The Low-Income Home Energy Assistance Program (LIHEAP)

This report provides background on the Low-Income Home Energy Assistance program (LIHEAP), originally established in 1981 by Title XXVI of P.L. 97-35 and reauthorized several times. It is a block grant program under which the federal government gives states, the District of Columbia, U.S. territories and commonwealths, and Indian tribal organizations (referred to as grantees) annual grants to operate multi-component home energy assistance programs for needy households.

Order Code 94-211 EPW Updated January 27, 2003 CRS Report for Congress Received through the CRS Web The Low-Income Home Energy Assistance Program (LIHEAP) Emilie Stoltzfus Analyst in Social Legislation Domestic Social Policy Division Summary The Low-Income Home Energy Assistance program (LIHEAP), established in 1981 by Title XXVI of P.L. 97-35 and currently authorized through FY2004, is a block grant program under which the federal government gives states and other jurisdictions annual grants to operate home energy assistance programs for low-income households. The most current Department of Health and Human Services (HHS) data show an estimated 3.9 million households received winter heating/crisis assistance in FY2000. According to a survey done by the National Energy Assistance Directors Association (which represents state LIHEAP directors), the number of households receiving winter heating assistance reached 5 million in FY2001 but declined to 4.4 million in FY2002. On January 24, HHS released $200 million in LIHEAP contingency funds in response to increased home heating oil prices. All states received the funds, which were primarily allocated in the same manner as regular program funds. However $80 million of the contingency funds were distributed using additional formula factors intended to ensure that states with the greatest number of low-income households using home heating oil received more aid. The money was distributed out of $300 million in LIHEAP contingency funds Congress appropriated in FY2001 (P.L. 107-20). A total of $100 million in contingency funds remain available for distribution “until expended.” Acting under the authority of the continuing resolutions, HHS has released first and second quarter FY2003 regular LIHEAP funds totaling $1.38 billion. In FY2002, $1.7 billion in regular LIHEAP funds were appropriated along with $300 million in contingency funds. The President’s FY2003 budget requested $1.4 billion in regular LIHEAP funding and $300 million in contingency funds. As introduced on January 8, H.R. 246 would appropriate $1.7 billion in regular LIHEAP funds but would not appropriate any contingency funds. As passed on January 23, the Senate Omnibus FY2003 spending measure (H.J.Res. 2) seeks a total of $2 billion in regular FY2003 funds (before rescissions) ; it does not include contingency funds. This report provides background on LIHEAP and will be updated periodically. Congressional Research Service ˜ The Library of Congress CRS-2 Recent Developments and Current Issues Congress has not yet finalized the appropriations amounts for FY2003 and the final funding level remains unclear. Under the authority of the continuing resolutions (most recently P.L. 108-2) a total of $1.38 billion in regular FY2003 LIHEAP funds have been released in this fiscal year. On January 24 the Administration released $200 million in LIHEAP contingency funds. FY2003 Funding Level. The LIHEAP statute authorizes regular appropriations, which are allocated to all states based on a statutory formula, and contingency funds, which are allocated to one or more states at the discretion of the Administration. As passed on January 23, the Senate Omnibus spending measure (H.J.Res. 2) includes a total of $2 billion in regular LIHEAP funds. The final funding level may fall below this mark however, because, as a part of the same measure, the Senate also approved several acrossthe-board funding cuts for all domestic non-military programs. In addition $300 million of the funds were added by an amendment (S.Amdt. 27) that sought to convert previously appropriated contingency funds (P.L. 107-20) into regular LIHEAP funds; after the Senate approved the bill, the Administration released $200 million of those LIHEAP contingency funds (see below, FY2003 Contingency Funds Released). The Senate Omnibus measure would not appropriate any new contingency funds. H.R. 246, introduced January 8 by Rep. Regula, who chairs the subcommittee on Labor-HHS-Education appropriations, would provide a total of $1.7 billion in FY2003 regular LIHEAP funds but would not appropriate any contingency funds. In its FY2003 budget, the Administration sought $1.4 billion in regular LIHEAP funds and $300 million in contingency fund. This is $300 million less than the regular FY2002 funding level of $1.7 billion but equals the level of contingency funding provided for that year. Contingency Funds Released. On January 24, 2003 President Bush directed HHS to release $200 million in LIHEAP contingency funds to help address increased home heating fuel costs. Of these funds $120 million was distributed to all states according to the same formula used to allocate regular LIHEAP funds. The remaining $80 million was also distributed to all states but several formula factors were added to ensure that states with the largest number of low-income households using oil as their primary heating fuel received a greater share of the funds. Low-income households were defined as having income at or below 150% of the federal poverty level or 60% of state median income, whichever is greater.1 To distribute this money, the Administration drew on LIHEAP contingency funds that Congress included in an FY2001 supplemental appropriations act (P.L. 107-20). That act included a total of $300 million in contingency funds and stipulated that this money would be “available until expended.” The remaining $100 million in appropriated contingency funds continue to be available for distribution. In August 2002, HHS released $100 million in LIHEAP contingency funds. The funds were distributed to each state whose temperatures between June 23, 2002 and August 3, 2002 were significantly higher than the state’s 30-year average temperature for that time period. Among the 34 jurisdictions that met this criteria, funds were allocated 1 Data on the number of low-income households using oil as their primary heating fuel was obtained from the 1990 Census. A list of FY2003 contingency allotment amounts by state is available at [http://www.hhs.gov/news/press/2003pres/20030124a.html]. CRS-3 based on the severity of the heat wave and the number of households with incomes below 125% of the federal poverty level.2 The August release of contingency funds was made from the $300 million appropriated for this account as part of FY2002 appropriations (P.L. 107-116). That money was made available for FY2002 use only and the remaining $200 million expired with the end of that fiscal year. Second Quarter FY2003 Funds Released. On January 6, 2003 HHS released $545 million in regular LIHEAP funds. This allotment of money was based on a $1.7 billion annual funding level. States received their second quarter allotments, along with supplemental first quarter funds (which were initially released based on a $1.4 billion annual funding level). However, the total amount of regular FY2003 LIHEAP funds made available to each state was limited to no more than 90% of the state’s annual allotment (at the $1.7 billion funding level).3 This limit affected a number of states that normally request all (or more than 90%) of their regular annual LIHEAP funds in the first or second quarters. (LIHEAP funds are released quarterly but states are permitted to specify what percentage of their total annual funds they wish to receive in a given quarter.) LIHEAP formula. The President’s FY2003 budget indicates the Administration’s interest in changing the formula used to distribute LIHEAP funds and, in particular, in “basing the formula on current home energy expenditures paid by low-income households.” As part of an April floor colloquy, Senator Landrieu – citing the fact that the money is now allocated based on dated assumptions – asked that the LIHEAP formula be revisited; Senator Kennedy, who then chaired the Senate HELP committee charged with reauthorizing LIHEAP in FY2004, promised to hold hearings to address this issue. (See Congressional Record, April 16, 2002 S2716-S2717). As amended in 1984 (P.L. 98-558), the LIHEAP statute provides that funds be allotted to states based on current home energy expenditures of low-income households. However, it also states that unless regular LIHEAP funds reach $1.975 billion in any given fiscal year (after FY1985) no state can receive less funds than it would have received under the previous allotment formula. Because regular LIHEAP funds have not exceeded $1.975 billion since FY1986, the prior formula for allocating funds has generally governed the percentage share of funds states receive. First developed for use in FY1981, that formula relied on then available population, weather, and energy expenditure data and included factors that gave greater weight to states with colder temperatures. Performance measurement. The LIHEAP statute provides that states are to use available federal LIHEAP funds to serve households that pay high home energy costs (relative to their low incomes) and that include “vulnerable” members (defined as very young, disabled, or frail elderly individuals). With this legislative mandate in mind, HHS has developed performance goals and measures to enable it to quantify state performance. The initial performance goals are to increase the percent of LIHEAP recipient households having: 1) a member 5 years of age or younger; 2) a member 60 years of age or older; and 3) the lowest incomes and the highest energy costs. Achievement of these goals will be 2 For a detailed explanation of the criteria used to distribute the funds, a list of the qualifying states, and the allocations made, go to [http://www.acf.dhhs.gov/programs/liheap/im02-17.htm]. 3 FY2003 regular LIHEAP funding levels, by state, are available on the HHS LIHEAP Web page [http://www.acf.dhhs.gov/programs/liheap/cr.xls]. CRS-4 measured using specially developed benefit targeting and burden targeting indexes. The agency is working to establish FY2001 baseline data and intends to measure FY2002 performance. The information generated is intended to help states improve program outreach and management, and to assist HHS in determining how best to offer technical assistance. Federal LIHEAP Provisions and Program Operation LIHEAP is a federally-funded block grant program that helps ease the energy cost burden of low-income households. Federal requirements are minimal and leave most important program decisions to the states, the District of Columbia, U.S. territories and commonwealths, and Indian tribes and tribal organizations (collectively referred to as grantees) who receive federal funds. The federal government (HHS) may not dictate how grantees implement” assurances” that they will comply with general federal guidelines. Federal eligibility standards and grantee responsibility. Federal law limits eligibility to households with incomes up to 150% of the federal poverty income guidelines (or, if higher, 60% of the state median income). States may adopt lower income limits, but no household with income below 110% of the poverty guidelines may be excluded. States may separately choose to make eligible for LIHEAP assistance any household or households where at least one member is a recipient of Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Food Stamps, or certain needs-tested veteran’s programs. Within these limits, grantees decide which, if any, assistance categories to include, what income limits to use, and whether to impose other eligibility tests. The statute gives priority for aid to households with the greatest energy needs or cost burdens, especially those that include disabled or frail elderly individuals or young children. Federal standards require grantees to treat owners and renters “equitably,” to adjust benefits for household income and home energy costs, and to have a system of “crisis intervention” assistance for those in immediate need. LIHEAP assistance does not reduce eligibility or benefits under other aid programs. Federal rules also require outreach activities, coordination with the Department of Energy’s weatherization program, annual audits and appropriate fiscal controls, and fair hearings for those aggrieved. Grantees decide the mix and dollar range of benefits, choose how benefits are provided, and decide what agencies will administer the program. Participation and Benefits. Funds are available for four types of energy assistance to eligible households: help paying heating or cooling bills, low-cost weatherization projects (limited to 15% of allotment unless grantee has waiver for up to 25%), services to reduce need for energy assistance (limited to 5% of allotment), and assistance with energy-related emergencies. According to an HHS analysis of data from the Census Bureau’s March 1999 Current Population Survey, approximately 24% of LIHEAP recipients are households that do not receive any other public assistance through TANF, Supplemental Security Income, Food Stamps or subsidized housing and some 35% are elderly households. HHS uses state data to estimate participation levels. For FY2000 (most recent year available) an estimated 3.6 million households received assistance with heating payments, 318,000 received cooling aid, 920,000 received winter crisis aid, 88,000 received summer crisis aid, and 91,000 received weatherization assistance. (It is not possible to calculate from these data a single number of households aided because any one household may have received multiple kinds of assistance.) The percentage of federally eligible CRS-5 households receiving LIHEAP winter heating/crisis benefits declined from 31% in 1983 to an estimated 13% in FY2000. Greater program funding during the 2000-2001 heating season ( $855 million in LIHEAP contingency funds were made available to all states) may have allowed the percent of eligible households served in FY2001 to reach 17%. Regular LIHEAP funds appropriated for FY2002 were $300 million above the regular funds available for FY2002 but because no contingency funds were released during the heating season, state LIHEAP administrators experienced an effective cut in resources. The most recent available state data compiled by HHS shows an average heating/winter crisis benefit of $271 in FY2000 (compared to $237 in FY1999) and an average cooling/summer crisis benefit of $206 (compared to $137 in FY1999). The constant (1981) dollar value of average winter/heating crisis benefits declined from $213 in the first year of the program (FY1981) to a low of $112 in FY1998; in FY2000 its constant dollar (1981) value was $140. Authorization. In 1998, P.L. 105-285 reauthorized LIHEAP, without major program changes and set annual funding authorization for FY2002-FY2004 at $2 billion. In 1994 (P.L. 103-252), Congress stipulated that LIHEAP benefits and outreach activities target households with the greatest home energy needs (and costs), enacted a separate and permanent contingency funding authorization of $600 million each fiscal year and allowed those funds to be allocated to one or more states at the discretion of the HHS secretary. The 1994 law also established the “Residential Energy Assistance Challenge” (REACH) grant program to increase efficiency of energy usage among low-income families and reduce their vulnerability to homelessness, and other health and safety risks due to high energy costs. Other significant amendments to the program were authorized in 1990 under P.L. 101-501. That act created the Incentive Program for Leveraging NonFederal Resources, which offers supplemental grants to states that win reduced energy rates for low-income households. Although the statute provides for separate funding authorization of between $30 million to $50 million for these grants, in practice, leveraging incentive grants have been funded at between $22 million to $30 million out of the program’s regular fund appropriations. P.L. 101-501 also authorized a July to June program year (or forward) funding of LIHEAP to allow state program directors to plan for the fall/winter heating season with knowledge of available money. This program year language was subsequently removed although the statute now states that money appropriated in a given fiscal year is to be made available for obligation in the following fiscal year. Congress last provided advance appropriations for LIHEAP in the FY2000 appropriations cycle. Funding. The LIHEAP statute authorizes regular appropriations, which are allocated to all states based on a statutory formula, and contingency funds, which are allocated to one or more states at the discretion of the Administration. Each grantee receives a percentage share of the annual regular LIHEAP funds. If the annual regular federal appropriation is below $1.975 billion (which has been the case for regular LIHEAP funds since FY1986), states receive the same percentage share that they received in FY1984. The formula that determined the FY1984 percentage shares considered data available at that time pertaining to: heating degree days squared, total residential energy expenditures, home heating costs, number of low-income households, and other factors. If the annual regular appropriation were to exceed $1.975 billion, a different formula for calculating states’ percentage shares (including more current data) would begin to take effect. In either case LIHEAP grants to states may be supplemented with other federal dollars, including: contingency funds, leveraging incentive and REACH grants, funds left CRS-6 over from the previous fiscal year, and rarely (if ever) used authority to transfer funds from other federal block grants. (For more information see CRS Report RS20893, The Low-Income Home Energy Assistance Program: How are State Allotments Determined?) Contingency Fund Releases. LIHEAP contingency funds are separately authorized and may be allocated to one or more states based on their needs (as determined by the HHS Secretary). These funds may only be released at the discretion of the Administration and are authorized “to meet the additional home energy assistance needs of one or more States arising from a natural disaster or other emergency.” The term “emergency” is defined in the LIHEAP statute to include: a natural disaster; a significant home energy supply shortage or disruption; significant increases in the cost of home energy, home energy disconnections, participation in public benefit programs, or unemployment; or an “event meeting such criteria as the [HHS] Secretary may determine to be appropriate.” Table 1 shows a history of LIHEAP funding for each of FY1982FY2003. Table 1. LIHEAP Funding Trends: FY1982-FY2003 ($ in thousands) Regular funds Regular funds Contingency Contingency Fiscal President’s authorization Regular funds funds funds year request levela appropriation appropriated dispersed 1982 $1,400,000 $1,875,000 $1,875,000 1983 1,300,000 1,875,000 1,975,000 1984 1,300,000 1,875,000 2,075,000 1985 1,875,000 2,140,000 2,100,000 1986 2,097,765 2,275,000 2,100,000 1987 2,097,642 2,050,000 1,825,000 1988 1,237,000 2,132,000 1,531,840 1989 1,187,000 2,218,000 1,383,200 1990 1,100,000 2,307,000 1,443,000 1991 1,050,000 2,150,000 1,415,055 195,180 195,180 1992 1,025,000 2,230,000 1,500,000 300,000 0 1993 1,065,000 ssanb 1,346,030 595,200 0 1994 1,507,408 ssanb 1,437,402 600,000 300,000 1995 1,475,000 2,000,000 1,319,202 600,000 100,000 1996 1,319,204 2,000,000 900,000 180,000 180,000 1997 1,000,000 2,000,000 1,000,000 420,000 215,000 1998 1,000,000 2,000,000 1,000,000 300,000 160,000 1999 1,300,000 2,000,000 1,100,000 300,000 175,299 2000 1,400,000 ssanb 1,100,000 900,000 744,350c 2001 1,400,000 ssanb 1,400,000 600,000 455,650 2002 1,400,000 2,000,000 1,700,000 300,000e 100,000d e 2003 1,400,000 2,000,000 200,000f Source: Table prepared by the Congressional Research Service (CRS) based on HHS data. a Amounts listed are for regular funding only. In 1994 Congress enacted a permanent $600 million annual authorization for contingency funding. Prior to 1994 contingency funds were sometimes available. b Such sums as necessary. c President Clinton released $400 million of these FY2000 contingency funds in late September 2000 making it effectively available to states in FY2001. d These funds were distributed out of a total of $300 million in contingency funds that were appropriated in FY2002 (P.L. 107-116). With the end of FY2002, the remaining $200 million of theses FY2002 contingency funds expired. e Appropriations legislation for FY2003 has not yet cleared Congress. Under the authority of the continuing resolutions, $1.38 billion in regular FY2003 LIHEAP funds had been released as of January 6, 2003. f These funds were distributed out of a total of $300 million in contingency dollars appropriated as part of the FY2001 supplemental (P.L. 107-20). That law provided that the funds were “available until expended.” Currently there are $100 million in contingency funds available for appropriation.