Burdens Hurt Our Ability to Serve Residents
PHADA President John T. Mahon.
Fiscal Year 2026 started last October 1. Congress has now completed action on HUD appropriations four months after the deadline. The final enacted bill is wholly inadequate for public housing (especially the operating fund) and does not fully augment the Housing Choice Voucher program despite an increase of almost 9 percent.
Operating Fund Cuts
FY 25 operating funding was about $5.4 billion. In its version of the bill, the House allocated just shy of $5 billion, while the Senate included roughly $4.9 billion and some additional money for HAs in shortfall. Much to our dismay, the final measure includes only $4.68 billion with an additional $300 million for shortfall HAs.
The bottom line is that the new law will result in significant operating fund cuts for most HAs. Even worse, the cuts must be imposed halfway through the federal fiscal year (FFY) at the same time HAs are facing rising winter utility costs.
HUD had assumed the operating fund proration for FY 26 would be in the 89 percent range. However, the final appropriation dictates that it be lower, and the Department must apply the reduction disproportionately since there will only be about 5–6 months remaining in the FFY by the time HUD has a more accurate proration estimate.
While there is $300 million for shortfall HAs, that money will be distributed to a fairly small pool of agencies. Meanwhile, the Capital Fund is level funded at $3.2 billion, which is effectively another cut because of inflation and other increased costs from Build America Buy America (BABA) mandates.
On top of the cuts, many HAs still face increased Tenant Accounts Receivable (TARs) from the pandemic. In addition, insurance costs continue to escalate and HAs face more administrative burdens from HUD (more on that below).
HCV Program
As mentioned above, the new law includes increases the HCV program by almost 9 percent and there is 2.4 percent more for administrative fees. Even with the increases, HUD has indicated that funding may still be insufficient to renew all vouchers in FY 26.
HUD Adds More Burdens
In this kind of difficult budget environment, HUD should be exploring ways to provide HAs with more administrative relief, not place more burdens on them. This would allow us to focus better on the needs of residents. Unfortunately, the Department is doing the opposite. For example, it continues to impose unworkable cash management provisions HUD cannot fully explain and is itself not prepared to administer.
HUD’s requirements rewrite existing operating fund regulations and procedures. Among other problems, several accountants and finance experts have told PHADA that Notice PIH 2025-20 will dramatically increase the volume of accounting work, requiring a higher level of tracking. This will result in more costs for HAs, at a time when operating funding is being reduced.
HUD is also considering a new HOTMA/HIP timeline that is unrealistic and unworkable. As we all know too well, HUD has not been able to fully implement HOTMA Sections 102 and 104 due to technology issues, including delayed development of HIP. Nevertheless, HUD staff are now exploring ways to implement HOTMA without HIP, which would require updates to its PIC system.
The Department is also considering mandating compliance this year. PHADA, industry partners, and software vendors have cautioned against this – it simply is not feasible technologically and would require extensive staff training, resident education, and more costs. We will therefore continue to advocate for HUD to finalize development of HIP before requiring HOTMA compliance.
Lastly, HUD has issued new requirements for HAs to check the immigration status of all residents in just 30 days. The Department has made available a new EIV-SAVE Tenant Matching Report that cross-references IMS/PIC data with SAVE data to identify individuals’ citizenship or eligible immigration status. HAs are now required to review the report, confirm HUD-50058, perform coding, retain appropriate documentation, and initiate corrective action, including submission of corrected HUD-50058s within 30 days of the letter announcing the report’s availability.
Staff at my agency were able to complete these tasks within a reasonable period. However, other members report that the process is costly and time-consuming. That is not surprising—one size never fits all. Regardless of the time it takes, imposing this new requirement in the context of the budget situation described above is problematic. Additionally, HUD is imposing these new requirements by fiat without going through any rulemaking process typically required in these kinds of situations.
Conclusion
In sum, HUD’s actions are troubling for two reasons: First, the Department fails to recognize the reality of the budget challenges HAs are facing and is piling on new mandates. Second, the Department is all too frequently issuing letters and notices demanding that HAs take actions without going through proper rulemaking procedures.
PHADA will continue to point this out to the Department’s leadership, and working with our other industry organizations, will take this case to Congress. You can help by contacting PHADA staff to share concerns you have about any of the aforementioned topics or others. Thank you.