October 28, 2010

Fiscal Year 2011
The President released his FY 2011 budget request on February 1st which included $3.3 billion for the Low Income Home Energy Assistance Program (LIHEAP). Also included in the request was a legislative proposal for a trigger mechanism to provide automatic increase in energy assistance whenever there is a spike in energy costs or increase in food stamp recipients. It would reduce the block grant portion of the appropriation from $4.5 billion in FY 2010 to $2.5 billion in FY2011. The Budget would increase the amount of emergency contingency funds available from $590.3 million to $790 million. The Administration has estimated that the trigger would result in approximately $2 billion being released in FY 2011, which, if released in full, will result in a net increase in LIHEAP funding from $5.1 billion in FY 2010 to $5.3 billion in FY 2011.

Congress was unable to advance action on the FY2011 Congressional Budget Resolution and has only recently begun to move individual appropriations bills through the committee process. On July 15th, the full Senate Appropriations Committee approved an overall plan that would cut $14 billion from President Obama's proposed budget for the upcoming year. Passage of the plan opens the door for committee consideration of individual funding bills as it includes top line spending levels for each appropriations bill, called 302(b) allocations.

On July 20th, the House Appropriations Committee approved 202(b) allocations for the various appropriations subcommittees for fiscal year 2011 appropriations bills. The committee allocations fell within the overall budget levels set by the House Budget Enforcement Resolution adopted July 1st that calls for a $14.5 billion reduction to the President’s discretionary budget request. As such, all but two of the allocations, the Energy & Water and the Interior & Environment bills, are set lower than the FY 2011 budget request from the President. The committee also included modifications to the discretionary spending levels requested by the President since Congress had not enacted proposals to make certain funding mandatory, including a portion of the $1.8 billion in funding requested for the Low Income Home Energy Assistance (LIHEAP) program.

Both the House and Senate Appropriations committees have begun to move the FY 2011 House Labor-HHS-Education Appropriations legislation. On July 15th, by a vote of 11-5, the House Labor-HHS-Education Appropriations Subcommittee approved a draft spending bill that would provide a total of $738.7 billion for fiscal 2011. According to the committee the overall funding level includes $562.3 billion in mandatory spending and $176.4 billion is discretionary spending. The bill’s discretionary spending level would be $12.7 billion more than fiscal 2010 levels but $1.5 billion less than President’s request.

On July 27th, the Senate Appropriations subcommittee approved a $732 billion FY 2011 House Labor-HHS-Education Appropriations bill by a voice vote. Like the house legislation it provides $562.3 billion in mandatory spending but would set discretionary spending at $169.6 billion. According to the committee that would be an increase of $5.9 billion, or 4 percent, from last year’s funding level, but $986 million less than the President requested. Subsequently, the full Senate Appropriations Committee took up the legislation on July 29th voting 18-12 to report out the legislation.

Under the House draft legislation reported at the subcommittee level, funding for LIHEAP is maintained at the current level of $5.1 billion. In legislation approved by the Senate Appropriations Committee LIHEAP funding is set at $3.3 billion which is below current program funding levels but equal to the President’s overall FY 2011 budget request for the program. The Senate legislation and the President’s budget request differ in how the funds are divided between the basic block grant and contingency funds portion of the program. The $200 million difference is placed by the Senate in the basic block grant ($2.7 billion for the block grant and $590 million for contingency funds) while the President’s request would place it in the contingency fund ($2.5 billion for the block grant and $790 million for contingency funds). In addition, the Senate legislation would continue appropriations language from last year that would revise the distribution formula so that $505 million would be allocated to states based on the authorizing legislation’s formula and $2.2 billion would be based on the shares states received in FY 1984. This language was not included in the president’s FY 20111 budget request.

On September 20, NCSL joined a broad coalition of organizations in signing onto a letter to congressional leadership urging funding for the LIHEAP program for FY 2011 at the current level of $5.1 billion. LIHEAP has been funded at its full authorization level of 5.1 billion for the last two fiscal years. Here is a link to a copy of the letter.

Congress did not enact any of the 12 annual appropriations bill for FY 2011 prior to the start of the new federal fiscal year on October 1. Instead Congress passed a continuing resolution (CR, H.R. 3081) to keep the government running which was signed by the president on September 30. Under the CR most federal programs are funded at the FY 2010 level until December 3. Based on the language of the CR and subsequent guidance from the Office of Management and Budget (OMB) federal agencies are prohibited from allocating funds at a rate higher than the percentage of the year covered by the CR (17.5%). HHS usually provides states with a large portion of their allocation at the beginning of the year to ensure states have sufficient funds to help low-income individuals with their heating bills. This could prove problematic for states. For a chart with the complete list of third quarter LIHEAP allocations to states click here.

Congress is expected to return to the Capitol on Nov. 15th for the first week of the lame-duck session following the elections. Lawmakers expect to be considering either an omnibus spending bill to wrap up FY 2011 appropriations work or a long-term continuing resolution to cover federal government spending into next year at that time. To date there is no clear indication what the likely outcome of the lame duck session will be though many see the scope of the session as likely being limited to “must-do” pieces of legialtion.

Contingency Funds Released
On September 20, the U.S. Department of Health and Human Services released $101 million in emergency contingency funding to states for energy assistance. These LIHEAP contingency funds will provide states, territories, tribes and the District of Columbia with additional assistance to pay heating and cooling costs for eligible households. Funds will be allocated to all states based on their regular block grant allocations. This release of contingency funds is in addition to the $4.5 billion in LIHEAP block grant funding and the $490 million in emergency contingency funds received by states earlier this year. Funds released today are the remaining from FY 2010 LIHEAP contingency fund available for this fiscal year.

Legislation was introduced on February 2nd by Congressman Ed Markey (MA) to reauthorize the LIHEAP program. The Energy Assistance for American Families Act (H.R.4554) would increase the authorized funding level for the program to $7.6 billion for FY 2011 to FY 2014. The bill would also extend the expanded eligibility levels to families whose incomes total up to 75 percent of their state’s median income level. As previously noted the FY 2011 budget and appropriations conversation has been contentious and remains unresolved. Action is not expected on Rep. Markey’s bill before the end of session.

Program Administration
A June 2010 report from the Government Accountability Office (GAO) on the LIHEAP program raised concerns over the potential for fraud and improper payments in the program. GAO examined seven state programs, primarily selected based on size of LIHEAP grant and availability of centralized database, as part of a request to audit (1) the risk of fraud and abuse in LIHEAP in selected states; (2) case studies of fraudulent, improper, and abusive LIHEAP activity; and (3) key weaknesses in the design of LIHEAP’s internal controls framework.

In response to the report released by GAO, the National Energy Assistance Directors’ Association (NEADA) in conjunction with the US Department of Health and Human Services (HHS) announced the formation of a joint task force to address issues concerning waste, fraud and abuse in the Low Income Home Energy Assistance Program. The task force, according to a July 2nd press release from NEADA, will work with HHS strengthen internal controls to ensure these funds are used properly. NEADA also took the opportunity to highlight concerns about the rate of error identified by GAO in their report and has requested access to the files associated with the report to ascertain the accuracy of the review.

The GAO Report is available online here and to access the full press release from NEADA click here.

For more information please contact Sheri Steisel or Tamra Spielvogel or call 202-624-5400.