Low-Income Home Energy Assistance Program (LIHEAP) Allocation Rates: Legislative History and Current Law

Publication Date: February 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Social conditions

Type:

Abstract:

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. 96223. 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 holdharmless rate. Because total LIHEAP regular appropriations have not exceeded the equivalent of an FY1984 appropriation of $1.975 billion since FY1986, states continue to receive the same percentage of LIHEAP funds that they did under the old LIEAP formula (effectively Tier I of the current formula). This report will be updated as legislative or program activities warrant.