The impact of the hold-harmless and give-back provisions on the Low-Income Home Energy Assistance Program allocation mechanism

Abstract

The federal government distributes funds to states in a block grant for the Low-Income Home Energy Assistance Program (LIHEAP) using a mechanism based on hold-harmless and give back provisions triggered at various appropriation levels. If the regular appropriation in a given fiscal year is less than or equal to $1.975B, then a 1981 formula is used to allocate funds, while if the regular appropriation exceeds $1.975B, then a 1984 formula is applied in conjunction with a primary hold-harmless provision and a secondary hold-harmless provision triggered at $2.25B. The 1984 formula is a more equitable distribution mechanism than the 1981 formula, but because of the high legislated value of the trigger, has only rarely been employed—specifically, twice over the past 17 years, and last during the fiscal year 1986. In this paper, the history and legislative amendments of LIHEAP will be briefly reviewed, and then the LIHEAP statute will be investigated in terms of the hold-harmless and give-back provisions. A general analytic and computational framework is developed to analyze the impact of the hold-harmless and give-back provisions, and aggregate system measures are employed to examine the manner in which these provisions distort the 1984 formula allocation percentages.