Low Income Home Energy Assistance Program
Division of Energy Assistance/OCS/ACF

Awards of FY 2001 LIHEAP Leveraging Incentive Grants

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THIS CONTAINS INFORMATION ISSUED BY THE U.S. ADMINISTRATION FOR
CHILDREN AND FAMILIES IN LIHEAP INFORMATION MEMORANDUM TRANSMITTAL
NO. LIHEAP-IM-2001-23, DATED 7/11/01


TO:            LOW INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP)
               GRANTEES AND OTHER INTERESTED PARTIES

SUBJECT:       Awards of FY 2001 LIHEAP Leveraging Incentive
               Grants

RELATED        Low Income Home Energy Assistance Act, Title XXVI
REFERENCES:    of the Omnibus Budget Reconciliation Act of 1981,
               Public Law 97-35, as amended; 45 CFR Part 96,
               Block Grant Programs -- Final Rule, published May
               1, 1995, in the Federal Register (60 FR 21332 et
               seq.); and LIHEAP Action Transmittal 2000-9, dated
               August 3, 2000, re: applications for FY 2001
               leveraging awards.

PURPOSE:       To advise grantees of FY 2001 leveraging incentive
               grants to be awarded based on countable leveraging
               activities carried out during FY 2000.

BACKGROUND:    The Augustus F. Hawkins Human Services
               Reauthorization Act of 1990 (Public Law 101-501)
               amended the LIHEAP statute to establish a
               leveraging incentive program to reward grantees
               under the Low Income Home Energy Assistance
               Program (LIHEAP) that have acquired non-Federal
               home energy resources for low-income households.
               Leveraging incentive funds are awarded to those
               grantees that use their own or other non-Federal
               resources to expand the effect of the Federal
               LIHEAP dollars. Leveraging activities that took
               place in one fiscal year will be used to determine
               leveraging incentive grant awards in the following
               fiscal year.  For example, FY 2001 leveraging
               incentive awards are allocated to grantees based
               on countable leveraged resources that were
               provided to low income households in FY 2000.

               The Department of Health and Human Services
               (HHS) issued final implementing regulations for
               the leveraging incentive program on May 1, 1995
               (60 FR 21332). Leveraging requirements in the
               regulations are based closely on the leveraging
               requirements in section 2607A of the Low Income
               Home Energy Assistance Act.

               Grantees desiring leveraging incentive funds
               must submit an application each year -- the LIHEAP
               Leveraging Report -- that delineates the amount
               and types of leveraging activities they carried
               out during the base period.  HHS then determines
               whether the reported activities meet the
               requirements of the statute and regulations, and,
               therefore, are countable under the program for the
               purpose of determining allocations of the
               incentive funds. In general, we give grantees the
               benefit of the doubt where we can.

CONTENT:       The FY 2000 appropriations law for HHS and several
               other agencies (Public Law 106-113, signed
               November 9, 1999 also included advance funding for
               FY 2001 for LIHEAP.  The conference report on that
               law provides that, of the amount appropriated for
               LIHEAP for FY 2001, $27.5 million should be set
               aside for leveraging incentive grant awards.  Of
               this amount, 1994 amendments to the LIHEAP statute
               (Public Law 103-252) provide that up to 25% may be
               set aside for the new Residential Energy
               Assistance Challenge (REACH) program, funded for
               the first time in FY 1996.  The Department set
               aside the full 25% allowed for REACH, amounting to
               $6,875,000, thus leaving a total of $20,625,000
               for leveraging incentive grant awards in FY 2001.

               Applications for FY 2001 Leveraging Funds

               We received applications for FY 2001
               incentive awards from 37 States, 30 tribes or
               tribal organizations, and 1 territory.  These 68
               applications included claims for 495 separate
               leveraging resources/benefits that took place in
               FY 2000 with a gross claimed value totaling
               $686,515,436.  The net value of the claimed
               resources is $686,016,806, after deducting
               $498,630 for: (1) the grantees' own funds used to
               identify, develop and demonstrate the activities;
               (2) costs or charges to low income households to
               participate in the activities; and (3) LIHEAP
               funds used to identify, develop, and demonstrate
               the activities (limited to the higher of $35,000
               or 0.08% of a grantee's regular allotment for
               State grantees, or to the higher of $100 or 2.0%
               of the allotment for Indian tribes/tribal
               organizations and territories).

               After review by HHS, the claimed value of a
               number of resources was eliminated or reduced
               because part or all of the resource did not meet
               necessary requirements for countability.  We also
               made a number of adjustments necessitated by
               mathematical errors.

               Overall, we reduced the claimed value of 6
               resources because they are not countable in part
               or there were errors in calculations.  The value
               of one resource was increased because of corrected
               figures.  We rejected 3 resources because they did
               not meet the requirements for countability.  After
               making these adjustments, we approved 492
               resources in whole or in part for 68 grantees (37
               States, 30 tribes, and 1 territory), for a gross
               value of $686,084,384 and a net value of
               $685,585,754 after subtracting offsetting costs of
               $498,630.  Attachment 2 shows the number and value
               of resources claimed by each applicant, the amount
               of any adjustments to those numbers and values
               made by HHS, and the final approved number and
               value of countable resources as determined by HHS.

               Allocation of Leveraging Incentive Funds

               Using the final values of leveraging
               activities approved for each grantee, we
               calculated leveraging grant award allocations
               based upon a formula that is included in Section
               96.87(c)(1) of the LIHEAP regulations (45 CFR
               96.87(c)(1)), as published in a final rule in the
               Federal Register on May 1, 1995 (60 FR 21322).
               (See page 21364 of the regulation and pages 21351-
               56 of the preamble for further detail.)

               The formula provides that one-half of the
               funds, or $10,312,500 based on total available
               funds of $20,675,000, is to be distributed based
               on the amount of leveraging activities each
               grantee carries out as a proportion of the amount
               of its regular LIHEAP grant, taking into account
               the amount of leveraging activities carried out by
               all grantees as a proportion of their regular
               grants. Because the leveraging activities took
               place in FY 2000, we used allocations for FY 2000
               in calculating this portion of the formula.  We
               included regular block grant allotments,
               contingency funds allocated to leveraging
               applicants in FY 2000 and any FY 1999 funds that
               were reallotted to grantees in September 2000.

               The second half of the funds is to be
               distributed based on the amount of leveraging
               activities carried out by each grantee as a
               proportion of the total amount of leveraging
               activities carried out by all grantees.  The
               amounts derived under the two parts of the formula
               are then added together to determine the final
               grant amount, except that no grantee may receive
               more than (1) 12% of the leveraging incentive
               funds available, or (2) the lesser of the amount
               of its regular grant (including any contingency
               and/or realloted funds) or twice the amount it
               leveraged.

               The prohibition against receiving more than
               12% of the available leveraging incentive funds
               affected three State grantees (Pennsylvania, New
               Jersey, and California) this year, limiting their
               grant awards to $2,475,000.

               The prohibition against receiving more in
               incentive grant funds than the lesser of twice the
               amount leveraged or the amount of the regular
               block grant funds affected 21 of the tribal
               applicants this year.  The tribes in general do
               very well under our formula, in most cases
               receiving much more in return for each leveraging
               dollar invested than the States.

               We redistributed the "excess funds" from the
               21 tribes and three States on a proportionate
               basis to the other grantees.  Attachment 1 shows
               our calculations, with the last column showing the
               amount of the actual leveraging incentive grant
               award for each applicant.

               Allowable Uses of Leveraging Incentive Funds

               Leveraging incentive grant awards are being
               made to each grantee in the amount shown in the
               final column of Attachment 1, and will be
               available for drawdown shortly.  They may be
               obligated for eligible activities in FY 2001
               and/or FY 2002.  Grantees are reminded that the
               leveraging incentive funds must be used to
               maintain or increase benefits to low income
               households as a part of the grantee's LIHEAP
               program.  The incentive awards may not be used for
               costs of administration and planning, but they may
               be counted in the base for calculating the
               grantee's maximum planning and administrative
               costs (but these costs must be paid from other
               funds, such as regular block grant funds).
               Leveraging incentive grants for FY 2001 must be
               obligated by grantees no later than September 30,
               2002, or the funds will revert to the Federal
               government.  The leveraging incentive funds are
               not subject to the 10% carryover limit for regular
               block grant funds, and may not be added to the
               base on which the carryover limit for regular
               funds is calculated. The leveraging incentive
               funds also are not subject to the 15% limit on use
               of funds for weatherization activities, and may
               not be added to the base on which the
               weatherization limit for regular funds is
               calculated.  Consistent with the block grant
               philosophy, grantees are the primary interpreters
               in determining what constitutes an "obligation"
               under their own financial laws and procedures.

               Next Year's Applications for Leveraging Funds

               We would like to remind all grantees that the
               model plan application for regular LIHEAP block
               grant funding includes a place to report
               leveraging activities that are coordinated with
               LIHEAP.  You should include the information in
               your plan for FY 2001 that will be necessary for
               activities to count for leveraging funds to be
               awarded in FY 2002.  LIHEAP Leveraging Reports on
               leveraging activities carried out in FY 2001 are
               due by November 30, 2001 in order to qualify for
               FY 2002 leveraging incentive grant funds.
               Amendments to FY 2001 plans in order to
               incorporate descriptions of FY 2001 leveraging
               activities must be submitted no later than
               September 30, 2001.

ATTACHMENTS:   (1) Calculations of FY 2001 leveraging incentive
               grant awards, by grantee.

               (2) Listing of grantees submitting Leveraging
               Report Forms on FY 2000 activities to qualify for
               FY 2001 leveraging incentive grant awards,
               including number and value of resources claimed,
               adjustments to those claims made by HHS, and final
               approved number and value of resources.

INQUIRIES TO:  Linda M. Hill
               Division of Energy Assistance
               Office of Community Services, ACF, HHS
               370 L'Enfant Promenade, S.W.
               Washington, D.C.  20447
               Telephone:  (202) 401-9351
               Fax:  (202) 401-5718
               E-mail:  lhill@acf.dhhs.gov




                              _____________\s______________
                              Linda M. Hill
                              Acting Director
                              Division of Energy Assistance
                              Office of Community Services

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