Managing the $638 million low-income water & sewer assistance in the federal COVID relief package
As frequent readers of this page likely know, the COVID relief bill that Congress passed in December included $638 million for low-income water and sewer bill assistance. Despite its high-falootin’ mouthful of a name, the Low-Income Household Drinking Water and Wastewater Emergency Assistance Program (LIHDWWEAP?*) has the feel of a last-minute provision tossed into the package. The $638M program got just 1.5 pages in Section 533 of the mammoth 5,593 page law, with little guidance on how the program will be structured or administered. Meanwhile, a new presidential administration has just taken office and is still trying to get organized. Advocates, regulators, and water sector managers are puzzled about how to manage the program and what it might mean for future federal forays into water affordability; I’ve been fielding lots of calls and messages on this issue over the past month.
Frequent readers also know that there are good reasons to be sober in our expectations of how much means-tested assistance can really help water affordability. But means-tested assistance is what Congress has cooking, and it's a useful part of an affordability strategy. So here I’ll do my best to summarize what we know about LIHDWWEAP (I’m going to call it LĬD-wēp , or LID-weep) administration and offer some ideas to the people charged with putting it into action.
Section 533 doesn’t say much about how LIHDWWEAP is supposed to work, but here are the basics. The program is to be administered by the Department of Health and Human Services (HHS), not EPA. That’s important because HHS already runs LIHEAP, the federal Low-Income Home Energy Assistance Program; Congress probably figures water utilities are a lot like energy utilities.**
HHS will not administer LIHDWWEAP directly. Rather, the program is structured as a set of grants to state and tribal governments. HHS is supposed to allot grants to each state and tribe based on the size of their populations under 150% of federal poverty levels and the share of the population that spends more than 30% of monthly income on housing. HHS hasn’t yet set the allotment formula, and it’s going to take at least several months of rulemaking before a dime gets to the states.
In turn, state governments will send funds to water utilities. Each state will have its own method for allocating funds to utilities and rules for the use of those funds. Section 533 says only that LIHDWWEAP is supposed to reduce water bill debt or service rates for “low-income households, particularly those with the lowest incomes, that pay a high proportion of household income for drinking water and wastewater services.” The law does not define “low-income” or “high proportion.” Section 533 directs HHS to use existing administrative procedures to the extent possible, but ultimately it will be up to water and sewer utilities to get the LIHDWWEAP money to the people who need it.
Congress just told HHS, hundreds of state and tribal agencies, and tens of thousands of utilities to provide means-tested assistance for low-income water/sewer customers. To be blunt, nobody really knows how to do that. Many utilities currently provide means-tested assistance or rate reduction programs, but to my knowledge there has never been a systematic study of U.S. water assistance program design, implementation or impact.† We’re more or less flying blind here.
All I can say definitively about LIHDWWEAP implementation is:
Having said that, I’ve worked with lots of utilities, I've seen a lot of assistance programs, and I know some things about water rates and public management. So with all appropriate caveats, here are some thoughts on how to implement the version of LIHDWWEAP that Congress just created. In crafting these educated guesses, I assume that state agencies and utility managers want to help low-income people as quickly and effectively as possible, and that strategic positioning for future LIHDWWEAP is a secondary concern.
Counsel for state administrators
Once HHS determines your state’s LIHDWWEAP allotment:
- Use a simple formula to allocate funds. Don’t bother trying to gather data on arrears or water debt and run sophisticated analyses to see which utilities “need” the most funding. That will take time and require data that lots of utilities can’t get readily, and funding is pretty meager anyway (it works out to about $10 for every person in the U.S. with income under 150% of poverty) so complexity would just slow things down. Just distribute funds to utilities as a function of service population and poverty rate. Where water and sewer services are offered by different organizations, just split them in half. No need for fancy allocation methods.
- Build a two-tiered system. Your state has hundreds of water and sewer utilities. A few of them are large, serving tens of thousands to maybe more than a million people. Those big utilities are professionalized organizations with hundreds to thousands of employees. But most of your state’s water and sewer utilities are very small, serving populations of less than 10,000 and employing fewer than a dozen people—maybe just one or two part-timers. Set up separate LIHDWWEAP implementation processes for big and small systems. The right size cut-off will vary from state to state, but I’d suggest a threshold of something like 50,000 in service population.
- Give big systems funds and get out of the way. Those large utilities probably have pretty good billing and accounting systems to track water/sewer debt, and they have a good idea how many customers may need assistance—lots of big utilities already have means-tested assistance, debt forgiveness, or rates in place. Send these big utilities their share of the LIHDWWEAP funds and let them use existing programs or create locally-tailored systems to get funds to customers who need it. Ask for a simple one-page report at the end of the year to tell you how they spent the money and how much they have left.
- Set up third-party administration for small systems. Your state’s small utilities already have a lot on their plates. Many have antiquated billing systems—maybe even paper ledgers—and poor or hard-to-manage account records. Most won’t have the organizational bandwidth to do the accounting, auditing, and reporting for LIHDWWEAP, let alone the capacity to handle means-testing. Even moderately-sized utilities (serving say 25,000) will not want to invest in administration of a LIHDWWEAP program that isn’t very generous. Instead, allocate funds to small systems, and then set up boilerplate memoranda of understanding (MOUs) that pool the small systems’ funds into funds to be administered by regional or county-level social service agencies that already manage means-tested programs. Allow funds to be distributed to any income-qualified resident of the small systems’ service areas. Don’t bother tying back benefits to specific bills or water debts.
Counsel for utilities
Once your state administrator allocates your LIHDWWEAP funds, they will probably come with some rules. Everything that follows carries the caveat: “…if state and federal regulations allow.”
- Use existing programs. If you already have a means-tested assistance or discount program that seems to work, just funnel the LIHDWWEAP funds into it and expand outreach and eligibility as much possible. In many cases the new program won't give very much money. Many existing programs target specific segments of the population (e.g., elderly, disabled); these should be expanded to include any income-qualified customers.
- Focus on shut-offs. If you don’t already have a means-tested assistance/discount program or your program doesn’t work very well, use LIHDWWEAP funds to manage (preferably eliminate) shut-offs for nonpayment. Setting up, publicizing, and administering an effective assistance program takes a lot of time. To help people right away, stick the LIHDWWEAP money into a dedicated account. When a residential customer account falls into serious delinquency and is at risk of shutoff, contact the customer and ask if (s)he qualifies for assistance by whatever guidelines are adopted locally. Make that process as easy as possible. If a customer slated for shut-off qualifies, just use the LIHDWWEAP funds to pay off the debt and maintain service. You can do this literally up to the moment when the utility crew shows up to shut the water off (but preferably earlier). Once a permanent assistance/discount program is up and running, any remaining LIHDWWEAP funds can supplement it.
- Work together. All of this stuff is easier to manage in larger organizations. If your utility doesn’t have the organizational capacity to take on LIHDWWEAP administration, cooperate with other utilities and/or organizations in your area to save on administrative costs while helping your customers in need.
LIHDWWEAP might have been a congressional afterthought jammed into an overstuffed emergency relief package, but it portends more federal water assistance to come. LIHEAP-style assistance seems to be the congressional Democrats’ preferred instrument for addressing water affordability. Congress and HHS will be watching as states and utilities grope toward administrative processes. Next time Congress takes up LIHDWWEAP, they'll probably have more than 300 words to say about how to carry it out.
*Y’all Capitol Hill people really need to think through the acronymic implications of the names you stick on programs.
**They’re not, really.
†We badly need such a study, but serious evaluation (i.e., rigorous analysis, not cherry-picked case studies) won’t be easy or cheap. Got a couple hundred grand to sponsor such a study? HMU!
Inefficient, inequitable, and maddeningly slow, America’s fragmented administrative institutions are saving the Republic before our eyes.
The American administrative apparatus is an astonishing jumble. Scores of federal agencies, fifty states (plus D.C.), 14 territories, hundreds of tribes, and tens of thousands of local governments share responsibility for domestic public policy in the United States. Beyond its inelegance, this mind-boggling fragmentation is a recipe for waste, confusion, and contradiction. No sane person would design a system like this if the goal was efficient, equitable regulation or delivery of public services. It’s a hot mess.
But by brilliant design or happy accident, America’s confusing and convoluted administrative institutions simultaneously allow for and defend against electoral abuse. The slow-rolling drama of this year’s federal elections is a dramatic case-in-point.
Federalism—a model of governance that shares authority between a central government and regional subunits—gets a pretty bad rap in political science and economics. Federalism generates inconsistent, often contradictory policies. The whole apparatus is inequitable, as citizens in different parts of the country experience government in very different ways, often with troubling racial or ethnic biases. Administrative systems are redundant, bloated, and sometime work at cross-purposes. Our system of government isn’t Schoolhouse Rock, it’s a Hieronymus Bosch painting.
Every time I move from one state to another and wait in line at the DMV, I wonder: does America really need more than fifty driver’s licensing regimes and insurance regulators? Do we really need to track births, deaths, marriages, and land ownership through 3,000 county governments? Does it really make sense to parcel out responsibility for firefighting and law enforcement and education and health care and trash disposal across tens of thousands of governments?
Brilliantly efficient policies conceived on drawing boards in think tanks, seminars, and congressional hearings slam into this amorphous, chaotic intergovernmental blob. Look no further than the COVID-19 vaccine administration to see what I mean.
Baffling, byzantine, brilliant elections
Disorder and fragmentation also afflict American democracy. Election administration is intensely local in the United States. Elections in this country aren’t run by the Federal Election Commission. In most of the U.S., county and town governments organize and administer elections with state oversight. The work of issuing and counting ballots falls to tens of thousands of local officials and poll workers. Votes are cast and counted with a bizarre mish-mash of technologies. Vote counting is slow, reporting of results is haphazard, and when presidential elections are close, the delays are maddening. Even worse, all this fragmentation can allow state or local authorities to make voting difficult when it’s politically advantageous. Our country has a troubled history of voter suppression and disenfranchisement. The 1965 Voting Rights Act was a landmark step toward addressing those problems, and over the years there have been calls to nationalize voting administration completely.
But ironically, fragmentation of our electoral system is also a safeguard against tyranny. Over the past month we’ve seen a remarkable federalist drama play out in Georgia. Georgia’s top election official and Secretary of State have publicly clashed with President Trump’s obdurate refusal to accept the outcome of the Peach State’s elections. The audio recording of Trump’s phone call with Georgia Secretary of State Raffensperger leaked last week is a testimony to the surprising strength of the nation’s fractured electoral systems.
Raffensperger, an elected official and life-long Republican, steadfastly refused to use his administrative authority to change his state’s election results, despite the President’s cajoling and vague threats. Raffensperger could show this kind of fortitude because he was selected by and is responsible to the voters of Georgia, not to the President of the United States. Raffensperger works in Atlanta alongside other Georgia officials; to capitulate to Trump’s demands would be to dishonor the public servants he sees every day. Just so, elections administrators in each of Georgia’s 159 counties are responsible to their own communities, not the President.
Hard to manage is also hard to hack
It is easy to imagine an alternative world in which Congress sets detailed rules for elections, the President appoints a Secretary of Elections, and a U.S. Department of Elections operates the whole system. Certainly, election administration would be more uniform, and we’d likely get results much faster. But uniform technology for casting and counting votes would make our elections far more vulnerable to electronic mischief. Whatever its other drawbacks, the Rube Goldberg Machine that is our election administration system is reasonably immune to concentrated attack. No vast right-wing conspiracy is possible, no deep-state conspiracy is possible, no national electoral conspiracy of any kind is really possible because our nation’s whole electoral apparatus is so convoluted.
Most of all, locally-managed elections form an inelegant but potent check on executive power. A U.S. Department of Elections staffed by presidential appointees would be glaringly vulnerable to presidential meddling. Would a U.S. Secretary of Elections appointed by President Trump resist manipulation the way that Georgia’s Secretary of State did?
As I write this, Georgia is in the throes of managing its special senate election. The polls suggest a close race, so it’s likely going to take elections officials a while to complete and validate everything. Angry, impatient cries will erupt from every ideological corner, just as they did in the ten days after last November’s federal elections. That’s OK. Our crazy quilt electoral system isn’t pretty, it isn’t quick, and it isn’t particularly fair; but it’s awfully hard to break. At a moment when our institutions are under stress, that is some comfort.
The growing national attention to public infrastructure in the United States has been gratifying to those of us who have been working on the issue for a long time. Infrastructure has been a simmering issue for decades, but a spate of recent high-profile disasters has pushed it to the forefront of American politics. It was a major theme in the 2016 presidential election, and last week the White House announced president Trump’s long-awaited infrastructure plan in a 55-page document.
I’ve had a chance to review and reflect on the proposal; in this inaugural blog post and a few posts to follow, I’ll share some observations about White House’s infrastructure plan. I’m going to focus on the infrastructure plan itself, and in ways that can maybe add some value to the public discourse. So in this series of posts I won’t comment on the president’s budget proposal or regulatory actions—I’ll just stick to the 55-page plan. This post will discuss the White House infrastructure plan’s broad financial elements, since adequacy of finance has garnered most attention. In future posts I’ll address privatization, water infrastructure, and workforce aspects of the plan… and maybe other stuff, too.
Federal funding as federal leverage
America’s infrastructure funding needs are enormous. Drinking water systems alone will require more than a trillion dollars over the next 25 years to maintain health and economic growth. Sewer systems need more than $271 billion over the next two decades. Replacement and repair costs for railroads, highways, bridges, seaports, airports, dams, levees, and myriad other systems are enormous. Even conservative estimates of infrastructure needs put the price tag into the trillions of dollars.
In the face of those daunting figures, the White House plan calls for about $200 billion in federal infrastructure funding, $50 billion of which is to be targeted at rural and tribal infrastructure. The most common critique has been disappointment in the scale federal commitment under the plan (for example), and no one seriously argues that $200 billion is adequate to address the nation’s infrastructure needs. The president’s plan seeks to use the federal contribution to spur local, state, and/or private investment by offering a 10-20% match. That is, a local government could propose a $100 million project; if approved, the federal government might contribute up to $20 million, with the local government responsible for raising the remaining $80 million from other sources. In that way, the federal government essentially subsidizes local/state/private infrastructure investment.
This arrangement is typical for federal infrastructure funding from the 1950s-1970s. Comparatively little of the nation’s critical infrastructure is actually owned by the federal government; most is owned and operated by state/local governments or private corporations. For highways, ports, and water/sewer systems in particular, the great federal spending programs of the past have been set up as proportionate matches or grants-in-aid for construction. In most cases, this cooperative arrangement was a central to the legislative coalition that came together to fund infrastructure. The idea is for the federal government to spur construction, then turn infrastructure over to state/local government for ongoing maintenance and replacement.
The main difference between the White House’s infrastructure funding proposal and the great federal infrastructure programs of decades past is the share of the federal contribution: Uncle Sam paid for 90% of construction costs under the 1956 Interstate Highway Act and 75% under the Clean Water Act, for example. To put things in perspective, the Clean Water Act’s $57 billion of local grants-in-aid would be more than $300 billion in today’s dollars.
State & local governments on the hook
But for a variety of reasons, many local and state governments have not adequately maintained, replaced, or expanded infrastructure. In some cases, disasters or economic decline have made adequate funding difficult. More often, though, state/local politicians find it easier to neglect infrastructure than to maintain it adequately. Repair and reinvestment aren’t very sexy, and politicians everywhere prefer lower taxes and user fees. Hence the multi-trillion-dollar infrastructure costs facing the nation.
Would a larger federal contribution than called for in the Trump plan help close the gap? Absolutely. But the days of federal largesse underwriting infrastructure in the 1950s-1970s are probably over. With entitlements, defense, debt and tax expenditures sucking up the lion’s share of the budget and politicians loathe to raise taxes, it’s difficult to imagine a trillion-dollar federal infrastructure initiative in near future.
Put simply, there is little Congressional appetite for massive federal investment in local and state infrastructure today. The most useful way to think about the White House funding plan is not to compare it to the Interstate Highway Act or Clean Water Act (when the feds paid a lot), but rather to the status quo (when feds pay virtually nothing). It’s exceedingly unlikely that the federal government is going to foot the whole infrastructure bill, or even half of it. State and local officials complaining about federal government failure to pay for their infrastructure replacements is like dinosaurs complaining about asteroids.
Capital for infrastructure has to come from somewhere. Under current political and fiscal conditions, the best prospect for effective federal financing is probably to entice other sources of capital into public infrastructure. That’s what the White House’s plan tries to do. Whether $200 billion is adequate to the task is hard to say.
I’ll take up the thorny question of infrastructure privatization another day.