The Shutdown’s Effects on PHAs—Frequently Asked Questions (FAQs)

 The Shutdown’s Effects on PHAs—Frequently Asked Questions (FAQs)

*This article was originally posted by NAHRO and updated October 7, 2013

UPDATED: NAHRO FAQs - The Government Shutdown and PHAs

This Direct News item, originally issued on October 3,is intended to address confusion created by media coverage of HUD’s “FY2013 Contingency Plan for Possible Lapse in Appropriations.” We are updating and reorganizing the questions and answers below to provide additional clarity and to respond to new questions we have received from NAHRO members, with a special emphasis on our best understanding of how HUD will handle Housing Choice Voucher Housing Assistance Payments and administrative fee funding in November and December should the federal shutdown persist.  We will continue to update and revise this resource as additional information becomes available.

It is important to note that it is possible for HUD to seek approval from the Office of Management and Budget (OMB) to revise its contingency plan should the shutdown remain in effect for an extended period.  The contingency plan in its current form, therefore, is a point-in-time summary of the actions that the Department is authorized to take at this moment in time.  The answers that NAHRO is providing in response to our members’ questions represent our best understanding of how the Department’s plans will be updated, revised, and ultimately implemented with OMB’s approval. Our answers reflect pre-shutdown conversations with senior HUD program staff, and while we relay this information with a high degree of confidence, PHAs should keep in mind that these processes remain fluid and nothing is absolutely guaranteed given the highly politicized nature of the shutdown, the possibility of interim and temporary legislative interventions, and the current lack of certainty as to how the shutdown will ultimately be resolved.

The Shutdown’s Effects on PHAs - Frequently Asked Questions

Section 8 Voucher Programs

Will I receive the amounts I am owed from HUD for Housing Assistance Payments (HAP) and ongoing administrative fees for October 2013, even during the government shutdown?

NAHRO’s Answer (UPDATED 10/4/13): Yes.  Page 58 of HUD’s contingency plan indicates that, “For the Housing Choice Voucher program, October payments were disbursed prior to October 1, 2013 and should be available to HCV participants.” HUD directly deposited the full amounts owed to approximately 3,060 PHAs for October 2013 on September 30, under the Department’s existing cash management formula for HAP and administrative fee disbursements, based on the most recent quarter of validated Voucher Management System (VMS) leasing data, adjusted upward by three percent and not to exceed each PHAs’ 2013 HAP budget authority for the year.

As one of the approximately 240 PHAs administering Section 8 vouchers that received a notice from HUD’s Financial Management Division on September 13, 2013 alerting us that our agency will receive a two-part staggered payment (scheduled first for October 1 and then again on or before October 7), will my agency receive the amounts that it is owed from HUD for HAP and ongoing administrative fees for October 2013, even during the government shutdown?

NAHRO’s Answer (10/3/13): Yes.  On September 30, HUD directly deposited only partial amounts for approximately 240 PHAs for October 2013.  HUD FMD’s notice also included a spreadsheet enclosurewhich shows the Department’s calculations related to these 240 PHAs’ estimated Net Restricted Asset (NRA) balances as of June 30, 2013, along with 50 percent of NRA amounts (which the Department estimates would still be available to help applicable PHAs meet their October 1, 2013 HAP obligations to participating property owners) and the partial HAP amount deposited in the PHAs’ bank accounts on September 30, 2013.  As always, expenditure of NRA for HAP payments in 2013 will be credited to PHAs’ FY 2014 annual renewal HAP eligibility.

As one of the approximately 240 PHAs administering Section 8 vouchers that received a notice and enclosure from HUD FMD (as described above), will my agency receive the remaining partial amounts that it is owed from HUD on or before October 7,  even during the government shutdown?

NAHRO’s Answer (10/3/13): Yes.  Through a combination of HUD FMD and HUD FMC staff designated as “excepted” personnel as well as independent contractors and available IT systems (described below), these 240 PHAs are slated to receive the remaining balance of the full amounts owed to each PHA for October 2013 on or before October 7, 2013, despite the government shutdown.  As it relates to HAP, the combination of direct HAP funding and available NRA should prove sufficient to meet HAP check obligations to participating property owners for October 2013.

Will HAP and administrative fee funding be distributed in November and December 2013 if the shutdown continues?

NAHRO’s Answer (Updated 10/4/13): Yes, assuming HUD seeks and receives approval from OMB to process funds and schedule disbursements for those months.  HUD’s contingency plan indicates that the Department’s ability to provide PHAs with “November (and subsequent)” HAP and administrative fees “depends on whether Congress passes a budget or reaches a deal on a Continuing Resolution.”  The contingency plan goes to state that “there are no payments beyond October scheduled to disburse at this time,” (emphasis added), and that the Department’s “ability to make timely November payments will depend upon receipt and timing of adequate allotments of funds, and having staff available to process funds and schedule disbursements.”

NAHRO believes that the Department chose its wording very carefully when it asserted that its ability to make “November (and subsequent)” payments is dependent upon the resolution of the FY 2014 appropriations process.  If the shutdown were to continue without interruption into January, HUD would no longer be able to provide PHAs with continued HAP and administrative fee funding.  Because Section 8 Voucher programs are funded on a calendar year basis, however, the previous fiscal year (2013) appropriations act (P.L. 113-6), and not the unresolved FY 2014 spending bill, is the source of funding for HAP and ongoing administrative fee payments for November and December 2013.

HUD’s document states that “[t]here are no payments beyond October scheduled to disburse at this time.” Again, while that statement is technically true as of today, NAHRO is confident the Department has processes in place to seek and receive approval to schedule and execute payments for November and December at the appropriate times.

Furthermore, NAHRO does not believe that our understanding is inconsistent with the Department’s assertion that its “ ability to make timely November payments will depend upon receipt and timing of adequate allotments of funds, and having staff available to process funds and schedule disbursements.” It is our understanding that the Treasury Department previously made national allotments of Section 8 voucher program funding to HUD for November and December 2013.  It is also our understanding that HUD has taken the necessary steps to have contractors process each PHA’s individual HAP and administrative fee disbursements, such that every PHA administering Section 8 voucher programs will receive the full payments for which it is entitled for November and December 2013, subject to eventual OMB approval of revisions to HUD’s contingency plan.  These revisions, once approved, would formalize the “receipt and timing of adequate allotments of funds,” while a combination of contractors and “excepted” HUD staff would provide HUD with the emergency capacity to “process funds and schedule disbursements.”

What will happen if we become a “shortfall PHA”?

NAHRO’s Answer (10/3/13): As previously reported in the Monitor, PIH Notice 2013-24states “[i]t is conceivable that as a result of variances between the reasonable assumptions used earlier in the year to forecast a PHA’s shortfall risk and the actual costs incurred in the ensuing months, a PHA that was not projected to be in a shortfall position in April may now find themselves at significant risk.”  PHAs that fit this description or “shortfall PHAs” that have not received sufficient HAP set-aside from HUD to prevent termination of existing HAP contracts and assisted dwelling leases are encouraged to avail themselves of the revised application processes detailed in HUD’s notice.  HUD has designated emergency personnel and off-site contractors in place to perform these essential tasks to help prevent termination of voucher-assisted households’ housing assistance.

Public Housing

Will PHAs receive Operating Funds for October?

NAHRO’s Answer (10/3/13): Yes.  Because the Operating Fund program operates on a calendar year basis, the FY2013 appropriations act provided funding through the end of December 2013.  HUD obligated all October Operating Fund allocations in the Line of Credit Control System (LOCCS) prior to the shutdown.  LOCCS will remain operational throughout the shutdown, and PHAs continue to have access to these funds.  Although no explanation of the obligation was posted prior to the shutdown, NAHRO believes that the available funds represent 82% of PHAs’ subsidy eligibility.

Will PHAs continue to receive Operating Funds if the shutdown continues through November and December?

NAHRO’s Answer (10/3/13): Yes.  HUD obligated each PHA’s remaining Operating Fund allocations for November and December in the Line of Credit Control System (LOCCS) prior to the shutdown.  LOCCS will remain operational throughout the shutdown, and PHAs continue to have access to these funds.  Although no explanation of the obligation was posted prior to the shutdown, NAHRO believes that the available funds represent 82% of PHAs’ subsidy eligibility.

Will PHAs receive 2014 Capital Funds during a shutdown?

NAHRO’s Answer (10/3/13): No.  Because no FY 2014 appropriations act has been passed, there are no funds available for the Capital Fund program at this time.  PHAs should have recently received their FY 2013 Capital Funds and should be working to obligate and expend these funds.  Due to the delays in the federal appropriations process, it is likely that FY 2014 Capital Funds will again be

General Questions

Which HUD IT Systems will continue to operate?

NAHRO’s Answer (10/3/13): HUD’s Contingency Plan indicated that most HUD IT systems utilized by PHAs have been classified as “excepted activities” and will remain operational and accessible during any shutdown.  These systems include:

  •     Enterprise Income Verification
  •     Inventory Management System
  •     Voucher Management System
  •     Financial Assessment Sub-System
  •     Financial Assessment Sub-System
  •     Physical Assessment Sub-System
  •     Integrated Assessment Sub-System
  •     Management Assessment Sub-System
  •     Technical Assistance Center
  •     Customer Assessment Sub-System

*The following is the original article posted by NAHRO on October 3, 2013

What will happen in October 2013?

Section 8 Voucher Programs:

Q: Will I receive the amounts I am owed from HUD for Housing Assistance Payments (HAP) and ongoing administrative fees for October 2013, even during the government shutdown?

A: Yes.  HUD directly deposited the full amounts owed to PHAs for October 2013 on September 30, under the Department’s existing cash management formula for HAP and administrative fee disbursements based on the most recent quarter of validated Voucher Management System (VMS) leasing data, adjusted upward by three percent and not to exceed each PHAs’ 2013 HAP budget authority for the year.

Q: As one of the approximately 240 PHAs administering Section 8 vouchers that received a notice from HUD’s Financial Management Division on September 13, 2013 alerting us that our agency will receive a two-part staggered payment (scheduled first for October 1 and then again on or before October 7), will my agency receive the amounts that it is owed from HUD for HAP and ongoing administrative fees for October 2013, even during the government shutdown?

A: Yes.  On September 30, HUD directly deposited only partial amounts for approximately 240 PHAs for October 2013.  HUD FMD’s notice also included a spreadsheet enclosure which shows the Department’s calculations related to these 240 PHAs’ estimated Net Restricted Asset (NRA) balances as of June 30, 2013, along with 50 percent of NRA amounts (which the Department estimates would still be available to help applicable PHAs meet their October 1, 2013 HAP obligations to participating property owners) and the partial HAP amount deposited in the PHAs’ bank accounts on September 30, 2013.  As always, expenditure of NRA for HAP payments in 2013 will be credited to PHAs’ FY 2014 annual renewal HAP eligibility.

Q: As one of the approximately 240 PHAs administering Section 8 vouchers that received a notice and enclosure from HUD FMD (as described above), will my agency receive the remaining partial amounts that it is owed from HUD on or before October 7,  even during the government shutdown?

A: Yes.  Through a combination of HUD FMD and HUD FMC staff designated as emergency personnel as well as independent contractors and available IT systems (described below), these 240 PHAs are slated to receive the remaining balance of the full amounts owed to each PHA for October 2013 on or before October 7, 2013, despite the government shutdown.  As it relates to HAP, the combination of direct HAP funding and available NRA should prove sufficient to meet HAP check obligations to participating property owners for October 2013.

Public Housing:

Q: Will PHAs continue to receive Operating Funds?

A: Yes.  Because the Operating Fund program operates on a calendar year basis, the FY2013 appropriations act provided funding through the end of December 2013.  HUD obligated all October Operating Fund allocations in the Line of Credit Control System (LOCCS) prior to the shutdown.  LOCCS will remain operational throughout the shutdown, and PHAs continue to have access to these funds.  Although no explanation of the obligation was posted prior to the shutdown, NAHRO believes that the available funds represent 82% of PHAs’ subsidy eligibility.

Q: Will PHAs receive 2014 Capital Funds during a shutdown?

A: No.  Because no FY 2014 appropriations act has been passed, there are no funds available for the Capital Fund program at this time.  PHAs should have recently received their FY 2013 Capital Funds and should be working to obligate and expend these funds.  Due to the delays in the federal appropriations process, it is likely that FY 2014 Capital Funds will again be distributed late in the year.

What will happen if the shutdown continues into November and December 2013?

Section 8 Voucher Programs:

Q: Will HAP and admin fees be distributed in November and December if the shutdown continues?

A: Yes. Because Section 8 Voucher programs are funded on a calendar year basis, the 2013 appropriations act (P.L. 113-6) provided funding for HAP and ongoing administrative fee payments through the end of December 2013. The Treasury Department and HUD have taken the steps necessary to ensure that every PHA administering Section 8 voucher programs receives the full payments to which it is entitled in 2013, whether through the cash management system and/or frontloading processes if needed.

Public Housing:

Q: Will PHAs continue to receive Operating Funds if the shutdown continues through November and December?

A: Yes.  HUD obligated each PHA’s remaining Operating Fund allocations for November and December in the Line of Credit Control System (LOCCS) prior to the shutdown.  LOCCS will remain operational throughout the shutdown, and PHAs continue to have access to these funds.  Although no explanation of the obligation was posted prior to the shutdown, NAHRO believes that the available funds represent 82% of PHAs’ subsidy eligibility.

What will happen if we become a “shortfall PHA”?

As previously reported in the Monitor, PIH Notice 2013-24 states “[i]t is conceivable that as a result of variances between the reasonable assumptions used earlier in the year to forecast a PHA’s shortfall risk and the actual costs incurred in the ensuing months, a PHA that was not projected to be in a shortfall position in April may now find themselves at significant risk.”  PHAs that fit this description or “shortfall PHAs” that have not received sufficient HAP set-aside from HUD to prevent termination of existing HAP contracts and assisted dwelling leases are encouraged to avail themselves of the revised application processes detailed in HUD’s notice.  HUD has designated emergency personnel and off-site contractors in place to perform these essential tasks to help prevent termination of voucher-assisted households’ housing assistance.

Which HUD IT Systems will continue to operate?

HUD’s Contingency Plan indicated that most HUD IT systems utilized by PHAs have been classified as “excepted activities” and will remain operational and accessible during any shutdown.  These systems include:

  •     Enterprise Income Verification
  •     Inventory Management System
  •     Voucher Management System
  •     Financial Assessment Sub-System
  •     Financial Assessment Sub-System
  •     Physical Assessment Sub-System
  •     Integrated Assessment Sub-System
  •     Management Assessment Sub-System
  •     Technical Assistance Center
  •     Customer Assessment Sub-System

NAHRO will continue to monitor the situation closely, and will send further reports as more information is made available.