PHADA Accounting Seminar

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• PHADA Accounting Seminar
• Financial Planning in an Uncertain Environment
• Presented by Jack Blosky
• June 8 , 2010

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Budgeting in these uncertain Times
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Project Based Budgeting

• 24 CFR 990.280
• All PHAs must develop and maintain a system of
  budgeting accounting for each project that
  allows for analysis of the actual revenues
  expenses at the property level.
• This applies to all programs revenue sources
  under your ACC (Operating Fund, CFP, etc)
• All Financial information will be budgeted
  accounted for at the property level.
• All Financial information will be in accordance
  with GAAP
• Project-based financial statements
• Upon completion of project-based accounting, PHA
  assets, liabilities, and equity shall be
  apportioned to the respective projects and/or HUD
  accepted Central Office cost centers

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What is an Operating Budget?
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Budget Planning Issues

• Balancing
• Timing
• Accountability
• Forecasting

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Budget Planning Issues

• Timing
• The SAGIS funding calculation will be due March
  1st, 2010 for all authorities for Calendar Year
  2010.
• Authorities will maintain their fiscal year-end
  if you dont coincide with a calendar year-end.
• Thus, authorities will still prepare a budget for
  their fiscal year-end, but prepare funding
  calculations on a calendar year.

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Budget Planning Issues

• Accountability
• Will force managers to be accountable to
  maintain budgets and effectively determine where
  weaknesses exist within their project
• Utilize Monthly Reports

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Budget Planning Issues

• Forecasting
• The authority should forecast at the project
  level to determine
• Possible Funding Shortfalls
• Uses of Capital Fund / Operations
• Strategy to fung funds
• Possible profit enhancement solutions
• Property Management Fees are not enough to cover
  Central Office costs.

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Budgeting

• Budgeting Administration
• Responsibility of Reports Reporting
• Once budgets are complete it is important to
  confirm what is actually happening. A central
  department (Finance Department) should design
  budget reports in order to coordinate various
  parts of the Authority. This would ensure the
  reports would be in proper form for comparisons
  and correlations. The manager in charge should
  know the form of information desired for the use
  of the departments and budget committee.

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Budgeting

• Budgeting Administration
• Responsibility of Reports Reporting
• The Property managers Maintenance Managers
  need to be involve in this process and understand
  the budget for their grouping. Budgets will be
  prepared for each grouping.

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Budgeting

• Budgeting Administration
• Decentralized Responsibility, Centralized Control
• The lower staff levels in the Authority should
  be consulted regarding the budgets relative to
  their responsibilities, it is also true that they
  cannot do an adequate job unless they have
  information as to the plan of the Authority and
  they have formulated plans for their own cost
  centers. Communication amongst staff is key!

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Budgeting

• Budgeting Administration
• Budgeting must be recognized more than a flow of
  data, for it also involves educating the
  Authority about policies and plans. This will
  result in budget committee activity which will
  involve staff from different areas to discuss and
  harmonize their budgets. Staff and Directors
  should have the opportunity to discuss their
  budget and have the staff be apart of the budget
  process (delegation).

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Budgeting for your Authority

• According to HUD Guidebook 7475 and the Annual
  Contribution Contract (HUD Form 53012A), the
  authority must prepare an annual budget that will
  be approved by the board of commissioners 90 days
  before the fiscal year begins. New Requirement
  Must have HUD 52574 (Board Resolution form)
  submitted to HUD prior to the beginning of your
  fiscal Year

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Estimation of Revenue Expenditures

• Prior Year Experience
• Prior Year Trends
• i.e. 3 Years
• Future Expectations
• Known Changes
• YTD Costs and Trending

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The New Operating Fund Formula! (SAGIS)
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The Operating Fund Formula

• Basic Formula doesnt change, it is still ---
• EXPENSES
• - INCOME
• SUBSIDY ELIGIBILITY

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PEL Project Expense Level

• 24 CFR 990.165
• HUD calculated a Project Expense Level for each
  of your projects based on the Harvard Cost Study
  model.
• Each PEL will be unique to each authority and
  measured in a Per Unit Month (PUM) cost.
• HUD used ten variables and associated
  coefficients.

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Utility Expense Level - UEL
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Utility Expense Level - UEL

• 24 CFR 990.170
• The UEL for each PHA is based on its consumption
  for each utility, the applicable rates for each
  utility , and an applicable inflation factor.
  The UEL for a given funding period is the product
  of the utility rate multiplied by the consumption
  level multiplied by the inflation factor.
• Utility Rate the utility rate for each type of
  utility will be the actual average rate from the
  latest 12 months that ended June 30 preceding the
  start of the Calendar year.
• Cost (include taxes tariffs)
• Consumption

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Utility Expense Level - UEL

• 24 CFR 990.170
• Payable Consumption Level The payable
  consumption level is based on the current
  consumption level adjusted by a utility
  consumption incentive. The incentive shall be
  compared by comparing current consumption level
  of each utility to the rolling base consumption
  level. If the comparison reflects a decrease in
  the consumption of a utility, the PHA shall
  retain 75 of this decrease. Alternately, if the
  comparison reflects an increase in the
  consumption of a utility, the PHA shall absorb
  75 of the increase.

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Other Formula Expenses Add-Ons

• 24 CFR 990.190
• PHAs can receive additional subsidy for the
  following add-ons
• Self-Sufficiency Reasonable costs of Program
  Coordinator associated costs with HUDs
  self-sufficiency program
• Loan Amortization for energy add-ons PHA may
  qualify for payments of principal interest for
  energy conservation measures
• Payments in Lieu of Taxes (PILOT) Based on
  latest PILOT payment
• Cost of Audit Based on latest actual audit
  cost
• Funding for resident participation Activities -
  25 per occupied unit to be used for resident
  participation activities

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Other Formula Expenses Add-Ons

• 24 CFR 190.190
• PHAs can receive additional subsidy for the
  following add-ons
• Asset Management Fee PHAs with 250 units or
  more will receive a 4 PUM fee. PHAs with less
  than 250 units that elect to transition to a
  project-based accounting system will receive a 2
  PUM fee. The fee is based on the total number of
  ACC units.
• Information Technology Fee Each PHA will
  receive a 2 PUM fee for costs attributable to
  information technology, based on total number of
  ACC units

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The Operating Fund Formula

• So now we have our Expenses portion of the
  formula ---
• Project Expense Level (PEL)
• Utilities Expense Level (UEL)
• Add-Ons
• This is then multiplied by the Eligible Unit
  Months

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Eligible Unit Months

• 24 CFR 990.135
• A PHAs total number of eligible unit months
  will be calculated for the 12 month period from
  July 1 to June 30 that is prior to the first day
  of the applicable funding period.
• The determination of whether a public housing
  unit satisfies the requirements of a unit month
  shall be based on the first or last day of each
  month as determined by the PHA.

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Eligible Unit Months

• 24 CFR 990.140
• A PHA is eligible to receive operating subsidy
  for public housing units for each unit month they
  are under an ACC and occupied by a public housing
  eligible family lease.

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Eligible Unit Months

• 24 CFR 990.145
• A PHA is eligible to receive operating subsidy
  for vacant public housing units each month they
  are under ACC and meet one of the following HUD
  approved vacancies
• Units undergoing on-schedule modernization when
  the vacancy is needed to do the work
• Special Use Units (resident services, resident
  organizations, self-sufficiency and anti-crime
  activities)
• Vacancies beyond the PHA control
• Litigation
• Declared Disasters
• Casualty Losses (during the time the claim is
  adjusted)
• Changing Market conditions (HUD approval
  required)

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Formula Income Level

• 24 CFR 990.195
• This revenue is equal to the amount of rent
  charged to tenants minus any utility allowances.
• Based on the PHAs June 2009 Rent Roll divided
  by the number of units under lease for the same
  time period (BY AMP)

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The Operating Fund Formula

• Now we have our Complete Subsidy Calculation
• Project Expense Level (PEL)
• Utilities Expense Level (UEL)
• Add-Ons
• -
• Income
• Subsidy

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Whats in a Year?

• Fiscal Year
• This will not change for you and you cannot
  change it
• Calendar Year
• Funding is now provided on a calendar year basis
• Data Year (7/1 6/30)
• Much data you will need to provide HUD will be
  for the time period of 7/1 6/30
• Utility information
• Unit eligibility (vacancy rate)

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• First need to identify capital needs for each
  project
• Second need to prioritize these capital needs
• Third need to obtain cost estimates for capital
  needs

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• Now you can start putting these items into your
  budget in conjunction with the amount of funding
  you will be receiving
• Options
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• Take 10 Of Grant and put it to 1410 first
• Take 20 of Grant and put it to 1406
• What ever is remaining of your funding amount
  distribute to Capital item needs
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• Take 10 of Grant and put it to 1410 first
• Distribute your capital items by priorities
• Any remaining amount of Grant put to 1406

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Operating Budget for the Section 8 Program
Blosky Associates
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Section 8 Operating budget

• Even though this is not required by HUD you
  should still prepare an operating budget
• Then use this to prepare monthly financial
  reports showing budget v. actual
• Need to monitor Admin expenses not just HAP
  expense
• When preparing the budget project what your admin
  fees will be for the year and then distribute
  expenses
• Make sure allocation methods is realistic and
  financially feasible

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Section 8 Operating budget

• Need to project what your admin fees will be
• Admin fees based on units leased now, not a fixed
  amount
• Based on data submitted through the VMS system
• Need to make sure this data is accurate
• Need to make sure you maximize your units leased,
  within the funding constraints
• Can not exceed for the year your total baseline
  units

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Section 8 Operating budget

• You can use the same forms from the LIPH budget
  to obtain expense amounts for the section 8
  budget
• Salaries benefits
• Admin expenses
• Insurance

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HCV Program Management Fees

• COCC may charge as management fee to HCV program
  the higher of
• 20 of its annual administrative fee as provided
  by Department each calendar year
• or
• 12 PUM per voucher leased
• PHAs can also charge the HCV program a 7.50 PUM
  bookkeeping fee

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McKean County Housing Authority McKean County Housing Authority McKean County Housing Authority McKean County Housing Authority
Section 8 Voucher Program Operating Budget Section 8 Voucher Program Operating Budget Section 8 Voucher Program Operating Budget Section 8 Voucher Program Operating Budget Section 8 Voucher Program Operating Budget
September 30, 2009



Revenue
HUD Subsidy - HAP HUD Subsidy - HAP HUD Subsidy - HAP 966,828
HUD Subsidy - Admin Fees HUD Subsidy - Admin Fees HUD Subsidy - Admin Fees 151,677
Other Income Other Income Other Income 4,000
Interest Interest 35,000

Total Revenue Total Revenue Total Revenue 1,157,505


Administrative Expenses Administrative Expenses Administrative Expenses
Salaries 96,087
Benefits 33,930
Legal 0
Training 2,000
Travel 2,000
Accounting 3,500
Auditing 4,000
Misc. Office expenses Misc. Office expenses 12,750
Contract costs Contract costs 8,000
Total Admin Expenses Total Admin Expenses Total Admin Expenses 162,267

HAP Expense HAP Expense HAP Expense 930,000

Total Expenses Total Expenses Total Expenses 1,092,267

Profit(Loss) including HAP expense Funding Profit(Loss) including HAP expense Funding Profit(Loss) including HAP expense Funding Profit(Loss) including HAP expense Funding 65,238

Profit(Loss) excluding HAP expense Funding Profit(Loss) excluding HAP expense Funding Profit(Loss) excluding HAP expense Funding Profit(Loss) excluding HAP expense Funding 28,410

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What is my Section 8 Equity?

• HAP Equity
• The Amount of excess funding your PHA has recd
  for HAP expenses since 2005
• Admin Equity
• The Amount of excess funding your PHA Recd for
  Admin Expenses since the start of your program
• Section 8 reserves need to be broken out between
  these 2 Equity amounts on the FDS

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How Should I monitor my Section 8 Funding
Reserves?

• Calculate HAP Equity (excess HAP Funding) at the
  end of your fiscal Year See Schedule
• If this is a large amount you need to spend this
  money. If not HUD will be recapturing it
• Remember you can not lease over your baseline
  number of units in total for the year.
• Should be monitoring HAP Expense v. HAP Funding
  on a monthly basis (See Schedule)

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• Monitoring The Section 8 Program

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NMHA - HCV NMHA - HCV NMHA - HCV
Calendar Year 2009 Calendar Year 2009 Calendar Year 2009

MO/YR UNDER Baseline HAP HUD HAP Over/(Under) Average
of Month LEASE Units EXPENSE SUBSIDY Subsidized HAP
             
Jan 89 92 25,307.00 23,017.00 2,290.00 284.35
Feb 92 92 22,818.00 23,017.00 -199.00 248.02
Mar 94 92 27,556.00 23,254.00 4,302.00 293.15
Apr 91 92 23,721.00 14,929.00 8,792.00 260.67
May 91 92 25,033.00 14,925.00 10,108.00 275.09
June 93 92 26,625.00 20,950.00 5,675.00 286.29
July 93 92 28,305.00 14,925.00 13,380.00 304.35
Aug 93 92 25,714.00 15,022.00 10,692.00 276.49
Sept 92 92 25,727.00 14,925.00 10,802.00 279.64
Oct 92 92 25,638.00 14,925.00 10,713.00 278.67
Nov 92 92 25,638.00 14,925.00 10,713.00 278.67
Dec 92 92 25,638.00 14,925.00 10,713.00 278.67
             
TOTALS 1104 1104 232,039.00 140,451.00 91,588.00 278.67



NRA 108,189.00
Available NRA 16,601.00
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Questions Answers
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