Health and Human Services Fiscal Year 2001 Appropriations for the Low Income Home Energy Assistance Program (LIHEAP)

April  21, 2000

by:   Olivia B. Wein, Staff Attorney

National Consumer Law Center

1629 K Street, N.W., suite 600

Washington, DC 20006

202-986-6060

I.    Introduction

Mr. Chairman and Members of the Committee, the National Consumer Law Center appreciates the opportunity to submit written testimony regarding appropriation of funds for the Low Income Home Energy Assistance Program for FY 2001.  This testimony is submitted on behalf of our low income and elderly clients who face going without food or medicine to avoid disconnection due to an inability to afford utility service.

The National Consumer Law Center (NCLC) is a nonprofit corporation dedicated to the interests of low-income consumers.  Founded in 1969, NCLC provides specialized legal support and consulting services to low-income consumers, their advocates, government agencies and private attorneys in all aspects of consumer and utility law.  NCLC has helped utilities, regulatory commissions and advocates design low-income affordability programs and has published leading manuals and reports on related law.[1]

NCLC is a strong supporter of the Low Income Home Energy Assistance Program (LIHEAP), as it is the primary safety net between low-income consumers and disconnection of utility service.  LIHEAP is designed to target energy assistance to households most in danger of losing that vital service.   However, without adequate regular appropriations, LIHEAP cannot get the job done.  On behalf of our low-income clients, we urge the restoration of LIHEAP funding to at least $1.5 billion in regular appropriations for FY 2001.  This level of funding is slightly less than the level appropriated for this program in FY 1988 and far from the $2 billion level authorized to be appropriated for this program in prior and upcoming years[2]. 

We also support additional emergency contingency funding of $300 million and advance LIHEAP appropriations for FY 2002 of at least $1.6 billion.  This amount is still below the pre-1987 regular appropriations levels, but would enable states to cover a larger portion of the energy burden for eligible customers and increase energy efficiency efforts to move households closer to energy self-sufficiency. 

While emergency funds are critical for responding to life-threatening, brutal winters and summer heat waves, increasing the regular appropriations for LIHEAP will allow the states to design more solid programs for the upcoming year.   This includes proactive, timely and appropriately designed responses to crisis situations, as opposed to reactive and potentially ill-timed responses due to the lag time that comes with the dependence on the release of emergency contingency funds.   Delays in responding to heating and cooling crisis needlessly jeopardize the health and safety of those Americans eligible for assistance.

II.    The Need for Restored Regular LIHEAP Funding

Those that cannot afford to pay their winter heating bill often face desperate choices.  A 1999 survey of LIHEAP recipients in Iowa revealed that when the heating bills were unaffordable, almost 21% went without medical care, 12.3% went without food and 19% went to bed early with lots of blankets.[3]   Analysis of recent data from the US Department of Energy, Energy Information Administration show that in 1997, about 2.1 million households suffered from loss of heat.   All but 154,000 of the households were LIHEAP eligible.[4]  The average period without heat was 3.3 days.[5]   The consequences of disconnections include, health and safety risks associated with alternative heat and lighting sources, such as kerosene and candles; hunger and malnutrition; hyperthermia and hypothermia and eviction and increased homelessness. 

Census statistics also show a widespread need for the LIHEAP program. 

* State Median Income

Source:  compiled from U.S. Dept. of Health and Human Service, LIHEAP Division of Energy Assistance/OCS/ACF table on number of all low-income households, by census region and state based on 1990 Census data.  

At its peak, regular, non-emergency, funding for LIHEAP was $2.1 billion in 1985.  Since then, regular block grant funding has been cut back to $1.1 billion in FY 1999 and 2000.    Consistent with the cutback in funding is the reduction of the number of households served.  According to the Administration for Children and Families, U.S. Department of Health and Human Services, the number of federally eligible households using LIHEAP assistance dropped from 7.5 million households in 1981 to 4.4 million households in 1996.[6]  

At the same time, the percent of LIHEAP recipients’ home heating bills covered by LIHEAP has been diminishing as the amount of recipients’ total heating bills has been increasing.   In 1981, LIHEAP covered around 23% of the total bills and since 1987, this percentage has steadily dropped from 19% in 1987 to 8% in 1996.[7]  At the same time total home heating bills have increased in current dollars from $7.0 billion in 1981 to $7.9 billion in 1987 to $10.6 billion in 1996.[8]

Who is hit hardest by the reduction in LIHEAP funding?  It is estimated that 43% of LIHEAP eligible households have children.[9]  A recent survey by the National Energy Assistance Directors Association released in September 1997, showed that of the 1.2 million households that lost LIHEAP assistance between FY 1995 and FY 1997, 313,000 had at least one elderly member and 156,000 had at least on disabled member.  

LIHEAP recipients also tend to be on the low-end of the poverty scale.  For example, in FY 1995, around 40% of households that received assistance were under 75% of the poverty level.[10]  The proportion of energy costs to household income is called the energy burden.  In 1995, NCLC completed a study that illustrated the disparity in energy burden between average residential and low-income households.  We found the burden for the average residential household is 3.8%, while low-income households pay far more.  Households receiving welfare assistance paid an average of 26% of their income on energy, Social Security recipients paid around 14% and minimum wage households paid around 12%.[11]

III.    LIHEAP can move households toward self-sufficiency

LIHEAP is a block grant that targets assistance to low-income households who pay a high proportion of household income on home energy, assists eligible families in crisis situations, and among other things, provides low-cost weatherization to reduce household energy costs.[12]  Increased funding for LIHEAP could work towards reducing dependence on energy assistance in the first place.  As noted by Vicky Mroczek, Chief of the Office of Community Services, Ohio Department of Development and the Director of Ohio’s LIHEAP program:

Reduction in energy assistance dependence over time is self-evident with respect to weatherization, but I think it’s also true on the bill assistance side.  When someone goes into debt to maintain utility service, there are costs or other needs that go unmet.  When someone owes the utility money over a long period, ratepayers bear that expense, too.  An unpaid final utility bill on a credit report impinges on a person’s ability to buy or rent housing; sometimes it can show up when a potential employer does a background check.  Loss of utility services also affects education performance due to excessive moving or unhealthy conditions in the home.

IV.    Emergency Contingency LIHEAP Funds

Emergency contingency funds are a critical resource in times of crisis, but should not be counted as part of the overall amount of funding a state has to plan a program.   Emergency contingency funds are released only after the emergence of a full-blown crisis, which may arise after the program has shut down for the season.  Maintaining current funding levels for LIHEAP regular and emergency contingency funding in lieu of restored regular funding will continue to place vulnerable low-income and elderly households in potentially life-threatening situations time and time again.   A more rational approach would be to increase the current level of the regular funding so that programs can effectively plan ahead for crisis situations to mitigate the danger to  safety and health.  

V.     The Private Sector

Fuel funds, a form of non-federal energy assistance, play an important role in helping those Americans in dire need of energy assistance; however, these funds are only a small fraction of the LIHEAP.   The National Fuel Funds Network estimates that in 1998, around $88 million in non-federal energy assistance was raised nationally.  These private sector funds are critical, but simply not large enough to provide the amount of energy assistance to eligible Americans as the LIHEAP and cannot fill the gap left by reduced levels of regular LIHEAP funding.

VI.     Conclusion

We urge the restoration of LIHEAP assistance to, at a minimum, $1.5 billion in regular appropriations for FY 2001 and $1.6 billion in advance appropriation for 2002.   Restored levels of regular funding will enable state agencies design a stronger program for the upcoming fiscal year.  Finally, the need for LIHEAP assistance continues, especially as states implement welfare reform and, as demonstrated this past winter with the home heating oil price crisis, inadequate funding levels place the health of financially vulnerable families in jeopardy.