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TESTIMONY OF OLIVIA A. GOLDEN
ASSISTANT SECRETARY FOR CHILDREN AND FAMILIES
DEPARTMENT OF HEALTH AND HUMAN SERVICES
BEFORE HEALTH, EDUCATION, LABOR AND PENSIONS
UNITED STATES SENATE
OCTOBER 3, 2000
Good morning, Mr. Chairman and members of the
Committee. I am Olivia Golden, Assistant Secretary for Children
and Families within the Department of Health and Human Services.
I appreciate the opportunity to appear before you today to
talk about the Low Income Home Energy Assistance Program (LIHEAP)
and how it helps millions of Americans maintain a safe, comfortable,
and stable home environment. The topic of this hearing - the
effect of the energy crisis on low-income families - takes
us back to the beginnings of the LIHEAP program. The program
grew out of a series of emergency programs generated by the
energy crises of the late 1970s. It took on its current form
with the realization that there needs to be a continuing Federal
role in ensuring that low income families and individuals
have adequate home energy balanced with State flexibility
in designing the best program approach to meet their needs.
The LIHEAP program continues to fulfill its dual responsibility
to provide ongoing assistance where it is most needed and
to respond to emergency situations such as extreme weather
conditions, supply disruptions, or price spikes. I will discuss
LIHEAP emergency contingency funding and the Leveraging Incentive
Program a little later, but first, I would like to tell you
more about the basic, underlying program.
LIHEAP Block Grant Program
In FY 1999, LIHEAP provided winter assistance to about 3.6
million households. Forty-seven percent of those households
included children; thirty-five percent included at least one
elderly person; sixty percent received food stamps; and thirty
percent received Supplemental Security Income (SSI). Twenty-four
percent of families receiving LIHEAP assistance did not receive
benefits under any other public assistance program, or reside
in subsidized housing.
The basic appropriation for FY 2000 was $1.1 billion, the
same level as in FY 1999. In its FY 2000 appropriations cycle,
Congress enacted an advance appropriation of $1.1 billion
for FY 2001, as requested by the President.
Funds are allocated to States based on a statutory formula
established when the program began based on low income population,
home energy expenditures by low-income households and cold
weather. Almost two-thirds of the funds go to Northeastern
and Upper Midwestern States. State and Federally recognized
tribes may request direct funding from the Department of Health
and Human Services, and about 130 tribes and tribal organizations
do so. A very small amount goes to the territories. When I
speak of States today, I really am referring to all LIHEAP
Types of Assistance
The LIHEAP statute defines "home energy" as a source of heating
or cooling in residential dwellings. All States run a heating
assistance program. Each LIHEAP grantee also has a method
to deal with households facing crisis situations -- generally
a shut-off notice or an empty fuel tank. Most States deal
with crises in a separate component that operates apart from,
and sometimes at different times than, the heating assistance
Help in paying winter heating bills can mean the difference
between self-sufficiency and financial disaster. An elderly
person, a family moving from welfare to self-sufficiency,
or a working parent may be able to make ends meet most of
the year. A LIHEAP benefit to help with the major heating
bill can make it possible for the elderly person to stay in
her home, for the family on welfare to move toward self-sufficiency,
and for the working parent to avoid having to seek other forms
of public assistance.
For example, according to a study on the relationship between
utility termination and homelessness, 32 percent of homes
in Philadelphia where electric service was discontinued were
abandoned within one year, as were 22 percent of the homes
where residential gas service was terminated. A study of the
effect of unaffordable home energy bills in Missouri found
that more than half of frequent movers claimed unaffordable
heating bills were an important factor contributing to their
most recent move. In this way, LIHEAP assists low-income families
with meeting their total housing costs.
You'll be hearing a little later from Jerry McKim, the administrator
of Iowa's Energy Assistance Program, about his state's recent
study that found that households faced with unaffordable energy
bills were going without basic necessities such as food and
medical care, or falling behind in paying their rent or mortgage
in order to pay their heating bill. We are impressed time
and again by the resourcefulness of LIHEAP staff in State
and local agencies to use LIHEAP funds to provide meaningful
help to families facing a home energy crisis. These workers
on the front lines generally resolve or avert the crisis by
telephoning the energy vendor, who maintains or restores service
based on an assurance that a LIHEAP benefit is to be paid.
If the household's arrearage is higher than the maximum benefit
amount, local workers often can find other sources of assistance
to supplement the LIHEAP benefit. They can also refer the
household to other forms of assistance they might need.
For example, Federal LIHEAP staff told me about one letter
they received from a man whose power had been disconnected.
He also was facing eviction because a motorcycle accident
had left him unable to work. The federal staff referred the
case to the State LIHEAP program. The local community action
agency caseworker not only helped the man get LIHEAP benefits,
but also helped him find a job and worked out a payment arrangement
with his landlord.
A LIHEAP crisis benefit obviously means a warm home (or sometimes
a cool one). But it also often means the difference between
a family staying in their home or having to move, with all
the disruption that entails. Having to move because there's
no heat can mean that a person can't get to his job, that
a child has to change school or leave a Head Start program,
or that child care arrangements must be changed.
LIHEAP funds also can be used to provide cooling assistance
in the summer, but block grant funds are not often used for
that purpose. While Only a few States have programs that offer
either heating or cooling assistance, very few have separate
cooling components under the block grant program.
Many States take advantage of the opportunity to use as much
as 15 percent of their LIHEAP funds for weatherization and
other low-cost energy-related repairs. Under certain circumstances,
a State can ask for a waiver to use up to 25 percent for weatherization.
The flexibility to use a small portion of LIHEAP funds in
this way allows States to help households make their energy
bills more affordable.
States can change their programs during the year simply by
amending their State plans. They do not need approval from
us to do so. This often happens when States receive emergency
contingency funds, but they can make changes at other times
Grantees may set their maximum income eligibility level as
low as 110 percent of the poverty level or as high as the
greater of 150 percent of the poverty level or 60 percent
of State median income.
Legislative changes in 1994 made it possible for grantees
to look less at absolute income levels and more at need. In
setting eligibility levels, States may give priority to households
that pay a large percentage of their income for home energy
or that include members who have the greatest energy need
because of age or health. We are engaged in a continuing process
with our grantees to give States the tools they need to make
their targeting more precise and to develop performance measures.
You will note that flexibility is a common theme in my testimony
on the LIHEAP block grant. I can't emphasize enough the importance
of the flexibility that the statute gives States to develop
their own programs. Clearly, the needs of Maine are very different
from the needs of Florida, or even Connecticut. Florida, undoubtedly,
is a lot warmer than Maine, but Florida also has about 12
times more low-income households than Maine. Connecticut and
Maine both have a lot of cold weather, but Maine is a much
more rural State than Connecticut. In Maine, small "Mom and
Pop" vendors, as opposed to large, commercial vendors, provide
about half of the fuel oil and kerosene for energy to low
income households. Even though all three of these states are
heavy users of fuel oil for heating, the different circumstances
of each state require that they negotiate different pricing
arrangements with vendorsnegotiating this type of energy for
low-income families requires different approaches. Small,
local vendors present more of a challenge for low-income families
in Maine than in much more For example, more urban States
such as Massachusetts or Connecticut can negotiate lower prices
for LIHEAP recipients because where the the larger commercial
vendors in these states can absorbnegotiated prices for this
population the reduction in price for this population. The
small, local vendors in Maine, by contrast, are less able
to offer discounted prices. States have wide flexibility to
adjust their programs to account for such local differences.
A number of States have been successful in negotiating reduced
rates for LIHEAP households. For example, Massachusetts and
Connecticut have very sophisticated pricing mechanisms that
allow them to pay a fixed rate over the price of fuel oil
in the harbor, thus realizing substantial savings for their
clients. Minnesota negotiates specific discount rates with
each of its fuel vendors.
Because the funding formula isvery heavily weighted by cold
weather patterns, the Northeastern and upper Midwestern States
receive LIHEAP funding that is proportionately greater than
States in the South or West. When it comes to LIHEAP, one
size definitely does not fit all.
Emergency Contingency Funds
In the 1994 LIHEAP reauthorization bill, Congress authorized
an annual emergency contingency fund. Funds appropriated for
this fund are available for immediate release in emergency
situations outlined in the statute, generally when there has
been unusually hot or cold weather or when there are supply
disruptions and/or sharp increases from normal home energy
prices. The number of States that receive funds, the amount
released, and the distribution among States depends on the
nature of the emergency situation.
This past fiscal year (FY 2000) saw emergency releases that
ran the gamut of emergency situations. Last winter, the President
exhausted the $300 million contingency fund appropriation
in three releases responding to very sharp increases in the
price of home heating oil and liquefied petroleum gas (or
LPG). These price increases affected all States, but primarily
those in the Northeast that have the largest proportion of
fuel oil users. For that reason, the bulk of these funds went
to the Northeastern States - with $215 million allocated based
exclusively on the impact of high fuel oil and LPG prices
on individual StatesStates, weighted by the number of low
income households in each State.
The President previously had released $5 million of FY 2000
emergency funds to New Jersey to help with the energy-related
needs arising from Hurricane Floyd.
In July, Congress enacted a supplemental appropriation that
included an additional $600 million in contingency funds,
as the President had requested. So far, the President has
released approximately $445 million of the available funds.
During the summer, a number of Southern states experienced
a heat waves that broke records for severity and duration..
The President released $35 million tothe 10 eight States most
severely impacted by the heat. He also released a little over
$9 million for two more localized crises in Alaska and California.
Finally, last week the President released $400 million so
that States could prepare for significant increases anticipated
in winter heating bills for users of fuel oil, LPG, and natural
gas. Half of this funding was allocated based on the normal
block grant formula and half based on the block grant formula
weighted by household use of these three fuels.
By releasing these funds now, the President made it possible
for States to plan ahead on how best to address price increases
in the fuels that their residents use. I can assure you we
will continue to monitor weather, supply and prices as the
winter progresses and respond appropriately.
Leveraging Incentive Program
In addition to the block grant and contingency funding, Congress
enacted a Leverage Incentive Program that rewards grantees
that successfully develop non-Federal resources to help low
income people meet their home heating and cooling needs. The
first grants under this program were made in FY 1992.
In FY 2000, we awarded $20.6 million to 37 States and 29
Tribal grantees that reported 491 countable leveraging activities
worth a total of $624.5 million. Examples of leveraging activities
include utility and fuel discounts, donations of materials
such as air conditioners or weatherization supplies, and State
or tribal funds added to the program.
This program has been very successful in increasing the assistance
available to help low income households keep warm during the
In conclusion, let me just reiterate that LIHEAP is a program
that works. Through the normal funding mechanisms, it works
to help millions of America's most needy families maintain
a healthy temperature in their homes. Through the emergency
contingency process, this program is able to respond to crisis
situations such as supply disruptions, price spikes or extreme
weather conditions. We can all be proud of the way LIHEAP
has worked to serve those most in need, including many hard-pressed
working families. This program is an excellent example of
the Administration, Congress, and the States working together
to design and continue to support a critical program.
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