HUD Publishes Revised New Administrative Fee Formula

HUD has published its revision of the new administrative fee formula for the Housing Choice Voucher Program. The new formula would calculate administrative fees on the basis of six variables:

1. Program size;
2. Wage rates;
3. Benefit load;
4. Percent of households with earned income;
5. New admissions rate; and
6. Percent of assisted households that live a significant distance from the PHA’s headquarters.

The PHA’s fees would be calculated yearly and then have a revised inflation factor applied to the calculated fee.

HUD has made three major changes to the prior formula:

1. For PHAs in metropolitan areas, the wage index formula variable is based on the average local government wage rate for the PHA’s metropolitan Core Based Statistical Area (CBSA), rather than that average local government wage rate for all of the metropolitan counties in the PHA’s state;
2. The health insurance cost index formula has been replaced with a new “benefit load” formula variable, which is designed to measure the variation in costs for all benefits that are paid for HCV employees, not just health insurance costs [In NAHRO’s comments we wrote the health insurance cost index metric does not “accurately (capture) all benefit costs” and recommended “(a) proxy that measures and takes into account these higher PHA costs”]; and
3. The small area rent ratio (SARR) variable has been removed from the proposed formula [In NAHRO’s comments, we stated that “the small area rent ratio does not appropriately measure the actual costs of helping voucher holders to access high opportunity neighborhoods”].

NAHRO is still in the preliminary stages of analyzing the formula. Additional details and analysis will be forthcoming.

The full notice can be read here.

NAHRO’s comments on the previous formula can be read here.