LIHEAP: Program and Funding

Order Code RL31865 The Low-Income Home Energy Assistance Program (LIHEAP): Program and Funding Updated January 17September 18, 2008 Libby Perl Analyst in Housing Domestic Social Policy Division The Low-Income Home Energy Assistance Program (LIHEAP): Program and Funding Summary The Low-Income Home Energy Assistance program (LIHEAP), established in 1981 (P.L. 97-35), is a block grant program under which the federal government makes annual grants to states, territories, and tribes to operate home energy assistance programs for low-income households. The LIHEAP statute authorizes two types of funds: regular funds, which are allocated to all states using a statutory formula, and contingency funds, which are allocated to one or more states at the discretion of the Administration. In the FY2008 Consolidated Appropriations Act (P.L. 110-161), Congress appropriated $1.98 billion in regular LIHEAP funds, the same amount that was allocated for regular funds in FY2007. For contingency funds, Congress appropriated approximately $590 million in FY2008. This amount exceeds the FY2007 appropriation of $181 million by more than $400 million, and also exceeds the President’s FY2008 budget request of $282 million, as well as the amount in the House and Senate FY2008 conference report (H.Rept. 110-424) for the Labor, Health and Human Services, and Education appropriations bill (H.R. 3043), which would have provided just under $432 million for FY2008. The Administration released $450 million in FY2008 contingency funds to all states, tribes, and territories on January 16, 2008. Of the amount distributed, $150 million was allocated to all grantees according to their percentage allocation under the LIHEAP block grant formula, $50 million was allocated to 11 states based on the percentage of low-income households that use heating oil, and the remaining $250 million was distributed to 26 states on the basis of both the percentage of low-income households that use heating oil, natural gas, or propane for heat, and on the average temperature between November 1, 2006, and March 1, 2007. Contingency funds were released on two occasions in FY2007. On August 29, 2007, the Department of Health and Human Services (HHS) released $50 million in contingency funds to twelve states due to severe heat. These states were Alabama, Arkansas, Georgia, Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, and Tennessee. On September 27, 2007, HHS released the remainder of the FY2007 contingency funds — $131 million. Of the $131 million, $106 million went to all states, tribes, and territories for anticipated winter heating costs, while the remaining $25 million went to seven states based on heating oil usage and average 2006-2007 winter temperature. These states were Alaska, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. In the 110th Congress, two bills have been introduced that would appropriate an additional $1 billion in LIHEAP contingency funds. Both bills, H.R. 4275 and S. 2405, are entitled the Keeping Americans Warm Act. In addition, a number of bills have been introduced that would provide additional funds for LIHEAP through various means, including penalties collected from energy suppliers and profits from . On February 5, 2008, the President released his FY2009 budget in which he requested a total of $2 billion for LIHEAP, $1.7 billion in regular funds, and $300 million in contingency funds. The budget proposal would provide $570 million less for LIHEAP than was provided in FY2008. The Administration has released FY2008 contingency funds on three occasions. First, on January 16, 2008, it released $450 million to all states, tribes, and territories. Of the amount distributed, $150 million was allocated to all grantees according to their percentage allocation under the LIHEAP formula, $50 million was allocated to 11 states based on the percentage of low-income households that use heating oil, and the remaining $250 million was distributed to 26 states on the basis of both the percentage of low-income households that use heating oil, natural gas, or propane for heat, and on the average temperature between November 1, 2006, and March 1, 2007. The second distribution occurred on February 22, 2008, when the Administration released $40 million to Alaska, Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. States received funds if at least 20% of their low-income households use heating oil as their primary heating fuel. Finally, on September 17, 2008, nearly $121 million in contingency funds was distributed to all states, tribes, and territories. Of the total, $96 million was distributed to all grantees according to their percentage allocations under the LIHEAP formula, while the remainder was distributed to seven states where at least 30% of low-income households use heating oil: Alaska, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. In the 110th Congress, several bills have been introduced that would appropriate additional funds for LIHEAP. These include identical bills introduced in the Senate and the House entitled the Warm in Winter and Cool in Summer Act (S. 3186 and H.R. 6427). Both bills would appropriate additional funds to LIHEAP for FY2008: $1.265 billion for regular funds and $1.265 billion for contingency funds. In addition, a number of bills have been introduced that would provide additional funds for LIHEAP through various means, including penalties collected from energy suppliers and profits from carbon allowance trading. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FY2008 LIHEAP Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1FY2009 LIHEAP Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FY2008 LIHEAP Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Consolidated Appropriations Act (P.L. 110-161) . . . . . . . . . . . . . . . . . 2 Additional LIHEAP Funding Legislation . . . . . . . . . . . . . . . . . . . . . . . 3 FY2007 LIHEAP Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Distribution of LIHEAP Contingency Funds . . . . . . . . . . . . . . . . . . . . . . . . . 45 FY2008 Contingency Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 FY2007 Contingency Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 LIHEAP Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Report to Congress on Preventing Loss of Life Because of Extreme Indoor Indoor Air Temperatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. . . . . . 9 Program Rules and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710 Federal Eligibility Standards and Grantee Responsibility . . . . . . . . . . . . . . . 810 Kinds of Energy Assistance Available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 811 Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911 Households Served . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912 Benefit Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1013 Funds and Their Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1214 Regular Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1214 Tier I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1215 Tier II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1315 Tier III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1316 Contingency Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1316 Leveraging Incentive and REACH Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 1416 Other Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1417 Legislative History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1517 List of Tables Table 1. Table 2. Table 3. Table 4. Table 5. Final FY2006, FY2007, and FY2008 LIHEAP Funding . . . . . . . . . . . . 3 Final FY2006 - FY2008 LIHEAP Funding and Proposed FY2009 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table 2. Recent LIHEAP Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 7 Table 3. LIHEAP Heating/Winter Crisis Aid, Selected Years . . . . . . . . . . . . . . 11 14 Table 4. LIHEAP Funding by State, FY2005 to FY2008 . . . . . . . . . . . . . . . . . . 16 19 Table 5. LIHEAP Funding: FY1982 to FY2008 . . . . . . . . . . . . . . . . . . . . . . . . 1821 The Low-Income Home Energy Assistance Program (LIHEAP): Program and Funding Introduction The Low-Income Home Energy Assistance program (LIHEAP), established in 1981 by Title XXVI of P.L. 97-35, is a block grant program under which the federal government gives states, territories, and tribes annual grants to operate home energy assistance programs for low-income households. The LIHEAP statute provides for two types of program funding: regular funds and contingency funds. Regular funds are allotted to states according to methods prescribed by the LIHEAP statute.1 The second type of LIHEAP funding, called contingency funds, may be released and allotted to one or more states at the discretion of the President and the Secretary of Health and Human Services (HHS). The first section of this report describes appropriations of LIHEAP funds for FY2008 and FY2007. It also discusses current issues and legislation related to LIHEAP. The second section of this report discusses LIHEAP rules, including household eligibility and how funds may be used, and presents the most recent data available from HHS regarding household characteristics and benefit levels. Finally, the third section discusses how each category of LIHEAP funds is distributed to states, as well as a breakdown of funds to the states during the last several fiscal years. Recent Developments FY2008 LIHEAP Funding On December 26, 2007, the President signed the FY2008 Consolidated Appropriations Act (P.L. 110-161). The funding bill provides a total of approximately $2.57 billion for LIHEAP (see Division G of P.L. 110-161). Of this amount, $1.98 billion is for regular funds, the same amount appropriated in FY2007; $590 million is allocated for contingency funds.2 The regular fund appropriation FY2009 LIHEAP Funding The President’s FY2009 budget proposed to fund LIHEAP at a total of $2 billion. Of this amount, $1.7 billion was proposed for LIHEAP regular funds, to be distributed via formula to the states, tribes, and territories, and $300 million was proposed to be allocated to the contingency fund and distributed at the discretion of the Administration. The President’s request is approximately $570 million less than was appropriated for LIHEAP in FY2008 (P.L. 110-161). Under the amounts proposed by the President, the regular funds would be reduced by $280 million in FY2009 compared to FY2008, and the contingency funds would be reduced by about $290 million. On July 8, 2008, the Senate Appropriations Committee approved its 1 See Section 2604(a)-(d) of the Low Income Home Energy Assistance Act (Title XXVI of P.L. 97-35), as amended. The section is codified at 42 U.S.C. §8623(a)-(d). 2 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 (continued...) CRS-2 exceeds the President’s FY2008 budget request of $1.5 billion by $480 million and his contingency fund request of $282 million by approximately $308 million. The regular fund appropriation in P.L. 110-161 is the same amount that was requested in the CRS-2 version of the FY2009 Departments of Labor, Health and Human Services, and Education Appropriations Act (S. 3230). The bill would appropriate the same amounts for LIHEAP that were appropriated in FY2008 — $1.98 billion in regular funds and $590 million in contingency funds. FY2008 LIHEAP Funding Consolidated Appropriations Act (P.L. 110-161). On December 26, 2007, the President signed the FY2008 Consolidated Appropriations Act (P.L. 110161). The funding bill provided a total of approximately $2.57 billion for LIHEAP (see Division G of P.L. 110-161). Of this amount, $1.98 billion was for regular funds, the same amount appropriated in FY2007; $590 million was allocated for contingency funds.2 The regular fund appropriation exceeded the President’s FY2008 budget request of $1.5 billion by $480 million and his contingency fund request of $282 million by approximately $308 million. The regular fund appropriation in P.L. 110-161 was the same amount that was requested in the conference agreement for the FY2008 Departments of Labor, Health and Human Services, and Education Appropriations bill (H.R. 3043, H.Rept. 110-424), which was vetoed by the President on November 13, 2007. For contingency funds, however, the Consolidated Appropriations Act providesprovided $158 million more than would have been provided in the House and Senate conference agreement, which would have appropriated just under $432 million. The House-passed version of H.R. 3043 contained $682 million for contingency funds, while the Senate’s substitute version of H.R. 3043 would have provided the same level appropriated in FY2007 — $181 million. (For information on how regular funds are distributed to the states, see CRS Report RS21605, LIHEAP: Estimated Allocations, by Libby Perl.) 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 according to their ability to obtain non-LIHEAP resources for energy assistance (leveraging incentive grants) and for increasing the energy efficiency of low-income households (REACH grants). These funds are discussed later in this report. In recent years, Congress has allocated around $27 million for these two funds, an amount that is taken out of the LIHEAP regular fund appropriation. 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 appropriations act, it released to the states the $26.7 million that would otherwise have been distributed as leveraging incentive and REACH grants under the LIHEAP 2 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 P.L. 110-161, Division G, Section 528. After application of the rescission, $1.98 billion is available for regular funds and $590 million for contingency funds. Prior to application of the rescission, the stated appropriations levels in P.L. 110-161 are $2.015 billion for LIHEAP regular funds and $596 million to contingency funds. Of the amount appropriated for contingency funds, $250 million is designated as emergency spending; the rescission does not apply to the $250 million in emergency funds. CRS-3 formula. (For information on the distributions to each state, see CRS Report RS21605, LIHEAP: Estimated Allocations, by Libby Perl.) Additional LIHEAP Funding Legislation. Some Members of the Senate have attempted to add funds to the FY2008 LIHEAP appropriation on three occasions in FY2008. The first attempt was part of the economic stimulus package (H.R. 5140), which was considered by the Senate in early February 2008. However, the LIHEAP provisions were ultimately removed from H.R. 5140 prior to the bill’s passage by the Senate. An early Senate version of H.R. 5140, which was eventually signed into law on February 13, 2008, as the Economic Stimulus Act of 2008 (P.L. 110-185), contained an additional $1 billion for LIHEAP. The funds would have been divided evenly between regular and contingency funds. This would have brought the total regular fund allocation for FY2008 to $2.48 billion and contingency funds to over $1 billion. The LIHEAP provisions would have required the contingency funds to be distributed within 30 days of the law’s enactment and to be distributed according to the “old” LIHEAP formula (see a discussion of the LIHEAP formula later in this report). The second attempt to provide funds for LIHEAP was part of the FY2008 Supplemental Appropriations Act (H.R. 2642). In the Senate Appropriations Committee markup, an amendment was adopted that would have provided $1 billion for LIHEAP, with $500 million allocated as formula funds and $500 million as contingency funds. As with the provision in the economic stimulus package, the amendment directed that the contingency funds be distributed according to the “old” LIHEAP formula. However, prior to Senate passage of the bill, the language directing how the contingency funds should be distributed was removed. As passed by the Senate on May 22, 2008, H.R. 2642 would have appropriated $1 billion for LIHEAP, without specifying if or how the funds would be divided. However, the House removed the funds for LIHEAP from its version of H.R. 2642 prior to approving the bill on June 19, 2008. The third attempt to appropriate additional funds for LIHEAP was made through S. 3186, the Warm in Winter and Cool in Summer Act. The bill, introduced on June 24, 2008, proposed to add more than $2.5 billion to the amounts already appropriated for LIHEAP in FY2008. Under S. 3186, funding would have been divided evenly between LIHEAP regular funds and contingency funds, with $1.265 billion going to each. The bill bypassed committee consideration and went directly to the Senate floor for a cloture vote on July 26, 2008. The cloture vote on S. 3186 failed, however, so the Senate did not consider the bill. FY2007 LIHEAP Funding For FY2007, Congress appropriated $1.98 billion in regular funds and $181 million in contingency funds for LIHEAP through a year-long continuing resolution (P.L. 110-5). This is the same amount that was appropriated for LIHEAP in the FY2006 Departments of Labor, Health and Human Services, and Education Appropriations Act (P.L. 109-149) as reduced by a 1% across-the-board rescission (P.L. 109-148). The total amount appropriated in FY2007 exceeded the President’s budget request of $1.782 billion by $380 million. Prior to the enactment of the yearlong continuing resolution, the House Appropriations Committee would have CRS-4 provided $1.93 billion in regular LIHEAP funds and $181 million in contingency funds in the Departments of Labor, Health and Human Services, and Education Appropriations Act (H.R. 5647). The Senate Appropriations Committee would have provided $1.98 billion in regular LIHEAP funds and $181 million in contingency funds in its version of the spending bill (S. 3708). Prior to enactment of P.L. 110-5 on February 15, 2007, three continuing resolutions provided funding for LIHEAP.3 Three FY2007 supplemental appropriations bills, each entitled the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act, attempted to provide additional funds for LIHEAP. The first bill (H.R. 1591), introduced on March 20, 2007, would have provided $400 million for LIHEAP, $200 million for regular funds and $200 million for contingency funds. The Senate’s version of the supplemental appropriations bill (S. 965), introduced on March 22, 20062007, would have provided $640 million for LIHEAP, $320 million in regular funds, and $320 million in contingency funds. However, in conference with the House, the LIHEAP provisions in H.R. 1591 prevailed. On May 1, 2007, the 2 (...continued) Education programs. See P.L. 110-161, Division G, Section 528. After application of the rescission, $1.98 billion is available for regular funds and $590 million for contingency funds. Prior to application of the rescission, the stated appropriations levels in P.L. 110-161 are $2.015 billion for LIHEAP regular funds and $596 million to contingency funds. Of the amount appropriated for contingency funds, $250 million is designated as emergency spending; the rescission does not apply to the $250 million in emergency funds. 3 These were P.L. 109-289, P.L. 109-369, and P.L. 109-383. CRS-3 President vetoed H.R. 1591, and the House failed to override the veto. On May 8, 2007, another supplemental appropriations bill was introduced in the House (H.R. 2206). Like H.R. 1591, it would have provided $400 million for LIHEAP, dividing the amount equally between regular and contingency funds. However, on May 24, funds for LIHEAP were removed from H.R. 2206 in conference with the Senate. Table 1. Final FY2006, FY2007, and FY2008 LIHEAP - FY2008 LIHEAP Funding and Proposed FY2009 Funding State Formula Grants Regular Set-Asides (ApproximatelyApprox. $300,000 for technical Contingency assistance, which is permanently permanently authorized in the statute) Contingency Total Final FY2006 Appropriationa P.L. 109-149 1.98 billion — 27.225 million — leveraging incentive fund 181 million 2.161 billion 1.000 billion 3.161 billion P.L. 109-204b 500 million None 500 million Total 2.48 billion — 27.225 million — leveraging incentive fund 681 million — 27.225 million — leveraging incentive fund 181 million 1.50 2.161 billion —d 590 million 2.570 billion — 27.225 million — leveraging incentive fund 282300 million 1.98 billion Not specified 682 million 1.98 billion Not specified 181 million 1.98 billion Not specified 432 million — 26.749 million — leveraging incentive fund 590 million 2.161 billion 1.000 billion 3.161 billion Final FY2007590 million Final FY2007 Appropriation P.L. 110-5 1.98 billion Final FY2008 Appropriation P.L. 110-5 1.98 billion 2.161 billion FY2008 Proposed Funding President’s Request H.R. 3043 (HousePassed) H.R. 3043 (Senate Substitute) H.Rept. 110-424 (Conference Report) 1.782 billion 2.662 billion 2.161 billion 2.412 billion Final FY2008 Funding P.L. 110-161c 1.98 billion 2.570 billion 161c 1.98 billion Proposed FY2009 Funding President’s Request 1.7 billion S. 3230 (Senate 1.98 billion Approps. Committee) 3 These were P.L. 109-289, P.L. 109-369, and P.L. 109-383. 2.0 billion 2.570 billion CRS-5 Source: Congressional Research Service on the basis of P.L. 109-148, P.L. 109-149, P.L. 109-171, P.L. 109-204, P.L. 110-5, P.L. 110-161, the U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF) FY2008FY2009 Justification of Estimates for Appropriations Committees, House Appropriations Subcommittee Table, H.R. 3043, and H.Rept. 110-424. a. Under the Department of Defense Appropriations Act (P.L. 109-148), discretionary spending in FY2006 was reduced by 1% through an across-the-board rescission. The amounts in P.L. 109149 include the rescission. b. The funds made available for FY2006 in P.L. 109-204 were originally appropriated for FY2007 in the Deficit Reduction Act of 2005, P.L. 109-171. Congress shifted the funds to FY2006 in P.L. 109-204. c. Amounts for Department of Labor, Health and Human Services, and Education programs were subject to a 1.747% rescission. See P.L. 110-161, Division G, Section 528. Amounts in this table represent the amounts available after the rescission. CRS-4 d. The FY2008 Appropriations Act (P.L. 110-161) did not specify funds for the leveraging incentive grants. Distribution of LIHEAP Contingency Funds FY2008 Contingency Funds. Congress appropriated just over $590 million in LIHEAP contingency funds for FY2008 to be released at the discretion of HHS to states according to their energy needs. On January 16, 2008, the needs. The Administration has distributed contingency funds on three occasions in FY2008. (For the total amount of funds distributed to each state in FY2008, see Table 4.) First, on January 16, 2008, the Administration announced the release of $450 million to all states, tribes, and territories. The total amount was distributed in three ways. (For the amount of funds distributed to each state, see Table 4.) ! ! ways. 4 ! $150 million was distributed to all states tribes and territories on the basis of the percentage of funds that each receives under the block grant LIHEAP formula.4 ! $50 million was distributed to 11 states where the percentage of lowincome households that use heating oil is 20% or more. The allocations were based on the percentage of funds each state receives under the LIHEAP block grant formula, weighted by the percentage of low-income of lowincome heating oil users in the state. The states that received a a portion of the $50 million distribution were Alaska, Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. ! $250 million was distributed to 26 states where at least 60% of lowincome households use either heating oil, natural gas, or propane for heat, and the average temperature between November 1, 2006, and March 1, 2007, was 39° Fahrenheit or lower. Funds were distributed on the basis of the percentage of funds each state receives under the block grantLIHEAP formula, weighted by the percentage of low-income households using heating oil, natural gas, or propane to heat their In each case where HHS distributed contingency funds based on the LIHEAP formula in FY2008, grantees received the percentage of funds they receive under the “old” LIHEAP formula. For a discussion of the formula, see the section “Funds and Their Distribution” later in this report. CRS-6 homes. Each of the states that received funds under the $50 million distribution, with the exception of Delaware, received a portion of the $250 million distribution. The remaining states that received funds were Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, South Dakota, Utah, Wisconsin, and Wyoming. Approximately $140 million in FY2008 contingency funds remain available for distribution through the end of the fiscal year, at which point they will expire if not distributed. In addition, $20 million in contingency funds from the FY2005 appropriations law (P.L. 108-447) remain available until expended. In FY2007, Congress appropriated $181 million in LIHEAP contingency funds, and HHS released the total amount through two separate distributions. First, on August 29, 2007, HHS announced that it would release $50 million in contingency funds to twelve states that experienced severe heat during the month of August. These twelve states were Alabama, Arkansas, Georgia, Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, and Tennessee. The distribution was based on two factors involving cooling degree days. A cooling 4 Each grantee received the percentage of funds they receive under the “old” LIHEAP formula. For a discussion of the formula, see the section “Funds and Their Distribution” later in this report. CRS-5 degree day measures the extent to which a day’s average temperature rises above 65°F. For example, a day with an average temperature of 80° F results in a measure of 15 cooling degree days. States qualified for contingency funds if they experienced at least 341 cooling degree days during the three-week period ending August 25, 2007, and if they experienced 61 or more excess cooling degree days compared to their 30-year norm for the same time period. Fund distributions were weighted on the basis of the number of low-income The second FY2008 distribution of contingency funds occurred on February 22, 2008, when the Administration released $40 million to eleven states on the basis of heating oil usage. States received funds if at least 20% of low-income households use heating oil as their primary heating source. The following states received funds: Alaska, Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. Finally, on September 17, 2008, the Administration released the balance of the FY2008 contingency funds — approximately $101 million — together with $20 million in contingency funds that remained available from the FY2005 appropriation. Of the total funds released, $96 million was distributed to all states, tribes, and territories based on the proportions of the LIHEAP formula. The remaining $25 million was distributed to seven states where at least 30% of low-income households use heating oil as their primary heating source. Funds were allocated to those seven states based on their share of LIHEAP formula funds, weighted by the share of households in the state using heating oil. The states that received funds on this basis were Alaska, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. FY2007 Contingency Funds. In FY2007, Congress appropriated $181 million in LIHEAP contingency funds, and HHS released the total amount through two separate distributions. First, on August 29, 2007, HHS announced that it would release $50 million in contingency funds to twelve states that experienced severe heat during the month of August. These twelve states were Alabama, Arkansas, Georgia, Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, and Tennessee. The distribution was based on two factors involving cooling degree days. A cooling degree day measures the extent to which a day’s average temperature rises above 65°F. For example, a day with an average temperature of 80° F results in a measure of 15 cooling degree days. States qualified for contingency funds if they experienced at least 341 cooling degree days during the three-week period ending August 25, 2007, and if they experienced 61 or more excess cooling degree days compared to their 30-year norm for the same time period. Fund distributions were weighted on the basis of the number of low-income households in each state. The remaining $131 million in contingency funds was released on September 27, 2007. Of the $131 million, just over $106 million went to all states, tribes, and territories for anticipated winter heating needs. The funds were allocated based on on the basis of each grantee’s share of block grant funds. The remaining $25 million was allocated allocated to seven states according to the percentage of low-income households that use use heating oil and according to average temperature. States qualified if at least 30% of of low-income households use heating oil and if the average temperature between October 1, 2006, and March 31, 2007 was at or below 47° F. The seven states that CRS-7 received funds were Alaska, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. (See Table 4 at the end of this report for the total amount of contingency funds allocated to each state.) Table 2 shows recent federal funding levels for LIHEAP, including the amount of contingency funds released. Table 2. Recent LIHEAP Funding (dollars in millions; sums may not equal totals due to rounding) Fiscal Year 2002 2003 2004 2005 2006 2007 2008 Funds Appropriated Regularc Contingency 1,700 1,788 1,789 1,885 2,480 1,980 1,980 300 0 99 298 681 181 590 Contingency Funds Distributeda To All To Some Subtotal States States 0 100 100 200 0 200 40 59 99 250 27 277 100 580 680 106 75 181 150 300 450246 365 611 Total Funds Distributedb Subtotal (To Total All States) 1,700 1,800 1,988 1,988 1,829 1,889 2,135 2,162 2,580 3,160 2,086 2,161 2,130 2,430226 2,591 Source: Tables prepared by the Congressional Research Service (CRS). a. The amount of contingency funds appropriated in a fiscal year may differ from the amount of contingency funds that are distributed in that fiscal year for two reasons: First, the LIHEAP statute gives the Administration discretion to release (or not release) any of the available contingency funding. Further, these funds, as directed by Congress in its appropriations language, may be available for release in one or more years. b. Regular funds, all of which are included in both of the Total Funds Distributed columns, include all regular funding distributed by formula to the states, the tribes, and the District of Columbia, as well as set-asides for the territories, leveraging incentive grants, REACH grants, and technical assistance (with total set-asides of approximately $30 million). The “Subtotal to all states” column includes all regular funds plus any contingency funds that were distributed to all states; the “Total” column includes all regular funds plus any contingency funds that were distributed to one or more states. c. Regular LIHEAP funds are made available to states on a quarterly basis (October, January, April, and July). However, states may specify what percentage of their total allotment they wish to receive in each quarter, and many states receive all, or the great majority of, their LIHEAP funds in the first two quarterly disbursements. CRS-6 LIHEAP Legislation in the 110th Congress Bills that would affect aspects of LIHEAP have been introduced in the 110th Congress. The following list discusses many of them, but is not an exhaustive list of LIHEAP-related legislation. ! Two bills, H.R. 4275 and S. 2405, both entitled the Keeping Americans Warm Act, would appropriate $1 billion for LIHEAP contingency funds in addition to amounts otherwise appropriated. in FY2008. ! Versions of bills in both the House and Senate, entitled the Warm in Winter and Cool in Summer Act (S. 3186 and H.R. 6427), would appropriate additional funds for LIHEAP for FY2008. They would add $1.265 billion to the formula grants, for a total of $3.245 billion CRS-8 in FY2008, and $1.265 billion to the contingency funds for a total of $1.855 billion. ! The LIHEAP Equity Act (H.R. 153), would mandate that no more than 50% of the funding provided under LIHEAP be made available for heating purposes. ! S. 669, the LIHEAP Emergency Reform Act, concerns contingency funds. The bill would allow a state governor to apply to the Secretary of Health and Human Services for certification that there is an emergency in his or her state (as defined by the LIHEAP statute), and for an allotment of contingency funds in response to the emergency. ! The Home Energy Assistance Targeted for Seniors Act (H.R. 2984) would rename LIHEAP the “Low Income and Senior Home Energy Assistance Act” and make eligible for benefits households with incomes at or below state median income, as long as at least 50% of the household’s income was attributable to persons age 65 and older. (Currently households may not have incomes above 60% of state median income and still be eligible for LIHEAP.) ! The Federal Price Gouging Prevention Act (H.R. 1252) would make it illegal to charge excessive prices for various types of fuel if an “energy emergency” is declared by the President. The illegal practices would include selling oil, gasoline, natural gas, or petroleum at unconscionably excessive prices; intentionally reporting false price information; or manipulating the market. Penalties imposed for violations of these provisions would be used to provide LIHEAP assistance. On May 23, 2007, the bill bypassed committee consideration and went straight to the House floor, where it passed under suspension of the rules. A similar bill with the same title (H.R. 6346) was introduced by the same sponsor, Representative Bart Stupak, on June 23, 2008. The next day, a motion to pass H.R. 6346 under suspension of the rules failed. ! Two other bills would similarly use penalties imposed on energy providers to fund LIHEAP. The Federal Energy Price Protection Act (H.R. 2460) would penalize oil, gas, and petroleum suppliers for price gouging with the fees going to LIHEAP, while the Clean, Reliable, Efficient and Secure Energy Act of 2007 (S. 1602) would give a portion of penalties collected from energy suppliers to LIHEAP. ! The Low Carbon Economy Act (S. 1766) would set greenhouse gas emissions targets for entities such as natural gas processing plants, electric power plants, and refineries. Under the program, these CRS-7 regulated entities would trade allowances that entitle them to emit a certain amount of greenhouse gases. A portion of the proceeds from the auction of these allowances would be allocated to fund LIHEAP. CRS-9 Another bill that would seek to cap carbon emissions and devote a portion of proceeds from the sale of allowances is the Investing in Climate Action and Protection Act (H.R. 6186). ! America’s Climate Security Act (S. 2191) is like S. 1766 in that it would set up a system under which regulated entities would trade allowances to emit greenhouse gases. During the years 2012 to 2050, a portion of proceeds from the auctions (20%) would be allocated to an Energy Assistance Fund, of which 50% would be available to the LIHEAP program. On December 5, 2007, the Senate Committee on Environment and Public Works reported S. 2191. ! Another bill, the Energy Security and Corporate Accountability Act (S. 1238) would not affect LIHEAP, but would create a program for LIHEAP-eligible households called the Low-Income Transportation Energy Assistance Fund 2191. On May 20, 2008, S. 3036, the Lieberman-Warner Climate Security Act was introduced in the Senate. It is identical to S. 2191, but contains provisions to make the bill deficit neutral. The Senate debated S. 3036 in early June 2008. However, after several days of consideration, the Senate was not able to invoke cloture on June 6, 2008. (For more information about the cap-and-trade provisions of these bills, as well as those in S. 1766 and H.R. 6186, see CRS Report RL33846, Greenhouse Gas Reduction: Cap-and-Trade Bills in the 110th Congress, by Larry Parker, Brent D. Yacobucci, and Jonathan L. Ramseur.) ! Another bill, the Energy Security and Corporate Accountability Act (S. 1238) would not affect LIHEAP, but would create a program for LIHEAP-eligible households called the Low-Income Transportation Energy Assistance Fund. The program would give funds to families to assist in purchasing gasoline or passes for public transportation. A similar bill in the Senate, the Low Income Gasoline Assistance Program Act (S. 2968) would make grants to states that would then be used to assist low-income households with the purchase of gasoline. ! The Consumer Reasonable Energy Price Protection Act of 2008 (H.R. 5800) would impose a windfall profits tax on the sale of oil and natural gas. A “windfall profit” is defined by the act as an amount that exceeds a reasonable profit as determined by a “Reasonable Profits Board,” to be established pursuant to H.R. 5800. Proceeds under the windfall profits tax would be allocated to LIHEAP. Another bill, the Renewable Investment and Consumer Protection Act (H.R. 6155), would tax stock repurchase transactions made by oil companies and give 40% of the proceeds to LIHEAP. Report to Congress on Preventing Loss of Life Because of Extreme Indoor Air Temperatures The Energy Policy Act of 2005 (P.L. 109-58) required HHS to report to Congress on how LIHEAP “could be used more effectively to prevent loss of life from extreme temperatures.” On February 15, 2007, HHS released a report in which it summarized state recommendations for ways to use LIHEAP funds to prevent heatandheat- CRS-10 and cold-related deaths due to indoor air temperature.5 Recommendations were in five categories: ! ! ! ! ! Education and outreach; Weatherization and energy-related home repairs; Special assistance for vulnerable populations; Partnerships with other social services programs and energy providers; and Research on the needs of, and best practices for helping, vulnerable households. Program Rules and Benefits Federal LIHEAP requirements are minimal and leave most important program decisions to the states, the District of Columbia, the territories, and Indian tribes and tribal organizations (collectively referred to as grantees) who receive federal funds. The federal government (HHS) may not dictate how grantees implement “assurances” that they will comply with general federal guidelines. 5 U.S. Department of Health and Human Services, Administration for Children and Families, Low Income Home Energy Assistance Program Report to Congress on: Preventing Loss of Life Due to Extreme Indoor Temperatures, February 15, 2007. CRS-8 Federal Eligibility Standards and Grantee Responsibility Federal law limits LIHEAP eligibility to households with incomes up to 150% of the federal poverty income guidelines (or, if greater, 60% of the state median income). States may adopt lower income limits, but no household with income below 110% of the poverty guidelines may be considered ineligible. States may separately choose to make eligible for LIHEAP assistance any household of which at least one member is a recipient of Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Food Stamps, or certain needs-tested veterans’ programs. LIHEAP assistance does not reduce eligibility or benefits under other aid programs. Within these limits, grantees decide which, if any, assistance categories to include, what income limits to use, and whether to impose other eligibility tests. The statute gives priority for aid to households with the greatest energy needs or cost burdens, especially those that include disabled individuals, frail older individuals, or young children. Federal standards require grantees to treat owners and renters “equitably,” to adjust benefits for household income and home energy costs, and to have a system of “crisis intervention” assistance for those in immediate need. The LIHEAP definition of “energy crisis” leaves room for each state to define the term slightly differently, although generally, crisis assistance is provided to households that are in danger of losing their heating or cooling due to problems with equipment, 5 U.S. Department of Health and Human Services, Administration for Children and Families, Low Income Home Energy Assistance Program Report to Congress on: Preventing Loss of Life Due to Extreme Indoor Temperatures, February 15, 2007. CRS-11 receipt of a utility shutoff notice, or exhaustion of a fuel supply.6 Federal rules also require outreach activities, coordination with the Department of Energy’s Weatherization Assistance Program, annual audits and appropriate fiscal controls, and fair hearings for those aggrieved. Grantees decide the mix and dollar range of benefits, choose how benefits are provided, and decide what agencies will administer the program.7 Kinds of Energy Assistance Available Funds are available for four types of energy assistance to eligible households: ! ! ! ! help paying heating or cooling bills; low-cost weatherization projects (e.g., window replacement or other home-energy related repair; limited to 15% of allotment unless a grantee has a waiver for up to 25%); services to reduce need for energy assistance (e.g., needs assessment, counseling on how to reduce energy consumption; limited to 5% of allotment); and help with energy-related emergencies (winter or summer crisis aid). 6 The LIHEAP statute defines an energy crisis as “weather-related and supply shortage emergencies and other household energy-related emergencies.” 42 U.S.C. §8622(3). For the state definitions of “crisis” see the HHS LIHEAP Networker FY2007 compilation of definitions, available at [http://www.liheap.ncat.org/tables/FY2007/CrisisDef2007.doc]. 7 Information regarding state LIHEAP program characteristics and contacts is available at [http://www.liheap.ncat.org/sp.htm]. CRS-9 Use of Funds The majority of LIHEAP funding is used to offset home heating costs. In FY2004FY2005, the most recent year for which data regarding total obligations are available, approximately 55.42% of all LIHEAP funds were used to provide heating assistance; all states (including the District of Columbia) provided some heating assistance.8 Nearly all states also offered crisis assistance, most of which is used for heating needs. In FY2004, 16.5FY2005, 17.6% of LIHEAP funds were used to provide crisis assistance in 4647 states. FiveSix of these 4647 states provided summer as well as winter crisis assistance, and one state — Hawaii — provided only summer crisis assistance.9 Also in FY2004, 2.9FY2005, 2.8% of funds were used for cooling aid (offered by 13 states); 11.310.6% of total LIHEAP funds were used for weatherization services (provided by 4544 states); 8.7% of available funds were used for administration and planning purposes (51 states), and 1% of the FY2004 funds were used to offer services to reduce the need for energy assistance (provided by 22 states).10 Households Served When the LIHEAP program began in FY1983, approximately 6.8 million households received heating or winter crisis assistance (or both), representing 31% of federally eligible households. Since that time, the number of households receiving assistance declined generally until FY2000, reaching a low of 3.6 million recipients in FY1999. After FY2000, the number of recipient households began increasing again. In FY2005, the most recent year for which information related to the broad heating and cooling categories is available, it is estimated that 5.3 million households received this LIHEAP assistance.11 (See Table 3.) The same trend can be seen in the percentage of federally eligible households that receive funds. By FY1999, the number of federally eligible households receiving LIHEAP heating or winter crisis assistance had dropped from 31% to 12%. In FY2005, 15% of federally eligible households received assistance. The number of households receiving cooling assistance reached its high point in FY2002, with more than half a million recipients. In FY2005, approximately 400,000 households received cooling or summer crisis assistance.12 The most recently available information that further breaks down the number of households assisted by the type of assistance they received comes from FY2004, 8 Based on state-reported total LIHEAP obligations for FY2004 (including federal and any supplemental non-federal funding) of $1.949 billion. U.S. Department of Health and Human Services, Administration for Children and Families, Low Income Home Energy Assistance Program Report to Congress for Fiscal Year 2004, May 25, 2007, p. 14 (hereafter FY2004 LIHEAP Report to Congress). 9 Ibid., Table C-3, p. 55. 10 Ibid., p. 14. 11 U.S. Department of Health and Human Services, Administration for Children and Families, FY2005 LIHEAP Home Energy Notebook, May 2007, p 28 (hereafter FY2005 LIHEAP Home Energy Notebook). 12 Ibid., p. 29. CRS-10 a year in which 5.0 million households were estimated to have received LIHEAP heating or winter crisis assistance, and 400,000 to have received cooling or summer crisis aid. (Because many households may receive more than one kind of LIHEAP assistance, some households may be represented in more than one category.) States reported that approximately 4.6 million households received assistance with heating payments; 308,000 received cooling aid; approximately 1.1 million received winter or year-round crisis aid; 88,000 received summer crisis aid; and 112,000 received weatherization assistance.13 HHS estimates that of all households receiving LIHEAP heating assistance, about 32% had at least one member 60 years of age or older; about 32% had at least one disabled member; and some 22% included at least one child five years of age or younger.141% of available funds were used for administration and planning purposes (51 6 The LIHEAP statute defines an energy crisis as “weather-related and supply shortage emergencies and other household energy-related emergencies.” 42 U.S.C. §8622(3). For the state definitions of “crisis” see the HHS LIHEAP Networker FY2007 compilation of definitions, available at [http://www.liheap.ncat.org/tables/FY2007/CrisisDef2007.doc]. 7 Information regarding state LIHEAP program characteristics and contacts is available at [http://www.liheap.ncat.org/sp.htm]. 8 Based on state-reported total LIHEAP obligations for FY2005 of $2.224 billion. U.S. Department of Health and Human Services, Administration for Children and Families, Low Income Home Energy Assistance Program Report to Congress for Fiscal Year 2005, April 24, 2008, p. 14 (hereafter FY2005 LIHEAP Report to Congress). 9 Ibid., Table C-3, pp. 57-58. CRS-12 states), and 1.2% of the FY2005 funds were used to offer services to reduce the need for energy assistance (provided by 24 states).10 Households Served In FY2005, it is estimated that 5.3 million households received LIHEAP heating or winter crisis assistance.11 This estimate attempts to remove duplication among households that received both heating and winter crisis assistance; the estimate is derived from the 4.9 million households that received heating assistance and the 1.3 million that received winter or year round crisis assistance in FY2005. The number of households receiving heating or winter crisis assistance in FY2005 increased from FY2004, when an estimated 5.0 million households were served. When LIHEAP began in FY1983, approximately 6.8 million households received heating or winter crisis assistance. Since that time, the number of households receiving assistance declined generally until FY2000, reaching a low of 3.6 million recipients in FY1999. After FY2000, the number of recipient households began increasing again. (See Table 3.) The same trend can be seen in the percentage of federally eligible households that receive heating or winter crisis assistance. In FY1983, the 6.8 million households that received funds represented 31% of federally eligible households. By FY1999, the number of federally eligible households receiving LIHEAP heating or winter crisis assistance had dropped to 12%. In FY2004, 14% of federally eligible households received assistance, and in FY2005, that number increased to 15%. The number of households receiving cooling assistance reached its high point in FY2002, with more than half a million recipients. In FY2005, approximately 400,000 households received cooling or summer crisis assistance.12 This estimate of de-duplicated households is derived from the 337,000 households that received cooling aid and the 93,000 households that received summer crisis aid in FY2005. Also in that year, 104,000 households received weatherization assistance.13 HHS estimates that of all households receiving LIHEAP heating assistance, about 32% had at least one member 60 years of age or older; about 31% had at least one member with a disability; and some 22% included at least one child five years of age or younger.14 10 Ibid., p. 14. 11 U.S. Department of Health and Human Services, Administration for Children and Families, FY2005 LIHEAP Home Energy Notebook, May 2007, p 28 (hereafter FY2005 LIHEAP Home Energy Notebook). 12 Ibid., p. 29. 13 FY2005 LIHEAP Report to Congress, p. 19. 14 Ibid., pp. 21-22. CRS-13 Benefit Levels The constant dollar value of LIHEAP heating and winter crisis benefits has declined, generally, from the program’s beginning, as has the portion of home heating bills covered by LIHEAP. In FY1983, the average heating and winter crisis benefit, measured in constant 1981 dollars, was $209. By FY1998, it had declined to $117, and although the value of benefits went up from FY1999 through FY2001, it declined again thereafter, and in FY2005 the average constant dollar benefit was $140.15 (See Table 3.) In addition, the LIHEAP heating and winter crisis benefit now covers a smaller portion of home heating bills than in earlier years, 8% in FY2005 compared to 18% in FY1983.16. In FY2005, the LIHEAP benefit covered 8% of the combined home heating costs of all households federally eligible for LIHEAP, compared to 18% in FY1983.16 This estimate includes the heating costs of households that were eligible for LIHEAP based on the federal guidelines, but did not receive LIHEAP assistance. The constant dollar value of the cooling and summer crisis benefit, which is available to a more limited number of households in far fewer states, had largely risen from the program’s beginning until FY2002. In FY1983, the constant dollar value of LIHEAP cooling benefits (in 1981 dollars) was $57. By FY2000 and FY2001, the average benefit had reached $107. However, by FY2004 and FY2005, the average cooling or summer crisis benefit had declined to $91.17 Apart from federal funding levels, a variety of factors help determine to what extent LIHEAP is able to meet its stated goal of assisting low-income households in meeting their home energy needs.18 These include the following: 13 FY2004 LIHEAP Report to Congress, p. 18. 14 Ibid., pp. 20-21. 15 FY2005 LIHEAP Home Energy Notebook, p. 30. 16 Ibid., p. 31. 17 Ibid., p. 30. 18 See also CRS Report RS20761, LIHEAP and Residential Energy Costs, by Bernard Gelb. CRS-11 ! the cost of energy for a given household (influenced by energy price fluctuations and variation in kinds of fuels used); ! the amount of energy consumed (influenced by severity of the weather, energy efficiency of housing, and expected standards of comfort); and ! the number of eligible households (influenced by population size and health of the economy). 15 FY2005 LIHEAP Home Energy Notebook, p. 30. 16 Ibid., p. 31. 17 Ibid., p. 30. 18 See also CRS Report RS20761, LIHEAP and Residential Energy Costs, by Bernard Gelb. CRS-14 Table 3. LIHEAP Heating/Winter Crisis Aid, Selected Years Fiscal Year 1983 1990 1993 1998 1999 2000 2001 2002 2003 2004 2005 Households Number receiving aid ( millions) Number federally eligible (millions) Federally eligible and receiving aid Benefit Levels Average benefit (nominal $) Average benefit (constant 1981 $)a Costs OffsetLIHEAP Coverage Portion of winter heating bill covered by LIHEAP (for all federally eligible households)b 6.8 5.8 5.6 3.9 3.6 3.9 4.8 4.4 4.8 5.0 5.3 22.2 25.4 28.4 29.1 29.0 29.4 30.4 32.7 34.5 35.4 34.8 31% 23% 20% 13% 12% 13% 16% 13% 14% 14% 15% $225 $209 $201 $213 $237 $270 $364 $291 $312 $277 $304 $209 $147 $129 $117 $128 $140 $187 $147 $154 $132 $140 18% 15% 11% 9% 9% 11% 14% 12% NAc 8% 8% Before receiving LIHEAP benefit Portion of household income required for home heating (for LIHEAP-recipient households) 8.3% 4.5% 4.7% 3.4% 3.3% 3.3% 4.7% 3.6% 4.9% 4.8% 5.6% After receiving LIHEAP benefit 2.6% 2.0% 2.4% 1.3% 1.1% 1.0% 1.7% 1.3% NAc 2.7% 3.3% Source: Table compiled by Congressional Research Service (CRS) based on on the basis of information provided by or included included in the U.S. Department of Health and Human Services, Administration for Children and Families, Office of of Community Services, Division of Energy Assistance, LIHEAP Home Energy Assistance Notebooks for FY1998, FY2000, FY2001, FY2002, FY2003, FY2004 and FY2005. a. The constant dollars are based on the 1981 value of the benefit (using the CPI-U index). b. These percentages represent the estimated portion of combined home heating costs for all households federally eligible for LIHEAP that was offset by LIHEAP heating/winter crisis assistance. c. HHS did not make FY2003 data for these trends available. CRS-12 Funds and Their Distribution The LIHEAP statute authorizes regular funds appropriations, which are allocated to all states based onon the basis of a statutory formula, and contingency fund appropriations, which are allocated to one or more states at the discretion of the Administration. The statute also authorizes a smaller amount of funds for incentive grants to states that leverage non-federal resources for their energy assistance programs. Regular Funds Regular funds are distributed to states according to a three-tier formula in the LIHEAP statute and based on the level of funds appropriated in a given fiscal year.19 The three-tier formula is the result of changes to the LIHEAP statute in 1984 through the Human Services Reauthorization Act (P.L. 98-558). Prior to the changes in P.L. 98-558, LIHEAP allotments to the states were based largely on home heating needs with minimal consideration of cooling costs, and did not provide for the use of 19 States are defined to include the District of Columbia. Indian tribes receive funds out of state allotments that are proportionate to their share of LIHEAP-eligible households in the state. Before state allotments are made, the statute provides that at least one-tenth (but not more than one-half) of 1% of the total appropriation must be set aside for energy assistance in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. CRS-15 updated data, including population and energy costs. (For more information on the history of the LIHEAP formula, see CRS Report RL33275, LIHEAP Allocation Rates: Legislative History and Current Law, by Libby Perl.) The new distribution formula provides that in determining state allotments the Department of Health and Human Services shall use “the most recent satisfactory data available” and consider home energy costs of low-income households (not simply all households, as was previously the case). These changes to the calculation of state allotments mean that some states will receive a smaller percentage share of regular funds, while some will receive a larger share. In order to offset the losses to certain states resulting from the formula change, and “prevent severe disruption to programs,”20 Congress implemented two “hold harmless” provisions in P.L. 98-558 to prevent states from losing too much funding. This resulted in the three-tier current law formula, which is described in more detail below. Tier I. The Tier I formula is used to allocate funds when the total LIHEAP regular fund appropriation is less than $1.975 billion. Neither hold harmless provision applies at the Tier I level, and HHS allocates funds according to the allotment percentages used under the pre-1984 formula. The old formula is used because the amount of appropriated funds required to trigger the new formula is $1.975 billion. The LIHEAP statute stipulates that for FY1986 and succeeding years, no state shall receive less money than it would have received in FY1984 had the 19 States are defined to include the District of Columbia. Indian tribes receive funds out of state allotments that are proportionate to their share of LIHEAP-eligible households in the state. Before state allotments are made, the statute provides that at least one-tenth (but not more than one-half) of 1% of the total appropriation must be set aside for energy assistance in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. 20 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-13 LIHEAP funding in that year been $1.975 billion.21 According to HHS, then, the LIHEAP statute requires use of the old allotment percentages when funding is less than $1.975 billion.22 Until FY2006, funding levels for LIHEAP only twice exceeded the $1.975 billion level, in FY1985 and FY1986. Thus, from FY1987 through FY2005, states continued to receive the same allotment percentages they received under the previous LIHEAP formula. Tier II. For appropriations above $1.975 billion and up to $2.25 billion, the Tier II rate applies, and HHS uses the formula enacted in 1984 to calculate state allotments. Under the Tier II formula, a hold harmless level applies, and no state may receive less funding than it would have received under the Tier I distribution rate as it was in effect for FY1984, assuming a $1.975 billion appropriation.23 State 20 Report of the Committee on Energy and Commerce (H.Rept. 98-139, Part 2), to accompany H.R. 2439, May 15, 1984, p. 13. 21 42 U.S.C. §8623(a)(2)(A). 22 U.S. Department of Health and Human Services, Low Income Home Energy Assistance Program: Report to Congress for FY1987, p. 133. The statutory provision that provides for use of the old formula is 42 U.S.C. §8623(a)(3). 23 Since this language was enacted, Congress further provided that HHS could use regular LIHEAP funds appropriations for Training and Technical Assistance (P.L. 99-425). It also authorized Leveraging Incentive Grants (P.L. 101-501) and the REACH option (P.L. 103252) — both of which it generally funds out of regular LIHEAP funds. These debits on the regular funds account were not in place for FY1984. Because they affect the level of regular funds available for state grant allotments by a little more than $25 million, it is possible but not certain that HHS would not implement the newer formula before a regular funds (continued...) CRS-16 allotment percentages may be different, however. To ensure that states receive their hold harmless levels of funding, those states that gain the most funding under the new formula must have their percentage share of funds ratably reduced to bring other states up to the hold harmless level.24 Tier III. The Tier III formula applies to funding levels at or above $2.25 billion. The Tier III rate uses the Tier II methodology to distribute funds, but adds a second hold-harmless requirement, a hold harmless rate. States that would receive less than 1% of a $2.25 billion appropriation must have their funds allocated using the rate that would have been used at a hypothetical $2.14 billion appropriation (if this rate is greater than the calculated rate at $2.25 billion). In both the Tier II and Tier III rates, a state will not be allocated less funds than the state received under the Tier I distribution as it was in effect in FY1984 (had the appropriation level been $1.975 billion). Contingency Funds The statute currently provides an annual authorization of $600 million for LIHEAP contingency funds (contingency funds are authorized indefinitely).25 Appropriated contingency funds may only be released at the discretion of HHS and may be allocated to one or more states based on their needs. The statute authorizes 21 42 U.S.C. §8623(a)(2)(A). 22 U.S. Department of Health and Human Services, Low Income Home Energy Assistance Program: Report to Congress for FY1987, p. 133. The statutory provision that provides for use of the old formula is 42 U.S.C. §8623(a)(3). 23 Since this language was enacted, Congress further provided that HHS could use regular LIHEAP funds appropriations for Training and Technical Assistance (P.L. 99-425). It also authorized Leveraging Incentive Grants (P.L. 101-501) and the REACH option (P.L. 103252) — both of which it generally funds out of regular LIHEAP funds. These debits on the regular funds account were not in place for FY1984. Because they affect the level of regular funds available for state grant allotments by a little more than $25 million, it is possible but not certain that HHS would not implement the newer formula before a regular funds appropriation level of approximately $2.0028 billion. 24 42 U.S.C. §8623(a)(3). 25 42 U.S.C. §8621(e). CRS-14 according to their needs. The statute authorizes the appropriation of contingency funds “to meet the additional home energy energy assistance needs of one or more states arising from a natural disaster or other emergency.” The term “emergency” is defined in the LIHEAP statute to include a natural disaster; a significant home energy supply shortage or disruption; significant increases in the cost of home energy, home energy disconnections, participation in public benefit programs, or unemployment; or an “event meeting such criteria as the [HHS] Secretary may determine to be appropriate.” Leveraging Incentive and REACH Funds In 1990, P.L. 101-501 amended the program statute to provide a separate funding authorization of $50 million ($30 million if regular funds appropriated are under $1.4 billion) for incentive grants to states that leverage non-federal resources for their LIHEAP programs.26 Such resources might include negotiated lower energy rates for low-income households or separate state funds. States are awarded incentive funds in a given fiscal year based onon the basis of a formula that takes into account their their previous fiscal year success in securing non-federal resources for their energy assistance program. In 1994 (P.L. 103-252) the statute was further amended to provide that of any incentive funds appropriated, up to 25% may be set aside for the Residential Energy Assistance Challenge Option (REACH). Under the REACH option states may be awarded competitive grants for their efforts to increase 23 (...continued) appropriation level of approximately $2.0028 billion. 24 42 U.S.C. §8623(a)(3). 25 42 U.S.C. §8621(e). 26 42 U.S.C. §8621(d). CRS-17 efficiency of energy usage among low-income families and to reduce those families’ vulnerability to homelessness and other health and safety risks due to high energy costs. The funding authorization for Leveraging Incentive and REACH grants is separate from regular funds, and the programs were not reauthorized in P.L. 109-58. In practice, however, Congress has funded these initiatives at $22 million to $30 million with dollars set-aside out of annual regular fund appropriations. Other Funds States are allowed to carry over unused funds from a previous fiscal year (limited to 10% of funds awarded a state). A diminishing amount of money may also be available from previously settled claims of price control violation by oil companies.27 In addition, the Social Services Block Grant program allows states to transfer up to 10% of funds to provide low-income home energy assistance,28 while the Temporary Assistance for Needy Families program gives states the discretion to use funds for home heating and cooling costs.29 26 42 U.S.C. §8621(d). 27 FY2004 LIHEAP Report to Congress, p. 11. For FY2004, $2 million in oil overcharge funds was available to one state. 28 42 U.S.C. §1397a(d). 29 42 U.S.C. §604(a)(1). CRS-15 Legislative History Since it was created by the Low Income Home Energy Assistance Act of 1981 (Title XXVI of P.L. 97-35), the LIHEAP program has been reauthorized or amended seven times. The legislation and some of the significant changes made are briefly discussed in the following paragraphs. In 1984, P.L. 98-558, established a new formula by which regular LIHEAP funds are to be distributed in every year (after FY1985) in which regular appropriations exceed $1.975 billion. This level of funding was exceeded in FY1986 and again in FY2006. In 1986, P.L. 99-425 extended the program with few changes. In 1990, P.L. 101-501 created the Incentive Program for Leveraging Non-Federal Resources and authorized a July to June program year (or forward funding) for LIHEAP to allow state program directors to plan for the fall/winter heating season with knowledge of available money. This program year language was subsequently removed, although the statute now states that money appropriated in a given fiscal year is to be made available for obligation in the following fiscal year. Congress last provided advance appropriations for LIHEAP in the FY2000 appropriations cycle. In 1993, P.L. 103-43 extended the authorization of LIHEAP for one year but made no other changes. In 1994 (P.L. 103-252) Congress stipulated that LIHEAP benefits and outreach activities target households with the greatest home energy needs (and costs), and it enacted a separate and permanent contingency funding 27 FY2004 LIHEAP Report to Congress, p. 11. For FY2004, $2 million in oil overcharge funds was available to one state. 28 42 U.S.C. §1397a(d). 29 42 U.S.C. §604(a)(1). CRS-18 authorization of $600 million for each fiscal year. The 1994 law also established the competitive REACH grant option. In 1998, P.L. 105-285 authorized annual regular funding for each of FY2002-FY2004 at $2 billion and made explicit a wide variety of situations under which HHS is authorized to release LIHEAP contingency funds. Finally, in 2005 the Energy Policy Act (P.L. 109-58) reauthorized the program and raised the LIHEAP regular funds authorization level for FY2005 through FY2007 to $5.1 billion. It also explicitly permitted the purchase of renewable fuels as part of providing LIHEAP assistance; required the Department of Energy to report on use of renewable fuels in provision of LIHEAP aid; required HHS to report (within one year of the legislation’s enactment) on ways that the program could more effectively prevent loss of life due to extreme temperatures; and allowed the Secretary of the Interior, when disposing of in-kind oil and gas royalties taken from oil and gas leases, to grant a preference for the purpose of providing additional resources to support federal low-income energy assistance programs. CRS-1619 Table 4. LIHEAP Funding by State, FY2005 to FY2008 (dollars in millions) State Total Funds Distributeda (Regular and Contingency) FY2005 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 South Dakota 19.9 10.1 7.7 13.5 91.7 32.4 46.8 6.2 6.7 29.6 22.5 2.2 12.2 117.2 53.9 38.9 17.4 28.1 29.8 30.6 34.2 91.9 112.5 84.0 27.4 48.1 12.8 19.0 4.0 18.3 83.9 9.9 277.9 40.6 14.0 104.7 14.7 25.0 145.5 15.1 14.6 11.6 FY2006 31.787 12.839 14.230 23.336 156.441 44.806 71.106 10.954 8.165 49.785 40.026 2.567 14.055 193.814 75.327 52.054 27.709 45.320 32.671 43.496 61.889 126.425 153.615 110.849 27.415 78.220 19.259 28.634 7.247 27.740 114.759 11.555 381.719 71.125 19.272 164.226 26.921 24.575 202.324 23.066 25.279 16.540 Regular Contingency Allotment Distributed FY2007 22.077 8.631 7.856 15.749 94.089 33.073 48.102 5.727 6.700 27.970 28.564 2.228 12.275 119.418 54.062 38.319 19.727 32.010 22.499 32.487 33.036 93.757 112.509 81.681 17.838 52.645 12.487 18.940 4.016 18.769 79.920 9.867 261.178 45.156 13.446 105.643 17.517 25.035 140.520 15.428 17.636 10.977 Total FY2008 16.668 7.420 7.453 12.799 89.258 31.375 40.930 5.433 6.356 26.534 20.985 2.113 11.645 113.287 51.286 36.352 16.653 26.693 17.148 25.547 31.340 81.841 106.733 77.488 14.353 45.251 11.846 17.963 3.810 15.497 75.817 9.347 247.769 36.328 12.756 100.219 14.003 23.750 133.306 13.439 13.322 10.413 1.280 2.465 0.576 0.983 6.856 8.059 13.598 0.827 0.488 2.038 1.612 0.162 0.894 29.100 13.174 9.338 4.278 2.050 1.317 8.487 2.407 27.190 27.417 19.905 1.102 11.624 3.043 4.614 0.293 5.149 25.251 0.718 82.316 2.790 3.277 25.744 1.076 1.824 44.288 4.465 1.023 2.675 17.948 9.885 8.029 13.782 96.114 39.435 54.528 6.259 6.845 28.572 22.596 2.276 12.539 142.387 64.461 45.690 20.931 28.743 18.466 34.034 33.747 109.030 134.150 97.393 15.456 56.875 14.888 22.577 4.103 20.645 101.068 10.065 330.085 39.118 16.032 125.963 15.079 25.574 177.594 17.903 14.345 13.088 CRS-17994 7.504 7.648 13.057 91.023 31.729 41.754 5.542 6.484 27.068 21.407 2.137 11.776 114.565 51.865 36.762 16.989 27.230 17.494 25.835 31.971 82.764 107.943 78.363 14.643 45.762 11.979 18.165 3.887 15.672 76.865 9.535 250.569 37.059 12.542 101.350 14.286 24.022 134.810 13.590 13.590 10.531 2.096 4.177 0.943 1.610 11.227 9.597 23.864 1.387 0.800 3.338 2.640 0.266 1.465 34.650 15.687 11.119 5.094 3.358 2.157 19.000 3.942 43.677 32.646 23.701 1.806 13.841 3.623 5.494 0.479 9.963 31.843 1.176 108.477 4.570 3.884 30.653 1.762 2.988 56.948 7.226 1.676 3.185 19.090 11.681 8.591 14.667 102.250 41.326 65.618 6.929 7.284 30.406 24.047 2.403 13.241 149.216 67.552 47.881 22.083 30.588 19.651 44.835 35.913 126.442 140.589 102.063 16.448 59.603 15.602 23.660 4.366 25.635 108.707 10.711 359.046 41.629 16.426 132.004 16.048 27.010 191.759 20.816 15.266 13.715 CRS-20 Total Funds Distributeda (Regular and Contingency) State FY2005 Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Subtotal b Tribes Territoriesc Leveraging/REACHd Training/Tech. Asst.e Total FY2006 Regular Contingency Allotment Distributed FY2007 Total FY2008 28.3 46.2 14.7 13.8 41.7 39.9 18.5 75.3 5.9 47.139 84.005 22.848 20.903 75.053 39.631 24.543 99.837 8.987 33.568 46.545 15.062 14.162 40.241 40.443 18.621 73.525 5.932 2,111 20.1 2.9 27.3 0.3 3,096 32.897 3.456 27.225 0.297 2,108 1,929.207 23.201 21.107 2.788 2.645 27.225 26.749 0.297 0.292 2,162 3,160 2,161 Total 27.039 44.155 14.289 11.616 38.175 38.367 17.665 69.750 5.628 1,980 2.077 3.391 3.670 3.859 2.932 2.947 1.357 17.917 1.446 29.116 47.546 17.959 15.475 41.107 41.314 19.021 87.667 7.073 445.368 2,374.574 4.429 25.536 .203 2.848 — 26.749 — 0.292 450 2,43027.584 45.044 14.452 11.747 38.944 38.800 17.935 70.538 5.693 3.401 5.555 4.371 7.624 4.802 4.826 2.222 21.334 1.721 30.985 50.599 18.823 19.370 43.746 43.626 20.157 91.872 7.415 2,111 20.1 2.9 27.3 0.3 3,096 32.897 3.456 27.225 0.297 2,108 23.201 2.788 27.225 0.297 1,955.498 21.530 2.681 —f 0.292 603.892 2,559.390 6.453 27.983 0.333 3.014 — —f — 0.292 2,162 3,160 2,161 1,980 610.678 2,590.679 Source: Table compiled by the Congressional Research Service (CRS) based onusing U.S. Department of of Health and Human Services (HHS) data. a. The totals shown in these columns include regular fund allocations to states (net of the direct awards to tribes) and any contingency funds awarded to the state in that year. b. This funding is made directly available to or for tribes but is reserved out of a given state’s allotment amount. As prescribed in the statute, the tribal set-aside from a state gross allotment is based on tribal households in that state. c. The statute provides that HHS must set-aside not less then one-tenth of 1% and not more than onehalf of 1% for use in the territories (American Samoa, Guam, Puerto Rico, Northern Mariana Islands, and the U.S. Virgin Islands). d. The statute provides a separate funding authorization for competitive grants under the leveraging incentive program (designed to encourage states to increase non-federal support for energy assistance). It also provides that up to 25% of any leveraging funds made available may be reserved for competitive REACH grants (for state efforts to increase efficient use of energy among low-income households and to reduce their vulnerability to homelessness and other problems due to high energy costs). Congress has in recent years stipulated that a certain portion of the LIHEAP regular funds be set aside for leveraging grants and, of this amount, HHS has reserved 25% for REACH grants. e. The statute provides that HHS may reserve up to $300,000 for making grants or entering into contracts with states, public agencies, or private nonprofits that provide training and technical assistance related to achieving the purposes of the LIHEAP program. f. The FY2008 Appropriations Act (P.L. 110-161) did not specify funds for leveraging incentive and REACH grants. CRS-21 CRS-18 Table 5. LIHEAP Funding: FY1982 to FY2008 (dollars in thousands) Fiscal Year 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Regular Fundsa President’s Request 1,400,000 1,300,000 1,300,000 1,875,000 2,097,765 2,097,642 1,237,000 1,187,000 1,100,000 1,050,000 1,025925,000 1,065,000 1,507,408 1,475,000 1,319,204 1,000,000 1,000,000 1,300000,000 1,400100,000 1,400100,000 1,400,000 1,400,000 1,700,000 1,800900,500g, h 1,800,000g 1,782,000 1,500,000 Authorized 1,875,000 1,875,000 1,875,000 2,140,000 2,275,000 2,050,000 2,132,000 2,218,000 2,307,000 2,150,000 2,230,000 ssanb ssanb 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 ssanb ssanb 2,000,000 2,000,000 2,000,000 5,100,000 5,100,000 5,100,000 —hi Contingency Fundsa Appropriated Appropriated 1,875,000 1,975,000 2,075,000 2,100,000 2,100,000 1,825,000 1,531,840 1,383,200 1,443,000 1,415,055 1,500,000 1,346,030 1,437,402 1,319,202 900,000 1,000,000 1,000,000 1,100,000 1,100,000 1,400,000 1,700,000 1,788,300e 1,789,380 1,884,799 2,480,000 1,980,000 1,980,000 — — — — — — — — — 195,180 300,000 595,200 600,000 600,000 180,000 420,000 300,000 300,000 900,000 600,000 300,000 0 99,410 297,600 681,000 181,000 590,328 Distributed Total Distributed — — — — — — — — — 195,180 0 0 300,000 100,000 180,000 215,000 160,000 175,299 744,350c 455,650 100,000d 200,000f 99,410 277,250 679,960 181,000 450,000 610,678j Total Distributed 1,875,000 1,975,000 2,075,000 2,100,000 2,100,000 1,825,000 1,531,840 1,383,200 1,443,000 1,610,235 1,500,000 1,346,030 1,737,402 1,419,202 1,080,000 1,215,000 1,160,000 1,275,299 1,844350c 1,855,650 1,800,000 1,988,300 1,888,790 2,162,050 3,160,000 2,161,000 2,430,000590,678 Source: Table prepared by the Congressional Research Service (CRS) on the basis of HHS data. a. Amounts listed under the Regular Funds heading are for regular funding only. In 1994, Congress enacted enacted a permanent $600 million annual authorization for contingency funding. As shown, however, before this authorization contingency funds were sometimes made available. b. Such sums as necessary. c. President Clinton released $400 million of these FY2000 contingency funds in late September 2000 making making it effectively available to states in FY2001. d. These funds were distributed out of the total FY2002 contingency appropriation (P.L. 107-116). With the end of FY2002, the remaining $200 million of these contingency funds expired. e. The final FY2003 appropriations act (P.L. 108-7) included $1.688 billion in new regular funds and converted converted into regular funds $100 million of remaining contingency funds originally appropriated in FY2001 (P.L. 107-20). f. These funds were distributed out of contingency dollars appropriated as part of the FY2001 supplemental supplemental (P.L. 107-20). That law provided that the funds were “available until expended.” Congress subsequently converted some of these dollars into regular funds (see tablenote). g. Of this amount, the President requested that $500,000 be set aside for a national evaluation. h. LIHEAP is unauthorized in FY2008In FY2005, the President’s initial budget request for LIHEAP regular funds was $1,800,000,500. However, on November 14, 2004, the President submitted a budget amendment to Congress, requesting $1,900,000,500 for LIHEAP regular funds. CRS-22 i. LIHEAP is unauthorized in FY2008. j. Of the contingency funds distributed in FY2008, $20 million came from funds appropriated in the FY2005 Departments of Labor, Health and Human Services, and Education Appropriations Act (P.L. 108-447). Contingency funds in P.L. 108-447 were made available until expended.