Recent guidance from HUD will effectively impose a salary cap on public housing agency executives for fiscal year 2012 by barring the use of HUD funds to pay salaries in excess of $155,500.

On February 24, 2012, HUD issued guidance on implementing the provision in its Federal Fiscal Year (FFY) 2012 Appropriations Act (P.L. 112-55) that limits the use of FFY 2012 appropriations funding for Section 8 Tenant-Based Rental Assistance and Section 9 Capital Fund and Operating Fund to pay public housing agency (PHA) employee salaries.

Effective March 17, 2012, no funds originating from the Section 8 Tenant-Based Rental Assistance and Section 9 Capital Fund and Operating Fund may be used to pay the salary of a PHA employee in excess of $155,500 (Executive Schedule Level IV).

The salary limitation applies to all PHAs, including low-rent only, Section 8 only and Moving to Work PHAs that: (1) receive FFY 2012 appropriations for the Section 8 Housing Choice Voucher program, Section 9 Capital Fund, or Section 9 Operating Fund; and (2) pay any annual salary to an employee during the PHA’s 2012 fiscal year that exceeds $155,500.

It also applies to fees for asset management or Section 8 administration collected by a PHA’s Central Office Cost Center that may be attributable to Section 8 or Section 9 funding. Any fees collected by a PHA that originate from FFY 2012 funding for Section 8 or Section 9 are subject to the salary limitation.

Funds remaining from previous fiscal years are not affected by the salary limitation. PHAs may carry over funding from previous years or use other non-restricted funds to pay salaries, in accordance with applicable eligibility requirements.

The salary limitation applies to all PHA employees, including chief executive officers, executive officials, and employees. PHAs must determine on a case-by-case basis whether or not independent contractors are employees of the PHA for the purposes of applying the salary limitation.

To implement the salary limitation, each PHA must compute 1) the beginning and end dates of its fiscal year 2012, 2) employees’ salaries in excess of $155,500, and 3) the amount of salary that has been paid and remains due as of March 17, 2012. “Salary” includes payments during the PHA’s fiscal year 2012 to all employees who are paid on an annual basis. It does not include bonuses, overtime, or benefits such as requirement, life insurance, medical insurance, or the use of a PHA vehicle.