Staffing for Adequate Fire and Emergency Response: The SAFER Grant Program

Summary: In response to concerns over the adequacy of firefighter staffing, the Staffing for Adequate Fire and Emergency Response Act, known as the SAFER Act, was enacted by the 108th Congress as Section 1057 of the FY2004 National Defense Authorization Act (P.L. 108-136). The SAFER Act authorizes grants to career, volunteer, and combination local fire departments for the purpose of increasing the number of firefighters to help communities meet industry-minimum standards and attain 24-hour staffing to provide adequate protection from fire and fire-related hazards. Also authorized are grants to volunteer fire departments for recruitment and retention of volunteers. SAFER is administered by the Federal Emergency Management Agency (FEMA) of the Department of Homeland Security (DHS).

Summary: On January 3, 2018, the President signed the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 (P.L. 115-98). P.L. 115-98 extends the SAFER and AFG authorizations through FY2023; extends the sunset provisions for SAFER and AFG through September 30, 2024; provides that the U.S. Fire Administration (USFA) may develop and make widely available an online training course on SAFER and AFG grant administration; expands SAFER hiring grant eligibility to cover the conversion of part-time or paid-on-call firefighters to full-time firefighters; directs FEMA, acting through the Administrator of USFA, to develop and implement a grant monitoring and oversight framework to mitigate and minimize risks of fraud, waste, abuse, and mismanagement related to the AFG and SAFER grant programs; and makes various technical corrections to the SAFER and AFG statute.

Summary: The Consolidated Appropriations Act, 2019 (P.L. 116-6) provided $700 million for firefighter assistance in FY2019, including $350 million for SAFER and $350 million for AFG. For FY2020, the Administration requested $688.688 million for firefighter assistance, including $344.344 million for SAFER and $344.344 million for AFG. This is the same amount the Administration requested in its FY2019 budget proposal and a 1.6% reduction from the FY2019 appropriation.

Summary: An overall issue for the 116th Congress is how equitably and effectively grants are being distributed and used to protect the health and safety of the public and firefighting personnel against fire and fire-related hazards. Another continuing issue is budget appropriations for SAFER and AFG. As is the case with many federal programs, concerns over the federal budget deficit could impact budget levels for SAFER and AFG. At the same time, firefighter assistance budgets will likely receive heightened scrutiny from the fire service community, given the local budgetary shortfalls that many fire departments may face.

Summary: Additionally, a continuing issue related to SAFER hiring grants has been whether SAFER statutory restrictions should be waived to permit grantees to use SAFER funds for retention and rehiring. Division F, Title III, Section 307 of the Consolidated Appropriations Act, 2018 stated that FEMA "may" grant SAFER waiver authority. However, for the 2018 round of SAFER awards, FEMA has chosen not to exercise that authority, and thus will not provide SAFER hiring grants for retaining or rehiring firefighters. The Consolidated Appropriations Act, 2019 (P.L. 116-6) also includes SAFER waiver authority for the FY2019 round of SAFER awards. The Administration's FY2020 budget proposal does not request SAFER waiver authority.

Firefighting and the provision of fire protection services to the public is traditionally a local responsibility, funded primarily by state, county, and municipal governments. During the 1990s, however, shortfalls in state and local budgets—coupled with increased responsibilities (i.e., counterterrorism) of local fire departments—led many in the fire community to call for additional financial support from the federal government. Since enactment of the FIRE Act in the 106 th Congress, the Assistance to Firefighters Grants (AFG) program (also known as "fire grants" and "FIRE Act grants") has provided funding for equipment and training directly from the federal government to local fire departments.

Since the fire grant program commenced in FY2001, funding has been used by fire departments to purchase firefighting equipment, personal protective equipment, and firefighting vehicles. Many in the fire-service community argued that notwithstanding the fire grant program, there remained a pressing need for an additional federal grant program to assist fire departments in the hiring of firefighters and the recruitment and retention of volunteer firefighters. They asserted that without federal assistance, many local fire departments would continue to be unable to meet national consensus standards for minimum staffing levels, which specify at least four firefighters per responding fire vehicle (or five or six firefighters in hazardous or high-risk areas). Fire-service advocates also pointed to the Community Oriented Policing Services (COPS) program as a compelling precedent of federal assistance for the hiring of local public safety personnel.

In support of SAFER, fire-service advocates cited studies performed by the U.S. Fire Administration and the National Fire Protection Association, the Boston Globe , and the National Institute for Occupational Safety and Health (NIOSH) which concluded that many fire departments fall below minimum standards for personnel levels. According to these studies, the result of this shortfall can lead to inadequate response to different types of emergency incidents, substandard response times, and an increased risk of firefighter fatalities.

On the other hand, those opposed to SAFER grants have contended that funding for basic local government functions—such as paying for firefighter salaries—should not be assumed by the federal government, particularly at a time of high budget deficits. Also, some SAFER opponents disagree that below-standard levels in firefighting personnel are necessarily problematic, and point to statistics indicating that the number of structural fires in the United States has continued to decline over the past 20 years.

In response to concerns over the adequacy of firefighter staffing, the Staffing for Adequate Fire and Emergency Response Act—popularly called the "SAFER Act"—was introduced into the 107 th and 108 th Congresses. The 108 th Congress enacted the SAFER Act as Section 1057 of the FY2004 National Defense Authorization Act ( P.L. 108-136 ; signed into law November 24, 2003). The SAFER provision was added as an amendment to S. 1050 on the Senate floor ( S.Amdt. 785 , sponsored by Senator Dodd) and modified in the FY2004 Defense Authorization conference report ( H.Rept. 108-354 ). The SAFER grant program is codified as Section 34 of the Federal Fire Prevention and Control Act of 1974 (15 U.S.C. 2229a).

The SAFER Act authorizes grants to career, volunteer, and combination fire departments for the purpose of increasing the number of firefighters to help communities meet industry-minimum standards and attain 24-hour staffing to provide adequate protection from fire and fire-related hazards. Also authorized are grants to volunteer fire departments for activities related to the recruitment and retention of volunteers.

On January 2, 2013, the President signed P.L. 112-239 , the FY2013 National Defense Authorization Act. Title XVIII, Subtitle A is the Fire Grants Reauthorization Act of 2012, which significantly amended the SAFER statute (15 U.S.C. 2229a) and authorized the SAFER program through FY2017. Table 1 provides a summary of key SAFER provisions in the 2012 reauthorization, and provides a comparison with the previous version of the SAFER statute.

Two types of grants are authorized by the SAFER Act: hiring grants and recruitment and retention grants. Hiring grants cover a three-year term and are cost shared with the local jurisdiction. According to the amended statute, the federal share shall not exceed 75% in the first year of the grant, 75% in the second year, and 35% in the third year. While the majority of hiring grants will be awarded to career and combination fire departments, the SAFER Act specifies that 10% of the total SAFER appropriation be awarded to volunteer or majority-volunteer departments for the hiring of personnel.

Additionally, at least 10% of the total SAFER appropriation is set aside for recruitment and retention grants , which are available to volunteer and combination fire departments for activities related to the recruitment and retention of volunteer firefighters. Also eligible for recruitment and retention grants are local and statewide organizations that represent the interests of volunteer firefighters. No local cost sharing is required for recruitment and retention grants.

Fire Grants Reauthorization in the 115th Congress

With the authorizations of both the AFG and SAFER programs expiring on September 30, 2017, and with sunset dates for both programs of January 2, 2018, the 115 th Congress considered reauthorization legislation.

On April 5, 2017, S. 829 , the AFG and SAFER Program Reauthorization Act of 2017, was introduced by Senator McCain and referred to the Committee on Homeland Security and Governmental Affairs. On May 17, 2017, the committee ordered S. 829 to be reported ( S.Rept. 115-128 ) with an amendment in the nature of a substitute. On August 2, 2017, the Senate passed S. 829 by unanimous consent.

On July 12, 2017, the House Subcommittee on Research and Technology, Committee on Science, Space and Technology, held a hearing entitled U.S. Fire Administration and Fire Grant Programs Reauthorization: Examining Effectiveness and Priorities . Testimony was heard from the USFA acting administrator and from fire service organizations.

On December 15, 2017, H.R. 4661 , the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017, was introduced by Representative Comstock. H.R. 4661 was identical to the Senate-passed S. 829 , except that while S. 829 repealed the sunset provisions for AFG and SAFER, H.R. 4661 extended the sunset dates to September 30, 2024. Additionally, H.R. 4661 reauthorized the USFA through FY2023.

On December 18, 2017, the House passed H.R. 4661 by voice vote under suspension of the rules. On December 21, 2017, the Senate passed H.R. 4661 without amendment by unanimous consent.

Other legislation related to SAFER reauthorization included H.R. 3881 , the AFG and SAFER Program Reauthorization Act of 2017, introduced by Representative Pascrell, which was identical to S. 829 as passed by the Senate.

On January 3, 2018, the President signed the United States Fire Administration, AFG, and SAFER Program Reauthorization Act of 2017 ( P.L. 115-98 ). P.L. 115-98

extends the SAFER and AFG authorizations through FY2023; extends the sunset provisions for SAFER and AFG through September 30, 2024; extends the USFA authorization through FY2023; provides that the U.S. Fire Administration in FEMA may develop and make widely available an online training course on SAFER and AFG grant administration; expands SAFER hiring grant eligibility to cover the conversion of part-time or paid-on-call firefighters to full-time firefighters; directs FEMA, acting through the Administrator of USFA, to develop and implement a grant monitoring and oversight framework to mitigate and minimize risks of fraud, waste, abuse, and mismanagement related to the SAFER and AFG grant programs; and makes various technical corrections to the SAFER and AFG statute.

The SAFER grant program receives its annual appropriation through the House and Senate Appropriations Subcommittees on Homeland Security. Within the appropriations bills, SAFER is listed under the line item, "Firefighter Assistance Grants," which is located in Title III—Protection, Preparedness, Response, and Recovery. "Firefighter Assistance Grants" also includes the Assistance to Firefighters Grant Program.

Although authorized for FY2004, SAFER did not receive an appropriation in FY2004. Table 2 shows the appropriations history for firefighter assistance, including SAFER, AFG, and the Fire Station Construction Grants (SCG) grants provided in the American Recovery and Reinvestment Act (ARRA). Table 3 shows recent and proposed appropriated funding for the SAFER and AFG grant programs.

For FY2017, the Administration requested $335 million for SAFER and $335 million for AFG, a reduction of $10 million for each program from the FY2016 enacted level. According to the budget request, the proposed reduction in SAFER and AFG "reflects FEMA's successful investments in prior year grants awarded." The Administration's FY2017 budget did not request SAFER waiver authority for FY2017.

Under the proposed budget, the SAFER and AFG grant accounts would be transferred to the Preparedness and Protection activity under FEMA's broader "Federal Assistance" account. According to the budget request, Federal Assistance programs will "assist Federal agencies, States, Local, Tribal, and Territorial jurisdictions to mitigate, prepare for and recover from terrorism and natural disasters."

On May 26, 2016, the Senate Appropriations Committee approved S. 3001 , the Department of Homeland Security Act, 2017. The Senate bill would provide $680 million for firefighter assistance, including $340 million for SAFER and $340 million for AFG. The committee maintained a separate budget account for Firefighter Assistance and did not transfer that budget account to the Federal Assistance account as proposed in the Administration budget request. In the accompanying report ( S.Rept. 114-68 ), the committee directed DHS to continue the present practice of funding applications according to local priorities and those established by the USFA, and to continue direct funding to fire departments and the peer review process. The committee stated its expectation that funding for rural fire departments remain consistent with their previous five-year history, and encouraged FEMA to consider the need for resources for staffing grants to rural departments that meet both local and regional needs.

On June 22, 2016, the House Appropriations Committee approved its version of the Department of Homeland Security Appropriations Act, 2017. Unlike the Senate, the House committee did transfer the Firefighter Assistance budget account into a broader Federal Assistance account in FEMA. The bill provided $690 million for firefighter assistance, including $345 million for SAFER and $345 million for AFG. In the committee report, the committee directed FEMA to continue administering the fire grants programs as directed in prior year committee reports.

The Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) provided $690 million for firefighter assistance in FY2017, including $345 million for SAFER and $345 million for AFG. The firefighter assistance account is transferred to FEMA's broader Federal Assistance account.

For FY2018, the Administration requested $688.688 million for firefighter assistance, including $344.344 million for SAFER and $344.344 million for AFG, slightly below the FY2017 level. SAFER and AFG are under Grants in the Federal Assistance budget account.

On July 18, 2017, the House Appropriations Committee approved the Department of Homeland Security Appropriations Act, 2018 ( H.R. 3355 ; H.Rept. 115-239 ). The bill provided $690 million for firefighter assistance under the Federal Assistance budget account, including $345 million for SAFER and $345 million for AFG. In the bill report, the committee encouraged FEMA to give high-priority consideration to grants providing for planning, training, and equipment to firefighters for crude oil-by-rail and ethanol-by-rail derailment and incident response.

On September 14, 2017, the House passed H.R. 3354 , a FY2018 omnibus appropriations bill that includes funding for SAFER and AFG. During floor consideration, the House adopted an amendment offered by Representative Kildee that added $20 million to SAFER; thus H.R. 3354 would provide $365 million for SAFER and $345 million for AFG.

The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) provided $700 million for firefighter assistance in FY2018, including $350 million for SAFER and $350 million for AFG. Money is to remain available through September 30, 2019.

For FY2019, the Administration requested $688.688 million for firefighter assistance, including $344.344 million for SAFER and $344.344 million for AFG.

On June 21, 2018, the Senate Appropriations Committee approved S. 3109 , the Department of Homeland Security Appropriations Act, 2019 ( S.Rept. 115-283 ). The Senate bill would provide $700 million for firefighter assistance, including $350 million for SAFER and $350 million for AFG.

On July 25, 2018, the House Appropriations Committee approved its version of the FY2019 Homeland Security appropriations bill ( H.R. 6776 ; H.Rept. 115-676 ). The House bill would also provide $700 million for firefighter assistance, including $350 million for SAFER and $350 million for AFG. Unlike the Senate bill, the House bill would continue SAFER waiver authority.

The Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) provided $700 million for firefighter assistance in FY2019, including $350 million for SAFER and $350 million for AFG, with funds to remain available through September 30, 2020. Division A, Title III, Section 307 of P.L. 116-6 includes SAFER waiver authority which FEMA would be able to implement (if it so chose) for the FY2019 round of SAFER awards.

For FY2020, the Administration requested $688.688 million for firefighter assistance, including $344.344 million for SAFER and $344.344 million for AFG. This is the same amount the Administration requested in its FY2019 budget proposal and a 1.6% reduction from the FY2019 appropriation. The Administration's FY2020 budget proposal does not request SAFER waiver authority.

In 2009, with the economic turndown adversely affecting budgets of local governments, concerns arose that modifications to the SAFER statute may be necessary to enable fire departments to more effectively participate in the program. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) included a provision (§603) that waived the matching requirements for SAFER grants awarded in FY2009 and FY2010.

Subsequently, the FY2009 Supplemental Appropriations Act ( P.L. 111-32 ) included a provision (§605) giving the Secretary of Homeland Security authority to waive certain limitations and restrictions in the SAFER statute. For grants awarded in FY2009 and FY2010, waivers permitted grantees to use SAFER funds to rehire laid-off firefighters and fill positions eliminated through attrition, allow grants to extend longer than the five-year duration, and permit the amount of funding per position at levels exceeding the limit of $100,000.

The Department of Defense and Continuing Appropriations Act, 2011 ( P.L. 112-10 ) contained language that removed cost-share requirements and allowed SAFER grants to be used to rehire laid-off firefighters and fill positions eliminated through attrition. However, the law did not remove the requirement that SAFER grants fund a firefighter position for four years, with the fifth year funded wholly by the grant recipient. P.L. 112-10 also did not waive the cap of $100,000 per firefighter hired by a SAFER grant. According to fire service advocates, these unwaived SAFER requirements (the mandatory five-year position duration, the $100,000 cap) would be a disincentive for many communities to apply for SAFER grants, because localities would be reluctant to apply for grants that would require future expenditure of local funds.

P.L. 112-74 , the Consolidated Appropriations Act, FY2012, included language (§561) prohibiting using any funds to enforce all of the SAFER restrictions that have been lifted since FY2009. Additionally, Section 562 of P.L. 112-74 reinstated DHS waiver authority for the restrictions that were not lifted in the FY2011 appropriations bill ( P.L. 112-10 ).

Meanwhile, the SAFER reauthorization language in the Fire Grants Reauthorization Act of 2012 ( P.L. 112-239 ) removed the $100,000 cap per firefighter hired, shortened the grant period from four to three years, removed the requirement to retain SAFER-hired firefighters for one year past the termination of federal grant support, and provided economic hardship waivers that will give DHS the authority to waive matching requirements and prohibitions on using SAFER funds for rehiring laid-off firefighters and filling positions eliminated through attrition.

The Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ) and the Consolidated Appropriations Act, 2014 ( P.L. 113-76 ) continued to grant DHS waiver authority from SAFER requirements. Specifically, DHS was allowed to waive cost sharing requirements, the three-year grant term, cost limits per firefighter hired, and the prohibition on using SAFER funds for rehiring laid-off firefighters and filling positions eliminated through attrition.

The same SAFER waiver authority was included in the Administration's FY2015 budget proposal and in the FY2015 House and Senate Department of Homeland Security Appropriations bills. In the bill report accompanying H.R. 4903 ( H.Rept. 113-481 ), the House Appropriations Committee noted that this annual waiver authority has been available since FY2009, and that the reauthorization of the SAFER program by the 112 th Congress ( P.L. 112-239 ) provided FEMA with permanent authority to waive certain matching and nonsupplantation requirements for grantees based on a determination that a grantee meets economic hardship criteria. Given that FEMA had been working with stakeholders to develop these criteria and that the agency hoped to soon be able to implement its new waiver authority, the committee expected that FY2015 would be the last instance in which annual waiver authority would be provided, and that any waivers in future fiscal years would be limited to the authorization provided in P.L. 112-239 .

The Department of Homeland Security Appropriations Act, 2015 ( P.L. 114-4 ) was signed by the President on March 4, 2015. Section 557 of P.L. 114-4 provided SAFER waiver authority for FY2015.

The Administration's FY2016 budget would have maintained SAFER waiver authority for FY2016. S. 1619 , the Department of Homeland Security Act, 2016, would also have continued waiver authority. The accompanying bill report ( S.Rept. 114-68 ) directed FEMA to work with stakeholders and present a recommendation to the Senate Appropriations Committee on the feasibility of removing these waivers in future appropriations. However, neither the House bill ( H.R. 3128 ), nor the final Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) contained the SAFER waiver provision for FY2016.

The Administration's FY2017, FY2018, and FY2019 budgets did not request SAFER waiver authority, and neither the House nor Senate Appropriations Committee bills contained SAFER waiver provisions. However, Section 307 of the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) again contained the previous waiver authority provision, stating that FEMA "may" grant SAFER waiver authority to allow SAFER funds for retaining and rehiring firefighters. However, for the 2018 round of SAFER awards, FEMA chose not to exercise that authority, and thus will not provide SAFER hiring grants for retaining or rehiring firefighters.

The House FY2019 Homeland Security appropriations bill would have continued the waiver authority in FY2019, while the Senate FY2019 Homeland security appropriations bill did not include the SAFER waiver authority provision. Ultimately, the Consolidated Appropriations Act, 2019 ( P.L. 116-6 ) included SAFER waiver authority for the FY2019 round of SAFER awards. The Administration's FY2020 budget proposal does not request SAFER waiver authority.

For the latest information and updates on the application for and awarding of SAFER grants, see the official SAFER grant program website at https://www.fema.gov/staffing-adequate-fire-emergency-response-grants .

Table 4 shows the state-by-state distribution of SAFER grant funds, from FY2005 through FY2017. Table 5 shows the percentage distribution of SAFER grant funds by type of department (career, combination, volunteer) for FY2009 through FY2014, while Table 6 shows the percentage distribution of SAFER grant funds by community service area (urban, suburban, rural) for FY2009 through FY2014. Of the FY2014 SAFER awards, grants for hiring accounted for 90% of the total federal share of dollars awarded, while recruitment and retention accounted for 10%.

During 2014 and 2015, the DHS Office of the Inspector General (OIG) conducted an audit of SAFER grants for fiscal years 2010 through 2012. On June 8, 2016, the DHS OIG released its report finding that 63% of SAFER grant recipients over that period did not comply with grant guidance and requirements to prevent waste, fraud, and abuse of grant funds. The report recommended that FEMA's Grant Programs Directorate develop and implement an organizational framework to manage the risk of fraud, waste, abuse, and mismanagement. According to the report, FEMA has concurred with the OIG findings and has taken corrective actions to resolve the recommendations.

Meanwhile, the Fire Grants Reauthorization Act of 2012 ( P.L. 112-239 ) directed GAO to prepare a report to Congress that includes an assessment of the effect of the changes made by P.L. 112-239 on the effectiveness, relative allocation, accountability, and administration of the fire grants. GAO was also directed to evaluate the extent to which those changes have enabled grant recipients to mitigate fire and fire-related and other hazards more effectively. In September 2016, GAO released its report, entitled Fire Grants: FEMA Could Enhance Program Administration and Performance Assessment. The report concluded that FEMA's fire grant policies and the awards made in FY2013 and FY2014 generally reflected the changes to the fire grant statute made by P.L. 112-239 , and that FEMA enhanced its assessment of program performance by establishing and reporting on measures of effectiveness of the grants. However, GAO also concluded that those performance measures do not include measurable performance targets linked to SAFER and AFG program goals, and that "aligning the fire grants programs' use of data on, and definitions of, critical infrastructure to award fire grants and assess program performance with the more objective, quantitative approach used by DHS and GPD [the Grants Program Directorate] for other programs and non-fire preparedness grants could enhance GPD's efforts to integrate the fire grants program into larger national preparedness efforts and more objectively assess the impact of fire grants."

Firefighter assistance grants were impacted by the partial government shutdown. FEMA personnel who administer the grants were furloughed. For all three grant programs (AFG, SAFER, and FP&S) the application and awards process was delayed. For the 2018 awards round, the application windows for AFG and FP&S closed in October and December 2018, respectively, but the processing of those applications could not move forward. The opening of the 2018 round application window for SAFER grants was also delayed.

For grants already awarded (in the 2017 and previous rounds), grant recipients periodically draw down funds, either to reimburse expenditures already incurred, or in immediate advance of those expenditures. Grant recipients were unable to draw down funds during the shutdown, which may have disrupted the ability of the grantees to continue grant-funded activities, including personnel costs covered by SAFER grant awards, which extend for three years. This disruption may continue after the government shutdown has resolved due to a backlog of payment requests that need to be processed once furloughed FEMA grant personnel return to work.

SAFER grants are distributed to career, volunteer, combination, and paid-on-call fire departments serving urban, suburban, and rural areas. A continuing issue is how equitably and effectively grants are being distributed and used to protect the health and safety of the public and firefighting personnel against fire and fire-related hazards.


The LIHEAP Formula

Summary: The Low Income Home Energy Assistance Program (LIHEAP) provides funds to states, the District of Columbia, U.S. territories and commonwealths, and Indian tribal organizations (collectively referred to as grantees) primarily to help low-income households pay home energy expenses. The LIHEAP statute provides for two types of funding: regular funds (sometimes referred to as block grant funds) and emergency contingency funds. Regular funds are allocated to grantees based on a formula, while emergency contingency funds may be released to one or more grantees at the discretion of the Secretary of the Department of Health and Human Services (HHS) based on emergency need. This report focuses on the way in which regular funds are distributed.

Summary: Regular LIHEAP funds are allocated to the states according to a formula that has a long and complicated history. (Tribes receive a share of state funding, while a percentage of regular funds is set aside for territories.) Prior to enactment of LIHEAP, in 1981, a series of predecessor energy assistance programs focused on the heating needs of cold weather states. This focus was in part the result of high heating oil prices throughout the 1970s. When LIHEAP was enacted, it adopted the formula of its immediate predecessor program, the Low Income Energy Assistance Program (LIEAP). Funds under LIEAP were distributed according to a multi-step formula that was more favorable to colder-weather states. The LIHEAP statute specified that states would continue to receive the same percentage of regular funds that they did under the LIEAP formula. This is sometimes referred to as the "old" LIHEAP formula.

Summary: After several years, when Congress reauthorized LIHEAP in 1984 it changed the program's formula by requiring the use of more recent population and energy data (data were not updated under the "old" formula) and reducing the emphasis on heating needs. The effect of these changes meant that, in general, some funding would be shifted from colder-weather states to warmer-weather states. (Using FY2019 formula data, the figure below shows which states receive a greater share of funds under the "new" and "old" formulas.) To prevent a dramatic shift of funds, Congress added two "hold-harmless" provisions to the formula. The percentage of funds that states receive under the formula enacted in 1984 is sometimes referred to as the "new" formula.

Summary: New formula data is used to calculate state allotments when appropriations for LIHEAP regular funds exceed approximately $2 billion. In the years following the enactment of the "new" LIHEAP formula, appropriations did not reach this level, so until the mid-2000s funds were largely distributed according to the "old" formula percentages. However, in FY2006, and in FY2009 through FY2019, regular fund appropriations have ranged from $2.5 billion to $4.5 billion, and the "new" formula has been incorporated into the way in which funds are distributed to the states. Notably, however, since FY2009 Congress has limited the operation of the "new" formula by requiring that the majority of regular funds be distributed using "old" formula percentages. For distributions to the states from FY2009-FY2019, see Table C-1.

The Low Income Home Energy Assistance Program (LIHEAP) is a block grant program administered by the Department of Health and Human Services (HHS) 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. Established in 1981 by Title XXVI of P.L. 97-35 , the Omnibus Budget Reconciliation Act, LIHEAP has been reauthorized and amended a number of times, most recently in 2005, when P.L. 109-58 , the Energy Policy Act, authorized annual regular LIHEAP funds at $5.1 billion per year from FY2005 through FY2007.

The federal LIHEAP statute has very broad guidelines, with many decisions regarding the program's operation made by the states. Recipients may be helped with their heating and cooling costs, receive crisis assistance, 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 federally 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 LIHEAP statute provides for two types of program funding: regular funds—sometimes referred to as block grant funds—and emergency contingency funds. Regular funds are allotted to states on the basis of the LIHEAP statutory formula, which was enacted as part of the Human Services Reauthorization Act of 1984 ( P.L. 98-558 ). The way in which regular funds are allocated to states depends on the amount of funds appropriated by Congress. The second type of LIHEAP funds, emergency contingency funds, last appropriated in FY2011, 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.

For more information on LIHEAP more generally, see CRS Report RL31865, LIHEAP: Program and Funding , by Libby Perl. The remainder of this report discusses only the history and methods of distributing regular LIHEAP funds to the states. Funds for tribes are included in each state's formula allocations and are distributed at the state level based on eligible tribal members. Territories receive funds separately as a percentage set aside of regular funds, so neither tribes nor territories are included in the formula discussion.

The current statutory LIHEAP formula was enacted in 1984 as part of P.L. 98-558 , the Human Services Reauthorization Act. The statutory formula replaced a formula from a predecessor program to LIHEAP, the Low Income Energy Assistance Program (LIEAP), which was active for one year (FY1981) prior to enactment of LIHEAP. The LIEAP formula emphasized the heating needs of cold-weather states. When Congress changed the LIHEAP formula in 1984, there were two primary differences from the previous formula: home heating needs were not emphasized to the same degree, and the law provided that HHS use the most recent data available to calculate allotments (the LIEAP formula used static data to distribute funds to the states).

For more information about both the history of energy assistance formulas from the 1970s through enactment of LIHEAP as well as the enactment of the statutory formula, see Appendix D .

The term "old" LIHEAP formula refers to the way in which regular funds were distributed using the formula under LIEAP, which was then adopted by LIHEAP when it was enacted. Congress directed that LIEAP state allocations be determined using a complex combination of alternate formulas and factors that included residential energy expenditures, a measure of "coldness" called heating degree days, and household income. Further, as specified in law, the data for each factor were either from a particular year or measured a change over a particular period of time, so the data inputs did not change. See Table D-2 for LIEAP formula data.

The result of the LIEAP combination of formulas was that each state was assigned a static percentage of funds that did not change from one year to the next. For example, Minnesota received approximately 4.0% of total LIHEAP funds under this formula, and Florida received not-quite 1.4% of the total. See column (a) of Table 1 for each state's share of funds under the "old" LIHEAP formula.

The term "new" LIHEAP formula refers to the way in which funds are to be distributed via the statutory formula enacted as part of P.L. 98-558 . The statute provides that each state's share of funds is to be based on low-income household expenditures on home energy in the state. See the statutory language in the text box, below.

Based on the statutory language, HHS calculates heating and cooling consumption and expenditures by low-income households in each state, with the numbers updated each year. (See " Calculating the New Formula Percentages ," later in this report, for more details about how the formula rates are calculated.) Each state's share is then based on the ratio of low-income household expenditures on home energy for the state to all expenditures of low-income households in the country. For example, when formula data were updated in FY2019, Minnesota's share of funds under the "new" formula was approximately 1.9% of the total and Florida's was about 4.4%. See column (b) of Table 1 for FY2019 formula shares.

However, unlike under the "old" formula, states do not necessarily receive their "new" formula percentage share of funds. As can be seen from the Minnesota and Florida examples, the implementation of the "new" LIHEAP formula meant that some states saw their share of funding reduced, while others saw their share increased. As a result, Congress included in the statutory formula two "hold harmless" provisions to make sure that states that saw their shares of total funds decrease were prevented from dramatic drops in funding. The hold harmless provisions operate so that states that gain the most funding have their share reduced to compensate states that lose funding. See " Using the "New" Formula Percentages to Allocate Funds to the States ," later in this report, for a more detailed description about how the hold-harmless provisions operate.

The LIHEAP Formula and Congressional Appropriations

In the 25 years after the enactment of the "new" LIHEAP formula, Congress, with few exceptions, did not appropriate sufficient regular funds to require use of "new" formula data. Because of the hold-harmless provisions in the statutory formula, appropriations must exceed approximately $2 billion before the "new" formula percentages are used. During these years, the "old" formula percentages (found in column (a) of Table 1 ) were used to distribute LIHEAP funds to the states.

Starting in FY2009, appropriations for LIHEAP regular funds have exceeded $2 billion, ranging from $3.3 billion to $4.5 billion over the last 10 years. However, the "new" formula has not operated as is provided for in the statute. Instead, Congress has directed, in appropriations language, that a portion of funds be distributed using the "new" formula, and the remainder using the "old" formula. For example, in FY2019 P.L. 115-245 provided that $716 million be distributed according to the "new" formula, and the remainder, about $2.96 billion (after deducting funds for the territories and training and technical assistance), distributed using the "old" formula percentages. For allocations to the states from FY2009-FY2019, see Appendix C .

The next section of this report (" Determining State LIHEAP Allotments Using the "New" Formula ") goes into additional detail about how the "new" formula operates, while Appendix D explains more about the history of the "old" LIHEAP formula.

Determining State LIHEAP Allotments Using the "New" Formula

The LIHEAP statutory formula provides for three different methods to calculate each state's allotment of regular LIHEAP funds. The calculation method used to determine state allotments depends upon the size of the appropriation in a particular year.

If the annual appropriation level is at or below the equivalent of a hypothetical FY1984 appropriation of $1.975 billion, then the "old "LIHEAP formula percentages apply. If appropriations exceed a hypothetical FY1984 appropriation of $1.975 billion, then "new" formula percentages apply and are used to calculate state allotments. To calculate the new formula percentages, HHS determines the heating and cooling costs of low-income households in each state. If the appropriation is less than $2.25 billion, the new formula percentages are used together with a hold-harmless level that prevents states from falling below the amount they would have received at the hypothetical FY1984 appropriations level. Finally, if appropriations equal or exceed $2.25 billion, the "new" percentages apply, as does the hold-harmless level, and, in addition, a hold-harmless rate increases the "new" formula percentage for certain states.

This section describes the steps involved in allocating LIHEAP funds to the states under each of the appropriations triggers.

The LIHEAP formula uses the home energy expenditures of low-income households in each state as a first step in determining the amount of total regular funds that each state will receive. Specifically, this means estimating the amount of money that all low-income households (as defined by the LIHEAP statute) in each state spend on heating and cooling from all energy sources. This method 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. Further, as mentioned in the previous section, the "new" formula requires HHS to determine allocations "on the basis of the most recent satisfactory data available to the Secretary." HHS updates these data annually. The most recent data were provided to CRS in 2019.

The process for capturing the expenditures of low-income households involves the following steps:

Total Residential Energy Consumption. The first step in calculating new formula rates is determining total residential energy consumption for each heating and cooling source in every state. Residential energy consumption is usually measured in terms of the total amount of British Thermal Units (Btus) used in private households and generally captures energy used for space and water heating, cooling, lighting, refrigeration, cooking, and the energy needed to operate appliances. The most recent data used in calculating LIHEAP formula rates come from the 2016 Energy Information Administration (EIA) State Energy Data System consumption estimates. Temperature Variation. The next step in determining the formula rates involves adjusting the amount of energy consumed for each fuel source by temperature variation in each state. This is done by using a ratio consisting of the 30-year average heating and cooling degree day data to each state's share of the most recent year's average heating and cooling degree days. 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. For example, a day with an average temperature of 50°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. The purpose of the adjustment to fuel consumption is to account for abnormally warm or cool years, where energy usage might attain extreme values. This information is collected by the National Oceanic and Atmospheric Administration. The most recent year's average heating and cooling degree day data are from 2016, and the 30-year average was computed from 1971 to 2000. Heating and Cooling Consumption. As mentioned above, total residential energy consumption encompasses other uses in addition to heating and cooling (e.g., operation of appliances). So the next step in calculating LIHEAP formula rates is to derive the portion of fuel consumed specifically to heat and cool homes as opposed to other uses. The EIA, as part of the Residential Energy Consumption Survey (RECS), uses an "end use estimation methodology" to estimate the amount of fuel used for heating and cooling (among other uses). The most recent information on heating and cooling consumption comes from the 2009 RECS. HHS adjusts the EIA heating and cooling consumption estimates using heating degree day and cooling degree day data. Low-Income Household Heating and Cooling Consumption. After estimating heating and cooling consumption for all households, the next step is to calculate heating and cooling consumption in Btus for low-income households. HHS uses Census data to determine fuel sources used by low-income households. The most recent information on low-income households and the fuel sources they use comes from the American Community Survey five-year estimates for 2012-2016. In addition, low-income consumption data are adjusted to account for the fact that low-income households might use more or less of a fuel source than is used by households on average. This is done using consumption data from the 2009 RECS. Total Spending on Heating and Cooling. To arrive at the amount of money that low-income households spend on heating and cooling, the number of Btus used by low-income households that were estimated in the previous step are multiplied by the average fuel price for each fuel source. The total amount spent on heating and cooling by low-income households for each fuel source is then added together to arrive at total spending for each state. Regional energy price variation can be significant, and the formula takes expected expenditure differences into account. This information is collected by the EIA and published in the State Energy Data System Consumption, Price, and Expenditure Estimates. The most recent price data used to calculate formula rates are from 2016. New Formula Percentage. Finally, these expenditure data are used to estimate the amount spent by low-income households on heating and cooling in each state relative to the amount spent by low-income households on heating and cooling in all states. The calculated proportion becomes the new formula percentage for each state. Table 1 at the end of this section shows both the percentages under the "old" formula (column (a)) and the most recent "new" formula percentages (column (b)), received by CRS from HHS in 2019. To see how the formula rates for each state have changed in recent years, see Table 2 .

These new formula percentages are used to allocate LIHEAP funds to the states if the annual appropriation exceeds the equivalent of a hypothetical FY1984 appropriation of $1.975 billion. However, they do not represent the exact percentage of funds that all states will receive under the new formula. The ultimate allotments are determined after application of both the hold-harmless level and hold-harmless rate, described in the next section. The new percentages are the starting point for determining how funds will be allocated to the states.

Using the "New" Formula Percentages to Allocate Funds to the States

The LIHEAP "new" formula percentages that HHS calculates using the most recent satisfactory data available do not necessarily represent the percentage of funds that states will receive. State allotments depend upon the application of the two hold-harmless provisions in the LIHEAP statute. Some states must have their share of funds ratably reduced in order to hold harmless those states that would, but for the hold-harmless provisions, lose funds. Other states see a gain in their share of funds because they benefit from the hold-harmless provisions. The application of the hold-harmless provisions depends upon the size of the appropriation for a given fiscal year. These appropriation level triggers are described below.

"Old" Formula: Appropriations at or Below $1.975 Billion

The LIHEAP statute does not contain an explicit trigger for the "new" formula rates to be used. However, the statute specifies that states must receive no less than "the amount of funds the State would have received in fiscal year 1984 if the appropriations for this subchapter for fiscal year 1984 had been $1,975,000,000." As a result, up to this appropriation level, states receive the same percentage of funds that they would have received at a given appropriation level under the "old" LIHEAP formula.

The FY1984 appropriation of $1.975 billion referred to in the LIHEAP statute is hypothetical because this was not the amount actually appropriated in FY1984. The actual FY1984 appropriation was $2.075 billion. In addition, the current year appropriation that is "equivalent to" a hypothetical FY1984 appropriation of $1.975 billion is not exactly $1.975 billion. In FY1984, with the exception of funds provided to the territories, all LIHEAP regular funds were distributed to the states. Since then, two other funds have become part of the regular fund distribution. These are funds for training and technical assistance (TTA) and for the leveraging incentive (LI) grants (which includes REACH grants) to the states. This means that an appropriation that is equivalent to a hypothetical FY1984 appropriation of $1.975 billion must account for these new funds. For example, in FY2019, Congress appropriated $2.988 million for TTA and no funding for LI /REACH, so the equivalent of an FY1984 appropriation of $1.975 billion is approximately $1.978 billion.

The LIHEAP formula in FY1984 distributed funds by giving states the same percentage of funds that they received in FY1981 under the predecessor program, the Low Income Energy Assistance Program (LIEAP). Table 1 shows rates under the old formula in column (a). For example, at an appropriation at or below the equivalent of a hypothetical FY1984 appropriation of $1.975 billion, Alabama would receive 0.86% of total funds, Alaska would receive 0.55% of total funds, and so on. Table A-1 , column (a), reports the dollar amount of funds that each state would have received in FY1984 had the regular fund appropriation been $1.975 billion. For comparison purposes, the dollar amounts also assume that funds for the territories would be 0.5% of the total, a change made by HHS beginning with the FY2014 appropriation.

"New" Formula with Hold-Harmless Level: Appropriations Between $1.975 Billion and $2.25 Billion

If the regular LIHEAP appropriation exceeds the equivalent of a hypothetical FY1984 appropriation of $1.975 billion for the fiscal year, all funds are to be distributed under a different methodology, using the new set of percentages described earlier. In addition, a hold-harmless level applies to ensure that certain states do not fall below the amount of funds they would have received at the equivalent of a hypothetical FY1984 appropriation of $1.975 billion.

Table 1 shows whether a state benefits from the hold-harmless level. This is indicated by a "Y" in column (c), while the dollar amount of funds those states receive by being held harmless appears in column (d). For example, Alabama is not held harmless, while Colorado is held harmless. The dollar amount of funds that Colorado receives pursuant to the hold-harmless level is $31.613 million. But for the hold-harmless level, Colorado would receive less than this dollar amount at its new formula percentage at certain appropriation levels. Eventually, when appropriations increase sufficiently, the percentage of funds under the new formula for hold-harmless states will exceed their hold harmless amounts and they will begin to receive their new percentage of funds. This appropriation level varies for each state. For example, at lower appropriation levels, the $31.613 million hold-harmless level for Colorado exceeds the state's new percentage share of 1.438% of total funds. However, by the time appropriations reach $2.25 billion, Colorado's new percentage share exceeds $31.613 million and the state begins to receive funds at the new percentage. Eventually, many states will receive the percentage of funds at their new percentage.

The hold-harmless level is achieved by reducing the allocation of funds to states with the greatest proportional gains under the new formula percentages. For example, under the most recent LIHEAP formula percentages, states with the greatest proportional gains were Nevada, Arizona, and Texas. Depending on the appropriation level, these states (and others with the greatest gains) may then have their allotments reduced to hold harmless the states that would otherwise see reduced benefits. So although these states with the greatest proportional gains will see their LIHEAP allotments increase under the new formula, their allotments may not increase to reach their new formula rates (column (b) of Table 1 ).

Columns (b) and (c) of Table A-1 show estimated allotments to the states at hypothetical appropriations levels between $1.975 billion and $2.25 billion. Column (b) shows the estimated allotment of funds that each state would receive when the regular fund appropriation is at $2.14 billion and column (c) shows the estimated allotment of funds when the regular fund appropriation is just under $2.25 billion ($2,249,999,999).

"New" Formula with Hold-Harmless Level and Rate: Appropriations At or Above $2.25 Billion

The LIHEAP statute stipulates additional requirements in the method for distributing funds when the appropriation is at or above $2.25 billion. At this level, the hold-harmless level still applies, but, in addition, a new hold-harmless rate is applied. Specifically, 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 percentage at $2.14 billion is greater than the percentage originally calculated at the hypothetical $2.25 billion appropriation; this is not true for all states that receive less than 1% of the $2.25 billion appropriation.) Then that state will receive the percentage share of funds it would have received at $2.14 billion for all appropriation levels at or above $2.25 billion. This hold-harmless rate ensures a state specific share of the total available funds.

As with the hold-harmless level, the allocations to the states with the greatest proportional gains are then ratably reduced again until there is no funding shortfall. Column (e) of Table 1 shows which states benefit from the hold-harmless rate, indicated by a "Y," while column (f) shows the proportion of funds that those states receive. For example, Idaho benefits from the hold-harmless rate and receives 0.580% of the total appropriation when appropriations are at or above $2.25 billion.

The application of the hold-harmless rate creates another layer of discontinuity in the allocation rates. States that are ratably reduced see their allocations at $2.25 billion fall below the amount they would receive at $2.249 billion, while states that benefit from the hold-harmless rate see their funding jump up slightly. Columns (d) through (i) of Table A-1 in Appendix A show estimated allotments to states at various hypothetical appropriations levels at or above $2.25 billion.

Implementation of the "New" LIHEAP Formula

Until FY2006, appropriations for regular LIHEAP funds had only exceeded the equivalent of a hypothetical FY1984 appropriation of $1.975 billion in 1985 and 1986; thereafter, from FY1987 through FY2005, and again in FY2007, states continued to receive the same percentage of LIHEAP funds that they received under the program's predecessor, LIEAP (see column (a) of Table 1 for these percentages). In FY2006, funds were distributed under the "new" LIHEAP formula when Congress appropriated $2.48 billion in regular funds for the program. In FY2008, perhaps due to an oversight, the new formula was again used to distribute funds. The FY2008 Consolidated Appropriations Act ( P.L. 110-161 ) failed to authorize a set-aside called leveraging incentive grants. As a result, the funds for those grants were added to the LIHEAP regular funds, triggering use of new formula data. In FY2009, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act ( P.L. 110-329 ) appropriated $4.51 billion in regular funds. However, the law further specified that $840 million be distributed according to the "new" LIHEAP formula, with the remaining $3.67 billion distributed according to the percentages of the "old" formula established by LIEAP. From FY2010 through the present, Congress has continued to appropriate funds using a version of a split between the "old" and "new" formulas. See Table C-1 in Appendix C of this report for the distribution of funds to the states from FY2009 through FY2019.

Appendix A. Estimated Allotments to the States Under Various Hypothetical Appropriations Levels

Table A-1 , below, shows estimated allocations to the states at various hypothetical appropriations levels. In column (a) are allotments at the equivalent of a hypothetical FY1984 appropriation of $1.975 billion—under recent LIHEAP practice where funds are set aside for training and technical assistance, the equivalent appropriation level is approximately $1.978 billion. The remaining columns show estimated allotments at appropriations of $2.14 billion, just under $2.25 billion, $2.25 billion, $3.0 billion, $3.69 billion (the amount appropriated in FY2019), $4.0 billion, and $5.1 billion, the amount at which the LIHEAP program was last authorized in P.L. 109-58 . In each case, the estimates assume that 0.5% would be set aside for the territories, the amount set aside by HHS starting in FY2014.

Appendix B. Further Depiction of How State Allotments Depend Upon Appropriation Levels

Figure B-1 graphically illustrates the interplay of the hold harmless provisions in state allotments for three types of states over a range of appropriations from $0 to $5.1 billion.

Represented are (1) a hold-harmless level state, (2) a state whose increased allocations are ratably reduced in order to maintain allocations for the hold-harmless level and rate states, and (3) a hold-harmless level and rate state. These three states are not representative of all states in the three categories; see Table A-1 for the range of individual state allocations.

In the figure, there are three vertical areas. These areas separate the three levels of appropriations that are triggers under current law and were explained previously in this report. The figure also graphs the three types of states. These three types of states are as follows.

Hold-Harmless Level Only State . This state is depicted with a blue line running from $0 to point G. States with "new" formula percentages that start out lower than their "old" formula percentages 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%. 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 1 , these are the states that have a "Y" in column (c) and an "N" in column (e).Ratable Reduction State. This state is depicted with a purple line running from $0 to point H. States with "new" formula percentages that are higher than their "old" formula percentages are subject to a ratable reduction. Their new formula percentage is greater than their old (FY1984) percentage. There is a small decrease in state allotments at point D that is attributable to the increased shortfall on the distribution of funds that the hold-harmless rate imposes. In Table 1 , these are the states that have an "N" in both column (c) and column (e).Hold-Harmless Level and Rate State. This state is depicted with a red line running from $0 to point I. States have lower new formula percentages and are subject to both the hold-harmless level and the hold harmless rate provisions. The hold-harmless level is evident by the fixed state allotment from point C to point E. However, the (subtle) jump at exactly $2.25 billion (point E) 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 1 , these are the states that have a "Y" in column (c) and a "Y" in the column (e).

Appendix C. LIHEAP Formula Fund Allocations to the States, FY2010-FY2019

Since FY2009, Congress, through appropriations language, has directed that a portion of the regular funds appropriated be distributed to the states via the "new" LIHEAP formula, and the remainder using the "old" formula percentages. The portion of funds distributed via the new formula has ranged from 14% to nearly 20% of regular funds appropriated, depending on the year.

Table C-1 , below, shows actual LIHEAP regular fund allocations to the states from FY2009 through FY2019. In each year, funds for the territories, training and technical assistance (TTA), and leveraging incentive grants (if appropriated) are first subtracted from the total appropriation. The remainder of funding is distributed to the states via formula as directed in appropriations language. For example, in FY2019 Congress directed that $716 million be distributed via the "new" LIHEAP formula, and the remainder via the "old" LIHEAP formula percentages.

The column header in Table C-1 for each year shows the total regular funds appropriated for LIHEAP (including funds that were not distributed via the formula such as rescissions and transfers). Total funding distributed to the states via formula is in the final row of the table for each year. The table notes describe the division between "new" and "old" formulas, and any other relevant information.

Appendix D. History of the LIHEAP Formula

The mid- to late-1970s, a time marked by rapidly rising fuel prices, also marked the beginning of federal energy assistance funding for low-income households. The first national program to help low-income households was created in early 1975 to assist families with energy conservation primarily through home weatherization. This assistance was provided through a new Emergency Energy Conservation Program (EECP), enacted as part of the Headstart, Economic Opportunity, and Community Partnership Act of 1974 ( P.L. 93-644 ). The funds were administered by the Community Services Administration (CSA), the successor agency to the Office of Economic Opportunity, which was responsible for many of the programs created as part of the 1964 war on poverty. Beginning in 1977, funds were also made available through the CSA to help families directly pay for fuel (as opposed to weatherization expenses) via a variety of programs. Each of these programs had in common a focus on the need for heating assistance (versus cooling assistance).

Congress continued to appropriate funds for energy assistance programs through FY1980, at which point a new program, the Low Income Energy Assistance Program (LIEAP), was enacted as part of the Crude Oil Windfall Profits Tax Act of 1980 ( P.L. 96-223 ). LIEAP, which was administered by the Department of Health and Human Services (HHS), was funded for one year, FY1981, before the creation of LIHEAP. Like the CSA programs, LIEAP emphasized heating over cooling needs. This preference was reflected in both the CSA program formulas and the LIEAP set of formulas, which used variables that benefitted cold-weather states to determine how funds would be distributed. The LIEAP set of formulas continues to have relevance for the way in which LIHEAP funds are distributed. This section of the report describes these predecessor programs to LIHEAP and their distribution formulas.

Community Services Administration Energy Assistance Programs

On January 4, 1975, President Ford signed into law the Headstart, Economic Opportunity, and Community Partnership Act of 1974 ( P.L. 93-644 ), which contained funds for a new program, called the Emergency Energy Conservation Program (EECP). The program was to be administered by the Community Services Administration (CSA), and its purpose was

to enable low-income individuals and families, including the elderly and the near poor, to participate in energy conservation programs designed to lessen the impact of the high cost of energy ... and to reduce ... energy consumption.

The law governing EECP listed a number of eligible activities in which states could participate, including energy conservation and education programs; weatherization assistance; loans and grants for the purchase of energy conservation technologies; alternative fuel supplies; and fuel voucher and stamp programs. Despite the variety of activities that could be funded through the program, the first CSA funding notice regarding the program limited eligible activities to "winterizing" homes and to giving emergency assistance "to prevent hardship or danger to health due to utility shutoff or lack of fuel." During the four years the EECP was funded, the majority of funds were used for weatherization expenses.

EECP funds were distributed to states via a formula that benefitted those states with high heating costs. One formula variable in particular, a measure of "coldness" called heating degree days, benefitted cold-weather states. Heating degree days measure the extent to which a day's average temperature falls below 65° Fahrenheit. For example, a day with an average temperature of 50° results in a measure of 15 heating degree days. Because heating degree days are higher in cold-weather states, including the heating degree day variable in a formula favors states with greater heating needs. Squaring the heating degree days magnifies this effect. The EECP formula took the number of population-weighted heating degree days in each state, squared them, and multiplied the result by the number of households in poverty that owned their homes to determine how funds would be allocated. The CSA acknowledged the emphasis on heating needs in its formula, stating that the FY1975 allocation "was heavily weighted to the coldest areas." In the three fiscal years that followed the first appropriation for the EECP, from FY1976 through FY1978, the CSA changed somewhat the way in which it allocated funds to the states; however, the factors continued to favor cold-weather states through use of either heating degree days or heating degree days squared.

The first year that Congress specifically appropriated funds for direct assistance to help low-income households (those at or below 125% of poverty) pay their energy costs (instead of funds that went primarily for weatherization and conservation activities) was FY1977. The FY1977 Supplemental Appropriations Act ( P.L. 95-26 ) provided $200 million for a Special Crisis Intervention Program to be administered by CSA. States could use funds to make direct payments to fuel providers on behalf of low-income families lacking the financial resources to pay their energy bills. The CSA directed states to target households where utilities had been shut off (or were threatened with shut off) or who could prove "dire financial need" as the result of paying large energy bills. Although the law did not reserve funds exclusively for heating costs, the way in which funds were allocated to the states emphasized heating need. Funds were distributed to the states based on a formula that used (1) heating degree days squared, (2) the number of households in poverty, (3) the number of persons above age 65 with incomes below 125% of poverty, and (4) the relative cost of fuel in the region. Congress again appropriated $200 million for crisis intervention in both FY1978 and FY1979. In FY1978, funds were available to households with the need for assistance as the result of an energy-related emergency such as lack of fuel, a natural disaster, fuel shortages, and widespread unemployment. In FY1979, funds were made available to assist families facing "substantially increased energy costs and/or life- or health-threatening situations caused by winter-related energy emergencies."

In FY1980, Congress appropriated a total of $1.6 billion for energy assistance. Of this amount, $400 million was appropriated for the Energy Crisis Assistance Program (ECAP, a CSA program similar to the Special Crisis Intervention Program) through two separate appropriations. The remainder, $1.2 billion, was appropriated as part of the FY1980 Department of the Interior Appropriations Act ( P.L. 96-126 ) to the Department of Health, Education, and Welfare (HEW, the predecessor to HHS) for cash assistance and crisis intervention due to high energy costs. This appropriation to HEW is sometimes referred to as Low Income Supplemental Energy Allowances. Of this $1.2 billion, $400 million was to be distributed specifically to recipients of Supplemental Security Income (SSI). The rest of the funds appropriated to HEW, approximately $800 million, as well as the ECAP funds, were distributed to states on the basis of three factors: heating degree days squared, the number of households below 125% of poverty, and the difference in home heating energy expenditures between 1978 and 1979. The formula used to distribute the $400 million for SSI recipients used these same factors but also included the number of SSI recipients in each state relative to the national total.

The Low Income Energy Assistance Program (LIEAP) Formula

In April 1980, Congress replaced the patchwork energy assistance programs of the late 1970s with one program, the Low Income Energy Assistance Program (LIEAP). LIEAP, the direct predecessor program to LIHEAP, was established as part of the Crude Oil Windfall Profits Tax Act of 1980 ( P.L. 96-223 ). The program was introduced in the Senate as the Home Energy Assistance Act ( S. 1724 ) and was incorporated into H.R. 3919 , the bill that would become the Crude Oil Windfall Profits Tax Act, on the Senate floor. Like the energy assistance programs of the late 1970s such as the Special Crisis Intervention Program and the Low Income Supplemental Energy Allowances, LIEAP allocated funds to states in order to help low-income households pay their home energy costs. Also like these predecessor programs, LIEAP allocated funds to states using a method that put more emphasis on the heating needs of cold-weather states than it did on cooling needs.

The formula developed under LIEAP continues to be relevant in several ways: (1) it has been used to distribute LIHEAP funds as recently as FY2007, (2) the percentage shares of funds that states received continue to be the benchmark for the way in which states are held harmless under the current LIHEAP formula, and (3) from FY2009 through the present, Congress has distributed the bulk of LIHEAP funds using the LIEAP formula percentages (for more information, see Appendix C ). As a result, the variables used are important in understanding the current formula and the way in which it is used to distribute funds.

Ultimately, Congress developed the LIEAP formula through two different laws: P.L. 96-223 , the law that authorized LIEAP, and P.L. 96-369 , a continuing resolution enacted six months later. The following two subsections describe the elements of the formula developed through each.

The formula developed as part of S. 1724 , and subsequently incorporated into P.L. 96-223 , reflected, in part, the concern that the problem of rising energy costs were "most critical in areas with high home heating costs." The formula for LIEAP arose from a Senate compromise over three different proposals. The debate centered around the degree to which heating should be emphasized over energy expenditures generally. Some Members wanted a formula that accounted for all energy uses and was not based solely on geographic location, while others saw the program's purpose as solely to provide heating assistance. The debate on the Senate floor was, at times, contentious, with Senator Edmund Muskie (Maine) resolved to filibuster in order to support the heating needs of northern states. Primarily at issue was the measure of heating degree days, particularly the extent to which they would be weighted and whether they would be squared.

Under the final compromise LIEAP formula in P.L. 96-223 , states received funds under one of four different alternatives used to measure home energy need, depending on which one benefitted a state the most. Three of the four options contained different combinations of several formula factors: residential energy expenditures; heating degree days or heating degree days squared; and the number of low-income households in the state.

Under the first formula alternative, 50% of the allocation was based on residential energy expenditures and 50% on heating degree days squared multiplied by the number of households at or below the Bureau of Labor Statistics (BLS) lower living standard. Under the second formula alternative, 25% of the allocation was based on residential energy expenditures and 75% based on heating degree days squared multiplied by the number of households at or below the BLS lower living standard. Under the third formula alternative, 50% of the allocation was based on residential energy expenditures and 50% based on heating degree days (not squared) multiplied by the number of households with incomes at or below the BLS lower living standard. The fourth option guaranteed states a minimum benefit of $120 for each household that received Aid to Families with Dependent Children (AFDC), SSI, or Food Stamp benefits. The option was added to S. 1724 at the Finance Committee level in recognition of the fact that (in general) funds were not being provided for cooling costs.

(See Table D-2 for a breakdown of these formulas.)

While the focus of the formula was on heating assistance, the LIEAP law did allow states to provide for cooling when households could demonstrate medical necessity. Congress authorized LIEAP for one year, FY1981, at $3 billion, but funds were not appropriated as part of P.L. 96-223 .

Before the formula in P.L. 96-223 could be used to allocate funds, 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 October of 1980, six months after enactment of the Crude Oil Windfall Profits Tax Act. The new allocation method was not described in P.L. 96-369 , however. Instead, the continuing resolution referred to a House Appropriations Committee report (H. Rept. 96-1244) accompanying another bill—the FY1981 Departments of Labor, Health and Human Services and Education Appropriations Act. It was in this committee report that the additional formula components for LIEAP were laid out. The additional formula components appeared to be intended to act as a counter to the formula developed in P.L. 96-223 , which some argued benefitted warmer weather states more than was necessary.

The first step in the new 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 formula alternative, 50% of the allocation was based on the increase in home heating expenditures, and 50% was based on the number of heating degree days squared times the population with income less than or equal to 125% of poverty. This was the same formula used for the Low-Income Supplemental Energy Allowances Program. Under the second formula alternative, 25% of the allocation was based on total residential energy expenditures, and 75% 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 . States would then receive the greater of these two amounts. To see the percentage of funds that each state received under the LIEAP formula, see Table 1 , column (a).

Although the alternative formulas under H.Rept. 96-1244 used factors similar to those in P.L. 96-223 , the original set of formulas was somewhat more favorable to warm-weather states. For example, the BLS lower living standard, used in all of the P.L. 96-223 formulas but only one of those in H.Rept. 96-1244, was higher than 125% of poverty for most household sizes, which benefitted the South, where the low-income population was higher. The original set of formulas in P.L. 96-223 also provided for a minimum benefit to states on the basis of the number of AFDC, SSI, and Food Stamp recipient households, unconditioned on their household heating expenditures. In addition, the inclusion of the increase in home heating expenditures in H. Rept. 96-1244 benefitted Northeastern states, where heating oil prices had increased substantially.

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. Some of the changes to the program included less restrictive federal rules and more state flexibility in determining how to operate their LIHEAP programs. 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.

When the formula for LIEAP was initially created in 1980 under the Crude Oil Windfall Profits Tax Act ( P.L. 96-223 ), it brought about a good deal of debate on the floor of the Senate, where the formula provisions were added to the legislation. Discussion over the formula also occurred leading up to the enactment of P.L. 96-369 , the FY1981 continuing resolution that funded LIEAP and amended the formula. Despite these earlier disagreements over formula allocations, the process to enact LIHEAP in 1981 did not engender the same level of debate or result in a different formula. Instead, the law creating LIHEAP 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 . From FY1982 through FY1984, then, states continued to receive the same percentage of funds that they received under the LIEAP formula.

The 1984 LIHEAP Reauthorization: A New Formula

When Congress began to consider reauthorizing LIHEAP in 1983, two aspects of the formula were debated. First, some legislators recognized that the multi-step LIEAP formula benefitted cold-weather states relative to warm-weather states. The second debated aspect of the formula centered on 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 available. For example, the most recent data the formula used were 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.

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. The amendment was eventually dropped from H.R. 3520 in conference with the Senate.

Efforts to reauthorize LIHEAP began in April 1983 with the introduction of 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 markups: 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." 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. 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.

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 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, $2.5 billion in FY1986, $2.625 billion for FY1987, and $2.8 billion for FY1988.

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. 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 less funding 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 were less than 1%. These states would instead receive the allotment rate they would have received at an appropriation of $2.14 billion if that allotment rate were higher than the rate at $2.25 billion. In their 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. Otherwise, the concern was that appropriations might have to increase significantly before small state allotments would increase above their hold-harmless levels, with the states' percentage shares of funds declining even as total appropriations increased.

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 , the Human Services Reauthorization Act, on October 30, 1984.