Permitted Uses of Funds

Under the LIHEAP statute grantees are permitted to use LIHEAP funds for home energy assistance and other certain uses.

Types of Assistance

LIHEAP block grant funds can be used for the following types of energy assistance:

• Home Energy Assistance. Section 2602(a) authorizes HHS to make grants to LIHEAP grantees to assist eligible households in meeting the costs of home energy which is defined in section 2603(3) as a source of heating or cooling in residential dwellings.
  
  
• Energy Crisis Intervention or Crisis Assistance. Section 2604(c) provides that, of the funds available to it, a LIHEAP grantee is to reserve for energy crisis intervention "a reasonable amount based on data from prior years. . . until March 15 of each program year. . . ." Section 2603(3) of the LIHEAP statute defines "energy crisis" as "weather-related and supply shortage emergencies and other household energy-related emergencies." Section 2603(1) of the LIHEAP statute defines the term, "emergency," to mean:
  
  

  (1) natural disaster; (2) a significant home energy supply shortage or disruption; (3) a significant increase in the cost of home energy, as determined by the Secretary; (4) a significant increase in home energy disconnections reported by a utility, a State regulatory agency, or another agency with necessary data; (5) a significant increase in participation in a public benefit program such as the food stamp program carried out under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), the national program to provide supplemental security income carried out under title XVI of the Social Security Act (42 U.S.C. 1381 et seq.) or the State temporary assistance for needy families program carried out under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), as determined by the head of the appropriate Federal agency; (6) a significant increase in unemployment, layoffs, or the number of households with an individual applying for unemployment benefits, as determined by the Secretary of Labor; or (7) an event meeting such criteria as the Secretary, in the discretion of the Secretary, may determine to be appropriate.

• Low-cost Residential Weatherization and Other Energy-related Home Repair. Section 2605(k) provides that up to 15 percent of the funds allotted or available to a LIHEAP grantee for a fiscal year may be used for "low-cost residential weatherization or other energy-related home repair." After March 31 of each fiscal year, LIHEAP grantees may request HHS to grant a waiver that increases from 15 percent to up to 25 percent the maximum amount of LIHEAP funds allotted or available to them that may be used for weatherization or other energy-related home repair.
  
  Note--Weatherization funding for low income households also is available from the Department of Energy's Low Income Weatherization Assistance Program.
  
  

Other Uses of LIHEAP Funds

LIHEAP block grant funds also can be used for the following activities:

• Administrative/planning Costs. Section 2605(b)(9) provides that a LIHEAP grantee may use up to 10 percent of "funds payable" to it for a fiscal year for planning and administering the use of its LIHEAP funds.
  
  Note--"Funds payable" usually includes the regular LIHEAP allocation, supplemental or contingency funds, leveraging incentive award funds and reallotment funds. "Funds payable"do not include carryover funds.
  
  The HHS block grant regulations permit an Indian tribes, tribal organizations, and small insular areas to use a somewhat larger percent for this purpose. Grantees may not use leveraging incentive funds for administration, but may add them to the base on which they calculate the amount of block grant funds that may be used for administration and planning. Neither the statute nor the regulations specifically define administrative costs.
  
  The preamble to the regulations indicates that, "as a general matter, administrative costs are all the costs of program administration, whether they would be considered direct or indirect costs under categorical grants." However, each grantee "must determine which expenses constitute administrative costs chargeable to grant funds on a case-by-case basis" (47 FR 29477 (1982)) based upon the intrinsic nature of the program and standard accounting procedures followed by the grantee. The LIHEAP regulations at 45 CFR 96.88(a) state, "Any expenditure for governmental functions normally associated with administration of a public assistance program must be included in determining administrative costs subject to the statutory limitation on administrative costs, regardless of whether the expenditure is incurred by the State, a subrecipient, a grantee, or a contractor of the State."
  
  
• Carryover of Funds to Subsequent Fiscal Year, Section 2607(b)(2)(B) provides that a LIHEAP grantee may request that up to 10 percent of its "funds payable" be held available for the next fiscal year. Grantees' carryover amount can include any administrative funds that were not obligated up to the 10 percent cap in the fiscal year for administrative costs. The amount of unobligated administrative dollars can be used in the following fiscal year, but is not to be counted towards that year's administrative cap.
  
  
• Identification, Development, and Demonstration of Leveraging Programs. Section 2607A of the statute and 45 CFR 96.87(c)(1) of the block grant regulations provide that states may spend up to the greater of $35,000 or 0.08 percent of their allocated funds each fiscal year to identify, develop, and demonstrate leveraging programs. Indian tribes, tribal organizations, and insular areas may spend up to the greater of $100 or 2 percent of their federal LIHEAP allotments under 45 CFR 96.87(c)(1) of the block grant regulations for this purpose.
  
  
• Obligation of Leveraging Incentive Funds. Section 2607A of the LIHEAP statute and implementing regulations provide for leveraging incentive funds to be available for obligation from the date they are awarded to a LIHEAP grantee until the end of the fiscal year following the fiscal year in which the funds were awarded, without regard to limitations on carryover of LIHEAP funds in section 2607(b)(2)(B). The uses of leveraging incentive funds are restricted to increasing or maintaining heating, cooling, energy crisis, and/or weatherization benefits as a part of the grantee's LIHEAP program.
  
  
• Assurance 16 Activities. Section 2605(b)(16) of the LIHEAP statute gives grantees authority to "Use up to 5 percent of such [LIHEAP] funds, at its option, to provide services that encourage and enable households to reduce their home energy needs and thereby the need for energy assistance, including needs assessments, counseling and assistance with energy vendors. . ."
  
  

Statutory Limitations on Uses of Funds

• Heating, Cooling and Crisis Assistance Funds
  
  There is no limit on the amount of funds used for heating, cooling or crisis assistance benefits. A cooling program is not required. If a grantee does not have a separate crisis assistance program, it still must have a process to handle energy crisis situations. Grantees must be able to respond to an energy crisis within 48 hours and respond to a life-threatening energy crisis within 18 hours. Grantees must also ensure that crisis application intake centers are near the population to be served and that individuals who are physically infirm have transportation to intake sites or can submit applications from their homes.
  
  
• Weatherization
  
  It is the option of the grantee to provide weatherization or other low-cost energy-related home repairs. Grantees may use up to 15 percent of funds allotted or funds available for this activity. (Funds allotted means LIHEAP grant funds issued during a fiscal year, except leveraging incentive awards, and funds available may be allotted funds, oil overcharge funds, transferred funds from other block grants, and carryover funds.) A grantee may request a waiver and use up to 25 percent of funds for weatherization and low-cost energy home repairs if the grantee meets certain criteria outlined in the block grant regulations. Leveraging incentive funds may be used for weatherization without regard to the 15 percent to 25 percent maximum, but leveraging funds cannot be added to the base (funds allotted or funds available) to compute the amount used for weatherization.
  
  Some grantees provide weatherization and energy-related home repairs under the crisis assistance program and do not count those funds within the 15 percent to 25 percent limit on weatherization funds.
  
  
• Administrative Costs
  
  The LIHEAP statute places a limit of 10 percent on "funds payable" in a fiscal year for administrative costs. Indian tribes, however, may use more than 10 percent as described below.
  
  An Indian tribe that receives an allotment of $20,000 or less may use up to 20 percent of "funds payable" to an Indian tribe for a fiscal year for administrative costs.
  
  An Indian tribe that receives an allotment over $20,000 may use 10 percent of "funds payable" to the Indian tribe for a fiscal year plus $2,000 for administrative costs.
  Leveraging funds may be added to the base to compute the amount to be used for administration but should not be used for administrative costs.
  
  
• Carryover Funds
  
  Up to 10 percent of "funds payable" to a grantee for a fiscal year may be carried over to the next fiscal year to be used in LIHEAP. Those LIHEAP funds carried over must be obligated in the next fiscal year or be returned to the federal government.
  
  Leveraging award funds cannot be added to the base to compute the carryover amount, but can be carried over to the next fiscal year without regard to the 10 percent carryover limit. Leveraging award funds must be obligated in the year they are granted or, if carried over, by the end of the next year.