Study Documents Need for LIHEAP Funding Boost

A new study documents the largest one-year jump in home heating prices in three decades and says LIHEAP needs to be funded at $5.2 billion to avoid widespread hardship among low-income households.

Titled “Out In The Cold: How Much LIHEAP Funding Will Be Needed to Protect Beneficiaries from Rising Energy Prices?,” the study by the Center on Budget and Policy Priorities presents data on the amount of funding each state will need in 2006 to keep LIHEAP recipients from paying more out-of-pocket for their heat this winter.

To protect households currently receiving LIHEAP assistance from paying more for heat this winter and accommodate a small expected increase in LIHEAP participation will require a funding level of $5.2 billion for 2006, the Center’s analysis finds. Projections issued by the Department of Energy indicate that home heating prices will average 47.5 percent more this winter than last winter. This is the steepest one-year increase in these costs since 1974, before LIHEAP was created.

The total heating bill of the average LIHEAP-assisted low-income household will increase by at least $500 this winter unless Congress provides the program with substantially more than the $2.2 billion in funding it received for fiscal year 2005. Increasing LIHEAP funding to $5.2 billion would enable the program to cover the full increase in recipients’ heating costs so they would not be forced to pay more out of their very limited budgets for heat this winter, the study says.

The study authors assume a five percent increase in LIHEAP participation for 2006, but they acknowledge that estimate may be too conservative. LIHEAP participation has risen by an average of six percent annually since 2002, largely because increases in energy costs in those years led more eligible households to apply for the program. This year’s increase in energy costs is nearly three times as great as the average annual increase since 2002.

Source: Center on Budget and Policy Priorities

Page Last Updated: December 7, 2005