The Administration's Operating Reserves Offset Proposal

NAHRO's comprehensive rundown of the administration's proposal to impose a $1 billion offset against PHAs' operating reserves for 2012 is now available online.  A few highlights, including our request for assistance: 

The President’s FY 2012 budget proposal released on February 14 estimates 2012 operating subsidy eligibility at $4.962 billion, yet the budget requests only $3.962 billion in appropriations for the Operating Fund.  To make up the difference, the budget includes suggested statutory language that would, if accepted by Congressional appropriators, authorize the HUD Secretary to “take into account PHAs’ excess operating reserves” when determining PHAs’ 2012 funding allocations. According to the FY 2012 HUD budget appendix, this authority would allow the Department “to reduce funding allocations to PHAs that have more than sufficient (i.e., excess) reserve levels.”

NAHRO opposes the administration’s proposed offset of $1 billion against PHAs’ operating reserves.  NAHRO members have been unambiguous in their written and verbal reactions to the proposal:  The offset would unfairly punish the responsible, strategic, and entrepreneurial stewardship of federal public housing resources.  NAHRO will advocate vigorously for a direct appropriation sufficient to provide 100 percent of operating subsidy eligibility under the current Operating Fund rule. At the same time, NAHRO will insist that the Department be completely transparent regarding its plans for implementing an offset.  Having a clear sense of HUD’s intended methodology is the only way that NAHRO and its industry partners will be able to minimize the damage to the public housing program should the Congress (over the industry’s strenuous objections) ultimately accept the administration’s proposal.

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As NAHRO seeks to illustrate the potential consequences of the administration’s offset proposal within the Department and on the Hill, we will need your help.  Please consider sharing with NAHRO staff two types of information related to operating reserves:

  • First, if your agency has strategically accumulated a significant level of reserves, we are interested in learning about the types of activities, projects, and initiatives your agency planned to fund using these resources – and what a reduction of your agency’s reserves to a level equal to four or six months’ expenses would mean for those plans. 
  • Second, if your agency has previously used Operating Funds subsidy or operating reserves to support capital improvements (other than to pay the debt service for the cost of financing improvements), we are interested in receiving information on such transactions as well as your experiences, if applicable, related to securing HUD approval. 

If you would like to share the information requested in the referenced Direct News item, please contact me at jfalcusan@nahro.org.