HUD Issues Guidance on Administrative Fee Reserves

HUD’s Office of Public and Indian Housing recently issued Notice PIH-2015-17, which provides guidance to public housing agencies (PHAs) on the use and reporting of administrative fee reserves for the Housing Choice Voucher program. The new notice responds to Office of the Inspector General recommendations to implement controls and require reconciliation of administrative fee reserves.

The notice refers to reserve accounts formerly identified by HUD as Unrestricted Net Assets (UNA) and Net Restricted Assets (NRA) as Unrestricted Net Position (UNP) and Restricted Net Position (RNP), respectively. This is consistent with Governmental Accounting Standards Board (GASB) guidance.

Pursuant to 24 CFR 982.155, PHAs maintain a UNP, which is a single administrative fee reserve account for the Housing Choice Voucher (HCV) program. According to the notice, PHA administrative fees can only be used to cover costs incurred to perform PHA administrative responsibilities for the Housing Choice Voucher program. If a surplus remains at the end of the fiscal year, the surplus will be added to the administrative fee reserves.

Specifically, on an annual basis, PHAs credit to the UNP the total of:

1. The difference between program administrative fees (paid by HUD for a PHA fiscal year); and
2. PHA program administrative expenses for the fiscal year; plus
3. The net of revenue (administrative fee payments and HAP reimbursements received from Initial PHAs) and expenses (HAP paid) related to the administration of unabsorbed portability units administered (Port-Ins); plus
4. Interest and other income earned on the investment of administrative fee reserves (and up to $500 per calendar year in interest and investment income earned on HAP and RNP funds); plus
5. The portion of fraud recoveries actually collected that flows to the administrative fee reserves (usually 50 percent of total collected); plus
6. Any other miscellaneous administrative revenues or equity transfers to the HCV administrative fee reserve; minus
7. Any expenditures from the reserve account to cover excess HAP costs not covered by HAP funding and HAP reserves (RNP account) or other allowed uses of administrative reserves.