Order Code RS21605
Updated November 8, 2005
CRS Report for Congress
Received through the CRS Web
Low-Income Home Energy
Assistance Program (LIHEAP):
Formula and Estimated Allocations
Julie M. Whittaker
Analyst in Applied Microeconomics
Domestic Social Policy Division
Libby Perl
Analyst in Social Legislation
Domestic Social Policy Division
Summary
The Low-Income Home Energy Assistance Program (LIHEAP) is a block grant
program 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. This
report reviews how allotments of regular LIHEAP funding are determined and how these
calculations change at different funding levels. Included is a description of the
components of the new LIHEAP formula rates. The data reflect new formula factors
reported by the Department of Health and Human Services (HHS) in October 2005.
These figures have been updated to reflect conversations with HHS on their allotment
methodology. This report will be updated as events warrant.
Low-Income Home Energy Assistance Program
The Low-Income Home Energy Assistance Program (LIHEAP) is a block grant
program 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, LIHEAP has been reauthorized and amended
several times, most recently in 2005, when P.L. 109-58 reauthorized annual regular
1 For additional information on LIHEAP, see CRS Report RL31865, The Low-Income Home
Energy Assistance Program (LIHEAP): Program and Funding Issues, by Libby Perl and Emilie
Stoltzfus.
Congressional Research Service ˜ The Library of Congress

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CRS-2
LIHEAP funds at $5.1 billion per year from FY2005 to FY2007. The LIHEAP
appropriation for FY2005 was $2.182 billion.
Federal standards have very broad guidelines, with almost all decisions regarding
LIHEAP made by the states. Recipients may be helped with their regular heating and
cooling costs, may receive crisis assistance, may have weatherization expenses paid, or
may receive other aid designed to reduce their home energy needs. The most current
Department of Health and Human Services (HHS) data show an estimated 4.8 million
households received winter heating/crisis assistance in FY2003.
Type of Grants Authorized Under LIHEAP
The LIHEAP statute provides for two types of program funding: regular and
contingency grants. Regular funds are allotted to states according to methods prescribed
by the LIHEAP statute as amended by the Human Services Reauthorization Act of 1984
(P.L. 98-558). The method of allotment may change based on the funding level. For
FY2005 Congress made $1.885 billion in regular LIHEAP grants available.
Emergency funds may be released and allotted to one or more states at the discretion
of the President and the Secretary of HHS. 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.2 In FY2005, Congress provided $298 million in emergency funds
for contingency purposes.
Current Law Distribution: How Allotments of Regular
LIHEAP Funding Are Determined
Current law provides for three different methods to calculate each state’s allotment
of regular LIHEAP funds. The calculation method depends upon the size of the
appropriation for that fiscal year. For funding levels above $1.975 billion, no method will
allocate a state less funds than the state would have received at a $1.975 billion funding
level in FY1984. However, the proportion of total regular funds each state receives may
differ substantially from the proportion that would have been received at $1.975 billion.
Tier I: Below $1.975 Billion. Current law requires that for fiscal years in which
the regular LIHEAP fund appropriation is $1.975 billion or less, as has been the case each
fiscal year since FY1987, states receive the same percentage of funds that were received
in FY1984 (Section 2604(a)(2)(A)).3 The LIHEAP formula in FY1984 distributed funds
by giving states the same share of funds that they received in FY1981 under the
predecessor program to LIHEAP, the Low-Income Energy Assistance Program (LEAP).
Column (a) in Table 1 reports the amount of funds that each state would have received
in FY194 had the regular appropriation been $1.975 billion.
2 Depending on how Congress appropriates them, emergency 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.
3 All section citations refer to the Low Income Home Energy Assistance Act (Title XXVI of P.L.
97-35), as amended.

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Tier II: From $1.975 up to $2.25 Billion. If the regular LIHEAP appropriation
exceeds $1.975 billion for the fiscal year (Section 2604(a)(2)(A)(ii)), all funds are to be
distributed under a different methodology, including a new set of rates that are subject to
a hold-harmless level. The set of factors used to determine this new set of rates is
sometimes called the “new” formula. Under Tier II calculations, a state’s allotment in the
statute is required to reflect “the percentage which expenditures for home energy by
low-income households in that state bears to such expenditures in all states ...” (See
“Components of the New Formula” below.) However, the statute provides that no state
can be allocated less LIHEAP funds than the state would have received under the Tier I
formula if the appropriation level in 1984 were equal to $1.975 billion.4 This provision
is known as the “hold-harmless” level.
Since this language was enacted, Congress further provided that HHS could use
regular LIHEAP appropriations for Training and Technical Assistance (P.L. 99-425) as
well as authorized both Leveraging Incentive Grants (P.L. 101-501) and the Residential
Energy Assistance Challenge option (P.L. 103-252) — both are generally funded out of
regular LIHEAP funds. These debits on the regular funds account were not in place for
FY1984. Because they affect the level of regular funds available for state grant allotments
by approximately $25 million, it is possible that HHS would not implement the new
formula before a regular funds appropriation level reaches $2.0028 billion.
Implementing the hold-harmless level greatly changes the proportion of the total
allocation that most states receive. This is because the statute provides that the hold-
harmless levels must be achieved by reducing the allocation of funds to those states with
the greatest proportional gains. Column (b) in Table 1 reports the estimated allotment
of funds that each state receives when the regular appropriation is at $2.007 billion, the
House-approved appropriation for FY2006 (H.R. 3010), while Column (c) reports the
estimated allotment of funds when the regular appropriation is at just under $2.25 billion
($2,249,999,999). The allocations in Columns (b) and (c) are calculated using the Tier
II methodology previously described. Here, it is clear how the effect of the hold-harmless
level produces significant differences in the states’ shares at different levels. This
becomes more pronounced as the federal funding level increases from $2.007 billion up
to $2.25 billion. For example, at $2.007 billion, Alabama receives 0.86% of the total
appropriation (an estimated allotment of $17.1 million), and 1.08% at just under $2.25
billion (an estimated allotment of $23.9 million). In comparison, Wisconsin receives
3.57% at $2.007 billion (an estimated allotment of $70.5 million), and 3.18% at just under
$2.25 billion (an estimated allotment of $70.5 million since Wisconsin is still affected by
the hold-harmless level).
Tier III: At or Above $2.25 Billion. The law stipulates additional requirements
in the methods for distributing funds when the appropriation is at or above $2.25 billion
(Section 2604(a)(2)(B)). At this level all of the provisions specified in the Tier II
allocation methodology are in place, including the change in the formula factors and the
hold-harmless level. In addition, a new hold-harmless rate is applied. 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
4 In fact, the appropriation in 1984 was not $1.975 billion but the law refers to this hypothetical
amount in its hold-harmless provision. The actual FY1984 provision was $2.075 billion.

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have received at a $2.14 billion appropriation level (assuming the new percentage is
greater than the percentage originally calculated at the actual, $2.25 billion or greater,
appropriation). This hold-harmless rate ensures a state specific share of the total
available funds. The allocations to the states with the greatest proportional funding share
increases are then ratably reduced again, using the methodology described in the Tier II
discussion, until there is no funding shortfall.
The application of the hold-harmless rate creates another layer of discontinuity in
the allocation rates. Column (c) in the table reports the estimated allotment of funds that
each state receives when the regular appropriation is just under $2.25 billion, while
Column (d) reports the estimated allotment of funds that each state receives when the
regular appropriation is at $2.25 billion after the hold-harmless rate is applied. Column
(e) reports the estimated allotment of funds that each state receives when the regular
appropriation is at $3.159 billion. Column (f) reports estimated allotment of funds that
each state receives when the regular appropriation is at $5.1 billion.
Components of the New Formula Rates (Used in Tiers II and III)
For funding levels above $1.975 billion, statute provides that HHS is to “determine
the expenditure for home energy by low-income households on the basis of the most
recent satisfactory data available.” Developed by HHS, this formula accounts for
variations in heating and cooling needs of the states, in types of energy used, variations
in energy prices, and in the low-income population and their heating and cooling methods.
Thus, the new formula is a complex aggregation of four major groups of state-level data.
! Average Annual Heating and Cooling degree days by state. A heating
degree day measures the extent to which a day’s average temperature
falls below 65°F and a cooling degree day measures the extent to which
a day’s average temperature rises above 65°F. This information is
collected by the National Oceanic and Atmospheric Administration. A
state’s heating and cooling degree data are weighted by population in the
state. Averages over 30 years also are measured and are taken into
account by the formula.
! Residential sector energy price projections by fuel type in nominal
dollars. These projected prices for fuels include fuel oil, natural gas,
electricity, kerosene and liquefied petroleum gas. Regional variation of
energy prices can be significant and the formula takes expected
expenditure differences into account. This information is collected by
the Department of Energy’s Energy Information Administration (EIA)
and published in the State Energy Price and Expenditure Report.
! Residential energy consumption by fuel source, for heating and for
cooling by BTUs. There is substantial variation by state and region on
the distribution of types of energy used for home consumption. Fuel oil,
natural gas, electricity, and kerosene consumption data are collected in
the State Energy Data Report from the EIA. Data for coal, wood, and
liquefied petroleum gas are collected in the Combined State Energy Data
System by the EIA.
! The number of heating and cooling units by fuel source and the number
of low-income households by fuel source are calculated from Census data
by the Bureau of the Census, Department of Commerce. The ratio of

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CRS-5
low-income heating and cooling use by region and fuel source for all
income levels of heating and cooling is calculated by using the
Residential Energy Consumption Survey from EIA.
New Formula Issues: Appropriate and Timely Measures. Several questions
may face Congress about the new formula calculation and Tiers II and III methodologies.
The determination of appropriate funding levels to trigger the use of the new
formula. The new formula rate is applied at levels above $1.975 billion . However, after
all hold-harmless conditions are satisfied, not all states receive the proportion of funds
equivalent to their new formula rate.
The determination of appropriate measures of home energy consumption.
The incorporation of cooling days (defined as temperatures above 65°F) may overstate
warmer states’ energy needs and understate colder states’ energy needs.
Timely calculation of the new rates. Even the most current information is often
several years old by the time it is available. For example, the energy price data are from
2003. As a result, the raw data used in these calculations may not be applicable to current
home energy needs.
Table 1. Low-Income Home Energy Assistance Program (LIHEAP),
Estimated State Allotments for Regular Block Grants
($ in millions)
Tier I
Tier II
Tier III
Hypothetical
State
$1.975
Just under
billion
$2.007
$2.25
$2.25
$3.159
in FY1984
billion
billion
billion
billion
$5.1 billion
(a)
(b)
(c)
(d)
(e)
(f)
Alabama
$16.963
$17.060
$23.917
$23.643
$44.500
$75.677
Alaska
$10.828
$10.828
$10.828
$11.392
$16.051
$26.002
Arizona
$8.203
$8.250
$11.567
$11.434
$21.521
$36.598
Arkansas
$12.943
$13.018
$18.250
$18.041
$30.850
$49.973
California
$91.001
$91.522
$128.308
$126.837
$207.587
$336.267
Colorado
$31.729
$31.729
$31.729
$31.729
$38.107
$61.730
Connecticut
$41.392
$41.392
$45.980
$45.980
$64.788
$104.950
Delaware
$5.494
$5.525
$7.746
$7.657
$14.330
$23.214
District of Columbia
$6.428
$6.465
$7.551
$7.551
$10.640
$17.236
Florida
$26.840
$26.840
$26.840
$26.840
$37.385
$60.559
Georgia
$21.221
$21.343
$29.921
$29.578
$55.672
$94.675
Hawaii
$2.137
$2.149
$2.457
$2.457
$3.462
$5.608
Idaho
$12.376
$12.376
$12.376
$13.021
$18.347
$29.721
Illinois
$114.565
$115.222
$140.374
$140.374
$197.795
$320.406
Indiana
$51.872
$51.872
$51.921
$51.921
$73.159
$118.510
Iowa
$36.762
$36.762
$36.762
$36.762
$39.822
$64.507
Kansas
$16.883
$16.980
$23.804
$23.531
$36.316
$58.828
Kentucky
$26.994
$27.149
$38.061
$37.624
$60.097
$97.350

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Tier I
Tier II
Tier III
Hypothetical
State
$1.975
Just under
billion
$2.007
$2.25
$2.25
$3.159
in FY1984
billion
billion
billion
billion
$5.1 billion
(a)
(b)
(c)
(d)
(e)
(f)
Louisiana
$17.342
$17.441
$22.574
$22.574
$31.807
$51.524
Maine
$26.815
$26.815
$26.815
$26.815
$30.818
$49.922
Maryland
$31.693
$31.875
$44.686
$44.174
$83.144
$141.393
Massachusetts
$82.797
$82.797
$82.797
$82.797
$103.454
$167.585
Michigan
$108.770
$108.770
$108.770
$108.770
$130.762
$211.820
Minnesota
$78.363
$78.363
$78.363
$78.363
$78.363
$95.824
Mississippi
$14.543
$14.626
$20.505
$20.270
$38.152
$64.881
Missouri
$45.762
$46.024
$57.263
$57.263
$80.687
$130.703
Montana
$14.517
$14.517
$14.517
$15.273
$21.520
$34.861
Nebraska
$18.180
$18.180
$18.180
$19.127
$26.951
$43.658
Nevada
$3.853
$3.875
$5.432
$5.370
$10.108
$17.189
New Hampshire
$15.672
$15.672
$15.672
$16.488
$23.233
$37.634
New Jersey
$76.865
$76.865
$76.865
$76.865
$105.078
$170.215
New Mexico
$10.270
$10.270
$11.456
$11.456
$16.142
$26.148
New York
$250.974
$250.974
$250.974
$250.974
$309.107
$500.719
North Carolina
$37.403
$37.617
$52.737
$52.132
$98.122
$166.865
North Dakota
$15.770
$15.770
$15.770
$16.591
$23.378
$37.869
Ohio
$101.350
$101.931
$117.581
$117.581
$165.678
$268.381
Oklahoma
$15.592
$15.682
$21.985
$21.733
$40.905
$68.571
Oregon
$24.591
$24.591
$24.591
$24.591
$27.850
$45.114
Pennsylvania
$134.810
$134.810
$134.810
$134.810
$178.560
$289.248
Rhode Island
$13.629
$13.629
$14.414
$14.414
$20.309
$32.899
South Carolina
$13.472
$13.549
$18.995
$18.777
$35.342
$60.103
South Dakota
$12.808
$12.808
$12.808
$13.475
$18.987
$30.756
Tennessee
$27.344
$27.501
$38.555
$38.112
$62.829
$101.775
Texas
$44.653
$44.909
$62.960
$62.238
$104.364
$169.058
Utah
$14.745
$14.745
$14.745
$15.513
$21.858
$35.407
Vermont
$11.747
$11.747
$11.747
$12.358
$17.414
$28.208
Virginia
$38.606
$38.827
$54.433
$53.809
$98.106
$158.921
Washington
$40.450
$40.450
$40.450
$40.450
$41.935
$67.931
West Virginia
$17.864
$17.966
$22.907
$22.907
$32.277
$52.286
Wisconsin
$70.538
$70.538
$70.538
$70.538
$70.538
$111.876
Wyoming
$5.903
$5.903
$5.903
$6.211
$8.751
$14.176
Total
$1,972.325 $1,976.520 $2,219.191 $2,219.191
$3,126.959
$5,065.331
Source: Congressional Research Service (CRS) calculations based on factors provided by the Department of Health
and Human Services (HHS) in October 2005.
Notes: These estimates take into account current program practice where HHS sets aside funds out of regular LIHEAP
funds for technical assistance and training, territories, leverage incentive grants and Residential Energy Assistance
Challenge (REACh) grants. This has implications for the total amount of funds going directly to the states. For
example, $2.0 billion appropriation is estimated to result in $1.970 billion in regular LIHEAP funds going directly to
the states. Because $1.970 billion is less than the hypothetical $1.972 billion that would have gone to the states under
the hypothetical FY1984 appropriation, CRS estimates that the funds from an appropriation of $2.0 billion would be
distributed under the Tier I formula.

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