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Targeting LIHEAP Benefits STATE STRATEGIES BASED ON HOUSEHOLD INCOME,
SECTION 1: PERCENTAGE OF INCOME TARGETING SECTION 2: BURDEN-BASED TARGETING SECTION 3: COST-BASED TARGETING Assuring that the highest LIHEAP benefit goes to households with the lowest incomes and highest energy costs in relation to income has always been an integral part of LIHEAP. Prior to 1994, Congress had charged program administrators to develop strategies to "assure that the highest benefits go to households with the lowest incomes and the highest energy costs in relation to income, taking into account family size," (Section 2605(b)(5), LIHEAP statute). In its 1994 reauthorization of the LIHEAP program (Public Law 103-252, signed May 18, 1994), Congress put additional emphasis on awarding benefits to those who needed them most by defining the purpose of LIHEAP as, in part, to "provide assistance to low-income households in meeting their home energy costs, particularly those with the lowest incomes that pay a high proportion of household income for home energy." Further, Section 2605(b)(5), cited above, and the one most relevant to this paper, was changed. States must now "provide, in a timely manner, that the highest level of assistance will be furnished to those households which have the lowest incomesand the highest energy costs or needsin relation to income, taking into account family size," (emphasis added). For the first time, Congress defined both "energy burden" and "energy needs." "Energy burden" was defined as "the expenditures of the household for home energy divided by the income of the household." The phrase "highest home energy needs" was described as "taking into account both the energy burden of such household and the unique situation of such household that results from having members of vulnerable populations, including very young children, individuals with disabilities, and frail older individuals." LIHEAP statutory amendments based on Public Law 103-252 require that states consider a household's energy need and energy burden at three programmatic points: outreach activities, eligibility determination, and provision of assistance. In addition to the statute's additional emphasis on providing assistance to high burden households, Congressional committee notes made strong recommendations on that subject. In Congressional committee notes referencing the legislation (House Report 103-483 on H. R. 4250, Committee on Education and Labor), Congress explained its concern in expanding the statute as follows:
Congress's concern over the energy burden of the low income was certainly not the first or the last time it had been called to public attention. Publications by the federal government and advocacy groups have noted the disproportionate energy burden of the low income for over a decade. The Department of Health and Human Services in the LIHEAP Home Energy Notebook for Fiscal Year 1999 compared the energy burden of all households, low-income households and LIHEAP recipient households, both for total residential energy costs and for home energy, i.e., only heating or cooling costs. The Notebook reported that the residential energy burden for low-income households was 12.5 percent and for LIHEAP recipients it was 14.8 percent, compared with 6.1 percent for all households. The home heating burden for all households was 1.9 percent, compared with 3.8 percent for low-income households and 5.2 percent for LIHEAP recipients. In January 1995, the National Consumer Law Center (NCLC) published Energy and the Poor: The Crisis Continues, which offered a state-by-state analysis of the energy burden carried by the nation's low-income households. Among other things, NCLC's analysis revealed:
A 2001 publication titled "The Winter Energy Outlook for the Poor," by Economic Opportunity Studies (EOS), detailed a more serious energy burden situation for America's low-income families. After several years of relatively mild weather and stable energy prices, the winter of 2000-01 saw heating oil, propane and natural gas prices jump by at least 50 percent. The EOS study reported the following impacts on low-income households that winter:
While the Department of Energy has predicted lower prices for the winter of 2001-2002, no heating fuel is predicted to return to its pre-2000 prices. As a result, the energy burdens of the poor are expected to remain high in 2002, according to EOS. Since the inception of LIHEAP, states have developed a variety of targeting strategies to assure more equitable benefit levels based on income, energy costs and energy burden. In this paper, the LIHEAP Clearinghouse updates its 1996 compilation on state variations in targeting of LIHEAP benefits. The purpose of this paper is to select sample variations; it is not intended to cover all states' methods. The Clearinghouse has identified three separate approaches employed among the states. 1) The first approach is called the percentage of income payment plan (PIPP). The FY 2001 programs of North Dakota, and Ohio are highlighted in the first section of this report, along with Colorado's and Rhode Island's programs, which resemble PIPPs. (Note: While there are numerous utility-sponsored PIPPs and variations upon them, they are beyond the scope of this paper. More information is available from the National Consumer Law Center and the LIHEAP Clearinghouse.) 2) The second approach is called burden based targeting. Employed by some states in response to the 1994 LIHEAP statute reauthorization, it determines individual client energy burdens and directly factors them into the LIHEAP benefit determination, along with other factors such as presence of vulnerable persons (elderly, disabled or households with children) in the household. The FY 2001 practices of the states of Arizona, Louisiana, New York and California are detailed in Section Two within. 3) The third approach is called the cost-based method and it bases LIHEAP benefits on actual heating costs (or a reasonably accurate estimate thereof), with benefit matrices designed to ensure that those with the highest costs and lowest incomes receive the highest benefits. Of these cost-based approaches, FY 2001 examples from New Hampshire, Minnesota, Washington, and Wisconsin are detailed in Section Three of this paper. The examples cited in this paper are for information purposes only and do not indicate endorsement by the U.S. Department of Health and Human Services. SECTION 1: PERCENTAGE OF INCOME TARGETING Ohio has had a statewide Percentage of Income Payment Plan (PIPP) since 1983 when it was created by the Public Utilities Commission of Ohio (PUCO). It is the largest and oldest state mandated PIPP in the country, serving about 200,000 households each year. Qualifying PIPP customers pay 10 percent of the household's current gross monthly income to the utility company which provides the primary source of heat, (typically natural gas) and 5 percent of the household's current gross monthly income to the company providing the secondary source of heat, (typically electricity). A customer served by a combination utility company or an all electric home pays 15 percent of monthly income to that utility company. Those customers with electricity as their primary heat source pay the specified percentage of income during the heating season, (November 1 through April 15); during the non-heating season (April 16 through October 31), they pay the percentage of income or the current bill, whichever is higher. Gas heat customers pay the 10 percent of their income year round. Customers who are at or below 50 percent of the federal poverty level pay 3 percent instead of 5 percent for their secondary source of heat during the winter season only. Or, if the lower income customer is served by a combination utility company or has only one heating source, the customer pays 13 percent of gross monthly income to that utility company. If customers remain current on their PIPP payments, they cannot be shut off at any time regardless of the amount of their arrears. The PIPP only applies to customers of gas and electric utilities regulated by the Public Utility Commission of Ohio; customers of municipal or cooperative utilities cannot participate. The amount of the bill not covered by a combination of the customer's PIPP payment, the LIHEAP payment, and any other energy assistance the customer may receive, is recovered through a tariff rider or surcharge on gas and electric utility bills. With the passage of electric utility restructuring legislation in Ohio in 1999, the electric portion of the PIPP underwent several changes. Formerly each regulated utility company administered its own PIPP accounts; the restructuring legislation required that electric PIPP accounts be administered through the Ohio Office of Community Services (OCS), the LIHEAP grantee. (The gas portion of the PIPP remains unchanged.) The electric PIPP rider was changed to a Universal Service Rider effective September 1, 2000, and all customer classes are assessed the rider. The electric utilities are required to collect rider revenues and remit them to OCS, which keeps them in an interest-bearing account called the Universal Service Fund (USF). OCS returns the verified amount of unpaid PIPP bills, or arrears, to the appropriate utility. Remaining funds from the rider collections stay in the USF, to be spent on a targeted energy efficiency program and consumer education services to high consumption, high arrears PIPP households. According to Nick Sunday, state LIHEAP director, this provision of the restructuring law allows targeting of energy efficiency and consumer education services to high burden PIPP households starting in October 2001. OCS coordinates with the Ohio Office of Energy Efficiency, the weatherization grantee, to monitor monthly consumption, bill payment and arrearage data from electric utilities for their PIPP accounts. Households whose total energy burdens exceed a certain threshold (to be determined by the two state agencies by October 1, 2001) will be eligible for individually targeted services, to include electric baseload energy efficiency, weatherization measures, and energy efficiency education. The baseload and education measures will largely be funded by the USF; weatherization by the Weatherization Assistance Program. The combined resources of LIHEAP and the USF, if property targeted, should reduce not only the cost of the PIPP to all ratepayers by reducing total accumulated arrears, but, most importantly, the energy cost burden on low-income consumers, Sunday said. Ohio's LIHEAP is coordinated with the PIPP; households may sign up for both at the same time on a joint application. In practice, most households are enrolled or reinstated in the PIPP when they apply for LIHEAP crisis assistance. The LIHEAP program determines household eligibility for PIPP, and each year reverifies eligibility. Households must apply for LIHEAP in order to qualify for PIPP, and income eligibility for both LIHEAP and the PIPP is 150 percent of the federal poverty level. In addition to the targeting provided by the PIPP, Ohio's LIHEAP payment matrix takes into account prices for all fuel types by utility or provider, household size, income, and location in the state. The LIHEAP program then uses heating cost estimates to determine its benefit distribution range by poverty ratio. In FY 2000, for those households at the lowest income level, the LIHEAP benefit covered up to 38 percent of winter heating costs; for those at the highest poverty level, LIHEAP covered about 14 percent of winter heating costs. For more information, contact Nick Sunday, Dept. of Development, 77 South High St., 25th Floor, Columbus, OH 43266-0413; (614) 644-6846; nsunday@odod.state.oh.us. The state is a pioneer in targeting, having had a percentage of income program with calculations for energy burden since 1980. In a paper written for a LIHEAP workshop on targeting in 1987, former North Dakota LIHEAP coordinator Lawrence De Bilzan explained how the state complied with the existing LIHEAP statute (which required that states assure that the highest level of assistance is provided to households with the lowest incomes and the highest energy costs in relation to income). "To accomplish this goal, or requirement," De Bilzan wrote, "we assumed we had to compute a specific benefit for each individual household that takes into account their income and energy cost. Developing a system of computing benefits that integrated the cost of heat, the household burden, the household income and the benefits needed became our objective." The result of North Dakota's formula, he continued, was successful targeting of the highest level of LIHEAP benefits to the lowest income households that have the greatest heat burden. "Households with the lowest income may not receive the highest benefit if their heat burden is low. Conversely, a household with a higher level of income may receive greater benefits if their heat burden is greater." The state does not get actual costs from utilities, but does have a cost/consumption table for each county that is based on average usage or consumption for various sizes of living units, types of buildings and types of fuel. The consumption data, obtained from the Department of Housing and Urban Development (HUD), is stated in BTUs per hour by housing type and was developed by HUD in the late 1970s from records of actual fuel used by its low-income housing assistance recipients. The consumption figures are combined with heating-degree-day data for various locations within the state, along with projected fuels costs, which are updated annually by fuel suppliers on a county-by-county basis. The result is a table listing heating costs by county, by building type, number of bedrooms, fuel type and supplier. Heating assistance benefits are an individually determined percentage of the eligible household's estimated heat costs incurred during the heating season, October through May. The amount the household can afford to pay is based on family size and income as follows:
The household's "percentage of income heat burden" is the dollar amount above divided by the estimated cost of heat from the cost/consumption tables rounded down to the nearest 5 percent. The remainder is the LIHEAP percentage share of the actual heat cost, rounded up to the nearest 5 percent. For example: a one-person household at 40 percent of the state median income with an income of $10,608 had an affordable payment of $424. ($10,608 times 4 percent). The person lived in a one-bedroom, electrically heated unit, whose estimated heat cost, per the cost/consumption tables, was $640. Dividing $424 by $640 equals 66 percent, which, rounded down to the nearest five percent, equals 65 percent. This is the percentage the household must pay of its actual heating costs. The LIHEAP program pays the remainder, 35 percent. Some households can demonstrate that they maintain home temperatures higher than anticipated in the cost/consumption table due to members' age, disability or health problems. If so, the household's percentage share will be based on actual costs from the previous year. The maximum percentage of actual heating costs that LIHEAP pays is 95 percent, and the minimum is 10 percent. Eligible households whose LIHEAP percentage is less than 6 percent will receive a one-time $50 cash benefit. On average, according to North Dakota assistant LIHEAP director Ron Knutson, LIHEAP pays about 65 percent of heating costs and clients pay 35 percent. The average benefit in FY 2000 was $368. Unlike Colorado's program, North Dakota households are required to make the co-payment, although compliance is monitored by vendors, not the program itself. When clients are approved for the program, they receive a notice saying they are responsible for the predetermined percentage of their heating bill from October through May. The household makes its co-payment directly to the supplier and the state makes the LIHEAP co-payment directly to the supplier on behalf of the eligible household. Knutson said most households make their co-payments. To ease their co-payment obligation, households are encouraged to enter into even monthly payment plans with their supplier. For more information, contact Ron Knutson, Dept. of Human Services, State Capitol, 3rd Floor, Bismarck, ND 58505; (701) 328-4882; soknur@state.nd.us. Colorado's targeting method resembles a PIPP in that a household income contribution is built into the matrix. The difference is that the contribution is a "soft commitment," according to former LIHEAP director Glenn Cooper, because the household doesn't have to make the contribution directly; rather, it is deducted up-front from benefits. Whenever possible, Colorado reviews home heating costs from the previous winter, along with household income, to calculate LIHEAP benefits. According to Colorado's state plan, "Benefits will equal estimated home heating costs minus a household income contribution." The only change Colorado has made to its formula in recent years has been to raise benefit levels by 100 percent across the board for FY 2001 due to escalating energy costs, especially natural gas, and state legislation, passed in January 2001, providing an additional $10 million in state severance tax funds to LIHEAP. In FY 2001, Colorado's formula for determining the contribution was as follows: households at 0-75 percent of poverty contributed nothing; households at 76- 100 percent contributed 1 percent of countable income and, households at 101-150 percent contributed 2 percent of countable income, and households at 151-185 percent of poverty contributed 3 percent of their countable income. Colorado calculates estimated home heating costs by using the six-month home heating costs from the previous winter for the primary heating source, which vendors are required to provide. In those situations when heating costs from a previous year are not available, Colorado employs a "flat-rate model," based on historical data, fuel and household types, to estimate heating costs. The following example from an actual case shows how Colorado's calculation works: A household of two persons with a total monthly income of $902.85 applied for LIHEAP benefits. The household's six-month heating bill was $321.08, which when divided by 6 to determine a one-month heating average, equaled $53.51. Then, after consulting information about the household's poverty level and the state's "Household Income Contribution Table," energy assistance personnel determined a household income contribution percentage. In this case, the household's contribution percentage was 1 percent of the total monthly income of $902.85. One percent of that amount is $9.03 The household contribution, $9.03, was then subtracted from $53.51, leaving $44.45. Multiplied by 6 months, this figure then established this particular household's energy assistance benefit of $266.88. (Because the state doubled its benefits for 2001, the benefit that year would be $533.76.) In recalling how the state's payment system originated a decade ago, Cooper said the state was sued in 1985 by legal services advocates who claimed that the payment matrix in effect at the time, based in part on climate zones, was inaccurate and inequitable. The advocates recommended a graduated income contribution as a basis for payment. The first year the household contribution scale ranged from 1 to 8 percent of income, Cooper recalled. However, this formula proved unworkable; many clients were denied benefits because their income contribution exceeded their heating costs. Since then, the household income contribution has been capped at 4 percent, and the percentages for each income group have varied each year depending on the amount of LIHEAP funds available. For more information, contact Glenn Cooper, or Ann Peden, Dept. of Human Services, 1575 Sherman St., Rm. 319, Denver, CO 80203; (303) 866-5970; glenn.cooper@state.co.us; ann.peden@state.co.us Rhode Island operated a statewide Percentage of Income Payment Plan (PIPP) from 1992 through 1997. In 1998 the state began to determine benefits from a new formula based on poverty level, average fuel budget, and burden. The new method "keeps the spirit of the PIPP" by retaining two of its key components - arrearage forgiveness and budget pay plans for clients - while simplifying and streamlining a process that had become an administrative burden, said state LIHEAP director Matt Guglielmetti. Under the PIPP, clients were required to make monthly co-payments that ranged from 5 to 10 percent for gas heated households and 8 to 15 percent for electrically heated households. However, during FY 1997, its last year, Guglielmetti said the PIPP was serving fewer households, the copayment was getting too high for people to afford, and administrative costs were becoming unwieldy. These problems were in part due to reduced LIHEAP funding, which affected the PIPP because LIHEAP picked up the difference between the household's copayment and actual costs. If clients didn't make their copayments, the LIHEAP payment was held up and they could be taken off the PIPP, resulting in massive paperwork and extensive year-end balancing. Under the current program, the LIHEAP payment is made upfront, which works out better for clients, utilities and the state, Guglielmetti said. Utilities subtract the amount of the LIHEAP benefit and bill the client for the remainder as part of a levelized monthly budget plan; they also forgive client arrears. One large gas utility matches 35 percent of the LIHEAP grant. According to Rhode Island's FY 2002 LIHEAP plan, the LIHEAP benefits are determined from a formula as follows:
For more information, contact Matt Guglielmetti, Department of Administration, Div. of Central Services, One Capitol Hill, Providence, RI 02908; (401) 222-6920; matteog@gw.doa.state.ri.us. SECTION 2: BURDEN-BASED TARGETING The state of Arizona's targeting strategy, for both its heating and cooling assistance programs, employs a point system which considers household income, energy burden, and energy need. For example, according to criteria adopted in October 1995 and still in effect, a household at 0-50 percent of poverty is assigned 5 points and a household at 111-150 percent is assigned 1 point. A household whose energy burden is 21 percent (or more) of its household income is assigned 6 points and one whose burden is but 5 percent is assigned 0 points. The "energy need" criteria can assign 1 point for an elderly resident, 1 point for a disabled resident, and 1 for a child age 6 and under (with a maximum of 3 points per household allowed for energy need criteria as it applies). Households whose points total between 12 and 14 can receive between $150-$300, between 7 and 11 points, $100-$250; between 3 to 6, $50-$150. Households with 0-2 points will not receive LIHEAP benefits. To determine a household's energy burden, Arizona examines a one-month utility bill that covers a 30-day period. (The bill may be the current bill or past due; if it's a past due bill covering 2 months or more, the state takes the larger month's amount). It considers both electric and gas bills (or if the household uses propane or wood). If the applicant does not have copies of such bills, Arizona contacts an electric utility for a copy of the electric bill and allows a maximum of $30 for a gas or propane bill and $150 for wood. Utility bills are added to determine a "monthly utility cost." Monthly utility cost divided by monthly gross income provides the household's energy burden percentage. Estella Tapia of Arizona's LIHEAP program, providing data from an actual case file, offered an example of how their point system works: An 84-year-old disabled woman applied for assistance. Her monthly income of $758.10 (from Social Security) placed her in the range of 81-110 percent of poverty. For this, she received 3 points. Her one-month electric bill was $40, her gas bill was $34, totaling $74. This figure was divided by her monthly income of $758, placing her "energy burden" in the range of 6-10 percent. For energy burden, she received 3 points. A calculation of the client's "energy need," which awards points based on vulnerability, awarded her 1 point for being elderly and 1 point for being disabled. Thus, this client's total points were 8, placing her in the $100-$250 payment level. The LIHEAP program agreed to pay her electric and gas bills, providing a LIHEAP benefit of $100. Agencies must pay within the point ranges, they cannot pay below the minimum or exceed the maximum amounts. For more information, contact Vicki Chambers, Dept. of Economic
Security, P.O. Box 6123, Phoenix, AZ 85005; (602) 542-6633; vchambers@mail.de.state.az.us. California utilizes a two-step process in determining a household's eligibility for LIHEAP. This process takes into consideration not only a household's gross monthly income, but additional households factors including: energy burden, vulnerable populations, and other relevant criteria (determined at the local level by each individual service provider). Additionally, local agencies prioritize eligibility (services) by assigning priority points to each of considered priority factors, and households with the highest total of priority points receive assistance. The agencies report to the state the number of households served in the targeted vulnerable categories. LIHEAP benefits are issued using a similar concept to ensure that households with lessor incomes receive the highest possible benefit level available within the residing county. Benefits for LIHEAP are structured and specific to each individual county within California. Utilizing county specific factors (gas & electric energy costs and climate), obtained via annual Utility Company Rate Surveys responses, the department establishes county and state estimates for residential energy costs. These county factors, also referred to as County Coefficients, represent the estimated cost of residential energy for an individual county in relationship to the statewide estimate residential energy costs. County coefficients serve as a factor in determining the amount of a LIHEAP benefit. As a result, counties with the higher county coefficient will receive higher benefit levels. A second factor in determining LIHEAP benefit levels is the Poverty Group factor, also referred to as the Poverty Group Coefficient. This factor represents the approximate number of months the benefit will assist the client, and is structured to provide more months of assistance to households with lessor incomes. The following matrix represents the four Poverty Groups, the assigned levels of poverty, and the estimated months of assistance:
In addition, local administering agencies are required to submit annual goals and priority plans identifying targeted demographic groups and methods for determining prioritization of services. These goals are monitored throughout the year for compliance. Clients must provide proof of their gross monthly income and a documentation of the households total energy costs, (utility bills) so that eligibility and energy burden can be determined on an individual basis. On their annual goal forms, agencies establish their goals for the year: For example, an agency's goal for LIHEAP might be that households assisted for HEAP will have an average energy burden of at least 15 percent. Agencies may set differing goals for HEAP, ECIP and weatherization depending on their local needs. Goals must also be set for targeting of households with vulnerable populations; for example, an agency may decide that no less than 10 percent of the total HEAP households served will have at least one person who is a member of one of the vulnerable population groups listed above. In response to a "2000 LIHEAP Survey on Managing for Results," California reported that it had exceeded its targeting projections in regard to serving high burden and vulnerable households. For example, the HEAP projected statewide average energy burden for households with at least one member of a vulnerable population was 9.8 percent. The actual statewide average energy burden for households in vulnerable populations ranged from 13.4 percent to 8.5 percent. For more information, contact Jason Wimbley, Department of Community Services and Development, 700 North 10th Street, Room 258, Sacramento, California 95814; (916) 323-8694; jwimbley@csd.ca.gov. Since 1994 the state has structured its benefit payments to take into account energy burden and households containing children 5 years old or younger, as well as disabled or elderly individuals (60 years and older). A household's one month energy bill (generally the month of application) is divided by the household's monthly income. The percentage figure obtained (the energy burden) is utilized to determine the fixed rate that will be credited toward utility costs. Maximum and minimum benefit levels are determined by the amount of LIHEAP funding. The following fixed rate benefit schedule is used:
As household size increases, the benefit is increased by $10 in each percentage category and $10 is added for each household containing children, or a disabled or elderly individual. The maximum benefit for FY 2001 was $190, and the minimum was $50. The program operates year round, with half of benefit funds allocated for heating assistance benefits and half for cooling, and people generally apply during the coldest or hottest months when their bill is highest. For more information, contact Eileen Fourroux, Louisiana Housing
Finance Agency, Energy Assistance Section, 200 Lafayette Street,
Suite 102, Baton Rouge, Louisiana 70801; (225) 342-1320, Ext. 304;
efourroux@lhfa.state.la.us.
New York targets benefits by considering income, household size, energy burden, and vulnerable members of households. New York defines "vulnerable" households as those "containing elderly person(s) (age 60 or older), disabled individual(s), and a child or children under 8 years of age." New York directs higher benefits to "heater" households, defined as "those households responsible for payment of their primary heating costs." By comparison, "non-heater" households are "those non-subsidized households which are not directly responsible for their primary heating costs but which pay for heat through an undesignated portion of their monthly rent or mortgage payment." To determine benefits for heater households, New York has developed a point system (comparable to Arizona's) that considers: income, existence in household of a "vulnerable" resident, household size and applicant's energy burden ratio. New York has established a "Statewide Energy Costs Proxy," which varies according to fuel type and household size, to estimate household energy costs. In situations where a household's actual costs might land it in a higher energy burden ratio category, households have the option of providing documentation of those costs. To determine annual household income, New York takes a household's gross income during the month of application and multiplies that figure by 12. For FY 2001, New York's point system consisted of the following:
With this formula, an eligible household could tally between 2 and 8 points. Like Arizona, New York assigns a dollar value to each point depending upon that year's available funding. Household benefits would then equal total points multiplied by the point value. In its FY 2001 state plan, New York offered the following example: "Ms. B., a Family Assistance recipient, and her two young children (ages 2 and 4) rent an apartment and are responsible for payment of a natural gas primary heating bill. Ms. B.'s energy burden ratio is determined to be 13 percent. Ms. B.'s total point value is 6," based on the following:
Then, if the statewide per-point dollar value was $50, Ms. B.'s HEAP benefit would be $300 (6 points X $50 = $300). Meanwhile, eligible "non-heating" households receive benefits based on a two-tier payment structure linked to income. In FY 2001, Tier I households received a non-heating benefit of $50; Tier II households received a benefit equal to $40. For more information, contact Mr. Bruce Bowdy, LIHEAP Coordinator, Dept. of Social Services, 40 North Pearl Street, Albany, NY 12243-0001; (518) 473-0332; bruce.bowdy@dfa.state.ny.us. SECTION 3: COST-BASED TARGETING Minnesota's targeting formula considers income, household size and the actual cost of heating fuel for 12 consecutive months including the previous heating season (October 1 through May 31). To verify actual heating costs for the household, Minnesota uses the customer's vendor record. To determine the amount of assistance a household will receive Minnesota's 2001 EAP Income Eligibility Guideline Table, Cost-based Matrix is used (see below). Using the chart, the example below shows how to determine the benefit for a household of three with a gross income of $3,000 for the previous three months and heating costs of $675 for the previous 12 months.
For more information, contact John M. Harvanko, Director, Office of Energy Programs, 390 N. Robert, Annex, St. Paul, MN 55101, (651) 284-3275, john.harvanko@state.mn.us New Hampshire grants the highest benefits to those households which have both the lowest income (75 percent of poverty or lower) and the highest energy cost. A "double matrix" approach determines benefits. The matrix has two components: part one is based upon household income (adjusted for family size); part two is based upon the previous year's home heating energy costs. (See matrix below). Annual heating costs are determined in one of two ways: the qualified household can provide documentation of actual heating costs or the local CAP can consult state-generated "heating tables." The tables divide New Hampshire into six regions (degree days in the state range from 6,500 to 12,500) and consider building type (single family house, multi-family residence, or mobile home) number of rooms, and fuel type. These tables are updated regularly and the current tables take into account fuel price escalations in 2001. New Hampshire's LIHEAP program has 24 different benefit levels. The household income levels are: 75, 100, 125, 150, and 250 percent of poverty (which is equivalent to 60 percent of the state median income, that state's income maximum). The home heating energy costs levels are: $100-$600, $601-$900, $901-$1200, and $1,201 and above. Thus, a household at 75 percent of poverty with heating costs of more than $1,200 receives the greatest benefit. And, conversely, a household 60 percent of state median income with heating costs of $600 or less receives the smallest benefit. New Hampshire Benefit Matrix Chart
For more information, contact Celeste Lovett, Office of Energy and Community Services, 57 Regional Drive, Concord, NH 03301-8506; (603) 271-2611; clovett@gov.state.nh.us Washington has been using a heat-cost based method of targeting benefits since 1996. Benefits are determined through a mathematical formula that uses individual household income, household size and annual heat costs to determine benefits. Heating costs are attained by the local agencies who can either access utility records through a dedicated computer terminal or online through a secure connection. Or, clients may bring in a copy of their bills. Washington calculates the heat cost as follows: After compiling the client's last 12 months of utility costs, it takes the lowest monthly or bi-monthly bill and multiplies it by 12 or 6 respectively. The subsequent total provides a "non-heating baseline cost." The remainder is the heat cost. Households at zero percent of poverty receive a benefit equal to 90 percent of their annual heat costs, and households at 125 percent of poverty will receive a benefit equal to 50 percent of their annual heat costs. All households with incomes between zero and 125 percent of poverty will receive benefits which range between 50 and 90 percent of their annual heat costs. For FY 2001, benefits were subject to a maximum of $700 and minimum of $25; the state expected to raise the maximum to $750 for FY 2002. When heat cost information is not available, a back-up heat cost chart is used. Back-up heat cost charts are developed for: households that heat with wood; for oil and propane heated households without 12 months of vendor receipts; for electric and gas heated households without 12 months billing history; and for households whose heat is included in their rental payments. These charts are based on actual heat costs from the most recent client database, to the extent possible. Depending on the household's dwelling type, a percentage of the back-up heat costs is used to determine benefits as follows: 100 percent for single family detached, duplex and triplex households; 75 percent for four-plex, townhouse, rowhouse and one and two story apartment building households; and 60 percent for high rise and/or three story or more apartment building households, and recreational vehicles which are 30 feet or less. An additional percentage of 25 percent of the back-up heat costs, after dwelling type is considered, is used for roomer/boarder households. For more information, contact Will Graham, Office of Community Development. P.O. Box 48300, Olympia, WA 98504-8300; (360) 725-2854, willg@cted.wa.gov
With the advent of energy reliability legislation passed in 1999, Wisconsin created a Public Benefits Fund (PBF) that provided additional funding for low-income energy assistance and energy efficiency programs. The new money allowed the Wisconsin Home Energy Assistance Program (WHEAP) to change from addressing only heating costs to addressing total heating fuel costs and household non-heating electric costs. For most households this represents the total home energy bill. The low-income portion of the PBF is administered by the WHEAP grantee, via contract from the Department of Administration, Energy Division. FY 2001 was the first year the department received PBF and incorporated them into the WHEAP program. In general, LIHEAP funds are used to pay a percentage of the total heating fuel costs for households regardless of fuel type. Households eligible for PBF also receive a benefit that covers a percentage of their non-heating electric cost. Wisconsin pays heating assistance benefits based on a sliding scale benefit structure. Households with the highest annual heating costs and lowest incomes receive the highest amount of assistance. In order to determine annual heating costs, the local administering agencies request client consumption data from utilities -- either the previous 12 months of consumption, the past program year, or the utility's estimate of annual costs. Wisconsin's formula for calculating benefits considers a household's poverty level (income and household size) and past home heating fuel costs. With this formula:
Each year Wisconsin's payment model is designed to provide benefits to all anticipated eligible applicants (based on historical data). The benefit formula, therefore, is adjusted annually based on anticipated recipients and federal appropriations. The benefit formula is as follows: Grant Amount = (Annual heating costs) X [(180 - Percent of poverty) / benefit coefficient] X 0.01 (Note: In this formula, the number 180 sets the ratio between the highest and lowest percentage of bill paid at 4:1. The benefit coefficient determines the average benefit level, and 0.01 adjusts the results to a number between 0 and 1 that is multiplied by the heating fuel cost to determine the benefit amount. The maximum benefit for FY 2001 was $1200; the same maximum is set for FY 2002. The non-heating electric benefit is determined in the same manner; the only difference is the benefit coefficient and the non-electric heating cost it's based on. For those with electric heating, 45 percent of the annual bill is considered non-heating electric. Applicants who don't report electric costs are paid on the basis of 50 percent of a proxy calculated based on the number of household members. The average electric payment in FY 2001 was $109; in FY 2002, it's expected to be $102. The program's computer system can generate two payments, one to the primary heating vendor using LIHEAP funds and another to the electric vendor using public benefit funds. Additionally, the state flags households with high heating fuel costs and high energy burdens as an indicator for local agencies to provide proactive assistance to the household. Depending upon the extent that local agencies provide proactive services (there is wide variation across the state), the client may receive or be referred to client education, budget counseling, case management, or other services as needed. The program works closely with weatherization providers and a household that has heating costs higher than the norm for its housing type is placed on a priority list for weatherization. For more information, contact Steven Tryon, Energy Services Director, Wisconsin Dept. of Administration, P.O. Box 7868, Madison, WI 53707-7868; (608) 266-7601; heat@doa.state.wi.us. Since Congress in its 1994 reauthorization of LIHEAP emphasized the importance of energy burden in calculating LIHEAP benefits, more and more states have taken energy burden into account, either directly or indirectly, in determining their benefits. States have looked at clients' income and designed their programs to ensure that low-income clients pay no more than a certain percentage of their incomes for home energy. Others have looked at energy costs and devised matrices to ensure that those with the highest energy costs and lowest incomes receive the highest benefits. Still others have taken client's energy bills and income together and devised formulas to provide high burden and low-income households with the highest benefits.
Page Last Updated: April 5, 2007 |
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