Study: PHAs Underfunded When Administering HCV Program

April 17, 2015

HUD recently released its Housing Choice Voucher Administrative Fee Study. Congress directed HUD to gather comprehensive and detailed data on the administrative costs associated with operating the Housing Choice Voucher (HCV) program. The HCV program is administered by approximately 2,300 local, regional, and state PHAs. The funding these PHAs receive for running the HCV program includes the housing subsidy itself, plus administrative fees to cover the costs of running the program. This study is the first time that HUD has collected such empirical data.

HUD recently released its Housing Choice Voucher Administrative Fee Study. Congress directed HUD to gather comprehensive and detailed data on the administrative costs associated with operating the Housing Choice Voucher (HCV) program. The HCV program is administered by approximately 2,300 local, regional, and state PHAs. The funding these PHAs receive for running the HCV program includes the housing subsidy itself, plus administrative fees to cover the costs of running the program. This study is the first time that HUD has collected such empirical data.

The purpose of the study is to better understand how much it costs for a PHA to administer a high-performing and efficient HCV program and to use the findings to propose a new funding methodology. The study looked at 60 high-performing PHAs over the course of 2013. The study found that PHAs’ administrative fees are insufficient to run the HCV program. The administration’s FY 2016 budget has already cited this report in its request for $2 billion in administrative fees, an increase of $490 million from FY 2015.

The HCV Administrative Fee Study found that while the average cost of administering the HCV program was $70.03 per voucher per month, the average fee received was just $51.64 per voucher per month. Further, only two of the 60 PHAs in the study received enough administrative fee funding to cover their costs during the study period.

HUD’s current formula uses Fair Market Rents (FMRs) as a basis for the allocation of fees; however, the study found that FMRs have no documented connection to actual costs of administering the program. The study proposes to change the formula to account for real cost factors, including local wages, health insurance costs, program size, family characteristics, and the extent to which voucher-assisted households live a substantial distance from the PHA’s main office.

Under the proposed new formula, 92 percent of the PHAs would receive increased administrative fee funding compared to the amount they received during 2013. Under the proposal, fees would also be updated annually, based on the formula variables and an inflation factor, to make sure that fees keep pace with inflation and reflect current program characteristics.

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