	Introduction to LIHEAP

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. The LIHEAP statute provides for two types of program funding: regular funds—sometimes referred to as block grant funds—and emergency contingency funds. 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. Territories receive funds separately as a percentage set aside of regular funds, so neither tribes nor territories are included in the formula discussion. 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). 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. 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. 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. 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. New Formula Percentage. 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). 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. Table C-1 , below, shows actual LIHEAP regular fund allocations to the states from FY2009 through FY2019. This appropriation to HEW is sometimes referred to as Low Income Supplemental Energy Allowances. 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 ).
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.
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.
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.
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.