Project-Based Accounting

A strategy for Public Housing Agencies to Convert to HUD's New Project-Based Management System

HUD's new Proposed Rule on the Operating Funds makes two significant changes to the Public Housing Program. First, it introduces a new formula for determining Public Housing Operating Subsidies. Secondly, it redirects the focus of the Public Housing Program from an "Agency" focus to a focus on the operating and financial management performance at the "Property" level. The new Proposed Rule on the Operating Fund requires:

Property-based funding- Under this system, HUD will calculate and obligate the operating subsidy at the property level, rather than simply fund the agency as an entity. Each property will receive a formula-determined Project Expense Level (PEL), based on the unique property characteristics.

Property-based accounting- Public Housing Agencies (PHAs) will be required to submit year-end financial statements to HUD for each property (income and expense statement, and balance sheet). Also, PHAs will be required to utilize a new fee-for-service approach for the treatment of overhead costs and centrally provided property management services. Additionally, extensive adjustments to cost accounting systems will be required.

Property-based monitoring- HUD will monitor performance (fiscal, physical, management, and customer satisfaction) on a property-by-property basis.