Order Code RL33275
Low-Income Home Energy Assistance
Program (LIHEAP) Allocation RatesThe LIHEAP Formula:
Legislative History and Current Law
Updated August 30, 2007November 19, 2008
Libby Perl
Analyst in Housing Policy
Domestic Social Policy Division
Low-Income Home Energy Assistance Program
(LIHEAP) Allocation RatesThe LIHEAP Formula:
Legislative History and Current Law
Summary
The Low- Income Home Energy Assistance Program (LIHEAP) provides funds
to states so that they may help low-income households pay home energy expenses.
States may use LIHEAP funds to assist families with heating and cooling costs,
provide crisis assistance, and pay for weatherization projects. The LIHEAP statute
provides for two types of funding: regular block grant funds and emergency
contingency grants. All regular funds that Congress appropriates are allocated to the
states, the District of Columbia, U.S. territories and commonwealths, and Indian
tribal organizations, whereas contingency funds may be released to one or more states
at the , the District of Columbia, U.S. territories and commonwealths, and Indian
tribal organizations (collectively referred to as grantees) primarily to help lowincome households pay home energy expenses. The LIHEAP statute provides for
two types of funding: regular funds (sometimes referred to as block grant funds) and
emergency contingency funds. Regular funds are allocated to grantees based on a
formula, while contingency funds may be released to one or more grantees at the
discretion of the Secretary of the Department of Health and Human Services
(HHS) based
on emergency need.
Regular LIHEAP funds are allocated to the states according to a formula that
has a long and complicated history. (Tribes receive funds based on their number of
federally eligible LIHEAP households compared to the total number in the state,
whereas territories receive a set percentage of total LIHEAP regular funds.) In 1980,
In 1980, Congress created the predecessor
program to LIHEAP, the Low- Income Energy
Assistance Program (LIEAP), P.L. 96223 as part of the Crude Oil Windfall Profits Tax Act (P.L.
96-223). Because Congress was particularly concerned with the high costs of heating (as
opposed to cooling)
heating, funds under LIEAP were distributed according to a multi-step
formula that benefitted cold-weather states. Later in 1980, Congress further amended
the LIEAP formula in a continuing resolution, P.L. 96-369, but did nothing to change
the emphasis on heating expenditures in cold-weather states. Congress enacted
LIHEAP in 1981
benefitted cold-weather states. In 1981, Congress enacted LIHEAP as part of the
Omnibus Budget Reconciliation Act (P.L. 97-35), replacing LIEAP, and. However, the
LIHEAP statute specified that states would
continue to receive the same percentage
of regular funds that they did under the
LIEAP formula.
When Congress reauthorized LIHEAP in 1984 as part of the Human Services
Reauthorization Act (P.L. 98-558), it changed the
program’s formula by requiring the
use of more recent population and energy data
and requiring that HHS consider all energyboth
heating and cooling costs of low-income households alone (a
(a change from the focus on the
heating needs of all households). The effect of these
changes meant that , in general,
funds would be shifted from cold-weather northeastern and
midwestern states to southern and westernstates to warm-weather states. To prevent
a dramatic shift of
funds, Congress added two “hold-harmless” provisions to the
formula. The result of
these provisions is a current law, three-tiered formula
(sometimes referred to as the “new” formula), the application of which
depends on
the amount of regular funds that Congress appropriates.
The Tier I formula is used to allocate funds when the total LIHEAP regular fund
appropriation is less than or equal to the equivalent of an FY1984 a hypothetical FY1984
appropriation of
$1.975 billion. Above an appropriation of $1.975 billionthis level, funds are allocated
according to
Tier II of the formula, which includes a hold-harmless level to prevent
some certain states
from losing LIHEAP funds. Finally, Tier III applies to appropriations at
or above
$2.25 billion, and includes a second hold-harmless provision, the holdharmless rate. Until FY2006, when Congress appropriated $2.48 billion in regular
funds, totalhold-harmless rate.
Since FY1986, LIHEAP regular fund appropriations had nothave exceeded the equivalent
of an
FY1984 appropriation of $1.975 billion since FY1986. This report will be updated
as legislative or program activities warranton three occasions: in FY2006, when
the regular fund appropriation was $2.48 billion; in FY2008, when appropriations
slightly exceeded the trigger; and in FY2009, when Congress directed that $840
million be distributed according to the “new” LIHEAP formula.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LIHEAP: Regular and Contingency GrantsPredecessor Programs to LIHEAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
History and Previous Methods for Distributing Regular Funds . . . . . . . . . . . . . . . 2
Predecessor Program: Low Income Energy Assistance Program (LIEAP) . . 2
Enactment of LIHEAP2
Community Services Administration Energy Assistance Programs . . . . . . . 3
Low Income Energy Assistance Program (LIEAP) . . . . . . . . . . . . . . . . . . . . 6
The LIEAP Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Enactment of LIHEAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reauthorization: Formula Discussions10
Continued Use of the LIEAP Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LIHEAP: Introduction of a Hold-Harmless Level11
The 1984 LIHEAP Reauthorization: A New Formula . . . . . . . . . . . . . . . . 11
Formula Discussions . . . . . . . . . . . . .. . . . . . 5
LIHEAP: Introduction of a Hold-Harmless Rate . . . . . . . . . . . . . . . . . . . . . 6
Current Law Distribution: How Allotments of Regular LIHEAP
Funding Are Determined. . . . 11
Introduction of a Hold-Harmless Level . . . . . . . . . . . . . . . . . . . . . . . . 12
Introduction of a Hold-Harmless Rate . . . . . . . . . . . . . . . . . 7
Tier I: Below $1.975 Billion . . .. . . . . . . . 12
LIHEAP Formula Statutory Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tier II: From $1.975 Billion up to $2.25 Billion . . . . . . . . . . . . . . . . . . . . . 8
Tier III: At or Above $2.2513
Determining LIHEAP Regular Fund Allotments Using the “New” Formula . . . 14
Calculating the New Formula Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Using the New Formula Rates to Allocate Funds to the States . . . . . . . . . . 17
Tier I: Below $1.975 Billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Further Depiction of How State Allotments Depend Upon
Appropriation Levels17
Tier II: From $1.975 Billion up to $2.25 Billion . . . . . . . . . . . . . . . . .18
Tier III: At or Above $2.25 Billion . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Components of the New Formula Rates (Used in Tiers II and III)19
Implementation of the “New” LIHEAP Formula . . . . . . . . . . . . . . . . . . 15
Other CRS Reports on LIHEAP. . 20
Appendix A: Estimated Appropriations to the States Under Various
Hypothetical Appropriation Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Appendix: Summary of Significant LIHEAP Rates and Triggers . . . . . . . . . . . 1723
Appendix B: Further Depiction of How State Allotments
Depend Upon Appropriation Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Appendix C: Actual LIHEAP Allocations to the States, FY2006-FY2009 . . . . . 28
List of Figures
Figure 1. Estimated Low Income Home Energy Assistance Program
(LIHEAP)
Allocations at Various Appropriation LevelsHypothetical Appropriations Level for
Three Types of States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1427
List of Tables
Table 1. Low Income Home Energy Assistance Program (LIHEAP),
Estimated State Allotments for Regular Block GrantsSelect Energy Assistance Formulas, FY1975-FY1980 . . . . . . . . . . . . . . 6
Table 2. Distribution of Funds Under LIEAP . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 23. Low-Income Home Energy Program (LIHEAP):
“Old” and “New” Allotment Rates by State, FY20072008 . . . . . . . . . . . . . . . . . . . 18
Low-Income Home Energy Assistance
Program (LIHEAP) Allocation Rates21
Table A-1. LIHEAP Estimated State Allotments for Regular Funds
at Various Hypothetical Appropriation Levels . . . . . . . . . . . . . . . . . . . . . . 24
Table C-1. LIHEAP Actual State Regular Fund Allotments for
FY2006 through FY2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
The LIHEAP Formula:
Legislative History and Current Law
Introduction
The Low- Income Home Energy Assistance Program (LIHEAP) is a block grant
program administered by the Department of Health and Human Services (HHS)
under which the federal government gives annual grants to states, the
District of
Columbia, U.S. territories and commonwealths, and Indian tribal
organizations to
operate multi-component home energy assistance programs for
needy households.1
Established in 1981 by Title XXVI of P.L. 97-35, the Omnibus Budget
Reconciliation Act, LIHEAP has LIHEAP has
been reauthorized and amended severala number of times,
most recently in 2005, when P.L. 10958109-58, the Energy Policy Act, authorized annual
regular LIHEAP funds at $5.1 billion per year from FY2005
through FY2007.2
The federal LIHEAP statute has very broad guidelines, with almost all decisions
regarding the program’s operation made by the states. Recipients may be helped with
their regular heating and cooling costs, receive crisis assistance,2 have weatherizing
expenses expenses
paid, or receive other aid designed to reduce their home energy needs.
Households Households
with incomes up to 150% of the federal poverty income guidelines (or,
if greater, 60%
of the state median income) are , are federally eligible for LIHEAP benefits. States
may may
adopt lower income limits, but no household with income below 110% of the
poverty poverty
guidelines may be considered ineligible. The most current Department of
Health and Human Services (HHS)HHS data show an that an
estimated 5.3 million households
received winter heating/ or winter crisis assistance in FY2005.3
LIHEAP: Regular and Contingency Grants
in FY2005 (the majority of LIHEAP funds pay for heating assistance).3
The LIHEAP statute provides for two types of program funding: block grant
funds — alsoregular funds
— sometimes referred to as regularblock grant funds — and emergency contingency grants. funds.
Regular funds
are allotted to states according to methods prescribed by the LIHEAP statute as
amended byon the basis of the LIHEAP statutory formula,
which was enacted as part of the Human Services Reauthorization Act of 1984 (P.L.
98-558).4 The way in which regular funds are allocated to states depends on the
amount of funds appropriated by Congress. The second type of LIHEAP funds,
emergency contingency funds, may be released and allotted to one or more states at The
allotment methods operate so that the way in which funds are allocated to states
1
For additional information on LIHEAP, see CRS Report RL31865, The Low- Income Home
Energy Assistance Program (LIHEAP): Program and Funding, by Libby Perl.
2
Crisis assistance may include immediate funds to prevent utilities from being disconnected
in a household.
2
LIHEAP is codified at 42 U.S.C. §§8621-8630.
3
U.S. Department of Health and Human Services, Administration for Children and Families,
FY2005 LIHEAP Home Energy Notebook, May 2007, p. 28.
CRS-2
depends on the amount of funds appropriated by Congress. For FY2007, Congress
appropriated $1.98 billion in LIHEAP regular funds.
Contingency funds may be released and allotted to one or more states at the
Report to Congress, April 24, 2008, p. 20.
4
The formula section is codified at 42 U.S.C. §8623.
CRS-2
the discretion of the President and the Secretary of HHS.5 The funds may be released at
at any point in the fiscal year to meet additional home energy assistance needs created
by a natural disaster or other emergency.4 On August 29, 2007, the Department of
Health and Human Services announced that it would release $50 million in
contingency funds to twelve states because of severe heat. The funds that were
released were part of the FY2007 contingency fund appropriation of $181 million.
Approximately $131 million in FY2007 funds remain available until the end of the
fiscal year, at which point they expire. In addition, just under $21 million in FY2005
contingency funds remain available until expended.
The remainder of this report discusses only the history and methods of
distributing regular LIHEAP funds.
History and Previous Methods for
Distributing Regular Funds
Predecessor Program: Low Income Energy
Assistance Program (LIEAP)
The predecessor program to LIHEAP, the Low Income Energy Assistance
Program (LIEAP), was established as part of the Crude Oil Windfall Profits Tax Act
of 1980, P.L. 96-223. Like LIHEAP, the predecessor program allocated funds to
states so that they could assist low-income households in paying home energy costs,
primarily the costs of heating their homes. The program emerged as the result of
concern over substantial increases in home energy costs, especially home heating fuel
costs, during the late 1970s. In its report accompanying H.R. 3919, a bill that
contained an early version of LIEAP, the Senate Finance Committee explained its
emphasis on total heating expenditures writing that “[a]lthough all low-income
households have suffered from increased energy costs, a particular hardship has
fallen on those households in the very coldest parts of the country....”5 As a result of
Congress’s concern about high heating costs, P.L. 96-223 allocated funds to states
through a formula that emphasized heating needs, while placing less importance on
cooling needs. In fact, P.L. 96-223 allowed states to provide funds for cooling only
when households could demonstrate medical necessity.
Under LIEAP, states chose one of four alternative formulas to measure home
energy needs. Each formula contained different combinations of several factors:
4
Depending on how Congress appropriates them, contingency funds may remain available
for distribution in more than one fiscal year, or they may expire with the fiscal year for
which they were appropriated.
5
Report of the Senate Committee on Finance, S.Rept. 96-394, to accompany H.R. 3919,
November 1, 1979, p. 112.
CRS-3
residential energy expenditures; heating degree days6 or heating degree days squared;
and the number of low-income households in the state.7 Because total energy
expenditures (rather than energy expenditures of low-income households only) and
heating degree days (rather than cooling degree days) are higher in cold-weather
states, all formulas effectively gave preference to the home energy needs of lowincome households in cold-weather states. Congress authorized LIEAP for one year,
FY1981, at $3 billion.
Before the formula in P.L. 96-223 could be used to allocate funds, however,
Congress introduced an alternative method for computing the state distribution rates.
It did so when it appropriated $1.85 billion in LIEAP funds for FY1981 in a
continuing resolution (P.L. 96-369). In addition to appropriating funds, P.L. 96-369
amended the set of formulas for determining state allotments that was set out in the
Crude Oil Windfall Profits Tax Act. The continuing resolution referred to a House
report (H.Rept. 96-1244) where the specific formula components were laid out.
H.Rept. 96-1244 contained an alternative set of formulas to those in P.L. 96-223,
with two sets of calculations for estimating state allotments.8 The alternative formula
calculations did little to erode the defacto cold-weather states preference, however.
The first step in the alternative set of formulas was to determine each state’s
share of funds using two calculations set out in H.Rept. 96-1244, and assign states
the greater of the two amounts. Under the first alternative, half of the allocation was
based on the increase in home heating expenditures between 1978 and 1980, and half
was based on the number of heating degree days squared times the population with
income less than or equal to 125% of poverty. Under the second alternative, one
quarter of the allocation was based on total residential energy expenditures in 1980,
and three quarters was based on heating degree days squared multiplied by the
number of low-income households in the state.
The greater of the two percentages calculated using the formula in H.Rept. 961244 was then assigned to each state. After adjusting state allotments proportionately
so that the total allocation reached 100% of funds available, the second step in the
6
Heating degree days and cooling degree days measure how daily temperatures relate to
requirements for heating and cooling. The concept is explained later in this paper, in the
section “Components of the New Formula Rates.”
7
The number of low-income households was based on the Bureau of Labor Statistics (BLS)
lower living standard income level. The BLS determined this income level through its
annual family budgets, which it maintained from 1947 to 1981. At the time the LIEAP
program was enacted, the BLS developed annual family budgets assuming three different
standards of living — lower, intermediate, and higher. The budget was calculated using
costs of consumer goods including food, housing, transportation, clothing, and health care
(unlike the federal poverty guidelines, which are based on the amount of money needed to
buy food). The budget was then adjusted for family size and the prices of goods in various
cities throughout the country. See David S. Johnson, John M. Rogers, and Lucilla Tan, “A
Century of Family Budgets in the United States,” Monthly Labor Review, 124, no. 5 (May
2001): 28-45.
8
Report of the House Committee on Appropriations, H.Rept. 96-1244, to accompany H.R.
7998, August 21, 1980, pp. 75-76.
CRS-4
amended formula was to compare these state allotments to 75% of the amount each
state would receive under the formula in P.L. 96-223. Although the alternative
formula under H.Rept. 96-1244 used factors similar to those in P.L. 96-223, the
original set of formulas was slightly more favorable to warm-weather states because
it put more weight on the size of a state’s low-income population, and provided for
a minimum benefit to states based on the number of recipient households,
unconditioned on their household heating expenditures. In addition, the inclusion of
the increase in home heating expenditures from 1978 to 1980 in H.Rept. 96-1244
benefitted northeastern states, where heating oil prices had increased substantially.
Enactment of LIHEAP
In August 1981, the Omnibus Budget Reconciliation Act, P.L. 97-35, created
LIHEAP, replacing its predecessor, LIEAP. The new program was not substantially
different from the previous program, although it contained less restrictive federal
rules and gave states more flexibility in determining how to operate their LIHEAP
programs. Regarding the formula, the new law provided that the allotment
percentages for each state would remain the same as they had been in FY1981 under
the LIEAP formula as amended by P.L. 96-369. The program was authorized at
$1.85 billion for FY1982-FY1984. In FY1982, Congress appropriated $1.875 billion
for LIHEAP; in FY1983, it appropriated $1.975 billion; and in FY1984, $2.075
billion.
Reauthorization: Formula Discussions
When Congress began to consider reauthorizing LIHEAP in 1983, two aspects
of the formula were disputed. First, legislators recognized that the multi-step formula
benefitted cold-weather states relative to warm-weather states because it took account
of energy costs of all households, not just low-income households.9 On average, the
proportion of poor families in warm-weather states is higher than that in cold-weather
states. Therefore, a formula that considered the total home energy expenditures of
only low-income households would allocate proportionately more funds to warmweather states.
The second disputed aspect of the formula centered around the appropriateness
and timeliness of the data used in formula calculations. In 1983, the energy
information used to calculate state allotments was not the most current data
available.10 For example, the most recent data the formula used was the change in
the cost of energy between 1978 and 1980, or the cost of energy in 1980, depending
9
See, for example, Comments of Rep. Billy Tauzin, Joint Hearing before the Subcommittees
on Energy and Commerce, Education and Labor, and Ways and Means, 98th Cong., 1st sess.,
February 24, 1983, pp. 119-120.
10
Report of the Committee on Energy and Commerce (H.Rept. 98-139, Part 2), to
accompany H.R. 2439, May 15, 1984, p. 13.
CRS-5
on the sub-formula one chose to apply. No aspect of the formula took account of
increased costs after 1980.11
Legislative sentiment in favor of changing the formula was evident, when, in
September 1983, the House adopted an amendment to the Emergency Immigration
Education Act (H.R. 3520) that would have adjusted the LIHEAP formula and
resulted in a change in allocations to the states. The amendment’s formula took into
account the energy expenditures of poor families, which, according to the
amendment’s sponsor, Representative Carlos Moorhead (California), would result
in lower percentage allocations for 23 states, mostly in the Northeast and Midwest,
gains for 27, primarily in the South, and the same allocation for one state.12 The
amendment was eventually dropped from H.R. 3520 in conference with the Senate.
LIHEAP: Introduction of a Hold-Harmless Level
Efforts to reauthorize LIHEAP had begun in April 1983, when Representative
Richard Ottinger (New York) introduced the Low-Income Home Energy Assistance
Amendments of 1984 (H.R. 2439). The bill was referred to two committees:
Education and Labor and Energy and Commerce. Within the Energy and Commerce
committee, two subcommittees held mark-ups: Fossil and Synthetic Fuels and
Energy Conservation and Power.
As introduced, H.R. 2439 did not contain changes to the LIHEAP formula. The
Subcommittees on Fossil and Synthetic Fuels and Energy Conservation and Power
worked together to arrive at a formula change, which had the effect of shifting funds
from states in the Northeast to the South and West. Unlike the previous set of
formulas developed under LIEAP, the new formula directed the Department of
Health and Human Services to determine states’ allotments “using data relating to the
most recent year for which data is available” [sic]. Because the cost of heating oil
remained steady between 1981 and 1983, and the price of natural gas rose 33%, this
meant that states in the Northeast — where heating oil was the primary source of
energy — would lose LIHEAP dollars, while states in the South and the Midwest
would gain under this provision.13 In addition, population growth in the South (as
well as its higher poverty rates) meant that southern states would benefit from the use
of more recent population data.
To offset the losses to certain states resulting from the use of current data, H.R.
2439 also included a hold-harmless provision, or hold-harmless level; this provision
ensured that if appropriations were less than or equal to $1.875 billion, states would
receive no less than the amount they would have received had the same amount been
11
Ibid., p. 4.
12
Congressional Record, September 13, 1983, p. 23877. The greatest increases in
percentage allocations were for Florida at 51%, Texas at 44%, and Alabama at 37%. The
states whose percentage allocations decreased the most were Vermont at 32%, North Dakota
at 24%, and New Hampshire at 23%.
13
“The Low-Income Home Energy Assistance Program: An Analysis of the 1984
Reauthorization Issues,” Coalition of Northeastern Governors, April 1984, p. 9.
CRS-6
appropriated in FY1984. If the annual appropriation exceeded $1.875 billion, states
would not receive less than their allotment would have been under the old formula
at this appropriations level. The bill additionally increased the LIHEAP
authorization level to $2.075 billion for FY1984, $2.26 billion for FY1985, $2.625
billion for FY1987, and $2.8 billion for FY1988.
LIHEAP: Introduction of a Hold-Harmless Rate
After the House Energy and Commerce Committee reported H.R. 2439 to the
House floor — but before the full House could act on the bill — the Senate passed
its version of LIHEAP reauthorization as part of the Human Services Reauthorization
Act, S. 2565, on October 4, 1984.14 The Senate bill contained language very similar
to H.R. 2439, but made several changes and additions to the formula.
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S. 2565 specified that states’ shares of LIHEAP funds would be
based on the home energy expenditures of low income households,
not on expenditures of all households.
The hold-harmless level was altered. S. 2565 directed that no state
in FY1985 would receive fewer funds than it received in FY1984,
and for FY1986 and thereafter, no state would receive less than the
amount they would have received in FY1984 if the appropriations
level had been $1.975 billion.
A second hold-harmless provision, or hold-harmless rate, was
created. The provision maintained the percentage allocated rather
than a total funding level allocated to each affected state.
The hold-harmless rate provision guaranteed that certain states would receive
increased allotments when appropriations reached $2.25 billion. States would qualify
for this increase if their total allotment percentage at an appropriation of $2.25 billion
was less than 1%. These states would instead receive the allotment rate they would
have received at an appropriation of $2.14 billion if that allotment rate was higher
than the rate at $2.25 billion. In its debate about S. 2565, Senators referred to the
hold-harmless rate as the “small States hold harmless,” as the intent was to protect
the small (population) states’ shares of LIHEAP funds.15 Otherwise, these states’
percentage shares of LIHEAP funds might decline, even as total appropriations
increased. No rate protection was guaranteed for more populous states beyond the
aforementioned hold-harmless level.
The Senate bill also included different authorization amounts for LIHEAP,
$2.14 billion for FY1985 and $2.275 billion for FY1986. After S. 2565 passed the
Senate, the House debated and passed the bill on October 9, 1984, retaining all the
provisions included in the Senate version. The bill became P.L. 98-558 on October
30, 1984. Until FY2006, appropriations for regular LIHEAP funds had only exceeded
an equivalent FY1984 appropriation of $1.975 billion in 1985 and 1986; therefore,
from FY1987 through FY2005, states continued to receive the same percentage of
14
The final version of S. 2565 can be found in the Congressional Record, October 4, 1984,
p. S13393.
15
Congressional Record, October 4, 1984, pp. S13415-S13416.
CRS-7
LIHEAP funds that they received under the program’s predecessor, LIEAP. In
FY2006, funds were distributed according to Tier III of the LIHEAP formula.
Current Law Distribution: How Allotments of
Regular LIHEAP Funding Are Determined
Current law as enacted in P.L. 98-558 provides for three different methods to
calculate each state’s allotment of regular LIHEAP funds. The set of factors used to
determine the percentage of total funds that each state receives is sometimes called
the “new” formula. The calculation method (which uses the new formula rates) for
state allotments depends upon the size of the appropriation for that fiscal year. It is
important to understand that although the new formula rates are always applied to all
appropriations, when appropriations are below a hypothetical FY1984 appropriation
of $1.975 billion, the result of the current law’s hold-harmless provisions is that
states receive the same allotment percentages that they did under the old formula.16
(Table 2 in the Appendix lists both the “old” and “new” allotment percentages.)
There are several important implications of current law:
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16
For funding levels at or below the hypothetical FY1984 allotment,
states are guaranteed that their allotment rate is equivalent to what
it was under the old formula.
For funding levels above the hypothetical FY1984 allotment, the
new formula will not allocate any state fewer funds than the state
would have received at the hypothetical FY1984 funding level of
$1.975 billion. However, some states may not receive any funds
above that level, despite substantial increases in appropriation levels.
Due to the hold-harmless provisions, the proportion of total regular
funds each state receives at funding levels above $1.975 billion may
differ substantially from the proportion they would have received at
$1.975 billion.
For funding levels above $2.25 billion, certain states are subject to
a hold-harmless rate. If a state would receive less than 1% of the
total regular fund allotment at a hypothetical appropriation of $2.25
billion, and the state’s allotment proportion at a $2.14 billion
appropriation is greater than it would be at $2.25 billion, then that
state will receive the $2.14 billion allotment proportion for all
appropriation levels at or above $2.25 billion.
The actual proportion of total regular funds each state receives at
funding levels above $1.975 billion may differ substantially from the
calculated new formula rate prior to application of the hold-harmless
provisions. This is due to the hold-harmless provisions and ratable
reductions. Ratable reductions must be applied to some states’
allotments to ensure that other states do not fall below the holdharmless level or hold-harmless rate.
See U.S. Department of Health and Human Services, Low Income Home Energy
Assistance Program: Report to Congress for FY1987, p. 133.
CRS-8
Tier I: Below $1.975 Billion
Current law requires that for fiscal years in which the regular LIHEAP fund
appropriation is equivalent to a hypothetical FY1984 appropriation of $1.975 billion
or less,17 states receive the same percentage of funds that they would have received
at that appropriation level (Section 2604(a)(2)(A)).18 Note that the appropriation
level that is equivalent to a hypothetical FY1984 appropriation of $1.975 billion has
changed since FY1984. In FY1984, with the exception of funds provided to the
territories, the entire LIHEAP block grant was distributed to the states. Since then,
two other funds have become part of the block grant distribution. These are funds
for training and technical assistance and for the leveraging incentive grants (which
includes REACH grants) to the states. This means that an appropriation that is
equivalent to a hypothetical FY1984 appropriation of $1.975 billion must account for
these funds. Assuming that funds for leveraging incentive/REACH grants is $27.5
million and training and technical assistance is $300,000, then the equivalent of an
FY1984 appropriation of $1.975 billion is approximately $2.0028 billion.19
The LIHEAP formula in FY1984 distributed funds by giving states the same
share of funds that they received in FY1981 under the predecessor program, the
Low-Income Energy Assistance Program (LIEAP). In Table 1, column (a) reports
the amount of funds that each state would have received in FY1984 had the regular
appropriation been $1.975 billion.
Tier II: From $1.975 Billion up to $2.25 Billion
If the regular LIHEAP appropriation exceeds $1.975 billion for the fiscal year,
all funds are to be distributed under a different methodology, including a new set of
rates that are subject to a hold-harmless level (Section 2604(a)(2)(A)(ii)). Under Tier
II calculations, a state’s allotment in the statute is required to reflect “the percentage
which expenditures for home energy by low-income households in that state bears
to such expenditures in all states...” (See “Components of the New Formula” below.)
However, the statute provides that no state can be allocated less LIHEAP funds than
the state would have received under the Tier I formula if the appropriation level in
1984 were equal to $1.975 billion. This provision is known as the hold-harmless
level. (As mentioned above, this currently corresponds to $2.0028 billion in
appropriations for regular LIHEAP funds.)
Implementing the hold-harmless level greatly changes the proportion of the total
allocation that most states receive with application of the new formula. This is
because the statute provides that the hold-harmless level must be achieved by
reducing the allocation of funds to those states with the greatest proportional gains.
17
In fact, the appropriation in 1984 was not $1.975 billion but the law refers to this
hypothetical amount in its hold-harmless provision. The actual FY1984 appropriation was
$2.075 billion.
18
All section citations refer to the Low-Income Home Energy Assistance Act (Title XXVI
of P.L. 97-35), as amended.
19
This amount is arrived at by adding $27.5 million and $300,000 to $1.975 billion.
CRS-9
Column (b) in Table 1 reports the estimated allotment of funds that each state
receives when the regular appropriation is at $2.14 billion, whereas Column (c)
reports the estimated allotment of funds when the regular appropriation is just under
$2.25 billion ($2,249,999,999). The allocations in (b) and (c) are calculated using
the Tier II methodology previously described. (Table 2 in the Appendix lists
whether or not a state is subject to the hold-harmless level.)
Tier III: At or Above $2.25 Billion
The law stipulates additional requirements in the methods for distributing funds
when the appropriation is at or above $2.25 billion (Section 2604(a)(2)(B)). At this
level, all of the provisions specified in the Tier II allocation methodology are in
place, including the change in the formula factors and the hold-harmless level. In
addition, a new hold-harmless rate is applied. That is, for all appropriation levels at
or above $2.25 billion, states that would have received less than 1% of a total $2.25
billion appropriation must be allocated the percentage they would have received at
a $2.14 billion appropriation level. (This assumes the percentage at $2.14 billion is
greater than the percentage originally calculated at the hypothetical $2.25 billion
appropriation; this is not true for all states that receive less than 1% of the $2.25
billion appropriation.) This hold-harmless rate ensures a state specific share of the
total available funds. The allocations to the states with the greatest proportional
funding share increases are then ratably reduced again, using the methodology
described in the Tier II discussion, until there is no funding shortfall.
The application of the hold-harmless rate creates another layer of discontinuity
in the allocation rates. Column (d) in Table 1 reports the estimated allotment of
funds that each state receives when the regular appropriation is at $2.25 billion after
the hold-harmless rate is applied. Column (e) reports the estimated allotment each
state would receive at an appropriation of $2.25 billion. Column (f) reports the
estimated allotment of funds that each state would receive when the regular
appropriation is at $3.0 billion. Column (g) reports the estimated allotment of funds
that each state would receive when the regular appropriation is at $4.0 billion.
Column (h) reports estimated allotment of funds that each state would receive when
the regular appropriation is at $5.1 billion (the amount authorized by P.L. 109-58).
CRS-10
Table 1. Low Income Home Energy Assistance Program (LIHEAP),
Estimated State Allotments for Regular Block Grants
($ in millions)
Tier I
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Hypothetical
$1.975 Billion
in FY1984
(a)
16.963
10.828
8.203
12.943
91.001
31.729
41.392
5.494
6.428
26.840
21.221
2.137
12.376
114.565
51.872
36.762
16.883
26.994
17.342
26.815
31.693
Tier II
Tier III
$2.14 Billion
(b)
21.461
10.828
Just under
$2.25 Billion
(c)
25.855
10.828
$2.25 Billion
(d)
25.470
11.392
$2.5 Billion
(e)
36.021
12.673
$3.0 Billion
(f)
57.336
15.236
$4.0 Billion
(g)
76.627
20.363
$5.1 Billion
(h)
97.847
26.002
10.379
16.376
115.135
31.729
41.392
6.951
6.518
33.958
26.849
2.137
12.376
114.565
51.872
36.762
21.360
34.153
21.941
26.815
40.098
12.504
19.728
126.272
31.729
41.392
8.374
6.857
40.910
32.346
2.232
12.376
114.565
51.872
36.762
24.526
37.463
26.433
26.815
48.307
12.318
19.435
126.272
31.729
41.392
8.249
6.857
40.301
31.864
2.248
13.021
114.565
51.872
36.762
24.526
37.463
26.039
26.815
47.588
17.420
26.709
140.478
31.729
42.753
10.734
7.629
56.997
45.065
2.501
14.486
118.401
54.540
36.762
27.285
41.677
36.826
26.815
59.764
27.814
32.111
168.889
37.986
51.400
12.905
9.171
91.004
71.952
3.007
17.416
142.347
65.571
36.762
32.803
50.107
50.579
26.815
71.851
39.351
42.914
225.712
50.766
68.694
17.246
12.257
134.996
106.735
4.019
23.275
190.240
87.632
43.050
43.840
66.965
67.597
28.625
96.026
50.249
54.799
288.218
64.825
87.717
22.022
15.652
175.001
138.365
5.132
29.721
242.922
111.899
54.971
55.980
85.509
86.316
36.551
122.618
CRS-11
Tier I
State
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Hypothetical
$1.975 Billion
in FY1984
(a)
82.797
108.770
78.363
14.543
45.762
14.517
18.180
3.853
15.672
76.865
10.270
250.974
37.403
15.770
101.350
15.592
24.591
134.810
13.629
13.472
12.808
27.344
44.653
14.745
11.747
38.606
Tier II
$2.14 Billion
(b)
82.797
108.770
78.363
18.400
52.663
14.517
18.180
4.875
15.672
76.865
12.994
250.974
47.322
15.770
101.350
19.728
24.591
134.810
13.629
17.045
12.808
34.596
56.496
14.745
11.747
48.844
Just under
$2.25 Billion
(c)
82.797
108.770
78.363
22.167
55.406
14.517
18.180
5.873
15.672
76.865
13.934
250.974
57.009
15.770
101.350
23.766
24.591
134.810
13.629
20.534
12.808
41.678
68.061
14.745
11.747
58.843
Tier III
$2.25 Billion
(d)
82.797
108.770
78.363
21.837
55.406
15.273
19.127
5.785
16.488
76.865
13.934
250.974
56.161
16.591
101.350
23.412
24.591
134.810
14.339
20.228
13.475
41.058
67.047
15.513
12.358
57.967
$2.5 Billion
(e)
82.797
114.820
78.363
27.293
61.639
16.991
21.279
8.182
18.343
76.865
15.501
250.974
78.646
18.457
111.388
33.111
24.879
134.810
15.952
28.608
14.991
50.724
94.823
17.258
13.749
69.555
$3.0 Billion
(f)
90.332
138.042
78.363
32.813
74.105
20.428
25.583
13.064
22.053
84.225
18.636
252.031
94.552
22.190
133.916
43.105
29.911
153.563
19.178
42.282
18.023
60.983
151.400
20.748
16.529
83.622
$4.0 Billion
(g)
120.724
184.486
78.363
43.853
99.038
27.300
34.190
19.379
29.472
112.563
24.906
336.827
126.364
29.656
178.972
57.607
39.974
205.229
25.631
56.508
24.086
81.501
224.589
27.729
22.091
111.757
$5.1 Billion
(h)
154.156
235.575
90.633
55.996
126.464
34.861
43.658
25.121
37.634
143.734
31.804
430.102
161.357
37.869
228.534
73.560
51.044
262.062
32.728
72.157
30.756
104.071
291.143
35.407
28.208
142.705
CRS-12
Tier I
State
Washington
West Virginia
Wisconsin
Wyoming
Total
Hypothetical
$1.975 Billion
in FY1984
(a)
40.450
17.864
70.538
5.903
1,972.33
Tier II
$2.14 Billion
(b)
40.450
20.242
70.538
5.903
2,109.339
Just under
$2.25 Billion
(c)
40.450
21.296
70.538
5.903
2,219.191
Tier III
$2.25 Billion
(d)
40.450
21.296
70.538
6.211
2,219.191
$2.5 Billion
(e)
40.450
23.692
70.538
6.910
2,468.852
$3.0 Billion
(f)
48.109
28.483
70.538
8.307
2,968.175
$4.0 Billion
(g)
64.295
38.066
83.632
11.102
3,966.821
$5.1 Billion
(h)
82.100
48.608
106.792
14.176
5,065.331
Source: Congressional Research Service (CRS) calculations based on factors provided by the Department of Health and Human Services (HHS) in May 2007.
Notes: These estimates take into account current law, which allows HHS to set aside funds out of regular LIHEAP funds for territories, leverage incentive grants and
Residential Energy Assistance Challenge (REACH) grants and training and technical assistance. For each estimate, approximately 0.14% is allocated to the territories,
$27.5 million to leveraging incentive and REACH grants, and $300,000 to training and technical assistance.
CRS-13
Further Depiction of How State Allotments
Depend Upon Appropriation Levels
Figure 1 graphically illustrates state allotments for three “typical” types of states
over a range of appropriations from $0 to $5.1 billion. In the figure, there are three
vertical areas. These areas separate the three levels of appropriations (Tiers I-III) that
are triggers under current law and were explained in the previous section. the figure
also graphs the three basic types of states. Reading from top to bottom of Figure 1,
these three types of states are
!
!
!
Hold-harmless level only states. These states are subject to only
the hold-harmless level provision. They do not qualify for the holdharmless rate because each state’s share of the regular funds at $2.25
billion is greater than 1%. An example of a hold-harmless level only
state is represented by the line that runs from $0 to point G. The
hold-harmless level is evident from point A to point F. Here, despite
increases in the appropriations level, the state allotment remains
fixed. In Table 2 (located in the Appendix), these are the states that
have a “Y” in the “Subject to hold-harmless level?” column and a
“N” in the “Subject to hold-harmless rate?” column.
Ratable reduction states. These states are subject to a ratable
reduction. Their new formula rate is greater than their old, FY1984,
rate. An example of these states is depicted by the line that runs
from $0 to point H. The ratable reduction is (somewhat) evident by
the curvilinear appearance of line segments BD and DH. There is a
small non-linear decrease at point D. This is attributable to the
increased shortfall on the distribution of funds that the hold-harmless
rate imposes. In Table 2, these are the states that have a “N” in the
“Subject to hold-harmless level?” column and a “N” in the
“Subject to hold-harmless rate?” column.
Hold-harmless level and rate states. These states are subject to
both the hold-harmless level and the hold harmless rate provisions.
An example of a typical level and rate state is shown by the line that
runs from $0 to point I. The hold-harmless level is evident by the
fixed state allotment from point C to point E. However, the (subtle)
non-linear jump at exactly $2.25 billion signals that this state is
subject to the hold-harmless rate provision. After the allotment
jump at $2.25 billion, the state’s allotment continues to increase (at
a rate lower than the old rate, but higher than the new rate). In Table
2, these are the states that have a “Y” in the “Subject to
hold-harmless level?” column and a “Y” in the “Subject to
hold-harmless rate?” column.
CRS-14
Figure 1. Estimated Low Income Home Energy Assistance Program (LIHEAP) Allocations at Various
Appropriation Levels for Three Types of States
$120
Tier II hold-harmless
level
Tier I
G
Tier III hold-harmless rate
$100
H
Hold-harmless level
only state
State Allotment
($ in millions)
$80
A
F
$60
Ratably reduced
state
Hold-harmless level
and rate state
$40
I
D
$20
B
C
E
$0
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Appropriation
($ in millions)
Source: Figure created by Congressional Research Service (CRS) calculations using allotment rates provided by the Department of
Health and Human Services in May 2007.
CRS-15
Components of the New Formula Rates
(Used in Tiers II and III)
As mentioned previously, when Congress considered a new formula for
distributing LIHEAP funds in 1983 and 1984, one of its concerns was the
appropriateness and timeliness of the data used in formula calculations. At the time,
the energy information used to calculate state allotments was not the most current
data available.20 For example, the formula used the change in cost of energy between
1978 and 1980, but did not take account of increased costs after 1980. In fact, the
formula factors were fixed rates, and the LIHEAP statute at that time had no
provision for allowing newer information to be incorporated into the determination
of state allotments.
Current law requires HHS to “determine the expenditure for home energy by
low-income households on the basis of the most recent satisfactory data available.”
Developed by HHS, this formula accounts for variations in heating and cooling needs
of the states, the types of energy used, energy prices, and the low-income population
and their heating and cooling methods.
The new formula is a complex aggregation of state-level data, which attempts
to capture the expenditures of low-income households on heating and cooling for the
most current year possible. Variables used include the following:
!
!
20
Average Annual Heating and Cooling Degree Days by State. A
heating degree day measures the extent to which a day’s average
temperature falls below 65°F and a cooling degree day measures the
extent to which a day’s average temperature rises above 65°F. This
information is collected by the National Oceanic and Atmospheric
Administration. For example, a day with an average temperature of
40°F results in a measure of 15 heating degree days; a day with an
average temperature of 80°F results in a measure of 15 cooling
degree days. A state’s heating and cooling degree data are weighted
by population in the state. Averages over 30 years also are measured
and are taken into account by the formula. The data from 2005 are
used to represent current climatic conditions that would cause an
increase or decrease in energy needs.
Residential Sector Energy Price Projections by Fuel Type in
Nominal Dollars. These projected prices for fuels include coal, fuel
oil, natural gas, kerosene, liquefied petroleum gas, and electricity.
Regional energy price variation can be significant, and the formula
takes expected expenditure differences into account. This
information is collected by the Department of Energy’s Energy
Information Administration (EIA) and published in the State Energy
Report of the Committee on Energy and Commerce (H.Rept. 98-139, Part 2), to
accompany H.R. 2439, May 15, 1984, p. 13.
CRS-16
!
!
!
Data System Consumption, Price, and Expenditure Estimates.21 The
price data are from 2002 and are used to calculate current home
energy expenditures.
Total Residential Energy Consumption by Fuel Source by State.
Residential energy consumption consists of the total Btus (British
Thermal Units) used in private households, generally encompassing
space and water heating, cooling, lighting, refrigeration, cooking,
and the energy needed to operate appliances. Estimates are provided
for coal, natural gas, fuel oil, kerosene, liquified petroleum gas, and
electricity. The data come from the 2002 EIA State Energy Data
System Consumption, Price, and Expenditure Estimates.
The Percentage of Each Fuel Source Used for Heating and Cooling
by State. These data represent the percentage of Btus in a state that
are used for heating and the percentage used for cooling. This
information is used to calculate heating and cooling consumption by
low-income households and comes from the 2001 Residential
Energy Consumption Survey, adjusted for 2003.
The Number of Low-Income Households by Fuel Source. The
Bureau of the Census, Department of Commerce, prepares a special
sample for the Department of Health and Human Services of the fuel
sources used by low-income households. The most recent
information comes from the 2000 Census. Low-income households
are those whose income is the greater of 150% of poverty or 60% of
state median income.
Although the underlying formula factors today are frequently revised as new
information becomes available, many components that comprise the current law
formula factors are as out-of-date as the factors used in the old formula were in 1983
when there was a push to incorporate newer (price) information. The most recent
formula factors were provided to CRS by the Department of Health and Human
Services in May 2007.
Other CRS Reports on LIHEAP
CRS Report RL31865, The Low-Income Home Energy Assistance Program
(LIHEAP): Program and Funding, by Libby Perl.
CRS Report RS21605, Low-Income Home Energy Assistance Program (LIHEAP):
Estimated Allocations, by Libby Perl.
21
The EIA’s state data tables are available at [http://www.eia.doe.gov/emeu/states/
_seds.html].
CRS-17
Appendix: Summary of Significant
LIHEAP Rates and Triggers
Table 2 presents a summary of significant LIHEAP rates and triggers for each
state. Column (a) lists the “old” formula factor percentages that states receive when
the appropriation level is below the hypothetical FY1984 appropriation. Column (b)
lists the “new” formula factor percentages that were provided by the Department of
Health and Human Services in May 2007. As mentioned earlier in this report,
current law requires that these “new” percentages be applied to state allotments,
regardless of the appropriation level. However, because of the hold-harmless
provisions, some (if not all) states do not actually end up with a state allotment that
mirrors this percentage.
Column (c) demarcates whether a state, given current law, would be subject to
the hold-harmless level provision (marked with a “Y”). These are states that have
a “new” percentage rate that is lower than their “old” percentage rate. Column (d)
lists the dollar value of the hold-harmless level for those states (dollars are reported
in millions). Column (e) lists whether a state would be subject to the hold-harmless
rate provision (labeled “Y”). These are states that would have received less than 1%
of a total $2.25 billion appropriation and are then allocated the percentage they would
have received at a $2.14 billion appropriation level. (This assumes the new
percentage is greater than the percentage originally calculated at the actual, $2.25
billion or greater, appropriation.) Column (f) lists the rate that would be used for
those “hold-harmless rate” states for appropriation levels at or above $2.25 billion.
CRS-18
Table 2. Low-Income Home Energy Program (LIHEAP):
“Old” and “New” Allotment Rates by State, FY2007
Hold-Harmless Level
Hold-Harmless Rate
Subject to
HoldSubject to
“Old”
“New”
HoldHarmless
HoldAllotment Allotment Harmless
Level
Harmless
Rate (%) Rate (%)
Level? ($Millions)
Rate?
State
(a)
(b)
(c)
(d)
(e)
Alabama
0.86%
1.93
N
—
N
Alaska
0.55
0.38
Y
10.828
Y
Arizona
0.42
0.99
N
—
N
Arkansas
0.66
1.08
N
—
N
California
4.61
5.69
N
—
N
Colorado
1.61
1.28
Y
31.729
N
Connecticut
2.10
1.73
Y
41.392
N
Delaware
0.28
0.43
N
—
N
District of Columbia
0.33
0.31
Y
6.428
N
Florida
1.36
4.19
N
—
N
Georgia
1.08
2.83
N
—
N
Hawaii
0.11
0.10
Y
2.137
Y
Idaho
0.63
0.39
Y
12.376
Y
Illinois
5.81
4.80
Y
114.565
N
Indiana
2.63
2.21
Y
51.872
N
Iowa
1.86
1.09
Y
36.762
N
Kansas
0.86
1.11
N
—
N
Kentucky
1.37
1.69
N
—
N
Louisiana
0.88
1.70
N
—
N
Maine
1.36
0.72
Y
26.815
N
Maryland
1.61
2.42
N
—
N
Massachusetts
4.20
3.04
Y
82.797
N
Michigan
5.51
4.65
Y
108.770
N
Minnesota
3.97
1.79
Y
78.363
N
Mississippi
0.74
1.11
N
—
N
Missouri
2.32
2.50
N
—
N
Montana
0.74
0.41
Y
14.517
Y
Nebraska
0.92
0.60
Y
18.180
Y
Nevada
0.20
0.69
N
—
N
New Hampshire
0.79
0.45
Y
15.672
Y
New Jersey
3.90
2.84
Y
76.865
N
New Mexico
0.52
0.63
N
—
N
New York
12.72
8.49
Y
250.974
N
North Carolina
1.90
3.19
N
—
N
North Dakota
0.80
0.24
Y
15.770
Y
Ohio
5.14
4.51
Y
101.350
N
Oklahoma
0.79
1.45
N
—
N
Oregon
1.25
1.01
Y
24.591
N
Pennsylvania
6.84
5.17
Y
134.810
N
Rhode Island
0.69
0.60
Y
13.629
Y
South Carolina
0.68
1.42
N
—
N
South Dakota
0.65
0.27
Y
12.808
Y
HoldHarmless
Rate (%)
(f)
—
0.51
—
—
—
—
—
—
—
—
—
0.10
0.59
—
—
—
—
—
—
—
—
—
—
—
—
—
0.69
0.86
—
0.74
—
—
—
—
0.75
—
—
—
—
0.65
—
0.61
CRS-19
Hold-Harmless Level
State
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Hold-Harmless Rate
HoldSubject to
Subject to
“New”
HoldHarmless
Hold“Old”
Level
Harmless
Allotment Allotment Harmless
Rate?
Level? ($Millions)
Rate (%) Rate (%)
(b)
(c)
(d)
(e)
(a)
1.39
2.05
N
—
N
2.26
7.10
N
—
N
0.75
0.65
Y
14.745
Y
0.60
0.36
Y
11.747
Y
1.96
2.82
N
—
N
2.05
1.62
Y
40.450
N
0.91
0.96
N
—
N
3.58
2.11
Y
70.538
N
0.23
5.903
0.30
Y
Y
HoldHarmless
Rate (%)
(f)
—
—
0.70
0.56
—
—
—
—
0.28
Source: Congressional Research Service (CRS) calculations based on factors provided by the
Department of Health and Human Services (HHS) in May 2007.
Note: The actual proportion of total regular funds each state receives at funding levels above $1.975
billion may differ substantially from the calculated new formula rate due to the hold-harmless
provisions and the ratable reductions to cover the budgetary shortfall from the hold-harmless
provisions6
The remainder of this report discusses only the history and methods of
distributing regular LIHEAP funds.
Predecessor Programs to LIHEAP
The mid- to late-1970s, a time marked by rapidly rising fuel prices, also marked
the beginning of federal energy assistance funding for low-income households. The
first national program to help low-income households was created in early 1975 to
assist families with energy conservation primarily through home weatherization. This
assistance was provided through a new Emergency Energy Conservation Program
(EECP), enacted as part of the Headstart, Economic Opportunity, and Community
Partnership Act of 1974 (P.L. 93-644). The funds were administered by the
Community Services Administration (CSA), the successor agency to the Office of
Economic Opportunity, which was responsible for many of the programs created as
part of the 1964 war on poverty. Beginning in 1977, funds were also made available
through the CSA to help families directly pay for fuel (as opposed to weatherization
expenses) via a variety of programs. Each of these programs had in common a focus
on the need for heating assistance (versus cooling assistance).
Congress continued to appropriate funds for energy assistance programs through
FY1980, at which point a new program, the Low Income Energy Assistance Program
(LIEAP) was enacted as part of the Crude Oil Windfall Profits Tax Act of 1980 (P.L.
96-223). LIEAP, which was administered by the Department of Health and Human
Services (HHS), was funded for one year, FY1981, before the creation of LIHEAP.
Like the CSA programs, LIEAP emphasized heating over cooling needs. This
preference was reflected in both the CSA program formulas and the LIEAP set of
formulas, which used variables that benefitted cold-weather states to determine how
funds would be distributed. The LIEAP set of formulas continues to have relevance
for the way in which LIHEAP funds are distributed. This section of the report
describes these predecessor programs to LIHEAP and their distribution formulas.
5
Depending on how Congress appropriates them, contingency funds may remain available
for distribution in more than one fiscal year or they may expire with the fiscal year for which
they were appropriated.
6
The statutory definition of emergency includes a significant home energy supply shortage
or disruption, a significant increase in the cost of home energy, a significant increase in
home energy disconnections, a significant increase in participation in a public benefit
program, a significant increase in unemployment, or an event meeting such criteria as the
Secretary determines to be appropriate. 42 U.S.C. §8622.
CRS-3
Community Services Administration
Energy Assistance Programs
On January 4, 1975, President Ford signed into law the Headstart, Economic
Opportunity, and Community Partnership Act of 1974 (P.L. 93-644), which
contained funds for a new program, called the Emergency Energy Conservation
Program (EECP). The program was to be administered by the Community Services
Administration (CSA), and its purpose was
to enable low-income individuals and families, including the elderly and the near
poor, to participate in energy conservation programs designed to lessen the
impact of the high cost of energy ... and to reduce ... energy consumption.
The law governing EECP listed a number of eligible activities in which states could
participate, including energy conservation and education programs; weatherization
assistance; loans and grants for the purchase of energy conservation technologies;
alternative fuel supplies; and fuel voucher and stamp programs. Despite the variety
of activities that could be funded through the program, the first CSA funding notice
regarding the program limited eligible activities to “winterizing” homes and to giving
emergency assistance “to prevent hardship or danger to health due to utility shutoff
or lack of fuel.”7 During the four years the EECP was funded, the majority of funds
were used for weatherization expenses.8
EECP funds were distributed to states via a formula that benefitted those states
with high heating costs. One formula variable in particular, a measure of “coldness”
called heating degree days, benefitted cold-weather states. Heating degree days
measure the extent to which a day’s average temperature falls below 65° Fahrenheit.
For example, a day with an average temperature of 50° results in a measure of 15
heating degree days. Because heating degree days are higher in cold weather states,
including the heating degree day variable in a formula favors states with greater
heating needs. Squaring the heating degree days magnifies this effect.9 The EECP
formula took the number of population-weighted heating degree days in each state,
squared them, and multiplied the result by the number of households in poverty that
owned their homes to determine how funds would be allocated.10 The CSA
7
Community Services Administration, “Character and Scope of Specific Community Action
Programs: Emergency Energy Conservation Program,” Federal Register, vol. 40, no. 145,
July 28, 1975, p. 31603.
8
See, for example, House Appropriations Committee, report to accompany H.R. 4877, the
FY1977 Supplemental Appropriations Act, 95th Cong., 1st sess., H.Rept. 95-68, March 11,
1977: “The funds in this program are used primarily to purchase materials to insulate the
homes of low-income families.”
9
For example, if a southern state experiences 700 heating degree days in a year and a
northern state experiences 7,000, the northern state has 10 times as many heating degree
days as the southern state. However, if both numbers are squared, the northern state has 100
times as many heating degree days as the southern state.
10
Community Services Administration, “Emergency Energy Conservation Program:
Submission of Funding Plans,” Federal Register, vol. 41, no. 208, October 27, 1976, p.
(continued...)
CRS-4
acknowledged the emphasis on heating needs in its formula, stating that the FY1975
allocation “was heavily weighted to the coldest areas...”11 In the three fiscal years
that followed the first appropriation for the EECP, from FY1976 through FY1978,
the CSA changed somewhat the way in which it allocated funds to the states;
however, the factors continued to favor cold-weather states through use of either
heating degree days or heating degree days squared.12
The first year that Congress specifically appropriated funds for direct assistance
to help low-income households (those at or below 125% of poverty) pay their energy
costs (instead of funds that went primarily for weatherization and conservation
activities) was FY1977. The FY1977 Supplemental Appropriations Act (P.L. 95-26)
provided $200 million for a Special Crisis Intervention Program to be administered
by CSA. States could use funds to make direct payments to fuel providers on behalf
of low-income families lacking the financial resources to pay their energy bills. The
CSA directed states to target households where utilities had been shut off (or were
threatened with shut off) and who could prove dire need due to large energy bills.13
Although the law did not reserve funds exclusively for heating costs, the way in
which funds were allocated to the states emphasized heating need. Funds were
distributed to the states based on a formula that used (1) heating degree days
squared, (2) the number of households in poverty, (3) the number of persons above
age 65 with incomes below 125% of poverty, and (4) the relative cost of fuel in the
region.14 Congress again appropriated $200 million for crisis intervention in both
FY1978 and FY1979.15 In FY1978, funds were available to households with the
need for assistance as the result of an energy-related emergency such as lack of fuel,
a natural disaster, fuel shortages, and widespread unemployment.16 In FY1979, funds
were made available to assist families facing “substantially increased energy costs
10
(...continued)
47096.
11
12
Federal Register, vol. 41, no. 208, October 27, 1976, p. 47096.
See Ibid., pp. 47096-47097.
13
Community Services Administration, “Special Crisis Intervention Program: General
Information, Application Procedures, and Post Grant Requirements,” Federal Register, vol.
42, no. 125, June 29, 1977, p. 33240.
14
The formula was described in the Senate Appropriations Committee report to accompany
H.R. 4877, the FY1977 Supplemental Appropriations Act, 95th Cong., 1st sess., S.Rept. 9564, March 24, 1977. The CSA implemented this formula, which it described in guidance
to the states. See the Federal Register, Ibid.
15
Funds were appropriated through the FY1978 Supplemental Appropriations Act (P.L. 95240) and in FY1979 through a continuing resolution (P.L. 95-482). In FY1978, Congress
called the program Emergency Energy Assistance Program and in FY1979 called it the
Crisis Intervention Program (excluding the word “Special” from the title).
16
Community Services Administration, “Emergency Energy Conservation Program: Funding
Requirements for Emergency Energy Assistance Program,” Federal Register, vol. 43, no.
46, March 8, 1978, p. 9476.
CRS-5
and/or life- or health-threatening situations caused by winter-related energy
emergencies.”17
In FY1980, Congress appropriated a total of $1.6 billion for energy assistance.
Of this amount, $400 million was appropriated for the Energy Crisis Assistance
Program (ECAP, a CSA program similar to the Special Crisis Intervention Program)
through two separate appropriations.18 The remainder, $1.2 billion, was appropriated
as part of the FY1980 Department of the Interior Appropriations Act (P.L. 96-126)
to the Department of Health, Education, and Welfare (HEW, the predecessor to
HHS) for cash assistance and crisis intervention due to high energy costs. This
appropriation to HEW is sometimes referred to as Low Income Supplemental Energy
Allowances. Of this $1.2 billion, $400 million was to be distributed specifically to
recipients of Supplemental Security Income (SSI). The rest of the funds appropriated
to HEW, approximately $800 million, as well as the ECAP funds, were distributed
to states on the basis of three factors: heating degree days squared, the number of
households below 125% of poverty, and the difference in home heating energy
expenditures between 1978 and 1979. The formula used to distribute the $400
million for SSI recipients used these same factors but also included the number of
SSI recipients in each state relative to the national total.
17
Community Services Administration, “Emergency Energy Conservation Program: Fiscal
Year 1979 Crisis Intervention Program,”Federal Register, vol. 43, no. 250, December 28,
1978, pp. 60466-60467.
18
Congress appropriated $250 million for ECAP as part of an FY1980 Continuing
Resolution (P.L. 96-123, referencing the FY1980 Departments of Labor, Health and Human
Services and Education Appropriations bill, H.R. 4389), and appropriated an additional
$150 million as part of the Department of the Interior Appropriations Act (P.L. 96-126).
CRS-6
Table 1. Select Energy Assistance Formulas, FY1975-FY1980
Emergency Energy
Conservation Program:a
FY1975
(P.L. 93-644)
(Heating degree
days)2 * number of
homeowners in poverty
Special Crisis
Intervention Program:b
FY1977
(P.L. 95-26)
Low Income Supplemental
Energy Allowances:c
FY1980
(P.L. 96-126)
(Heating degree days)2
½ (Heating degree
days)2 * number of
households below 125% of
poverty
Number of households in
poverty
½ Difference in home heating
expenditures between 1978
and 1979
Number of persons over age
65 with income less than
125% of poverty
Relative cost of fuel
Source: For the formula under P.L. 93-644, see Community Services Administration, “Emergency
Energy Conservation Program: Submission of Funding Plans,” Federal Register, vol. 41, no. 208,
October 27, 1976, p. 47096. For the formula under P.L. 95-26, see Senate Appropriations Committee,
report to accompany H.R. 4877, the FY1977 Supplemental Appropriations Act, 95th Cong., 1st sess.,
S.Rept. 95-64, March 24, 1977. The formula for P.L. 96-126 is contained within the law.
* Multiplied by.
a. Of the funds appropriated for the Emergency Energy Conservation Program, 90% were distributed
via the formula, while the remaining 10% were divided among the 12 coldest states as measured
by heating degree days.
b. The Special Crisis Intervention Program did not specify a weight for each of the four variables used
to determine allocations.
c. Of the $1.6 billion appropriated for energy assistance in FY1980, $400 million was set aside for
SSI recipients. The formula to distribute those funds was a heating degree days2 * number of
households below 125% of poverty, a difference in home heating expenditures between 1978
and 1979, and a SSI recipients in each state relative to the national total.
Low Income Energy Assistance Program (LIEAP)
In April 1980, Congress replaced the patchwork energy assistance programs of
the late 1970s with one program, the Low Income Energy Assistance Program
(LIEAP). LIEAP, the direct predecessor program to LIHEAP, was established as part
of the Crude Oil Windfall Profits Tax Act of 1980 (P.L. 96-223). The program was
introduced in the Senate as the Home Energy Assistance Act (S. 1724) and was
incorporated into H.R. 3919, the bill that would become the Crude Oil Windfall
Profits Tax Act, on the Senate floor. Like the energy assistance programs of the late
1970s such as the Special Crisis Intervention Program and the Low Income
Supplemental Energy Allowances, LIEAP allocated funds to states in order to help
low-income households pay their home energy costs. Also like these predecessor
programs, LIEAP allocated funds to states using a method that put more emphasis
on the heating needs of cold-weather states than it did on cooling needs.
During the 1970s, home energy costs had increased substantially while wages
failed to keep up. According to the report from the Senate Committee on Labor and
CRS-7
Human Resources that accompanied the Home Energy Assistance Act (S. 1724),
between 1972 and 1979, heating oil prices increased by 293%, natural gas prices by
155%, and electricity prices by 91%, while wages grew by 59% during the same
period.19 During 1978, low-income households spent an estimated 18.4% of their
income, on average, to pay their utilities, with expenditures in New England by lowincome households exceeding 30% of income.20 The Senate Committee on Labor
and Human Resources held numerous hearings about the need for energy assistance
to address the “dramatically rising cost of home heating.”21
The resulting formula in S. 1724 reflected, in part, the committee’s concern that
the problem of rising energy costs were “most critical in areas with high home
heating costs.”22 Although subsequent changes were made to the LIEAP formula in
S. 1724 before it was enacted, the need for heating assistance continued to be
paramount. The formula developed under LIEAP has been used to distribute
LIHEAP funds as recently as FY2007, so the variables used are important in
understanding the current formula and the way in which it is used to distribute funds.
The LIEAP Formula. When the Home Energy Assistance Act (S. 1724) was
introduced, it contained a formula that would have distributed funds to the states on
the basis of half on residential energy expenditures and half on heating degree days
(the heating degree day measure is described in the previous section “Community
Services Administration Energy Assistance Programs”). However, on the Senate
floor, the program formula was amended, resulting in a multi-part formula under
which states would receive funds.
Formula Under P.L. 96-223. Under the final LIEAP formula in P.L. 96-223,
states received funds under one of four alternative formulas used to measure home
energy need, depending on which one benefitted a state the most. Three of the four
formulas contained different combinations of several factors: residential energy
expenditures; heating degree days or heating degree days squared; and the number
of low-income households in the state.
!
Under the first formula alternative, half of the allocation was based
on residential energy expenditures and half on heating degree days
squared multiplied by the number of households at or below the
Bureau of Labor Statistics (BLS) lower living standard.23
19
Senate Committee on Labor and Human Resources, Home Energy Assistance Act, report
to accompany S. 1724, 96th Cong., 1st sess., S.Rept. 96-378, October 25, 1979, p. 2.
20
Ibid., p. 3.
21
Also discussed at the hearings was “the need for some level of assistance to be provided
to certain eligible households, where excessive heat is a factor in threatening life and
health.” Ibid., p. 5. This did not figure prominently into the formula, however.
22
23
Ibid., p. 12.
The BLS determined the lower living standard income level through its annual family
budgets, which it maintained from 1947 to 1981. At the time the LIEAP program was
enacted, the BLS developed annual family budgets assuming three different standards of
(continued...)
CRS-8
!
Under the second formula alternative, one quarter of the allocation
was based on residential energy expenditures and three quarters
based on heating degree days squared multiplied by the number of
households at or below the BLS lower living standard.
!
Under the third formula alternative, half of the allocation was based
on residential energy expenditures and half based on heating degree
days (not squared) multiplied by the number of households with
incomes at or below the BLS lower living standard.
The fourth option guaranteed states a minimum benefit of $120 for each household
that received Aid to Families with Dependent Children (AFDC) or Food Stamp
benefits. (See Table 2 for a breakdown of these formulas.)
All formulas in P.L. 96-223 effectively gave preference to states with colder
climates due to the variables used. As discussed earlier in this report, the heating
degree day variable is a measure of temperatures below 65° F and therefore favors
cold-weather states. Squaring the heating degree day variable magnifies the
discrepancy between warm- and cold-weather states. In addition, residential energy
expenditures of all households (rather than energy expenditures of low-income
households only) are higher in cold-weather states because, on average, the
proportion of poor families in warm-weather states is higher than that in cold-weather
states. However, the LIEAP law did allow states to provide for cooling when
households could demonstrate medical necessity.24 Congress authorized LIEAP for
one year, FY1981, at $3 billion, but funds were not appropriated as part of P.L. 96223.
Formula Under P.L. 96-369. Before the formula in P.L. 96-223 could be
used to allocate funds, Congress introduced an alternative method for computing the
state distribution rates. It did so when it appropriated $1.85 billion in LIEAP funds
for FY1981 in a continuing resolution (P.L. 96-369), in October of 1980, six months
after enactment of the Crude Oil Windfall Profits Tax Act. The new allocation
method was not described in P.L. 96-369, however. Instead, the continuing
resolution referred to a House Appropriations Committee report (H.Rept. 96-1244)
accompanying another bill — the FY1981 Departments of Labor, Health and Human
Services and Education Appropriations Act. It was in this committee report that the
23
(...continued)
living: lower, intermediate, and higher. The budget was calculated using costs of consumer
goods including food, housing, transportation, clothing, and health care (unlike the federal
poverty guidelines, which are based on the amount of money needed to buy food). The
budget was then adjusted for family size and the prices of goods in various cities throughout
the country. See David S. Johnson, John M. Rogers, and Lucilla Tan, “A Century of Family
Budgets in the United States,” Monthly Labor Review, 124, no. 5 (May 2001): 28-45.
24
According to the law, “The State is authorized to make grants to eligible households to
meet the rising costs of cooling whenever the household establishes that such cooling is the
result of medical need pursuant to standards established by the Secretary.”
CRS-9
specific formula components for LIEAP were laid out.25 H.Rept. 96-1244 did little
to erode the defacto cold-weather states preference enacted in the original LIEAP
formula.
The first step in the new set of formulas was to determine each state’s share of
funds using two calculations set out in H.Rept. 96-1244 and assign states the greater
of the two amounts.
!
Under the first formula alternative, half of the allocation was based
on the increase in home heating expenditures, and half was based on
the number of heating degree days squared times the population with
income less than or equal to 125% of poverty.
!
Under the second formula alternative, one quarter of the allocation
was based on total residential energy expenditures, and three
quarters was based on heating degree days squared multiplied by the
number of low-income households in the state.
The greater of the two percentages calculated using the formula in H.Rept. 96-1244
was then assigned to each state. After adjusting state allotments proportionately so
that the total allocation reached 100% of funds available, the second step in the
amended formula was to compare these state allotments to 75% of the amount each
state would receive under the formula in P.L. 96-223. States would then receive the
greater of these two amounts.
Although the alternative formulas under H.Rept. 96-1244 used factors similar
to those in P.L. 96-223, the original set of formulas was slightly more favorable to
warm-weather states. For example, the BLS lower living standard was higher than
125% of poverty for most household sizes, which benefitted the South, where the
low-income population was higher.26 The original set of formulas also provided for
a minimum benefit to states on the basis of the number of AFDC and Food Stamp
recipient households, unconditioned on their household heating expenditures. In
addition, the inclusion of the increase in home heating expenditures in H.Rept. 961244 benefitted northeastern states, where heating oil prices had increased
substantially.27
25
House Committee on Appropriations, report to accompany H.R. 7998, the FY1981
Departments of Labor, Health and Human Services, and Education Appropriations Act, 96th
Cong., 2nd sess., H.Rept. 96-1244, August 21, 1980, pp. 75-76.
26
“The Low-Income Home Energy Assistance Program: An Analysis of the 1984
Reauthorization Issues,” Coalition of Northeastern Governors, April 1984, p. 5.
27
H.Rept. 96-1244 did not specify the years between which the increase in home heating
expenditures should be measured. In implementing the formula, HHS measured the increase
between 1978 and 1980.
CRS-10
Table 2. Distribution of Funds Under LIEAP
P.L. 96-223
P.L. 96-369
Assign each state the option under which they
receive the greatest proportion of funds. If
Options 2 and 3 both result in a greater
proportion than Option 1, assign the state the
lesser of Option 2 or 3.
Each state receives the greater of 75% of the
amount under P.L. 96-223 or Option 1 or
Option 2 under P.L. 96-369.
Option 1:
Option 1:
½ Residential energy
expenditures
½ (Heating degree days)2 *
Households with income #
BLS lower living standard
Option 2:
¼ Residential energy
expenditures
¾ (Heating degree days)2 *
Households with income #
BLS lower living standard
Option 3:
½ Increase in home heating
expenditures from 1978-1980a
½ (Heating degree days)2 *
Population with income #
125% of poverty
Option 2:
¼ Total residential energy
expenditures 1980
¾ (Heating degree days)2 *
Households with income #
BLS lower living standard
½ Residential energy
expenditures
½ Heating degree days *
Households with income #
BLS lower living standard
Option 4:
Funds sufficient for a
minimum benefit of $120 per
AFDC- and/or Food Stamprecipient household
Source: The Crude Oil Windfall Profits Tax Act (P.L. 96-223) and the House Appropriations
Committee Report to Accompany H.R. 7998, the FY1981 Departments of Labor, Health and Human
Services, and Education Appropriations Bill, H.Rept. 96-1244, August 21, 1980.
* Multiplied by.
# Less than or equal to.
a. H.Rept. 96-1244 did not specify which years would be used to determine residential energy
expenditures; 1978 and 1980 were the years used by HHS.
Enactment of LIHEAP
In August 1981, the Omnibus Budget Reconciliation Act, P.L. 97-35, created
LIHEAP, replacing its predecessor, LIEAP. The new program was not substantially
different from the previous program. Some of the changes to the program included
less restrictive federal rules and more state flexibility in determining how to operate
their LIHEAP programs. The program was authorized at $1.85 billion for FY1982FY1984. In FY1982, Congress appropriated $1.875 billion for LIHEAP; in FY1983,
it appropriated $1.975 billion; and in FY1984, $2.075 billion.
CRS-11
Continued Use of the LIEAP Formula
When the formula for LIEAP was initially created in 1980 under the Crude Oil
Windfall Profits Tax Act (P.L. 96-223), it brought about a good deal of debate on the
floor of the Senate, where the formula provisions were added to the legislation.28
Discussion over the formula also occurred leading up to the enactment of P.L. 96369, the FY1981 continuing resolution that funded LIEAP and amended the
formula.29 Despite these earlier disagreements over formula allocations, the process
to enact LIHEAP in 1981 did not engender the same level of debate or result in a
different formula. Instead, the law creating LIHEAP provided that the allotment
percentages for each state would remain the same as they had been in FY1981 under
the LIEAP formula as amended by P.L. 96-369. From FY1982 through FY1984,
then, states continued to receive the same proportion of funds that they received
under the LIEAP formula.
The 1984 LIHEAP Reauthorization: A New Formula
Formula Discussions. When Congress began to consider reauthorizing
LIHEAP in 1983, two aspects of the formula were debated. First, legislators
recognized that the multi-step LIEAP formula benefitted cold-weather states relative
to warm-weather states.30 This was due to the heating degree day variable and the
fact that residential energy costs of all households (instead of just low-income
households) were used under the various LIEAP formulas. The second debated
aspect of the formula centered on the appropriateness and timeliness of the data used
in formula calculations. In 1983, the energy information used to calculate state
allotments was not the most current data available.31 For example, the most recent
data the formula used were the change in the cost of energy between 1978 and 1980,
or the cost of energy in 1980, depending on the sub-formula one chose to apply. No
aspect of the formula took account of increased costs after 1980.32
Legislative sentiment in favor of changing the formula was evident, when, in
September 1983, the House adopted an amendment to the Emergency Immigration
Education Act (H.R. 3520) that would have adjusted the LIHEAP formula and
resulted in a change in allocations to the states. The amendment’s formula took into
account the energy expenditures of poor families, which, according to the
amendment’s sponsor, Representative Carlos Moorhead (California), would result
28
See, for example, Senate debate, Congressional Record, vol. 125, parts 24-25 (November
13-15, 1979), pp. 32082-32086, 32275-32293, 32558-32565.
29
House debate, Congressional Record, vol. 126, part 18 (August 27, 1980), pp. 2350223515.
30
See, for example, Comments of Rep. Billy Tauzin, Joint Hearing before the
Subcommittees on Energy and Commerce, Education and Labor, and Ways and Means, 98th
Cong., 1st sess., February 24, 1983, pp. 119-120.
31
Report of the Committee on Energy and Commerce to accompany H.R. 2439, the LowIncome Home Energy Assistance Amendments of 1984, 98th Cong., 2nd sess., H.Rept. 98139, Part 2, May 15, 1984, p. 13.
32
Ibid., p. 4.
CRS-12
in lower percentage allocations for 23 states, mostly in the Northeast and Midwest,
gains for 27, primarily in the South, and the same allocation for one state.33 The
amendment was eventually dropped from H.R. 3520 in conference with the Senate.
Introduction of a Hold-Harmless Level. Efforts to reauthorize LIHEAP
had begun in April 1983 with the introduction of the Low-Income Home Energy
Assistance Amendments of 1984 (H.R. 2439). The bill was referred to two
committees: Education and Labor and Energy and Commerce. Within the Energy
and Commerce committee, two subcommittees held mark-ups: Fossil and Synthetic
Fuels and Energy Conservation and Power.
As introduced, H.R. 2439 did not contain changes to the LIHEAP formula. The
Subcommittees on Fossil and Synthetic Fuels and Energy Conservation and Power
worked together to arrive at a formula change, which had the effect of shifting funds
from states in the Northeast to the South and West. Unlike the previous set of
formulas developed under LIEAP, the new formula directed the Department of
Health and Human Services to determine states’ allotments “using data relating to the
most recent year for which data is available.” Because the cost of heating oil
remained steady between 1981 and 1983, and the price of natural gas rose 33%, this
meant that states in the Northeast — where heating oil was the primary source of
energy — would lose LIHEAP dollars, while states in the South and the Midwest
would gain under this provision.34 In addition, population growth in the South (as
well as its higher poverty rates) meant that southern states would benefit from the use
of more recent population data.
To offset the losses to certain states resulting from the use of current data, H.R.
2439 also included a hold-harmless provision, or hold-harmless level; this provision
ensured that if appropriations were less than or equal to $1.875 billion, states would
receive no less than their allotment would have been under the old formula at this
appropriations level. The bill additionally increased the LIHEAP authorization level
to $2.075 billion for FY1984, $2.26 billion for FY1985, $2.625 billion for FY1987,
and $2.8 billion for FY1988.
Introduction of a Hold-Harmless Rate. After the House Energy and
Commerce Committee reported H.R. 2439 to the House floor — but before the full
House could act on the bill — the Senate passed its version of LIHEAP
reauthorization as part of the Human Services Reauthorization Act (S. 2565) on
October 4, 1984.35 The Senate bill contained language very similar to H.R. 2439, but
made several changes and additions to the formula.
33
Congressional Record, vol. 129, part 17 (September 13, 1983), p. 23877. The greatest
increases in percentage allocations were for Florida at 51%, Texas at 44%, and Alabama at
37%. The states whose percentage allocations decreased the most were Vermont at 32%,
North Dakota at 24%, and New Hampshire at 23%.
34
“The Low-Income Home Energy Assistance Program: An Analysis of the 1984
Reauthorization Issues,” Coalition of Northeastern Governors, April 1984, p. 9.
35
The final version of S. 2565 can be found in the Congressional Record, daily edition, vol.
130 (October 4, 1984), p. S13393.
CRS-13
!
S. 2565 specified that states’ shares of LIHEAP funds would be
based on the home energy expenditures of low-income households,
not on expenditures of all households.
!
The hold-harmless level was altered. S. 2565 directed that no state
in FY1985 would receive fewer funds than it received in FY1984,
and for FY1986 and thereafter, no state would receive less than the
amount they would have received in FY1984 if the appropriations
level had been $1.975 billion.
!
A second hold-harmless provision, or hold-harmless rate, was
created. The provision maintained the percentage allocated rather
than a total funding level allocated to each affected state.
The hold-harmless rate provision guaranteed that certain states would receive
increased allotments when appropriations reached $2.25 billion. States would qualify
for this increase if their total allotment percentage at an appropriation of $2.25 billion
were less than 1%. These states would instead receive the allotment rate they would
have received at an appropriation of $2.14 billion if that allotment rate were higher
than the rate at $2.25 billion. In its debate about S. 2565, Senators referred to the
hold-harmless rate as the “small States hold harmless,” as the intent was to protect
the small (population) states’ shares of LIHEAP funds.36 Otherwise, these states’
percentage shares of LIHEAP funds might decline, even as total appropriations
increased. No rate protection was guaranteed for more populous states beyond the
aforementioned hold-harmless level.
The Senate bill also included different authorization amounts for LIHEAP,
$2.14 billion for FY1985 and $2.275 billion for FY1986. After S. 2565 passed the
Senate, the House debated and passed the bill on October 9, 1984, retaining all the
provisions included in the Senate version. The bill became P.L. 98-558, the Human
Services Reauthorization Act, on October 30, 1984.
LIHEAP Formula Statutory Language. Unlike the allocation formulas
under LIEAP and the other energy assistance programs that preceded LIHEAP, which
dictated the use of specific variables to determine allotments to the states, the
LIHEAP formula as drafted by Congress gives more general guidance to HHS. The
LIHEAP statute, as enacted in P.L. 98-558 and codified at 42 U.S.C. §8623(a)(2)
provides as follows.
(A) a State’s allotment percentage is the percentage which expenditures for home
energy by low-income households in that State bears to such expenditures in all
States, except that States which thereby receive the greatest proportional increase
in allotments by reason of the application of this paragraph from the amount they
received pursuant to Public Law 98 — 139 [the FY1984 appropriation] shall
have their allotments reduced to the extent necessary to ensure that —
(i) no State for fiscal year 1985 shall receive less than the amount of funds
the State received in fiscal year 1984; and
36
Congressional Record, daily edition, vol. 130 (October 4, 1984), pp. S13415-S13416.
CRS-14
(ii) no State for fiscal year 1986 and thereafter shall receive less than the
amount of funds the State would have received in fiscal year 1984 if the
appropriations for this subchapter for fiscal year 1984 had been
$1,975,000,000, and
(B) any State whose allotment percentage out of funds available to States from
a total appropriation of $2,250,000,000 would be less than 1 percent, shall not,
in any year when total appropriations equal or exceed $2,250,000,000, have its
allotment percentage reduced from the percentage it would receive from a total
appropriation of $2,140,000,000.
The next section of this report describes how funds are allocated to the states
according to this statutory language.
Determining LIHEAP Regular Fund Allotments
Using the “New” Formula
Current law as enacted in P.L. 98-558, sometimes referred to as the “new”
LIHEAP formula, provides for three different methods to calculate each state’s
allotment of regular LIHEAP funds. The calculation method used to determine state
allotments depends upon the size of the appropriation for that fiscal year. If the
annual appropriation level does not exceed the equivalent of a hypothetical FY1984
appropriation of $1.975 billion, then the allocation rates under the “old” LIHEAP
formula apply. This is sometimes referred to as “Tier I” of the LIHEAP formula. If
appropriations exceed a hypothetical FY1984 appropriation of $1.975 billion, then
new formula rates apply and are used to calculate state allotments. To calculate the
new formula rates, the most recent data available are used to determine the heating
and cooling costs of low-income households. When appropriations exceed the
$1.975 billion level, but are less than $2.25 billion, the new formula rates are used
together with the hold-harmless level. This is sometimes referred to as “Tier II” of
the LIHEAP formula. Finally, if appropriations equal or exceed $2.25 billion, the
new rates apply and both the hold-harmless level together with the hold-harmless rate
are in effect. This is sometimes referred to as “Tier III” of the LIHEAP formula.
This section describes the steps involved in allocating LIHEAP funds to the states
under the three tiers of the formula.
Calculating the New Formula Rates
As mentioned previously, when Congress considered a new formula for
distributing LIHEAP funds in 1983 and 1984, one of its concerns was the
appropriateness and timeliness of the data used in formula calculations. At the time,
the energy information used to calculate state allotments under the LIEAP formula
did not use the most current data available.37 For example, the formula used the
change in cost of energy between 1978 and 1980, but did not take account of
37
Report of the Committee on Energy and Commerce to accompany H.R. 2439, the LowIncome Home Energy Amendments of 1984, 98th Cong., 2nd sess., H.Rept. 98-139, Part 2,
May 15, 1984, p. 13.
CRS-15
increased costs after 1980. In fact, the formula factors were fixed rates, and the
LIHEAP statute at that time had no provision for allowing newer information to be
incorporated into the determination of state allotments. The LIHEAP formula as
created by P.L. 98-558 requires HHS to use the most recent data available. HHS
updates these data periodically. The most recent data were provided to CRS in
September of 2008.
As directed by the statute as enacted in 1984, the LIHEAP formula uses the
home energy expenditures of low-income households in each state as a first step in
determining the proportion of total regular funds that each state will receive.38
Specifically, this means estimating the amount of money that all low-income
households (as defined by the LIHEAP statute39) in each state spend on heating and
cooling from all energy sources. This method accounts for variations in heating and
cooling needs of the states, the types of energy used, energy prices, and the lowincome population and their heating and cooling methods. The process for capturing
the expenditures of low-income households for the most current year possible
involves the following steps.
!
Total Residential Energy Consumption. The first step in
calculating new formula rates is determining total residential energy
consumption for each heating and cooling source in every state.
Residential energy consumption is usually measured in terms of the
total amount of British Thermal Units (Btus) used in private
households and generally captures energy used for space and water
heating, cooling, lighting, refrigeration, cooking, and the energy
needed to operate appliances. The most recent data used in
calculating LIHEAP formula rates come from the 2004 Energy
Information Administration (EIA) State Energy Data System
consumption estimates.
!
Temperature Variation. The next step in determining the formula
rates involves adjusting the amount of energy consumed for each
fuel source by temperature variation in each state. This is done by
using a ratio consisting of the 30-year average heating and cooling
degree day data to each state’s share of the most recent year’s
average heating and cooling degree days. A heating degree day
measures the extent to which a day’s average temperature falls
below 65°F and a cooling degree day measures the extent to which
a day’s average temperature rises above 65°F.40 For example, a day
with an average temperature of 50°F results in a measure of 15
heating degree days; a day with an average temperature of 80°F
38
“[A] State’s allotment percentage is the percentage which expenditures for home energy
by low-income households in that State bears to such expenditures in all States...” 42 U.S.C.
§8623(a)(2).
39
The LIHEAP statute considers households with income at or below 150% of poverty or
60% of state median income (whichever value is greater) to be low income. 42 U.S.C.
§8624(b)(2)(B).
40
A state’s heating and cooling degree data are weighted by population in the state.
CRS-16
results in a measure of 15 cooling degree days. The purpose of the
adjustment to fuel consumption is to account for abnormally warm
or cool years, where energy usage might attain extreme values. This
information is collected by the National Oceanic and Atmospheric
Administration. The most recent year’s average heating and cooling
degree day data are from 2006, and the 30-year average was
computed from 1971 to 2000.
!
Heating and Cooling Consumption. As mentioned above, total
residential energy consumption encompasses other uses in addition
to heating and cooling (e.g. operation of appliances). So the next
step in calculating LIHEAP formula rates is to derive the portion of
fuel consumed specifically to heat and cool homes as opposed to
other uses. The EIA, as part of the Residential Energy Consumption
Survey (RECS), uses an “end use estimation methodology” to
estimate the amount of fuel used for heating and cooling (among
other uses). The most recent information on heating and cooling
consumption comes from the 2001 RECS, adjusted for 2003.41
!
Low-Income Household Heating and Cooling Consumption.
After estimating heating and cooling consumption for all
households, the next step is to calculate heating and cooling
consumption in Btus for low-income households. The Bureau of the
Census, Department of Commerce, prepares a special sample for
HHS of the fuel sources used by low-income households. The most
recent information on low-income households and the fuel sources
they use comes from the 2000 Census. In addition, low-income
consumption data are adjusted to account for the fact that lowincome households might use more or less of a fuel source than is
used by households on average. This is done using consumption
data from the 2001 RECS adjusted for 2003.
!
Total Spending on Heating and Cooling. To arrive at the amount
of money that low-income households spend on heating and cooling,
the number of Btus used by low-income households that were
estimated in the previous step are multiplied by the average fuel
price for each fuel source. The total amount spent on heating and
cooling by low-income households for each fuel source is then
added together to arrive at total spending for each state. Regional
energy price variation can be significant, and the formula takes
expected expenditure differences into account. This information is
collected by the EIA and published in the State Energy Data System
Consumption, Price, and Expenditure Estimates.42 The most recent
price data used to calculate formula rates are from 2004.
41
For more information about the RECS, see the EIA website at [http://www.eia.doe.gov/
emeu/recs/].
42
The EIA’s state data tables are available at [http://www.eia.doe.gov/emeu/states/
_seds.html].
CRS-17
!
New Formula Rate. Finally, these expenditure data are used to
estimate the amount spent by low-income households on heating and
cooling in each state relative to the amount spent by low-income
households on heating and cooling in all states. The calculated
proportion becomes the new formula percentage, or rate, for each
state. See Table 3 at the end of this section for both old and new
LIHEAP formula rates. Column (a) shows the rates under the “old”
formula, while column (b) shows the most recent “new” formula
rates.
These new formula rates are used to allocate LIHEAP funds to the states if the
annual appropriation exceeds the equivalent of a hypothetical FY1984 appropriation
of $1.975 billion. However, these new formula rates do not represent the exact
proportion of funds that states will receive under the new formula. The ultimate
allotments are determined after application of the both the hold-harmless level and
hold-harmless rate, described in the next section. The new rates are the starting point
for determining how funds will be allocated to the states.
Using the New Formula Rates to Allocate Funds to the States
The LIHEAP new formula rates that HHS calculates using the most current data
available do not necessarily represent the proportion of funds that states will receive.
State allotments depend upon the application of the two hold-harmless provisions in
the LIHEAP statute. Some states must have their share of funds ratably reduced in
order to hold harmless those states that would, but for the hold-harmless provisions,
lose funds. Other states see a gain in their share of funds because they benefit from
the hold-harmless provisions. The application of the hold-harmless provisions
depends upon the size of the appropriation for a given fiscal year. These
appropriation level triggers are described below.
Tier I: Below $1.975 Billion. Current law requires that for fiscal years in
which the regular LIHEAP fund appropriation is equivalent to a hypothetical FY1984
appropriation of $1.975 billion or less, states receive the same percentage of funds
that they would have received at that appropriation level under the “old” LIHEAP
formula.43 This FY1984 appropriation of $1.975 billion referred to in the LIHEAP
statute is hypothetical because this was not the amount actually appropriated in
FY1984. The actual FY1984 appropriation was $2.075 billion. In addition, the
current year appropriation that is “equivalent to” a hypothetical FY1984
appropriation of $1.975 billion is not exactly $1.975 billion. In FY1984, with the
exception of funds provided to the territories, all LIHEAP regular funds were
distributed to the states. Since then, two other funds have become part of the regular
fund distribution. These are funds for training and technical assistance and for the
43
It is important to understand, however, that although the new formula rates are always
applied to all appropriations, when appropriations are below a hypothetical FY1984
appropriation of $1.975 billion, the result of the current law’s hold-harmless provisions is
that states receive the same allotment percentages that they did under the old formula. See
U.S. Department of Health and Human Services, Low Income Home Energy Assistance
Program: Report to Congress for FY1987, p. 133.
CRS-18
leveraging incentive grants (which includes REACH grants) to the states. This
means that an appropriation that is equivalent to a hypothetical FY1984 appropriation
of $1.975 billion must account for these new funds. Assuming that funds for
leveraging incentive/REACH grants is $27 million and training and technical
assistance is $300,000 (the amounts allocated to these funds in FY2009), then the
equivalent of an FY1984 appropriation of $1.975 billion is approximately $2.0023
billion.44
The LIHEAP formula in FY1984 distributed funds by giving states the same
share of funds that they received in FY1981 under the predecessor program, the Low
Income Energy Assistance Program (LIEAP). Table 3, at the end of this section of
the report, shows rates under the old formula in column (a). For example, at an
appropriation at or below the equivalent of a hypothetical FY1984 appropriation of
$1.975 billion, Alabama would receive 0.86% of total funds, Alaska would receive
0.55% of total funds, and so on. Appendix A, Table A-1, column (a) reports the
dollar amount of funds that each state would have received in FY1984 had the
regular fund appropriation been $1.975 billion.
Tier II: From $1.975 Billion up to $2.25 Billion. If the regular LIHEAP
appropriation exceeds a hypothetical FY1984 appropriation of $1.975 billion for the
fiscal year, all funds are to be distributed under a different methodology, using the
new set of rates described earlier. In addition, a hold-harmless level applies to ensure
that certain states do not fall below the amount of funds they would have received at
the equivalent of a hypothetical FY1984 appropriation of $1.975 billion. Table 3,
at the end of this section, shows whether a state benefits from the hold-harmless
level. This is indicated by a “Y” in column (c), while the dollar amount of funds
those states receive by being held harmless appears in column (d). For example,
Alabama is not held harmless, while Alaska is held harmless. The dollar amount of
funds that Alaska receives pursuant to the hold-harmless level is $10.828 million.
But for the hold-harmless level, Alaska would receive less than this dollar amount
at its new formula rate at certain appropriation levels. Eventually, when
appropriations increase sufficiently, the allotments for states that are held harmless
with exceed their hold harmless amounts. This appropriation level varies for each
state.
The hold-harmless level is achieved by reducing the allocation of funds to those
states with the greatest proportional gains under the new formula rates.45 For
example, under the most recent LIHEAP formula rates, states with the greatest
proportional gains were Nevada, Texas, and Florida. Depending on the appropriation
level, these states (and others with the greatest gains) may then have their allotments
reduced to hold harmless those states that would otherwise see reduced benefits. So
although these states with the greatest proportional gains will see their LIHEAP
44
45
This amount is arrived at by adding $27 million and $300,000 to $1.975 billion.
“States which thereby receive the greatest proportional increase in allotments ... shall have
their allotments reduced to the extent necessary to ensure that ... no State for fiscal year
1986 and thereafter shall receive less than the amount of funds the State would have
received in fiscal year 1984 ...” 42 U.S.C. §8623(a)(2)(A)(ii).
CRS-19
allotments increase under the new formula, their allotments may not increase to reach
their new formula rates (column (b) of Table 3).
Columns (b) and (c) of Table A-1 in Appendix A show estimated allotments
to the states at hypothetical appropriations levels under Tier II of the LIHEAP
formula. Column (b) shows the estimated allotment of funds that each state would
receive when the regular fund appropriation is at $2.14 billion and column (c) shows
the estimated allotment of funds when the regular fund appropriation is just under
$2.25 billion ($2,249,999,999).
Tier III: At or Above $2.25 Billion. The LIHEAP statute stipulates
additional requirements in the method for distributing funds when the appropriation
is at or above $2.25 billion. At this level, all of the provisions specified in the Tier
II allocation methodology are in place, including the change in the formula factors
and the hold-harmless level. In addition, a new hold-harmless rate is applied. That
is, for all appropriation levels at or above $2.25 billion, states that would have
received less than 1% of a total $2.25 billion appropriation must be allocated the
percentage they would have received at a $2.14 billion appropriation level.46 (This
assumes the percentage at $2.14 billion is greater than the percentage originally
calculated at the hypothetical $2.25 billion appropriation; this is not true for all states
that receive less than 1% of the $2.25 billion appropriation.) Then that state will
receive the $2.14 billion allotment proportion for all appropriation levels at or above
$2.25 billion. This hold-harmless rate ensures a state specific share of the total
available funds.
As with the Tier II funding level, the allocations to the states with the greatest
proportional gains are then ratably reduced again, using the methodology described
in the Tier II discussion, until there is no funding shortfall. Column (e) of Table 3
shows which states benefit from the hold-harmless rate, indicated by a “Y,” while
column (f) shows the proportion of funds that those states receive. For example,
Alaska benefits from the hold-harmless rate and receives 0.513% of the total
appropriation when appropriations are at or above $2.25 billion.
The application of the hold-harmless rate creates another layer of discontinuity
in the allocation rates. Columns (d) through (h) of Table A-1 in Appendix A show
estimated allotments to states at various hypothetical appropriations levels above at
or above $2.25 billion. Column (d) shows the estimated allotment of funds that each
state receives when the regular appropriation is at $2.25 billion after the holdharmless rate is applied. Columns (e) through (h) show the estimated allotment each
state would receive at $2.5 billion, $3.0 billion, $4.0 billion, and $5.1 billion.
46
“[A]ny State whose allotment percentage out of funds available to States from a total
appropriation of $2,250,000,000 would be less than 1 percent, shall not, in any year when
total appropriations equal or exceed $2,250,000,000, have its allotment percentage reduced
from the percentage it would receive from a total appropriation of $2,140,000,000.” 42
U.S.C. §8623(a)(2)(B).
CRS-20
Implementation of the “New” LIHEAP Formula
Until FY2006, appropriations for regular LIHEAP funds had only exceeded the
equivalent of a hypothetical FY1984 appropriation of $1.975 billion in 1985 and
1986; therefore, from FY1987 through FY2005, and again in FY2007, states
continued to receive the same percentage of LIHEAP funds that they received under
the program’s predecessor, LIEAP (see column (a) of Table 3 for these proportions).
In FY2006, funds were distributed under the “new” LIHEAP formula when Congress
appropriated $2.48 billion in regular funds for the program. In FY2008, perhaps due
to an oversight, the new formula was again used to distribute funds. The FY2008
Consolidated Appropriations Act (P.L. 110-161) failed to authorize a set-aside called
leveraging incentive grants. As a result, the funds for those grants were added to the
LIHEAP regular funds, triggering the new formula.47 In FY2009, the Consolidated
Security, Disaster Assistance, and Continuing Appropriations Act (P.L. 110-329)
appropriated $4.51 billion in regular funds. However, the law further specified that
$840 million be distributed according to the “new” LIHEAP formula, with the
remaining $3.67 billion distributed according to the proportions of the “old” formula
established by LIEAP. See Table C-1 in Appendix C of this report for the
distribution of funds to the states in FY2006 through FY2009.
47
For more information about this issue, see Appendix C of this report.
CRS-21
Table 3. Low-Income Home Energy Program (LIHEAP):
“Old” and “New” Allotment Rates by State, 2008
Hold-Harmless Level
“Old”
Allotment
Rate (%)
State
(a)
Alabama
0.860
Alaska
0.549
Arizona
0.416
Arkansas
0.656
California
4.614
Colorado
1.609
Connecticut
2.099
Delaware
0.279
District of Columbia
0.326
Florida
1.361
Georgia
1.076
Hawaii
0.108
Idaho
0.628
Illinois
5.809
Indiana
2.630
Iowa
1.864
Kansas
0.856
Kentucky
1.369
Louisiana
0.879
Maine
1.360
Maryland
1.607
Massachusetts
4.198
Michigan
5.515
Minnesota
3.973
Mississippi
0.737
Missouri
2.320
Montana
0.736
Nebraska
0.922
Nevada
0.195
New Hampshire
0.795
New Jersey
3.897
New Mexico
0.521
New York
12.725
North Carolina
1.896
North Dakota
0.800
Ohio
5.139
Oklahoma
0.791
Oregon
1.247
Pennsylvania
6.835
Rhode Island
0.691
South Carolina
0.683
South Dakota
0.649
Hold-Harmless Rate
Subject to
Hold- Subject to
“New” HoldHarmless
HoldAllotment Harmless
Level Harmless
Rate (%) Level?
($Millions) Rate?
(b)
(c)
(d)
(e)
1.650
N
—
N
0.317
Y
10.828
Y
0.813
N
—
N
0.910
N
—
N
5.303
N
—
N
1.305
Y
31.729
N
2.164
N
—
N
0.453
N
—
N
0.328
N
—
N
3.781
N
—
N
2.734
N
—
N
0.099
Y
2.137
Y
0.331
Y
12.376
Y
4.998
Y
114.565
N
2.128
Y
51.872
N
1.064
Y
36.762
N
1.106
N
—
N
1.621
N
—
N
1.514
N
—
N
0.908
Y
26.815
N
2.652
N
—
N
3.311
Y
82.797
N
4.645
Y
108.770
N
1.917
Y
78.363
N
0.951
N
—
N
2.309
Y
45.762
N
0.441
Y
14.517
Y
0.558
Y
18.180
Y
0.576
N
—
N
0.503
Y
15.672
Y
3.621
Y
76.865
N
0.577
N
—
N
9.393
Y
250.974
N
3.261
N
—
N
0.273
Y
15.770
Y
4.803
Y
101.350
N
1.275
N
—
N
0.750
Y
24.591
N
5.731
Y
134.810
N
0.665
Y
13.629
N
1.349
N
—
N
0.235
Y
12.808
Y
HoldHarmless
Rate (%)
(f)
—
0.513
—
—
—
—
—
—
—
—
—
0.101
0.587
—
—
—
—
—
—
—
—
—
—
—
—
—
0.688
0.862
—
0.743
—
—
—
—
0.748
—
—
—
—
—
—
0.607
CRS-22
Hold-Harmless Level
State
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
“Old”
Allotment
Rate (%)
(a)
1.386
2.264
0.748
0.596
1.957
2.051
0.906
3.576
0.299
Hold-Harmless Rate
Hold- Subject to
Subject to
“New” HoldHarmless
HoldAllotment Harmless
Level Harmless
($Millions) Rate?
Rate (%) Level?
(b)
(c)
(d)
(e)
1.801
N
—
N
6.524
N
—
N
0.599
Y
14.745
Y
0.319
Y
11.747
Y
3.041
N
—
N
1.204
Y
40.450
N
0.907
N
—
N
2.080
Y
70.538
N
0.202
5.903
Y
Y
HoldHarmless
Rate (%)
(f)
—
—
0.699
0.557
—
—
—
—
0.280
Source: Congressional Research Service (CRS) calculations based on factors provided by the
Department of Health and Human Services (HHS) in September 2008.
Note: The actual proportion of total regular funds each state receives at funding levels above $1.975
billion may differ substantially from the calculated new formula rate due to the hold-harmless
provisions and the ratable reductions to cover shortfall from these hold-harmless provisions.
CRS-23
Appendix A: Estimated Appropriations to the States
Under Various Hypothetical Appropriation Levels
Table A-1, below, shows estimated allocations to the states at various
hypothetical appropriations levels. In column (a) are allotments at the equivalent of
a hypothetical FY1984 appropriation of $1.975 billion — under current LIHEAP
practice where funds are set aside for leveraging incentive grants and training and
technical assistance, the equivalent appropriation level is approximately $2.0023
billion. The remaining columns show estimated allotments at appropriations of $2.14
billion, just under $2.25 billion, $2.25 billion, $3.0 billion, $4.0 billion, and $5.1
billion, the amount at which the LIHEAP program was last authorized in P.L. 109-58.
CRS-24
Table A-1. LIHEAP Estimated State Allotments for Regular Funds
at Various Hypothetical Appropriation Levels
($ in millions)
Tier I
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Hypothetical
$1.975 Billion
in FY1984
(a)
16.963
10.828
8.203
12.943
91.001
31.729
41.392
5.494
6.428
26.840
21.221
2.137
12.376
114.565
51.872
36.762
16.883
26.994
17.342
26.815
31.693
82.797
108.770
78.363
14.543
45.762
14.517
Tier II
Tier III
$2.14 Billion
(b)
21.677
10.828
Just under
$2.25 Billion
(c)
26.014
10.828
$2.25 Billion
(d)
25.613
11.392
$2.5 Billion
(e)
34.432
12.673
$3.0 Billion
(f)
48.984
15.235
$4.0 Billion
(g)
65.463
20.360
$5.1 Billion
(h)
83.588
25.998
10.483
16.541
111.879
31.729
45.660
7.021
6.924
34.300
27.119
2.137
12.376
114.565
51.872
36.762
21.575
34.197
22.162
26.815
40.502
82.797
108.770
78.363
18.585
48.714
14.517
12.580
19.850
117.704
31.729
48.037
8.425
7.285
41.161
32.544
2.201
12.376
114.565
51.872
36.762
24.554
35.977
26.595
26.815
48.603
82.797
108.770
78.363
21.109
51.250
14.517
12.387
19.544
117.704
31.729
48.037
8.296
7.285
40.527
32.043
2.248
13.021
114.565
51.872
36.762
24.554
35.977
26.185
26.815
47.855
82.797
108.770
78.363
21.109
51.250
15.273
16.652
22.461
130.942
32.226
53.440
11.152
8.104
54.481
43.076
2.501
14.485
123.428
52.542
36.762
27.315
40.024
35.201
26.815
64.331
82.797
114.704
78.363
23.483
57.014
16.990
24.142
27.003
157.420
38.742
64.246
13.461
9.743
79.847
63.131
3.007
17.415
148.386
63.166
36.762
32.839
48.117
44.941
26.965
78.717
98.293
137.898
78.363
28.231
68.543
20.426
32.264
36.087
210.375
51.774
85.859
17.989
13.020
121.835
96.330
4.019
23.273
198.302
84.415
42.208
43.885
64.303
60.059
36.036
105.198
131.358
184.287
78.363
37.728
91.601
27.297
41.197
46.079
268.626
66.110
109.632
22.969
16.625
156.397
123.655
5.131
29.717
253.210
107.788
53.895
56.037
82.108
76.689
46.015
134.326
167.729
235.314
97.088
48.175
116.964
34.856
CRS-25
Tier I
State
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
Hypothetical
$1.975 Billion
in FY1984
(a)
18.180
3.853
15.672
76.865
10.270
250.974
37.403
15.770
101.350
15.592
24.591
134.810
13.629
13.472
12.808
27.344
44.653
14.745
11.747
38.606
40.450
17.864
70.538
5.903
1,972.33
Tier II
$2.14 Billion
(b)
18.180
4.924
15.672
76.865
12.182
250.974
47.798
15.770
101.350
19.926
24.591
134.810
14.037
17.216
12.808
34.944
57.064
14.745
11.747
49.336
40.450
19.140
70.538
5.903
2,109.839
Just under
$2.25 Billion
(c)
18.180
5.909
15.672
80.379
12.816
250.974
57.359
15.770
106.614
23.912
24.591
134.810
14.767
20.660
12.808
39.984
68.479
14.745
11.747
59.204
40.450
20.136
70.538
5.903
2,219.690
Tier III
$2.25 Billion
(d)
19.127
5.818
16.488
80.379
12.816
250.974
56.476
16.591
106.614
23.544
24.591
134.810
14.767
20.342
13.475
39.984
67.424
15.512
12.358
58.293
40.450
20.136
70.538
6.211
2,219.690
$2.5 Billion
(e)
21.278
7.821
18.342
89.419
14.257
250.974
75.921
18.457
118.605
31.486
24.591
141.520
16.428
27.346
14.990
44.481
90.638
17.257
13.748
75.098
40.450
22.401
70.538
6.909
2,469.351
$3.0 Billion
(f)
25.581
11.462
22.051
107.501
17.140
278.838
96.804
22.189
142.588
37.853
24.591
170.137
19.750
40.049
18.021
53.475
132.838
20.747
16.528
90.283
40.450
26.931
70.538
8.306
2,968.674
$4.0 Billion
(g)
34.186
17.489
29.469
143.663
22.906
372.637
129.368
29.653
190.554
50.586
29.762
227.370
26.394
53.522
24.084
71.464
202.694
27.726
22.088
120.654
47.756
35.990
82.519
11.101
3,967.320
$5.1 Billion
(h)
43.652
22.451
37.629
183.442
29.249
475.817
165.189
37.864
243.316
64.593
38.002
290.326
33.702
68.341
30.752
91.252
260.192
35.403
28.204
154.061
60.979
45.956
105.367
14.174
5,065.830
Source: Congressional Research Service (CRS) calculations based on factors provided by the Department of Health and Human Services (HHS) in September 2008.
Notes: These estimates take into account current law, which allows HHS to set aside funds out of regular LIHEAP funds for territories, leverage incentive grants and
Residential Energy Assistance Challenge (REACH) grants and training and technical assistance. For each estimate, approximately 0.14% is allocated to the territories,
$27 million to leveraging incentive and REACH grants, and $300,000 to training and technical assistance. Differing allocations to leveraging incentive and REACH
grants could change state allotments.
CRS-26
Appendix B: Further Depiction of How State
Allotments Depend Upon Appropriation Levels
Figure 1 graphically illustrates state allotments for three “typical” types of states
over a range of appropriations from $0 to $5.1 billion. Represented are (1) a holdharmless level state, (2) a hold-harmless level and rate state, and (3) a state whose
increased allocations are ratably reduced in order to maintain allocations for the holdharmless level and rate states.
In the figure, there are three vertical areas. These areas separate the three levels
of appropriations (Tiers I-III) that are triggers under current law and were explained
previously in this report. The figure also graphs the three basic types of states.
Reading from top to bottom of Figure 1, these three types of states are as follows.
!
Hold-Harmless Level Only States. These states are subject to only
the hold-harmless level provision. They do not qualify for the holdharmless rate because each state’s share of the regular funds at $2.25
billion is greater than 1%. An example of a hold-harmless level only
state is represented by the line that runs from $0 to point G. The
hold-harmless level is evident from point A to point F. Here, despite
increases in the appropriations level, the state allotment remains
fixed. In Table 3, these are the states that have a “Y” in the
“Subject to hold-harmless level?” column and a “N” in the
“Subject to hold-harmless rate?” column.
!
Ratable Reduction States. These states are subject to a ratable
reduction. Their new formula rate is greater than their old, FY1984,
rate. An example of these states is depicted by the line that runs
from $0 to point H. There is a small decrease in state allotments at
point D that is attributable to the increased shortfall on the
distribution of funds that the hold-harmless rate imposes. In Table
3, these are the states that have a “N” in the “Subject to
hold-harmless level?” column and a “N” in the “Subject to
hold-harmless rate?” column.
!
Hold-Harmless Level and Rate States. These states are subject to
both the hold-harmless level and the hold harmless rate provisions.
An example of a typical level and rate state is shown by the line that
runs from $0 to point I. The hold-harmless level is evident by the
fixed state allotment from point C to point E. However, the (subtle)
jump at exactly $2.25 billion signals that this state is subject to the
hold-harmless rate provision. After the allotment jump at $2.25
billion, the state’s allotment continues to increase (at a rate lower
than the old rate, but higher than the new rate). In Table 3, these are
the states that have a “Y” in the “Subject to hold-harmless level?”
column and a “Y” in the “Subject to hold-harmless rate?” column.
CRS-27
Figure 1. Estimated Low Income Home Energy Assistance (LIHEAP) Allocations at Various Hypothetical Appropriations Level
for Three Types of States
$120
T ie r II h o ld - h a r m le s s
le v e l
T ie r I
G
T ie r III h o ld - h a rm le s s r a te
$100
Ho ld - h a r m le s s le v e l
o n ly s ta te
($ in millions)
State Allotment
$80
H
F
A
R a ta b ly r e d u c e d
s ta te
$60
Ho ld - h a r m le s s le v e l
a n d r a te s ta te
$40
D
$20
I
B
C
E
$0
$0
$ 1 ,0 0 0
$ 2 ,0 0 0
$ 3 ,0 0 0
$ 4 ,0 0 0
$ 5 ,0 0 0
Ap p r o p r ia t io n
( $ in m illio n s )
Source: Figure created by Congressional Research Service (CRS) calculations using allotment rates provided by the Department of Health and Human Services in September 2008.
CRS-28
Appendix C: Actual LIHEAP Allocations
to the States, FY2006-FY2009
In the most recent regular fund appropriation for LIHEAP, the FY2009
Consolidated Security, Disaster Assistance, and Continuing Appropriations Act (P.L.
110-329), Congress appropriated $4.51 billion. However, of that amount, $840
million was to be distributed according to the “new” formula and the remainder
under the “old” formula proportions. Column (e) of Table C-1 shows the amount
of regular funds that each state received under P.L. 110-329.
In the FY2008 Consolidated Appropriations Act (P.L. 110-161), Congress
appropriated $1.98 billion in LIHEAP regular funds.48 The first distribution to the
states of the regular funds appropriated in P.L. 110-161 occurred in December 2007;
allocations were made on the basis of the proportions of the “old” LIHEAP formula.
The amount of funds that each state received under this allotment is in column (c) of
Table C-1. Then, on June 26, 2008, HHS announced that it would distribute funds
that were thought to have been allocated to leveraging incentive and REACH grants
in the FY2008 Appropriations Act as part of the regular fund formula grants. Since
the early 1990s, leveraging incentive and REACH grants have been made to states
and tribes on the basis of their ability to obtain non-LIHEAP resources for energy
assistance (leveraging incentive grants) and for increasing energy efficiency of lowincome households (REACH grants). In recent years, Congress has allocated about
$27 million for these two funds. However, in FY2008, P.L. 110-161 did not
appropriate funds for leveraging incentive and REACH grants. When HHS
discovered that language to appropriate the funds was missing from the law, it
released the $26.7 million that would otherwise have been distributed as leveraging
incentive and REACH grants as part of the LIHEAP formula distribution. The
addition of nearly $27 million to the formula grants caused the funds to be released
under the “new” LIHEAP formula. Column (d) of Table C-1 shows the total amount
of funds that each state received after $26.7 million was added and funds were
distributed under the new formula.
Column (b) of Table C-1 shows the amounts allocated to the states in FY2007
when Congress appropriated $1.98 billion in regular LIHEAP funds as part of a
year-long continuing resolution (P.L. 110-5). Funds were distributed according to
the proportions of the old formula. Column (a) shows the amount allotted to each
state in FY2006, when $2.48 billion was appropriated for LIHEAP regular funds
through two different laws. The FY2006 Departments of Labor, Health and Human
Services, and Education Appropriations Act (P.L. 109-149) appropriated $1.98
billion for LIHEAP and a bill to make available funds in the Deficit Reduction Act
of 2005 for LIHEAP (P.L. 109-204) appropriated $500 million.
48
P.L. 110-161 contained an across-the-board rescission of 1.747% that reduced the stated
amounts appropriated for most Departments of Labor, Health and Human Services, and
Education programs. See Division G, Section 528 of P.L. 110-161. The $1.98 billion
appropriation for regular funds was the amount available after this rescission.
CRS-29
Table C-1. LIHEAP Actual State Regular Fund Allotments for
FY2006 through FY2009
($ in millions)
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
FY2007
FY2006
Allotments: Allotments:
$1.98
$2.48
billionb
billiona
(a)
(b)
31.310
16.769
12.572
10.704
15.142
8.110
22.765
12.796
153.184
89.963
31.729
31.367
47.809
40.920
10.141
5.431
7.852
6.355
49.542
26.534
39.170
20.979
2.555
2.113
14.370
12.235
145.959
113.259
53.986
51.280
36.762
36.343
26.798
16.690
44.347
26.686
32.010
17.144
26.815
26.509
58.499
31.332
82.797
81.853
108.770
107.529
78.363
77.469
26.843
14.377
59.541
45.240
16.856
14.351
21.109
17.973
7.112
3.809
18.197
15.493
77.540
75.988
11.925
10.153
250.974
248.112
69.038
36.976
18.310
15.590
122.259
100.194
28.780
15.415
24.591
24.311
134.810
133.273
15.825
13.473
24.867
13.318
FY2008
Allotments
Prior to
6-26-08:
$1.98
billionc
(c)
16.774
10.707
8.112
12.799
89.985
31.375
40.930
5.433
6.356
26.541
20.985
2.113
12.238
113.287
51.293
36.352
16.695
26.693
17.148
26.516
31.340
81.873
107.556
77.488
14.381
45.251
14.355
17.978
3.810
15.497
76.007
10.156
248.173
36.985
15.594
100.219
15.418
24.317
133.306
13.477
13.322
FY2008
Allotments
After
6-26-08:
FY2009
$1.98 Allotments:
billiond $4.5 billione
(d)
(e)
17.111
60.063
10.828
23.568
8.275
29.047
13.057
36.497
91.797
225.894
31.729
63.474
41.754
95.783
5.542
17.384
6.484
14.653
27.075
95.037
21.407
75.141
2.137
4.652
12.376
26.939
114.565
237.236
51.872
103.609
36.762
67.803
17.031
45.349
27.230
68.353
17.494
57.196
26.815
49.457
31.971
101.296
82.797
162.981
108.770
222.412
78.363
144.528
14.670
39.011
45.762
103.541
14.517
31.598
18.180
39.573
3.887
13.643
15.672
34.112
76.865
166.690
10.360
24.901
250.974
475.935
37.730
123.243
15.770
34.325
101.350
220.588
15.729
49.007
24.591
45.355
134.810
274.925
13.629
30.209
13.590
47.702
CRS-30
State
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
FY2006
FY2007
Allotments: Allotments:
$2.48
$1.98
billiona
billionb
(a)
(b)
14.871
12.662
46.363
27.033
82.421
44.144
17.120
14.576
13.639
11.613
71.259
38.166
40.450
39.988
23.818
17.660
70.538
69.733
6.854
5.836
2,449.16
1,949.83
FY2008
Allotments
Prior to
6-26-08:
$1.98
billionc
(c)
12.665
27.039
44.155
14.580
11.616
38.175
39.998
17.665
69.750
5.838
1,950.314
FY2008
Allotments
After
6-26-08:
FY2009
$1.98 Allotments:
billiond $4.5 billione
(d)
(e)
12.808
27.878
27.584
73.723
45.044
158.110
14.745
32.094
11.747
25.568
38.944
118.084
40.450
74.603
17.935
40.584
70.538
130.096
5.903
12.850
1,977.027 4,476.302
Source: Department of Health and Human Services (HHS) final regular fund allocations for FY2006
through FY2009. These include tribal allotments.
a. The total regular fund appropriation for FY2006 was $2.48 billion, $1.98 billion of which was
appropriated in P.L. 109-149, and $500 million in P.L. 109-204. Initially, P.L. 109-149
appropriated $2.0 billion for regular funds, but the amount was subject to a 1% across-theboard rescission, resulting in a $1.98 billion appropriation (P.L. 109-148). In addition, both
training and technical assistance and the leveraging incentive and REACH funds were
reduced by 1% in column (a).
b. Congress approved a year-long continuing resolution for FY2007 (P.L. 110-5), which was enacted
on February 15, 2007. The law provided that LIHEAP receive the same amount of funds for
FY2007 that was appropriated for FY2006 in P.L. 109-149, as reduced by a 1% rescission
(P.L. 109-148).
c. The initial allotments for FY2008 were slightly greater than for FY2007, despite the similar
appropriations levels, due to a 1.747% across-the-board rescission for most Departments of
Labor, Health and Human Services, and Education programs. See P.L. 110-161, Division
G, Section 528. This meant that set asides for leveraging incentive and REACH grants, and
for training and technical assistance, were slightly reduced from FY2007 levels.
d. On June 26, 2008, HHS released an additional $26.7 million in formula grants to the states. These
funds had been set aside for leveraging incentive and REACH grants until HHS realized that
Congress had not appropriated these funds in P.L. 110-161. As a result, distributions were
re-calculated under the “new” LIHEAP formula, and additional funds were provided to the
states.
e. Congress appropriated approximately $4.5 billion for LIHEAP as part of a continuing resolution
(P.L. 110-329). Of this amount, $840 million was allocated under the “new” LIHEAP
formula, with the remainder allocated according to the proportions of the “old” LIHEAP
formula.