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Budget and Policy Post
November 22, 2021

The 2021-22 California Spending Plan

Human Services

Department of Community Services and Development

A department under the California Health and Human Services Agency, the Department of Community Services and Development (CSD) oversees the state’s federal funding allocations for the Low-Income Home Energy Assistance Program (LIHEAP), Community Services Block Grant (CSBG), and the newly created Low-Income Household Water Assistance Program (LIHWAP). In addition, CSD oversees the state’s Low-Income Weatherization Program (LIWP). In overseeing these programs, CSD provides funding to administering private nonprofit and local government organizations that help low-income families achieve and maintain economic security, meet their home energy needs, and reduce their utility costs through energy efficiency upgrades and access to renewable energy.​ In 2021‑22, CSD will begin to administer the state’s new California Arrearage Payment Program (CAPP), providing payments directly to energy utility providers to offset customer debts accrued during the coronavirus disease 2019 pandemic.

This post details new funding and flexibilities for CSD’s programs, described above, included in the 2021‑22 spending plan.

CAPP: New Energy Utility Arrearage Assistance Program to Provide Pandemic Relief. The 2021‑22 spending plan includes $1 billion federal American Rescue Plan Act (ARPA) fiscal relief funds (from the state’s discretionary pot totaling around $27 billion) to provide debt relief for energy customers who have accrued energy utility arrearages during the pandemic. Trailer bill language establishes the new limited-term program and lays out the implementation model for the program. Specifically, CSD is surveying the state’s energy utility providers to determine total arrearages (surveys were due to CSD from utility providers September 9, 2021), and will distribute funds directly to providers to pay down the identified debts on behalf of individual energy customers. Legislation specifies that 30 percent of assistance dollars will be used for local publicly owned electric utilities and cooperatives, while 70 percent will be used for investor-owned electric utilities. Because CAPP is designed to be a time-limited program in response to the pandemic and CSD aims to disburse finds as quickly as possible, trailer bill language exempts the department from creating regulations for the program.

Legislation Establishes LIHWAP. The 2021‑22 budget package also includes trailer bill language to provide authority for CSD to develop and administer LIHWAP, which is a new federal program created as part of the Consolidated Appropriations Act of 2021, with additional funding specified by ARPA. LIHWAP is intended to be a limited-term program to provide emergency assistance for low-income households that have accrued drinking water and wastewater arrearages during the pandemic. California has been allocated $116 million for the program. To begin implementing the new program, CSD drafted a LIHWAP State Plan—with feedback from stakeholders—and submitted this plan for approval from the federal government in August 2021. As with CAPP, budget legislation exempts LIHWAP from the requirement that CSD establish regulations for the program, primarily because the program is time limited for pandemic response, and CSD will aim to disburse LIHWAP funds to address existing water arrearages as quickly as possible once federal funds are released.

LIWP Augmentations. LIWP provides low-income Californians with household solar energy systems and other energy efficiency upgrades at no cost, with the goal of reducing greenhouse gas emissions by saving energy​ and generating clean renewable power. LIWP encompasses three core program components: (1) farmworker housing energy efficiency and solar, (2) community solar, and (3) multifamily energy efficiency and renewables. The spending plan includes $25 million General Fund for the farmworker housing component of LIWP. In addition, the 2021‑22 Climate Resilience and Cap and Trade spending packages include funding for LIWP for three years. Specifically, the Climate Resilience package—which totals $3.7 billion General Fund over three years across numerous departments—includes $25 million in 2022‑23 and an additional $25 million in 2023‑24 for CSD for LIWP. The Cap and Trade package—which allocates $1.5 billion Greenhouse Gas Reduction Fund dollars across several departments in 2021‑22—includes $15 million for CSD for LIWP in 2021‑22. For more detail about these two packages, refer to our Climate Resilience spending plan analysis and our Cap and Trade package spending plan analysis here.

Legislation Allows More Flexible Uses of Supplemental LIHEAP Funds. ARPA provided states with supplemental funding allocations for LIHEAP. California’s supplemental ARPA allocation for LIHEAP is around $203 million. The 2021‑22 budget package includes trailer bill language to waive certain statutory provisions for these funds. For example, waivers apply to the requirement that 25 percent of the funds be used for weatherization, and that CSD “afford local service providers maximum flexibility and control,” with the aim of allowing CSD to more effectively target the supplemental funds for utility payment assistance for low-income households in response to the fiscal effects of the pandemic. The waivers apply only to the supplemental funds, not to California’s regular LIHEAP allocation. We note that CSD was granted similar waivers for around $50 million in supplemental LIHEAP funding provided by the federal Coronavirus Aid, Relief, and Economic Security Act.

Legislation Expands Eligibility for CSBG. The federally funded CSBG program provides flexible grants to local governments and nonprofit organizations to address poverty. Various allowable uses for these grants include services related to education and employment, food and nutrition, health, homelessness and housing, and more—all for “eligible beneficiaries,” as defined by law. The 2021‑22 budget package includes trailer bill language to update the statutory definition of eligible beneficiaries—as allowed by U.S. Code—to include all individuals living in households with incomes up to the maximum that a state may adopt (which U.S. Code specifies may not exceed 125 percent of the official federal poverty line). Prior to this change, the maximum income for eligible beneficiaries under California statute was pegged to the federal poverty level.