Order Code RL33275
CRS Report for Congress
Received through the CRS Web
Low-Income Home Energy Assistance
Program (LIHEAP) Allocation Rates:
Legislative History and Current Law
Updated July 18, 2006
Julie M. Whittaker
Specialist in Economics
Domestic Social Policy Division
Libby Perl
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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Low-Income Home Energy Assistance Program
(LIHEAP) Allocation Rates: Legislative History
and Current Law
Summary
The Low-Income Home Energy Assistance Program (LIHEAP) provides funds
to states so that they may help low-income households pay home energy expenses.
States may use LIHEAP funds to assist families with heating and cooling costs,
provide crisis assistance, and pay for weatherization projects. The LIHEAP statute
provides for two types of funding: regular block grant funds and emergency
contingency grants. All regular funds that Congress appropriates are allocated to the
states, the District of Columbia, U.S. territories and commonwealths, and Indian
tribal organizations, whereas contingency funds may be released to one or more states
at the discretion of the Secretary of the Department of Health and Human Services
(HHS) based on emergency need.
Regular LIHEAP funds are allocated to the states according to a formula that
has a long and complicated history. In 1980, Congress created the predecessor
program to LIHEAP, the Low-Income Energy Assistance Program (LIEAP), P.L. 96-
223. Because Congress was particularly concerned with the high costs of heating (as
opposed to cooling), funds under LIEAP were distributed according to a multi-step
formula that benefitted cold-weather states. Later in 1980, Congress further amended
the LIEAP formula in a continuing resolution, P.L. 96-369, but did nothing to change
the emphasis on heating expenditures in cold-weather states. Congress enacted
LIHEAP in 1981 (P.L. 97-35), replacing LIEAP, and 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 (P.L. 98-558), it changed the
program’s formula by requiring the use of more recent population and energy data
and requiring that HHS consider all energy costs of low-income households alone (a
change from the focus on heating needs of all households). The effect of these
changes meant that funds would be shifted from cold-weather northeastern and
midwestern states to southern and western 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, the application of which
depends on the amount of regular funds that Congress appropriates.
The Tier I formula is used to allocate funds when the total LIHEAP regular fund
appropriation is less than or equal to the equivalent of an FY1984 appropriation of
$1.975 billion. Above an appropriation of $1.975 billion, funds are allocated
according to Tier II of the formula, which includes a hold-harmless level to prevent
some 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 hold-
harmless rate. Until FY2006, when Congress appropriated just over $3 billion to the
program, total LIHEAP regular appropriations had not exceeded the equivalent of an
FY1984 appropriation of $1.975 billion since FY1986. This report will be updated
as legislative or program activities warrant.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LIHEAP: Regular and Contingency Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
History and Previous Methods for Distributing Regular Funds . . . . . . . . . . . . . . . 2
Predecessor Program: Low Income Energy Assistance Program (LIEAP) . . 2
Enactment of LIHEAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reauthorization: Formula Discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
LIHEAP: Introduction of a Hold-Harmless Level . . . . . . . . . . . . . . . . . . . . 5
LIHEAP: Introduction of a Hold-Harmless Rate . . . . . . . . . . . . . . . . . . . . . 6
Current Law Distribution: How Allotments of Regular LIHEAP Funding
Are Determined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Tier I: Below $1.975 Billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tier II: From $1.975 Billion up to $2.25 Billion . . . . . . . . . . . . . . . . . . . . . 8
Tier III: At or Above $2.25 Billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Other CRS Reports on LIHEAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
List of Figures
Figure 1. Estimated Low-Income Home Energy Assistance Program
(LIHEAP) Allocations at Various Appropriation Levels for Three
Types of States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
List of Tables
Table 1. Low-Income Home Energy Assistance Program (LIHEAP),
Estimated State Allotments for Regular Block Grants . . . . . . . . . . . . . . . . 10
Table 2. Low-Income Home Energy Program (LIHEAP): “Old” and “New”
Allotment Rates by State, FY2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

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Low-Income Home Energy Assistance
Program (LIHEAP) Allocation Rates:
Legislative History and Current Law
Introduction
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 authorized annual regular LIHEAP funds at $5.1 billion per year from FY2005
through FY2007.
The federal LIHEAP statute has very broad guidelines, with almost all decisions
regarding the program’s operation made by the states. Recipients may be helped with
their regular heating and cooling costs, receive crisis assistance,2 have weatherizing
expenses 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 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. 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.
LIHEAP: Regular and Contingency Grants
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 allotment methods operate so that
the way in which funds are allocated to states depends on the amount of funds
appropriated by Congress. For FY2006, Congress twice appropriated regular
LIHEAP funds. First, Congress appropriated $2.0 billion in P.L. 109-149, which was
1 For additional information on LIHEAP, see CRS Report RL31865, The Low-Income Home
Energy Assistance Program (LIHEAP): Program and Funding, by Libby Perl.
2 Crisis assistance may include immediate funds to prevent utilities from being cut-off in a
household.

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CRS-2
reduced to $1.98 billion after application of a 1% across-the-board rescission in the
Department of Defense Appropriations Act (P.L. 109-148). Congress then
appropriated an additional $500 million in regular funds in P.L. 109-204, enacted on
March 20, 2006.
Contingency 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.3 In FY2006, Congress first appropriated
$183 million for contingency funds, which was reduced to approximately $181.2
million after the rescission required by P.L. 109-148. Congress appropriated an
additional $500 million in contingency funds in P.L. 109-204. On January 5, 2006,
the Administration released its first distribution of contingency funds for FY2006.
The release totaled $100 million, and funds were distributed to all states, the District
of Columbia, and the territories. On March 24, the Administration distributed an
additional $500 million to 25 states based on average temperature and the energy
sources used by low-income households.
The remainder of this report discusses only the history and methods of
distributing regular LIHEAP funds.
History and Previous Methods for
Distributing Regular Funds
Predecessor Program: Low Income Energy
Assistance Program (LIEAP)
The predecessor program to LIHEAP, the Low Income Energy Assistance
Program (LIEAP), was established as part of the Crude Oil Windfall Profits Tax Act
of 1980, P.L. 96-223. Like LIHEAP, the predecessor program allocated funds to
states so that they could assist low-income households in paying home energy costs,
primarily the costs of heating their homes. The program emerged as the result of
concern over substantial increases in home energy costs, especially home heating fuel
costs, during the late 1970s. In its report accompanying H.R. 3919, a bill that
contained an early version of LIEAP, the Senate Finance Committee explained its
emphasis on total heating expenditures writing that “[a]lthough all low-income
households have suffered from increased energy costs, a particular hardship has
fallen on those households in the very coldest parts of the country....”4 As a result of
Congress’s concern about high heating costs, P.L. 96-223 allocated funds to states
through a formula that emphasized heating needs, while placing less importance on
3 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.
4 Report of the Senate Committee on Finance, S.Rept. 96-394, to accompany H.R. 3919,
Nov. 1, 1979, p. 112.

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CRS-3
cooling needs. In fact, P.L. 96-223 allowed states to provide funds for cooling only
when households could demonstrate medical necessity.
Under LIEAP, states chose one of four alternative formulas to measure home
energy needs. Each formula contained different combinations of several factors:
residential energy expenditures; heating degree days5 or heating degree days squared;
and the number of low-income households in the state.6 Because total energy
expenditures (rather than energy expenditures of low-income households only) and
heating degree days (rather than cooling degree days) are higher in cold-weather
states, all formulas effectively gave preference to the home energy needs of low-
income households in cold-weather states. Congress authorized LIEAP for one year,
FY1981, at $3 billion.
Before the formula in P.L. 96-223 could be used to allocate funds, however,
Congress introduced an alternative method for computing the state distribution rates.
It did so when it appropriated $1.85 billion in LIEAP funds for FY1981 in a
continuing resolution (P.L. 96-369). In addition to appropriating funds, P.L. 96-369
amended the set of formulas for determining state allotments that was set out in the
Crude Oil Windfall Profits Tax Act. The continuing resolution referred to a House
report (H.Rept. 96-1244) where the specific formula components were laid out.
H.Rept. 96-1244 contained an alternative set of formulas to those in P.L. 96-223,
with two sets of calculations for estimating state allotments.7 The alternative formula
calculations did little to erode the defacto cold-weather states preference, however.
The first step in the alternative set of formulas was to determine each state’s
share of funds using two calculations set out in H.Rept. 96-1244, and assign states
the greater of the two amounts. Under the first alternative, half of the allocation was
based on the increase in home heating expenditures between 1978 and 1980, and half
was based on the number of heating degree days squared times the population with
income less than or equal to 125% of poverty. Under the second alternative, one
quarter of the allocation was based on total residential energy expenditures in 1980,
5 Heating degree days and cooling degree days measure how daily temperatures relate to
requirements for heating and cooling. The concept is explained later in this paper, in the
section “Components of the New Formula Rates.”
6 The number of low-income households was based on the Bureau of Labor Statistics (BLS)
lower living standard income level. The BLS determined this income level through its
annual family budgets, which it maintained from 1947 to 1981. At the time the LIEAP
program was enacted, the BLS developed annual family budgets assuming three different
standards of living — lower, intermediate, and higher. The budget was calculated using
costs of consumer goods including food, housing, transportation, clothing, and health care
(unlike the federal poverty guidelines, which are based on the amount of money needed to
buy food). The budget was then adjusted for family size and the prices of goods in various
cities throughout the country. See David S. Johnson, John M. Rogers, and Lucilla Tan, “A
Century of Family Budgets in the United States,” Monthly Labor Review, 124, no. 5 (May
2001): 28-45.
7 Report of the House Committee on Appropriations, H.Rept. 96-1244, to accompany H.R.
7998, Aug. 21, 1980, pp. 75-76.

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CRS-4
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. Although the alternative
formula under H.Rept. 96-1244 used factors similar to those in P.L. 96-223, the
original set of formulas was slightly more favorable to warm-weather states because
it put more weight on the size of a state’s low-income population, and provided for
a minimum benefit to states based on the number of recipient households,
unconditioned on their household heating expenditures. In addition, the inclusion of
the increase in home heating expenditures from 1978 to 1980 in H.Rept. 96-1244
benefitted northeastern states, where heating oil prices had increased substantially.
Enactment of LIHEAP
In August 1981, the Omnibus Budget Reconciliation Act, P.L. 97-35, created
LIHEAP, replacing its predecessor, LIEAP. The new program was not substantially
different from the previous program, although it contained less restrictive federal
rules and gave states more flexibility in determining how to operate their LIHEAP
programs. Regarding the formula, the new law provided that the allotment
percentages for each state would remain the same as they had been in FY1981 under
the LIEAP formula as amended by P.L. 96-369. The program was authorized at
$1.85 billion for FY1982-FY1984. In FY1982, Congress appropriated $1.875 billion
for LIHEAP; in FY1983, it appropriated $1.975 billion; and in FY1984, $2.075
billion.
Reauthorization: Formula Discussions
When Congress began to consider reauthorizing LIHEAP in 1983, two aspects
of the formula were disputed. First, legislators recognized that the multi-step formula
benefitted cold-weather states relative to warm-weather states because it took account
of energy costs of all households, not just low-income households.8 On average, the
proportion of poor families in warm-weather states is higher than that in cold-weather
states. Therefore, a formula that considered the total home energy expenditures of
only low-income households would allocate proportionately more funds to warm-
weather states.
The second disputed aspect of the formula centered around the appropriateness
and timeliness of the data used in formula calculations. In 1983, the energy
information used to calculate state allotments was not the most current data
8 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.,
Feb. 24, 1983, pp. 119-120.

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CRS-5
available.9 For example, the most recent data the formula used was the change in the
cost of energy between 1978 and 1980, or the cost of energy in 1980, depending on
the sub-formula one chose to apply. No aspect of the formula took account of
increased costs after 1980.10
Legislative sentiment in favor of changing the formula was evident, when, in
September 1983, the House adopted an amendment to the Emergency Immigration
Education Act (H.R. 3520) that would have adjusted the LIHEAP formula and
resulted in a change in allocations to the states. The amendment’s formula took into
account the energy expenditures of poor families, which, according to the
amendment’s sponsor, Representative Carlos Moorhead (California), would result
in lower percentage allocations for 23 states, mostly in the Northeast and Midwest,
gains for 27, primarily in the South, and the same allocation for one state.11 The
amendment was eventually dropped from H.R. 3520 in conference with the Senate.
LIHEAP: Introduction of a Hold-Harmless Level
Efforts to reauthorize LIHEAP had begun in April 1983, when Representative
Richard Ottinger (New York) introduced the Low-Income Home Energy Assistance
Amendments of 1984 (H.R. 2439). The bill was referred to two committees:
Education and Labor and Energy and Commerce. Within the Energy and Commerce
committee, two subcommittees held mark-ups: Fossil and Synthetic Fuels and
Energy Conservation and Power.
As introduced, H.R. 2439 did not contain changes to the LIHEAP formula. The
Subcommittees on Fossil and Synthetic Fuels and Energy Conservation and Power
worked together to arrive at a formula change, which had the effect of shifting funds
from states in the Northeast to the South and West. Unlike the previous set of
formulas developed under LIEAP, the new formula directed the Department of
Health and Human Services to determine states’ allotments “using data relating to the
most recent year for which data is available” [sic]. Because the cost of heating oil
remained steady between 1981 and 1983, and the price of natural gas rose 33%, this
meant that states in the Northeast — where heating oil was the primary source of
energy — would lose LIHEAP dollars, while states in the South and the Midwest
would gain under this provision.12 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.
9 Report of the Committee on Energy and Commerce (H.Rept. 98-139, Part 2), to accompany
H.R. 2439, May 15, 1984, p. 13.
10 Ibid., p. 4.
11 Congressional Record, Sept. 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%.
12 “The Low-Income Home Energy Assistance Program: An Analysis of the 1984
Reauthorization Issues,” Coalition of Northeastern Governors, Apr. 1984, p. 9.

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CRS-6
To offset the losses to certain states resulting from the use of current data, H.R.
2439 also included a hold-harmless provision, or hold-harmless level; this provision
ensured that if appropriations were less than or equal to $1.875 billion, states would
receive no less than the amount they would have received had the same amount been
appropriated in FY1984. If the annual appropriation exceeded $1.875 billion, states
would not receive less than their allotment would have been under the old formula
at this appropriations level. The bill additionally increased the LIHEAP
authorization level to $2.075 billion for FY1984, $2.26 billion for FY1985, $2.625
billion for FY1987, and $2.8 billion for FY1988.
LIHEAP: Introduction of a Hold-Harmless Rate
After the House Energy and Commerce Committee reported H.R. 2439 to the
House floor — but before the full House could act on the bill — the Senate passed
its version of LIHEAP reauthorization as part of the Human Services Reauthorization
Act, S. 2565, on October 4, 1984.13 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.
! The hold-harmless level was altered. S. 2565 directed that no state
in FY1985 would receive fewer funds than it received in FY1984,
and for FY1986 and thereafter, no state would receive less than the
amount they would have received in FY1984 if the appropriations
level had been $1.975 billion.
! A second hold-harmless provision, or hold-harmless rate, was
created. The provision maintained the percentage allocated rather
than a total funding level allocated to each affected state.
The hold-harmless rate provision guaranteed that certain states would receive
increased allotments when appropriations reached $2.25 billion. States would qualify
for this increase if their total allotment percentage at an appropriation of $2.25 billion
was less than 1%. These states would instead receive the allotment rate they would
have received at an appropriation of $2.14 billion. 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.14
Otherwise, these states’ percentage shares of LIHEAP funds might decline, even as
total appropriations increased. No rate protection was guaranteed for more populous
states beyond the aforementioned hold-harmless level.
The Senate bill also included different authorization amounts for LIHEAP,
$2.14 billion for FY1985 and $2.275 billion for FY1986. After S. 2565 passed the
Senate, the House debated and passed the bill on October 9, 1984, retaining all the
provisions included in the Senate version. The bill became P.L. 98-558 on October
13 The final version of S. 2565 can be found in the Congressional Record, Oct. 4, 1984, p.
S13393.
14 Congressional Record, Oct. 4, 1984, pp. S13415-S13416.

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CRS-7
30, 1984. Until FY2006, appropriations for regular LIHEAP funds had only
exceeded an equivalent FY1984 appropriation of $1.975 billion in 1985 and 1986;
therefore, from FY1987 through FY2005 states continued to receive the same
percentage of LIHEAP funds that they received under the program’s predecessor,
LIEAP. In FY2006, funds were distributed according to Tier III of the LIHEAP
formula.
Current Law Distribution: How Allotments of
Regular LIHEAP Funding Are Determined
Current law as enacted in P.L. 98-558 provides for three different methods to
calculate each state’s allotment of regular LIHEAP funds.15 The set of factors used
to determine the percentage of total funds that each state receives is sometimes called
the “new” formula. The calculation method (which uses the new formula rates) for
state allotments depends upon the size of the appropriation for that fiscal year. It is
important to understand that although the new formula rates are always applied to all
appropriations, when appropriations are below a hypothetical FY1984 appropriation
of $1.975 billion, the result of the current law’s hold-harmless provisions is that
states receive the same allotment percentages that they did under the old formula.16
(Table 2 in the Appendix lists both the “old” and “new” allotment percentages.)
There are several important implications of current law:
! For funding levels at or below the hypothetical FY1984 allotment,
states are guaranteed that their allotment rate is equivalent to what
it was under the old formula.
! For funding levels above the hypothetical FY1984 allotment, the
new formula will not allocate any state fewer funds than the state
would have received at the hypothetical FY1984 funding level of
$1.975 billion. However, some states may not receive any funds
above that level, despite substantial increases in appropriation levels.
! Due to the hold-harmless provisions, the proportion of total regular
funds each state receives at funding levels above $1.975 billion may
differ substantially from the proportion they would have received at
$1.975 billion.
! For funding levels above $2.25 billion, certain states are subject to
a hold-harmless rate. If a state would receive less than 1% of the
total regular fund allotment at a hypothetical appropriation of $2.25
billion, and the state’s allotment proportion at a $2.14 billion
appropriation is greater than it would be at $2.25 billion, then that
state will receive the $2.14 billion allotment proportion for all
appropriation levels at or above $2.25 billion.
15 See CRS Report RS21605, Low-Income Home Energy Assistance Program (LIHEAP):
Formula and Estimated Allotments, by Julie M. Whittaker and Libby Perl for the full
discussion.
16 See U.S. Department of Health and Human Services, Low Income Home Energy
Assistance Program: Report to Congress for FY1987, p. 133.

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CRS-8
! The actual proportion of total regular funds each state receives at
funding levels above $1.975 billion may differ substantially from the
calculated new formula rate prior to application of the hold-harmless
provisions. This is due to the hold-harmless provisions and ratable
reductions. Ratable reductions must be applied to some states’
allotments to ensure that other states do not fall below the hold-
harmless level or hold-harmless rate.
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 was the case in each fiscal year from
FY1987 through FY2005, states receive the same percentage of funds that they
received in FY1984 (Section 2604(a)(2)(A)).17 The LIHEAP formula in FY1984
distributed funds by giving states the same share of funds that they received in
FY1981 under the predecessor program, the Low-Income Energy Assistance Program
(LIEAP). In Table 1, column (a) reports the amount of funds that each state would
have received in FY1984 had the regular appropriation been $1.975 billion.
Tier II: From $1.975 Billion up to $2.25 Billion
If the regular LIHEAP appropriation exceeds $1.975 billion for the fiscal year,
all funds are to be distributed under a different methodology, including a new set of
rates that are subject to a hold-harmless level (Section 2604(a)(2)(A)(ii)). Under Tier
II calculations, a state’s allotment in the statute is required to reflect “the percentage
which expenditures for home energy by low-income households in that state bears
to such expenditures in all states...” (See “Components of the New Formula” below.)
However, the statute provides that no state can be allocated less LIHEAP funds than
the state would have received under the Tier I formula if the appropriation level in
1984 were equal to $1.975 billion.18 This provision is known as the hold-harmless
level. (As mentioned in footnote 18, this currently corresponds to $2.0028 billion in
appropriations for regular LIHEAP funds.)
Implementing the hold-harmless level greatly changes the proportion of the total
allocation that most states receive with application of the new formula. This is
because the statute provides that the hold-harmless level must be achieved by
reducing the allocation of funds to those states with the greatest proportional gains.
Column (b) in Table 1 reports the estimated allotment of funds that each state
receives when the regular appropriation is at $2.14 billion, whereas Column (c)
reports the estimated allotment of funds when the regular appropriation is just under
$2.25 billion ($2,249,999,999). The allocations in (b) and (c) are calculated using
the Tier II methodology previously described. (Table 2 in the Appendix lists
whether or not a state is subject to the hold-harmless level.)
17 All section citations refer to the Low-Income Home Energy Assistance Act (Title XXVI
of P.L. 97-35), as amended.
18 In fact, the appropriation in 1984 was not $1.975 billion but the law refers to this
hypothetical amount in its hold-harmless provision. The actual FY1984 appropriation was
$2.075 billion.

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Tier III: At or Above $2.25 Billion
The law stipulates additional requirements in the methods for distributing funds
when the appropriation is at or above $2.25 billion (Section 2604(a)(2)(B)). At this
level all of the provisions specified in the Tier II allocation methodology are in place,
including the change in the formula factors and the hold-harmless level. In addition,
a new hold-harmless rate is applied. That is, for all appropriation levels at or above
$2.25 billion, states that would have received less than 1% of a total $2.25 billion
appropriation must be allocated the percentage they would have received at a $2.14
billion appropriation level. (This assumes the new percentage is greater than the
percentage originally calculated at the hypothetical $2.25 billion appropriation). This
hold-harmless rate ensures a state specific share of the total available funds. The
allocations to the states with the greatest proportional funding share increases are
then ratably reduced again, using the methodology described in the Tier II discussion,
until there is no funding shortfall.
The application of the hold-harmless rate creates another layer of discontinuity
in the allocation rates. Column (d) in Table 1 reports the estimated allotment of
funds that each state receives when the regular appropriation is at $2.25 billion after
the hold-harmless rate is applied. Column (e) reports the actual allotment of funds
that each state received for FY2006 where the regular appropriation was $2.48
billion. This column reflects the recision required by P.L. 109-148. (Both Training
and Technical Assistance and the Leveraging/REACH funds were reduced by 1%.)
Column (f) reports the estimated allotment of funds that each state receives when the
regular appropriation is at $3.0 billion. This column reflects the recision Column
(g) reports the estimated allotment of funds that each state receives when the regular
appropriation is at $4.0 billion. Column (h) reports estimated allotment of funds that
each state receives when the regular appropriation is at $5.1 billion (the amount
authorized by P.L. 109-58).

---

CRS-10
Table 1. Low-Income Home Energy Assistance Program (LIHEAP),
Estimated State Allotments for Regular Block Grants
($ in millions)
Tier I
Tier II
Tier III
Hypothetical
$1.975 billion
Just under
in FY1984
$2.14 billion
$2.25 billion
$2.25 billion
$2.48 billiona
$3.0 billion
$4.0 billion
$5.1 billion
State
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Alabama
$16.963
$21.045
$24.328 $24.054 $31.319
$47.024
$67.511
$87.205
Alaska
$10.828
$10.828 $10.828 $11.392 $12.574 $15.236 $20.363
$26.002
Arizona
$8.203
$10.178 $11.765 $11.633 $15.146 $22.741 $32.649
$42.233
Arkansas
$12.943
$16.058 $18.564 $18.354 $22.767 $27.589 $36.872
$47.082
California
$91.001
$112.901 $130.513 $129.040 $153.201 $185.646 $248.107
$316.814
Colorado
$31.729
$31.729 $31.729 $31.729 $31.729 $34.080 $45.546
$58.158
Connecticut
$41.392
$41.392 $43.320 $43.320 $47.814 $57.941 $77.435
$98.878
Delaware
$5.494
$6.816 $7.879 $7.791 $10.144 $12.816 $17.128
$21.871
District of Columbia
$6.428
$6.762
$7.115
$7.115
$7.853
$9.516
$12.717
$16.239
Florida
$26.840
$33.300 $38.494 $38.060 $49.557 $74.406
$106.823
$138.181
Georgia
$21.221
$26.329 $30.436 $30.092 $39.182 $58.830 $84.460
$109.253
Hawaii
$2.137
$2.200 $2.315 $2.315 $2.555 $3.096 $4.138
$5.284
Idaho
$12.376
$12.376 $12.376 $13.021 $14.372 $17.416 $23.275
$29.721
Illinois
$114.565
$125.707 $132.254 $132.254 $145.975 $176.890 $236.404
$301.871
Indiana
$51.872
$51.872 $51.872 $51.872 $53.992 $65.427 $87.440
$111.654
Iowa
$36.762
$36.762 $36.762 $36.762 $36.762 $36.762 $47.595
$60.776
Kansas
$16.883
$20.946 $24.213 $23.940 $26.801 $32.477 $43.405
$55.424
Kentucky
$26.994
$33.490 $38.715 $38.278 $44.352 $53.745 $71.828
$91.718

---

CRS-11
Tier I
Tier II
Tier III
Hypothetical
$1.975 billion
Just under
in FY1984
$2.14 billion
$2.25 billion
$2.25 billion
$2.48 billiona
$3.0 billion
$4.0 billion
$5.1 billion
State
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Louisiana
$17.342
$21.515 $24.872 $24.591 $32.019 $48.075 $66.623
$85.072
Maine
$26.815
$26.815
$26.815 $26.815 $26.815
$27.561
$36.834
$47.034
Maryland
$31.693
$39.321 $45.454 $44.941 $58.517 $80.121
$107.078
$136.730
Massachusetts
$82.797
$82.797 $82.797 $82.797 $82.797 $92.520
$123.648
$157.890
Michigan
$108.770
$108.770 $108.770 $108.770 $108.770 $116.941 $156.286
$199.566
Minnesota
$78.363
$78.363 $78.363 $78.363 $78.363 $78.363 $78.363
$90.280
Mississippi
$14.543
$18.043 $20.858 $20.622 $26.851 $40.316 $57.881
$74.871
Missouri
$45.762
$51.280 $53.950 $53.950 $59.548 $72.159 $96.436
$123.142
Montana
$14.517
$14.517 $14.517 $15.273 $16.857 $20.428 $27.300
$34.861
Nebraska
$18.180
$18.180 $18.180 $19.127 $21.112 $25.583 $34.190
$43.658
Nevada
$3.853
$4.780 $5.526 $5.463 $7.114
$10.681
$15.334
$19.836
New Hampshire
$15.672
$15.672
$15.672 $16.488 $18.199 $22.053 $29.472
$37.634
New Jersey
$76.865
$76.865
$76.865
$76.865 $77.549 $93.972
$125.589
$160.368
New Mexico
$10.270
$10.270
$10.793
$10.805 $11.926 $14.452 $19.314
$24.663
New York
$250.974
$250.974
$250.974
$250.974 $250.974 $276.436 $369.444
$471.752
North Carolina
$37.403
$46.404
$53.643 $53.038 $69.058 $96.371
$128.795
$164.462
North Dakota
$15.770
$15.770
$15.770 $16.591 $18.312 $22.190 $29.656
$37.869
Ohio
$101.350
$105.295 $110.779 $110.779 $122.272 $148.167 $198.018
$252.854
Oklahoma
$15.592
$19.345 $22.363 $22.110 $28.789 $37.856 $50.593
$64.604
Oregon
$24.591
$24.591 $24.591 $24.591 $24.591 $24.906 $33.286
$42.504
Pennsylvania
$134.810
$134.810 $134.810 $134.810 $134.810 $159.688 $213.415
$272.515
Rhode Island
$13.629
$13.629
$13.629 $14.339 $15.826 $19.178 $25.631
$32.728

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CRS-12
Tier I
Tier II
Tier III
Hypothetical
$1.975 billion
Just under
in FY1984
$2.14 billion
$2.25 billion
$2.25 billion
$2.48 billiona
$3.0 billion
$4.0 billion
$5.1 billion
State
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
South Carolina
$13.472
$16.714
$19.322 $19.103 $24.874 $37.347 $53.618
$69.357
South Dakota
$12.808
$12.808
$12.808 $13.475 $14.873 $18.023 $24.086
$30.756
Tennessee
$27.344
$33.925 $39.217 $38.775 $46.368 $56.188 $75.093
$95.888
Texas
$44.653
$55.400 $64.042 $63.319 $82.446
$123.787
$177.718
$229.887
Utah
$14.745
$14.745 $14.745 $15.513 $17.122 $20.748 $27.729
$35.407
Vermont
$11.747
$11.747 $11.747 $12.358 $13.641 $16.529 $22.091
$28.208
Virginia
$38.606
$47.897 $55.368 $54.744 $71.280 $87.737
$117.256
$149.727
Washington
$40.450
$40.450 $40.450 $40.450 $40.450 $40.450 $50.121
$64.001
West Virginia
$17.864
$20.514
$21.582 $21.582 $23.821 $28.866 $38.578
$49.261
Wisconsin
$70.538
$70.538 $70.538 $70.538 $70.538 $70.538 $82.545
$105.404
Wyoming
$5.903
$5.903 $5.903 $6.211 $6.855 $8.307
$11.102
$14.176
Total
$1,972.33
$2,109.339 $2,219.19
$2,219.19
$2,449.434 $2,968.18
$3,966.821
$5,065.33
Source: Congressional Research Service (CRS) calculations based on factors provided by the Department of Health and Human Services (HHS) in December 2005.
Notes: These estimates take into account current law, which allows HHS to set aside funds out of regular LIHEAP funds for technical assistance and training,
territories, leverage incentive grants and Residential Energy Assistance Challenge (REACH) grants. As a result, an appropriation of $1.98 billion is estimated to result
in $1.950 billion in regular LIHEAP funds going directly to the states. Because $1.950 billion is less than the hypothetical $1.972 billion that would have gone to the
states under the hypothetical FY1984 appropriation, CRS estimates that these funds would be distributed under the Tier I formula.
a. The $2.48 billion appropriation (column e) reflects the amount of regular LIHEAP funding in the Departments of Labor, Health and Human Services, and Education,
and Related Agencies Appropriations Act of 2006 (P.L. 109-149) and the additional $500 million in regular funds in P.L. 109-204. The $2.48 billion
represents the 1% cut in the $2.0 billion required by P.L. 109-148. As a result, both Training and Technical Assistance and the Leveraging/REACH funds
were reduced by 1% in column (e). All other estimated allotments do not reflect this 1% cut.

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CRS-13
Further Depiction of How State Allotments
Depend Upon Appropriation Levels
Figure 1 graphically illustrates state allotments for three “typical” types of
states over a range of appropriations from $0 to $5.1 billion. In the figure, there are
three vertical areas. These areas separate the three levels of appropriations (Tiers I-
III) that are triggers under current law and were explained in the previous section.
the figure also graphs the three basic types of states. Reading from top to bottom of
Figure 1, these three types of states are
! Hold-harmless level only states. These states are subject to only
the hold-harmless level provision. They do not qualify for the hold-
harmless rate because each state’s share of the regular funds at $2.25
billion is greater than 1%. An example of a typical hold-harmless
level only state is represented by the line that runs from $0 to point
G. The hold-harmless level is evident from point A to point F.
Here, despite increases in the appropriations level, the state
allotment remains fixed. In Table 2 (located in the Appendix), these
are the states that have a “Y” in the “Subject to hold-harmless
level?” column and a “N” in the “Subject to hold-harmless rate?”
column.
! Ratable reduction states. These states are subject to a ratable
reduction. Their new formula rate is greater than their old, FY1984,
rate. An example of these states is depicted by the line that runs
from $0 to point H. The ratable reduction is (somewhat) evident by
the curvilinear appearance of line segments BD and DH. There is a
small non-linear decrease at point D. This is attributable to the
increased shortfall on the distribution of funds that the hold-harmless
rate imposes. In Table 2, these are the states that have a “N” in the
“Subject to hold-harmless level?” column and a “N” in the
“Subject to hold-harmless rate?” column.
! Hold-harmless level and rate states. These states are subject to
both the hold-harmless level and the hold harmless rate provisions.
An example of a typical level and rate state is shown by the line that
runs from $0 to point I. The hold-harmless level is evident by the
fixed state allotment from point C to point E. However, the (subtle)
non-linear jump at exactly $2.25 billion signals that this state is
subject to the hold-harmless rate provision. After the allotment
jump at $2.25 billion, the state’s allotment continues to increase (at
a rate lower than the old rate, but higher than the new rate). In Table
2, these are the states that have a “Y” in the “Subject to
hold-harmless level?” column and a “Y” in the “Subject to
hold-harmless rate?” column.

---

CRS-14
Figure 1. Estimated Low-Income Home Energy Assistance Program (LIHEAP) Allocations at Various
Appropriation Levels for Three Types of States
$120
Tier II hold-harmless level
Tier I
G
Tier III hold-harmless rate
$100
Hold-harmless
level only state
$80
H
F
A
llotment
$60
millions)
Ratably reduced
state
Hold-harmless
State A
($ in
level and rate
state
$40
D
I
$20
B
C
E
$0
$0
$1,000
$2,000
$3,000
$4,000
$5,000
Appropriation
($ in millions)
Source: Figure created by Congressional Research Service (CRS) calculations using allotment rates provided by the Department of Health and Human Services in December 2005.

---

CRS-15
Components of the New Formula Rates
(Used in Tiers II and III)
As mentioned previously, when Congress considered a new formula for
distributing LIHEAP funds in 1983 and 1984, one of its concerns was the
appropriateness and timeliness of the data used in formula calculations. At the time,
the energy information used to calculate state allotments was not the most current
data available.19 For example, the formula used the change in cost of energy between
1978 and 1980, but did not take account of increased costs after 1980. In fact, the
formula factors were fixed rates, and the LIHEAP statute at that time had no
provision for allowing newer information to be incorporated into the determination
of state allotments.
Current law requires HHS to “determine the expenditure for home energy by
low-income households on the basis of the most recent satisfactory data available.”
Developed by HHS, this formula accounts for variations in heating and cooling needs
of the states, the types of energy used, energy prices, and the low-income population
and their heating and cooling methods.
The new formula is a complex aggregation of four major groups of state-level
data, which attempts to capture the expenditures of low-income households for the
most current year possible.
! Average Annual Heating and Cooling degree days by state. A
heating degree day measures the extent to which a day’s average
temperature falls below 65°F and a cooling degree day measures the
extent to which a day’s average temperature rises above 65°F. This
information is collected by the National Oceanic and Atmospheric
Administration. For example, a day with an average temperature of
40°F results in a measure of 15 heating degree days; a day with an
average temperature of 80°F results in a measure of 15 cooling
degree days. A state’s heating and cooling degree data are weighted
by population in the state. Averages over 30 years also are measured
and are taken into account by the formula. The data from 2002 are
used to represent “current” climatic conditions that would cause an
increase or decrease in energy needs.
! Residential sector energy price projections by fuel type in nominal
dollars. These projected prices for fuels include fuel oil, natural gas,
electricity, kerosene and liquefied petroleum gas. Regional energy
price variation can be significant, and the formula takes expected
expenditure differences into account. This information is collected
by the Department of Energy’s Energy Information Administration
(EIA) and published in the State Energy Price and Expenditure
Report. The price data are from 2000 and are used to calculate
“current” home energy expenditures.
19 Report of the Committee on Energy and Commerce (H.Rept. 98-139, Part 2), to
accompany H.R. 2439, May 15, 1984, p. 13.

---

CRS-16
! 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 consumption
data are from 2003.
! 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 low-income household energy consumers used to
calculate “current” low-income home energy expenditures are from
1999. Low-income households are those whose income is the
greater of 150% of poverty or 60% of state median income.
Although the underlying formula factors today are frequently revised as new
information becomes available, many components that comprise the current law
formula factors are as out-of-date as the factors used in the old formula were in 1983
when there was a push to incorporate newer (price) information.
Other CRS Reports on LIHEAP
CRS Report RS20761, LIHEAP and Residential Energy Costs, by Bernard Gelb.
CRS Report RS21605, Low-Income Home Energy Assistance Program (LIHEAP):
Formula and Estimated Allocations, by Julie M. Whittaker and Libby Perl.
CRS Report RL31865, The Low-Income Home Energy Assistance Program
(LIHEAP): Program and Funding, by Libby Perl.
A variety of congressional distribution memoranda on estimated state
allotments at various appropriations exist. Please contact Julie Whittaker for further
information.

---

CRS-17
Appendix
Table 2 presents a summary of significant LIHEAP rates and triggers for each
state. Column (a) lists the “old” formula factor percentages that states receive when
the appropriation level is below the hypothetical FY1984 appropriation. Column (b)
lists the “new” formula factor percentages that were calculated in December 2005.
As mentioned earlier in this report, current law requires that these “new” percentages
be applied to state allotments, regardless of the appropriation level. However,
because of the hold-harmless provisions, some (if not all) states do not actually end
up with a state allotment that mirrors this percentage.
Column (c) demarcates whether a state, given current law, would be subject
to the hold-harmless level provision (marked with a “Y”). These are states that have
a “new” percentage rate that is lower than their “old” percentage rate. Column (d)
lists the dollar value of the hold-harmless level for those states (dollars are reported
in millions). Column (e) lists whether a state would be subject to the hold-harmless
rate provision (labeled “Y”). These are states that would have received less than 1%
of a total $2.25 billion appropriation and are then allocated the percentage they would
have received at a $2.14 billion appropriation level. (This assumes the new
percentage is greater than the percentage originally calculated at the actual, $2.25
billion or greater, appropriation). Column (f) lists the rate that would be used for
those “hold-harmless rate” states for appropriation levels at or above $2.25 billion.

---

CRS-18
Table 2. Low-Income Home Energy Program (LIHEAP):
“Old” and “New” Allotment Rates by State, FY2006
Subject to
Hold-
Subject to
hold-
harmless
hold-
Hold-
harmless
level
harmless
harmless
“Old”
“New”
level?
(millions)
rate?
rate
State
(a)
(b)
(c)
(d)
(e)
(f)
Alabama
0.86%
1.72%
N
—
N
—
Alaska
0.55%
0.37%
Y
$10.828
Y
0.51%
Arizona
0.42%
0.84%
N
—
N
—
Arkansas
0.66%
0.93%
N
—
N
—
California
4.61%
6.25%
N
—
N
—
Colorado
1.61%
1.15%
Y
$31.729
N
—
Connecticut
2.10%
1.95%
Y
$41.392
N
—
Delaware
0.28%
0.43%
N
—
N
—
District of Columbia
0.33%
0.32%
Y
$6.428
N
—
Florida
1.36%
3.58%
N
—
N
—
Georgia
1.08%
2.45%
N
—
N
—
Hawaii
0.11%
0.10%
Y
$2.137
N
—
Idaho
0.63%
0.33%
Y
$12.376
Y
0.59%
Illinois
5.81%
5.96%
N
—
N
—
Indiana
2.63%
2.20%
Y
$51.872
N
—
Iowa
1.86%
1.20%
Y
$36.762
N
—
Kansas
0.86%
1.09%
N
—
N
—
Kentucky
1.37%
1.81%
N
—
N
—
Louisiana
0.88%
1.68%
N
—
N
—
Maine
1.36%
0.93%
Y
$26.815
Na
—
Maryland
1.61%
2.70%
N
—
N
—
Massachusetts
4.20%
3.12%
Y
$82.797
N
—
Michigan
5.51%
3.94%
Y
$108.770
N
—
Minnesota
3.97%
1.78%
Y
$78.363
N
—
Mississippi
0.74%
1.54%
N
—
N
—
Missouri
2.32%
2.43%
N
—
N
—
Montana
0.74%
0.39%
Y
$14.517
Y
0.69%
Nebraska
0.92%
0.54%
Y
$18.180
Y
0.86%
Nevada
0.20%
0.46%
N
—
N
—
New Hampshire
0.79%
0.54%
Y
$15.672
Y
0.74%
New Jersey
3.90%
3.17%
Y
$76.865
N
—
New Mexico
0.52%
0.49%
Y
$10.270
Y
0.49%
New York
12.72%
9.31%
Y
$250.974
N
—
North Carolina
1.90%
3.25%
N
—
N
—
North Dakota
0.80%
0.21%
Y
$15.770
Y
0.75%
Ohio
5.14%
4.99%
Y
$101.350
N
—
Oklahoma
0.79%
1.28%
N
—
N
—
Oregon
1.25%
0.84%
Y
$24.591
N
—
Pennsylvania
6.84%
5.38%
Y
$134.810
N
—
Rhode Island
0.69%
0.61%
Y
$13.629
Y
0.65%
South Carolina
0.68%
1.42%
N
—
N
—
South Dakota
0.65%
0.27%
Y
$12.808
Y
0.61%
Tennessee
1.39%
1.89%
N
—
N
—

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CRS-19
Subject to
Hold-
Subject to
hold-
harmless
hold-
Hold-
harmless
level
harmless
harmless
“Old”
“New”
level?
(millions)
rate?
rate
State
(a)
(b)
(c)
(d)
(e)
(f)
Texas
2.26%
5.75%
N
—
N
—
Utah
0.75%
0.55%
Y
$14.745
Y
0.70%
Vermont
0.60%
0.36%
Y
$11.747
Y
0.56%
Virginia
1.96%
2.96%
N
—
N
—
Washington
2.05%
1.26%
Y
$40.450
N
—
West Virginia
0.91%
0.97%
N
—
N
—
Wisconsin
3.58%
2.08%
Y
$70.538
N
—
Wyoming
0.30%
0.20%
Y
$5.903
Y
0.28%
Source: Congressional Research Service (CRS) calculations based on factors provided by the
Department of Health and Human Services (HHS) in December 2005.
Note: The actual proportion of total regular funds each state receives at funding levels above $1.975
billion may differ substantially from the calculated new formula rate due to the hold-harmless
provisions and the ratable reductions to cover the budgetary shortfall from the hold-harmless
provisions.
a. Maine is not subject to the hold-harmless rate because at an appropriation of $2.25 billion it
receives over 1% of the total allocation to the states

---