Public Housing Agencies (PHAs) can only help low-income families with Housing Choice Vouchers (HCV) if they can pay the costs of administering the program. Since the beginning of the program in the mid-1970s, the formula for allocating administrative fees has largely relied on differences in fair market rents (FMR) for determining administrative fee allocations, based on the theory that FMRs correlate with wage rates and other costs of operation, like office rent.
 
The lack of actual data on how much it costs to run a high performing and efficient voucher program has undermined HUD’s efforts to ensure adequate levels of funding throughout the nation.
 
Through a very detailed and methodical approach, this study captured all costs incurred (labor, non-labor, direct, indirect, overhead costs) at a broad sample of 60 PHAs operating high performing and efficient HCV programs across the country between 2012 and 2014. The study proposes a new administrative fee formula, which is based on cost drivers that cover the actual costs to administer the HCV program and has implications for the overall budget and for individual PHAs.