LIHEAP is the largest federal program designed to address the home energy needs of low-income households. LIHEAP provides financial assistance for home heating and cooling costs. Within states eligibility is limited to those with incomes below either 60 percent of the state’s median income or 150 percent of the state’s poverty level, whichever is greater. LIHEAP has been helping low-income families manage energy costs and stay warm during the winter since 1982.
To help address upcoming winter heating needs, Congress should provide new funding to LIHEAP in the amount of $5.1 billion for the fiscal year, which is the amount that Congress is authorized (or able) to spend on the program. Beginning with fiscal year 2005, Congress was authorized to spend up to $5.7 billion dollars on LIHEAP each year—$5.1 billion on a regular block grant and $600 million in emergency contingency funds. However, since that time, the amount distributed via these funding streams has failed to surpass $3.2 billion. The available funding for FY 2008 was even lower, at $2.5 billion.
This low appropriation level will not be enough to help families with this year’s drastic increases in energy prices. It was not enough to comprehensively address previously existing needs. The program currently reaches only about 15.6 percent of eligible households. Due to limited resources, LIHEAP tends to target the poorest families and those with vulnerable members. Thus, despite the established income caps, 70 percent of recipients have incomes of less than 100 percent of the federal poverty level, which is currently $21,027 for a family of four.
What’s more, the actual value of the benefits received by individual households has been steadily declining. In 1981, each household received an average of $213 for their heating and winter crisis costs. By 2005, the inflation-adjusted value of the benefit had plummeted to $140. At the same time the value of the benefit has been going down, the price of home energy has been going up. Thus, LIHEAP assistance has been covering an increasingly smaller percentage of household heating bills.
Importantly, CAP has offered another policy proposal that would provide direct rebates to families of varying income levels to offset higher energy costs. Low-income households would benefit from such funds. However, these funds would compliment, rather than replace, additional LIHEAP funds, because they would serve those households with unusually high home energy bills in relation to their income, even as compared to other low-income families. Thus, measures designed to target the average household (or the average low-income household) would not fully meet the needs of those typically enrolled in LIHEAP.
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