KEY POINTS
- LIHEAP funding spans five categories: (1) Direct energy assistance: As subsidy to help with home heating or cooling costs or in the event of crisis when a household is without or nearly without home energy; (2) Weatherization assistance: Projects that increase the energy efficiency of homes to reduce the need for future energy assistance; (3) Administrative spending: Costs associated with administering the LIHEAP program; (4) Other spending: Includes nominal payments to households, technology-related updates, energy self-sufficiency activities, or leveraging non-federal funds for the program; (5) Carryover funding: Any funds not spent on the above categories can be obligated to the next federal fiscal year (less than 10 percent)
- Since Fiscal Year 2016 (FY16), states have consistently spent most of their LIHEAP funds on direct energy assistance, with an increase following increased LIHEAP funding during the COVID-19 pandemic.
- In FY25, states spent an average of over 75 percent of LIHEAP funds on direct energy assistance for households. They spent around 10 percent on weatherization assistance, eight percent on administrative spending, and two percent on other forms of spending, with the rest (four percent) carried over to the next year for future LIHEAP needs.
- In terms of dollars, these proportions amount to about $3 billion in spending for direct energy assistance to households, with $1 billion going towards non-energy assistance related activities, including $180 million carried over to the next fiscal year.
- LIHEAP allocations vary widely state to state. For example, in FY25 states ranged from 55 percent to 93 percent on direct energy assistance and zero to 25 percent on weatherization assistance.
- Administrative spending tended to be more similar across states in FY25, hovering at or just under the 10 percent cap; spending on "other" LIHEAP activities was similarly stable across most states, though much lower, with the majority of states spending little to $0 in this category.
Nearly 80 percent of states had unused funds in FY25, carrying over around four percent on average – less than half of the 10 percent limit – to the following fiscal year.
This is a summary of the full report. Download the full report for more details on the data, methods, and findings.
BACKGROUND
The U.S. Department of Health and Human Services (HHS) administers the Low Income Home Energy Assistance Program (LIHEAP), which serves low-income households that pay a high proportion of income on home energy. HHS issues funds as a block grant, giving states, tribes, and territories latitude to tailor approaches to local needs. This analysis focused on states, which must submit planned spending estimates in advance of the fiscal year and report final allocations afterward on activities we groups into five broad categories: direct energy assistance (heating, cooling, and crisis assistance), weatherization assistance (capped at 15 percent, with waivers up to 25 percent), administrative spending (capped at 10 percent), other spending (including nominal payments, information technology (IT), Assurance 16 self-sufficiency activities, and leveraging), and carryover funds (capped at 10 percent).
STATES SPEND LIHEAP FUNDS ON DIRECT ENERGY ASSISTANCE, WEATHERIZATION ASSISTANCE, ADMINISTRATIVE, AND OTHER COSTS
To better understand how states use federal LIHEAP funds, particularly how much directly benefits households, the analysis examines state-reported data on federal LIHEAP funds from FY16 through FY25, sourced from the LIHEAP Performance Management Data Warehouse made publicly available by HHS. The analysis groups state-reported spending activities into the five broader categories described above based on how the funds are used, distinguishing funding that directly assists households with current home energy costs, funding intended to reduce future household energy costs, funding used to administer the program, and other LIHEAP-related needs.
MOST NATIONAL LIHEAP SPENDING GOES TO DIRECT ENERGY ASSISTANCE
In FY25, of the $4.2 billion in federal LIHEAP funding allocated to states, states spent 76 percent on direct energy assistance ($3.2 billion), which amounts to about $3 spent on direct assistance for every $1 spent on all other costs. The remaining quarter ($1 billion) broke down as 10 percent on weatherization ($420 million), eight percent on administrative spending ($330 million), two percent on other activities ($80 million), and four percent carried over to the following fiscal year ($180 million). Within direct energy assistance, heating made up nearly half of total LIHEAP funding ($1.9 billion), followed by crisis assistance at about one-fifth ($872 million) and cooling at about one-tenth ($440 million)
States' allocations were consistent from FY16 through FY25, with one exception: in FY21, the share of carryover spending jumped from around five percent to over 30 percent while the share of direct energy assistance declined. This occurred because the American Rescue Plan Act increased LIHEAP funding and waived the 10 percent carryover cap, allowing states to carry late-arriving supplemental funds into FY22, when they were then used for direct energy assistance.
LIHEAP SPENDING PATTERNS VARY ACROSS STATES, BUT DIRECT ENERGY ASSISTANCE ACCOUNTS FOR THE MAJORITY OF SPENDING IN EVERY STATE
States Spent over Half their LIHEAP Funds on Direct Energy Assistance in FY25, with Some Wide Variation
All states spent more than half of FY25 funds on direct energy assistance, ranging from 55 percent in Montana to over 90 percent in Florida and South Dakota. In terms of dollars spent, this translates to a range of about $1.20 being spent on direct energy assistance per $1 on all other categories of LIHEAP spending (Montana) to about $12.50 being spent on direct energy assistance per $1 of other LIHEAP spending (South Dakota)
States' Weatherization Assistance Spending Depends in Part on Their Direct Energy Assistance Spending
Weatherization assistance was the second largest spending category for states on average in FY25, though variation across states is substantial. The federal LIHEAP statute allows states to choose whether to use a portion of their allocation for low-cost weatherization assistance within a 15 percent funding cap, with some states requesting waivers to raise the cap to 25 percent. States that devote a smaller share of funds to direct energy assistance tend to allocate more to other categories, most commonly weatherization. For example, California spends 60 percent on direct energy assistance (versus a 76 percent national average) and 25 percent on weatherization (versus a 10 percent average); Montana and Ohio show similar patterns. Conversely, states with higher direct energy assistance shares tend to spend less on weatherization — Oklahoma, for instance, spends 90 percent on direct energy assistance and only two percent on weatherization. While weatherization may help reduce future energy assistance needs, states can only provide it to a small subset of their LIHEAP caseload at a time. Future research could examine the trade-offs between reducing long-term costs for a small portion of the population versus helping more households cover current energy costs.
Administrative Spending Looks Similar Across Most States, At or Just Below the 10 Percent Cap
While states show considerable variation in direct energy assistance and weatherization assistance spending, there is much less variation in administrative spending. States face a 10 percent federal cap on administrative spending, and over two-thirds of states spent between eight and 10 percent on administrative spending in FY25. A few states spent notably less than this cap, including Florida, Oklahoma, Ohio, and Texas — states that had either markedly larger than average direct energy assistance spending (Florida, Oklahoma, Texas) or weatherization assistance spending (Ohio).
Nearly Half of States Spent $0 on "Other" Spending; Those that Did Mainly Used it for IT-Related Updates
Spending in the "other" category — which includes nominal payments to households with unique energy circumstances, IT updates, energy self-sufficiency activities under Assurance 16, and leveraging non-federal funds — made up the smallest proportion of state-level FY25 spending. Around 42 percent of states spent no money in these categories at all, and almost 75 percent spent less than three percent. A few states are notable outliers, mainly due to higher spending on technology enhancements: West Virginia spent about 11 percent of its total funding in this category due to updating its management information system (MIS), and Kansas, Montana, and North Dakota also had IT-related spending drive their totals. Washington had uniquely high spending on nominal payments, and California had uniquely high spending on Assurance 16 activities in FY25.
All States Remained at or Below 10 Percent Carryover Cap; Most Carried Over Less Than 5 Percent
Around 80 percent of states carried over some FY25 funds into the next federal fiscal year. States are allowed to carry over up to 10 percent of federal funds, which can then go towards the next federal fiscal year's direct energy assistance, weatherization, administrative spending, or other spending. Some states budget carryover funding, if feasible, to minimize laying off state or local LIHEAP staff and to avoid gaps while waiting for new federal funding. Conversely, states also typically avoid budgeting the maximum carryover amount permitted under federal law because small budget adjustments are sometimes needed late in the year when utility vendors return unused LIHEAP benefits. In FY25, only Maryland carried over the full 10 percent; the majority of states carried less than five percent over to FY26, with about a fifth of states carrying over no funds. States with relatively high carryover proportions varied in their FY25 spending patterns: some had relatively low weatherization spending (Maryland, Alaska, Connecticut), others had lower than average direct energy assistance spending (Michigan, North Dakota, Virginia), and some had no "other" spending (Alaska, Missouri, Virginia).
CONCLUSION
States consistently prioritize direct energy assistance, which made up over three-quarters of FY25 LIHEAP spending, with smaller shares going to weatherization, administration, and other activities, and the remainder carried forward. Spending patterns have been stable over the decade aside from the FY21 ARPA-driven carryover spike. Proportions vary considerably by state, though direct energy assistance remains the majority use of funds everywhere.
*This content is in the process of Section 508 review. If you need immediate assistance accessing this content, please submit a request to Danielle Berman, danielle.berman@hhs.gov. Content will be updated pending the outcome of the Section 508 review.