HUD Provides PHAs with Net Restricted Assets as of 12/31/11 and Last Chance to Correct It

In the mid-afternoon on Friday, February 17, 2012 HUD sent PHAs that administer Section 8 voucher programs, an e-mail with their 12/31/2011 Net Restricted Asset (NRA) balance reports for their final review.  If a PHA finds that the HUD calculated NRA balance differs from HUD’s calculated balance as of December 31, 2011 by more than an immaterial amount (e.g., 3%), they must contact their assigned Financial Analyst at the FMC within two business days of receiving HUD’s letter on February 17, 2012 to discuss it and resolve any problems. HUD set Thursday, February 23, 2012 as date for the PHAs to resolve any major differences with their FMC Financial Analysts. If HUD does not have the correct NRA balance for a PHA by Thursday, February 23, 2012, NRA funds could be offset from them in their final 2012 Housing Assistance Payment (HAP) budget authority that should not be subject to the offset. 

As previously reported, the “Consolidated and Further Continuing Appropriations Act of 2012” (P.L. 112-55) included a $650 million rescission/offset from PHAs’ Net Restricted Assets, as determined by HUD.  The Act enables HUD to derive the required $650 million rescission from reductions to PHAs’ calendar year 2012 allocations.  The Department acknowledged that the truncated time frame for final resolution of their NRA balances as of 12/31/11 is very short, however, they state having to meet the Congressional mandate to announce the renewal funding awards by 3/1/2012, which leaves them with less than seven business days to complete this process.  

HUD reports that some PHAs with significant variances between their reported NRA balance and HUD calculations at 9/30/2011, provided to PHAs by HUD in their mid-December 2011 notices and spreadsheet enclosures, unfortunately did not take the opportunity to review it with HUD at that time.   PHAs showing significant differences between their VMS-reported NRA vs. the HUD calculated NRA, and VMS-reported Cash and Investment balances – all as of December 31, 2011, will also get a direct e-mail from a designated HUD staff member recommending resolution of these differences immediately.  HUD is urging these PHAs to take this final opportunity before the offsets are determined. 

HUD’s letter states, “PHAs are expected to have sufficient resources in cash and investments to support the full NRA value, and it is critical that the calculated NRA is accurate. Any concerns regarding the December 2011 roll-forward balance need to be raised immediately. In addition, if your PHA does not have the cash and investments to support your December 2011 NRA balance, you must immediately notify your FMC financial analyst of that situation and report the cash and investments your agency does have to support the NRA balance. Note that voucher program cash and investments are considered available to support the NRA before supporting the Unrestricted Net Assets.”

Over the last two weeks, HUD has considered over 800 changes from PHAs that contacted their FMC Financial Analysts during the 9/30/2011 NRA balances review period (in mid-December 2011).  HUD states that previously agreed upon changes to the 9/30/2011 balances are already incorporated in the 12/31/2011 balances PHAs just received. 

If a PHA’s self-reported NRA value varies significantly from HUD’s calculated roll forward balance, the PHA is encouraged to review its reported revenues and expenses as a potential basis of the discrepancy and to follow the same steps outlined in HUD’s letter and/or spreadsheet with definitions and HUD’s methodology to calculate the roll forward balance.

When contacting your financial analyst, PHAs must identify the values in the calculation that are causing the discrepancy and they must be able to provide documentation that supports their proposed revisions.  Any changes PHAs provide to VMS data in this process will apply only to the calculation of their NRA balance.  HUD will not revise PHAs’ CY 2012 HAP funding allocations as a result of any changes in VMS figures as part of this process.

PHAs with questions are instructed by HUD to call their respective Financial Analysts (or contact designated in the direct email if other than their FA) immediately.  HUD’s due date will not be extended and HUD states that PHAs will be held accountable for differences that were not resolved within the opportunities provided during 9/30 and 12/31/2011 NRA review periods.

Here is an example of HUD’s letter, spreadsheet enclosure with financial figures, and spreadsheet enclosure with definitions and an explanation of the Department’s calculations and methodology.

MS999_NRA_20120216_NRA NonVASH_M12-020_(ENCL3).pdf105.35 KB
MS999_NRA_20120216_NRA NonVASH_M12-020_(ENCL1).xls30 KB
MS999_NRA_20120216_NRA NonVASH_M12-020_(ENCL4).xlsx14.71 KB