PHAs Revisit PIH Notice 2010-19 (2011-25 and 2012-26) In Order To Reap All Relief Benefits Possible
NOTE: A shorter version of this article appeared in the print version of the February 28 Monitor.
Under PIH Notice 2010-19 titled, “Administrative Guidance for Effective and Mandated Use of the Enterprise Income Verification (EIV) System” through the present, several improvements and a streamlined income verification method were made available to PHAs (as well as their affiliates or instrumentalities) to implement in the Public Housing, Section 8 Tenant-Based Voucher, Section 8 Project-Based Voucher, and Project-Based Certificate programs. This notice might have been overlooked by some because its subject title of PIH Notice 2010-19 was not descriptive of the actual changes that HUD authorized in the Income Verification Hierarchy.
With the tremendous financial pressures facing PHAs, more and more agencies that did not previously experience a financial necessity to fully avail themselves of a streamlined income verification method under this notice or were not aware of this method and its benefits, are now revisiting the remaining program relief measures available to them under PIH Notice 2010-19 (as extended under PIH Notice 2011-25 and PIH 2012-26 on June 1, 2012 and currently slated to expire on May 31, 2013) for further programmatic relief. If for example, a household has had a recent change of employer(s) or their employment hours and/or wages with their existing employer(s) has either decreased or increased and when EIV data is not available or is incorrect, PHAs may use these households’ employment pay stubs to define their current income for purposes of projecting their anticipated annual income for eligibility determinations, as well as income and rent determinations. As described in PIH Notice 2010-19 (extended for PHAs use in 2011, 2012 and beyond), acceptable tenant-provided documentation (generated by a third-party source) include, but are not limited to: pay stubs, payroll summary report, employer notice/letter of hire/termination and/or printouts of unemployment monetary benefit notices all of which constitute “Level 4 / High” in HUD’s Verification Hierarchy. Excerpts from HUD PIH Notice and regulations regarding this example, which provide very important programmatic details, are quoted below the questions and answers.
Anytime certain program measures on income and rent determinations have been practiced a certain way as stipulated by HUD program regulations and Notices over time, it is understandable how some PHAs may initially view increased administrative flexibility offered by PIH Notice 2010-19 (extended for PHAs use in 2011, 2012 and beyond), as a “relaxation” on income integrity and proper payments. Yet, a very significant area of emphasis has and continues to be on program integrity and proper payments at every segment of the process and by every key group. Some PHAs may be reluctant to “relax” their existing income verification by streamlining their policy and procedures under PIH Notice 2012-26 until such time that they understand and believe in implications and opportunities presented in the Notice. It is our hope to engage with our PHA members on this topic in an effort to answers questions they may have, before considering adopting the streamlined income verification method authorized under HUD’s PIH Notices.
How significant are the administrative cost savings by exercising this income verification method under PIH Notice 2010-19 as extended under 2012-26?In the Public Housing program 32 percent of all households have some income from wages, and 34 percent of all voucher-assisted households have some income wages. Although the percentage of scenarios described above does not apply to all assisted-households with some income from wages, over the course of their participation in rental assistance programs a very significant percentage of households with some income from wages has a change of employer(s) or their employment hours and/or wages with their existing employer(s) has either decreased or increased; when EIV data is not available or is incorrect. Depending on whether or not the PHA does or does not utilize “The Work Number” (an automated verification system) and/or State Wage Information Collection Agency (SWICA) database to validate tenant-reported income, PHAs have reported to us, that for the subset of households with some income from wages, they no longer have to go through the added time and expense of sending out manual third-party income verification from an employer(s) for 40 – 100 percent of these households. PHAs also report that there additional benefits to their staff and program participants in being able to complete income and rent calculations eligibility determinations at that time and to complete their annual recertification or interim recertification without having to continue to track it until manual third-party income verification from an employer(s) is or is not returned as well as the processes that would follow.
Would exercising this income verification method under PIH Notice 2010-19 as extended under 2012-26, help PHAs establish and keep their policies and procedures simple as they relate to eligibility, annual and interim reexaminations? Yes, for PHAs that have not already been utilizing this income verification method (described in the example above), doing so now, would enable them to keep their policies and procedures as well as their attendant administrative expenses under PIH Notice 2012-26, as simple as possible as they relate to both using these households’ current income as anticipated and verifying household income. It should be noted that PHAs’ practice of this income verification method (further described in detail below) is entirely consistent with PIH Notice 2013-3 (http://www.nahro.org/news-content/hud-issues-temporary-voucher-and-public-housing-regulatory-reforms-one-year) and can continue to be practiced by PHAs already engaged in this income verification method as well as commenced by PHAs who had not previously used it.
As a tax-funded program that relies on the support of the taxpaying public, PHAs take accurate income reporting, program integrity and enforcement measures very seriously. As such, if a PHA implemented the streamlined income verification method in PIH Notice 2010-19 (as extended in PIH Notice 2012-26) and recommended throughout this article, wouldn’t it likely result in a relaxation in the income and program integrity of a PHA’s program that they have worked so hard to maintain and develop over the years?While that conclusion is totally understandable, the answer is no. Among other things, after completing the streamlined income verification method recommended, PHAs still have the opportunity and obligation to review substantial differences in reported household income using HUD EIV’s Income Discrepancy Reports or use of other Upfront Income Verification (Level 6/5) described below. In doing so, PHAs determine an amount equal to or greater than $2,400 annually (after the fact) to assist them in determining “false positives” versus potential cases of unreported household income for purposes of possible further program integrity enforcement measures. As a result, utilizing this valid and authorized streamlined income verification, PHAs in no way, shape or form relax the integrity or enforcement of their programs.
By implementing this streamlined income verification method, wouldn’t a PHA likely open themselves up to any greater findings from their Independent Public Auditors or HUD during site reviews for RHIIP, RIM or Quality Assurance? While this concern is understandable for the reasons described above, the answer is no as the streamlined income verification is authorized in PIH Notices. Under the subheadings “Verification Technique Definitions” and “Third Party Verification Techniques” PIH Notice 2010-19 as extended by PIH Notice 2012-26 states:
Written Third Party Verification (Level 4):An original or authentic document generated by a third party source dated either within the 60-day period preceding the reexamination or PHA request date. Such documentation may be in the possession of the tenant (or applicant), and is commonly referred to as tenant-provided documents. It is the Department’s position that such tenant-provided documents are written third party verification since these documents originated from a third party source. The PHA may, at its discretion, reject any tenant-provided documents and follow up directly with the source to obtain necessary verification of information.”
Examples of acceptable tenant-provided documentation (generated by a third party source) include, but are not limited to: pay stubs, payroll summary report, employer notice/letter of hire/termination, SSA benefit verification letter, bank statements, child support payment stubs, welfare benefit letters and/or printouts, and unemployment monetary benefit notices. Current acceptable tenant-provided documents must be used for income and rent determinations.
The PHA is required to obtain at a minimum, two current and consecutive pay stubs for determining annual income from wages. For new income sources or when two pay stubs are not available, the PHA should project income based on the information from a traditional written third party verification form or the best available information.
Note: Documents older than 60 days (from the PHA interview/determination or request date) is acceptable for confirming effective dates of income.
Under the subheading “Upfront Income Verification” (Level 6/5) PIH Notice 2010-19, as extended by PIH Notice 2012-26, also states, “[i]t should be noted that the EIV system is available to all PHAs as a UIV technique. PHAs are encouraged to continue using other non-HUD UIV tools, such as The Work Number (an automated verification system) and state government databases, to validate tenant-reported income.”
Decreases in a household’s share of the rent are effective on the first day of the month following the date of the reported change. At the PHA’s policy discretion, if a household failed to report the change as required, the notice may or may not be effective retroactively. Increases are effective on the first day of the month after giving reasonable written notice. At the PHA’s policy discretion, if a household failed to abide by reporting requirements, the notice may or may not include a demand for repayment of excess assistance received for prior months. The notification to the household must advise the family of the opportunity for an informal hearing. PHAs may require households to report interim changes in family income or family circumstances as well. PHAs interim policies vary significantly from PHA to PHA, depending on a range of factors. PHAs with questions about interim reexaminations should refer to the applicable source documents such as § 982.516 Family income and composition: Regular and interim examinations for the Section 8 tenant-based voucher program.
PHAs should also consult HUD regulations 24 CFR 5.609(d) regarding the option PHAs have to use historical income for households with seasonal or cyclic income when applicable. 24 CFR 5.609(d) – ‘Annualization of income’ states, “[i]f it is not feasible to anticipate a level of income over a 12-month period (e.g., seasonal or cyclic income), or the PHA believes that past income is the best available indicator of expected future income, the PHA may annualize the income anticipated for a shorter period, subject to a redetermination at the end of the shorter period.” 24 CFR 5.609(d), located on page 82 is available at: http://www.gpo.gov/fdsys/pkg/CFR-2012-title24-vol1/pdf/CFR-2012-title24-vol1-part5.pdf
From a HUD program enforcement perspective (and from Independent Public Auditors) will PHAs that use 24 CFR 5.609(d) for households with seasonal or cyclic income for purposes of eligibility determinations, income and rent determinations, wouldn’t a PHA likely open themselves up to greater findings from their Independent Public Auditors or HUD during site reviews for RHIIP, RIM or Quality Assurance? No. PHAs’ compliance and performance will be as accurate if they use 24 CFR 5.609(d) for households with seasonal or cyclic income as if they used these households’ current income as anticipated. In other words for program compliance purposes, neither a PHA’s use of 24 CFR 5.609(d) for households with seasonal or cyclic income nor current income as anticipated will be advantaged or disadvantaged with HUD’s compliance monitoring under either method. In other words, the annual income method a PHA implements for households with seasonal or cyclic income as stipulated under 24 CFR 5.609(d) or using current income as anticipated, determines the extent to which a PHA’s eligibility determinations, and income and rent determines were performed accurately using that specific time frame and method.
PIH Notice 2010-19 with two attachments relating to the notice are available at www.hud.gov/offices/pih/publications/notices/10/pih2010-19.pdfand http://tinyurl.com/3afkr2r and http://tinyurl.com/32j46lh. A thorough list of important resources and web-based trainings regarding “Rental Housing Integrity Improvement Project (RHIIP)/EIV Resources” are available at the end of PIH Notice 2010-19. PIH Notice 2012-26 is available at: http://www.nahro.org/sites/default/files/searchable/pih2012-26.pdf
NAHRO Wants to Hear From You about PIH Notice 2013-3, 2012-26 and 2010-19
Among other things, it is our hope to engage with our members on the topic of streamlined income verification method in PIH Notice 2010-19 as extended under PIH Notice 2012-26, in an effort to answers questions they may have, before considering adopting the streamlined income verification method authorized under HUD’s PIH Notices. To this end, we encourage you to contact NAHRO’s Policy and Program Development staff to 1) let us know whether or not your PHA currently utilizes the streamlined income verification authorized in PIH Notice 2010-19 (as extended in PIH Notice 2012-26) and 2) if you have any comments or questions about this topic before considering whether or not to implement streamlined income verifications at: firstname.lastname@example.org.
NAHRO staff continues to receive feedback from members about PIH Notice 2013-3. We have played an intermediary role to help facilitate our members’ questions about PIH Notice 2013-3 are actively working with HUD staff to help provide further clarification of the notice as well as examples of how PHAs can apply these provisions. We anticipate that in the near future HUD will provide further written information and resources to help answer PHAs’ questions about PIH Notice 2013-3. Included in the feedback that we have received are questions regarding outstanding operational issues contained in the notice(s), expressions of specific and general concerns, expressions of specific and general benefits, etc. However, we would like to hear from more of our members about the notice(s). To this end, please feel free to contact NAHRO’s Policy and Program Development staff with your comments about PIH Notice 2013-3 at: email@example.com.