The 2022-23 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, and Low-Income Household Water Assistance Program (LIHWAP)—the last of which is a new limited-term program created in 2021-22. In addition, CSD oversees the state’s Low-Income Weatherization Program (LIWP). In overseeing these programs, CSD provides funding to 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 also began 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 COVID-19 pandemic.

This post details funding augmentations for three of CSD’s programs—CAPP, LIHWAP, and LIWP—included in the 2022-23 spending plan.

CAPP

Program Overview. The 2021-22 spending plan included $1 billion in federal American Rescue Plan Act (ARPA) fiscal relief funds (through the state’s Coronavirus Fiscal Recovery Fund of 2021) to provide debt relief for energy customers who have accrued energy utility arrearages during the pandemic. Budget-related legislation established the limited-term program and laid out the implementation model. Specifically, the language required CSD to survey the state’s energy utility providers to determine total arrearages and to allocate funds to providers to pay down the identified debts on behalf of energy customers (customers do not need to apply or take any active steps to receive assistance). Legislation further specifies that 30 percent of 2021-22 assistance dollars would be used for local publicly owned electric utilities (POUs) and cooperatives, while 70 percent would be used for investor-owned electric utilities (IOUs), including community choice aggregators (CCAs). (Under the CCA program, cities and counties may buy or generate electricity for residents and businesses within their communities. IOUs partner with CCAs to deliver the electricity through the IOUs’ transmission and distribution systems. IOUs also may provide meter reading, billing, maintenance, and outage response services for the CCAs within their service areas.)

Program Implementation in 2021-22. CSD was able to stand up the new program within a few months and had allocated all debt relief funds by the end of January 2022. Funds supported more than 1.5 million residential and commercial accounts. Utilities that received funds to offset customer debts are required to report certain information to CSD within six months of receiving their allocations, and CSD will then prepare a report for the Legislature within 60 days of receiving final reporting from utilities. Accordingly, the Legislature should receive CSD’s report within the next few months.

2022-23 Funding Augmentation. Following the allocation of all 2021-22 debt relief funds under CAPP, CSD again surveyed utility companies and determined that residential utility customers have remaining arrearages of around $1.2 billion accrued during the pandemic. To address these identified remaining arrearages, the 2022-23 spending plan provides an augmentation of $1.2 billion through the California Emergency Relief Fund (funded with General Fund resources) for CAPP as a component of the state’s broader energy package. Budget language specifies that 20 percent of the 2022-23 CAPP assistance dollars shall be allocated for assistance to customers of local POUs and cooperatives, while 80 percent shall be allocated for assistance to customers of IOUs, including CCAs. Funds shall be prioritized for active residential customers with past due balances accrued during the pandemic period who, absent assistance, might be subject to service disconnection.

As with the 2021-22 funds, budget-related legislation requires CSD to provide a report to the Legislature following allocation of all 2022-23 assistance dollars, specifying outcomes of CAPP such as total number of residential customers assisted and total funds distributed by utility.

Budget language also adds a section to the Revenue and Taxation Code specifying that energy utility bill assistance received through CAPP will not be counted as income for taxation purposes.

LIHWAP

Program Overview. LIHWAP is a new federal program created as part of the Consolidated Appropriations Act of 2021, with additional funding specified by ARPA. The program is intended to be limited term to provide emergency assistance for low-income households that have accrued drinking water and wastewater arrearages. California received a federal allocation of $116 million for the program. The 2021-22 budget package included legislation to provide authority for CSD to develop and administer LIHWAP, specifically requiring CSD to develop the federally required state implementation plan, detailing program eligibility, benefits, and other guidelines.

Program Implementation in 2021-22. CSD drafted California’s LIHWAP State Plan—with feedback from stakeholders—and submitted this plan for approval from the federal government in August 2021. Federal guidelines instruct states to base their LIHWAP program model on the federally funded LIHEAP program model. As such, California’s LIHWAP program implementation model relies on a network of community-based local service providers—the same service providers with whom CSD partners to implement LIHEAP—to help low-income households apply for assistance to pay down their outstanding residential ​water and wastewater utility bills. The federal government approved the state plan in November 2021 and CSD began rolling out benefits in June 2022. Because federal rules dictate that payments must be made directly to utility providers on behalf of eligible customers, CSD is working with a third-party vendor to manage direct payments to the state’s more than 3,000 water and wastewater utility providers.

Statute requires CSD to report to the Legislature on program expenditures, households served, and other metrics beginning six months after contracts for local service providers are executed. Reporting shall continue every six months until program funds are fully expended. As such, the Legislature should receive CSD’s first LIHWAP program report by the end of 2022.

SWRCB Implemented Similar Program, With Some Limitations. According to a 2021 survey by the State Water Resources Control Board (SWRCB), Californians accrued more than $300 million in drinking water arrearages. In addition, the state’s wastewater providers estimated arrearages could total several hundred million dollars. In response, the 2021-22 spending plan included $1 billion in ARPA fiscal relief funds (through the state’s Coronavirus Fiscal Recovery Fund of 2021) to SWRCB for the California Water and Wastewater Arrearage Payment Program (CWWAPP) to assist Californians who had accrued water arrearages during the pandemic period—specifically from March 4, 2020 to June 15, 2021. However, customers have continued to accrue water debts since the end of the specified period. In addition, given certain requirements of the program model, not all water and wastewater utilities participated in CWWAPP. Specifically, SWRCB estimates the program served around 80 percent of the state’s water customers, meaning around 20 percent were not eligible or did not apply for assistance through CWWAPP. This has resulted in a portion of the $1 billion going unspent in 2021-22.

2022-23 Funding Augmentation for LIHWAP. To help pay down remaining arrearages beyond what could be addressed by the initial federal LIHWAP funding allocation and beyond what SWRCB’s CWWAPP may cover, the 2022-23 spending plan augments LIHWAP by $200 million. These funds are unused ARPA fiscal relief funds (through the state’s Coronavirus Fiscal Recovery Fund of 2021) that the 2022-23 budget shifts from CWWAPP’s 2021-22 allocation and reallocates to LIHWAP.

LIWP

Program Overview. 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 currently encompasses two active program components: (1) farmworker housing energy efficiency and solar, and (2) multifamily energy efficiency and renewables. LIWP also previously funded components for single-family energy efficiency and solar projects, which concluded in 2018-19, as well as a community solar component, which concluded in 2021. Since the program launched in 2014-15, LIWP has received more than $200 million Greenhouse Gas Reduction Fund (GGRF) dollars. The level of GGRF funding dedicated to the program has fluctuated on an annual basis, ranging from around $75 million to less than $10 million in a given year. The program received a General Fund augmentation in 2021-22 (for 2022-23 and 2023-24), described in more detail below.

2022-23 Funding Augmentation for LIWP. The spending plan includes $15 million GGRF dollars for the farmworker housing component of LIWP in 2022-23. These funds are provided in addition to $25 million General Fund for LIWP in 2022-23 (and another $25 million in 2023-24) that was allocated by the 2021-22 Climate Resilience package, bringing total funding for LIWP in 2022-23 to $40 million.