NCLC's Senate Testimony in Support of LIHEAP
(Low Income Home Energy Assistance Program)
1. Introduction
Mr. Chairman and Members
of the Committee, the National Consumer Law Center appreciates the opportunity
to submit written testimony regarding appropriation of funds for the Low Income
Home Energy Assistance Program (LIHEAP) for FY 1999. This testimony is submitted
on behalf of our low income clients, who live with an increasing threat of loss
of utility service due inability to pay.
The National Consumer Law
Center (NCLC) is a nonprofit corporation dedicated to the interests of low income
consumers. Founded in 1969, NCLC provides specialized legal support and consulting
services to low income customers, their advocates, government agencies and private
attorneys in all aspects of consumer and utility law. NCLC has helped utilities,
regulatory commissions and advocates design low income affordability programs
in dozens of states over the past several years. NCLC has published leading
reports on the impacts of energy costs on the poor as well as manuals on related
law.
NCLC is a strong supporter
of the Low Income Home Energy Assistance Program, as it is the primary safety
net between low income consumers and disconnection of utility service. It is
efficiently designed to target benefits to households most in danger of losing
that vital service. However, without adequate funding, LIHEAP cannot get the
job done. In FY 1999 Congress has the opportunity to restore this program to
a level of funding sufficient to provide the protection and assistance that
low income households desperately need. On behalf of our low income clients
we urge Congress to appropriate no less than $1.437 billion, the FY 1994 level,
for FY 1999 and an advance appropriation for FY 2000 of at least $1.6 billion.
Emergency funding is also necessary.
2. The Need for LIHEAP
In FY 1998 the overall funding
level for LIHEAP reached an all time low. This was primarily because no emergency
funds were released, due to relatively mild winter weather. However, the ongoing
crisis low income households face in maintaining utility service did not change
significantly as a result of weather patterns. Instead, the impact of reduced
funding has meant lower levels of assistance for fewer households.
The human impact of these
lower funding levels were confirmed in a telephone survey of some of our clients.
In Illinois the LIHEAP program opened and closed again in October, when funds
ran out. Throughout the winter things were going crazy with shut offs, according
to Lillian Drummond of the South Austin Coalition Community Council in Chicago.
In many cases, LIHEAP assistance payments were not large enough to induce the
utilities to reconnect. In East St. Louis, Illinois the story is much the same.
Joe Hubbard, who has been with the Catholic Urban Program for thirty six years,
says This is the roughest I've ever seen. He explains that since the cold weather
never got severe enough to invoke state winter protection rules (below 32 degrees
Fahrenheit for a 24 hour period), disconnections were allowed. Then when the
weather did turn colder, households could not get reconnected. Those people
are out there lost, he stated. Both Drummond and Hubbard cite increasing use
of disconnection by utilities as a collection mechanism, which most impacts
the elderly and working poor.
In Wichita, Kansas diminished
LIHEAP funds have also resulted in increasing difficulties for low income households.
Sunflower Community Action reports that the LIHEAP program ran out of money
early, with many households being shut off. Food pantries, United Way, the Salvation
Army and other community based organizations are scrambling to help, but lack
resources needed to get households reconnected.
The most chilling report
on the impact of utility disconnection comes from Timothea Howard, Lead Organizer
of the Columbia Heights/Shaw Family Support Collaborative in Washington, D.C.
She states that for a significant number of households loss of utility service
is a contributing factor to children going into foster care. When families cannot
stretch their incomes to pay for food, rent and utilities, they tend to pay
for rent and food first, not realizing that landlords will report utility disconnections.
Living without utility service is considered neglect, which results in removal
of children from the home by protective services. Surely it would be more humane
and cost effective to keep the family together by providing energy assistance.
Census statistics also show
a widespread need for the LIHEAP program. Between 13.4 - 26% of U.S. households
are eligible, according to statutory standards. (See Table I)
Table I
Households
Eligible for LIHEAP of 91,993,582 TOTAL HH in US
LIHEAP is well designed
to channel benefits to those most in need, and LIHEAP recipients tend to be
on the low end of the poverty scale. For example, in FY 1995 40% of households
that received assistance were under 75% of the poverty level. And although low
income households consume 16% less heating energy than the average residential
household and pay 14% less for it, energy costs take up a huge proportion of
their average $10,048 annual income.
The proportion of energy
costs to household income is called the energy burden. In 1995 NCLC completed
a study that illustrated the disparity in energy burden between average residential
and low income households. We found the burden for the average residential
household is 3.8%, while low income households pay far more. For example, a
TANF household pays an average of 26% of their income on energy and recipients
of Social Security pay 14%.
3. Impact of LIHEAP Funding Reductions
The proportion of those
households that actually receive assistance has decreased as funding levels
have plunged in the past four years. For example, in FY 1994, 6 million households
received assistance from LIHEAP, but by FY 1997 a 30% reduction in funds resulted
in loss of assistance to approximately 1.7 million households, a 28.4% cut back.
(See Table II and III). With funding levels falling even lower in FY 1998, a
42.5% overall reduction from FY 1994, more households are losing assistance.
Who is hit hardest by these
program cuts? A survey by the National Energy Assistance Directors Association
(NEADA) released in September, 1997, showed that of the 1.2 million households
that lost LIHEAP assistance between FY 1995 and FY 1997, 313,000 had at least
one elderly member and 156,000 had at least one disabled member. Of the remaining
731,000 households it is likely that 43%, or 314,330, had children.
The NEADA study also found
that states have responded to LIHEAP budget cuts in a variety of ways, including
increasing the share of benefits to those with the highest energy burdens and
special needs groups including the elderly and disabled, reducing overall program
benefit levels, and reducing the eligibility ceiling.
Table II
Decline
in LIHEAP Funding Since FY 94
FY
1994
Regular
+ Lev/ REACH*= $1,437,392,360
%
Changefrom FY 94
Total
(Regular, Lev/REACH+ Emergency)= $1,737,392,360
Sources: For FY 1994-95,
HHS FY 1995 Report to Congress: LIHEAP, p.29
For FY 1996-97: National
Energy Assistance Directors Association Survey, Sept. 12, 1997
Decreases in LIHEAP funding
have been shown to increase the incidence of utility disconnections. Those that
do not receive LIHEAP assistance are almost twice as likely to be shut off.
The consequences of disconnections are well documented and include:
Health and safety risks
associated with alternate heat and lighting sources, such as kerosene heaters
and candles;
Hunger and malnutrition;
Hyperthermia and hypothermia;
Eviction and increase
in homelessness;
Diminished educational
performance by students with high mobility.
4. Time is Right to Restore LIHEAP Funding
Congress has been successful in bringing the deficit under control. However,
LIHEAP has contributed more than its share to this effort, suffering a cumulative
loss of $1.1 billion since FY 1985. As the nation moves toward a balanced budget,
we must also move toward balance in our priorities, making sure that basic necessities,
such as heat in the winter, are available to those who can least afford it.
LIHEAP has immense impacts for a relatively small budget, and should be restored
to a level of funding that truly protects the health and safety of vulnerable
low income Americans.
5. The Need for Advance Appropriations
The LIHEAP program needs
to go into operation prior to the heating season so that state agencies can
begin the process of taking applications. They need to know LIHEAP funding levels
early in order to implement the program at a time when it can effectively prevent
shut off of utility service: during the harshest part of the winter. For this
reason, NCLC requests that Congress include an advance appropriation for FY
2000 in its LIHEAP appropriation this year.
Conclusion
The ongoing crisis low income households face in maintaining their utility
service has been exacerbated by sharp drops in LIHEAP funding over the past
four years. In FY 1999 Congress has the opportunity to restore this program
to a level of funding that will avoid disconnections and the threats to health
and safety that go with them. We ask congress to fund the program at a level
of no less than $1.437 billion in FY 1999.
and NCLC