Housing authorities receive operating and capital subsidies from the U.S. Department of Housing and Urban Development (HUD) to cover ongoing operating and capital costs. They use these funds for general property management, ongoing program compliance, and, in many cases, providing supportive services to residents. Funding for operating and capital subsidies is subject to the annual appropriations process for the federal budget. For the past several decades, funding for public housing has been on a steady decline.
The Public Housing Operating Fund is the only major source of federal funds available to housing authorities, aside from tenant rent, to support public housing operations. Over the past several years, Congress has not provided the funding level calculated by formula to meet the full operating subsidy, but rather providing deeply prorated funding. The Operating Fund has only been fully funded to meet the need in 4 of the last 16 years since 2001. The Operating Fund continues to be underfunded, particularly after the devastating reductions of sequestration, and in FY13, FY14, FY15 and FY16 the Operating Fund was prorated at 82, 86, 84 and 89 percent, respectively.
The Public Housing Capital Fund is the dedicated source of annual funding available to housing authorities to make rehabilitation and modernization improvements to public housing. During the last decade, capital fund appropriations have dwindled, while ongoing accrual needs have increased dramatically. Currently, Capital Fund appropriations average less than $2 billion annually, while annual capital accrual needs are estimated at $3.4 billion. In 2010, HUD released its Capital Needs in the Public Housing Program report, estimating the capital needs for public housing to be approximately $25 billion. Based on estimated accrual rates (amount of funding needed to maintain the current stock) and recent budget allocations for the capital fund, we estimate that the capital needs for public housing has grown to at least $35 billion since 2010.