After announcing a $4.5 million budget shortfall earlier this year, Chattanooga Housing Authority officials said Tuesday they expect to have a break-even cash flow by the end of the year.

“We’ve had two reductions in force this year that represents about $3.5 million in savings,” said Betsy McCright, CHA’s interim executive director. “We’ll start to realize those savings by September.”

At the housing authority’s monthly board meeting, CHA officials said they plan to start building financial reserves by 2009 and 2010.

Officials with the U.S. Department of Housing and Urban Development have been investigating CHA’s financial problems for the past two weeks.

“We’ve had HUD REAC (Real Estate Assessment Center) auditors on board. We have just one left, and he’s finishing up. We expect a full report from HUD’s REAC sometime in July,” said Ms. McCright.

At the meeting, board members also approved a $395,856 contract with the Partnership for Families, Children and Adults to provide social services to elderly and disabled residents. The contract is for 19 months with the option for extension.

The Partnership has been providing similar services to the housing authority for more than a decade. The authority sent out a request for bids from other companies but did not receive any, officials said.

Sharon Kelley, owner of Sharon’s Adult Day Center and Rose of Sharon’s Senior Villa, told board members said she was not notified of the authority’s request for new proposals, although she’d met with the housing authority’s former executive director to discuss her desire and ability to supply services to elderly and disabled residents.

CHA officials told Ms. Kelley she would be notified of similar contracts in the future.