HUD issues final 2005
Section 8 funding calculations

Housing assistance payments prorated to 96 percent; administrative fees 99.4 percent

On January 21, HUD issued its final 2005 Section 8 funding announcement. HUD issued its initial announcement December 17 and allowed agencies an opportunity to review the calculations it used to arrive at their funding levels. The January 21 letter was issued after HUD considered more than 1,000 appeals sent by HAs questioning the numbers the Department used in determining HAP costs.

The Department now calculates that the national amount needed to fund the tenant-based Housing Choice Voucher program using the method prescribed by Congress-taking the average number of vouchers used during the May-July, 2004 period times the average HAP cost from that period times the annual adjustment factor-comes to $13.923 billion. That is $568 million more than was appropriated. Therefore, each agency will have its funding prorated down by 4.03 percent.

Even if Congress had appropriated the full amount required by its formula, it would not have been adequate to fund all the vouchers in use, because in some areas voucher costs increase at a faster rate than the annual adjustment factor. In 2004, using a similar formula, utilization declined by 3 percent, or 60,000 vouchers nationally. Unfortunately, therefore, 2005 risks seeing program utilization decline a total of 7-8 percent or an additional 140,000-160,000 vouchers.

HUD's letter explains that administrative fees will be funded at virtually the same level as 2004, with a proration of 99.4 percent. Agencies should make sure that their fee calculation reflects this proration. The letter also states that the fee is not based on units leased, but on the agency's pro rata amount of 2004 fees.

The January 21 letter includes the statement that the amounts provided are not subject to appeal.

PHADA FRONT