Concerns Over the Allocation Methods Employed in the US Low-Income Home Energy Assistance Program

Abstract

The Low-Income Home Energy Assistance Program (LIHEAP) is the largest federal energy assistance program in the United States and forms an important component of the social safety net for low-income households. The manner in which LIHEAP funds are allocated to states has been a contentious issue since the inception of the program. The distribution of funds among states is not proportionate to the need for assistance based on commonly accepted standards of fairness, with states in the Northeast and Midwest receiving more, and states in the South and West, less than they should. We derived and evaluated the formula by which states receive LIHEAP funding, and we found that unanticipated circumstances, not congressional intent, have perpetuated an inequitable distribution. In 1984, Congress corrected the formula it had hastily enacted in 1981 using a rational and equitable allocation system. It also added provisions, however, that prevented the improved system from being activated. As Congress considers future reauthorizations of LIHEAP, it has three options: to fully implement the intent of the 1984 reform of the program; to acknowledge that LIHEAP is primarily a heating-assistance program and adopt a heating-only formula to distribute LIHEAP funding; or to significantly increase LIHEAP funding. The history of LIHEAP appropriations does not imply that the reforms incorporated in the 1984 legislation should be thwarted; it implies that Congress should remove or reduce the legislative provisions that have produced the unintended result. Congress can fully implement the 1984 reform by removing the trigger appropriation or reducing the threshold to $1 billion or less.