LIHEAP Impact on Communities of Color Authored by David Honig | Founder, EEA Joe Gibbons | Chairman, EEA | Former State Representative, Florida Prepared by the LIHEAP: Impact on Communities of Color Summary According to the United States Census Bureau, the national poverty rate in 2013 was 14.5 percent. In other words, approximately 45.3 million people in the United States live in poverty. Living in poverty can affect the health and safety of a household, especially when a family increasingly becomes unable to afford essential energy services. Home energy is critically important on the coldest days of winter and the hottest days of summer. Without essential energy service, the very basics, such as staying warm, are in jeopardy. Additionally, energy service often provides necessary power for home medical devices and appliances used for safely storing and then cooking food. The federal government has a long established energy assistance program to help our most vulnerable households heat and cool their homes. Created in 1981, the Low Income Energy Assistance Program (LIHEAP) assists seniors, the disabled, and the poor to meet home heating energy needs and avoid the harsh reality of deciding whether to buy food or heat their home. Unlike other eligibility-‐based programs, LIHEAP is not an entitlement program. Available benefits are limited by the amount Congress appropriates. While LIHEAP is widely considered an efficient and effective program, LIHEAP funding has fallen well short of the need. States, tribes, and territories that administer programs under LIHEAP are only able to provide assistance to a small portion of those who qualify. The proportion of those living in poverty is disproportionately greater within communities of color. The poverty rate for African Americans is roughly 25.8 percent, followed closely by Hispanics at 23.2 percent. Given that appropriations for LIHEAP only fund a portion of the need, the risk of energy insecurity and the choice between heating the home or having food on the table is more prevalent in these communities. Because the number of households eligible for LIHEAP is far greater than those able to be served, taking action to advocate for LIHEAP funding and ensure the continued effectiveness of the program is vital to the people and families of these communities.
What is LIHEAP? Title XXVI of the Omnibus Budget Reconciliation Act of 1981 established the Low Income Home Energy Assistance Program (LIHEAP). The program gives states, tribes and territories funding to operate home energy assistance programs for low-‐income households. The goal of the program is to make home energy bills for heating and cooling more affordable for low-‐income households. The bulk of the funding is broken down into two distinct categories: regular funds March 2015 1 LIHEAP: Impact on Communities of Color and emergency contingency funds. Regular funds, referred to as block funds or formula funds, are allotted to states according to a formula in the LIHEAP statute. Emergency contingency funds are released under emergency circumstances only at the discretion of the President or the Secretary of Health and Human Services (HHS). The LIHEAP statute outlines the ways program funds can be applied. The funds must be used to help households with heating and cooling energy costs. Some of the funds must be set aside to assist with acute energy crises, like weather-‐related and supply based issues, but states ultimately decide what circumstances warrant assistance in those cases. Approximately 15 percent of the funds can be used for weatherization, with a maximum of 25 percent if an available federal waiver is sought. Additionally, 5 percent of the funds may be used to help households reduce needs for energy through home energy assessments. LIHEAP caps administrative costs at 10 percent of available funding to ensure that funding reaches people in need of assistance. LIHEAP Eligibility Eligibility for the program is largely based on household income. The federal government sets the income threshold at below 150 percent of the federal poverty level (FPL) or, if greater, 60 percent of the state median income. Some states have adopted lower income limits because the funding has never been adequate to serve all people within the federal threshold; however, federal requirements do not allow an income limit under 110 percent of the FPL. States are tasked with conducting outreach to eligible households, especially those with elderly or disabled residents and those with high energy burdens. Those with the lowest incomes, and with the highest energy needs related to that income, typically receive the most assistance. Federal rules allow states to decide the value and distribution of benefits. A variety of factors determine how each state's program takes shape, including the cost of energy per household, the amount of energy used per household, and the number of eligible households. Benefits may be distributed directly to energy consumers or producers. Protecting the Most Vulnerable Households that receive assistance are generally the lowest income households within the LIHEAP income-‐eligible population. In addition, the significant presence of elderly, disabled, and young children in LIHEAP households underscores the importance of the program. Below are key statistics from the U. S. Department of Health and Human Services most recent (2014) report to Congress (reporting 2009 data): •
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The median household poverty level for recipients was 79 percent. 31 percent of households receiving assistance had at least one member 60 years or older. Approximately 32 percent of households receiving heating assistance included at least one member with a disability. March 2015 2 LIHEAP: Impact on Communities of Color 3 •
About 22 percent of households receiving heating assistance included at least one child five years of age or younger. Home Energy Burden To determine those most in need of LIHEAP assistance, it is important to understand the concept of home energy burden. Home energy burden is the The lower the proportion of income a household spends on home energy bills for heating, cooling, refrigeration, appliances, and lighting. household income, the According to the U.S. Department of Health and Human greater the percentage Services’ most recent report to Congress (2014, with 2009 data), the average LIHEAP recipient home energy burden was of household income is 16.4 percent. In comparison, the average home energy burden spent on energy. for all households and non-‐low income households (those with income greater than the LIHEAP income requirements) were 7.2 percent and 3.6 percent respectively. This is compounded by the reality that lower income households generally live in older, less efficient, more energy-‐porous dwellings that contribute to higher energy costs and a higher energy burden. Additionally, the home energy burden increases dramatically for LIHEAP eligible households as income level decreases. For example, using 2013 state Home Energy Affordability Gap data released by Fisher, Sheehan & Colton, the average home energy burden for a household at 125 to 150 percent of the FPL was 9.36 percent. In comparison, the burden was 32 percent for a household under 50 percent of the FPL. LIHEAP assistance is aimed at providing relief from the highest energy burdens, but even with assistance, a LIHEAP home energy burden can still be twice that of all households. The Income Disparity The growing economic divide, including the growing income inequality gap, amplifies the number of households that are struggling to meet their energy needs. According to the U.S. Census Bureau, the national overall poverty rate in 2013 was 14.5 percent. In comparison, the poverty rate for communities of color is significantly higher. U.S. Poverty Rates by Race and Hispanic Origin 30 20 10 0 White Black or African American Indian American and Alaska Nafve Asian Nafve Hawaiian Hispanic or Lafno and Other Paciﬁc Islander Data from taken from the U.S. Census Bureau’s 2007-‐2011 American Community Survey illustrates the greater degree of poverty within communities of color. The poverty rates for Black or African Americans and American Indian and Alaska Natives are over double the poverty March 2015 LIHEAP: Impact on Communities of Color rates for those identified as White, with 25.8 percent and 27 percent respectively. Hispanics are also disproportionately in poverty, with a poverty rate of 23.2 percent. The relatively high incidence of poverty among minorities makes LIHEAP program design and funding especially important to communities of color. LIHEAP Funding Each year, the President releases his proposed budget which includes a requested amount for LIHEAP funding. Throughout the course of deliberations in Washington, D.C., LIHEAP receives funding via appropriations made by Congress and subsequently approved by the President. Between FY 2010 and FY 2013, LIHEAP funding declined from $5.1 billion to $3.256 billion. Subsequently for FY 2014, LIHEAP funding rose slightly to $3.4 billion – still $1.7 billion short from FY 2010. The National Energy Assistance Directors’ Association (NEADA) estimates that during this period, the number of households receiving LIHEAP support declined from 8.1 million to 6.7 million. In addition, NEADA estimates that in FY 2010, the average LIHEAP grant could purchase roughly 60.2 percent of the cost of home heating. In FY 2014, with rising fuel costs, the average purchasing power of a LIHEAP grant declined to 44.5 percent of the cost of home heating. The Need for Action Simply being eligible for LIHEAP does not entitle a household to LIHEAP benefits. Available benefits are limited by the amount that Congress appropriates each year. Therefore, the number of households that are served in a given year depends both on appropriations and how grantees use their funding. A recent study conducted by the Office of Human Services Policy of the U.S. Department of Health and Human Services looked at LIHEAP programs in six states in varying regions, and with various climates, proportions of population in poverty, and sizes of LIHEAP grants. The study acknowledges the limited overall reach of LIHEAP funds from the federal government and the need for states to identify and use non-‐federal funding sources. Of the six states examined, not one state's LIHEAP allocation allowed for more than 25 percent of LIHEAP eligible households to receive assistance. March 2015 4 LIHEAP: Impact on Communities of Color 5 Percent of LIHEAP eligible households receiving LIHEAP 30 20 10 0 California Colorado Florida Illinois Maine Michigan Data taken from Approaches to Low-‐Income Energy Assistance Funding in Selected States (April 2014), ASPE Research Brief. National statistics for households receiving heating and winter crisis assistance is similar. For FY 2000 – FY 2009, the percentage of federally eligible households receiving assistance ranged from 13 percent to 21 percent. It should be noted that in FY 2009, LIHEAP was funded at an historic $5.1 billion level. Even with this level of funding, only 21 percent of those deemed eligible by federal guidelines received LIHEAP assistance. These data points illustrate and emphasize the need for action to support and increase LIHEAP funding. Steps Communities Can Take It is crucial that all communities encourage the federal government to increase LIHEAP funding. Administration of the program has been proven to work in getting assistance to low income households efficiently. The program simply lacks adequate funding to serve all of the eligible households. This means that many families face the difficult decision of choosing energy services over basic household needs like food and medicine. Even worse, families may resort to using unsafe use of other methods of heating their homes as they risk disconnection from utility services for inability to afford services. The following key strategies have been identified for communities to demonstrate their support of the LIHEAP program. •
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Understand LIHEAP. Most people have never heard of LIHEAP. The most important tool for ensuring the protection of this vital federal program is to disseminate information and education about its importance within our communities. Participate in LIHEAP Action Day coordinated by the National Energy and Utility Affordability Coalition (NEUAC). Often held in early spring, this advocacy day, which was most recently held in Washington, D.C. on March 25, 2015, allows supporters to engage members of Congress on the importance of LIHEAP. If a supporter cannot attend in person, email and online petitions of support are available. For further information on this and other events coordinated by NEUAC, visit www.neuac.org. March 2015 LIHEAP: Impact on Communities of Color •
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Engage in low-‐income energy assistance programs and councils in your state. Some states have commissions and councils, featuring membership from utilities, nonprofits, and the state government, which engage on a variety of low income energy issues, including LIHEAP. It is important for communities of color to locate, contact and engage these entities to ensure that the membership understands the disproportionate impact poverty has on communities of color. Be active when your state prepares its LIHEAP state plan. Filed by October 1 of each year, state plan designs should include outreach to communities of color just as the federal LIHEAP plan design requires outreach to seniors and the disabled. In addition, active engagement ensures that programs are designed in a manner that will benefit all communities. Spread the message of how help from LIHEAP can be received. Identify the entities in your state that are responsible for distributing LIHEAP funds. Ensure that communities of color have access to these resources and are knowledgeable of where to seek help, if needed. Become knowledgeable of other methods used by states and local entities to supplement LIHEAP funding. For example, some utilities offer discounts for seniors or low income customers. Encourage eligible members of your community to enroll if they qualify. Conclusion LIHEAP is an urgently needed, life-‐saving safety net. Like all such programs, it’s vital to ask the question “what would need to change for this program no longer to be necessary?” The answer is two-‐fold. First, society will need to create a wider pathway out of poverty. Ultimately no one should have to choose between heat and food. And second, the cost of energy should be as affordable as possible. While energy costs have generally declined due to the steady increase in domestic natural gas production, these costs still represent a disproportionately high percentage of the total expenditures of low income families. Expanded energy conservation programs, and affordable renewable energy sources such as wind and solar, could go a long way toward meeting the energy needs of our most vulnerable families. March 2015 6 LIHEAP: Impact on Communities of Color References and Resources (all links last visited March 27, 2015) Campaign for Home Energy Assistance. March 2014. “INVESTING in LIHEAP: Why Energy Assistance is More Important Than Ever.” http://liheap.org/cms/assets/uploads/2014/06/Investing_in_LIHEAP_2014.pdf Fisher, Sheehan & Colton. May 2014. “Home Energy Affordability Gap 2013 state data.” http://homeenergyaffordabilitygap.com/03a_affordabilityData.html Landley, Alana and Yuliya Rzad. April 2014. “Approaches to Low-‐Income Energy Assistance Funding In Selected States.” ASPE Research Brief, Office of the Assistant Secretary for Planning and Evaluation, Office of Human Services Policy, U.S. Department of Health and Human Services. http://aspe.hhs.gov/hsp/14/LIHEAP/rb_LIHEAP.pdf MacCartney, Suzanne, Alemayehu Bishaw, and Kayla Fontenot. February 2013. “Poverty Rates for Selected Detailed Race and Hispanic Groups by State and Place: 2007-‐2011. American Community Survey Briefs. http://www.census.gov/prod/2013pubs/acsbr11-‐17.pdf National Energy Assistance Directors’ Association. Spring 2014 “Cost of Winter Heating Continues to Climb, LIHEAP Purchasing Power Declines to 44.5% of the Cost of Home Heating.” http://neada.org/cost-‐of-‐winter-‐heating-‐continues-‐to-‐climb-‐liheap-‐purchasing-‐power-‐declines-‐to-‐44-‐5-‐of-‐the-‐cost-‐of-‐home-‐
heating/ Perl, Libby. February 7, 2014. “LIHEAP: Program and Funding.” Congressional Research Service http://www.ncsl.org/Portals/1/Documents/cyf/LIHEAPProgramFunding.pdf Perl, Libby. August 7, 2013. “The LIHEAP Formula, Legislative History and Current Law.” Congressional Research Service http://neada.org/wp-‐content/uploads/2013/08/CRSLIHEAPHISTORYRL332752.pdf U.S. Department of Health and Human Services. June 6, 2014. “Low Income Home Energy Assistance Program: Report to Congress for Fiscal Year 2009.” https://www.acf.hhs.gov/sites/default/files/ocs/rpt_fy09_liheap_rtc_final_052114_2.pdf March 2015 7