Administrative Costs vs. Program Costs: State Variations

The LIHEAP statute and federal block grant regulations do not define administrative costs; therefore, states have the flexibility to define these costs and HHS will accept a state's definition of its costs unless it is "clearly erroneous."

States have developed a variety of definitions for administrative and program costs; the examples below and these links show definitions used by several states.

Some states have two cost categories: administrative and program; others have created a sub-category within program costs called program support or client services. Below are definitions used by various states followed by a list of functions associated with LIHEAP administration and program delivery and some variations used by states in categorizing them.

Sample Definitions


  • All direct and indirect costs including those of sub-recipients and contractors necessary to effectively mange the program
  • Costs tied to program operations, planning and development
  • Costs of a general nature incurred in the provision of energy assistance but not clearly identified with a particular program
  • Eligibility (Administrative Costs) Eligibility costs will cover overall administration of the program. Eligibility costs are defined as the agency costs for intake and eligibility determination and other associated costs
  • All costs associated with management oversight of the program, including participant eligibility for assistance; including but not limited to, development of contractor policies, goals and objectives; budgeting and fiscal reporting; hiring/supervising operations at administrative and program levels; program staff training; equipment purchases; participant intake and eligibility determination; and monitoring
  • The general costs associated with administering the LIHEAP block grant funds, including both direct and indirect costs, the costs for planning and issuing benefits

Program support / client services / direct services

  • Costs of providing non-financial services to households that are directly related to the purpose of LIHEAP
  • All costs associated with activities that support providing direct services to the eligible participant, including but not limited to, energy conservation activities which encourage and enable participants to reduce their home energy needs such as budget counseling, payment plans, low-cost/no-cost conservation materials and instructions. (Note: some states use Assurance 16 funds for these activities.)
  • Program support is a non-administrative line item intended to be used for line staff costs which are not strictly associated with intake and eligibility determination.
  • Other direct services: costs which are non-administrative in nature but are for activities directly related to benefit determination assistance, outreach, information resource and referral, case management and crisis service necessary to serve eligible households
  • Direct services support includes costs not administrative in nature but those used for outreach and targeting to eligible households not previously served.

Client assistance or benefits

  • Funds available for energy assistance payments to or on behalf of eligible households

State Administrative Costs

The following excerpts from State LIHEAP Manuals are examples of how state's define administrative costs: