Full House committee
passes appropriations bill

Section 8 admin fee provisions cause concerns
Provide inadequate funding; eliminate incentive
to be efficient; may recapture earned administrative fee reserve

The House Appropriations Committee passed the VA-HUD appropriations bill last night. It maintained the funding levels for public housing programs that had been approved by the subcommittee--$3.6 billion for the operating subsidy, $2.7 billion for the capital fund and $50 million for HOPE VI. PHADA believes these amounts will continue to underfund public housing programs, with operating subsidy again receiving a proration in the low to mid 90s, and the capital fund barely satisfying annual accrual needs.

Tenant-based Section 8 appropriations of $13.35 billion (including administrative fees) fall short of need by $600 million, using the cost of $6871/voucher forecast by the Center on Budget and Policy Priorities if the committee's projected 96 percent utilization rate is met. The bill's section concerning the administrative fee poses particular concerns for housing authorities. PHADA urges its members to contact their representatives and senators to inform them of the bill's problems.

1. Funding for 2004 Section 8 Administrative Fee Payments
   • Bill says the admin fee is not supposed to be limited at 10 percent of rental subsidy payments as HUD had requested.
   • Bill now bases funding on 2002 HA expenses rather than administrative fee formula.
   • Authorizes Secretary to allocate administrative funds-no longer distributed using existing formula.
     • No indication how this allocation will occur.
   • Claims that committee recommendation "ensures that PHA administrative funding needs are met."
   • Committee's method of arriving at $1.2 billion does not explain this claim.
     • Says it took amount HAs spent in 2002 and added 11 percent.
   • PHADA's calculations indicate that an increase greater than 11 percent will be needed to fund administrative costs.
     • Using a 96 percent lease up rate in 2004, there will be 15 percent more units leased than 2002*.
     • In addition there is an inflation factor.
     • To achieve 96 percent and higher lease up, HAs have to spend more per unit than in 2002.
       • More vouchers are issued
       • Individual participant counseling is increased
       • Landlord outreach is augmented.
       • More staff is hired.
   • Therefore, the Committee's method and appropriation are inadequate.
   • Funding should continue to be based on the existing formula for leased units.
     • The formula is a proven system that provides an incentive to administer the program efficiently.
     • It allows HAs to increase per unit admin costs if necessary to increase utilization, if they are not using their full formula amount.
     • Basing the Admin Fee on an insufficient amount will jeopardize the successful administration of the program.

2. The Administrative Fee Reserve
   • Bill language reads, "That, hereafter, the Secretary shall recapture any funds provided… in this Act or any other Act for administrative fees…which are in excess of the amounts expended…for the section 8 tenant-based rental assistance program and not otherwise needed to maintain an administrative fee reserve account balance of not to exceed 5 percent."
     • This language is ambiguous and could be interpreted to refer to administrative fees earned either in the future or in the past.
     • If it refers to the past, then housing authorities will have their administrative fee reserves recaptured.
   • This action threatens to take earned money away from agencies that have managed their programs efficiently and frugally.
     • In many cases, these reserves have been built up over 30 years in good faith.
     • They have been accumulated through hard work, overtime and skillful planning.
   • These reserves are used for worthy, low-income housing related purposes.
     • Improving the quality of the Section 8 program itself
     • Homeownership for low-income families
     • Developing affordable housing in the dearth of other federal programs
     • Supporting public housing, underfunded consistently for 15 years
   • The admin fee reserve is a win-win situation for the Federal government and the local community.
     • The Section 8 program is managed efficiently.
     • Local communities want to participate in this federal program.
     • The local community has resources to further its affordable housing goals.
   • Congress should not recapture fees earned by housing authorities over 30 years.

PHADA FRONT