Section 8 Voucher Administrative Fee Study Update
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1 Section 8 Voucher Administrative Fee Study Update James Armstrong, Policy Analyst, PHADA Jonathan Zimmerman, Policy Analyst, PHADA May 5, 2015
2 General Overview of Today s Presentation Fee Study Overview Cost Drivers from the Study Recommended Formula Variables Major Issues Next Steps Q&A
3 Fee Study Overview Rationale for the study Congress wanted to know how much administration really costs HUD told Congress it just didn't know Congress appropriated funds for this study No one seems to care about the real costs for administration of any other housing program
4 Irresponsible Budgets: Inadequate Appropriations Administrative fee prorations have been below 95 percent for over 10 years, the administration s 2016 proposal was at 90 percent of eligibility and the House may propose 68 percent. Agencies opting out of administering HCV programs has grown to and estimated 52 per year in Most (86 percent) of these opt outs have been by smaller HAs with fewer than 500 vouchers. Without responsible budget requests, this may be another multi-million dollar study for HUD and Congress to ignore.
5 What HUD has Said Cutting administrative fees to the degree that PHAs are unable to sustain the leasing and utilization supported by the renewal funding ultimately defeats the purpose for which that renewal funding is appropriated -HUD Fiscal Year 2015 Budget Justification Budgets are policy statements. - Jonathan Horowitz, Former HUD Deputy Chief of Staff
6 Design Elements There is no comparable function to study (not) Conduct a time and motion study A sample of agencies
7 Study Findings: Percent of Time by Program Area 60% 50% 50% 40% 30% 20% 16% 16% 15% 10% 0% Ongoing Occupancy Intake, Eligibility, and Lease Up Inspections Monitoring and Supervisory 2% Supportive Services (not FSS)
8 Study Findings Average cost per PHA per Unit Month Leased (UML) $70.03 Average percent of costs covered by fees under current formula 103% Average cost per UML by HCV program size. NOTE: All costs shown are for CY13 and are weighted to represent the universe of high-performing PHAs from which the sample was selected.
9 Cost Driver Analysis Identify factors that drive per unit costs. Conduct a regression analysis Find a line that predicts costs for new HAs
10 Fee Cost Drivers
11 A New Formula Derived from Cost Drivers Should: Be consistent with the study findings. Have a sound theoretical basis. Be based on data available to all PHAs. Be understandable to readers and stakeholders. Be predictable from year to year planning. Consider phasing in changes.
12 Fee Formula Variables * Based on 3 year rolling averages
13 Example of Adjustments in a Formula $ Formula Model Proposed Fee Formula Fee per UML $ Vouchers Under Lease
14 Formula Variable Values
15 Calculating Your Fee
16 Effects of Variable Differences
17 Where to Find Data?
18 Reported Impacts of New Fees 92% of HAs fees would be higher under the proposed formula than with the 75 percent proration between July 1, 2013 and June 30, Nationally, 100% eligibility of the proposed formula is 95% of the current formula eligibility. BUT 63% of HAs receive more funding under the proposed fee formula than under the existing formula; 37% of HAs receive less funding.
19 Small Program Findings Small programs are more expensive per voucher Under 50 vouchers - $115 per UML in to 250 vouchers - $60 per UML in Smaller program fees don t cover costs Under 50 vouchers Fees cover 70% of costs in to 250 vouchers Fees cover 118% of costs in No minimum size where fees cover all administrative costs
20 Family Self Sufficiency Findings Based on 35 agencies with between 20 and 500 participants Staff (FTEs) per participant rose with program size Under 50 participants: 0.8 FTEs 75 to 124 participants: 1.2 FTEs 125 to 175 participants: 1.8 FTEs FSS grants covering program costs Mean ratio of total costs to grants: 108% of the grant Median ration of total costs to grants: 105% of the grant
21 Portability Treatment The study recommends a simplified approach to fees for agencies Receiving agencies will still bill for HAP payments Fees for initial HAs: For outgoing portable vouchers, initial HAs will receive 20 percent of their routine formula calculated fee. Fees for receiving HAs: For incoming portable vouchers, receiving HAs will receive 100 percent of their routine formula calculated fee. Agencies will no longer share receiving agencies fees, and fees will not require interagency billing.
22 PHADA s Concern Circularity You spend what you get and that s what the study examined Effects of sequestration during the study period Impacts of HAs Cost Savings Measures Treatment of benefits in a wage index Degrading program quality during the study period New admission vs. EOPs Use of success rates Use of small area FMR/Metro FMR ratio
23 Statute and Rules HUD got it backward First it will issue a Notice of Proposed Information Collection for comment Second, it will issue a Proposed Rule, planned for the 3 rd quarter of 2015, for public comment Third, it will seek Congressional action to make statutory changes required to implement a revised fee formula A more rational approach First, change the statute Second, change the regulations Third, develop information collections for implementation
24 Opportunities The study produced an enormous amount of new data on program administration we hope will become public That study may offer a basis for administrative best practices all agencies can consider The study may influence the administration to propose responsible budgets and Congress to appropriate responsibly
25 Risks The study makes the existing proration look better A new formula will create winners and losers details coming in 3 weeks A new formula redistributes fee eligibility by size and region A new formula may encourage regionalizing programs
26 Policy Questions Will there be a hold harmless provision that will protect administrators from dramatic fee reductions? Will there be a minimum fee? The study recommends $42 Will there be a period of time to phase in changes to administrative fees? The study suggests phasing in new fees What quo will accompany HUD s quids (conversion to asset management was the quo in the Operating Fund)?
27 PHADA s Coverage and Analysis of Administrative Fee Study & Formula There are many aspects of the study and fee formula recommendations for Housing Authorities (HAs) to review, question, discuss and resolve PHADA link contains all things administrative fee study and formula on an ongoing basis PHADA has published two articles in a series of articles regarding HUD s study and formula recommendations, including: HUD Publishes Voucher Administrative Fee Study & Formula Recommendations Could Mean Major Changes for Voucher Programs (Advocate - April 22, 2015) HUD Responds to Industry Groups Letter on Agency-Level Admin. Fee Comparisons HUD s Summary Slides and Press Release Provided Distorted Message (Advocate May 6, 2015) Among other topics, PHADA s future articles will cover implications of the study and fee formula being conducted at the lowest administrative fee prorations in the history of voucher programs and HUD s methodological approaches to account for it, low admissions of new households under sequestration in 2013, as well as potential national and local affects for all types of housing agencies.
28 Questions & Answers Well, Maybe
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