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HUD FY2018 Appropriations: In Brief

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HUD FY2018 Appropriations: In Brief

August 28, 2017January 8, 2018 (R44931)

Most of the funding for the activities of the Department of Housing and Urban Development (HUD) comes from discretionary appropriations provided each year in the annual appropriations acts, typically as a part of the Transportation, HUD, and Related Agencies appropriations bill (THUD). HUD's programs are designed primarily to address housing problems faced by households with very low incomes or other special housing needs.1

Three rental assistance programs—Public Housing, Section 8 tenant-based rental assistance (which funds Section 8 Housing Choice Vouchers), and Section 8 project-based rental assistance, and Public Housing—account for the majority of the department's funding (nearly 80% of total HUD appropriations in FY2017). TwoIn addition, two flexible block grant programs—HOME and the Community Development Block Grant (CDBG) program—help communities finance a variety of housing and community development activities designed to serve low- and moderate-income families. Other more specialized grant programs help communities meet the needs of homeless persons, including those living with HIV/AIDS. HUD's Federal Housing Administration (FHA) insures mortgages made by lenders to homebuyers with low down payments and to developers of multifamily rental buildings containing relatively affordable units. FHA collects fees from insured borrowers, which are used to sustain theits insurance fund. Surplus FHA funds have been used to offset the cost of the HUD budget.

This In Brief report tracks progress on FY2018 HUD appropriations and provides detailed account-level, and in some cases sub-account-level, funding information as wells as footnotes with additional detail or context (Table 1).

Status of Appropriations

The FY2018 appropriations process has been affected by two important and related circumstances: the transition from the Barack Obama Administration to the Donald Trump Administration, which resulted in a delay in the release of the President's FY2018 budget request; and the delayed completion of the FY2017 appropriations process, which meant that final FY2017 totals were not known in time for the new Administration to prepare its FY2018 request.

Enactment of FY2017 Appropriations

Following a series of continuing resolutions, on May 5, 2017, the Consolidated Appropriations Act of 2017 was signed into law (P.L. 115-31). Title II of Division K provided full-year FY2017 appropriations for HUD. The law appropriated $48.1 billion for HUD's programs and activities. After accounting for offsets, the net discretionary budget authority provided for the department by the bill totaled $38.8 billion. This represented a $1 billion increase in funding over FY2016, which was primarily attributable to funding increases for the tenant-based rental assistance account (+$663 million) and project-based rental assistance account (+$196 million). The increased funding largely maintained current services for the roughly 3 million low-income families who receive housing assistance through the Housing Choice Voucher program and the project-based Section 8 program. The largest relative increase in funding was provided for HUD's lead hazard reduction programs (+32%). The law also included $400 million in disaster assistance provided through the CDBG program.

President's Request

On May 23, 2017, the Trump Administration submitted its detailed FY2018 budget request.2 (This followed the release of a FY2018 Budget Blueprint, or "skinny budget," in March 2017.) The budget request included $40.7 billion in gross discretionary appropriations for HUD, not accounting for savings from offsets and other sources. That amount is about $7.3 billion (15%) less than was provided in the final FY2017 appropriations law. When looking at net discretionary budget authority—accounting for the effect of offsets, rescissions, and other savings—the President's budget requested an even greater decrease relative to FY2017: At $31.2 billion in net discretionary funding for HUD, the request represents a decrease of about $7.6 billion (19.6%) compared to the net budget authority provided in FY2017. Much of the decrease is attributable to the President's proposal to eliminate funding for several HUD grant programs. Most notable among these are HUD's two largest block grant programs for states and localities, the CDBG and HOME programs, as well as those funded in the Self-Help Homeownership Opportunity (SHOP) account (i.e., funding for Habitat for Humanity and related sweat-equity programs and certain capacity building programs).

Additionally, the President's budget proposed several policy changes. These included an increase in the share of rent paid by certain recipients of HUD-assisted housing from 30% of family income to 35% and an elimination of utility reimbursements paid to families.

House Action

In anticipation of floor action following the August recess, on August 16, 2017, the House Rules Committee posted the text of H.R. 3354, the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2018, which is to serve as the legislative vehicle for the consolidated appropriations bill, the Make America Secure and Prosperous Appropriations Act, 2018. It(Table 1) as well as a discussion of selected key issues.

For more information about any of the programs, accounts, or funding levels discussed, please feel free to contact the relevant CRS expert, as labeled in the "Key Policy Staff" table at the end of this report. For more information about the Transportation, HUD, and Related Agencies appropriations bill as a whole, and relevant budget and appropriations concepts, readers should see CRS Report R45022, Transportation, Housing and Urban Development, and Related Agencies (THUD): FY2018 Appropriations, by [author name scrubbed] and [author name scrubbed]. For more information on trends in HUD funding, readers should see CRS Report R42542, Department of Housing and Urban Development (HUD): Funding Trends Since FY2002, by [author name scrubbed].

Status of Appropriations

No full-year FY2018 appropriations bills were enacted before the fiscal year began on October 1, 2017. Instead, FY2018 funding for HUD and all other federal agencies is currently being provided through a continuing resolution. More details about that law and the FY2018 appropriations process are provided below.

Continuing Resolutions: The Continuing Appropriations Act, 2018, and Supplemental Appropriations for Disaster Relief Requirements Act, 2017 (P.L. 115-56), was enacted into law on September 8, 2017. Division D of the law provided continuing appropriations for the federal government, including HUD, at FY2017 levels, less an across-the-board reduction of 0.6791%, through December 8, 2017. The only special provision, or "anomaly," relevant to THUD can be found in Section 142; it extended the authority for HUD to renew and restructure expiring project-based Section 8 contracts through the Mark-to-Market program—which was slated to expire on October 1, 2017—for the duration of the continuing resolution. Division B of the law provided supplemental appropriations for disaster relief and includes $7.4 billion in HUD CDBG disaster relief funding.

Prior to expiration of the first CR, Congress approved and the President signed into law a second CR, which extends the term of the first CR until December 22, 2017 (P.L. 115-90). Prior to the expiration of the second CR, a third CR was enacted extending the term of the first CR further, through January 19, 2018 (P.L. 115-96).

House Action: The House passed H.R. 3354, the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2018, on September 14, 2017. That bill serves as the legislative vehicle for a consolidated appropriations bill, the Make America Secure and Prosperous Appropriations Act, 2018, which combines the texts of the remaining appropriations bills that have not been considered by the full House, including H.R. 3353, the Transportation, HUD and Related Agencies Appropriations Act, 2018. H.R. 3353 had been reported by the Appropriations Committee on July 21, 2017, following full committee consideration July 17, 2017, and THUD subcommittee approval on July 11, 2017.

Senate Action: On July 27, 2017, the Senate Appropriations Committee approved its version of a FY2018 THUD appropriations bill, S. 1655, two days after it was approved in subcommittee.

President's Budget: On May 23, 2017, the Trump Administration submitted its detailed FY2018 budget request.2 This followed the release of a FY2018 Budget Blueprint, or "skinny budget," in March 2017.

Table 1. HUD FY2017-FY2018 Detailed Appropriations

In millions of dollars

Accounts

FY2017 Enacted

FY2018 Request

FY2018 Housea

FY2018 Senate Cmte.

FY2018 Enacted

combines the texts of the remaining appropriations bills that have not been considered by the full House, including H.R. 3353, the Transportation, HUD and Related Agencies Appropriations Act, 2018, with some changes. (The substance of the HUD portion of H.R. 3354 appears unchanged from H.R. 3353.) H.R. 3353 was reported by the Appropriations Committee on July 21, 2017, following full committee consideration July 17, 2017, and THUD subcommittee approval on July 11, 2017.

H.R. 3353 would increase gross appropriations for HUD's programs and activities by 18% over the President's budget request, providing a gross total that is level with FY2017. It does not follow the President's proposal to eliminate funding for HOME, CDBG, and SHOP, but it would reduce the funding for those accounts relative to FY2017 (-11%, -3%, and -17%, respectively). It would increase funding for the Housing for the Elderly account relative to FY2017 (+14%) and would provide level funding for most other HUD accounts.

In terms of policy changes, the bill does not include the rental assistance policy reforms requested by the President's budget.

Senate Action

On July 27, 2017, the Senate Appropriations Committee approved its version of a FY2018 THUD appropriations bill two days after it was approved in subcommittee. The bill, S. 1655, would increase gross appropriations for HUD's programs and activities by 4% over FY2017 and H.R. 3353 and by 23% over the President's request. It did not follow all the funding reductions proposed in the President's budget and would provide funding increases to the majority of HUD accounts relative to H.R. 3353.

In terms of policy changes, like H.R. 3353, the bill does not follow the President's rental assistance policy reform proposals. It includes several new policy changes, including an expansion of the Rental Assistance Demonstration—eliminating the cap on the number of units that may convert, modifying the terms of conversion for some properties, and expanding the program to Section 202 Housing for the Elderly properties (Section 236 of the General Provisions)—and new penalties for HUD if the agency does not issue reports to the committee about properties that fail inspection (Section 202 of the General Provisions).

Table 1. HUD FY2017-FY2018 Detailed Appropriations

In billions of dollars

     

Accounts

FY2017 Enacted

FY2018 Pres. Request

FY2018 House Cmte.a

FY2018 Senate Cmte.

Appropriations

 

 

 

 

Appropriations          

Salaries and Expenses (Mgmt. & Adm.)

1.$1,355

1.$1,324

1.$1,351

1.355

$1,355  

Tenant-Based Rental Assistance (Sec. 8 Housing Choice Vouchers)

20.,292

19.,318

20.,487

21.,365  365

Voucher Renewals (non-add)

18.,355

17.,584

18.,710

19.370

,370  

Administrative Fees (non-add)

1.,650

1.,550

1.,550

1.,725  725

New Incremental Vouchers (Including VASH) (non-add)

0.05050b

0.000

0.000

0.060c

60c  

Public Housing Capital Fund

1.,942

0.628

1.850

,852d

1.945

,945  

Public Housing Operating Fund

4.,400

3.,900

4.400

,390d

4.,500  500

Choice Neighborhoods

0.138

0.000

0.020

20

0.050

50  

Family Self Sufficiency

0.075

75

0.075

75

0.075

75

0.075

75  

Native American housing block grants

0.654

0.600

0.654

0.655

655  

Native American Housing Block Grants (non-add)

0.645

0.598

0.645

0.646

646  

Training and Technical Assistance (non-add)

0.007

0.000

0.007

0.007d

7e  

Indian housing loan guaranteee

f

0.007

7

0.000f

g

0.007

7

0.001

1  

Native Hawaiian block grant

0.002

2

0.000

0.000

0.001

1  

Housing, persons with AIDS (HOPWA)

0.356

0.330

0.356

375d

0.330

330  

Community Development Fund

3.,060

0.000

2.960

3,070d

3.060

,060  

CDBG Formula Grants

3.,000

0.000

2.900

3,010d

3.,000  000

Indian Tribes

0.060

60

0.000

0.060

60

0.060

60  

HOME Investment Partnerships

0.950

0.000

0.850

0.950

950  

Self-Help Homeownership

0.054

54

0.000

0.045

50d

0.054

54  

Self-Help and Assisted Homeownership Opportunity Program

0.010

10

0.000

0.010

10

0.010

10  

Section 4 Capacity Building

0.035

35

0.000

0.030

35d

0.035

35  

Rural Capacity Building

0.005

5

0.000

0.005

5

0.005

5  

Veterans Home Rehabilitation Pilot Program

0.004

4

0.000

0.000

0.004

4  

Homeless Assistance Grants

2.,383

2.,250

2.,383

2.456

,456  

Project-Based Rental Assistance (Sec. 8)

10.,816

10.,751

11.,082

11.,507  507

Contract Renewals

10.,581

10.,466

11.,082

11.,222  222

Contract Administrators

0.235

0.285

0.000g

h

0.285

285  

Rental Assistance Demonstration

0.000

0.000

0.000

0.004h

4i  

Housing for the Elderly (Section 202)

0.502

0.510

0.573

576d

0.573

573  

Housing for Persons with Disabilities (Section 811)

0.146

0.121

0.147

0.147

147  

Housing Counseling Assistance

0.055

55

0.047

47

0.050

50

0.047

47  

Manufactured Housing Fees Trust Fundi

j

0.011

11

0.011

11

0.011

11

0.011

11  

Rental Housing Assistance

0.020

20

0.014

14

0.014

14

0.014

14  

Federal Housing Administration (FHA) Expensesi

j

0.130

0.160j

k

0.135j

0.130j

130k d 130k  

Government National Mortgage Assn. (GNMA) Expensesi

j

0.024

24

0.026

26

0.026

26

0.025

25  

Research and technology

0.089

89

0.085

85

0.085

83d

0.085

85  

Fair housing activities

0.065

0.065

0.065

0.065

65

65

65

65

Fair Housing Assistance Program (non-add)

24

24

24

24

Fair Housing Initiatives Program (non-add)

39

39

39

40

Office, lead hazard control

0.145

0.130

0.130

0.160

160  

Lead Hazard Control Grants (non-add)

0.060

60

0.055

55

0.055

55

0.130k

130l  

Lead Hazard Reduction Demonstration (non-add)

0.055

55

0.045

45

0.050

50

0.000k

l  

Information Technology Fund

0.257

0.250

0.150

29d

0.250

250  

Inspector General

0.128

0.126

0.128

0.126

126  

Gross Appropriations Subtotal

48.,056

40.722

47,022

48.,034

49.,942  942

Offsetting Collections and Receipts

 

 

 

 

 

Manufactured Housing Fees Trust Fund

-0.011

11

-0.011

11

-0.011

11

-0.011

11  

FHA

-7.,998

-7.,741

-8.,011

-8.,011  011

GNMA

-1.,224

-1.,616

-1.,676

-1.676

,676  

Offsets Subtotal

-9.,233

-9.,368

-9.,698

-9.,698  698

Total Net Discretionary Budget Authority

38.$38,823

31.$31,354

38.$38,336

40.244

$42,244  

Source: Table prepared by CRS based on P.L. 115-31 and the Explanatory Statement accompanying H.R. 244, the FY2017 consolidated appropriations bill, as published in the Congressional Record, May 3, 2017, beginning on p. H4101; H.R. 3353 and the Comparative Statement of New Budget (Obligational) Authority, as published in H.Rept. 115-237, and H.R. 3354, as amended during floor consideration; S. 1655 and the Comparative Statement of New Budget (Obligational) Authority as published in S.Rept. 115-138; and HUD FY2018 Congressional Budget Justifications.

Justification.

Notes: Totals may not add due to rounding. Only selected set-asides are presented in this table. Figures include advancedadvance appropriations provided in the bills. Supplemental disaster relief appropriations are not shown in this table.

a. Note that the HUD-related portion of H.R. 3354, the vehicle for the FY2018 consolidated appropriations bill as published on the Rules Committee website, iswas substantively identical to the HUD-related portion of H.R. 3353, the FY2018 THUD appropriations bill reported by the House Appropriations Committee.

H.R. 3354 was subsequently amended during floor consideration, and HUD-related amendments are incorporated into this table. b.

b. Includes $40 million for Veteran Affairs Supportive Housing (VASH) vouchers and $10 million for Family Unification Program (FUP) vouchers, with a priority for serving youth exiting foster care.

c. Includes $40 million for VASH vouchers and $20 million for FUP vouchers, with a priority for serving youth exiting foster care.

d. This amount is adjusted to reflect floor amendments to H.R. 3354. e. In recent years, appropriations acts have included funding in this account for national and regional organizations that represent Native American housing interests to provide training and technical assistance to tribes, and separate funding for HUD to "support the inspection of Indian housing units, contract expertise, training, and technical assistance" related to Native American housing programs. S. 1655 would combine this funding and provide $7 million in total funding for training and technical assistance. (In FY2017, $3.5 million was provided for each purpose, for a total of $7 million.) The bill woulddoes not specify an amount for national and regional organizations, but in S.Rept. 115-138 the committee states that it "expects that these technical assistance funds will be provided to both national and regional organizations" with relevant experience.

e. A f. A separate home loan guarantee program for Native Hawaiians was not funded in FY2017, and funding for that program is not included in the President's budget request or in either the House or Senate committee-passed bills. However, the FY2018 HUD Budget Justification states that HUD "will carry forward balances of prior year loan guarantee authority sufficient to guarantee up to $23.3 million in loans" under the Native Hawaiian home loan guarantee program in FY2018.

f. g. The President's budget does not request funding for the Indian Housing Loan Guarantee Program. However, the FY2018 HUD Budget Justification states that HUD "will carry forward balances of prior year subsidy budget authority sufficient to guarantee up to $1.78 billion in loans in fiscal year 2018" under the program. The Senate committee-passed bill provides less credit subsidy, and authorizes a lower aggregate dollar amount of loan guarantees, than was provided in FY2017 or is included in the House bill.

g. Beginning inh. Since 2001, HUD has contracted with public housing agencies and state housing finance agenciesPublic Housing Agencies and State Housing Finance Agencies to manage project-based Section 8 contracts on the department's behalf. In 2008, HUD began the process of rebidding its existing contracts. That rebid process was contentious, and ended in litigation that ultimately required HUD to restart the process under new terms. The House Appropriations Committee, in H.Rept. 115-237, expresses displeasure with the department for not having completed the rebid per the guidance of the committee, and states, "Until the Committee gets assurances that HUD will respond appropriately, the Committee directs HUD to perform these functions in-house and provides adequate funding under the Management and Administration account."

h. i. Section 236 of the General Provisions of the bill proposes a number of modifications to the Rental Assistance Demonstration (RAD) program, including removing the cap on the number of public housing units that may participate (currently, at 225,000 units), allowing higher rents for certain multifamily properties that wish to convert (under what is often referred to as first component RAD), and expanding eligibility for RAD conversion to Section 202 properties. The bill would provide $4 million for additional rental subsidy to facilitate the conversion of Section 202 units.

i. j. Some or all of the cost of funding these accounts is offset by the collection of fees or other receipts, shown later in this table.

j. k. The President's budget requested an increase of $30 million in appropriations for administrative contract expenses for FHA over FY2017, to be offset by a new administrative support fee to be charged to participating FHA lenders. Neither the House nor Senate committee-passed bills provide this additional funding or the authority to charge an administrative support fee.

k. l. In S.Rept. 115-138, the Senate Appropriations Committee states, that "In an effort to ensure that more communities can access funding to address lead-based paint hazards in their low-income housing, the Committee has consolidated HUD's two lead hazard funding programs into a single grant program." However, it also states that "the Committee directs HUD to award no less than $65,000,000 of grants to remediate lead-based paint hazards in low-income housing to those jurisdictions with the highest lead-based paint abatement needs."

of grants to remediate lead-based paint hazards in low-income housing to those jurisdictions with the highest lead-based paint abatement needs." Selected Issues Housing Choice Voucher Renewal Funding

The cost of renewing existing Section 8 Housing Choice Vouchers is one of the most contentious HUD funding issues each year. It is the largest single expense in the largest account (the tenant-based rental assistance account) in HUD's budget. All of the roughly 2 million portable rental vouchers that are currently authorized and in use are funded annually, so in order for the low-income families currently renting housing with their vouchers to continue to receive assistance (i.e., renew their leases at the end of the year), new funding is needed each year. How much it will cost to renew those vouchers is difficult to estimate—since the cost of a voucher is driven by changes in market rents and tenant incomes—and estimates can change from the time the President's budget is released until final appropriations are enacted, as newer data are collected by HUD.

Although the President's budget request, the House-passed HUD appropriations bill, and the Senate-reported bill all include different funding levels for voucher renewals for FY2018, each purports to provide enough to fund all vouchers currently in use.3 However, low-income housing advocates have argued even more will be needed to maintain current vouchers.4 If the amount that is ultimately provided is less than the amount needed to fund all vouchers currently in use, then several things may happen. The Public Housing Authorities (PHAs)—the state-chartered entities that administer the program at the local level—with reserve funding from prior years may spend some of those reserves to maintain current services. PHAs without reserve funding may apply to HUD for a share of the reserve funding that Congress generally provides to the department and allows to be used to prevent termination of assistance. And PHAs may undertake cost-saving measures such as not reissuing vouchers to families on their waiting lists when currently assisted families leave the program.

Public Housing Operating Fund Proration

The largest source of federal funding to support the low-rent public housing program is provided through the public housing operating fund account. Operating funds are allocated to PHAs according to a formula that estimates what it should cost PHAs to maintain their public housing properties based on the characteristics of those properties. When the amount of appropriations provided is insufficient to fully fund the amount PHAs qualify for under the formula, their allocation is prorated, or reduced proportionally. Assuming the operating fund formula accurately reflects the costs of maintaining public housing, less than full funding means PHAs either will not be able to meet their full operating needs (e.g., maintenance, staffing, services for residents) or will have to spend down reserves they may have accumulated or seek other sources of funding.

According to HUD's Congressional Budget Justifications, the amount requested in the President's budget for the Operating Fund for FY2018 (a 13% decrease from FY2017) would be sufficient to fund an estimated 80.7% of PHAs' formula eligibility. Both the House-passed and Senate committee-reported bills propose more funding than requested, but neither proposes the full amount the President's budget estimated would be needed for 100% proration.5

Rental Assistance Demonstration (RAD)

The Rental Assistance Demonstration (RAD) is an Obama Administration initiative, first authorized by Congress in FY2012. Under RAD, a limited number of units funded through other HUD-assisted housing programs may convert to either project-based Section 8 rental assistance or Housing Choice Vouchers. The programs include the Rent Supplement program, Rental Assistance Payments, Public Housing, and Section 8 Moderate Rehabilitation program. RAD has never received funding, which means that in order to be eligible, projects must be able to undergo a cost-neutral conversion (i.e., receive no increase in federal subsidy as a result of the conversion).

Both the President's budget request and the Senate committee-reported bill proposed several expansions to the RAD demonstration for FY2018. They would eliminate the current 225,000-unit cap on the number of public housing units that can undergo a RAD conversion. Further, they would authorize the conversion of units with Project Rental Assistance Contract (PRAC) assistance under the Section 202 Housing for the Elderly program.

Funding for HUD Grant Programs The President's budget request included a proposal to eliminate funding for several HUD grant programs that provide funding for various affordable housing and community development activities. Most notable among these are HUD's two largest block grant programs for states and localities, the Community Development Block Grant (CDBG) and HOME Investment Partnerships programs, as well as grants funded in the Self-Help Homeownership Opportunity (SHOP) account (i.e., funding for sweat-equity programs, like Habitat for Humanity, and certain capacity building programs) and the Choice Neighborhoods Initiative. The press release accompanying the budget request suggested that the activities funded by these grant programs should be devolved to the state and local levels.6 Both the House-passed and Senate committee-reported bills would continue funding for these programs, though in some cases at lower levels than in FY2017. Performance-Based Contract Administrators for Project-Based Section 8

Performance-Based Contract Administrators (PBCAs) are organizations (historically, PHAs and state housing finance agencies) hired by HUD to manage contracts between HUD and private property owners under the project-based Section 8 rental assistance program. The President's FY2018 budget justifications for HUD indicated the agency's intent to issue a solicitation for new contracts during FY2018. This follows failed attempts during the Obama Administration to rebid the PBCA contracts that culminated in a series of court rulings requiring HUD to adhere to federal procurement law in issuing the contracts.7

The House-passed FY2018 HUD appropriations bill included no new funding for PBCAs. H.Rept. 115-237 included language directing the department to absorb PBCA functions until the committee gets assurances that HUD will respond to the committee's directions related to the PBCA rebid. Among the committee's directions was that the agency should conduct the solicitation under full and open competition and in accordance with federal procurement law.

In December 2017, HUD published a draft solicitation for new contracts to replace the existing PBCA contracts.8

FHA and Ginnie Mae Offsets

Under the terms of the Budget Control Act, as amended, discretionary appropriations are generally subject to limits, or caps, on the amount of funding that can be provided in a fiscal year. In addition, the annual appropriations bills also are individually subject to limits on the funding within them that are associated with the annual congressional budget resolution.9 The congressional appropriators can keep these bills within their respective limits in a number of ways, including by providing less funding for certain purposes to allow for increases elsewhere in the bill. In certain circumstances, appropriators also can credit "offsetting collections" or "offsetting receipts" against the funding in the bill, thereby lowering the net amount of budget authority in that bill.10

In the THUD bill, the largest source of these offsets is generally the Federal Housing Administration (FHA). FHA generates offsetting receipts when the loans that are insured by the program in a given year are estimated to collect more in fees paid by borrowers than will be needed to pay default claims to lenders.11 While not generally as large a source, the Government National Mortgage Association (GNMA) generally provides significant offsets within the THUD bill as well. GNMA guarantees mortgage-backed securities made up of government-insured mortgages (such as FHA-insured mortgages) and similarly generates offsetting receipts when the associated fees it collects are estimated to exceed any payments made on its guarantee.

The amount of offsets from FHA and GNMA can vary from year to year based on estimates of the amount of mortgages that FHA will insure, and that GNMA will guarantee, in a given year and how much those mortgages are expected to earn for the government. These estimates, in turn, are based on expectations about the housing market, the economy, the credit quality of borrowers, and relevant fee levels, most of which are factors outside of the immediate control of policymakers. If the amount of available offsets increases from one year to the next, then additional funds could be appropriated relative to the prior year's funding level while still staying within the same spending limit. If the amount of offsets decreases, however, then less funding would need to be appropriated relative to the prior year to avoid exceeding the same spending limit, all else equal.

For FY2018, the Congressional Budget Office (CBO) estimated that FHA and GNMA offsetting receipts would increase by just over $400 million as compared to FY2017. As a result, congressional appropriators could provide up to that much in additional appropriations in FY2018 without an increase in the total net budgetary authority as measured against the discretionary spending limits.

Author Contact Information

[author name scrubbed], Specialist in Housing Policy ([email address scrubbed], [phone number scrubbed])

Key Policy Staff

Area of Expertise

Name

Phone

E-mail

Public and assisted housing, including Section 8 Housing Choice Voucher and public housing; project-based Section 8 rental assistance

; HUD lead hazard programs; overarching HUD funding issues

[author name scrubbed]

[phone number scrubbed]

[email address scrubbed]

Community development, including CDBG and capacity building

[author name scrubbed]

[phone number scrubbed]

[email address scrubbed]

Section 202 housing for persons who are elderly, Section 811 housing for persons with disabilities, homeless assistance, HOPWA, and Fair Housing

[author name scrubbed]

[phone number scrubbed]

[email address scrubbed]

FHA, HOME, housing counseling, Native American housing programs

, Self Help Homeownership (SHOP)

[author name scrubbed]

[phone number scrubbed]

[email address scrubbed]

Footnotes

1.

For more information about federal housing assistance programs, see CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy, by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. For more information on HUD funding trends, see CRS Report R42542, Department of Housing and Urban Development (HUD): Funding Trends Since FY2002, by [author name scrubbed].

2.

For more information on the President's budget, see https://www.whitehouse.gov/omb/budget. For more information about HUD's budget request, see https://portal.hud.gov/hudportal/HUD?src=/program_offices/cfo/reports/fy18_CJ.

3.

From HUD's Congressional Budget Justifications for FY2018: "The funding request reflects a set of policies, described further below, that reduce costs while continuing to assist current residents." From the House THUD Subcommittee press release accompanying markup of the THUD bill: "This is adequate to continue assistance to all families and individuals currently served by these programs," https://appropriations.house.gov/news/documentsingle.aspx?DocumentID=394975. From S.Rept. 115-138: "In recognition of the Section 8 program's central role in ensuring housing for vulnerable Americans, the Committee recommendation and existing reserves will provide sufficient resources to ensure that no current voucher holders are put at risk of losing their housing assistance."

4.

The Center on Budget and Policy Priorities estimates that $19.6 billion will be needed in CY2018 to renew existing vouchers in use, compared to the $19.3 billion proposed by the Senate, $18.7 billion proposed by the House, and $17.8 requested by the President, https://www.cbpp.org/research/housing/congress-should-add-funding-to-prevent-2018-housing-voucher-cuts.

5.

The President's budget assumes $4.8 billion would be required for 100% proration in FY2018.

6.

HUD, "Trump Administration Proposes 2018 HUD Budget," press release, May 23, 2017, https://www.hud.gov/press/press_releases_media_advisories/2017/HUDNo_17-041.

7.

The Supreme Court's denial of certiorari in United States v. CMS Contract Management Services in April 2015 left the decision of the U.S. Court of Appeals for the Federal Circuit in effect. See CMS Contract Mgmt. Servs. v. Mass. Hous. Fin. Agency, 745 F.3d 1379 (Fed. Cir. 2014).

8.

Housing Assistance Payments (HAP) Contract Regional Support Services (HAPRSS) [Formerly known as Performance-Based Contract Administrator (PBCA) Program], Solicitation Number: 86546A18R00002, Agency: Department of Housing and Urban Development. Available at https://www.fbo.gov/index?s=opportunity&mode=form&id=e08c73f6c31b434e17cef64d0f2f3df0&tab=core&_cview=1.

9.

For background on these limits, which are referred to as "302(b) allocations" or "302(b) subdivisions," see CRS Report R40472, The Budget Resolution and Spending Legislation, by [author name scrubbed].

10.

According to Congressional Quarterly's American Congressional Dictionary, offsetting receipts are funds collected by the federal government, either from certain government accounts or the public as part of a business oriented transaction. They are not counted as revenue, but instead are deducted from spending because they are counted as "negative spending." The Government Accountability Office's Budget Glossary defines offsetting collections as collections authorized by law to be credited to appropriations or expenditure accounts that result from businesslike transactions, market-oriented activities with the public, intergovernmental transfers, and collections from the public that are governmental in nature but are required by law to be classified as offsetting. (GAO-05-734SP)

11.

The Federal Credit Reform Act of 1990 (FCRA) provided that the cost of federal loan insurance in a given fiscal year be recorded in the budget as the net present value of all expected cash flows from loans insured in that year. For the FHA accounts, the cash inflows are mainly the insurance premiums paid by borrowers, and the cash outflows are mainly the payments to lenders for the cost of loan defaults. If the estimated cash flows in are expected to exceed cash outflows for the loans insured in that year, then offsetting receipts are available; if cash flows out are expected to exceed cash flows in for the loans insured in that year, appropriations are needed to supplement the program. For more information, see CRS Report R42875, FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund), by [author name scrubbed].