HUD Releases Guidance on Interest Earned on Operating Funds

By Eric Oberdorfer, Director of Policy & Legislative Affairs

May 7, 2025 — Today, HUD published new guidance on its Asset Management webpage to help Public Housing Agencies (PHAs) comply with the requirement to return interest earnings over $500 to the Department of Health and Human Services (HHS). This requirement was first outlined in Notice PIH-2024-25, Public Housing Operating Subsidy Grant Eligibility Calculations and Processing for Calendar Year (CY) 2025. The notice states that PHAs must deposit Operating Subsidy grants, program income, and disposition proceeds into interest-bearing accounts, and remit any interest exceeding $500 to HHS at least annually. While this requirement aligns with federal procurement regulations, it had not been included in prior years’ operating subsidy notices.

In response to feedback from stakeholders, including NAHRO, HUD developed the guidance on remitting interest earned to assist PHAs in meeting Office of Management and Budget (OMB) compliance. The guidance explains how to calculate interest using year-end balances, quarterly or monthly accounting, and average daily balances. It also provides instructions for reporting and returning federal interest and provides additional background on the requirements for maintaining grant funds at financial institutions.

The guidance can be found here.