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Emergency Assistance funds have been used to pay for the cost of providing temporary shelter, storing or replacing household goods, and reimbursing the expenses of moving a family to a new home or returning a family to a former home. States are given the flexibility within broad Federal guidelines to determine EA eligibility requirements as well as specify what needs the program will cover. All together, 32 States and territories have chosen to participate in this program. Thirty States use EA funds to shelter homeless families or to prevent evictions, and eight States use them to provide temporary shelter for families in hotels or motels.
Question. When do you expect the final Emergency Assistance/AFDC-special needs regulations to be issued? 2, 19912
Answer. A Notice of Proposed Rule-making (NPRM) on Emergency Assistance (EA) is under development. The NPRM is being developed along the lines of the recommendations submitted to Congress in July 1989 in a report entitled, Use of the Emergency Assistance and AFDC Programs to provide Shelter to Families. In the report, the Department recommended issuing a rule to prohibit reimbursement under the EA program for assistance for periods beyond 30 consecutive days in a 12-month period while:
continuing to allow use of EA funds to prevent evictions and utility cut-offs by paying past due rent and utility costs, and
assisting homeless families to secure permanent housing by covering the first month's rent and security deposit.
In the Omnibus Budget Reconciliation Act (OBRA) of 1989, the Congress permitted HHS to issue revised proposed regulations incorporating the recommendations included in the Department's 1989 Report to Congress. OBRA 1990 extended the moratorium on the final rule becoming effective before September 30, 1991. As a result, we will not publish a rule that becomes effective before October, 1991.
CHILD SUPPORT ENFORCEMENT
Question. What effect will the child Support Enforcement provisions of the Family Support Act of 1988 have on net public savings? Will any of the 1988 provisions result in more efficient State programs? How?
Answer. Even after full implementation of the Family Support Act's Child Support provisions, aggregate program costs will continue to exceed applicable AFDC collections for the immediate future. So long as the majority of the collections come on behalf of non-AFDC families, for which the State and Federal government get no direct benefit, this situation is likely to continue.
Certain of the 1988 provisions will result in more efficient programs. For example, immediate income withholding will reduce the need to locate obligors and employers subsequent to entry of a support order and failure to pay mandated support by initiating withholding at the time the order is entered. The program standards and timeframes for providing services mandated by the 1988 Amendments will also result in improvements in program and case management, an area sorely in need of attention and improvement. The requirement that guidelines be a rebuttable presumption, as opposed to advisory, in setting support awards in the states, will ensure consistency in amounts awarded as well as streamline the support establishment process in courts or administrative bodies by eliminating extended debate on the appropriate amount of support, except in exceptional
Finally, the requirement for periodic review and modification of support orders will ensure that the amount of support remains
equitable over time and through changes in the circumstances of all parties involved.
Question. Do you expect the proposed changes to the child support enforcement incentive payment structure, as outlined in the FY 1992 Budget, to result in net program savings for taxpayers? If 80, how?
Angwer. The FY 1992 proposal assumes that changes in the incentive payment structure will reduce Federal costs by $54 million in FY 1992 which is insufficient to generate a net public savings to the taxpayer in this program. However, to the extent that the bonuses built in to this proposal encourage increased establishment of paternities and support orders, especially on behalf of AFDC recipients, collections should also increase, resulting in increasing program savings.
Question. Have the paternity standards enacted by the 1988 Act increased the annual number of paternity determinations? Why have States had such a bad record in establishing paternities?
Answer. There is evidence that the States are beginning to increase paternity establishment, but the evidence is only suggestive. Definitive evidence will come from further experience with the statutory paternity establishment performance standard, that takes effect in FY 1992. The number of paternities established for AFDC, non-AFDC, and AFDC arrears only cases has increased 28 percent in the last two years:
Likewise, birth rates to both single and married mothers have increased.
Some States seem to believe that paternity establishment is not cost-effective, that the majority of such births occur to teenaged fathers who have no jobs and cannot pay anyway. The costs of establishing paternity, from this perspective, are more than the expected collections. Others use ineffective techniques for establishing paternity or have trouble obtaining state-of-the-art genetic testing techniques. Paternity thus becomes a low priority for them.
Fortunately, these perceptions are not accurate. Research indicates that in the aggregate, paternity establishment, over time, is cost-effective. Most teenaged fathers eventually get jobs and eventually are capable of paying child support if paternity has been established previously. The longer establishment is put off the more difficult it becomes. In addition, and if not perhaps more important, paternity establishment has clear social benefits that can't be overlooked, e.g., establishing inheritance rights and providing valuable medical information about the parent that could impact on the child's health.
Question. By definition, a large segment of the Child Support Enforcement program, namely the non-AFDC component, provides no direct savings to the States or the Federal Government. Does the Administration hold the view that the intangible benefits (i.e., welfare cost avoidance, etc.) of the child Support Enforcement program outweigh consideration of cost-effectiveness?
Answer. The need for, and benefits of, providing services to non-AFDC families was recognized in 1975 when the Congress first extended availability of child support enforcement services under the IV-D program to those families. The importance of providing these vital services has continued since that time, and was reiterated by language added to Title IV-D of the Social Security Act in the 1984 Amendments.
The Administration agrees that IV-D services are essential to non-AFDC families, often helping them to maintain or attain selfsufficiency. The welfare cost avoidance factor, measured to be approximately $1 in savings to the AFDC, Food Stamps and Medicaid programs for every $5 in non-AFDC collections, remains valid. Further, the long-range financial benefits of paternity establishment significantly outweigh the initial investment in terms of support collected, even if such collections are not immediately forthcoming.
Question. Is it true that most States currently do not charge a fee to non-AFDC families who apply for child Support Enforcement services. If so, what reasons do the states give for this policy?
Answer. Current statute requires an application fee of no more than $25 be charged for IV-D services, but allows the State to pay the fee out of state funds, charge the applicant, or attempt to recover the fee from the obligor. As a result, many States absorb the application fee or impose a minuscule fee, such as one dollar or less, to avoid charging any non-AFDC applicant a fee. State's reasons may include that absorbing the fee is administratively simpler than collecting a fee in each case, a belief that services should be provided without cost to the applicant and that in light of generous Federal funding for support enforcement services, the dollar cost to the State of absorbing a nominal fee outweighs the potential consumer resistance to a higher fee structure.
QUESTIONS SUBMITTTED BY SENATOR ARLEN SPECTER
LOW INCOME HOME ENERGY ASSISTANCE
Question. A recent GAO report examining the effect of funding cuts in the LIHEAP program found 800,000 fewer households received assistance between FY' 86-89, a cut of 12 percent. In Pennsylvania the cut was over 20 percent. Given these cuts, the instability of energy prices and the uncertainty of the nation's economy, why does the administration recommend cutting the program another 40 percent?
Answer. In viewing the need for LIHEAP assistance, it is important to consider what is happening with the household energy burden, i.e., the average percent of household income that is spent on home energy. The President's budget takes into account the average decrease in household energy burden that has occurred between FY 1981 and FY 1989.
More specifically, the average percent of income spent by LIHEAP recipient households for home heating (after the receipt of LIHEAP heating assistance) declined 26 percent from 2.7 percent of household income in FY 1981 to 2.0 percent of household income in FY 1989. At the same time, the average percent of household income spent by low income households on home heating and cooling declined 32 percent from 8.0 percent of household Income to 5.4 percent of household income. This decline in the household energy burden indicates a reduced need for LIHEAP in offsetting home energy costs as a percent of household income.
The President's budget includes a request for a FY 1992 appropriation of $925 million for LIHEAP, plus a $100 million contingency fund to be released if heating oil prices are more than 20 percent above historical levels.
Question. Based on historical state patterns, how many households do you estimate will be eliminated from the program under your proposal?
Answer. Because LIHEAP is a block grant which affords the grantees flexibility in designing their energy assistance programs, there is no direct correlation between reductions in federal
appropriations and households served. The LIHEAP grantee may supplement their federal appropriation with state or oil overcharge monies, not exercise their option to transfer funds out of LIHEAP into other block grants, eliminate a service component such as cooling or weatherization or reduce the size of the benefit provided. Because of the flexibility of the block grant, we are unable to estimate the number of households that will be served under any level of federal appropriations.
It should also be kept in mind that other low Income programs also are available to assist with shelter costs, including housing programs, AFDC, SSI and other indexed entitlement programs which include a component for energy costs and energy price increases.
Question. The GAO report indicates that between 1986 and 1989 there was a growth in the number of LIHEAP households with elderly or handicapped individuals. What options exist for these households, which often are on fixed incomes, should their LIHEAP benefits be terminated?
Answer. The LIHEAP block grant statute requires grantees to target benefits to the low income households most in need. It also contains provisions to assure that eligible households--especially households with elderly and handicapped members--are made aware of LIHEAP and similar assistance and that eligible individuals-especially those who are physically infirm--have the opportunity to apply for assistance at accessible sites.
Also, there are a number of sources of assistance for home energy costs, in addition to LIHEAP. LIHEAP is intended to supplement these sources and the household's own income. Other Federal programs, such as SSI, AFDC, and housing subsidies, provide assistance for home energy costs, and the Department of Energy's Weatherization Assistance Program helps to reduce home energy bills. We believe that States share responsibility for their low income citizens, also. States can designate their own funds for LIHEAP or can use other programs that provide assistance for home energy costs. Consistent with their priorities, States can designate oil overcharge funds and funds from two other HHS block grants for LIHEAP. However, it should be noted that the majority of States continue to transfer LIHEAP funds to other block grants and no transfers were made into LIHEAP in FY 1989 and FY 1990. In addition, there are many private sources of assistance, including utility companies (through budget payment plans, for example) and private fuel funds and weatherization efforts.
Question. How much did the states receive in oil overcharge funds in FY '90 and how much does the Department estimate will be released to the states in FY '91 and FY 1927
Answer. States received approximately $135.2 million from oil overcharge distributions, all from stripper Well funds. This $135.2 million includes $123 million from Texaco and $12.2 million in other Stripper Well distributions.
Based on our communications with the Department of Energy (DOE), approximately $100 to $150 million will be distributed to the States each year for FY 1991 and FY 1992.
Question. What percentage of the oil overcharge funds allocated to the states in FY 189 and FY '90 were used for LIHEAP?
Answer. The Department of Energy (DOE) is the main source for Information and estimates regarding the amount of oil overcharge funds states have received and what portions states have designated for the eligible programs. DOE provides us with reports on the cumulative dollars designated by the states from 1986 to date. The Information does not specify amounts expended in each fiscal year for LIHEAP or the other eligible programs.
The most recent report from DOE showg that states have designated approximately $4 billion of the combined Exxon and Stripper Well funds they have received through FY 1990. of this $4 billion, approximately $895 million has been designated for LIHEAP. This is about 22% designated for LIHEAP out of all funds designated for the eligible programs.
Question. How many households do you estimate are eligible for LIHEAP assistance? What percentage of the eligible population did the program serve in FY 90 and FY 917
Answer. Our latest estimate for FY 1990 indicates that 5.8 million households were assisted with heating costs. Based on preliminary estimates of eligible households derived from the Bureau of the Census' March 1990 Current Population Survey, the 5.8 million households constitute:
23 percent of the 25.4 million households eligible under
stricter state LIHEAP income standards. We will have a preliminary estimate in April 1991 of the number of households that states plan to assist in FY 1991. However, we will not have an estimate of the number of LIHEAP eligible households in FY 1991 until data from the March 1991 Current Population Survey is available in September 1991.
Question. What is the average income of LIHEAP recipients? How does this compare to the average Income nationally? What is the average cost of household energy costs?
Answer. Based on data from the March 1990 Current Population Survey conducted by the Bureau of the Census, the average income of those federally eligible LIHEAP households receiving heating a88istance from October 1990 - March 1991 was $7,861. This compares with $9,747 for all federally eligible LIHEAP households and $36,520 for all u.s. households. We should have FY 1990 data on household energy costs available in April 1991. The average cost of household energy costs for FY 1989 has been estimated to be as follows:
for total residential energy, the average household cost was
Question. In fiscal years 1989 and 1990, Congress provided funding to meet the program shortfalls in the previous fiscal year for the Voluntary Agency Matching Grant Program. Do you anticipate a shortfall in the program for fiscal year 1991? How many refugees were resettled under the program in FY '89 and FY '90, and how many do you project will be resettled in FY '91 and FY '92?
Answer. We anticipate having sufficient funds to cover FY 1991 arrivals. In FY 1989 and FY 1990, respectively, 32,265 and 33,580 refugees were resettled through the matching grant program. Approximately 40,000 refugees are expected to be resettled through the matching grant program in FY 1991. We have not yet projected the number for 1992.