[Senate Hearing 110-859]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-859
 
        CLIMBING COSTS OF HEATING HOMES: WHY LIHEAP IS ESSENTIAL

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON CHILDREN AND FAMILIES

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                   ON

EXAMINING THE RISING COSTS OF HEATING HOMES, FOCUSING ON THE LOW INCOME 
                HOME ENERGY ASSISTANCE PROGRAM (LIHEAP)

                               __________

                             MARCH 5, 2008

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions


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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

               EDWARD M. KENNEDY, Massachusetts, Chairman

CHRISTOPHER J. DODD, Connecticut     MICHAEL B. ENZI, Wyoming,
TOM HARKIN, Iowa                     JUDD GREGG, New Hampshire
BARBARA A. MIKULSKI, Maryland        LAMAR ALEXANDER, Tennessee
JEFF BINGAMAN, New Mexico            RICHARD BURR, North Carolina
PATTY MURRAY, Washington             JOHNNY ISAKSON, Georgia
JACK REED, Rhode Island              LISA MURKOWSKI, Alaska
HILLARY RODHAM CLINTON, New York     ORRIN G. HATCH, Utah
BARACK OBAMA, Illinois               PAT ROBERTS, Kansas
BERNARD SANDERS (I), Vermont         WAYNE ALLARD, Colorado
SHERROD BROWN, Ohio                  TOM COBURN, M.D., Oklahoma

           J. Michael Myers, Staff Director and Chief Counsel

                 Ilyse Schuman, Minority Staff Director

                                  (ii)

  
?



                            C O N T E N T S

                               __________

                               STATEMENTS

                        WEDNESDAY, MARCH 5, 2008

                                                                   Page
Dodd, Hon. Christopher J., Chairman, Subcommittee on Children and 
  Families, opening statement....................................     1
Kennedy, Hon. Edward M., Chairman, Committee on Health, 
  Education, Labor, and Pensions.................................     3
Murkowski, Hon. Lisa, a U.S. Senator from the State of Alaska....     4
    Prepared statement...........................................     6
Reed, Hon. Jack, a U.S. Senator from the State of Rhode Island...     8
Power, Meg, Ph.D., Senior Advisor, National Community Action 
  Foundation, Washington, DC.....................................    10
    Prepared statement...........................................    12
Frank, Deborah A., M.D., Professor of Pediatrics, Boston 
  University School of Medicine, Director of Grow Team for 
  Children, Boston Medical Center, Boston, MA....................    20
    Prepared statement...........................................    22
Hussain, Robin, Resident, Hartford, CT...........................    25
    Prepared statement...........................................    27
Surber, Regina, Director, Community Programs, Department of Human 
  Services, Nashville, TN........................................    28
    Prepared statement...........................................    30

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    .............................................................
    Petroleum Marketers Association of America (PMAA), The New 
      England Fuel Institute (NEFI), and the Independent 
      Connecticut Petroleum Association (ICPA)...................    46
    National Energy Assistance Directors' Association............    48

                                 (iii)

  


        CLIMBING COSTS OF HEATING HOMES: WHY LIHEAP IS ESSENTIAL

                              ----------                              


                        WEDNESDAY, MARCH 5, 2008

                                       U.S. Senate,
                     Subcommittee on Children and Families,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:21 a.m. in 
room SD-430, Dirksen Senate Office Building, Hon. Christopher 
J. Dodd, chairman of the subcommittee, presiding.
    Present: Senator Dodd, Kennedy, Murkowski, and Reed.

                   Opening Statement of Senator Dodd

    Senator Dodd. What I will do here this morning with 
everyone's permission, if I may, is I will make a quick opening 
statement myself on this issue, and the Chairman of the 
committee, Senator Kennedy, is here to make some comments this 
morning. I know he can't stay as long as he would like because 
of other obligations.
    Then I will ask, obviously, Senator Murkowski as well for 
any comments that she may have. Senator Reed has long been 
involved in the subject matter of low-income energy assistance.
    Then we will get right to our witnesses, and I am grateful 
to all of them for being here and those of you in the audience. 
I would like to thank everyone for coming together this morning 
to consider the Low Income Home Energy Assistance Program 
(LIHEAP). For 27 years, since 1981, LIHEAP has helped millions 
and millions of Americans pay their heating bills and keep 
their families warm or cool, as the circumstances require.
    I would like to welcome and thank all of our witnesses, who 
will provide testimony here this morning. Many of them will 
explain the critical importance of LIHEAP to American families 
and how many more Americans could be assisted if we, in 
Congress, would expand LIHEAP's reach and increase the 
program's funding.
    For almost 30 years now, LIHEAP has kept thousands of 
Americans from having to make the impossible and very difficult 
choices between heating their homes, feeding their families, 
providing for their medical needs. It has made the difference 
between having money to pay for a mortgage rather than facing 
foreclosure in the spring. It has allowed senior citizens to 
afford to heat or cool their homes without sacrificing other 
necessities, such as prescription drugs.
    Clearly, LIHEAP is about much more than heat or cooling. We 
will hear from our witnesses it is intertwined with many other 
aspects of a family or an individual's life. LIHEAP is not just 
a heating and cooling program. It is a home ownership program, 
a nutrition program, certainly a health program.
    A family that struggles to pay its energy bill may be 
forced to turn off heat, to cut back on purchasing nutritious 
food, or go without the necessary medications. A child who 
can't sleep from hunger or cold can't pay attention in class in 
the morning. He will be more prone to illness, putting further 
pressure on schools and our healthcare system.
    This year, more and more families are faced with those 
dilemmas. This all becomes quite obvious if anyone has paid any 
attention to the news in the last few weeks. The slowing of our 
economy has brought higher unemployment. In my own State of 
Connecticut, unemployment has risen 24 percent over the last 
year. As families all over are losing income, rising fuel 
prices are stretching their energy budgets like never before, 
certainly in recent memory.
    Just this past week, we saw the price of crude oil reach 
well over $100 a barrel. By the way, last evening I heard some 
energy experts talking about it. They were saying it is no 
exaggeration to think that the price of a barrel may exceed 
$200 before very long at all. That these numbers are going up 
radically, the demand is increasing. Of course, you saw the 
President calling upon OPEC nations to increase more supply 
without any success at all.
    This is just the beginning of a problem that is going to 
grow worse in many ways. An increase, by the way, to $100 a 
barrel is an increase of 73 percent just from last year alone. 
Heating fuel prices have risen dramatically. The U.S. Energy 
Information Agency estimates that this year it will cost $1,962 
to heat a home with oil. That is a 33 percent increase from 
last year and 117 percent increase since 2004.
    The cost of heating a home with natural gas has gone up 30 
percent since 2004, and the cost of heating with propane, which 
heats homes in many rural areas across our Nation, has 
increased 23 percent in the last year and 73 percent since 
2004.
    As a result of these drastically rising costs, heating 
assistance that made a real difference for families just a few 
years ago is obviously no longer doing the job. Our LIHEAP 
dollars are being stretched way beyond their capacity. Again, 
in my home State, Connecticut offers, I think, a good example 
of what is going on. In 2008, nearly twice as many households 
as last year ran out of their basic LIHEAP benefits by January 
14. January 14 in a State where nights can stay freezing well 
into March or even April.
    When basic benefits run out, crisis assistance kicks in. 
Many families exhaust that as well, leaving them with virtually 
nothing at all. In 2007, that was true of 211 families in my 
State. In 2008, how many families did this happen to? Just to 
give you an idea, 2,981. In 1 year, from 211 families to 2,981.
    As both the price of oil and the number of families in need 
has risen, the funding we need to help them has remained 
basically flat for a quarter of a century now. That means we 
have been forced to pick and choose who can stay warm through 
the winter, who will spend it shivering. Six out of ten 
eligible families get nothing at all. Thankfully, emergency 
LIHEAP funding was released in January and again 2 weeks ago. 
Still, it is not nearly enough to cover the projected 
shortfalls.
    Families are counting on LIHEAP, and they are counting on 
us to fight to fund it fully, if we can. Six out of seven 
families are making do without heat at all. Six out of seven 
families are being forced into impossible choices, as I 
mentioned earlier, between warmth, food, and medicine. This is 
six families too many.
    Before I close, I would briefly like--wait, I will come 
back to this. I was going to introduce our witnesses, but let 
me do that after we have heard from the other members of the 
committee here. With that, let me turn to Senator Kennedy just 
for an opening quick comment?
    The Chairman. Lisa.
    Senator Murkowski. No, Mr. Chairman.

                  Opening Statement of Senator Kennedy

    Senator Kennedy. Thank you very much, Senator Dodd and 
Senator Murkowski, Senator Reed. Thank you very much for having 
this hearing and for your continued very important and good 
work in fighting for the increase in LIHEAP funding.
    It has been a bipartisan effort. I thank Senator Murkowski, 
Senators Snowe and Collins. Bernie Sanders has been very 
involved. Jack Reed has been fighting for this for years, and 
Senator Dodd has been one of our true leaders, and I thank you 
for doing this.
    I want to express appreciation to a wonderful panel of 
witnesses. They just are people that will tell it as it is, and 
we are very, very lucky to have you. Particularly glad Dr. 
Frank, who will talk about the impact of the lack of heat on 
children and children's development, children's health, which 
the Chairman has mentioned, but is really enormously important.
    It seems to me that the LIHEAP recipients are in the middle 
of a perfect storm, a perfect storm. The explosion of costs for 
oil this winter has been something which has been just so 
dramatic and so out of step with people on fixed incomes. We 
will hear about that. The pressure is on so many of these 
families that have lost jobs, and the fact as the Chairman 
knows all so well, the whole dramatic impact of the housing and 
mortgage crisis, where people are in real danger if they can't 
pay the mortgage.
    We are used to hearing a choice between food on the table, 
prescription drugs for the parents, and heating oil. Now we 
have the additional kind of burden, and that is whether they 
can afford to pay their mortgages, and it is all affecting and 
hitting a very special group of people. It is a definable 
group, and they are our neighbors and our fellow citizens, and 
we know what needs to be done.
    It used to be that in Massachusetts, generally, it is about 
four tanks--you can correct me, Dr. Frank--about four tanks 
last a wintertime. If you received, you would get--only about 
40 percent of those who are eligible receive it. In 
Massachusetts, we are somewhat higher than the national 
average. You maybe get one tank of that, maybe a tank and a 
half. Not even--it is less than that? Well, you are going to 
straighten us out on it.
    This is just an incredibly challenging, and you are going 
to tell us about how long that tank is going to last, depending 
on your house and depending on the family, number of children 
that are in it.
    We had a wonderful testimony, Ms. Margaret Gilliam from 
Dorchester, who is looking after two children and the 
challenges that she faces. I think that this is just that we 
know what needs to be done, we know how to do it, and the real 
question is whether we have the will to do so. I want to thank 
Senator Dodd and others who are really leading this battle to 
help us to make sure that we are going to get the job done.
    Final point, it is interesting that if that family is 
driven out of their home, the cost in Massachusetts for a 
homeless family is $32,000 per year for a family of four. We 
are talking about a tank of fuel oil to keep the family 
together in their home or the risk that that family is going to 
be driven out their home and all the additional kinds of costs 
that are going to be out there.
    This is a no-brainer, and we just want to thank you for 
highlighting this challenge. We want to say that we will work 
closely with you in every possible way to see if we can't 
provide some relief for these needy families.
    I thank the Chair.
    Senator Dodd. Senator, thanks so much. Again, sometimes I 
feel like I am stating the obvious to all gathered here. You 
mentioned Jack and Senator Murkowski and others involved, but 
none of this would have ever happened over the years without 
Senator Kennedy. That just doesn't happen. We are very grateful 
to you for years of commitment to this issue.
    This has been a subject matter that has enjoyed some good 
bipartisan support over the years. For those of us who live 
with it every year in our States, we understand how critically 
important this is.
    With that, let me turn to Senator Murkowski.

                     Statement of Senator Murkowski

    Senator Murkowski. Well, thank you, Mr. Chairman, Senator 
Dodd. The good news for us in Alaska is it is starting to warm 
up, but it has been a very tough, tough winter back home.
    You mention, Senator Dodd, the energy information 
statistics. I was at an Energy Committee hearing yesterday, 
where EIA presented their annual report, if you will, an 
analysis of oil on the market and what was happening with 
energy prices. Yesterday in the hearing, they predicted that 
heating oil prices are likely to rise marginally higher before 
slowly falling to 2016, and then we are going to see oil rising 
again, reaching a nominal value of $113 per barrel in 2030 for 
oil.
    Electricity also is expected to continue to rise, peaking 
at 9.3 cents per kilowatt hour in 2009, another nearly 15 
percent increase before we see a little bit of a slowing. They 
also stated at yesterday's hearing, as they stated at the start 
of this winter, that energy costs were going to cost the 
average household between 8 to 39 percent more to heat and cool 
their homes this year.
    The news is not good in terms of indicators and where we 
are going with our high energy costs. You have, Senator 
Kennedy, mentioned how long a tank of home heating fuel will 
last the average family. We know that the LIHEAP aid is 
currently providing on average about $314 to the typical home. 
At that current price, it is enough for about a single tank of 
oil, enough to last a family maybe a couple weeks to a month, 
depending on climate and temperature.
    You know, in the State of Alaska, where your winters last 
longer, or Connecticut or Rhode Island, where your winters last 
longer, that means that you have got a lot of time on either 
end of that tank of fuel where you are on your own.
    I mentioned the temperatures in Alaska. I was up in a 
community a couple of weeks ago. The week that I was there it 
was blissfully warm. It was about 40 degrees. The week prior to 
that, it was 60 below zero. They had a 100-degree swing in 
temperature. This is where we live. What we are facing in our 
communities, in Arctic Village, for example, the cost of 
heating oil last month was $6.36 a gallon. We see about $5 a 
gallon in most of our other remote villages.
    What we are seeing in terms of a percentage of income to 
Alaskan families--on average through the communities on the 
road systems--Alaskans are paying about 33 percent of their 
income on energy costs. Those are the communities that are on 
the road system. You get out into our isolated rural 
communities, where you are not connected by road, 62 percent of 
the income of a family is going toward energy costs.
    Now you couple this with the fact that the only way to get 
to these places is to fly. If you have a medical issue that 
requires you to come to town, come to one of the cities, you 
have spent all of your income for the year between energy and 
transportation costs. This is a huge, huge issue for us. We 
know that it is critical to the health of families to make sure 
that you are able to be warm in the winter. It is not all about 
us in the north. It is also vital to be cool in the summertime.
    I know that we will hear testimony this morning that when 
62 percent or 33 percent of your income is going toward energy, 
where do you make up the difference? It is in the prescription 
drugs. It is in the food. It is in all of those other things 
that we, as families, face on a daily basis.
    Mr. Chairman, I don't want to take up too much of the 
committee's time with opening statements other than to 
recognize that we need to do more when it comes to the issue of 
LIHEAP, whether it is through increases to the funding amounts. 
I know, Dr. Power, you are going to speak to some of the 
proposals that might be out there for program changes. I look 
forward to hearing that testimony.
    It is something that so many have worked diligently on, but 
the recognition is that the need for energy assistance is as 
critical to America's families as assistance for welfare or 
food stamps or Medicaid because this is part of what allows us 
to be healthy.
    I look forward to working with the other members of the 
committee. I do have a longer statement that I would like to 
submit to the record.
    Senator Dodd. Absolutely.
    [The prepared statement of Senator Murkowski follows:]

                Prepared Statement of Senator Murkowski

    Thank you Mr. Chairman for holding this subcommittee 
hearing as we begin the process of considering a 
reauthorization of the Low Income Home Energy Assistance 
Program--LIHEAP. I also would like to thank Ranking Member, 
Senator Alexander for all his work on LIHEAP.
    It is slightly difficult to separate the two immediate 
issues involving LIHEAP from each other: No. 1, not having 
enough money allocated to the program at present to help it 
deal with the record-high home heating oil costs that poor and 
even middle-income households are paying this winter, not 
counting what they are facing next winter; and the high 
electricity air conditioning costs households likely will be 
facing come summer; and No. 2, how to make changes in the 
program to help it work better and more adequately meet the 
needs of Americans for energy assistance, assuming it is ever 
``fully'' funded.
    Just yesterday the Energy Information Administration 
predicted that heating oil prices are likely to rise marginally 
higher before beginning a slow fall to 2016 before oil prices 
again start to rise, reaching a nominal value of $113 per 
barrel in 2030 for oil. Electricity also is expected to 
continue to rise, peaking at 9.3 cents per kilowatt hour in 
2009, another nearly 15 percent increase, before electricity 
slowly declines to 2016 before rising again in real terms until 
2030.
    EIA at the start of this winter predicted that energy costs 
were going to cost the average household 8 to 39 percent more 
to heat and cool their homes this year. Already 34 million 
households in America qualify to gain LIHEAP aid--having 
incomes of less than 150 percent of the Federal poverty level. 
Unfortunately, there is adequate funding so that only 16 
percent of those households currently receive any aid and those 
households only receive on average about 17 percent of the 
$1,864 a year average cost of heating and cooling a home.
    LIHEAP currently is providing aid that averages $314 to the 
typical home. That at current prices is enough for about a 
single tank of oil, enough to last a family for 2 weeks to a 
month, depending on climate and temperature. We are saying that 
for the other 4 months of winter, much longer in Alaska, that 
households are on their own.
    Coming from a State like Alaska, that is a real problem. In 
Alaska, where the cost of heating oil last month was $6.36 a 
gallon in Arctic Village and often near $5 a gallon in many 
other remote villages, heating oil was dominating family's 
budgets. According to a 2006 survey by the University of 
Alaska's Institute of Social and Economic Research, home 
heating fuel/electricity was costing the average remote 
resident $4,683 a year, compared to the national average this 
year of $1,864. That means that where energy costs should cost 
the average household between 4 percent and 6 percent of their 
income, Alaskans are paying on average 33 percent of their 
income on energy costs, that figure reaching up to 62 percent 
of their income in remote communities.
    While Alaska State government spends more on LIHEAP than 
many States--Alaska providing the average household a $742 
subsidy, compared to less than half that nationwide, it is far 
from enough to make energy costs affordable for many.
    As the testimony today makes clear, being able to afford 
heat in winter and cooling in summer is much more than a simple 
convenience. Sufficient heat is vital for good health. Babies 
and toddlers and seniors especially need heat to allow for 
mental development and to ward off illness. Efforts to 
supplement heat from burning fire wood to using kerosene or 
electric space heaters increase the risks of health effects 
like asthma and increase the risks of carbon monoxide 
poisoning, fires and other accidents.
    Scrimping on food and prescriptions to be able to afford to 
pay for heat and electricity can also harm children, hurt their 
development and learning potential and increase the chances for 
illness.
    There is a good reason why LIHEAP was created 27 years ago. 
Unfortunately, there is not a good reason why we have allowed 
funding for the program to drop to such a relatively disastrous 
level.
    Given recent record prices for oil and significant hikes 
for electricity, we need to find $2 billion to $3 billion more 
funds to reach a theoretical full funding level of $5.1 billion 
for this year--depending on whether you start with the 
President's proposed spending for fiscal year 2009 of $2 
billion or start with actual spending, plus contingency funding 
that Congress adopted for fiscal year 2008.
    This hearing is actually not about finding $800 million to 
$1 billion or more for fiscal year 2008, or building $3.1 
billion more of funds into a budget resolution for fiscal year 
2009 and then finding the actual funds to pay for the 
authorization. This hearing is about how we should change the 
program during a reauthorization to make it work better for 
Americans.
    I know, given the Alaska experience, we need to not only 
raise the funding to fully fund households with incomes under 
150 percent of the poverty level, but likely raise that 
threshold higher. Increasingly households that used to be 
considered lower middle income are now in an energy 
affordability crunch. That is certainly the case in my State of 
Alaska.
    We may also need to consider an expansion of the LIHEAP 
program so that it covers other types of energy costs that 
households have to pay. If you can't afford to get to work to 
earn a paycheck, then you won't be able to afford to keep your 
house warm or keep food on the table. Some more comprehensive, 
hopefully short-term expansion of LIHEAP, may be needed unless 
energy prices fall precipitously.
    We also need to review all of the recommendations for 
program changes offered by our witnesses. I particularly 
appreciated the suggestions by Dr. Power in the National 
Community Action Foundation testimony.
    What I know is that LIHEAP is a vital part of the Nation's 
safety net for low-income residents. It is as vital as welfare 
or food stamps or Medicaid, because it is hard to remain 
healthy, well nourished or able to work, if you are either so 
cold that you can barely function or so hot in summer that heat 
stroke is a constant danger.
    LIHEAP needs to work well. It also needs to be adequately 
funded. Even if in this time of a budget shortage, we need to 
do better by this program. I welcome the testimony we are about 
to receive on how we can make LIHEAP better fulfill its 
promise.
    Thank you Mr. Chairman.

    Senator Murkowski. I would like to move forward with the 
testimony this morning.
    Senator Dodd. Thank you very, very much, Senator. Very 
eloquently said. Connecticut had their strong winters, I can't 
recall the last time we had 60 below anywhere.
    Senator Murkowski. Come on up.
    Senator Dodd. I know. It has been a while. I love it. It is 
a beautiful State.
    Senator Reed, thank you very much.

                       Statement of Senator Reed

    Senator Reed. Well, thank you, Chairman Dodd, and thank 
you, Senator Murkowski, for your excellent statement with 
respect to an issue that concerns us all.
    I want to thank the witnesses because you will, both from 
an academic standpoint and also from a personal standpoint, 
illuminate this issue better than we can. Indulge me for a 
moment while I say a few words.
    This program evolved after the price shocks of the 1970s, 
and it was a vital safety net for low-income Americans then, 
and it is a vital safety net today, who make tough choices. 
Senator Dodd, Senator Kennedy illustrated those tough choices--
prescription drugs or food or mortgage payments--and the 
choices are more difficult today than they were in the last 
several years.
    We are still in a situation where energy prices have a huge 
impact on the budgets of families throughout this country, and 
with the downturn of the economy, we are seeing the pressures 
become excruciating. Oil has jumped over $100 a barrel. I never 
thought in my life, and I guess I am at the point in life where 
I say that a lot, that I would see a $100 barrel of oil.
    With stagnant wages and fixed incomes--that is the other 
phenomena we are seeing--these prices are beyond the absorption 
capacity of most families. They are being squeezed--tough, 
difficult circumstances. We have cold winters. Not as cold as 
Alaska, but we have cold winters. In the summertime, in the 
Southwest for the excruciating heat, people use LIHEAP just to 
stay alive because they don't suffer from--particularly seniors 
from being a heat casualty in the Southwest and the Southeast.
    In fiscal year 2007, my home State of Rhode Island was able 
to serve about 29,000 households with LIHEAP. This is just a 
small fraction of those that qualified. LIHEAP provides a vital 
safety net to these households, but unfortunately, LIHEAP 
funding is not keeping pace with the demand. I was disappointed 
last month, and we couldn't in the stimulus package include 
additional funding for LIHEAP. We are going to try again.
    LIHEAP needs this additional funding, and the President's 
budget request for Fiscal Year 2009 calls for a 22 percent cut 
to LIHEAP--not an increase, but a cut. Now, I don't know, but 
when oil is surging at over $100 a barrel, driving up the 
prices of all energy products, how do you propose to cut a 
program, it does not even keep up with the price? That is just, 
to me, difficult to fathom.
    The National Energy Assistance Directors Association 
reports that such a cut would force States to either cut grants 
or decrease the amount of families. That is just arithmetic. We 
have got to do better than that. We could actually face the 
loss of about 1.2 million households if these cuts go into 
effect nationwide, and that is a staggering number.
    I think we should fully fund LIHEAP. That is $5.1 billion, 
and I am disappointed about the proposed budget. I am prepared 
to offer amendments on the budget resolution to support full 
funding in 2009. The numbers are clear, but the story of LIHEAP 
is not about numbers. It is about people, people who are 
working hard and struggling mightily, and they need some 
assistance.
    I am pleased particularly that Dr. Frank is going to talk 
about the impact to children. Senator Dodd and I have been 
conducting some clinical experiments over the last several 
years with the effect of many things on small children. Senator 
Murkowski also. She is a little ahead of us. We look forward to 
your testimony.
    Thank you, Mr. Chairman.
    Senator Dodd. Thank you very much, Senator. Prior to that 
time, it was merely an intellectual exercise.
    Senator Reed. Policy, public policy.
    Senator Dodd. Now it has become a very personal exercise.
    Well, again, thank our colleagues who are here and talking 
about this, and let me quickly introduce our witnesses.
    Meg Power--Meg, we thank you for being here--is the senior 
advisor to the National Community Action Foundation and 
President of the Economic Opportunity Studies, and we thank you 
very, very much for your work.
    Deborah Frank, Senator Kennedy has already introduced in a 
sense, a professor of pediatrics at Boston University Medical 
School, is the founder and a principal investigator of the 
Children's Centennial Nutritional Assessment Program. We are 
looking forward to your testimony. You have heard all of us 
address the issues of what happens to children in these areas.
    Robin Hussain is from Hartford, CT, and will share her 
personal story about LIHEAP. We thank you very much, Robin, for 
coming down. I see sitting behind you some friends, who go back 
a long time. Edith, good to see you here with us as well, from 
community action programs in Connecticut.
    And Regina Surber is the director of community services at 
the Tennessee Department of Human Services responsible for the 
administration of the LIHEAP program in her State, and we 
obviously want to hear from you in terms of how this is working 
and what it means in a State like Tennessee, a border State. We 
have talked about our northern-tier States, and obviously this 
is an issue that transcends just geography by low temperatures.
    We thank all of you for coming. Let me ask, if I could, 
this morning if we could keep your opening statements to around 
5 or 6 minutes. I won't bang the gavel down. As with all 
members here, even those who are not here, the record will 
remain open for comments they would like to make, any 
supporting documentation they think would be helpful to the 
record, and that includes our witnesses here this morning.
    Your full testimony and supporting information will be 
included in the record as we develop this case for additional 
funding.
    With that, Dr. Power, let me begin with you, and we will 
move right down as I have introduced you, and then we will get 
to some questions.
    Doctor.

    STATEMENT OF MEG POWER, PH.D., SENIOR ADVISOR, NATIONAL 
          COMMUNITY ACTION FOUNDATION, WASHINGTON, DC

    Ms. Power. Thank you, Mr. Chairman.
    It is a pleasure and an honor to be here today to talk on 
behalf of the Nation's community action agencies. They manage 
about a third of the LIHEAP resources every year, and we 
believe they see the vast majority of LIHEAP applicants who 
come facing a crisis and need help quickly and need to have an 
interview and a personal interaction with a system to deliver 
this kind of help.
    I am a little stumped because each of you has been far more 
eloquent than I ever could be in describing the problems that 
our testimony tries to quantify. I think it is important for us 
to note and remember that this committee is where the LIHEAP 
block grant was born in 1980 for the 1981 season. This is our 
home, our mother, if you will, and each of you who is here 
today, and Chairman Kennedy, and Chairman Alexander--former 
Chairman Alexander--were tremendous champions of moving 
legislation each of the times we have reauthorized. You have 
all been champions of supplemental funding last year and this 
year in the face of terrific political odds, and we are most 
grateful for the bipartisan, multiregional support that this 
program has enjoyed and that you still have the energy to keep 
up the fight. Thank you for that.
    The statistics cited on rising energy costs, particularly 
the oil prices, are very dramatic, and they are a little mind-
numbing. The daily news is a macro kind of a number, and we are 
going to try to bring those down to the family level for you 
just so you have a few more numeric weapons in your arsenal 
advocating for LIHEAP, as all of you do.
    As you said, several of you said, Senator Reed was just 
saying how oil prices have topped a historic mark. Eighteen 
years ago was supposed to be the real dollar high water mark 
for oil prices. Well, they have gone past that. The less-
trumpeted drama this year, although in 2006 it was headlines, 
is the steady upward march of natural gas prices, and natural 
gas is the fuel most households use.
    A very little-noticed problem is that liquid propane gas 
follows fuel oil prices, and liquid propane gas is not used 
much in the Northeast, but it is a very common fuel in low-
income housing and in mobile homes throughout the Midwest and 
the South. Those prices are essentially on the same trajectory 
as fuel oil. It is a little harder because you have to get a 
tank-full delivered--not the product, but the tank full of 
propane gas. Our agencies in border States and southern States 
and the Midwest are having a terrible time because homeowners 
have to add LIHEAP and their own money together to get even one 
propane delivery.
    Some of the new figures we have tried to give you in 
today's testimony simply to add to these eloquent arguments are 
measurements of the energy burden, which is what we call the 
bill that people have to pay for energy as divided by their 
annual income, and it is astronomical this year, a new high. 
LIHEAP-eligible customers, according to our forecast models, 
can, as a group, expect to pay 17 percent of their income on 
average. Of course, this is a number that reflects the extremes 
that Senator Murkowski was just speaking of. Any New Englander 
knows 17 percent is not the average, of course not for Alaska 
and certainly not for New England. It is higher.
    In fact, all fuel oil users, and most of them are in the 
Northeast, are expecting to pay about 24 percent of income on--
sorry, 26 percent of their income on their energy bills this 
year. Electric heat users will pay about 13 percent of their 
income. There are tremendous differences in the impact of these 
prices on households, none of them affordable. The average 
American who is not eligible for LIHEAP has consistently been 
paying about 4 percent of annual income and still that will be 
the case this year.
    About 40 percent of the people who are eligible for LIHEAP 
are in poverty, truly very low incomes below the Federal 
poverty guidelines. For them, the average energy burden 
nationwide is going to be about 22 percent, essentially an 
absurd figure. That is what it would take if they were able to 
buy all their energy, pay all their bills.
    LIHEAP can make an enormous difference in the regions where 
the States are properly funded. Perhaps no State is now 
properly funded. In those areas, it can expect to cover perhaps 
20 or 25 percent of the bill if it is coupled with utility 
discounts and other help. All together, this means, as the 
Chairman has said, each of you has said, a tremendous 
constellation of hardships, none of which are better described 
than in the C-SNAP program study. I will leave that to Dr. 
Frank.
    The census finds exactly the same numbers under the SIPP 
survey. LIHEAP is a unique tool because it can be directed to 
the energy bills. In other words, households with high bills 
get more help, and it is properly targeted. It is a terrific 
tool for households who are working low-wage workers and need 
only help with their energy bills to get by. Our community 
action agencies see them.
    It is also an important part of our efforts to help 
families develop long-term self-sufficiency, so that they 
become permanently able to maintain their family's economic 
security without further help. That takes a while.
    Finally, it is a terrific tool for leveraging other 
resources. There are more than $2 billion of additional energy 
benefits available for low-income people, very unevenly 
distributed. Half of that is in California. A number of States 
don't have any.
    Those are utility discounts, those are charitable 
contributions through fuel funds, and they are consumer 
protections that help write off arrearages and waive fees, all 
of them tied to LIHEAP participation and agreements with the 
LIHEAP program. That is a very valuable tool for those agencies 
out there that are doing a job to change customers' situations 
forever, if they can, and for the mid-term at least, and it is 
important to keep LIHEAP and strengthen the program so that 
there is more of it everywhere.
    I appreciate the opportunity to put this in the record.
    [The prepared statement of Ms. Power follows:]

                 Prepared Statement of Meg Power, Ph.D.

    Thank you for the opportunity to present the views of the National 
Community Action Foundation (NCAF) which represents the Nation's 1,100 
local Community Action Agencies. On behalf of our director, David 
Bradley and our national membership, I want to thank the subcommittee 
for its history of unwavering support for the LIHEAP programs from the 
very year of its birth in 1981. Mr. Chairman, you have championed 
energy assistance from the moment you were elected to the House of 
Representatives; like Senator Kennedy, you have never failed to keep 
the heat on every Administration and every Congress to, literally, 
``keep the heat on.'' Senator Alexander, under your leadership the 
subcommittee reported, and the Senate passed, a solid re-authorization 
bill in 2003; NCAF was honored to work in partnership with you in that 
effort.
    Community Action Agencies (also called CAAs or CAPs) deliver about 
one-third of the LIHEAP bill assistance resources to participants. We 
estimate that our local agencies actually work face-to-face with the 
vast majority of those who receive ``crisis'' assistance. CAAs 
administer nearly all the LIHEAP funds devoted to Weatherization. 
LIHEAP is second only to Head Start as the largest program in our 
network.
    My testimony is in three parts:

     a situation report on the energy burdens that low-wage 
workers, retirees and their families are carrying this very year;
     a description of the ways Community Action uses LIHEAP as 
part of a coordinated strategy to move participants closer to economic 
security, and
     NCAF's proposals for re-shaping the LIHEAP statute to make 
the program an even better tool for helping energy consumers in the 
21st century.

I. SITUATION REPORT: A FORECAST OF LOW-INCOME CONSUMERS' FY 2008 ENERGY 
                            BURDEN AND BILLS

    Consumers' energy bills for the gas or oil and electricity they 
need to meet only the most basic requirements for safe housing have not 
been higher in a generation, not even in ``real'' dollars. Every 
region's small consumers are affected by the cost and by the rapid rate 
of change. This year, once again, homes that rely on delivered fuels, 
fuel oil and LP gas, will have the fastest-rising bills, as well as the 
highest bills. Two years ago that dubious honor went to natural gas 
users in several regions.
    We measure the impact of household bills the simple way, much as 
the Federal housing measure for affordable housing is based on the 
percent of income represented by out-of-pocket expenditures: energy 
burden is the percent of annual income a household must spend to buy 
utilities (not including water) and all other residential fuels the 
household uses yearly.




    Sources: ORNL October 2007; EOS updates Feb 2008.

    Heating and cooling together make up just 50-60 percent of annual 
low-income consumer bills, depending on weather and price. Households 
must pay utility bills that include all uses.
    Forecasts based on an Oak Ridge National Laboratory model and using 
updated Federal data \1\ \2\ on incomes and energy show that, during 
this fiscal year, the population eligible for LIHEAP, about 34 million 
households, can expect to pay an average of $1,864 for energy. That sum 
will equal 17 percent of their average household income. The lowest-
income eligible consumers, the approximately 13 million in poverty, 
will pay less, $1,644, but that bill is an even higher share of their 
very low incomes: 22 percent. (Since energy burden is calculated by 
dividing income by the energy cost, the lower the income the higher the 
burden for the same energy bill.)
---------------------------------------------------------------------------
    \1\ Eisenberg, Joel F., Short- and Long-Term Perspectives: The 
Impact on Low-Income Consumers of Forecasted Energy Price Increases in 
2008 and a Cap-and-Trade Carbon Policy in 2030 ORNL/CON-503, Oak Ridge 
National Laboratory, Oak Ridge, Tennessee, December 2007, and January 
MIDWINTER UPDATE. http://weatherization.ornl.gov/.
    \2\ Details of the model and methodology are in the report: Power, 
Meg, `` The FY 2008 Energy Burdens Low-Income Consumers, Economic 
Opportunity Studies, and Washington, DC. www.
opportunitystudies.org.
---------------------------------------------------------------------------
    Charts 1 and 2 show forecast bills and energy burdens for the 
entire eligible population and for the subgroup of eligible households 
in poverty compared to all households with incomes higher than the 
LIHEAP eligibility ceiling. Chart 1 shows the poor use less fuel, but 
Chart 2 shows it costs them a far higher share of their very limited 
incomes. Households not eligible for LIHEAP average a 4 percent annual 
energy burden. 



    The incidence of high energy burden varies geographically. Chart 4 
shows the average energy burden forecast for each Census division. In 
six of the nine, LIHEAP consumers will have burdens at or above the 
national average. The differences stem from both the expected bill 
amounts and the income variation among the regions.



    Chart 5 shows how the type of heating fuel a household uses affect 
the size of its energy burden and the proportion of household income 
left for other needs. Clearly, there is a basis for the LIHEAP 
requirement to vary benefits as well as for flexible implementation 
based on fuels and, as the graph suggests, based on the predictability 
of extreme hardships of several kinds which will threaten those who use 
deliverable fuels to heat in a normal winter. However, the clearest 
message is that eligible families' after-energy disposable income will 
be far too low to meet other basic needs for the year. Analysts have 
developed several descriptive tools for quantifying the shortfall 
between a minimally adequate annual budget and actual incomes. \3\
---------------------------------------------------------------------------
    \3\ Roger Colton has developed two tools for State and local-level 
applied calculations of the impacts of energy costs on household 
budgets and the difference between a livable income that includes true 
energy costs and real household incomes.
    The difference between affordable energy bills and actual bills is 
calculated for low-income households State by State and posted at 
http://www.homeenergyaffordabilitygap.com/.
    His Home Energy Insecurity Scale parallels the measurements of food 
insecurity. It was disseminated by HHS LIHEAP office in 2003: http://
www.fsconline.com/downloads/Papers/2003%2005%20insecurity-scale.pdf.



    Will eligible consumers and others of modest means, really pay 
bills of this magnitude? Millions will make partial payments and a 
minority will receive help from LIHEAP and utility discount programs. 
Others will experience catastrophic consequences, some families will be 
forced to move; those with compromised health, including many children 
with asthma and allergies, risk health crises from living in poorly 
heated or un-air-conditioned space. The best documented effects are 
those tracked in by Children's Sentinel Nutrition Project Dr. Frank 
leads.
    However, it is important to recognize that the choices low-income 
energy consumers are making are even more complex than ``heat or eat.'' 
These don't rhyme as well, but Census surveys and opinion surveys 
confirm that the choices frequently are:

     See the doctor/fill the prescription or keep the lights/
refrigerator on?
     See a dentist about this toothache or pay for heat?
     Look for another apartment but buy the oil while we're 
looking, or pay the rent and plug in a space heater because the power 
can't be shut off until March?

    Every one of these methodologically sophisticated studies and 
surveys confirms that consumers will make such risky sacrifices to keep 
warm enough and to keep the lights and refrigerator on. The C-SNAP 
study brings life just some of the cold hard numbers reported in the 
U.S. Census SIPP survey of Measures of ``material well-being'' \4\ 
which showed the national scope of energy-related hardships.
---------------------------------------------------------------------------
    \4\ See ``Supplemental Measures of Material Well-Being: Basic 
needs, Consumer Durables, Energy and Poverty, 1981-2002.'' U.S. Census 
Bureau, Washington, DC. P23-202, December 2005. Also a summary of 
energy specific clusters of hardships in ``Making Ends Meet when Energy 
Costs Soar'' Meg Power, Economic Opportunity Studies, Washington, DC. 
www.opportun-
itystudies.org.
---------------------------------------------------------------------------
    In 2001, 9 percent of U.S. households who could not afford to pay 
their energy bills at least once during the year.

     This was the most common of all inability-to-pay problems 
reported by the 21 million households who could not afford one or more 
essential services or goods that year;
     The majority of those with un-affordable energy bills 
experienced several hardships at once during the same period. The most 
common listed in order were:

            Experienced hunger (``critical food insecurity'');
            Skipped medical or dental care; and
            Missed rent or mortgage payment.

     Nearly half had incomes too high for LIHEAP eligibility 
and nearly every one of them was a working family. However, the number 
and severity of simultaneous hardships rose in inverse proportion to 
income, so that the lowest-income had the most simultaneous hardships 
and the most severe or ``critical'' hardships.

            Those in Poverty were by far the most likely to 
        experience crisis-proportion hardships: hunger, utility shutoff 
        and eviction.

    At the time of that survey, 2001, prices were lower and the weather 
was milder than at present. The gap between incomes at the bottom of 
the national income range and energy prices continues to widen, the 
first chart we presented demonstrates. Few if any other consumer costs 
have dropped as a share of household income.

   II. HOW CAN CAAS TARGET LIHEAP TO ENHANCE FAMILY ECONOMIC SECURITY

    LIHEAP is an important tool in the fight to reduce poverty and 
stabilize workers, retirees and to their families, but it has become 
too small a lever by contrast to the energy burden that must be 
relieved. In recent years, many middle class working families have also 
swelled demand for these scarce resources. Many come in to the CAA for 
the first time, having never before sought help from any government or 
charitable program, but unable to pay the high bill to keep from being 
disconnected from utility service or denied a propane or fuel oil 
delivery.

How LIHEAP is Unique in CAA Anti-Poverty Initiatives
    The reasons CAAs believe this distinctive energy assistance program 
is more valuable to solve certain household problems that an equivalent 
amount of generic emergency funding or income support are:

    1. LIHEAP payments are structured, by statue, to address the great 
variation in the size of energy bills, even among homes that look the 
same and have inhabitants who have similar incomes. While climate, 
geography and family size explain some of the diversity, experts can 
only guess that aging equipment and the peculiarities of older 
buildings have a lot to do with the fact that similar customers have 
very different bills. The LIHEAP benefit matrix targets the energy 
burden.
    2. LIHEAP is an effective tool for leveraging partnerships with 
suppliers. State LIHEAP programs are the largest ``residential'' 
consumer in their State; they transfer thousands of payments as 
electronic credits to the participant accounts. Many utilities and 
their regulators have reciprocated with consumer protections, free 
waivers and discounts. Many CAA energy managers also have open access 
to a utility customer service representative who can tailor flexible 
payment and even debt-forgiveness arrangements for specific 
participants and who is available to respond to emergencies in periods 
of severe weather or disaster.

LIHEAP Supports Three CAA Strategies
    A CAA uses this unique asset three ways. Each is intended to 
contribute its core mission: building long-term economic stability in 
partnership with their participant. As the subcommittee is well aware, 
CAAs' approach is to coordinate different, appropriate resources and 
maintain long-standing relationships with low-wage workers struggling 
toward security. They use CSBG funds to manage the coordinated and 
mobilized partners and funding. LIHEAP is one of the direct forms of 
assistance essential to most, but not all, of our participants.
    LIHEAP is used:

    1. To prevent major economic destabilization of low-wage workers 
and retirees uniquely threatened because of their high energy bills. 
Every year eligible community residents who have never relied on LIHEAP 
or other help come to their CAAs because their tight budgets could no 
longer accommodate their higher energy bills. Such consumers are those 
who have been ``getting by'' on very modest incomes and whose situation 
has not changed, except for the dramatic increase in the cost of their 
fuels. They generally seek and accept only LIHEAP help and perhaps 
registration in utility discount or budget payment plans. No other form 
of Federal or State support would be as effective at maintaining the 
precarious economic independence as LHEAP: its benefits are geared to 
the energy burden of households, and it is efficiently delivered and 
coordinated by the CAA with related energy subsidies or protections.

    a. In 2006, CAAs informal and desperate reports to NCAF here in 
Washington chronicled a flood of such newcomers and others who were 
ineligible, but of modest means and at great risk. (Fuel funds are able 
to provide some over-income applicants with assistance for as long as 
funds last.)
    b. Many returned in 2007 when prices were similar to those in 2006, 
or higher in the case of petroleum products, but received inadequate 
help because LIHEAP funding was much lower.
    c. At present, CAAs are reporting a new flood of ``new'' applicants 
who are painfully realizing they cannot afford energy and still 
continue to meet their other obligations.
    d. Because benefits vary by energy bills and burdens which (unlike 
local area rents, or even transportation and child care costs) fall 
over a wide range even within the eligible group, the effective LIHEAP 
targeting can result in effective prevention of family insecurity.

    2. To stabilize those facing a major economic or personal crisis 
that threatens their long-run chances of being self-supporting.
    Many hardworking Americans fall into poverty as a result of 
ordinary, but dramatic, personal tragedies--job loss, disability, loss 
of a loved one, the needs of relatives. Without assets or adequate 
credit, their loss may lead to many other setbacks and, eventually, 
true poverty. CAAs have learned how a strong ``hand up'' early in such 
a crisis can prevent lasting, catastrophic consequences, and LIHEAP 
becomes one of the key resources needed to keep or re-establish safe 
housing. For many, either new service must be set up or large unpaid 
utility debts must be reduced. CAA staff have developed unique 
relationships with customer service departments of major suppliers, 
and, in most States, are able to negotiate concessions for their 
families who are starting to recover from a crisis. These relationships 
are one result of the ``leverage'' LIHEAP confers in the energy 
markets. Because the program is the largest buyer of residential energy 
in any service area, the vendors it works with are willing partners and 
seek to keep information flowing as well as transactions, to the 
benefit of the participant.
    3. Finally, LIHEAP is an essential support for the long-term 
development of family security for those who are working hard and 
learning hard to open future opportunities with the support of their 
CAAs. Their energy burdens will remain high until their incomes rise 
significantly, even as the family is working hard.
    LIHEAP is one of the key elements in building family credit; 
participants in CAA family development programs and local asset-
building initiatives take part in financial education and budgeting 
exercises. Some CAAs use LIHEAP as a base or match, for participant 
out-of-pocket payments for energy after helping them join the utility 
budget plan. CAAs' LIHEAP staff helps negotiate debt forgiveness plans 
with utilities when possible.

    Many demonstration programs funded with a REACH grant from HHS have 
tested the use of LIHEAP as an incentive or family development support 
in different program contexts. The State of Texas for many years served 
only a limited number of younger consumers, but has invested 
significant case-management resources in them and offers monthly LIHEAP 
credits for participants who lived up to their development and self-
sufficiency goals.
    Four States (NV, NH, NJ, and OH) integrate LIHEAP into a utility 
rate structure that requires only a reasonable percent of monthly 
income to be paid by the customer, with the balance of the bill picked 
up by the rate-payers and LIHEAP. We see these experiments as the 
beginning of a policy solution that engages all sectors in reducing 
energy insecurity and the high lifetime costs of the risks from 
unaffordable energy bills.

  III. NCAF'S RECOMMENDATIONS RE: LIHEAP AUTHORIZATION 2008-2010 AND 
                                 BEYOND

    Mr. Chairman, NCAF recognizes the fiscal constraints and the time 
constraints that confront the 110th Congress and we realize the former 
may persist well into the 111th. We believe that some changes in LIHEAP 
requirements that can be judged without a massive program review or 
evaluation would be very helpful immediately, and that other important 
changes deserve some study to provide a basis on which the authorizing 
committees can decide on changes in the near future.
    Programmatic changes:

    A. Preparing Formula Options for the Future: One of the important 
changes that we believe urgently needs to be addressed after adequate 
preparation is a change in the distribution formula. Clearly all 
States' programs need far more resources. As the analysis above shows, 
warm States' consumers are disproportionately affected by increases in 
their energy bills, because the LIHEAP resource shortfall compared to 
the need is so great. CAAS in the south and southwest especially face 
extraordinary and growing demands for energy help and they exhaust 
their resources within days or weeks, not a few months. We believe that 
the formula now creates a major barrier to added funding because the 
coldest States reap so little additional reward from new 
appropriations. We suggest that, rather than committing to the current 
formula indefinitely or to trying to re-allocate a too-scarce resource 
on the basis of untested criteria, legislation should require the 
Secretary of HHS or the Congressional Research Service to work with the 
Census Bureau and deliver at least three options for a formula that is 
fair to every State and ensures that, if the funding increases, every 
State is a winner.
    B. Other Evaluations to Guide Future LIHEAP: Another study NCAF 
would like to see undertaken during short authorization through 2010 is 
a compilation of the evaluation studies funded through REACH 
demonstration projects. Reach grantees tested more effective or cost-
effective ways to deliver LIHEAP to specific groups or to all. The 
Department has never reported on these nor suggested what best 
practices might be helpful to many.
    C. Program Changes that Support Family Stabilization: We believe 
some changes are warranted now, including some that were in the 2003 
committee bills. All of NCAF 's suggestions are outlined in an appendix 
we would like to submit for the hearing record. The two changes that 
would greatly improve CAAs' ability to use LIHEAP as part of 
stabilization and self-sufficiency strategies now are:

    1. States should provide assurance that no consumer who pays bills 
timely will receive fewer benefits than another with the same 
characteristics like energy burden, family size, income and other 
criteria on which benefits are based. LIHEAP ``crisis'' policies that 
provide more benefits for those threatened with a disconnection or 
those without fuel undermine all the other programs' incentives for 
participants to manage budgets wisely and build credit and assets. 
States' benefit regulations that require a shut-off warning as a 
condition for an additional benefit mean that this public policy 
rewards non-payment; their CAAs see participants torn between making 
their small contributions to suppliers timely or risking their credit 
and raising their bills with penalty charges in return for hundreds 
more dollars to help meet family needs. This problem persists in many, 
but a minority, of the States.
    2. Further, so-called Assurance 16 funding for working with 
participants over time with an integrated set of supports has been 
essential to many States' LIHEAP-related financial literacy and 
security initiatives. LIHEAP administration funds are very restricted, 
a limitation that works against careful targeting of benefits to energy 
burden and providing integrated and sustained support to participants. 
We believe the States should be allowed to choose the amount to use for 
this purpose.

Funding
    In the 2-year authorization bill, we would prefer to see, we 
believe that a $6 billion authorization will give appropriators scope 
to meet more needs, but not set an unrealistically high benchmark. We 
have every faith in the Chairman's willingness to fight for emergency 
funding in the even more catastrophic energy market events.
    However, we believe that the conditions for emergency contingency 
funding must be changed so that the factors that trigger a release are 
predictable, fair and based on the reality of energy bills. We have 
provided some proposed language in our attachment.
    Thank you for your consideration of Community Action's suggestions; 
we intend them as useful additions to the subcommittee's historic 
record of leadership for the Nation's most vulnerable energy consumers, 
and NCAF stands ready to work on improving and refining these ideas.
                                 ______
                                 
         LIHEAP Reauthorization: Program Changes for Discussion

                          CHANGE THE PURPOSES

NCAF Proposal
    (1) In subsection (a), by striking ``primarily'' and all that 
follows and inserting the following: ``in meeting their immediate home 
energy needs, making home energy costs more affordable, and preventing 
household energy crisis, such as reducing home energy costs through 
payment to, or on behalf of, participants, obtaining lower costs for 
the home energy purchased by participants, and providing services and 
resources that reduce the energy burdens of low-income home energy 
consumers.''

Rationale
    These purposes were added to the committee's reauthorization bill 
which passed the Senate in 2003. They encourage the use of LIHEAP funds 
for services, investments, and, of course, payments, that reduce the 
``burden'' of energy bills. Examples would be services that enrolled 
applicants in EITC or other appropriate programs, State discount 
programs that advocate for protections that regulations provide, secure 
other donations or support to correct energy-guzzling defects, etc.
    The text also subsumes the original purposes; to keep both is 
unnecessary.

                         MANAGE EMERGENCY FUNDS

NCAF Proposal
    Requires Secretary to release Emergency Contingency Funds when HDD 
or CDD exceed 10-year norm by 15 percent or more and/or in a month when 
residential fuel prices rises to 20 percent higher than the 5-year 
norm.

Rationale
    This removes uncertainty about the release of contingency funds in 
the event of extreme weather or dramatic price increases. It corrects 
the present process which can appear capricious in the selection of the 
variable that determines what State is funded.

                        ENCOURAGE NEW LEVERAGING

NCAF Proposal
    Add an instruction to the criteria for disbursing leveraging 
incentive funds to provide additional funds to newly-won leveraged 
resources as determined by the Secretary.

Rationale
    The leveraging ``incentive'' fund is a very small percentage of 
LIHEAP, and States that add new leveraged resources reap miniscule 
rewards. Its value as an incentive is somewhat restored by rewarding 
recent initiatives more heavily than long-ago victories.

                           STATE APPLICATION

NCAF Proposal
    Authorize States to submit 2-year plans.

Rationale
    This would remove any Federal barrier to year-round activities to 
enroll new participants, purchase fuel with advance contracts, etc.
 change assurance 16 to allow state to set amount used for the purposes

NCAF Proposal
    Add: ``The State may use funds authorized under this title, at its 
option, to provide services that encourage and enable households to 
reduce their home energy need, to make their energy costs more 
affordable and prevent energy crisis, including needs assessments, 
energy conservation education, counseling, and assistance with energy 
vendors, and other benefits such as financial literacy asset-building 
services, support for ameliorating housing conditions and costs, 
provided that such services or resources have been demonstrated by a 
REACH pilot program or through other formal evaluations to be as 
effective as payments in making energy affordable for eligible 
households.

Rationale
    States need both more flexibility and incentives to move in the 
direction of affordability programs. Demonstrated and evaluated 
approaches that make energy bills or energy burden lower with 
persistent results should be allowable.
    benefit rules must not reward non-payment with higher assistance

NCAF Proposal
    In section 2605 (B) after ``intervene in energy crisis 
situations;'' add ``provided that no household shall receive higher 
benefits as a result of non-payment of energy bills than another 
household with the same needs energy burden and home energy type that 
has paid energy bills more timely and thereby prevented energy 
crisis.''

                           PAYMENTS BY STATES

NCAF Proposal
    Provides the States will make payments to subgrantees according to 
OMB's generic categorical Federal grant rules, i.e., will make 
systematic advances for local agencies in good standing, not provide 
reimbursement only.

Rationale
    Block Grants are not governed by the same rules on timing of State 
payments from Federal funds, and some States force local agencies to 
advance LIHEAP vendor payments and management costs by using their 
other funds or even borrowing. This affects all their credit 
availability as well as other services and investments for low-wage 
workers and their families. The provision means all States will start 
up LIHEAP with an advance of funds for a short period of operations. 
Then local grantees will apply for reimbursement or advances, as 
needed, per the OMB rules governing all Federal grants except Block 
Grants.

                                STUDIES

NCAF Proposal
    Secretary works with expert regulatory organizations to adapt their 
survey tools to State vendor agreement format.

Rationale
    The National Regulatory Research Institute has recommended 
Commissions adopt reporting requirements and formats for tracking 
utility disconnections and residential bad debt information. States 
could use an appropriately designed report as one element of their 
LIHEAP vendor agreement.

NCAF Proposal
    Secretary prepares report to Congress on options for funding 
allocation factors that are fair to consumers in all States.

Rationale
    The distribution formula stymies LIHEAP expansion because all 
States would not benefit from growth. The Congress needs an objective 
study presenting viable alternatives. This language sets out one 
alternative for the criteria to use in suggesting formulae. An 
alternative could be a CRS study options paper.

                          TECHNICAL ASSISTANCE

NCAF Proposal
    Authorizes up to \1/2\ of 1 percent of LIHEAP for studies, for 
publishing REACH results, and for training/technical assistance. 
Prohibits the use of these funds for Federal salaries or Federal 
monitoring.

Rationale
    Minimal LIHEAP data or analysis is performed. A decade of REACH 
project evaluations remains uncollected and un-reviewed. This change 
provides a bare minimum to allow timely review of data, reports, 
sharing best practices, and study of potential improvements to the 
program, including those set out in the ``Studies'' section.

    Senator Dodd. Well, thank you very much, Doctor.
    Dr. Frank, welcome. A pleasure to have you before the 
committee.

 STATEMENT OF DEBORAH A. FRANK, M.D., PROFESSOR OF PEDIATRICS, 
BOSTON UNIVERSITY SCHOOL OF MEDICINE, DIRECTOR OF GROW TEAM FOR 
          CHILDREN, BOSTON MEDICAL CENTER, BOSTON, MA

    Dr. Frank. Thank you, Chairman Dodd and distinguished 
members of the committee. I am honored to be here.
    The C-SNAP project, which my colleague Dr. Cook, who is 
here, and I and a number of the rest of us focuses on infants 
and toddlers under 3, who are the most vulnerable and also, 
except I guess for your grandchildren, the least visible of 
your constituents. They probably are not knocking on the doors 
of your office to brief your staff.
    I would like to stress that all the research that I present 
was completed by 2006 before the current exponential increase 
in energy and food. It probably underestimates the severity of 
the problem. I am here to tell you, rather than home doctoring 
the malnourished babies I should be doctoring, that in the 
basis of research and clinical experience LIHEAP is a child 
survival program. LIHEAP is a child health program. LIHEAP is a 
nutrition program, and LIHEAP is a child development program.
    From the first days of pediatric internship, it is drummed 
into our heads that the quickest way to make a baby stop 
breathing is to let them get too hot or too cold. Parents know 
that babies will freeze to death before they starve to death. 
Given the risk of dark and cold, they cut back on food, and 
that in itself jeopardizes children directly.
    Remember that babies, 0 to 3, are developmentally in the 
most rapid period of brain and body development. They are also 
the most physiologically vulnerable to cold stress and to 
hunger, and I can explain the technology later, if you want. 
When babies divert scarce calories to keep up their body heat, 
they don't learn and they don't grow.
    Parents sacrifice on both fronts, living with food scarcity 
while heating their homes unsafely with cooking stoves and 
space heaters, using candles and kerosene lights, practices 
which increase the risk of fire, burns, and carbon monoxide 
poisoning. I want to call to remembrance Rebecca, who was 9. It 
was her birthday. And Rouben, who was 11, who died in my 
hospital 2 months ago because their parents were trying to keep 
their bedroom warm with a space heater, which is what people do 
when they are trying to make oil last.
    Such fires account for 10 percent of all fires, but 40 
percent of all deaths. Candles also are a huge cause of child 
death, and often these occur in homes where the electricity had 
been cut off.
    Now, unnecessary deaths of children are the most soul-
stirring, but there are many other, much more prevalent and 
serious effects of what we call energy insecurity that have 
long-term and short-term ominous implications. In a sample of 
almost 10,000 babies in Baltimore, Philadelphia, Little Rock, 
Minneapolis, and Boston, about a third are energy insecure. In 
this report, we show that they are not only more likely to be 
hungry and sick, but what actually floored us, because we 
weren't expecting it, is that they are 80 to 90 percent more 
likely than their energy secure peers to be developmentally at 
risk.
    I am a developmental pediatrician. I know that if children 
are delayed in these first critical 3 years, it is very hard to 
catch up. Energy insecurity is not just a problem for little 
children being sick and being hungry, but with them being less 
ready for school long before they are out of diapers.
    Now we know that there isn't just the disease, there is a 
medicine. We know this from research, which was recently 
published in Pediatrics, that there is a partially effective 
medicine to protect children in this current epidemic of energy 
insecurity. That medicine is called LIHEAP.
    We found that when we compared renter families who were all 
eligible for LIHEAP, but those who got it and those who didn't, 
comparing for the background differences, if the children were 
in a family that should be getting LIHEAP and weren't, they 
were 23 percent more likely to be growing poorly and 32 percent 
more likely to have to be admitted to the hospital the day we 
saw them in an emergency room.
    I would point out that a cost of a single 3- to 4-day 
pediatric hospitalization for something routine, not ICU, costs 
about $6,000. That would fund LIHEAP allotments for a whole lot 
of families. Its child health track record, although not 
perfect in LIHEAP, is better than many things we do every day.
    The problem with this medicine is it only reaches, as you 
heard, one in seven of the eligible, which is worse than the 
flu shot. There are those who get it, where the dose is too 
low. As Senator Murkowski saw, in Massachusetts right now, it 
applies only about a third of the cost of a tank of oil, which 
is about 2 weeks' worth of keeping somebody warm. Senator 
Kennedy's information was probably 3 weeks out of date. It is 
getting worse and worse.
    Now food costs are the highest in 10 years as well as 
energy costs, and they are linked. We are very concerned that 
this very grim epidemic of cold, hunger, illness, and 
developmental delay is going to affect an ever-increasing 
number of America's children. We can diagnose the problem. Only 
you, our leaders, can prescribe the medicine by increasing and 
stabilizing LIHEAP funding, as Dr. Power said.
    I am here to remind you again what my colleagues and I and 
pediatricians like us around the country know, but is not noted 
in most policy conversations, which is that LIHEAP is a child 
survival program. LIHEAP is a child health program. LIHEAP is a 
child nutrition program. LIHEAP is a child development program.
    I am very thankful that you care enough to be here today to 
show that you are willing to consider evidence-based policies 
to the fuel future of our children, and I hope that you will be 
able to guide your legislative colleagues so fewer of our 
children will die or be chronically impaired by hunger, ill 
health, and slow learning for want of safe and adequate energy.
    Thank you for your attention.
    [The prepared statement of Dr. Frank follows:]

              Prepared Statement of Deborah A. Frank, M.D.

    Chairman Dodd and distinguished members of the committee, my name 
is Deborah A. Frank. I am honored to be given the opportunity to share 
with you the experience of pediatric clinicians and the evidence of 
pediatric researchers on the importance of the Low Income Home Energy 
Assistance Program (LIHEAP). I am a Professor of Pediatrics at Boston 
University School of Medicine and a founder and principal investigator 
of the Children's Sentinel Nutrition Assessment Program (C-SNAP), a 
multi-site pediatric research group which focuses on the impact of 
public policies on babies and toddlers under the age of 3 years, the 
most vulnerable and the least visible of your constituents. I would 
like to stress that all the research I am presenting was completed by 
2006 before the exponential increase in energy and food costs in 2007 
and 2008, so it probably underestimates the current level of risk to 
our children.
    I would be back at Boston Medical Center doctoring these 
``invisible'' malnourished children, as I do most Wednesdays, if I did 
not know on the basis of research and clinical experience that LIHEAP 
is a child survival program, LIHEAP is a child health program, LIHEAP 
is a child nutrition program, and LIHEAP is a child development 
program.
    LIHEAP, as you know, is instructed by statute to target benefits to 
``vulnerable households with the highest home energy needs,'' defined 
as those including either an individual with disabilities, a frail 
elder, or at least one member who is a young child. This is a medically 
sound choice. (www.acf.hhs.gov/programs/liheap/perform/index/html 
accessed 3/06/06). From the first days of a pediatric internship it is 
drummed into our heads that the quickest way to make a baby stop 
breathing is to let the environment become too cold or too hot. 
Families, as well as doctors, know children will freeze to death before 
they starve to death, so confronted with the dire risks of dark and 
cold, parents turn to the only flexible part of a poor family's budget, 
the food budget. This trade-off is not only often not adequate to avoid 
chronic problems keeping the house warm and lights on, but also has 
been shown by decades of research to jeopardize children's current and 
future health and development by increasing the family's food 
insecurity--what front line workers call hunger. A new report, Fuel for 
Our Future, from the Children's Sentinel Nutrition Assessment Program 
(C-SNAP) demonstrates that even before the recent record surge in 
energy costs, this ``heat or eat dilemma'' was depressingly familiar to 
America's poor and near-poor families and their doctors.
    These untenable choices wreak havoc on all our citizens, but 
particularly on the health of our youngest and most vulnerable 
children. Babies and toddlers ages 0 to 3, who developmentally are in 
the most rapid period of brain and body development, are also among the 
most physiologically vulnerable to cold stress. They lose body heat 
more rapidly than older children and adults because of their higher 
surface area-to-mass ratio. When babies' bodies have to divert already-
scarce calories to maintain body heat, cold and hunger intertwine to 
jeopardize their current health and growth, as well as their future 
ability to learn and relate to others. The 14 percent of America's 
children of all ages who have special health care needs, although not 
targeted in our C-SNAP sample, are also actively endangered by cold and 
dark. Cold temperatures trigger painful crises among children with 
sickle cell disease and severe attacks among children with asthma. The 
health of children in general is threatened. How are parents to feed 
their children safely if they have no gas or electricity for 
refrigeration or cooking? How are they to administer nebulizer 
treatments without electricity? How are they to keep babies clean 
without warm water?
    Low-income families pay a much higher percentage of their income 
for energy costs than families with higher incomes--6 percent is 
considered affordable, but many poor families pay 15, 20, or even 40 
percent. This squeeze causes terrible choices. Federal research shows 
that while both rich and poor families increase their expenditures on 
home fuel in unusually cold months, poor families offset this cost 
through decreasing food purchases with an average 10 percent decrease 
in caloric intake. Many inevitably sacrifice on both fronts, living 
with food scarcity while heating their homes with cooking stoves and 
space heaters, using candles and kerosene lamps for lighting, practices 
which increase the risk of fires, burns, and carbon monoxide poisoning. 
I want particularly to call to remembrance in this context Rebecca 
Zizi, age 9, and her brother, Rouben Zizi, age 11, who died in the 
emergency room of Boston Medical Center (the hospital where I work) on 
December 29, 2007 because of a fire started by the space heater their 
family had placed in their bedroom--a common practice when parents are 
worried they will not be able to afford enough heating oil to keep warm 
throughout our long New England winters. Such fires account for only 10 
percent of all heating fires, but 40 percent of all deaths. Indeed, it 
is not just lack of heat but lack of light that can kill children--25 
percent of all fatal candle fires occur in homes where the electricity 
has been cut off.
    While not as soul-searing as the unnecessary deaths of children, 
there are many other serious and widely prevalent effects of families' 
inability to afford adequate energy which have long term ominous 
implications for the present and future well being of young Americans. 
The health effects of energy insecurity surface on the bodies of babies 
in emergency rooms at hospitals like Boston Medical Center during the 
cold of winter. Long before the current energy crisis, we found a 30 
percent increase in the number of underweight infants and toddlers in 
the Boston Medical Center Emergency Room in the 3 months following the 
coldest months, compared to the rest of the year.
    More recently, my colleague Dr. John Cook, who is here today, and 
the rest of the C-SNAP team have evolved and tested a measure of 
household energy security, which is under review in a medical journal 
as we speak.
    We define energy security as follows:
    Household Energy Security (HES) is consistent access to enough of 
the kinds of energy needed for a healthy and safe life in the 
geographic area where a household is located. An energy-secure 
household's members are able to obtain the energy needed to heat/cool 
their home and operate lighting, refrigeration and appliances while 
maintaining expenditures for other necessities (e.g., rent, food, 
clothing, transportation, child care, medical care, etc.). A household 
experiences energy insecurity (HEI) when it lacks consistent access to 
the amount or the kind of energy needed for a healthy and safe life for 
its members.
    This construct was put into practice as follows for families with 
children under 3 years:

     if in the past year the family had received a letter 
threatening a utility turn-off but had not yet experienced it, they 
were classified as moderately energy insecure;
     if they had tried to heat the house with a cooking stove 
or had suffered a utility turn-off or unheated or uncooled day because 
of inability to pay the bills, they were classified as severely energy 
insecure.

    We were appalled to find in a sample of almost 10,000 babies and 
toddlers seen in the C-SNAP sites of Baltimore, Philadelphia, Little 
Rock, Minneapolis, and Boston, more than a third lived in energy 
insecure households. This is really troubling since, in the subgroups 
of impoverished babies and toddlers of color we already have looked at, 
summarized in the C-SNAP report ``Fuel for our Future'' which is 
available here today, energy insecure children were not only more 
likely to be food insecure, but they were sick, sick enough to be 
hospitalized. (I would point out that the cost of a single 3-4 day 
pediatric hospitalization currently costs $6,000, enough to fund LIHEAP 
allotments for 20 families.) What also really startled us was that 
severely energy insecure infants and toddlers were 80-90 percent more 
likely than their energy secure peers to be developmentally at risk. I 
know as a developmental behavioral pediatrician that children have 
great difficulty catching up from development delay during the critical 
period of brain growth in the first 3 years of life. Energy insecurity 
is associated not just with little children being sick and hungry, but 
with them being less ready for school long before they are out of 
diapers. These disturbing results hold true for children of all 
ethnicities--because our paper is under consideration I cannot yet 
share the details with you.
    We do know there is a medicine that is partially effective in 
protecting children from the current epidemic of energy insecurity and 
its costly consequences, not just in human suffering, but in medical 
and educational costs now and in the future. That medicine is public 
energy assistance, which at the Federal level is called LIHEAP (Low 
Income Home Energy Assistance Program). Research my colleagues and I 
recently published in the medical journal Pediatrics shows that, after 
considering background differences, children in LIHEAP-eligible 
families who rent and pay for their own heat, but do not get LIHEAP, 
were 23 percent more likely to be growing poorly and 32 percent more 
likely to have to be admitted to the hospital on the day we saw them in 
an emergency room than similar children in LIHEAP-eligible families 
that do receive it. LIHEAP's child health track record, although 
clearly not perfect, is better than many treatments doctors use every 
day. There are two problems with this medicine: (1) it doesn't reach 
most in need and (2) for those who receive it the dose is too low.
    LIHEAP is currently funded to reach only about 16 percent of those 
who should get it.
    I was shocked to learn from Dr. Cook and his economist colleagues 
that the average yearly LIHEAP grant has declined to $314.00 per family 
per year, only about \1/3\ of the cost of one tank of oil, which 
represents only enough oil to keep a family warm for about 2 weeks. 
This is down from an already inadequate $427.00 in fiscal year 2005 
when our study was in progress and the cost of home energy was high but 
not as high as it is today. Thus the LIHEAP ``medicine'' doesn't reach 
most of the families who need it and, for those who do get it, the dose 
is what doctors call ``subtherapeutic''--below the level needed for 
adequate treatment.
    With food costs the highest in 10 years and energy costs the 
highest on record, my pediatric colleagues and I are deeply concerned 
that this already grim epidemic of cold, hunger, illness, and 
developmental delay is going to effect ever increasing numbers of 
America's children. We can see the problem evolving just as clearly as 
we see a new and dangerous strain of influenza. We pediatricians can 
diagnose the problem, but only you, our leaders, can make the treatment 
available in adequate doses to more of those who need it by increasing 
and stabilizing LIHEAP funding. I am here to remind you again what 
pediatric clinicians and researchers know but has not been addressed in 
most policy debates--LIHEAP is a child survival program, LIHEAP is a 
child health program, LIHEAP is a child nutrition program, and LIHEAP 
is a child development program. I am so thankful you care enough to be 
here today to show that you are willing to consider evidence-based 
policies to fuel the future of our children. It is my hope that you 
will guide your legislative colleagues to make decisions so fewer of 
America's children will die or be chronically impaired by hunger, ill 
health, and slow learning for want of safe and adequate energy.

    Senator Dodd. Thank you very much, Doctor. That was very 
important statistics and very, very helpful. On the 
developmental side particularly, I think it sheds a different 
light on the issue than the one traditionally brought up when 
we talk about these issues. Thank you.
    Thank you very much for being here, Ms. Hussain. I should 
have introduced--I understand there is a grandchild here as 
well, a little one.
    Ms. Hussain. Yes.
    Senator Dodd. I didn't see behind--I apologize. Do you want 
to stand up so we can see you here? What is your name?
    Desiree. Desiree.
    Senator Dodd. Nice to meet you. Thank you for coming to 
Washington.

       STATEMENT OF ROBIN HUSSAIN, RESIDENT, HARTFORD, CT

    Ms. Hussain. Hello.
    Senator Dodd. Hi.
    Ms. Hussain. Good morning. My name is Robin Hussain. I am a 
single grandmother, raising three grandchildren in Hartford, 
CT. I particularly want to thank Senator Dodd, our Senator, who 
never forgets how ordinary people in Connecticut are struggling 
and need his help.
    I am very grateful to Senator Alexander, Senator Kennedy, 
Senator Reed, Senator Murkowski, and the members of the 
committee for this opportunity to speak on behalf of LIHEAP and 
how much it helps stabilize low-income households like mine and 
my neighbors.
    As I see it, your heating cost is the toughest thing to 
manage in your entire household. I am a really good manager. I 
find that there are many expenses that you can bring down. You 
can shop more carefully. You can clip coupons, switch to 
another market. You can get used clothes. You can find a more 
affordable apartment, but you don't have a choice when it comes 
to heating that apartment. You don't have a choice of a natural 
gas vendor or a different one. There are no coupons to clip.
    If you rent, you have no control over the efficiency of the 
furnace. But heat is not optional. It is not a luxury. You 
might turn down the thermostat, but you are still going to need 
to heat that apartment.
    What do you do if you are looking at a gas bill of more 
than $300 a month for heat, hot water, and cooking. That is 
what my bill would have been over the last three winters if I 
had not been receiving LIHEAP and participating in the matching 
payment program with our utilities. At times, our rent took 
more than two-thirds of our family's income. How would I have 
kept heat in that apartment?
    Believe me, I never thought that I would be asking anyone 
for help. I got my working papers when I was just 12 years old 
so that I could join a group in the city raking leaves and 
picking up trash. During high school, I had two jobs. I had a 
lot of energy and a lot of ambition.
    As an adult, I have been in retail, catering, car rentals. 
I am a very good organizer. I was always promoted to the 
manager level. I raised three kids in, I would say--what you 
would say we could call ourselves, comfortable--not really well 
off, but definitely getting along. My favorite job was managing 
a Thrifty Car Rental headquarters. I brought home $575 a week 
after taxes, had a company car. From where I sit today, that 
looked like easy street.
    Things really started to change in 2001. To put it bluntly, 
I lost my fight to keep my daughters away from the world of 
violence and drugs. In spite of everything our family tried to 
do, it became clear that I would have to step in for my 
grandchildren to give them the kind of life that my daughters 
were unable to pull together.
    The empty nest, years of career growth, prosperity, turned 
into a struggle to parent two children under the age of 3, 
trying to keep a job and pay the babysitters. Then I really hit 
a wall. Taking the children, taking care of them when they were 
sick made me miss work too often to hang onto my job at BJ's. 
At this point, I was looking at a grandparent stipend now of 
$666 a month and no other income.
    My rent was really low, just $450 for a three-bedroom 
apartment, cold flat. But food, phone, heat, electricity, 
gasoline, and car insurance, you can't squeeze that all out of 
the other $216 a month. I wondered what I would do if I would 
have to give up our apartment and move in with family or 
friends. But a grandmother with two preschool children--how 
long could we stay on someone's couch?
    You have heard the expression, ``When one door closes, 
another opens? '' My brother told me about the Community 
Renewal Team, where I could get the kids into Head Start and 
help find some help managing my bills. I worked with a 
caseworker, and we started on a budget plan right away.
    The most important thing was the Energy Assistance Program. 
It helped me by paying my heating bills in that drafty old 
apartment. This year, LIHEAP is paying $675 toward my heat and 
hot water bill. To cover the rest, I am on a payment plan. I 
bring $80 a month to the gas company. If I get the payment in 
on time, the gas company matches it dollar-for-dollar. In other 
words, they forgive $80 for every $80 I pay.
    Maybe that doesn't sound like much to some people, but it 
is hard to find that $80 some months. My other bills I kind of 
alternate. Some months I pay the electricity, but not the 
phone. Others, it is the other way around. I try to stick to 
paying that gas bill on time because if you are late, you lose 
that match for the rest of the winter. It is still hard, but 
LIHEAP has helped me take better care of my family.
    With the children enrolled in Head Start, I went back to 
work. First, I substituted in Head Start classrooms so that my 
hours would match the kids'. The money was just enough to push 
me over the income limit and for my medical insurance. So that 
was canceled.
    I found an early shift job at a hotel, where I got full 
medical insurance. Neither of these jobs paid great wages, but 
I still relied on the Energy Assistance Program. It helped that 
I could afford and could count on the Program for one of the 
most basic needs, keeping my family warm.
    The most recent chapter in my story is sitting behind me 
today in the hearing room. This past year, I was asked to take 
in one more granddaughter who has been through some really 
traumatic experiences. Right now, DCF is not allowing her to be 
left with a sitter, not even our relatives, which is why she 
came here to Washington with me. Her medical appointments, her 
psychiatric appointments, her court dates have all kept me from 
working so far this year. LIHEAP has been a life-saver once 
again.
    In closing, I hope that I have been able to convey how 
important LIHEAP is to low-income people. There are a lot of 
working-class people, people like me who are trying to work, 
trying to raise families to make our ends meet. The LIHEAP 
program treats people with dignity. It helps to ease the burden 
of staying warm in the winter, whether you are in an apartment 
heated with gas or a home heated with oil.
    We can all see that the fuel and heat have gone sky high 
these last couple of years. Programs like this help prevent 
people from freezing or losing their apartments altogether. 
Thank you very much for listening.
    Senator Dodd. Thank you. We could probably just end the 
hearing right now. I think you have kind of said it all. 
Eloquent, eloquent testimony.
    Ms. Hussain. Thank you very much.
    Senator Dodd. I am very proud to represent you. Thanks.
    Good luck here following that testimony.
    Ms. Surber. Yes, you saved me till last, and she has 
already said everything I need to say. That is exactly how our 
clients in Tennessee feel as well.
    Senator Dodd. Well, thank you very much, Ms. Surber, for 
being here. It means a lot to have you here.

   STATEMENT OF REGINA SURBER, DIRECTOR, COMMUNITY PROGRAMS, 
          DEPARTMENT OF HUMAN SERVICES, NASHVILLE, TN

    Ms. Surber. Our LIHEAP program operates in our State year 
round, providing needed assistance with heating and cooling 
costs for as long as the funds will allow. Our LIHEAP dollars 
are distributed through a network of community action agencies 
and other nonprofits and entities of local governments. Our 
State uses a priority point system to target our funds to some 
of the most needy households in our State, particularly the 
elderly, the medically fragile, and households with very young 
children.
    As we are all painfully aware, energy prices are soaring. 
In our State, we have seen many families arriving at our local 
agencies requesting assistance who have never had to ask for 
any kind of assistance before. These are families who have been 
struggling paycheck-to-paycheck to provide for themselves and 
now find that this one paycheck simply does not cover all of 
the increased costs of the basic necessities of life. Receiving 
assistance through the LIHEAP program means that they can use 
some of those dollars for food or gas to get to work that they 
would normally have had to use to heat or cool their homes.
    States have the flexibility to set their benefit levels to 
address the local needs in their communities. When the number 
of households requesting assistance starts to increase, States 
must decide whether to keep their current benefit levels and 
serve fewer households or serve more households by reducing the 
benefit level for each. That is a hard decision for a State 
office.
    Increasing the number of households served by decreasing 
the benefit level of each on the surface may seem like an 
equitable way of sharing available resources. But are we truly 
helping a household with a smaller benefit level if they cannot 
make up the difference themselves to pay that bill?
    With the current increase in the number of households 
requesting assistance with their energy costs, our State's 
current formula allocation simply does not meet the demand. Any 
decrease in the LIHEAP program funding would have a detrimental 
effect on the health and well-being of thousands of low-income 
households in Tennessee. Likewise, no increase in the program 
allocations means that many more households will go without 
this basic necessity.
    Experience has shown us that we have a need for a year-
round energy assistance program. As a southern State, one might 
assume that the dangerously high temperatures during the summer 
months are the only time when we need to focus our efforts on 
assisting households with their energy bills. However, we, like 
our northern counterparts, experience cold temperatures for a 
period of time each year. While our winters may not be as long 
or be as extremely cold, individuals and families unable to pay 
their heating costs often place themselves in great danger as 
they attempt to find alternate means, such as candles or wood 
fires, to keep themselves warm.
    Certainly, we do need the funds to assist households with 
cooling their homes in the summer. Last August, Tennessee, 
along with several other southern States, experienced some of 
the hottest temperatures ever recorded in those States. The 
highest loss of life attributed to the heat wave was sadly 
within our own State, where we had 15 deaths related to the 
extreme high temperatures.
    We know that the elderly and the very young and the 
medically fragile are most susceptible to the heat. Our own 
limited efforts to address this issue through the distribution 
of air conditioners to low-income households only met a very 
small portion of that need. We rely on the LIHEAP program to 
help us serve our low-income households within our State.
    The mission of the LIHEAP program is very basic--to provide 
heating and cooling assistance to households living in poverty. 
These households, as you have heard, are routinely placed in 
the difficult position of having to choose to pay for heating 
or cooling costs or feed their families. The receipt of the 
Federal LIHEAP program funds allows our State to provide 
assistance to these families so that, for at least 1 month, 
they won't have to make that difficult choice.
    With the ever-increasing energy costs, the need for energy 
assistance is surely to rise. The gap between available 
resources and eligible households in our State continues to 
widen. Senior citizens living on fixed incomes and households 
with members who are very young or have medical disabilities 
are struggling every month to pay their energy bill.
    The need for energy assistance is growing so rapidly that 
support systems in local communities cannot keep up with the 
demand. These households will continue to turn to our 
department for assistance, and we will continue to rely on the 
LIHEAP program to help make those funds available.
    Energy is a basic need for all of us, whether it is for 
heating our homes during the winter or cooling them during the 
summer. For households that cannot afford their energy costs, a 
shutoff of their energy resource is only the first in a 
succession of problems resulting from their inability to pay 
that bill. These households often go on to experience 
additional medical expenses, malnutrition, and even 
homelessness.
    Tennessee appreciates the fact that, over the years, 
Congress has seen the importance of funding the LIHEAP program, 
and we ask for your continued investment in this program. We 
also ask for your consideration in re-evaluating and 
appropriately revising the funding formula to better reflect 
the real needs of the so-called warm weather States.
    Thank you, Mr. Chairman and committee members, for the 
opportunity to share with you this morning.
    [The prepared statement of Ms. Surber follows:]

                  Prepared Statement of Regina Surber

    Good morning, I am pleased to testify on behalf of the State of 
Tennessee on the importance of the Low Income Home Energy Assistance 
Program (LIHEAP) to our State. My name is Regina Surber and I am the 
Director of Community Services for the Tennessee Department of Human 
Services. The LIHEAP program is within my area and it provides an 
invaluable means for our Department to meet the heating and cooling 
needs of some of Tennessee's most vulnerable citizens.
    Energy burdens (percentage of household income used for energy 
costs) are on the rise for our low-income households who typically pay 
a higher percentage of their income toward the costs of heating and 
cooling their homes. In Tennessee, households living at or below 125 
percent of the Federal poverty guidelines are eligible for LIHEAP 
energy assistance.
    Our program operates year-round providing much needed energy 
assistance for heating and cooling costs. During the prior fiscal year, 
95,089 households applied for assistance through the LIHEAP program and 
83,448 households received assistance. The majority of households that 
did not receive assistance were not able to be served due to a lack of 
funds.
    Tennessee's formula funding for LIHEAP averages about $27M 
annually. The LIHEAP funds are distributed through a network of 
nineteen (19) nonprofit agencies and units of local governments serving 
all of our 95 counties. In our State, a priority point system is used 
to target services for households with members who are elderly, 
disabled, and/or under the age of six. In the prior fiscal year, 45 
percent of the households served had members who were elderly, 39 
percent with disabilities, and 16 percent with young children.
    The LIHEAP guidelines provide for States to have the option to set 
aside up to 15 percent of their LIHEAP allocation to support 
weatherization activities for low-income households. In Tennessee, we 
transfer 10 percent of our LIHEAP allocation to the State's 
Weatherization Assistance Program to support weatherization measures 
such as insulation and furnace repair.
    As we are all painfully aware, energy prices are soaring. In our 
State, we have seen many families arriving at our local agencies to 
apply for LIHEAP assistance who have never applied for assistance 
before. These are families who have been struggling paycheck to 
paycheck to provide for themselves and now find that their paychecks no 
longer cover the basic necessities of food, shelter, transportation, 
child care and medical needs.
    Receiving assistance through the LIHEAP program means they can use 
some of the dollars for food or fuel to get to their jobs that they 
would have normally used to pay the energy costs of heating or cooling 
their homes.
    States have the flexibility to set their benefit levels to address 
the needs in their local communities. When the number of households 
requesting assistance increases, States must decide whether to keep 
their current benefit levels and serve fewer households, or serve more 
households by reducing the benefit level.
    This is a hard decision for a State office. Increasing the number 
of households by decreasing the benefit level for each, on the surface, 
seems an equitable way of sharing available resources. But are we truly 
helping a household with an $800 electric bill if we provide them with 
a $200 benefit through the LIHEAP program? Will this household be able 
to come up with the additional $600 to keep their electricity on and 
their house warm or cool? For many of our elderly households, the 
answer would be no.
    With the current increase in the number of households requesting 
assistance with their energy costs, our State's current formula 
allocation does not meet the need. Any decrease in LIHEAP program 
funding would have a detrimental effect on the health and well-being of 
low-income households in Tennessee. Similarly, no increase in the 
program allocations means that many more households will go without 
this basic necessity.
    Experience has shown us that we have a need for the year-round 
availability of funds in our State. As a southern State, one may assume 
that the dangerously high temperatures in the summer months are the 
only time of year when we need to focus our efforts on assisting 
households with high energy bills.
    However, we, like our northern counterparts, experience cold 
temperatures for a period of the year. Average temperatures across 
Tennessee during the month of January average 27 degrees. While our 
winters may not last as long, or be as extremely cold, as in other 
parts of the Nation, individuals and families unable to pay for their 
heating costs often place themselves in great danger as they attempt to 
find alternate means, such as candles and wood fires, to keep 
themselves warm.
    Certainly, we do need funds to assist households with cooling their 
homes. Last August, Tennessee, along with several other southern 
States, experienced some of the hottest temperatures ever recorded. The 
highest loss of life attributed to the heat wave was in our State where 
we had 15 deaths related to the extreme high temperatures.
    We know that the elderly, the very young and the medically fragile 
are most susceptible to the heat. Our own limited efforts to address 
this issue through the distribution of air conditioners to low-income 
individuals met only a small portion of that need. We rely on the 
LIHEAP program to help us serve our low-income households during the 
summer months.
    The mission of the LIHEAP program is to provide heating and cooling 
assistance to households living in poverty. These households are 
routinely placed in the difficult position of having to choose to pay 
for heating/cooling costs or feeding their families. The receipt of the 
Federal LIHEAP program funds allows our State to provide assistance to 
these families so that, for at least 1 month, they won't have to make 
this difficult choice.
    With the ever-increasing energy costs the need for energy 
assistance is surely to rise. The gap between available resources and 
eligible households in our State continues to widen. Senior citizens 
living on fixed incomes and households with members who are very young 
or have medical disabilities are struggling to pay their energy bills.
    The need for energy assistance is growing so rapidly that support 
systems in local communities, including nonprofits and faith-based 
agencies, cannot meet the demand. These households will continue to 
turn to our Department for assistance. We rely on the LIHEAP program to 
enable us to meet their needs.
    Energy is a basic need for all of us, whether it is for heating our 
homes during the winter months or cooling them in the summer months. 
For households that cannot afford their energy costs, a shut-off of 
their energy resource is only the first in a succession of problems 
resulting from their inability to pay their bill. These households 
often go on to experience additional medical expenses, malnutrition, 
and even homelessness.
    Tennessee appreciates the fact that over the years Congress has 
seen the importance of funding the LIHEAP program and we ask for your 
continued investment in this critically needed program. We also ask for 
your consideration in re-evaluating and appropriately revising the 
funding formula to better reflect the real needs of the so-called 
``warm-weather'' States.
    Thank you for the opportunity to come before this subcommittee 
today to briefly share with you the importance of this Federal program 
to thousands of households in Tennessee.

    Senator Dodd. Well, thank you very much, Ms. Surber, as 
well. That was very helpful testimony, and I thought it was 
particularly worthwhile to have someone--I think it is sort of 
obvious in the northern-tier States, but to hear from someone 
in a border or a southern State, where you have the 
fluctuations that occur as rapidly as they do, is a good 
addition to the normal testimony we have from representatives 
of States where you either have tremendously high temperatures 
all of the time or a good part of the year very low 
temperatures.
    What I would like to do here is watch the clock here as 
well--excuse me. I don't know if Senator Reed is coming back? 
There are three of us here. We can kind of do this informally 
in a way and engage in a good conversation here.
    I wonder if you might, Dr. Power, let me begin with you. We 
have heard what Tennessee is doing obviously in the State, but 
I'm curious as to whether or not any States are doing anything 
unique or different that you are aware of around the country as 
a model. Obviously, we are serving a relatively small 
percentage of eligible people, but to what extent are there any 
good examples out there of how States are managing this issue 
in a way that might be instructive to those States who would 
like to deliver more services to people, what they could be 
doing?
    Obviously, we've got our responsibility on this side of the 
dais. A lot of times, I find a lot of very good ideas come from 
our States. Are there some examples out there that you would 
care to share with us at this point?
    Ms. Power. There are, and these are--I am reflecting the 
preferences of the community action network, which are biased 
toward some long-term and major system change solutions because 
there really aren't any evaluations of LIHEAP programs, third-
party evaluations.
    The leveraging I spoke about is very important, and where 
leveraging has been used first to finance advocacy and building 
partnerships and working things out with utilities and 
commissions, there are safety nets in place that have a series 
of discounts and weatherization matching investments from 
utilities going from LIHEAP and weatherization network. Is it 
enough? No. Is it a great deal more than LIHEAP and 
weatherization alone? Absolutely.
    The partnerships with the utilities are essential 
communications tools as well for finding out where there are 
going to be people in need, people at great risk, people shut 
off. The majority of States have some kind of leveraging 
arrangement, and a minority of States in the warm climate areas 
where LIHEAP is insufficient to be much of an attractive 
match--the exception is Texas, which has done a great deal in 
the course of its regulating its deregulation with discounts 
and weatherization. That is a generalized pattern, and LIHEAP 
is a terrific matching fund and attracts money.
    The second one is a more daring set of experiments in four 
States, statewide, and in individual utility areas in other 
States, that essentially holds the percentage of income that a 
household must pay to what the State considers a reasonable 
level, and that varies tremendously. That is almost like a baby 
Brook Amendment for public housing in that State.
    Nevada, New Jersey, New Hampshire's electric system and 
Ohio, for all its fuels, are trying to keep the lowest income 
LIHEAP population at no more than X. It is 6 percent in a 
couple of those States and as high as 15 percent in Ohio. The 
rest is essentially subsidized by LIHEAP and the rate payers 
and other funding sources, if they can find them, in the States 
as they are adjusting those programs.
    There is a rough justice to that. Indeed if, in fact, you 
could do this for everybody so that working households who are 
just over that eligibility line, when they get into trouble or 
when something happens, can also get that kind of protection, 
it is not even rough justice. It becomes a policy that could 
have tremendous support. It is not going to be possible for 
very small States. It involves a great deal of input from other 
rate payers in order to make this work, but it is a mix of 
State and Federal resources that could be the path.
    To the extent the Federal resources can balance, rural 
areas can't do this well with rural electric coops, power 
authorities. Federal power authorities are very involved in 
investing in the northwestern States with the low-income 
population assistance and not in any other areas, and 
particularly not the Tennessee Valley Authority, unfortunately, 
yet.
    There are good program models in which LIHEAP is not just 
used for emergency. In most States, you can't get more LIHEAP 
by not paying your bill than you could have gotten if you made 
your payments on time, and that works with the incentives that 
community action agencies like to provide to low-income, low-
wage workers to build assets, to build their credit, and to 
work toward long-term stability.
    There are a lot of models in there. We don't have any 
funding or leadership at the Department of Health and Human 
Services to share models, to communicate, train, and help the 
States with this kind of thing, and that would be very helpful 
in your oversight to put some responsibilities on the Federal 
administration of this block grant to help get the word out.
    Senator Dodd. Yes, that is a very good suggestion, and you 
want to be careful on resource allocation because the money is 
tight, but certainly requiring that.
    Can you just give us an idea, what you just explained here, 
could you just if you have it in your mind, what does that 
mean? I mean, if we are talking about 16 percent of the 
eligible population nationally qualifying for LIHEAP, what do 
those numbers look like in some of the States that you have 
mentioned where the models are pretty good? Do they expand 
dramatically the numbers of people who are qualifying for 
LIHEAP or getting LIHEAP or getting energy assistance?
    Ms. Power. Not that I know of, but I would like to be able 
to check that with those four States particularly for the 
record. What it does is stabilize those people who are involved 
and who are engaged in the program.
    Senator Dodd. It sustains the program through a length of 
period of time.
    Ms. Power. It sustains the program. It sustains those 
households. Ms. Hussain was very eloquent in describing one of 
those kinds of incentive programs. It is not a PIP, but 
arrearage forgiveness is the most important thing because all 
of these statistics that we have given you, as wonderful as 
these forecasts may be, don't include old debt. The Department 
of Energy doesn't collect that. We use their numbers. People 
owe a whole lot more than this year's bill, and we gave you 
this year's bill numbers in our testimony and on our models.
    The mountain of debt that is piling up on working 
households, even as they try and pay it off, is horrifying. 
There was a study by the credit card national association early 
in the year that found that 25 percent of households planned to 
pay for their energy on part or all on credit cards this 
winter.
    Senator Dodd. Well, do you know the median income in the 
United States, I think it is around $43,000, median income. The 
average revolving debt in this country is $9,000--excess of 
$9,300, and most of that revolving debt, well over 95 percent 
of it is credit card debt and growing. And so, you are getting 
as a percentage of people's income, a staggering amount of 
consumer debt.
    By the way, savings are at a negative rate as well. You get 
the combination of people unable to save--by the way, it is 
unable, not unwilling. Unable to save. The amount of consumer 
debt that is mounting, and of course, this is now with the 
housing foreclosure issue because a lot of people are taking 
out those second mortgages to do exactly that--to pay for home 
heating oil, to pay for credit card debt.
    Of course, they now have obligations in excess of the value 
of their homes, as we have watched them now decline value by 10 
percent, maybe 15 percent by next year. Putting people really 
under water here, and the problems just grow exponentially 
almost on a daily basis in this area.
    I would be interested if you could, Doctor, these are some 
very important numbers. I think we would all like to know what 
is working and what could work better? To the extent that the 
organization could help us pull some of that data together, and 
I think a very worthwhile suggestion we would want to 
communicate to the department here as a way of examining these 
questions and making this work better and highlighting and 
communicating some of those ideas could be very worthwhile.
    Ms. Power. I would be happy to, Mr. Chairman.
    Senator Dodd. Would you do that?
    Ms. Power. Yes.
    Senator Dodd. Dr. Frank, in a sort of related question 
here, and I appreciate immensely your analysis of this in the 
context of what happens in terms of developmental issues in the 
0 to 3 category and so we think beyond, and again, I think for 
most of us here in the room, you said it. I found myself going, 
``Yes, I knew that.'' The fact you just said it sort of brings 
it home that children are going to die of freezing before they 
die of hunger at that age.
    I hear it. I guess we all know that, but it sort of 
startles us to hear it. Their health conditions and brain 
development issues are critically important. I wonder if you 
have any thoughts on--you work with children on a daily basis, 
how do we do a better job of making these programs more 
accessible, making people more aware of them?
    Obviously, there are limitations on what resources exist. I 
suspect from what you said here a lot of it is that people just 
don't even apply for this.
    Ms. Frank. Or when they do apply, they are told to come 
back another day because the lines are too long.
    Senator Dodd. Yes.
    Ms. Frank. The paperwork and so on. It is the line--I mean, 
you have to take a day from work and maybe drag along a sick 
baby and then queue outside what we call the ABCDs. And then 
told, after X number of people go in the door, ``go away'' 
because ``I am sorry, we can't deal with anybody else today.''
    That is a huge counterincentive. I mean, I don't think it 
is a lack of education, at least not the people--we very 
quickly tell people in our hospital. ``Go. Go apply. Go to the 
ABCD.'' The ABCDs are out by--they don't open until November 1, 
and they are out by January.
    Senator Dodd. Yes.
    Ms. Frank. If you go, it may be just too difficult to get 
through that day, and then by the time you can get back, they 
are out. It is very complicated. It is a good medicine, and it 
is hard to get it. When you get it, the dose is low. Although 
what stunned me was that the dose made a difference. This was, 
again, old data when LIHEAP at least paid for like a whole tank 
of oil.
    Senator Dodd. Yes. Well, I am going to be asking--Ms. 
Surber, you as well, and others, you have got to share with us 
some ideas on how we can do this more efficiently. I mean, it 
is very, very helpful to us, all of us here, even those who may 
be opposed to the program. I think to the extent we can get the 
funding for it, we would all like to see it work better and 
become more efficient in its application.
    Ms. Frank. Dr. Power told me a brilliant idea when we were 
talking before, which is why not qualify people for 2 years at 
a time, since they are not suddenly going to become much richer 
and ineligible. I thought, boy, that would save a whole lot of 
time.
    Ms. Power. That would mean that you approve a 2-year plan, 
and the legislation allows the State to submit and then have 
approved a 2-year plan. It is pretty simple.
    Senator Dodd. Yes, well, that is a good suggestion, a good 
idea. Any other ones like that that you have would be very 
worthwhile.
    I wonder, Doctor, if there are any longitudinal studies 
that you have seen that deal with the achievement gap on this?
    Ms. Frank. It is very interesting that the surveys that ask 
about energy insecurity and the surveys that ask about child 
outcome are disconnected, and none of the longitudinal studies 
ask about either energy or housing security and long-term child 
outcome. They do ask about food security, but not energy.
    Senator Dodd. Yes.
    Ms. Frank. That is a real gap in our scientific knowledge. 
You can tell just in general that kids who are scoring in the 
delayed range at age 2 are just at exponentially more risk for 
flunking first grade. I mean, whatever got them to that point, 
they are going to do worse later.
    Senator Dodd. Well, it is always one of the issues I find 
myself confronted with here over the years, and I know Senator 
Murkowski has probably encountered the same thing. We will go 
to our colleagues on one of these issues--and there are a 
series of them--and oftentimes, I find that people think we are 
talking about separate families. If I go and say, ``Look, I am 
interested in the WIC program, and I am interested in LIHEAP, 
and I am interested in Head Start.''
    They will say, ``Look, I will tell you what. I will help 
you on the Head Start, and I will help you on the WIC, but I 
can't help you on the LIHEAP.'' I say it is the same family.
    Ms. Frank. Exactly.
    Senator Dodd. There is not a LIHEAP family and a WIC family 
and a Head Start family.
    Ms. Frank. Yes.
    Senator Dodd. And so, you are helping me on one side of 
them. You are taking money out of the other. Again, I realize 
we can't do everything, but we need to understand this thing. I 
presume what we are talking about here, we are not separating 
out. We are talking about a family that is suffering. If there 
is an achievement gap associated with the heating question or 
cooling issue, I presume that same family has also got a food 
problem here, and a variety of other things. You are dealing 
with----
    Ms. Frank. In our data for babies, actually, more families 
are energy insecure than are food insecure--which has also 
surprised us. They are still unacceptably high. I mean, if you 
can count off five babies and say one of those is hungry, and 
you count off three and one of those is energy insecure, that 
is appalling in this country.
    Senator Dodd. Yes. Well, should we--how do you do this? Who 
is doing these studies that should be picking up on this?
    Ms. Frank. Well, N. Haynes, Early Childhood Longitudinal 
Survey. They are just not asking them--again, there is the 
SIPP, but they don't ask about what happens. They don't measure 
the children, and those that measure the children don't ask 
about energy and housing. As far as I know, we are the only 
people who link those two levels of data.
    Senator Dodd. Yes, well, we can make that request. That is 
something we can get together up here and do a letter or 
something and make a request that they look at this----
    Ms. Frank. That would be good.
    Senator Dodd [continuing]. In a more comprehensive way. And 
last on this, on older children and adults--I know your 
specialty is 0 to 3. Are there any studies at all that indicate 
how this is playing out among older----
    Ms. Frank. Well, I can tell you clinically that kids with 
asthma, kids with sickle cell disease, cold triggers their 
illness, and so they end up in the emergency room. So does 
overheating and dehydration. They end up in the emergency room 
at $1,000 a whack because they got so cold that they either 
started to wheeze or they got into a painful crisis. I don't 
think anybody has studied it as systematically as we have for 
babies, but I can tell you clinically that everybody--that the 
house staff will say, ``It is cold tonight. We are going to be 
awfully busy.'' And they are right.
    Senator Dodd. Well, again, that seems sort of self-evident.
    Ms. Frank. Yes.
    Senator Dodd. It is important to hear that testimony. Let 
me begin with you, Robin, thank you again for being here. Very 
eloquent. Congratulations on being a great grandmother, too.
    It is a tough thing to appear before a congressional 
committee and talk about your life story, but you have done it 
with great dignity, and your story--I know we are all special, 
and individual stories are unique. I think you are probably 
well aware there are an awful lot of people who are in very 
similar situations, who work very hard and do their very best, 
and I have got a lot of confidence you are going to do fine. 
Those grandchildren are very, very lucky, indeed, to have you 
as a grandmother.
    Ms. Hussain. Thank you very much.
    Senator Dodd. I appreciate what you are doing. I guess I 
wanted to sort of ask you here as you have answered it, but 
maybe you just want to expound on it a little bit about how 
when you were forced to go without, I guess, having limited 
access to heating assistance, how did it affect your health? I 
mean, we obviously know how it can affect the children. We have 
talked about that. How did it affect you?
    Ms. Hussain. There were a lot more colds. When we couldn't 
afford to actually turn the heat up or I was actually getting 
really worried because the heating bill was so high, and that 
was kind of before I knew about LIHEAP and started to get my 
help, we doubled up on clothing. We wore thermals with a pair 
of jeans on top or with a pair of sweat pants on top. Double, 
triple blankets on the bed at night.
    We did get colds. I have asthma. I have bronchitis. So it 
triggers it, like she said. David has severe asthma. Desiree 
has asthma. Alena is the only one that didn't, knock on wood. 
We get more visits to the doctor's. We get more visits to the 
hospitals, to the emergency rooms. If their treatments get too 
severe, then I have to bring them in, and they have to get the 
actual physical asthma treatment.
    Very difficult. Winter season is very difficult. Colds, not 
always enough money to run to the corner store, but they 
weren't really sick enough quite just yet to bring them in to 
try to get the prescriptions for cough syrups and stuff like 
that, aspirins, fevers. Cold takes a toll.
    Senator Dodd. Were you using any of these alternative 
energy sources? The space heaters?
    Ms. Hussain. I had an electric heater, but I got really 
paranoid and scared because the kids at that time were a little 
bit younger. I was scared that they were going to go next to 
it, they were going to touch it, they were going to burn their 
hands.
    What I would do is like I would kind of sit up, and when I 
had it on, I would put it on for a certain amount of time to 
try to warm up the room. And then when I found myself just 
getting tired, I would turn it off. Then I would go to sleep 
and wake up in the morning, and I would get up first and turn 
it back on. We would get it nice and toasty in there, and then 
I would turn it off and put it up a little bit higher so that 
they couldn't touch it.
    I never did the kerosene thing because I was just totally 
too scared of that. Yes, there were alternatives. Electric 
blankets. Then on that note of putting the electric heaters and 
the electric blankets on, then my electric bill went sky high. 
It was rob Peter, pay Paul that month, and back and forth.
    Senator Dodd. What are you doing now? I am sorry. What is 
your job now? Do you have a job?
    Ms. Hussain. My job now is taking care of them. Desiree, I 
just got in January. She came to the household in January. I am 
back and forth with her doctors. She sees a psychiatrist once a 
week. She has what is called medi-complex. She has ADHD. She 
has severe asthma. We go back and forth to that. We go to court 
appointments from DCF, and we go to doctor's appointments.
    The other two children are in school. They are in first 
grade. There is not much you can do with a 6-hour day. I do as 
much as I can.
    Senator Dodd. You are doing pretty well. Doing pretty well.
    Ms. Surber here, I just want to--tell me about just 
quickly, and make this fast, your efforts on making people 
aware in Tennessee of the program. What works?
    Ms. Surber. We do it in two ways. We require our contract 
agencies, our community action agencies, to develop outreach 
activities and to share those with us. Then through our 
department, we do quarterly news releases to remind people that 
this program is out there. Unfortunately, as some have already 
indicated, we are kind of only increasing the people who show 
up for assistance when our money has long since run out, and 
that discourages them from perhaps coming back the next year 
and applying for it.
    Senator Dodd. How about the bureaucracy issue that was 
raised here by Dr. Power and Dr. Frank--just these people 
showing up, long lines? How do we make it more efficient? How 
do we make it work better? Any thoughts on this, as someone who 
has to deal with it every day?
    Ms. Surber. We are still working on that.
    Senator Dodd. How about this idea of a 2-year deal? What is 
that--how does that strike you?
    Ms. Surber. As long as we work out the funding issue that 
my budget people would be comfortable with, that would help 
because we are seeing a lot of the same families every year. 
Like they say, they are on fixed incomes, and their incomes are 
not going to increase enough to put them out of eligibility for 
the program.
    Senator Dodd. Any other thoughts on making this, making 
people more aware that you would recommend to us here?
    Ms. Surber. Not at this time, but we are certainly working 
on that ourselves. We will share with you any ideas that we 
have.
    Senator Dodd. Thanks very, very much. I have taken a long 
time. I apologize.
    Lisa.
    Senator Murkowski. Thank you.
    Ms. Hussain, I want to echo the comments from Senator Dodd. 
Your testimony here this morning was beautifully stated, and 
you speak to the reality of a world where you can manage, well, 
lots of other things. It sounds like you clearly have made 
great efforts to do just that, but you have no control over 
what is happening with your energy bills. It is something that 
is a basic need, and it is not as if you can shop better, as 
you say, or manage wiser.
    Senator Dodd, as you have mentioned, in a world where 
people are adding onto their credit card debt to just kind of 
make it through the day-to-day and recognizing that we are 
seeing folks basically borrowing and putting it on the credit 
card to basically keep the heat on, this is a very serious, 
very real situation.
    I, too, appreciate your story here this morning. I think it 
speaks to the very precarious nature that so many of our 
families face, whether it is in the colder States or in the 
warmer States. It is something that as well as you might be 
able to plan, there are some things you simply cannot get on 
top of.
    It sounds like you got lucky in going to a counselor that 
set you up to allow you to take advantage of the benefits that 
were available through the energy subsidy. It is a situation 
again, I think, of making sure that individuals and families 
know that these opportunities are available.
    I think we all recognize that the funding is the critical 
piece. If you don't have sufficient funding going to the 
program, you can't do what you need to do in Tennessee to meet 
all the needs, nor can you do it in Connecticut. I want to kind 
of go past the funding aspect of it and just acknowledge that 
we can do more, if we have more in the program.
    Ms. Surber, you spoke a little bit to the formula aspect 
and, Dr. Power, in your written testimony, you indicate that 
you think the formula creates a major barrier to added funding 
because the coldest States reap so little additional reward 
from new appropriations. And you go on to suggest that the 
Secretary of HHS or CRS work to develop different options for 
the formula. Can either one of you speak to what you think 
might work?
    Again, Senator Dodd is looking for good ideas. Is there 
something with the formula that, in your opinion, we can do 
that will enhance what we are able to do with LIHEAP?
    Ms. Surber. Just in thinking about looking at revising it, 
just updating the data, recognizing that each State has the 
different number of heating and cooling days, and taking a look 
at that, obviously. As I said, our winters aren't as cold as 
Connecticut's, but we turn around and have some extreme 
temperatures in the summer. Just taking all of that information 
into account, I think, would help.
    Senator Murkowski. Dr. Power.
    Ms. Power. I have been here through a couple of these, and 
it is not entirely clear whether either data or sweet reason 
determines the outcome. The current formula was negotiated 
between northeastern members of this committee and members from 
California and Louisiana, and it had a very different impact at 
the time it was put in place, which I think is 1986 because the 
population hadn't moved so far south.
    The second- and third-tier formulas, the third-tier 
formula, which really determines how additional money goes out, 
is heavily weighted to population and energy consumption. The 
result now, because of the population shift, is that so little 
money would go to Alaska. For $1 billion, for a 50-percent 
increase, say, in the program, I think Alaska would get a 1 
percent, less than 2 percent, anyway, increase.
    Small, cold States that desperately need more LIHEAP 
funding are the ones like North Dakota and even Minnesota is 
not so small, Vermont, would also get a rather negligible share 
out of a very big increase. You will have worked out the 
expedient of some of it through the President's discretion and 
some of it through the formula.
    Factors that take into account energy burden and take into 
account extreme weather could be balanced so that each State 
got a reasonable share of an increase. The question of what is 
reasonable we will leave in the hands of Congress and higher 
powers than ourselves. It is clear that the current is not 
reasonable. Looking at warm State funding, the gap to the need, 
the gap to the actual energy burden of households in most of 
the southern areas, there is not much difference between the 
burden of those eligible households or those households in 
poverty and the equivalent households in the Midwest.
    New England and Alaska are the exceptions----
    Senator Murkowski. Let me ask you then on that. If we were 
successful in increasing the amount of funding to LIHEAP, and 
let us just say we are wildly successful in increasing the 
amount of funding. I want to be optimistic today. What you are 
saying is that if we don't address how it is disbursed through 
the formula, you will still have inequities in certain parts of 
the country. Is that correct?
    Ms. Surber. Well, warm States wouldn't think so. If you 
were wildly successful and the money went out through the 
formula at $5 billion--I need to check my little computer 
runs--but Alaska would have a small increase, and Texas would 
have a, I think, 500 percent increase and Florida. I don't 
think they would think that that was not a success.
    I think proportionately that is a problem for New England 
and Alaska and the northern-tier States. There would still be a 
lot more money in the system.
    Senator Murkowski. Is anybody collecting the data that you 
have referred to, Ms. Surber? Do we know that?
    Ms. Power. The heating degree day data are the Weather 
Service.
    Ms. Surber. Then NOAA has that.
    Ms. Power. The current population data certainly the 
census. It would be a good idea to be a little more foresighted 
than we were 20 years ago in thinking how populations are going 
to move and how quickly things might change and whether a 
stable system can be put in place.
    Senator Murkowski. For purposes of the funding formula for 
LIHEAP, you don't have an analysis in terms of what is coming 
in with the data? Yes, we can get the weather data, and we can 
get the census data. That is nice. But in terms of how you can 
provide for equities within the system in terms of available 
funds, we are not collecting the data in that manner?
    Ms. Power. It is a matter of weighting those factors--
population, weather, and cost of energy. Those are judgment 
calls, but the reason we recommended HHS, CRS, some relatively 
impartial and respected organization in the Government is they 
could play with different weights and show the alternatives and 
how they come out?
    Senator Murkowski. Well, just in the weighting--and I will 
direct this to you, Dr. Frank. So you have got a population, 
let us take Alaska, where you have a higher percent of 
individuals below the poverty line. You theoretically have more 
children at risk. You have got factors that compound that with 
nutrition--should that be something that is factored in, aside 
from just weather and population? Because if we are talking 
about putting at risk developmentally a greater portion of that 
population on a per capita basis, isn't that something that we 
should be looking at?
    Ms. Frank. Well, I guess through my lens, as a 
developmental pediatrician, I absolutely agree that you have to 
think of this as a, as I said a child health program, a child 
development program. You don't want to make anybody worse 
because everyone is bad enough already.
    I guess that is a silly thing to say in this kind of 
setting. I think you do need to look at populations at risk not 
just because of temperature and cost, but because of other risk 
factors because it all forms a kind of net that tangles up 
children--housing, food, energy. So, yes, I agree.
    I mean, except I am probably outside of my field.
    Senator Murkowski. I will ask you one quick question and 
then defer to my colleague, Senator Reed. You have mentioned 
that children that are exposed to the cold at the very early 
years are at developmental risk. Is that also true if they are 
subjected to heat exposure? I don't have a lot of familiarity 
with heat.
    Ms. Frank. Well, if you have full-blown heat stroke, 
absolutely.
    Senator Murkowski. That will cause developmental delays?
    Ms. Frank. It could cause really serious brain damage. In 
terms, I think, remember that learning is a discretionary 
activity for little kids. They only learn when they are warm 
and happy and clean and comfortable, and then they go out and 
unpack your kitchen cupboard or whatever it is that they do to 
learn.
    If you are so hot that you are miserable or you are so cold 
that you are miserable, even if you are not about to die of it, 
you are not learning. And the same if you are hungry. If you 
are hungry, what you do is you kind of shut down. So you are 
not--you are what is called--you functionally isolate yourself 
from learning opportunities. In a little child, that is 
disastrous.
    Senator Murkowski. Thank you, Mr. Chairman.
    Senator Dodd. Those are great questions, and they are very 
poignant questions. That is, we have got to take a look at 
these formulas again, obviously, here with the changes that 
have occurred in the last 20 years. If Jack is successful with 
this amendment we all offered here, the irony would be that we 
are successful in getting some additional funds and then find 
out they are marginal increases for very affected populations. 
We ought to talk about that and how we approach this.
    Senator Reed.
    Senator Reed. Well, thank you, Mr. Chairman, and thank you, 
Senator Murkowski.
    I want to just publicly announce I am going to shamelessly 
expropriate all of your testimony with attribution when we 
argue for increased funding because it has been excellent. 
Thank you very much. It has hit so many different facets of 
this important issue.
    I think just a comment. I think our success in getting more 
funds is probably inversely related to talking about formula 
changes. That is--but we will do that. First, let us get the 
money because I think we will all agree with additional 
resources, we can fulfill at least our obligations to all the 
States.
    It raises an issue, too, with--Ms. Surber, I think the 
perspective of the State officials is that they can't see any 
more cuts, that they at least have to have the same amount of 
money going forward. If we talk about any changes, we would 
have to at least provide the same amount of funding that the 
States are getting now. Is that a fair point?
    Ms. Surber. Most certainly.
    Senator Reed. Yes, ma'am. Dr. Power, I was very struck by 
your chart four that talked about the energy burdens, and it 
seems to be located principally in the Northeast and Midwest, 
and that, of course, sort of triggered discussion of the 
formulas. What are the factors that go into that energy burden, 
and how are they recognized in the formulas?
    Ms. Power. The factors in the energy burden are really 
simple--expenditures divided by income, and they are 
projections based on a reasonable model. And the formula, the 
underlying formula is now grandfathered and had a lot to do 
with prices. In the second- and third-tier formulas, the 
population is the 125 percent of poverty and poverty 
populations and their projected energy prices kind of 
expenditures.
    The important thing about the program is that the benefits 
are supposed to vary, and generally do, with expenditures and 
burden--with expenditures and income, I mean. That burden 
determines your benefit, which is very helpful targeting. It 
takes a little bit more administrative cost to get it right, 
but it means money goes to the right people.
    Those pieces don't all come together in one formula in the 
program. I'm not answering fully your question with a full-
blown proposal. I am sorry.
    Senator Reed. No, but I mean, you have raised critical 
issues of every program we run, which is not just the top line, 
but is it targeted and what is the measure that we are 
applying? The measure would be essentially--and correct me if I 
am wrong. I very well might be. It is really sort of the out-
of-pocket cost to people to fill up their tank either with gas 
or with heating oil or with electricity. Is that fair?
    Ms. Power. Not so much the cost as in proportion to income, 
yes. As you pointed out, that chart shows that propane and fuel 
oil this year and last year, if I had last year's chart, are 
where the crisis in terms of the highest energy burden, and 
often they are. In 2006, when LIHEAP suddenly went to $3 
billion because of your leadership, that was a natural gas 
crisis. Because 60 percent of households use natural gas, 50 
percent of the poor heat with it, that was widespread and every 
region recognized it, that that graph would have looked a 
little different at that time.
    The graph that shows regional burdens shows that none of 
your States--but the Midwest burdens, which we know are high, 
are just pretty much the same as southern burdens, as the whole 
southern tier for some reason, until you get to the Southwest. 
It may be that DOE hasn't caught up with rising energy costs in 
the Southwest. You never know. It is a little bit off, not 
quite the national average.
    The Midwest and the South aren't that different in terms of 
the relationship between energy expenditures and income. The 
reason is incomes are much lower in the South, less 
expenditure, less income to bear it.
    Senator Reed. Right.
    Ms. Power. That is the sense of injustice is real, and it 
is based on energy burden.
    Senator Reed. One of the complicating factors here, too, is 
there are other complementary programs. I think it was 
discussed by Ms. Hussain, who the gas company provides 
incentives to provide support, etc. To get sort of a definitive 
kind of measure of how a family is doing, it would have to 
somehow at least appreciate that, maybe not factor in a 
formula. That varies, I am sure, State by State, county by 
county, city by city.
    Ms. Power. It would be terrific to provide an incentive for 
more.
    Senator Reed. Oh, I think so. An incentive for the private 
and public utilities to be much more helpful.
    Let me ask Ms. Hussain, you pointed out you found this out 
from your brother sort of coincidentally, which suggests to me 
we have to do a lot more outreach. Is that your impression?
    Ms. Hussain. Definitely. Had I not heard from my brother, I 
probably would have continued to not know about LIHEAP and its 
programs and never gone into CRT and never found out that they 
have so many other programs that they offer. Getting the 
information to people, I think, can save people's lives and 
their health.
    I had a few suggestions that I had thought of. Possibly 
every one of us gets a utility bill in the mail. We all open an 
envelope. How about putting it on the back of the envelope or 
perhaps in an insert? How about having more information with 
the 211 info line with our grandparents' navigator system, with 
the elderly meetings and stuff that we go to, and we help them 
with their services and their bingos and help those providers 
come out with some information that could possibly be passed on 
during some of their activities.
    I have a lot of----
    Senator Reed. Those are all excellent ideas.
    Ms. Hussain. The kind of ideas that just might get more of 
the information out there, billboards, public service messages, 
sides of buses. Heck, we walk by corner stores. Even posters 
for corner stores. You know, you are having difficulty paying 
your heating bill this winter? Don't freeze. Have a number 
there.
    Just different ideas if I had known.
    Senator Reed. Well, thank you.
    Ms. Surber--all excellent advice--but I am always sort of 
troubled by the dilemma that you are in, which is you don't 
have enough money for all the people who come in. Additional 
outreach might be raising false expectation. Is that part of 
it, do you think, in terms of why there is not more aggressive 
outreach?
    Ms. Surber. I think it has been. I think a year ago, we sat 
down with all of our community action agencies and talked about 
this very issue because I was getting calls that when I would 
say, ``Well, go sign up for LIHEAP,'' these callers would say 
they had never heard of it.
    We talked about doing that, and that was one of the 
agency's fears, having then a groundswell of people coming in 
and having to raise those false hopes and saying, ``Well, we 
will take your application just in case some more money becomes 
available later.'' It is very discouraging to those people who 
came in thinking this is going to be my life-saver today, and 
it didn't turn out that way.
    Senator Reed. Well, I think if we are fortunate in raising 
the top line, that might be an appropriate way to sort of help 
ask for more outreach, but I appreciate the dilemma that you 
front-line service folks are faced with.
    Dr. Frank, finally, your research has been very impressive. 
Have you quantified--because this is so often an effective way 
to get the point across--quantified the loss? LIHEAP funding 
goes down, we incur X additional cost with respect to children 
over their lifetime? Is there any discussion----
    Dr. Frank. I think the only thing we could do quickly--
although my colleague, Dr. Cook, who is here today, is an 
economist, and he could do the more complicated analysis. You 
could say, ``OK'', if not having LIHEAP increases 30 percent 
the risk that a little kid is going to have to come into an 
emergency room--you could quite much say to the hospital to be 
admitted--you can calculate how much that is going to cost the 
healthcare system.
    In general, it costs the public healthcare system in these 
cases because these are kids who are all income-eligible for 
some sort of public healthcare. They are not privately insured. 
It would not be hard to say, even assuming that it is only 15 
percent, you could save a huge number of healthcare dollars if 
you adequately funded LIHEAP.
    I just wanted to add to what Ms. Hussain said. There has 
also been a movement to have single applications for food 
stamps and health insurance, and if you could simplify it so 
that there is one application. Also to outplace people to 
places not only as you mentioned, but to hospitals. Just the 
way you say go down the hall to the pharmacy, you say go down 
the hall to the benefits office. That would be a way of 
reaching clearly the highest need, sickest population.
    I would point out in our study, LIHEAP was targeted to 
families with low-birth weight babies.
    Senator Reed. Well, thank you, Dr. Frank. Thank you all. 
Thank you, Mr. Chairman.
    Senator Dodd. Thank you, Senator Reed, very, very much. I 
think the important point we talked about is the formulas, but 
obviously the most important thing is getting additional 
dollars to get to all States as well. That would be our first 
order of business here.
    Lisa, do you have any other questions you want to ask?
    Senator Murkowski. No, thank you.
    Senator Dodd. Well, this has been very, very helpful. 
Excellent, excellent testimony and it will help us to make our 
case in the coming weeks here for additional support for the 
program. You have made a very strong case. Each one of you have 
made a very significant, worthwhile contribution to this. I 
appreciate that.
    I will keep the hearing record open. Some of our colleagues 
who were not here this morning may have some additional 
questions for you. We will leave that open for a few days here 
so they can be submitted. We ask you to respond as soon as you 
might have the chance to do so, so we can complete the record.
    I thank all of you very much, I thank my colleagues.
    The committee will stand adjourned.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

 Prepared Statement of the Petroleum Marketers Association of America 
   (PMAA), the New England Fuel Institute (NEFI) and the Independent 
                Connecticut Petroleum Association (ICPA)

    Chairman Dodd and members of this subcommittee, thank you for 
allowing the Petroleum Marketers Association of America (PMAA), the New 
England Fuel Institute (NEFI) and the Independent Connecticut Petroleum 
Association (ICPA) to submit testimony today. PMAA is a national 
federation of 46 States and regional trade associations representing 
some 8,000 independent fuel marketers that collectively account for 
approximately half of the gasoline and almost all of the distillate 
fuel consumed nationwide. PMAA marketers deliver the majority of the 
vital heating fuels that keep American families warm and businesses 
running. NEFI is a nationally recognized organization of nearly 1,100 
independent oil heat, propane, biofuel and motor vehicle fuel dealers 
and associated companies.
    The ICPA represents 542 members and their more than 13,000 
Connecticut-based employees who sell at retail over 700 million gallons 
of heating oil and 1.6 billion gallons of motor fuels to Connecticut's 
citizens. ICPA's member heating oil retailers provide services to the 
State's 26,000 LIHEAP customers with oil heat and work closely with the 
Connecticut Association for Community Action [CAFCA], who represents 
the community action agencies in Connecticut as well as Operation Fuel, 
the provider of fuel bank fuel assistance in Connecticut.
    Heating fuel marketers have an intimate and unique relationship 
with their customers and communities that utilities do not share. 
Furthermore, most fuel dealers are small, second and third generation 
family owned businesses providing not only heating fuel, but also 
technical service, vital energy efficiency consultation, and related 
heating and weatherization equipment to their customers.

                        INCREASING ENERGY COSTS

    Rising energy prices have made the cost of home heating an 
increasingly heavy burden to bear. Our Nation's low-income families and 
the elderly are hit the hardest; sometimes faced with the choice 
between paying their heating bills and providing other essentials such 
as food, medicine and warm clothing. Because of their close 
relationship with their customers and communities, our member dealers 
and service companies see this need first hand, and for this reason we 
continue to be steadfast supporters of the Federal Low Income Home 
Energy Assistance Program (LIHEAP); a program that has been critical in 
helping those citizens who need it the most.

                       INADEQUATE LIHEAP FUNDING

    PMAA, NEFI and ICPA support a fully funded LIHEAP program 
authorized by the Energy Policy Act of 2005 at $5.1 billion. 
Unfortunately, the president's budget for fiscal year 2009 reduces the 
LIHEAP budget by 22 percent from $2.57 billion to $2.0 billion, 
reducing the block grant from $1.98 billion to $1.7 billion and the 
emergency contingency fund from $590.3 million to $300 million. Due to 
insufficient LIHEAP funding, the Federal Government asks States to find 
ways to provide heating assistance to low-income families.

           LEVERAGING PROGRAMS/MARGIN-OVER-RACK PROGRAM (MOR)

    As part of the 1990 LIHEAP reauthorization bill, Congress included 
language encouraging States to ``leverage'' better prices for customers 
participating in LIHEAP. States that are able to leverage better energy 
prices for those enrolled in their energy assistance programs in turn 
qualify for more Federal LIHEAP dollars. In a growing number of 
Northeast States, leveraging programs targeting the heating oil--and 
propane--industry have surfaced due to insufficient LIHEAP funding. 
These programs vary, but most are discount of margin-over-rack (MOR) or 
discount-off-retail (DOR).
    The margin-over-rack (MOR) program encourages companies to take a 
hit on their already marginalized bottom lines above their ``rack'' or 
wholesale fuel price. The contract is given to the company with the 
lowest profit margin, and interferes with dealer-customer 
relationships, many of whom are decades old. The (MOR) program pays 
fuel dealers the lesser of either a set margin per gallon or their 
regular retail price on the date of delivery. For example, in 
Massachusetts (1991-2000), the margin was 25 cents per gallon; in 2000 
the State raised it to 28.5 cents per gallon. Vendors had requested the 
higher margin due to their increased operating costs. The MOR concept 
is based on the fact that oil vendors base their per gallon retail 
price on a margin added to their terminal or ``rack'' price. Each 
vendor's margin is different due to variances in operating costs 
associated with delivery of the product, local competition, and other 
factors.

    SMALL BUSINESS HEATING FUEL DEALERS ARE HURT BY MARGIN-OVER-RACK

    Margin-over-rack and discount-at-retail puts at risk the ability of 
small business deliverable fuel dealers to remain competitive and 
profitable, particularly as they compete against rate-payer subsidized 
electric and natural gas monopolies. It also puts them at odds with the 
fuel assistance programs they have supported for decades. These 
programs, on their face, force fuel dealers to create a separate and 
distinct class of customers, who, due to government mandate, are 
treated differently from all other customers.
    This differentiation forces dealers to absorb additional 
administrative costs--necessary only due to the MOR and DOR mandates--
to handle these customers.
    LIHEAP has never paid the entire fuel bill for the recipient. On 
average, it pays all but 50 percent of the household fuel cost. Given 
this shortcoming, mandated MOR and DOR will in many cases force the 
customer to either:

     Switch the entire account to a new fuel provider, thereby 
interfering with a dealer-customer relationship that is often decades 
old or,
     Force the customer household to deal with TWO DIFFERENT 
FUEL COMPANIES IN THE SAME HOUSEHOLD. Such an arrangement can and will 
lead to mistaken deliveries, overfilling of tanks (and spills) because 
Company A has no way of knowing if Company B has delivered, or disputes 
over what money is paying for what fuel.

      REGULATED UTILITIES CAN WITHSTAND MARGIN-OVER-RACK PROGRAMS

    Utility energy providers such as natural gas and electric companies 
are able to build the costs of these leveraging activities into their 
rate bases; by applying a minimal rate increase across their entire 
customer base they are able to pass the costs along. Utilities, which 
are large businesses that operate with little or no competition, can 
afford to--and do--pass on this expense to non-LIHEAP customers. 
Deliverable fuel dealers and marketers are not utility vendors, and as 
such, cannot pass these costs along to the rest of their customers. 
Doing so would jeopardize their ability to remain competitive and harm 
families that also struggle with heating costs but are ineligible for 
LIHEAP assistance. In States with aggressive leveraging programs, many 
deliverable fuel dealers have had to withdraw from State energy 
assistance programs; to the detriment of their predominately low-income 
customers. For example in Connecticut, where dealers are paid 31 cents 
over the New Haven average rack on the date of delivery, more than 200 
(of 350) dealers have withdrawn from the State program in the last 2 
years, and in parts of the State Community Action Program (CAP) 
agencies have had difficulty finding dealers and have had to look to 
Massachusetts dealers to deliver fuel. LIHEAP is the only Federal low-
income assistance program to offer financial incentives to States that 
require discounted prices for low-income residents. There is no 
leveraging program for food stamps, for example, where States are 
encouraged to require grocery stores to discount items for sale to low-
income customers.

                 SOLUTIONS TO MARGIN-OVER-RACK PROGRAMS

    PMAA, NEFI and ICPA believe the Federal leveraging statute must be 
corrected to welcome dealers back into LIHEAP rather than turning them 
away. We recommend that one of the following corrections be made to the 
leveraging statute:

     Remove the leveraging requirement completely;
     Discourage Margin-over-Rack (MOR) programs, which are 
causing a decline in fuel dealer participation in LIHEAP and hurting 
low-income Americans;
     Introduce and encouraging simple Discount-off-Retail Price 
(DOR) programs for heating oil, kerosene and propane;
     Encourage the use of existing dealer pre-buy, cap and 
fixed price programs, and thereby discourage the creation of a distinct 
class of customer because the customer uses the LIHEAP program;
     Encourage leveraging options that are not prejudicial to 
dealers with long-standing customer relationships. For example, 
attempts by State programs will sometimes ``bid out'' the LIHEAP block 
of fuel sales. This interferes with dealer-customer relationships that 
are in many cases decades old; and
     Restrict leveraging programs to only State regulated 
utilities that engage in cost recovery through public utility 
ratemaking procedures.

Our Recommendations Will:

     Increase dealer participation in State LIHEAP programs, or 
at a minimum, mitigate the decline in heating fuel dealers willing to 
support the program.
     Provide incentive for dealers who have historically been 
strong supporters to continue to support the program. Ensure continuity 
of service between dealers and customers with long-standing supply 
relationships caused by ``bidding out'' the LIHEAP portion of household 
fuel use to outside suppliers.
                               conclusion
    Again, PMAA, NEFI and ICPA would very much like to thank the 
subcommittee for the opportunity to submit testimony today. With 
heating oil prices at all time highs, small businessmen and low-income 
families will continue to feel the pinch. We would greatly appreciate 
the chance to testify before the subcommittee in future hearings to 
address the problems associated with MOR programs.

    Prepared Statement of the National Energy Assistance Directors' 
                              Association

    The members of the National Energy Assistance Directors' 
Association (NEADA), representing the State directors of the Low Income 
Home Energy Assistance Program (LIHEAP) are pleased to present this 
testimony on the role of LIHEAP in meeting the heating and cooling 
needs of some of the nation's poorest families. The members of NEADA 
would like to first take this opportunity to thank the members of the 
committee for their continued support in working to increase funding 
for LIHEAP.
    By way of background, there are four components to the LIHEAP 
program:

     Block grant providing formula grants to States to help 
low-income families pay their heating and cooling bills.
     Emergency contingency funds that can be released by the 
Administration for a number of reasons including natural disasters, 
rapid increases in home energy prices, high unemployment rates, and 
other economic conditions.
     Residential Energy Assistance Challenge (REACH) grant 
providing competitive discretionary grants to States to develop new 
strategies to assist households in reducing their home energy burden.
     Leveraging grants providing States with additional 
incentives to raise non-Federal funds for energy assistance.

    In addition, the law authorizes the appropriation of advance funds 
1 year before the start of the program year in order to allow States to 
plan for the design of their programs. This is especially important in 
years when the appropriation for the Federal fiscal year is delayed and 
cold weather States have to start their programs without knowing the 
final appropriation level. As a result, States sometimes have to revise 
their program benefit and eligibility levels several times during the 
course of the program year, until a final appropriation level is 
reached. This can cause considerable delay and confusion in the 
delivery of program services as well as additional administrative 
costs.

                AUTHORIZATION AND APPROPRIATIONS LEVELS

    The LIHEAP appropriation level for fiscal year 2007 was $2.1 
billion of which $1.98 billion was for the block grant and $181 million 
was allocated for emergency contingency funding. Of the amount provided 
for the block grant grant, $27.3 million was set-aside for REACH and 
leveraging. No advance funding was appropriated.
    For fiscal year 2008, the appropriation level provides the same 
amount for the block grant and increases the emergency contingency 
funding level by $408.6 million from $181.5 million to $590.3 million. 
As in fiscal year 2007, no advance funding was appropriated.
    The President's Budget for fiscal year 2009 would reduce the LIHEAP 
budget by 22 percent from $2.57 billion to $2.0 billion by reducing the 
block grant from $1.98 billion to $1.7 billion and the emergency 
contingency fund from $590.3 million to $300 million.
    The impact on low-income households would be severe. States would 
have few choices but to either reduce the share of home heating costs 
covered from 36.3 percent to 28.2 percent or the number of households 
served by 1.2 million from 5.7 million to 4.5 million. The Budget 
recommendations are very disappointing in light of continued high home 
energy prices and reports of rising arrearages and shut-off rates 
across the country.
    The authorization level for LIHEAP was increased from $2 billion to 
$5.1 billion by the Energy Policy Act in fiscal year 2005. The act also 
continued the authorization level for emergency contingency funds at 
$600 million. The program's authorization expired at the end of fiscal 
year 2007. The following table compares the current block grant funding 
level by State with the authorized funding level of $5.1 billion.

                          ELIGIBILITY CRITERIA

    LIHEAP allows States to set eligibility at the greater of 150 
percent of the Federal poverty level, or 60 percent of State median 
income. In fiscal year 2007, 150 percent of the Federal poverty level 
for a family of four was $30,975. In practice, most States target funds 
to lower income families.
    More than 70 percent of families receiving LIHEAP have incomes of 
less than 100 percent of the Federal poverty level ($20,650 for a 
family of four) and 44 percent have incomes of less than 75 percent of 
the poverty level ($15,488 for a family of four).
    State agencies generally contract with non-profit agencies to 
conduct outreach and sign-up activities. The application process is 
relatively straightforward. Most States require only proof of income 
and a copy of an applicant's most recent utility bills. Generally, 
asset tests are not required and some States now allow applications by 
mail.

                           HOUSEHOLDS SERVED

    The number of households receiving assistance has been rising 
rapidly. This reflects a significant rise in home energy prices and in 
the numbers of low-income households. Since 2002, the number of 
households receiving LIHEAP heating assistance has increased from 4.2 
million to an estimated 5.7 million in fiscal year 2007. Even at this 
level, the program is only able to serve 15.6 percent of eligible 
households. The majority of households have at least one member who is 
elderly, disabled or a child under the age of 5.
    Families receiving LIHEAP assistance carry a higher energy burden 
than most Americans--spending on average about 15 percent of their 
income on home energy bills, as compared to 3.4 percent for all other 
households. Many of these households also have at least one member who 
is disabled (43 percent) or elderly (41 percent).

                      USES OF FORMULA GRANT FUNDS

    LIHEAP is a block grant providing grantees with considerable 
flexibility delivering program services. In designing their programs, 
States are allowed to set-aside up to 10 percent of their allotment to 
cover administrative costs, up to 15 percent of program funds (25 
percent with a waiver from the U.S. Department of Health and Human 
Services) to support weatherization activities and up to 5 percent to 
support activities that enable households to reduce their home energy 
needs, including needs assessments, counseling, and assistance with 
energy vendors to reduce the price of energy.
    On average, States set-aside 10 percent of their block grant to 
support weatherization activities. These funds complement program 
support provided by the Weatherization Assistance Program
    (WAP). Weatherization assistance can include insulation, appliance 
and furnace repair and replacement and related health and safety 
measures. A weatherized home can use up to 30 percent less energy than 
a comparable home.
    States are also required to set-aside ``a reasonable amount'' of 
funds to be used until March 15 of the program year for energy crisis 
intervention. These interventions are defined to include households 
that need additional assistance to address life-threatening situations 
including shutoffs due to non-payment.

                         PROGRAM APPROPRIATIONS

    The distribution of formula grant funds is based on a complex 
formula that provides that no State beginning in fiscal year 1986 will 
receive less than the amount of funds it would have received in fiscal 
year 1984 if appropriations for fiscal year 1984 had been $1.975 
billion. Fiscal year 1984 funds were distributed to States on the same 
share of funds they received in fiscal year 1981 under the predecessor 
program to LIHEAP, the Low-Income Energy Assistance Program (LIEAP). 
The fiscal year 1981 allotment percentages were derived from an 
extremely complex formula that included such factors as heating degree 
days squared, home heating expenditures, total residential energy 
expenditures, and the population with income equal to or less than 125 
percent of the poverty income guidelines.
    The law also provides that when the LIHEAP block grant 
appropriation exceeds $1.975 billion (only in fiscal year 1985, fiscal 
year 1986 and fiscal year 2006), not including $27.5 million in other 
program setasides, funds are allocated under a complex formula that 
includes cooling as well as heating degree days and a small State 
minimum allocation.
    LIHEAP is not an entitlement program like Medicaid providing a 
minimum benefit level of health care coverage for eligible households. 
When the number of households receiving Medicaid increases, for 
example, the appropriation is automatically increased to guarantee the 
same benefit level for all recipient households. In the case of LIHEAP, 
however, when energy prices increase, the purchasing power of the 
LIHEAP benefit is reduced; when the number of households receiving 
assistance is increased, the average benefit is reduced. This is the 
situation the program is currently facing.

                       DECLINING PURCHASING POWER

    As everyone knows, energy prices have been rising. While the number 
of households receiving LIHEAP has been relatively stable at about 5.5 
million households or 15.6 percent of the eligible population since 
fiscal year 2006, the average Federal LIHEAP appropriation grant has 
decreased from $464 to $378. This would not be a problem if energy 
prices were decreasing proportionally.

     Est. Change in Households Served & Average Grant (FY 06-FY 08)
------------------------------------------------------------------------
                                                    # of
                                 Appropriation   Households    Average
          Fiscal year                 (in           (in         grant
                                   thousands)    thousands)
------------------------------------------------------------------------
2006...........................    $3,162,000         5,521         $464
2007...........................     2,186,000         5,507          322
2008...........................     2,570,000         5,507          378
------------------------------------------------------------------------

    Unfortunately, energy prices are remaining at very high levels. 
Home heating prices are projected by the U.S. Energy Information 
Administration (EIA) to reach almost $1,000 this year for the typical 
family, an increase of 9.3 percent since last year. As a result, there 
has been a significant decrease in the program's purchasing power.



    Between fiscal year 2006 and fiscal year 2008, the average LIHEAP 
grant as a percentage of total home heating costs declined from 32.4 
percent to 19.3 percent for heating oil, 49.1 percent to 44.1 percent 
for natural gas, 36.2 percent to 22.6 percent for propane and 59.3 
percent to 44.9 percent for electricity. The increase provided for 
fiscal year 2008 has helped to offset the decline, however, the share 
of expenditures covered continues to be inadequate to meet the need.
    Under the President's FY 2009 Budget, the decline would continue, 
assuming energy prices remain at current level, with the average grant 
declining to 34.9 percent of total costs.




 
----------------------------------------------------------------------------------------------------------------
                                                                     Heating    Natural
                            Fiscal year                                oil        gas      Propane   Electricity
                                                                    [percent]  [percent]  [percent]   [percent]
----------------------------------------------------------------------------------------------------------------
2006..............................................................       31.3       47.4       35.0        57.3
2007..............................................................       20.8       37.6       22.6        37.1
2008..............................................................       17.8       40.6       21.2        43.1
President 2009....................................................       15.0       34.3       17.6        34.9
----------------------------------------------------------------------------------------------------------------

    The increase in the price of delivered fuels--heating oil and 
propane--is of special concern to the States because they have fewer 
controls over the pricing and delivery of these fuels than they do over 
natural gas and electricity. The U.S. Energy Information Administration 
has projected that the price of home heating oil will increase from the 
2006-07 heating season by $532 (37.2 percent) to $1,962 and for propane 
from $1,281 to $1,670 (30.4 percent).
    A tank of heating oil, for example, now costs about $900, more than 
half of the total monthly Social Security payment for the average aged 
couple and almost the entire monthly income for an aged widower living 
alone. The 2008 average increase in Social Security is only about $24 a 
month, less than the amount needed to pay for the increase in home 
heating oil this year.
    Low-income families using heating oil this winter are facing a 
difficult situation. This is specially true for those on fixed incomes 
including the elderly and disabled. I do not expect the situation to 
change anytime soon.
    The situation for natural gas is quite different. Prices are set 
domestically and have been increasing at a much slower rate. For 
example, the average cost of home heating with natural gas is projected 
at $858 for the current winter heating season, about $45 more than last 
year and $1,104 less than the cost of home heating oil.

                      OUTLOOK FOR FISCAL YEAR 2008

    The increase in emergency contingency funding provided by the 
Omnibus Appropriations Act will help States adjust benefit levels to 
pay for higher heating and cooling costs. Yesterday's release of funds 
will provide needed help to offset the impact of higher energy costs 
this winter.
    The States are concerned that the increase will not be sufficient 
to meet the growing need for energy assistance and offset the impact of 
higher energy prices. We are currently conducting a survey of the 
States and the reports are grim. The States are serving about 15.6 
percent of eligible households. State directors believe that the 
percent served needs to be increased to at least 25 percent of the 
eligible households to help offset the growing affordability gap as 
prices increase faster than the rate of income.

                        ARREARAGES AND SHUT-OFFS

    One indicator of the rising need for energy assistance is the 
increase in arrearages and shut-offs. The National Regulatory Research 
Institute, for example, in a recent report found that past-due gas 
utility accounts rose from 16.5 percent in 2001 to 21 percent in 2006. 
Last spring, in a survey conducted by NEADA, States reported that 1.2 
million households were cut off from natural gas and electric service 
due to nonpayment of their energy bills. Several States reported 
significant increases in arrearage and shut-off rates from previous 
years. In addition, we are also learning that traditional arrearage 
management programs that provide matching payment programs to help 
families reduce their outstanding debt are becoming less and less 
effective. States are reporting that families increasingly do not have 
the resources to meet matching payment requirements and as a result are 
at greater risk of shut-off.

                          SUPPLEMENTAL FUNDING

    Many States, in partnership with their local utilities, also 
provide supplemental funding through direct appropriations or by 
creating system benefit funds, which are small charges against the 
utility rate base that are used to provide discounts and arrearage 
protection programs. In addition, utilities have also taken steps to 
provide low-income families with additional time to pay their bills by 
providing flexible payment arrangement and in many cases actively 
supporting State efforts to develop system benefit funds.
    The combined total of State, utility and charitable giving was 
about $3.2 billion in 2006 with charitable giving being the smallest 
amount at about $140 million annually. It is important to note, 
however, that these State, utility and charitable funds are no 
substitute for adequate Federal funding. The level of support varies 
considerably with only 12 States accounting for 83 percent of the total 
non-Federal spending on energy assistance.
what happens when families do not have sufficient funds to pay for home 

                 HEATING OR COOLING? RESEARCH FINDINGS

    Funding provided by the appropriations committee has allowed us to 
conduct surveys of families receiving LIHEAP assistance. Among the 
findings of our last survey:

     44 percent said that they skipped paying or paid less than 
their entire home energy bill in the past year. Households with 
children (67 percent) and those with income below 50 percent of the 
Federal poverty level (62 percent) were more likely to do so.
     30 percent reported that they received a notice or threat 
to disconnect their electricity or home heating fuel. Again, households 
with children (51 percent) and those with income below 50 percent of 
the Federal poverty level (51 percent) were more likely to experience 
this problem.
     8 percent reported that their electricity or gas service 
was shut off in the past year due to nonpayment of utility bills. In 
addition, 16 percent of households with children and 22 percent with 
income below 50 percent of the poverty level reported a service 
termination in the past year.
     18 percent said that they were unable to use their main 
source of heat in the past year for reasons ranging from their heating 
system was broken and they were unable to pay for its repair, they ran 
out of their bulk fuel and could not afford to pay for more, or because 
their utility used for heat was disconnected. Households with children 
(27 percent) and households with income below 50 percent of the poverty 
level (36 percent) were more likely to face this problem.
     13 percent reported that broken air conditioners or 
termination of electric service prevented them from using their air 
conditioner. Households with a disabled member (19 percent) and 
households with children (19 percent) were somewhat more likely to 
report this problem.

           PUBLIC HEALTH CONSEQUENCES OF UNAFFORDABLE ENERGY

    Unaffordable home energy presents a threat to public health and 
safety directly in the following ways:

     Households respond to high bills, arrearages, or worries 
about incurring high costs, by choosing not to heat their homes 
adequately in winter or cool them during the summer, or by using unsafe 
means to heat or illuminate their homes, for example, heating with a 
kitchen oven or barbecue grill or lighting by means of candles. Utility 
service shutoffs directly threaten health in this manner. In addition, 
when homes in poor structural shape need weatherization, it may be 
prohibitively costly or impossible to keep interiors within a safe 
temperature range.
     Lack of access to energy assistance also threatens health 
indirectly. The squeeze put on home budgets by high utility bills and 
the threat of shutoff leads households to make difficult trade-offs, 
purchasing heat or electricity for air-conditioning instead of food or 
medications. In northern States, for example, poor families with 
children spend less on food, and children eat fewer calories, compared 
with higher-income families (Bhattacharya et al., 1993). Poor seniors 
in the north are also more likely to go hungry in late winter and early 
spring, while seniors in the south, where energy bills for air-
conditioning can be high, are more likely to go hungry in late summer 
(Nord and Kantor, 2006).
     Seasonal differences in heating and cooling costs explain 
much of the difference in hunger prevalence for low-income households 
with school-aged children. Young children from families that are 
eligible for but not enrolled in energy assistance are more likely than 
children from families receiving LIHEAP to be small for their age 
(underweight) and more likely to need hospital admission on the day of 
a health care visit (Frank et al., 2006).
     Researchers from the Children's Sentinel Nutrition 
Assessment Program (C-SNAP) at the Boston Medical Center, conclude that 
``the health consequences of trade-offs in spending can be serious 
especially for the youngest children. The first 3 years of life are a 
uniquely sensitive period of extraordinary brain and body growth; the 
cognitive and physical development that takes place at this stage will 
never occur to the same degree again. Babies and toddlers who live in 
energy insecure households are more likely to be in poor health; have a 
history of hospitalization; be at risk of developmental problems and be 
food insecure.''

                    REAUTHORIZATION RECOMMENDATIONS

    The members of NEADA recommend that the following policies be 
adopted to strengthen and maintain the current program by:

     Increasing the percentage of eligible households served 
from the current rate of less than 20 percent to up to 40 percent by 
maintaining the current authorization level of $5.1 billion.
     Maintaining the current program block grant structure that 
allows States to develop new and innovative ways to stretch available 
program resources, including the use of prepurchase programs, 
negotiating discounts with vendors and arrearage forgiveness programs.
     Continuing to limit the use of the LIHEAP funds for 
purposes other than grant assistance. NEADA members believe that funds 
should not be increased for other purposes including Assurance 16, 
Weatherization Assistance and REACH demonstration grants, until there 
are sufficient funds available to meet the core need for grant 
assistance.
     Encouraging State public utility commissions to collect 
arrearage and shut-off data and making that data available to HHS and 
the Congress to help document the need for the release of emergency 
contingency funds. This data could serve as an indicator about the need 
for emergency funds to meet potential affordability crises.
     Endorsing raising the Secretary's training and technical 
assistance program to $750,000, the same level as was authorized 
previously.
     Expanding the flexibility of States to provide REACH 
grants to non-profits and community action agencies. Some States do not 
contract with CAAs or non-profits to deliver LIHEAP services for a 
variety of reasons; allowing States to provide REACH grants to other 
providers, including State agencies, would enhance the delivery of 
program services by helping to strengthen their delivery network.

                               CONCLUSION

    There is no substitute for adequate Federal funding of LIHEAP. The 
authorized level of $5.1 billion would provide sufficient funds to 
increase grant levels to adjust for inflation in energy prices and 
allow States to reach out to eligible households who are not currently 
receiving assistance.
    Thank for you this opportunity to testify today. NEADA we would be 
happy to respond to any questions or requests for additional 
information on this important program.

    [Whereupon, at 11:53 a.m., the hearing was adjourned.]

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