Webcast Q&A – Public Housing: Returning Interest Income

If HUD publishes guidance stating that PHAs must use operating reserves first, before drawing operating subsidy, then a PHA could see a significant impact on the FASS indicator.

Yes, the interest earned on CDs is subject to recapture if they contain grant revenue.

Currently, the PHA has the option to apply expenses to operating subsidy for program reserves first.

No, you do not have to spend the $10K in the next month before drawing down subsidy again.

A PHA must report interest income and expenses according to GAAP accounting.

Both CD accounts and bank accounts need to be listed out on the General Depository Agreement. 

Once the audit is completed the interest should be submitted to HHS.

24 CFR 990 states records must be retained for 5 years.

If administrative funds are being drawn and provided to the AMPs, these funds are considered expended on administrative costs.

An analysis would have to be completed to determine the funding sources.

Currently, yes, if monthly expenses are greater than the 1/12 operating subsidy received, $0 of cash is operating subsidy.

If you use the annual approach of calculation of interest, then the answer is likely, no.

Calculation of interest should only be calculated on grant advances.

24 CFR 990 requires that records be retained for a period of 5 years. The PHA would need to determine how much grant revenue is accumulated in reserves.

The PHA would need to determine how much grant revenue is accumulated in reserves.

The $500 applies to the entire LIPH program.

Yes, the gains on bond investments are considered interest income.

When 1406 funds are transferred to the AMP, the PHA is not required to match expenses with subsidy and is considered fully expended.

Interest is calculated using fiscal year. 

It depends on the interest calculation methodology. If you used an annual calculation methodology, this would make sense.

It seems that program income is paying for expenses, so interest would be calculated on funds drawn from prior years.

This would make sense if you were picking up actual cash outlays.

You want to draw funds to best manage cash flow.