LIHEAP Administration: The Statute and Regulations

LIHEAP grantees can look to the LIHEAP statute as a framework for many of their administrative functions.

The LIHEAP statute limits the amount of LIHEAP funds that state grantees may use for planning and administrative costs to 10% of funds payable for a fiscal year and stipulates that any excess administrative costs must come from non-federal funds.

LIHEAP Statute Section 2605(9)
(A) the State may use for planning and administering the use of funds under this title an amount not to exceed 10 percent of the funds payable to such State under this title for a fiscal year
B) the State will pay from non-Federal sources the remaining costs of planning and administering the program assisted under this title and will not use Federal funds for such remaining costs (except for the costs of the activities described in paragraph (16);

The statutory cost limitation is different for tribal grantees and territories:

Block grant regulations at 45 CFR 96.88(b)
(1) Grantees who are direct-grant tribes, tribal organizations or territories with allotments of $20,000 or less may use for planning and administrative costs up to 20 percent of the funds payable.
(2) Grantees that are direct-grant tribes or tribal organizations with allotments over $20,000 may use up to 20 percent of the first $20,000 (or $4,000) plus 10 percent of the funds payable that exceeds $20,000.

The LIHEAP statute does not define planning and administrative costs; however, the federal block grant regulations provide some guidance, essentially granting states some flexibility based on how it handles other programs.

Block Grant Regulations at 45 CFR Part 96.30
Except where otherwise required by Federal law or regulation, a State shall obligate and expend block grant funds in accordance with the laws and procedures applicable to the obligation and expenditure of its own funds.
The 10 percent cost limitation applies whether funds are subcontracted or transferred.

Block Grant Regulations at 45 CFR 96.88(a)

Costs of planning and administration: Any expenditure for governmental functions normally associated with administration in a public assistance program must be included in determining administrative costs subject to the statutory limitation on administrative costs, regardless of whether the expenditure is incurred by the State, a subrecipient, a grantee, or a contractor of the State.

See also: Divison of Assistance's Compilation of LIHEAP Statute and Block Grant Regulations.

HHS has issued general guidance (LIHEAP-IM-2000-12, dated 3/15/2000) stating that "costs associated with taking applications, determining eligibility and benefits levels, and monitoring the assistance provided, are normally administrative in a predominantly cash assistance program." It added that: Outreach "encompasses activities that are administrative and others that are not."

Furthermore, HHS will defer to the state's definition unless it is based on an interpretation of the statute that is "clearly erroneous."[45 CFR 96.50(e)]=

For more details on administrative costs and definitions, including examples of states' definitions, click here.