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Teri Robertson

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

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Teri Robertson

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  1. Financial Management for Non-Financial Managers Teri Robertson

  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

  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

  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

  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

  6. 2008 HCV Funding (in millions) 20072008 HAP Renewals (net) 14,336.300 14,644.506 HAP Set-Aside 100.000 50.000 NRA Offset .000 723.257 Tenant Protection HAP 150.000 200.000 Admin Fees (net) 1,251.000 1,316.000 Admin Fee Set-Aside 30.000 35.000

  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

  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

  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

  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

  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

  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

  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

  14. HAP Renewal Funding Subtotal X Annual Adjustment Factor +/- Budget Authority for Transferred Vouchers = Total Eligibility x 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

  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

  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

  17. Net Restricted Assets - Example • 1,000 vouchers in ACC baseline for CY Unit Months Available (UMAs): 12,000 Unit Months Leased (UMLs): 11,000 Unit Months Un-leased: 1,000 • NRA Bal (End of Prior Year): $ 900,000

  18. Net Restricted Assets – Ex (cont.) HAP CY Budget Authority $ 5,700,000 HAP Costs for 11,000 UMLs $ 5,610,000 Average HAP Cost: $ 510

  19. Net Restricted Assets – Ex (cont.) Unit Months Unleased: 1,000 X Average HAP Cost: $ 510 = HAP Costs for Un-leased UMAs $ 510,000

  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 $ 510,000 HAP Costs to Lease 100% UMAs $ 6,120,000

  21. Net Restricted Assets – Ex (cont.) HAP to Lease 100% UMAs $ 6,120,000 HAP CY Budget Authority $ 5,700,000 BA Shortfall if Fully Leased: $ 420,000 NRA Balance (End of Prior Year): $ 900,000 Usable NRA: $ 420,000 Unusable NRA: $ 480,000

  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

  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

  24. Net Restricted Assets – Funding Example

  25. Net Restricted Assets – Funding Example

  26. Net Restricted Assets – Funding Example

  27. Net Restricted Assets – Funding Example

  28. Net Restricted Assets – Funding Example

  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

  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

  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

  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

  33. Enclosure A – Emerald City

  34. Enclosure A – Emerald City

  35. Enclosure B – Emerald City

  36. Enclosure B – Emerald City

  37. Enclosure A – Never Land

  38. Enclosure A – Never Land

  39. Enclosure B

  40. Enclosure B – Never Land

  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.”

  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

  43. $50 Million HAP Set-Aside Two purposes for adjustments from the set-aside: • 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

  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

  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

  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 month • New HA fee rate tables are being developed – will be posted as soon as they are available • HAs encouraged to calculate estimated fee eligibility then

  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

  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

  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…

  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

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