The voices of Urban Institute's researchers and staff
September 19, 2017

Eliminating LIHEAP would leave poor families in the cold

September 19, 2017

The current administration’s budget would eliminate the Low-Income Home Energy Assistance Program, or LIHEAP. The March budget blueprint first noted the administration’s plan to eliminate all discretionary programs within the US Department of Health and Human Services’ Office of Community Services, including LIHEAP, because of purportedly weak impacts. In its May review of proposed budget savings and reforms, the administration justified LIHEAP’s elimination on two additional grounds: potential fraud and redundancy with other programs.

Limited evidence exists for those three justifications, but it is clear what could happen to families if Congress eliminates the program.

What is LIHEAP?

LIHEAP is a federal block grant to states that pays the electrical and gas utility bills for low-income families at times of need, particularly during the winter. Federal funding for LIHEAP has been steady over the past several years, with the program’s appropriation in the current federal budget at about $3.4 billion. As reported in the detailed fiscal year 2018 proposed budget, 6 million households nationally received heating assistance alone, with an average benefit of $371 per household annually, covering about half of each family’s heating bills. A family of four receiving LIHEAP assistance in 2016, for example, had a median income of $20,394.

The impacts claim

The March budget blueprint claims LIHEAP is a “lower-impact program and is unable to demonstrate strong performance outcomes.” But there have been no rigorous, national impact evaluations on recipient outcomes of LIHEAP. The national LIHEAP program and a few grantee states have conducted evaluations of whether and how their programs target the hardest to serve, and do so cost-effectively, but no studies look at the effects nationally and the impacts on the household recipients.

Because energy assistance is directly tied to energy access for low-income families, the impact of LIHEAP can best be estimated by changes in access if LIHEAP were cut. One national study, conducted in 2014, used simulations to estimate that eliminating LIHEAP would decrease the population of energy-secure households by 17 percent, leading to an increase in late, reduced, or nonpaid energy bills among this vulnerable population. The study also suggested that 56 percent of the energy-insecure population eligible for LIHEAP does not receive the benefits because of current funding levels.

Nonpayment or late payment of energy bills is an obvious counterfactual to assistance, with various repercussions for families (such as utility cutoffs), including coping strategies for dealing with the lack of electricity or gas. Exploratory studies have described what poor households do when they cannot afford their energy bills, including life-threatening actions. The subject of “energy poverty” is gaining attention and merits more rigorous evaluation of the impacts of interventions like LIHEAP on energy, financial, and health outcomes.

The fraud claim

The White House described LIHEAP as a federal program “known to have sizeable fraud and abuse, leading to program integrity concerns.” The review cited a 2010 Government Accountability Office study that described instances of states’ program applications using deceased or incarcerated people’s names as a sign that the national program lacked proper oversight.

In 1994, Congress instructed LIHEAP to reassess grantees’ benefit structures to ensure that the states were targeting the low-income households with the highest energy costs or needs. As a block grant program, LIHEAP can recommend and review states’ internal controls but not dictate them. LIHEAP can recommend various strategies, and it has done so since the 2010 report.

The May review notes that “states have taken steps…towards improving the verification of identify and income” since the study was conducted over seven years ago. LIHEAP has also developed a centralized performance and output monitoring system that lays the groundwork for tracking and for future research and evaluation.

The redundancy claim

The White House budget argues that many states have enacted laws or adopted programs to protect households who cannot pay their energy bills during times of personal financial distress, such as “disconnection” rules that prohibit utilities from terminating service, especially in times of extreme heat or cold. But many utilities rely on LIHEAP payments to comply with these rules.

The terms of these rules vary across states by household members’ age, physical challenge, and medical conditions and depend on local seasonal temperatures, not necessarily on household income or financial distress. They also do not apply for most municipal utilities and rural electric cooperatives and often require households to agree to alternative payment plans. These state rules are devised to keep the elderly and physically challenged from freezing. In contrast, LIHEAP is designed to keep poor children, families, and elderly and physically challenged individuals from the same fate.

Beyond other energy assistance programs, LIHEAP supplements but contrasts with other safety net programs. Compared with other income assistance or programs that provide other basic life necessities, LIHEAP provides utility payment assistance, including help for households in the extreme cases that may result in risks to life and health (such as winter freezes and summer heat waves).

The other national assistance program targeting home energy use is the US Department of Energy’s Weatherization Assistance Program (WAP), which pays for the energy-efficiency retrofits that decrease long-term energy needs. Some coordination exists between LIHEAP and WAP grantees, with some LIHEAP funds used for weatherization. But long-term retrofits cost more than immediate energy bills, and at a fiscal year 2017 funding appropriation of $215 million, WAP can cover only a few homes in need. WAP is also on the chopping block in the current budget proposal.

Keeping the fires burning

More than 6 million households, most of them within incomes below the federal poverty level, would lose resources if LIHEAP were eliminated. The average household would lose the equivalent of $366 annually (factoring in regular heating assistance plus crisis help).

Scholars and energy assistance professionals agree that additional tweaks of LIHEAP implementation are in order, such as

  1. improving states’ compliance and eligibility standards to reduce fraud and increase efficiencies,
  2. focusing on households in most financial need, and
  3. coordinating with national and local weatherization programs and housing quality programs to ensure a long-term reduction in the number homes whose occupants need LIHEAP.

Whether social assistance should be offered in other forms rather than energy bill payments also requires further study. But there is little criticism of the program’s purpose—the basic humanitarian goal of assistance—and without alternative options on the table, LIHEAP plays a crucial role for poor families.

In this Tuesday May 2, 2017 photo, Todd Alexander poses at his mobile home in Milton, Vt., that he heats with the help of the Low Income Heating Home Energy Assistance Program. Alexander, who is disabled and living on disability, said the assistance has helped him meet his energy needs and still have money left over to live. Photo by Wilson Ring/AP.

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