HUD Sends Letters on HCV Funding and Forecasting

By: Tushar Gurjal, Senior Policy Manager

On December 6, HUD sent two letters about funding for the Housing Choice Voucher (HCV) program. The first letter discusses the status of January Housing Assistance Payments (HAP) and administrative fee payments for January 2025; HUD’s projections for calendar year (CY) 2025 prorations; budget forecasting; and Voucher Management System (VMS) Costs and leasing report deadlines. The second letter emphasizes the need for careful planning while taking into account proration amounts for the upcoming calendar year.

January Payments

The Department is operating under a continuing resolution (i.e., funding is based on previous year levels) until December 20, 2024. These funding levels provide the following levels of funding:

• January 2025 – HAP prorated at 99.5% of CY 2024 eligibility (100% or full eligibility for Mainstream vouchers); and
• January 2025 – administrative fee prorated at 91% of estimated CY 2024 eligibility.

CY 2025 Estimated HAP Prorations

According to HUD’s most recent forecast, HAP prorations based on amounts in the House appropriations bill and Senate appropriations bill for 2025 are the following:

• Senate appropriations bill – 97.5% HAP proration; and
• House appropriations bill – 88.59% HAP proration.

Budget Planning

Housing agencies should plan for the possibility that they will receive less than full funding for HAP in 2025. They should evaluate whether their payment standards are being set at an appropriate level. Agencies should monitor their budgets and “take proactive actions to reduce shortfall risks if their projections indicate that the risks are significant.”

The second letter notes that many PHAs will enter 2025 with limited reserves and states that “the availability and amount of future shortfall funding from HUD is uncertain.” Therefore, “PHAs may have to make hard decisions to limit or cease voucher issuances or modify other policies (such as payment standards) in response to limited funding or potential shortfalls.”

The Department has both the Two-Year Tool and the Payment Standard Tool to help with these planning decisions. They can both be found at HUD’s HCV website (www.hud.gov/hcv). If necessary, agencies should also work with HUD’s shortfall prevention team.

Deadlines

Housing agencies should be reviewing their CY 2023 and CY 2024 costs and leasing data in VMS. The deadline for entering November, 2024 and CY 2023 corrections in costs and leasing data is December 23, 2024. The deadline to enter December 2024 costs and leasing data in VMS and prior month adjustments for CY 2024 is January 22, 2025. Housing agencies should make corrections well before these deadlines.

The first HCV funding letter sent on December 6 can be found here.

The second HCV funding letter sent on December 6 can be found here.