LIHEAP Leveraging Incentive Funds

LIHEAP leveraging incentive funds reward grantees that add private or non-federal public resources to provide home energy benefits to low income households beyond what could be provided with federal resources. The LIHEAP statute authorizes $30 million through FY 2007.

Leveraging award funds are issued to those grantees that submit a leveraging report by November 30, that have reported countable leveraging resources, and that have identified in the LIHEAP plan those resources that are integrated and coordinated with LIHEAP. The report must quantify the amount of leveraging accomplished by the grantee the prior fiscal year, less any costs incurred by the grantee to leverage such resources and any costs imposed on federally eligible households.

The amount of a leveraging award depends on the amount of funds the grantee is able to leverage for LIHEAP-eligible households compared to the amount of the grantee's allocation and also compared to the amount of all leveraged resources provided by other LIHEAP grantees.

HHS uses the following steps to calculate leveraging awards:

1. Under the LIHEAP statute, grantees desiring leveraging incentive funds or REACH funds must submit a separate application to the Department each year.
   
   
2. After its review, HHS approves countable resources after subtracting offsetting costs for: (1) the grantees' own funds used to identify, develop and demonstrate the activities; (2) costs or charges to low income households to participate in the activities; and (3) LIHEAP funds used to identify, develop, and demonstrate the activities (limited to the higher of $35,000 or 0.08 percent of a grantee's regular allotment for State grantees, or to the higher of $100 or 2.0 percent of the allotment for an Indian tribes/tribal organizations and insular areas).
   
   
3. Using the final values approved for each grantee, the leveraging grant award allocations were calculated, based upon a formula that was included in the final rule published in the Federal Register on May 1, 1995 (60 FR 21322).
   
   The formula provides that one-half of the funds is to be distributed based on the amount of leveraging activities each grantee carries out as proportion of the amount of its regular LIHEAP grant, taking into account the amount of leveraging activities carried out by all grantees as a proportion of their regular grants. Because the leveraging activities take place in the previous fiscal year, we used allocations for that fiscal year in calculating this portion of the formula. We include regular block grant allotments, any contingency funds allocated to leveraging applicants, and any prior fiscal year funds that were reallotted to leveraging applicants in the current fiscal year.
   
   The second half of the funds was to be distributed based on the amount of leveraging activities carried out by each grantee as a proportion of the total amount of leveraging activities carried out by all grantees. The amounts derived under the two parts of the formula were then added together to determine the final grant amount, except that no grantee could receive more than (1) 12 percent of the leveraging incentive funds available, or (2) the lesser of the amount of its regular grant (including any contingency funds) or twice the amount it leveraged.
   
   
4. The prohibition against receiving more than 12 percent of the available leveraging incentive funds can affect states. The prohibition against receiving more in incentive grant funds than the lesser of twice the amount leveraged or the amount of the regular block grant funds can affect tribal applicants. Indian tribes in general do very well under the formula, in most cases receiving much more in return for each leveraging dollar invested than the States. The "excess funds" from the states and Indian tribes are redistributed on a proportionate basis to the other grantees.
   
   

Leveraging funds received under the leveraging incentive award program are to be used to provide benefits under the grantee's LIHEAP program and can be used for heating, cooling, crisis or weatherization. They can be used for weatherization without regard to the weatherization maximum (15 percent unless a waiver is granted), but they cannot be added to the base to compute the total amount used for weatherization. (The "base" is usually the total LIHEAP funds allotted or available, see weatherization funds above.)

Leveraging funds cannot be used for planning and administration costs but can be used in the base amount to compute the amount for planning and administration. (The "base" amount, in this case, are "funds payable" and include regular LIHEAP funds, contingency funds, reallottment funds, and other supplemental funds.) leveraging funds cannot be counted in the base to compute the amount to be carried over to the next fiscal year, but can be carried over without regard to the 10 percent limit on carryover funds.