The LIHEAP Formula

The LIHEAP Formula: Legislative History and Current Law Libby Perl Specialist in Housing Policy July 6September 8, 2010 Congressional Research Service 7-5700 www.crs.gov RL33275 CRS Report for Congress Prepared for Members and Committees of Congress The LIHEAP Formula: Legislative History and Current Law Summary The Low Income Home Energy Assistance Program (LIHEAP) provides funds to states, the District of Columbia, U.S. territories and commonwealths, and Indian tribal organizations (collectively referred to as grantees) primarily to help low-income 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 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 either their number of federally eligible LIHEAP LIHEAP households compared to the total number in the state, or on agreements with their states, whereas territories receive a set percentage of total LIHEAP regular funds.) In 1980, Congress created the predecessor program to LIHEAP, the Low Income Energy Assistance Program (LIEAP) 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, funds under LIEAP were distributed according to a multi-step formula that benefitted cold-weather states. In 1981, Congress enacted LIHEAP as part of the Omnibus Budget Reconciliation Act (P.L. 97-35), replacing LIEAP. 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 both heating and cooling costs of low-income households (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 states 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 a hypothetical FY1984 appropriation of $1.975 billion. Above this level, funds are allocated according to Tier II of the formula, which includes a holdharmless level to prevent 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. Since FY1986, LIHEAP regular fund appropriations have exceeded the equivalent of an FY1984 appropriation of $1.975 billion in FY2006, when the regular fund appropriation was $2.48 billion; in FY2008, when appropriations slightly exceeded the trigger; and in FY2009 and FY2010, when Congress directed that $840 million be distributed according to the “new” LIHEAP formula. This report will be updated when new formula data are released and when proposed funding levels change (see Appendix C). Congressional Research Service The LIHEAP Formula: Legislative History and Current Law Contents Introduction ................................................................................................................................1 Predecessor Programs to LIHEAP...............................................................................................2 Community Services Administration Energy Assistance Programs.........................................2 Low Income Energy Assistance Program (LIEAP) ................................................................5 The LIEAP Formula........................................................................................................6 Enactment of LIHEAP ................................................................................................................8 Continued Use of the LIEAP Formula ...................................................................................9 The 1984 LIHEAP Reauthorization: A New Formula ............................................................9 Formula Discussions .......................................................................................................9 Introduction of a Hold-Harmless Level.......................................................................... 10 Introduction of a Hold-Harmless Rate ........................................................................... 10 LIHEAP Formula Statutory Language........................................................................... 11 Determining LIHEAP Regular Fund Allotments Using the “New” Formula............................... 12 Calculating the New Formula Rates .................................................................................... 12 Using the New Formula Rates to Allocate Funds to the States ............................................. 14 Tier I: Below $1.975 Billion.......................................................................................... 15 Tier II: From $1.975 Billion up to $2.25 Billion ............................................................ 15 Tier III: At or Above $2.25 Billion ................................................................................ 16 Implementation of the “New” LIHEAP Formula ................................................................. 17 Figures Figure B-1. Estimated Low Income Home Energy Assistance (LIHEAP) Allocations at Various Hypothetical Appropriations Levels for Three Types of States ................................... 27 Tables Table 1. Select Energy Assistance Formulas, FY1975-FY1980 ....................................................4 Table 2. Distribution of Funds Under LIEAP...............................................................................8 Table 3. Low-Income Home Energy Program (LIHEAP): “Old” and “New” Allotment Rates by State, 2010............................................................................................................... 17 Table 4. Recent State Allotment Rates Under the “New” LIHEAP Formula ............................... 20 Table A-1. LIHEAP Estimated State Allotments for Regular Funds at Various Hypothetical Appropriation Levels ......................................................................................... 23 Table C-1. LIHEAP Actual State Regular Fund Allotments for FY2006 through FY2010 and Estimated FY2011 Allotments ......................................................................................... 2930 Congressional Research Service The LIHEAP Formula: Legislative History and Current Law Appendixes Appendix A. Estimated Allotments to the States Under Various Hypothetical Appropriations Levels ............................................................................................................ 22 Appendix B. Further Depiction of How State Allotments Depend Upon Appropriation Levels .................................................................................................................................... 26 Appendix C. Actual LIHEAP Regular Fund Allocations to the States, FY2006-FY2010 and Estimated Allocations, FY2011........................................................................................ 28 Contacts Author Contact Information ...................................................................................................... 3134 Congressional Research Service 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 been reauthorized and amended a number of times, most recently in 2005, when P.L. 109-58, 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 heating and cooling costs, receive crisis assistance, have weatherizing expenses paid, or receive other aid designed to reduce their home energy needs. Households with incomes up to 150% of the federal poverty income guidelines or, if greater, 60% of the state median income, are federally eligible for LIHEAP benefits. States may adopt lower income limits, but no household with income below 110% of the poverty guidelines may be considered ineligible. Note, however, that in the FY2009 and FY2010 appropriations acts (P.L. 110-329 and P.L. 111-117), Congress gave states the authority to raise eligibility limits to 75% of state median income. The most current HHS data show that an estimated 5.5 million households received winter heating or winter crisis assistance in FY2006 (the largest share of LIHEAP funds pay for heating assistance).3 The LIHEAP statute provides for two types of program funding: regular funds—sometimes referred to as block grant funds—and emergency contingency funds. Regular funds are allotted to states on 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 discretion of the President and the Secretary of HHS.5 The funds may be released at any point in the fiscal year to meet additional home energy assistance needs created by a natural disaster or other emergency.6 The remainder of this report discusses only the history and methods of distributing regular LIHEAP funds. 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 LIHEAP is codified at 42 U.S.C. §§8621-8630. 3 U.S. Department of Health and Human Services, Administration for Children and Families, FY2006 LIHEAP Report to Congress, April 22, 2009, p. 21. 4 The formula section is codified at 42 U.S.C. §8623. 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. Congressional Research Service 1 The LIHEAP Formula: Legislative History and Current Law 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. 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 Congressional Research Service 2 The LIHEAP Formula: Legislative History and Current Law 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 acknowledged the emphasis on heating needs in its formula, stating that the FY1975 allocation “was heavily weighted to the coldest areas ... .”11 In the 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 lowincome 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 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. 47096. 11 Federal Register, vol. 41, no. 208, October 27, 1976, p. 47096. 12 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. 95-64, March 24, 1977. The CSA implemented this formula, which it described in guidance to the states. See the Federal Register, Ibid. Congressional Research Service 3 The LIHEAP Formula: Legislative History and Current Law 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 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. 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. 15 Funds were appropriated through the FY1978 Supplemental Appropriations Act (P.L. 95-240) 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. 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). Congressional Research Service 4 The LIHEAP Formula: Legislative History and Current Law 4877, the FY1977 Supplemental Appropriations Act, 95th Congress, 1st session, S.Rept. 95-64, March 24, 1977. The formula for P.L. 96-126 is contained within the law. Note: * 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 ⅓ heating degree days2 * number of households below 125% of poverty, ⅓ difference in home heating expenditures between 1978 and 1979, and ⅓ 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 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 low-income 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 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 Ibid., p. 12. Congressional Research Service 5 The LIHEAP Formula: Legislative History and Current Law 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 • 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, 23 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 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. Congressional Research Service 6 The LIHEAP Formula: Legislative History and Current Law 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. 96-223. 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 specific formula components for LIEAP were laid out.25 H. Rept. 96-1244 did little to erode the de facto 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. 96223, 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 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.” 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. Congressional Research Service 7 The LIHEAP Formula: Legislative History and Current Law 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. 96-1244 benefitted northeastern states, where heating oil prices had increased substantially.27 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. Notes: * 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 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. Congressional Research Service 8 The LIHEAP Formula: Legislative History and Current Law 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. 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. 96-369, 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 coldweather 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 in lower percentage allocations for 23 states, mostly in the Northeast and Midwest, gains 28 See, for example, Senate debate, Congressional Record, vol. 125, parts 24-25 (November 13-15, 1979), pp. 3208232086, 32275-32293, 32558-32565. 29 House debate, Congressional Record, vol. 126, part 18 (August 27, 1980), pp. 23502-23515. 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 Low-Income Home Energy Assistance Amendments of 1984, 98th Cong., 2nd sess., H.Rept. 98-139, Part 2, May 15, 1984, p. 13. 32 Ibid., p. 4. Congressional Research Service 9 The LIHEAP Formula: Legislative History and Current Law 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. • 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. 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. Congressional Research Service 10 The LIHEAP Formula: Legislative History and Current Law • 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 P.L. 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 (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 36 Congressional Record, daily edition, vol. 130 (October 4, 1984), pp. S13415-S13416. Congressional Research Service 11 The LIHEAP Formula: Legislative History and Current Law 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 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 June 2010. 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 37 Report of the Committee on Energy and Commerce to accompany H.R. 2439, the Low-Income Home Energy Amendments of 1984, 98th Cong., 2nd sess., H.Rept. 98-139, Part 2, May 15, 1984, p. 13. 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). Congressional Research Service 12 The LIHEAP Formula: Legislative History and Current Law 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 2007 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 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 2007, 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 2005 RECS.41 HHS adjusts the EIA heating and cooling consumption estimates using HDD and CDD data. • 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 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. 41 For more information about the RECS, see the EIA website at http://www.eia.doe.gov/emeu/recs/. Congressional Research Service 13 The LIHEAP Formula: Legislative History and Current Law Census Bureau prepares a special sample for HHS of the fuel sources used by heating and cooling consumption in Btus for low-income households. HHS uses Census data to determine fuel sources used by low-income households. The most recent information on low-income households and the fuel sources they use comes from the American Community Survey three-year estimates for 2005-200720052007. In addition, low-income consumption data are adjusted to account for the fact that low-income 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 2005 RECS. • 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 2007. • 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. Table 3 at the end of this section shows both the rates under the “old” formula (column (a)) and the most recent “new” formula rates (column (b)), received by CRS from HHS in June 2010. To see how the formula rates for each state have changed in recent years, see Table 4 (it follows Table 3). 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. 42 The EIA’s state data tables are available at http://www.eia.doe.gov/emeu/states/_seds.html. Congressional Research Service 14 The LIHEAP Formula: Legislative History and Current Law 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 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 FY2010), 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. 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 the equivalent of 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 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. 44 This amount is arrived at by adding $27 million and $300,000 to $1.975 billion. Congressional Research Service 15 The LIHEAP Formula: Legislative History and Current Law appropriations increase sufficiently, the allotments for states that are held harmless will 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 Florida, Texas, and Nevada. 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 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 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 holdharmless 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 holdharmless 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 45 “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). 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). Congressional Research Service 16 The LIHEAP Formula: Legislative History and Current Law 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 hold-harmless 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. 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 $3.67 billion distributed according to the proportions of the “old” formula established by LIEAP. For FY2010, as part of the Consolidated Appropriations Act (P.L. 111-117), Congress appropriated the same amount of regular funds as in FY2009 with the same division between the “old” and “new” formulas. See Table C-1 in Appendix C of this report for the distribution of funds to the states in FY2006 through FY2010. Table 3. Low-Income Home Energy Program (LIHEAP): “Old” and “New” Allotment Rates by State, 2010 Hold-Harmless Levela Hold-Harmless Rate “Old” Allotment Rate (%) (a) “New” Allotment Rate (%) (b) Subject to HoldHarmless Level? (c) HoldHarmless Level ($Millions) (d) Subject to HoldHarmless Rate? (e) HoldHarmless Rate (%) (f) Alabama 0.860 1.599% N — N — Alaska 0.549 0.511 Y 10.828 Y 0.513 Arizona 0.416 1.098 N — N — Arkansas 0.656 0.852 N — N — California 4.614 4.453 Y 91.001 N — Colorado 1.609 1.247 Y 31.729 N — Connecticut 2.099 2.239 N — N — Delaware 0.279 0.373 N — N — District of Columbia 0.326 0.192 Y 6.428 Y 0.305 State 47 For more information about this issue, see Appendix C of this report. Congressional Research Service 17 The LIHEAP Formula: Legislative History and Current Law Hold-Harmless Levela Hold-Harmless Rate “Old” Allotment Rate (%) (a) “New” Allotment Rate (%) (b) Subject to HoldHarmless Level? (c) HoldHarmless Level ($Millions) (d) Subject to HoldHarmless Rate? (e) HoldHarmless Rate (%) (f) Florida 1.361 4.583 N — N — Georgia 1.076 2.641 N — N — Hawaii 0.108 0.150 N — N — Idaho 0.628 0.349 Y 12.376 Y 0.587 Illinois 5.809 5.014 Y 114.565 N — Indiana 2.630 2.080 Y 51.872 N — Iowa 1.864 1.099 Y 36.762 N — Kansas 0.856 0.993 N — N — Kentucky 1.369 1.256 Y 26.994 N — Louisiana 0.879 1.365 N — N — Maine 1.360 1.090 Y 26.815 N — Maryland 1.607 2.080 N — N — Massachusetts 4.198 3.718 Y 82.797 N — Michigan 5.515 4.819 Y 108.770 N — Minnesota 3.973 2.025 Y 78.363 N — Mississippi 0.737 0.940 N — N — Missouri 2.320 2.011 Y 45.762 N — Montana 0.736 0.287 Y 14.517 Y 0.688 Nebraska 0.922 0.553 Y 18.180 Y 0.862 Nevada 0.195 0.526 N — N — New Hampshire 0.795 0.605 Y 15.672 Y 0.743 New Jersey 3.897 4.105 N — N — New Mexico 0.521 0.441 Y 10.270 Y 0.487 12.725 10.018 Y 250.974 N — North Carolina 1.896 2.823 N — N — North Dakota 0.800 0.256 Y 15.770 Y 0.747 Ohio 5.139 4.941 Y 101.350 N — Oklahoma 0.791 1.224 N — N — Oregon 1.247 0.702 Y 24.591 N — Pennsylvania 6.835 5.885 Y 134.810 N — Rhode Island 0.691 0.615 Y 13.629 Y 0.646 South Carolina 0.683 1.260 N — N — State New York Congressional Research Service 18 The LIHEAP Formula: Legislative History and Current Law Hold-Harmless Levela Hold-Harmless Rate State “Old” Allotment Rate (%) (a) “New” Allotment Rate (%) (b) Subject to HoldHarmless Level? (c) HoldHarmless Level ($Millions) (d) Subject to HoldHarmless Rate? (e) HoldHarmless Rate (%) (f) South Dakota 0.649 0.253 Y 12.808 Y 0.607 Tennessee 1.386 1.717 N — N — Texas 2.264 7.349 N — N — Utah 0.748 0.508 Y 14.745 Y 0.699 Vermont 0.596 0.419 Y 11.747 Y 0.557 Virginia 1.957 2.486 N — N — Washington 2.051 1.245 Y 40.450 N — West Virginia 0.906 0.639 Y 17.864 Y 0.847 Wisconsin 3.576 2.236 Y 70.538 N — Wyoming 0.299 0.129 Y 5.903 Y 0.280 Source: Congressional Research Service (CRS) calculations based on factors provided by the Department of Health and Human Services (HHS) in June 2010. 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. a. The states that benefit from the hold-harmless level vary depending on the amount appropriated for LIHEAP regular funds. The states listed here benefit from the hold-harmless level when appropriations just exceed the equivalent of an FY1984 appropriation of $1.975 billion. Congressional Research Service 19 The LIHEAP Formula: Legislative History and Current Law Table 4. Recent State Allotment Rates Under the “New” LIHEAP Formula Dates based on years in which CRS received data from HHS States “Old” Formula Rates 2005 2007 2008 2009 2010 Alabama 0.860% 1.722% 1.932% 1.650% 1.582% 1.599% Alaska 0.549 0.372 0.376 0.317 0.575 0.511 Arizona 0.416 0.838 0.992 0.813 1.018 1.098 Arkansas 0.656 0.929 1.082 0.910 0.884 0.852 California 4.614 6.255 5.690 5.303 4.479 4.453 Colorado 1.609 1.148 1.280 1.305 1.333 1.247 Connecticut 2.099 1.952 1.732 2.164 2.205 2.239 Delaware 0.279 0.432 0.435 0.453 0.375 0.373 District of Columbia 0.326 0.321 0.309 0.328 0.181 0.192 Florida 1.361 3.583 4.187 3.781 4.728 4.583 Georgia 1.076 2.445 2.829 2.734 2.620 2.641 Hawaii 0.108 0.104 0.101 0.099 0.150 0.150 Idaho 0.628 0.330 0.386 0.331 0.396 0.349 Illinois 5.809 5.960 4.796 4.998 4.843 5.014 Indiana 2.630 2.204 2.209 2.128 2.147 2.080 Iowa 1.864 1.200 1.085 1.064 1.028 1.099 Kansas 0.856 1.094 1.105 1.106 0.978 0.993 Kentucky 1.369 1.811 1.688 1.621 1.243 1.256 Louisiana 0.879 1.679 1.704 1.514 1.324 1.365 Maine 1.360 0.929 0.722 0.908 1.127 1.090 Maryland 1.607 2.699 2.421 2.652 1.965 2.080 Massachusetts 4.198 3.117 3.043 3.311 3.757 3.718 Michigan 5.515 3.940 4.651 4.645 5.040 4.819 Minnesota 3.973 1.782 1.789 1.917 2.023 2.025 Mississippi 0.737 1.538 1.105 0.951 0.974 0.940 Missouri 2.320 2.431 2.497 2.309 2.014 2.011 Montana 0.736 0.392 0.414 0.441 0.295 0.287 Nebraska 0.922 0.539 0.598 0.558 0.547 0.553 Nevada 0.195 0.465 0.686 0.576 0.500 0.526 New Hampshire 0.795 0.543 0.453 0.503 0.612 0.605 New Jersey 3.897 3.166 2.838 3.621 3.995 4.105 New Mexico 0.521 0.486 0.628 0.577 0.458 0.441 New York 12.725 9.313 8.491 9.393 9.520 10.018 Congressional Research Service 20 The LIHEAP Formula: Legislative History and Current Law “Old” Formula Rates 2005 2007 2008 2009 2010 North Carolina 1.896 3.247 3.186 3.261 2.766 2.823 North Dakota 0.800 0.209 0.235 0.273 0.246 0.256 Ohio 5.139 4.992 4.512 4.803 4.893 4.941 Oklahoma 0.791 1.275 1.452 1.275 1.236 1.224 Oregon 1.247 0.839 1.008 0.750 0.715 0.702 Pennsylvania 6.835 5.380 5.174 5.731 5.993 5.885 Rhode Island 0.691 0.612 0.596 0.665 0.635 0.615 South Carolina 0.683 1.418 1.425 1.349 1.278 1.260 South Dakota 0.649 0.275 0.268 0.235 0.249 0.253 Tennessee 1.386 1.893 2.055 1.801 1.743 1.717 Texas 2.264 5.752 7.095 6.524 7.668 7.349 Utah 0.748 0.555 0.648 0.599 0.559 0.508 Vermont 0.596 0.360 0.356 0.319 0.418 0.419 Virginia 1.957 2.956 2.817 3.041 2.428 2.486 Washington 2.051 1.264 1.621 1.204 1.225 1.245 West Virginia 0.906 0.973 0.960 0.907 0.663 0.639 Wisconsin 3.576 2.081 2.108 2.080 2.229 2.236 Wyoming 0.299 0.201 0.233 0.202 0.137 0.129 States Source: State rate data were received by CRS from HHS in December 2005, May 2007, September 2008, April 2009, and June 2010. Congressional Research Service 21 The LIHEAP Formula: Legislative History and Current Law Appendix A. Estimated Allotments to the States Under Various Hypothetical Appropriations 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 $5.1 billion, the amount at which the LIHEAP program was last authorized in P.L. 109-58. Congressional Research Service 22 Table A-1. LIHEAP Estimated State Allotments for Regular Funds at Various Hypothetical Appropriation Levels ($ in millions) Tier II Tier I State Hypothetical $1.975 Billion in FY1984 (a) $2.14 Billion (b) Tier III Just Under $2.25 Billion (c) $2.25 Billion (d) $2.5 Billion (e) $3.0 Billion (f) $4.0 Billion (g) $5.1 Billion (h) Alabama 16.963 22.588 28.942 28.113 39.480 47.463 63.430 80.993 Alaska 10.828 10.828 11.346 11.392 12.673 15.235 20.360 25.998 Arizona 8.203 10.924 13.997 13.596 19.991 28.476 41.864 53.455 Arkansas 12.943 17.236 18.903 18.903 21.029 25.282 33.786 43.142 California 91.001 93.955 98.847 98.847 109.965 132.201 176.673 225.592 Colorado 31.729 31.729 31.729 31.729 31.729 37.026 49.482 63.183 Connecticut 41.392 47.232 49.691 49.691 55.280 66.458 88.815 113.406 Delaware 5.494 7.316 8.278 8.278 9.209 11.071 14.795 18.892 District of Columbia 6.428 6.428 6.428 6.763 7.524 9.045 12.088 15.434 Florida 26.840 35.741 45.794 44.483 65.408 93.168 136.972 174.898 Georgia 21.221 28.259 36.208 35.171 51.715 73.663 104.760 133.767 Hawaii 2.137 2.846 3.319 3.319 3.692 4.439 5.932 7.575 Idaho 12.376 12.376 12.376 13.021 14.485 17.415 23.273 29.717 Illinois 114.565 114.565 114.565 114.565 123.808 148.843 198.913 253.990 Indiana 51.872 51.872 51.872 51.872 51.872 61.760 82.536 105.389 Iowa 36.762 36.762 36.762 36.762 36.762 36.762 43.617 55.695 Kansas 16.883 20.954 22.046 22.046 24.525 29.484 39.403 50.313 Kentucky 26.994 26.994 27.872 27.872 31.007 37.277 49.816 63.610 Louisiana 17.342 23.093 29.588 28.741 33.701 40.516 54.145 69.138 Maine 26.815 26.815 26.815 26.815 26.928 32.373 43.263 55.242 CRS-23 Tier I State Hypothetical $1.975 Billion in FY1984 (a) Tier II $2.14 Billion (b) Tier III Just Under $2.25 Billion (c) $2.25 Billion (d) $2.5 Billion (e) $3.0 Billion (f) $4.0 Billion (g) $5.1 Billion (h) Maryland 31.693 42.203 46.174 46.174 51.368 61.754 82.528 105.380 Massachusetts 82.797 82.797 82.797 82.797 91.812 110.378 147.508 188.352 108.770 108.770 108.770 108.770 119.001 143.064 191.190 244.128 Minnesota 78.363 78.363 78.363 78.363 78.363 78.363 80.355 102.605 Mississippi 14.543 19.366 20.865 20.865 23.211 27.905 37.292 47.618 Missouri 45.762 45.762 45.762 45.762 49.669 59.712 79.799 101.895 Montana 14.517 14.517 14.517 15.273 16.990 20.426 27.297 34.856 Nebraska 18.180 18.180 18.180 19.127 21.278 25.581 34.186 43.652 3.853 5.131 6.574 6.385 9.389 13.374 19.662 25.106 New Hampshire 15.672 15.672 15.672 16.488 18.342 22.051 29.469 37.629 New Jersey 76.865 86.609 91.119 91.119 101.367 121.864 162.859 207.953 New Mexico 10.270 10.270 10.270 10.805 12.020 14.451 19.312 24.659 250.974 250.974 250.974 250.974 250.974 297.405 397.450 507.500 North Carolina 37.403 49.806 62.652 61.988 69.699 83.793 111.980 142.986 North Dakota 15.770 15.770 15.770 16.591 18.457 22.189 29.653 37.864 101.350 104.255 109.683 109.683 122.020 146.693 196.040 250.322 Oklahoma 15.592 20.763 26.603 25.841 30.228 36.340 48.565 62.012 Oregon 24.591 24.591 24.591 24.591 24.591 24.591 27.868 35.584 Pennsylvania 134.810 134.810 134.810 134.810 145.320 174.705 233.474 298.121 Rhode Island 13.629 13.629 13.641 14.339 15.951 19.177 25.628 32.724 South Carolina 13.472 17.940 22.986 22.327 31.108 37.398 49.979 63.817 South Dakota 12.808 12.808 12.808 13.475 14.990 18.021 24.084 30.752 Michigan Nevada New York Ohio CRS-24 Tier I State Hypothetical $1.975 Billion in FY1984 (a) Tier II $2.14 Billion (b) Tier III Just Under $2.25 Billion (c) $2.25 Billion (d) $2.5 Billion (e) $3.0 Billion (f) $4.0 Billion (g) $5.1 Billion (h) Tennessee 27.344 36.221 38.107 38.107 42.393 50.965 68.109 86.968 Texas 44.653 59.461 76.187 74.005 108.817 155.000 227.875 290.971 Utah 14.745 14.745 14.745 15.512 17.257 20.747 27.726 35.403 Vermont 11.747 11.747 11.747 12.358 13.748 16.528 22.088 28.204 Virginia 38.606 51.408 55.190 55.190 61.397 73.812 98.642 125.955 Washington 40.450 40.450 40.450 40.450 40.450 40.450 49.390 63.065 West Virginia 17.864 17.864 17.864 18.794 20.908 25.136 33.591 42.892 Wisconsin 70.538 70.538 70.538 70.538 70.538 70.538 88.697 113.257 Wyoming 5.903 5.903 5.903 6.211 6.909 8.306 11.101 14.174 1,972.33 2,109.839 2,219.690 2,219.690 2,469.351 2,968.674 3,967.320 5,065.830 Total Source: Congressional Research Service (CRS) calculations based on factors provided by the Department of Health and Human Services (HHS) in June 2010. 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 0.134% 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-25 The LIHEAP Formula: Legislative History and Current Law Appendix B. Further Depiction of How State Allotments Depend Upon Appropriation Levels Figure B-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 hold-harmless 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 hold-harmless 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 B-1, these three types of states are as follows. • Hold-Harmless Level Only States. These states are subject to only the holdharmless level provision. They do not qualify for the hold-harmless 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 holdharmless 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 holdharmless 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 holdharmless 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. Congressional Research Service 26 Figure B-1. Estimated Low Income Home Energy Assistance (LIHEAP) Allocations at Various Hypothetical Appropriations Levels for Three Types of States $120 Tier II hold-harmless level Tier I G Tier III hold-harmless rate $100 Hold-harmless level only state State Allotment ($ in millions) $80 H A F Ratably reduced state $60 Hold-harmless level and rate state $40 I D $20 B C E $0 $0 $1,000 $2,000 $3,000 Appropriation ($ in millions) Source: Figure created by CRS using allotment rates provided by HHS in June 2010. CRS-27 $4,000 $5,000 The LIHEAP Formula: Legislative History and Current Law Appendix C. Actual LIHEAP Regular Fund Allocations to the States, FY2006-FY2010 and Estimated Allocations, FY2011 Table C-1, below, shows actual LIHEAP regular fund allocations to the states from FY2006 through FY2010 and estimated LIHEAP allocations for FY2011 based on the President’s budget request and the Senate Appropriations Committee-passed bill (S. 3686). The actual and estimated allocations include funds for tribes. The President’s proposed budget for FY2011 would provide $2.51 billion for LIHEAP regular funds. Column (g) of Table C-1 contains estimates of how funds would be distributed to the states if this amount were to be appropriated in FY2011. The Senate Appropriations Committeepassed bill to fund the Departments of Labor, Health and Human Services, and Education in FY2011 (S. 3686) would provide $2.71 billion for LIHEAP regular funds. The bill would maintain a proportional split between “old” and “new” formula funds that was introduced in the FY2009 appropriation for LIHEAP—approximately 81.4% of funds, or $2.21 billion, would be distributed according to the “old” formula proportions, while 18.6% of funds, or $505 million, would be distributed according to the “new” formula. Column (h) of Table C-1 shows estimated allotments to states under the provisions of S. 3686. The House Appropriations Subcommittee on the Departments of Labor, Health and Human Services, and Education has recommended a total of $5.1 billion for LIHEAP in FY2011.48 However, specifics about how funds would be divided are not available, so estimates are not yet included in the table. For FY2010, as part of the Consolidated Appropriations Act (P.L. 111-117), Congress funded LIHEAP regular funds at the same level as in FY2009—approximately $4.51 billion. P.L. 111117 also maintained the same division of funds as in FY2009, with $840 million distributed according to the “new” LIHEAP formula and $3.67 billion according to the “old” formula. Column (f) of Table C-1 shows the allocations to the states under P.L. 111-117. Note that funds are not distributed exactly as they were in FY2009 due to the fact that LIHEAP formula rates changed in April 2009. Column (e) of Table C-1 shows the amount of regular funds that each state received in FY2009 as part of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act (P.L. 110-329). In the FY2008 Consolidated Appropriations Act (P.L. 110-161), Congress appropriated $1.98 billion in LIHEAP regular funds.4849 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 48 See the Subcommittee Summary Table, available on its website at http://appropriations.house.gov/images/stories/pdf/ lhhse/FY2011_LHHS_Summary_Tabel-07.15.2010.pdf. 49 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. Congressional Research Service 28 The LIHEAP Formula: Legislative History and Current Law tribes on the basis of their ability to obtain non-LIHEAP resources for energy assistance (leveraging incentive grants) and for increasing energy efficiency of low-income 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 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. Congressional Research Service 28 The LIHEAP Formula: Legislative History and Current Law (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 $500 million. Congressional Research Service 29 Table C-1. LIHEAP Actual State Regular Fund Allotments for FY2006 through FY2010 and Estimated FY2011 Allotments ($ in millions) State FY2006 Allotments: $2.48 Billiona (a) FY2007 Allotments: $1.98 Billionb (b) FY2008 Allotments Prior to 6-26-08: $1.98 Billionc (c) FY2008 Allotments After 6-26-08: $1.98 Billiond (d) FY2009 Allotments: $4.5 Billione (e) FY2010 Allotments: $4.5 Billionf (f) FY2011 Estimated Allotments, President’s Request: $2.51 Billion (g) Billion (g) FY2011 Estimated Allotments, S. 3686: $2.71 Billiong (h) Alabama 31.310 16.769 16.774 17.111 60.063 58.799 39.640 41.332 Alaska 12.572 10.704 10.707 10.828 23.568 25.308 12.724 13.820 Arizona 15.142 8.110 8.112 8.275 29.047 33.729 20.257 21.017 Arkansas 22.765 12.796 12.799 13.057 36.497 35.773 21.115 22.417 California 153.184 89.963 89.985 91.797 225.894 202.749 110.410 119.615 Colorado 31.729 31.367 31.375 31.729 63.474 64.257 31.729 34.987 Connecticut 47.809 40.920 40.930 41.754 95.783 96.942 55.504 59.684 Delaware 10.141 5.431 5.433 5.542 17.384 15.189 9.246 9.799 District of Columbia 7.852 6.355 6.356 6.484 14.653 13.992 7.554 8.205 Florida 49.542 26.534 26.541 27.075 95.037 110.354 66.279 68.764 Georgia 39.170 20.979 20.985 21.407 75.141 87.252 52.404 54.369 Hawaii 2.555 2.113 2.113 2.137 4.652 6.023 3.707 3.922 Idaho 14.370 12.235 12.238 12.376 26.939 26.939 14.544 15.797 Illinois 145.959 113.259 113.287 114.565 237.236 232.865 124.309 135.916 Indiana 53.986 51.280 51.293 51.872 103.609 104.151 51.872 57.198 Iowa 36.762 36.343 36.352 36.762 67.803 67.803 36.762 40.537 Kansas 26.798 16.690 16.695 17.031 45.349 41.757 24.624 26.327 Kentucky 44.347 26.686 26.693 27.230 68.353 57.742 31.132 33.865 Louisiana 32.010 17.144 17.148 17.494 57.196 51.870 33.838 35.576 CRS-30 State FY2006 Allotments: $2.48 Billiona (a) FY2007 Allotments: $1.98 Billionb (b) FY2008 Allotments Prior to 6-26-08: $1.98 Billionc (c) FY2008 Allotments After 6-26-08: $1.98 Billiond (d) FY2009 Allotments: $4.5 Billione (e) FY2010 Allotments: $4.5 Billionf (f) FY2011 Estimated Allotments, President’s Request: $2.51 Billion (g) FY2011 Estimated Allotments, S. 3686: $2.71 Billiong (h) Maine 26.815 26.509 26.516 26.815 49.457 54.309 27.037 29.756 Maryland 58.499 31.332 31.340 31.971 101.296 82.002 51.575 54.765 Massachusetts 82.797 81.853 81.873 82.797 162.981 175.524 92.184 100.569 108.770 107.529 107.556 108.770 222.412 233.524 119.482 130.500 Minnesota 78.363 77.469 77.488 78.363 144.528 144.528 78.363 86.408 Mississippi 26.843 14.377 14.381 14.670 39.011 39.661 23.305 24.769 Missouri 59.541 45.240 45.251 45.762 103.541 95.257 49.870 54.506 Montana 16.856 14.351 14.355 14.517 31.598 31.598 17.059 18.528 Nebraska 21.109 17.973 17.978 18.180 39.573 39.573 21.364 23.204 7.112 3.809 3.810 3.887 13.643 15.841 9.514 9.871 New Hampshire 18.197 15.493 15.497 15.672 34.112 34.112 18.416 20.003 New Jersey 77.540 75.988 76.007 76.865 166.690 177.196 101.777 109.542 New Mexico 11.925 10.153 10.156 10.360 24.901 22.355 12.069 13.108 250.974 248.112 248.173 250.974 475.935 479.526 250.974 276.742 North Carolina 69.038 36.976 36.985 37.730 123.243 109.339 69.981 73.733 North Dakota 18.310 15.590 15.594 15.770 34.325 34.325 18.531 20.127 122.259 100.194 100.219 101.350 220.588 223.108 122.513 132.766 Oklahoma 28.780 15.415 15.418 15.729 49.007 47.902 30.350 31.913 Oregon 24.591 24.311 24.317 24.591 45.355 45.355 24.591 27.116 Pennsylvania 134.810 133.273 133.306 134.810 274.925 282.279 145.907 159.566 Rhode Island 15.825 13.473 13.477 13.629 30.209 29.666 16.016 17.395 South Carolina 24.867 13.318 13.322 13.590 47.702 47.311 31.234 32.578 South Dakota 14.871 12.662 12.665 12.808 27.878 27.878 15.051 16.347 Michigan Nevada New York Ohio CRS-31 FY2006 Allotments: $2.48 Billiona (a) State FY2007 Allotments: $1.98 Billionb (b) FY2008 Allotments Prior to 6-26-08: $1.98 Billionc (c) FY2008 Allotments After 6-26-08: $1.98 Billiond (d) FY2009 Allotments: $4.5 Billione (e) FY2010 Allotments: $4.5 Billionf (f) FY2011 Estimated Allotments, President’s Request: $2.51 Billion (g) FY2011 Estimated Allotments, S. 3686: $2.71 Billiong (h) Tennessee 46.363 27.033 27.039 27.584 73.723 72.092 42.564 45.319 Texas 82.421 44.144 44.155 45.044 158.110 183.593 110.266 114.401 Utah 17.120 14.576 14.580 14.745 32.094 32.094 17.327 18.819 Vermont 13.639 11.613 11.616 11.747 25.568 25.568 13.804 14.993 Virginia 71.259 38.166 38.175 38.944 118.084 100.856 61.645 65.532 Washington 40.450 39.988 39.998 40.450 74.603 74.603 40.450 44.603 West Virginia 23.818 17.660 17.665 17.935 40.584 38.884 20.993 22.800 Wisconsin 70.538 69.733 69.750 70.538 130.096 130.096 70.538 77.780 Wyoming 6.854 5.836 5.838 5.903 12.850 12.850 6.937 7.535 2,449.16 1,949.83 1,950.314 1,977.027 4,476.302 4,476.302 2,479.338 2,678.739 Total Source: Department of Health and Human Services (HHS) final regular fund allocations for FY2006 through FY2010. FY2011 levels are CRS estimates based on data received from HHS in June 2010. Actual and estimated allocations to the states 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-the-board 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. CRS-32 f. In FY2010, Congress appropriated the same amount for LIHEAP regular funds as it had in FY2009—approximately $4.5 billion—with the same division of funds between “old” and “new” formulas (P.L. 111-117). Although FY2010 LIHEAP funds were divided between the “old” and “new” formula in the same way as FY2009, the awards to the states are different because the formula factors were updated in April 2009. g. The estimated FY2011 allocations to the states in column (h) assume that $505 million of the total would be distributed according to the “new” LIHEAP formula, and that the remaining regular fund appropriation (approximately $2.21 billion) would be allocated according to the “old” LIHEAP formula. In estimating these allocations, CRS followed the method used by HHS in allocating FY2010 funds. This means that funds for the territories were removed proportionately from the funds appropriated under the “old” formula and the “new” formula. However, funds for leveraging incentive grants and training and technical assistance were subtracted only from the $2.21 billion allocated under the “old” formula. In calculating how the $505 million would be allocated under the “new” formula, CRS assumed that funds would be distributed as if approximately $2.48 billion were to be appropriated for LIHEAP regular funds with amounts over and above state allocations at $1.975 billion (the trigger for the “new” LIHEAP formula) assumed to be allocated to the states. This was the method used by HHS in FY2010. CRS-33 The LIHEAP Formula: Legislative History and Current Law Author Contact Information Libby Perl Specialist in Housing Policy eperl@crs.loc.gov, 7-7806 Congressional Research Service 3478.363 77.469 77.488 78.363 144.528 144.528 78.363 FY2008 Allotments Prior to 6-26-08: $1.98 Billionc (c) FY2006 Allotments: $2.48 Billiona (a) FY2007 Allotments: $1.98 Billionb (b) Alabama 31.310 16.769 16.774 Alaska 12.572 10.704 Arizona 15.142 Arkansas State Michigan Minnesota Congressional Research Service FY2008 Allotments After 6-26-08: $1.98 Billiond (d) 29 The LIHEAP Formula: Legislative History and Current Law FY2009 Allotments: $4.5 Billione (e) FY2010 Allotments: $4.5 Billionf (f) FY2011 Estimated Allotments, President’s Request: $2.51 Billion (g) 14.670 39.011 39.661 23.305 45.251 45.762 103.541 95.257 49.870 14.351 14.355 14.517 31.598 31.598 17.059 21.109 17.973 17.978 18.180 39.573 39.573 21.364 7.112 3.809 3.810 3.887 13.643 15.841 9.514 New Hampshire 18.197 15.493 15.497 15.672 34.112 34.112 18.416 New Jersey 77.540 75.988 76.007 76.865 166.690 177.196 101.777 New Mexico 11.925 10.153 10.156 10.360 24.901 22.355 12.069 250.974 248.112 248.173 250.974 475.935 479.526 250.974 North Carolina 69.038 36.976 36.985 37.730 123.243 109.339 69.981 North Dakota 18.310 15.590 15.594 15.770 34.325 34.325 18.531 122.259 100.194 100.219 101.350 220.588 223.108 122.513 Oklahoma 28.780 15.415 15.418 15.729 49.007 47.902 30.350 Oregon 24.591 24.311 24.317 24.591 45.355 45.355 24.591 Pennsylvania 134.810 133.273 133.306 134.810 274.925 282.279 145.907 Rhode Island 15.825 13.473 13.477 13.629 30.209 29.666 16.016 South Carolina 24.867 13.318 13.322 13.590 47.702 47.311 31.234 South Dakota 14.871 12.662 12.665 12.808 27.878 27.878 15.051 Tennessee 46.363 27.033 27.039 27.584 73.723 72.092 42.564 Texas 82.421 44.144 44.155 45.044 158.110 183.593 110.266 Utah 17.120 14.576 14.580 14.745 32.094 32.094 17.327 Vermont 13.639 11.613 11.616 11.747 25.568 25.568 13.804 Virginia 71.259 38.166 38.175 38.944 118.084 100.856 61.645 Washington 40.450 39.988 39.998 40.450 74.603 74.603 40.450 West Virginia 23.818 17.660 17.665 17.935 40.584 38.884 20.993 Wisconsin 70.538 69.733 69.750 70.538 130.096 130.096 70.538 Wyoming 6.854 5.836 5.838 5.903 12.850 12.850 6.937 2,449.16 1,949.83 1,950.314 1,977.027 4,476.302 4,476.302 2,479.338 FY2008 Allotments Prior to 6-26-08: $1.98 Billionc (c) FY2006 Allotments: $2.48 Billiona (a) FY2007 Allotments: $1.98 Billionb (b) Mississippi 26.843 14.377 14.381 Missouri 59.541 45.240 Montana 16.856 Nebraska State Nevada New York Ohio Total FY2008 Allotments After 6-26-08: $1.98 Billiond (d) Source: Department of Health and Human Services (HHS) final regular fund allocations for FY2006 through FY2010. FY2011 levels are CRS estimates based on data received from HHS in June 2010. Actual and estimated allocations to the states include tribal allotments. Congressional Research Service 30 The LIHEAP Formula: Legislative History and Current Law 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-the-board 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. 110329). 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. f. In FY2010, Congress appropriated the same amount for LIHEAP regular funds as it had in FY2009— approximately $4.5 billion—with the same division of funds between “old” and “new” formulas (P.L. 111117). Although FY2010 LIHEAP funds were divided between the “old” and “new” formula in the same way as FY2009, the awards to the states are different because the formula factors were updated in April 2009. Author Contact Information Libby Perl Specialist in Housing Policy eperl@crs.loc.gov, 7-7806 Congressional Research Service 31