Slide #1 © 2007 Nan McKay & Associates Annie Stevenson Common Rent Calculation Errors: Earned...

Slide #1©2007 Nan McKay & Associates

Annie Stevenson

Common Rent Calculation Errors: Earned Income

©2007 Nan McKay & Associates


Welcome to Lunch N Learn!

Upcoming topics for the occupancy series:• 5/4/07: VAWA• 6/7/07: HCV Denials and Terminations• 6/8/07: PH Denials and Terminations


Welcome to Lunch N Learn!

Today’s Topics:• Error-prone rent components, part 1

Employment IncomeTraining incomeEarned income disallowance


HUD’S Rental Housing Integrity Improvement Project (RHIIP)

Priority Secretarial initiative designed to reduce income and rent errors and improper subsidy payments

Comprehensive strategy to correct program errors in HUD’s high-risk rental housing subsidy programs

HUD’s objective: ensure the correct amount of assistance is provided to the families who need it


Statistics from 2001 Quality Control for Rental Assistance Subsidies Study

HUD overpaid rental subsidy by $2.6 billion (QC Study – 2001)

Estimated 60% of all subsidy and rent calculations contained some type of error:• Calculation errors• Failure to verify income • Incorrect deductions


2001 Quality Control Report

Most error-prone components of rent calculation (PHA and tenant error)• Earned income• Social Security benefits• Allowances and deductions


Employment Income


Employment Income

PD&R report found a 68% error rate for families with earned income (employment income)• 88% for families with more than 1 source of

earned income• Employment income is single strongest

predictor of errors in rent calculation


Employment Income

Annual income from employment includes full amount, before payroll deductions, of:

• Wages and salaries• Overtime pay, commissions, fees, tips and

bonuses• Other compensation for personal services


Employment Income

Reported income will usually be in amounts over a period of time that are less than annual (hourly, weekly, bi-weekly, semi-monthly, monthly, etc.)• Hourly/full time: rate X 2080• Weekly: amount X 52• Semi-monthly: amount X 24• Bi-weekly: amount X 26• Monthly: amount X 12


Seasonal Employment People in some occupations regularly work less

than 12 months per year• School employees• Agricultural workers• Construction trades

Two acceptable calculation methods are described in HUD’s HCV Guidebook

Page 4-7


Seasonal Employment

Method 1: Annualize current income• Interim reexam when income changes

Method 2: Calculate anticipated income from all known sources for the entire year• No interim reexam• History of income from past years is needed

Not useful when future income source is “unknown” or “none”


Seasonal Employment: Example

Meg Wells is currently employed as a teacher’s aide, earning $800 per month

For the last 3 years, she has worked this job for 9 months per year during the school season

3 months of each year, she works part-time at Subway, earning $500 per month


Calculation: Sample Method 1

Multiply current income ($800/month) times 12 months• $9,600 per year

When school ends, conduct an interim reexam• Multiply income from Subway ($500/month)

times 12 months• $6,000 per year


Calculation: Method 2 Calculate anticipated income from all known sources for the

entire year• School:

$800 x 9 months = $7,200• Subway

$ 500 x 3 months = +$1,500• TOTAL: $8,700

NOTE: There is no interim reexam when the participant changes jobs


Incorrect Calculation of Method 1

If the PHA counted only the current income ($800/month) times the anticipated length of the job (9 months), annual income would be calculated as $7,200• Family would pay less than TTP required by

regulations• Common error


Seasonal Employment

PHA needs a written policy for this situation• Policy should be implemented consistently• Families with seasonal employment should be

informed of policyIf PHA adopts Method 1, family needs to

know interim reexam will be conductedIf PHA adopts Method 2, family needs to

know interim reexam will not be conducted


Training Program Income


Income ExclusionsTraining Program Income

HUD-Funded Training Program• Exclude all amounts received under the

training program while they are in the program


HUD-Funded Training

The head of a tenant family receives $550 mo. in TANF. She enrolls in a HUD-funded training program operated by the PHA. TANF benefits stop. She receives $700 mo. while in the training program. Upon completion, she receives a job at the PHA earning $900 per month.

What monthly income is counted during training?

How long is income excluded?

What is counted after completion?



5.609(c)(8)(v)• Exclude all incremental earnings and benefits

resulting from participation in a qualifying State or local employment training program includes programs not affiliated with a local

governmentno specific programs cited



Incremental income: Increase in total amount of benefits and

earnings of family member prior to enrollment in training program versus after enrollment

PIH 98-2 states welfare and earnings



5.609(c)(8)(v)• Exclude incremental earnings and benefits

only while the family member participates in the employment training program



Definition of training program for 5.609(c)(8)(v) income exclusion:• Clearly defined goals and objectives



Training may include, but is not limited to• Occupational classroom training • Subsidized on-the-job training • Basic education

PIH 98-2


Training Program Income (c)(8)(v)

A family head receives $600 per month in TANF. He then enrolls in a qualified State employment training program and receives $750 per month in training income. TANF benefits stop.

What income is counted?

How long will income be excluded?


Training Program Income Issues When new employment is reported, PHA needs to

determine whether employment is part of a training program• Notice PIH 2001-15 identified frequent errors in this

componentRecommends educating participants on eligible

types of training programs• Check data-gathering forms for questions


Earned Income Disallowance



HCV: 24 CFR 5.617

Effective date 4/20/01• Technical

Amendments 2/13/02

PH: 24 CFR 960.255

Effective 10/01/99• Final Rule

–Effective date 4/28/00


PH and HCV earned income disallowance regulations are similar, except:• Section 8 EID only applies to family members

with disabilities• PH EID is not restricted to persons with

disabilities




EID excludes increases earned income from:• New employment• Increased earnings


EID Qualifications

To qualify for the EID, a family must be receiving assistance under the HCV/PH program.• Applicant families are not eligible for the EID

Family must experience an increase in annual income as a result of one of the following reasons . . .


Qualifications1. Employment by a (HCV: disabled) family

member who• Was “previously unemployed”* for one or more

years prior to employment* definition includes a person who has earned not

more than could be earned working 10 hrs/week, 50 wks/year, at established minimum wage

or…or…


Qualifications

2. Increased earnings by a (HCV: disabled) family member:• Whose increased earnings occurred during

member’s participation in an:economic self-sufficiency program job-training program


HUD Definition of Economic Self-Sufficiency Program

Any program designed to encourage, assist, train or facilitate economic independence of assisted families or to provide work for such families


HUD Definition of Economic Self-Sufficiency Program

Economic self-sufficiency programs can include:• job training• employment

counseling• work placement• basic skills training• education OR……...OR……...

• English proficiency• workfare• financial or household mgmt• apprenticeship• activity necessary for work


EID Qualifications

3. New employment or increased earnings by a (HCV: disabled) family member who has received TANF benefits or services within past 6 months

No minimum amount if TANF is received in form of monthly maintenance

If TANF is received in form of one-time payments, wage subsidies, or transportation assistance, total received over 6 month period must be at least $500


Determining the Incremental Increase

Determine the annual income of the EID-qualified person prior to the qualifying change (earned and/or unearned)

Calculate the annual income of the EID-qualified person after the qualifying change

The difference is the incremental increase


Example #1

Alice Brahm had $6000 in TANF benefits at the time she became employed. She is earning $13,600 at her new job, and her TANF benefits have stopped.

How much is the incremental increase?


Example 1: Think it Through

TANF $6000Empl $ 0Total $6000

TANF $ 0Empl $13,600Total $13,600

Did we exclude all of her earned income?

How much did we exclude?

Why didn’t we exclude the $13,600?


Example #2

Art Baker had no income at the time he became employed at $9800 per year.

How much is the incremental increase?


Example 2: Think it Through

Other Inc $ 0Empl $ 0Total $ 0

Other Inc $ 0Empl $9800Total $9800

Did we exclude all of his earned income?How much did we exclude?Why?


EID Initial 12-Month Exclusion

During initial 12 month exclusion period: • Exclude the full amount of increase in income

attributable to employment or increased earnings


EID Initial 12-Month Exclusion

Initial full exclusion period begins on date qualified family member is:• employed; or• first experiences increase in income due to

employment Initial full exclusion extends for a total of 12

cumulative months (don’t have to be consecutive months)


EID Second 12-Month Exclusion and Phase-In

Exclusion is 50% of any increase attributable to employment or increased earnings


EID Second 12-Month Exclusion and Phase-In

Second 12-month exclusion period begins after qualified family member has received 12 cumulative months of full exclusion

Phase-in period extends for a total of 12 cumulative months (not needed to be consecutive months)


EID Maximum 4 Year Disallowance

4 year lifetime maximum disallowance period• Starts at beginning of initial exclusion period

and ends exactly 48 months later• No exclusion may be given after this lifetime

limit has been reached


EID Maximum 4 Year Disallowance

EID regulations call for a maximum of 12 cumulative months for each of the two exclusion periods• Thus, an individual can “max out” after receiving

the EID for only two years12 consecutive full-exclusion months followed by12 consecutive phase-in exclusion months


EID Issues

How will you document – what evidence will you provide:• That the family is a “qualified family”?• The income exclusion in the family’s file?

How will you track the number of months income has been excluded and when the exclusion must end?


EID Issues

Tracking can be complex• In an ideal world, a person with disabilities

who qualifies for the EID will receive:The full exclusion for 12 consecutive monthsThe phase-in exclusion for the next 12

consecutive months• Tracking would be easy


In an Ideal World

1212 2424 3636 4848

100% of increase

100% of increase

50% of increase

50% of increase

Count all incomeCount all income

12 24


EID Issues

Tracking• In reality, the exclusion may stop and start

more than once, making it a challenge to figure out how much to disallow when there is a break during an exclusion period


Reality may be….

9 months9 months 6 months6 months 9 months9 months

100%100%

100%100% 50%50%50%50%

It’s over…It’s over…

1212 2424 3636 4848


EID Issues

Tracking• Or . . . The four-year maximum may be

reached before the full 12 months of phase-in (or even initial full exclusion) have been “used up”


Or…….Reality may be

9 months9 months 3 months3 months

100%100%100%100% 50%50%

It’s over…It’s over…

2 months2 months

1212 2424 3636 4848


Public Housing Only:Individual Savings Accounts

If PHA puts into policy… Instead of the disallowance, the family may elect

to have the PHA deposit in an Individual Savings Account an amount equal to the total amount that otherwise would have been excluded from annual income

PHA releases for rule-specified reasons



Learning Activity: Doria’s EID Calculation Part 1: Calculate the prequalifying income and

the exclusion amount and wages for EID member

Parts 2-4: Recalculate for changes


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May 4th – Violence Against Woman Act

for PH/HCV Occupancy hosted by Emily Wilcox

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Slide #1 © 2007 Nan McKay & Associates Annie Stevenson Common Rent Calculation Errors: Earned...

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Transcript of Slide #1 © 2007 Nan McKay & Associates Annie Stevenson Common Rent Calculation Errors: Earned...