TO

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Representative Paul Thissen Representative Kurt Daudt Senator Tom Bakk Senator David Hann Jaime Tincher, Chief of Staff to Governor Mark Dayton February 21, 2014 LIHEAP funding bill

FROM: DATE: RE:

In response to the ongoing propane crisis, Governor Dayton took the following actions that affected the Low Income Home Energy Assistance Program (LIHEAP).   He expanded the eligibility to include 120,000 additional households by increasing the state median income requirement from 50% to 60%. He increased the maximum crisis payment allowed per applicant from $500 to $1,000.

To support these changes, Governor Dayton has asked President Obama and members of Congress to provide additional federal funding for the program. Without it, the LIHEAP program is expected to run out of funds after March 1, 2014. We are asking you to pass a $20 million funding appropriation on February 25, 2014 so that we can deposit the funds into the LIHEAP account and ensure no Minnesotan experiences a delay in receiving their payments. It is possible that, without additional funds, Minnesotans will not have the money to fill their empty propane tanks. These factors contribute to the urgency of the situation:   To date, there are been 141,008 applications. Of those, 84% or 118,648 have been fully processed. The program has expended more “crisis payments” over the past two weeks than in the entire period between September 1, 2013 and January 31, 2014. A crisis is defined as a propane tank at less than 30%, and the initial grant payment has been exhausted. The total number of households receiving crisis payments is 24,785, at a total of $11,113,452. At this time last year, only $4,499.459 in crisis payments were allocated. There are 250 more LIHEAP applicants per day than during this time last year. The eligibility expansion from 50% to 60% has triggered an additional 2,683 applications. Of these, 2,038 are approved and 645 are still in process. A mitigating factor is that the weather is projected to stay bitterly cold throughout the weekend and into next week. This may trigger a surge in applicants worried about their dwindling tank supplies.

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Commerce estimates that the state will need the additional funding to cover all of Minnesota’s LIHEAP eligible applicants. This range is based on the following factors:

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Commerce is using some historical comparisons, so analyzing the total number of applicants between March 1 and the end of heating season, traditionally May 31, as baseline numbers. The eligibility increase from 50% to 60% of SMI means that 120,000 households are eligible, but so far, only 2,683 have applied. Commerce has no historical data or no way of accurately predicting how many more applications will actually come in. The state’s “cold weather rule” ends on April 15, and utilities can start shutting off service to delinquent customers. The extremely cold winter may trigger a sharp increase in applicants this year. The price of propane is still higher than average, at $3.28/gallon. While the price is decreasing, it is expected to stay higher than average through the duration of the heating season, and remains volatile if supplies fall unexpectedly.

Because of the ongoing volatility with the propane situation, the persistently cold winter, and the unknown number of future applicants, Commerce recommends that we seek $20 million in supplemental funds to ensure that we will be able to cover all eligible applicants, with any unspent money canceling back to the General Fund at the end of the time period in which LIHEAP applicants can obtain funding, July 30, 2014. We have attached DRAFT bill language for your review. Please call me if you have any questions or concerns. Additionally, Molly Pederson in the Governor’s Office can be reached at 651-201-3424 or 651-295-1652 if you or your members have any questions, require additional information, or would like to suggest changes to this language. Thank you for your timely action to address this urgent situation. Jaime Tincher