Sneak Preview: GAO Urges RHS To Monitor Assistance Allocations

October 6, 2017 | By Jerry Ashworth | Post a Comment

xgran_bookshot(The following was excerpted from a recent article in the Federal Grants Management Handbook.) Although the U.S. Department of Agriculture Rural Housing Service (RHS) last year developed a new method to better estimate federal rental assistance to multifamily housing properties and units, a recent Government Accountability Office (GAO) report recommended that RHS routinely monitor and test these estimates to ensure assistance allocations are calculated correctly.

Under the Section 521 Rental Assistance Program, RHS provides about $1.4 million annually in rental subsidies to owners of multifamily housing for more than 270,000 low-income rural households. The program provides rental assistance for tenants living in properties financed by direct loans from RHS’s Multi-Family Direct Loans and Farm Labor Housing District Loans and Grants programs. Under Section 521, eligible tenants pay no more than 30 percent of their income toward the rent, and RHS pays the balance to the property owner.

RHS provides the rental subsidies through agreements with property owners for an amount estimated to last for one year. RHS automatically renews expiring agreements if funding is available and the owner complies with program requirements.

However, for federal fiscal years (FY) 2013 through FY 2015, RHS experienced funding gaps in the program, partially due to the FY 2013 federal budget sequestration and rescissions that decreased the program’s $907 billion budget by about $70 million. In addition, GAO found that RHS used a statewide, per-unit average cost to calculate rental assistance agreement amounts, which allowed some properties to receive more funds than needed.

RHS also is hampered by the fact that Section 521 program requirements limit the options available to manage rental assistance funds differently when faced with constrained budgets. Because the program requires that agreements be funded for a one-year period, RHS could not move funds from those agreements with more funds than needed to those with less funding than needed. Although RHS requested certain legislative changes to provide it more flexibility to manage constrained budgets, these proposals were not approved.

As a result, RHS was unable to renew agreements until the following fiscal year for about 15,000 properties from FY 2013 to FY 2015. RHS requested and received more than $200 million for FY 2016 above the amount requested in the president’s budget to cover, among other things, the cost of renewing agreements that could not be renewed at the end of FY 2015 due to funding shortages.

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site.)

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