HUD’s Office of Public and Indian Housing (PIH) recently sent two letters addressed to executive directors and Public Housing Agency (PHA) board chairs on the funding and operational planning for the Housing Choice Voucher (HCV) program in 2025. The letters cover funding projections, budget management tools, and guidance for PHAs to mitigate potential financial shortfalls.

HUD reiterated that managing within budget is a fundamental principle of the HCV program. The letters remind PHAs that HUD has limited funds to address HCV funding shortfalls and additional funding is not guaranteed in any given year. In other words, PHAs should not rely on additional funds from HUD beyond what is provided in renewal funding when planning their HCV leasing and funding utilization for calendar year 2025.

PHAs are urged to prioritize stable assistance for current families and avoid overextending resources. Here are some highlights from the letters:

January Payments Under Continuing Resolution

HUD announced that HCV Housing Assistance Payments (HAP) for January 2025 will be prorated at 99.5 percent of 2024 eligibility levels under the Continuing Appropriations and Extensions Act of 2025, which extends funding until Dec. 20, 2024. Administrative fees for January will be prorated at 91 percent. Full eligibility is maintained for mainstream vouchers, with HAP at 100 percent and administrative fees at 91 percent.

2025 Funding Projections

HUD’s projections based on current House and Senate draft appropriations bills indicate the following potential proration levels for HAP:

• Senate bill: 97.5 percent HAP proration and 93.3 percent administrative fee proration.
• House bill: 88.59 percent HAP proration and 100 percent administrative fee proration.

HUD says the proration levels apply to all PHAs and were calculated by estimating the full HCV program renewal need for calendar year 2025 and comparing the program renewal need to the available funding proposed in the Senate and House draft bills. These levels reflect a tighter fiscal environment, with the Senate scenario offering slightly higher funding but both signaling a need for cautious planning by PHAs.

Budget Planning, Management

The letters encourage PHAs to use HUD’s Two-Year Tool (TYT) and Payment Standard Tool (PST) to assess funding scenarios and make informed decisions about voucher issuance, payment standards, and other policies. The tools provide insights into how leasing decisions and local rent trends impact budgets and participant rent burdens. Given the uncertainty about final funding levels, PHAs may need to limit voucher issuance or adjust payment standards to prevent financial strain.

The letters emphasized the importance of proactive measures, such as reviewing reserves and leveraging the Shortfall Prevention Team (SPT) for agencies facing funding challenges.