In the Consolidated  Appropriations Act of 2004, Congress limited the uses of the administrative  fees earned in fiscal year 2004 to the provision of Housing Choice Voucher  Program rental assistance and related development activities. Almost All Housing Agencies Reported January 2003 Reserves

As of September 2004, all but 5 of the 2,477 housing agencies required to  report their available administrative fee reserves as of January 31, 2003,  had done so. A Small Number of Housing Agencies Were Responsible for Most of the Difference

The total of all the housing agencies’ reported reserves available as of  January 31, 2003, was $587 million, about $211 million (26 percent) lower  than the average total reserves of $798 million for fiscal years 1999 to  2002. 1). 2). January 2003 Available Reserves Were Lower for Several Reasons

We found several reasons for the difference in reported reserve amounts. Second, some housing agencies obligated some of their reserves for  expenses not related to the Housing Choice Voucher Program, as was  permitted by HUD regulations. HUD Is Reducing Estimated Administrative Fees by About $37.8 Million

By December 2004, HUD plans to have completed most of the required  reductions to the estimated fiscal year 2003 administrative fees of 180  housing agencies, a total of about $37.8 million. As required by the 2003  Appropriations Resolution, HUD identified housing agencies whose fees  should be reduced because their reported January 2003 reserves exceeded  105 percent of the fees they earned in federal fiscal year 2002. HUD did not reduce the fees of some housing  agencies by the full difference between their January 2003 reserves and 105  percent of the fees earned in federal fiscal year 2002, because the 2003  resolution did not require HUD to make reductions to housing agencies’  administrative fees that exceeded the amounts they earned in fiscal year  2003. HUD Expects to Have Recaptured Some Excess 2003 Administrative Fees by December 2004

The 2003 Appropriations Resolution required HUD to recapture from  housing agencies administrative fees that they earned in fiscal year 2003  that exceeded administrative expenses, except for an amount necessary to  maintain a reserve equal to 5 percent of the fees earned in the Housing  Choice Voucher Program fiscal year 2003. HUD has not yet recaptured any excess fiscal year 2003 administrative fees. To determine the extent to which housing agencies reported to HUD their  available administrative fee reserves as of January 31, 2003, we analyzed  data from HUD showing all of the housing agencies that had reported their  January 2003 reserves and the amounts they had reported. To determine how housing agencies calculated their reserves as of January  31, 2003, and the possible reasons for declines in the reported amounts, we  selected 5 of the 10 housing agencies that had the largest differences  between the average of their reserves reported for fiscal years 1999 to 2002  and the amount they reported as of January 2003.
Why GAO Did This Study

The Department of Housing and Urban Development (HUD) received $12.9 billion in fiscal year 2003 for the Housing Choice Voucher Program, which helps about 2 million low-income families pay rent for privately owned housing. This amount included $1.1 billion in administrative fee payments to the public housing agencies that administer the program for HUD. In the Consolidated Appropriations Resolution of 2003, Congress included provisions to address a concern that housing agencies may have received more in fees than they needed to run the program. Housing agencies were directed to report to HUD their available reserves as of January 31, 2003. HUD was directed to reduce the fees agencies would receive if these levels were too high and recapture some excess fees. The conference report accompanying the Consolidated Appropriations Act of 2004 directed GAO to review compliance with these provisions. This report discusses (1) the extent to which housing agencies complied with the requirement to report to HUD their available administrative fee reserves as of January 31, 2003; (2) how these reported reserves compared with reserves reported in earlier fiscal years and possible reasons for any declines; (3) the extent to which HUD made required reductions to fiscal year 2003 fees; and (4) the extent to which HUD has recaptured excess fiscal year 2003 administrative fees.

What GAO Found

By the end of calendar year 2004, HUD expects to have finished implementing most of the provisions in the Consolidated Appropriations Resolution of 2003 that address the administrative fees housing agencies receive under the Housing Choice Voucher Program. As of September 2004, all but 5 of the 2,477 housing agencies had reported their available administrative fee reserves as of January 31, 2003. The reported amounts totaled $587 million, or about $211 million (26 percent) less than the average $798 million that housing agencies had reported in fiscal years 1999 to 2002. GAO found several reasons for this decline. For example, the 2003 resolution allowed housing agencies to deduct from their January 2003 reported amounts funds that were not "available." Some housing agencies deducted obligated or committed funds they considered unavailable, although they normally include these funds in the reserve amounts they report at their fiscal year ends. Further, between the end of their fiscal year 2002 and the January reporting date, some housing agencies obligated some of their reserves for expenses not related to the Housing Choice Voucher Program, as was permitted by HUD regulations. By December 2004, HUD plans to have completed most of the required reductions to the estimated fiscal year 2003 administrative fees of 180 housing agencies, a total of about $37.8 million. As required by the 2003 resolution, HUD identified housing agencies whose fees would be reduced based on the difference between their available January 2003 reserve balances and 105 percent of the fees they earned in federal fiscal year 2002. HUD has not recaptured any excess 2003 administrative fees but expects to have made some of the required recaptures by December 2004.