slide #87
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%
Slide #88
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
Slide #89
VIP
Success Rate
Avg anticipated HAP
Avg time iss/lease
Avg mo turnover
vouchers searching
Slide #90
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)
Slide #91
Available VIP Reports
Voucher Issuance Estimation
Reports Archive (you can save them)
Invitations Calculator• Will take into account the waiting list factor
Slide #92
Slide #93
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?
Slide #94
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
Slide #95
So Many Tools . . .A peek at our newest
Slide #96
So Many Tools . . .A peek at our newest
Slide #97
So Many Tools . . .A peek at our newest
Slide #98
So Many Tools . . .A peek at our newest
Slide #99
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