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Spiking Utility Costs Having Ripple Effect Throughout Public Housing —

Latest Announcement of Congressional Cuts Means Tough Choices for Housing Authorities

Beaumont - Public Housing Agencies (PHAs) across the country are urging Congress to fix immediate budget shortfalls that are occurring because HUD ignored projections in late 2005 that this year’s utility costs were going to skyrocket.

PHAs were funded in 2005 at on only 92 percent of what HUD itself estimates they need; HUD is now saying that they can expect only 85 percent of what they need — retroactive to the first of 2006. Just how bad is the problem?

· From 2001 to 2006 cuts to public housing funding exceeded $1 billion.

· For 2006 HUD underestimated utility expenses, resulting in a $300 million shortfall.

· In January ‘06, HUD announced that agencies would receive about $0.92 out of every dollar they are due. Now, it appears that they will only receive $0.85 on the dollar.

· HUD proposed to fund public housing in 2007 at $0.85 on the dollar. Because of underestimated utility costs and unexpected fuel cost increases, it now appears that public housing will receive less than $0.80 out of every dollar they are due in 2007.

The problem is that after HUD realized in the fall of 2005 that utility costs were going to eat up an additional $200 million out of the public housing allocation, they did not ask congress for additional funding. As a result, even public housing authorities that are not experiencing utility hikes are being hurt. (The final numbers, which came out in June, show a deficit closer to $300 million.)

HUD compounded the problem by distributing operating funds at the beginning of 2006 without taking the deficit into account. If they had, Public Housing Agencies (PHAs) would have had a full year to find ways to save instead of only six months.

“Everyone knows that you can’t suddenly balance your budget the last two days of the month,” said BHA executive director, Robert Reyna. “But that’s exactly what HUD expects us to do.”

Some of the more drastic actions that PHAs around the country have already taken or will be considering are, selling off assets and laying off staff. The end result for residents: longer waiting lists, and reduced maintenance and security.

The direct impact that the Housing Authority of the City of Beaumont will have to address is reflected in the table below showing the amount of public housing funding cuts BHA has endured over the past four years and the impact to the direct reduction in families we are now able to serve.

FFY	2003	2004	2005	2006
Public Housing Operating Subsidy	$ 1,256,032.00	$ 1,055,296.00	$ 1,214,220.00	$ 1,014,873
Public Capital Funds	$ 893,973.00	$ 1,023,891.00	$ 1,036,341.00	$ 978,426.00
Section 8 Funding	$ 7,589,898.00	$ 7,922,830.00	$ 8,322,358.00	$ 8,909,947.00
Section 8 Administrative Fee	$ 929,008.00	$ 839,895.00	$ 870,038.00	$ 882,783.00
Number of Section 8 Clients Served	1,696	1,625	1,724	1,505

“We are being asked to make extremely tough choices that will have very real impacts on our residents,” said Reyna. “It’s not fair to ask people at the bottom of the wage ladder to pay for HUD’s mistake.”

The public housing industry groups and resident advocates are calling on Congress to:

· Approve an emergency $300 million supplemental for FY 2006

· Approve an additional $300 million in Operating Fund appropriations for FY 2007 to help meet utility costs.

· At a minimum, adopt the provisions of the Senate Appropriations bill.

Reyna says, “Although our industry will continue to press for full funding for public housing nationally, we understand that Congress is operating under enormous budget pressure. We believe this request strikes a balance between the very real problems facing housing authorities and their residents across the nation, and the realities of the budget.”

For more information,
please email us at info@bmtha.org