On the limits of means-tested assistance programs for water & sewer

**Warning: sports metaphor ahead**

Like hitting a baseball, running a means-tested assistance program is hard.

Congress is betting on customer assistance programs (CAPs) as the way to tackle water and sewer affordability. Hot on the heels of the $638 million approved in the December COVID relief bill, Congress doubled down with another $500 million on the program earlier this month. When the first assistance bill passed, I observed that it said little about how the program was to be administered. The latest bill provides even less guidance—fewer than 250 words;* federal and state agencies will likely need several months of rulemaking before the program delivers a dime to customers.

In the end, implementation for low-income bill assistance will fall to the thousands of utilities that provide water and sewer service across the U.S. I continue to receive frequent queries from utility managers who want to address affordability effectively and are exasperated because their CAPs remain under-enrolled. One executive team I spoke with last month was incredulous that their utility lost a huge chunk of CARES funds because they couldn’t get customers to participate in a program that would have forgiven hundreds or thousands of dollars in water/sewer debt. Over and over again, I hear from utility leaders frustrated that their CAPs reach so few qualified customers. “What are we doing wrong?” they ask. “How can we do better?”

Decades of research on means-tested government assistance programs give us good reasons to temper our expectations about what water/sewer CAPs can accomplish. Means-tested programs are unlikely to reach more than a small fraction of the qualified customers--even if utilities do everything right.

Practical limits

Major League Baseball’s season starts this week, and baseball is on my mind. According to the rules, every player can get a hit every time he comes to bat, and so in theory a team can score an infinite number of runs and win by out-hitting its opponents. In reality, however, Major League batters hit in only about 25% of their at-bats. All-star players are better: they might hit around 30% of the time. Hall-of-Fame hitters—the greatest of all time—typically boast career batting averages between .300 and .350. Fewer than 30 players ever hit better than .400 for a season, and the last to do it was Ted Williams in 1941.

So the very best baseball players in the world fail between 60 and 70 percent of the time. That’s because hitting a baseball is difficult. It is nearly universally accepted among American sports fans that hitting a baseball is the hardest thing to do in all of sports. You can be supremely talented, train rigorously, study meticulously, and still fail 70% of the time.

In practice, CAPs reach only small percentage of eligible customers. That’s because administering a means-tested assistance program is hard. Consider what’s involved in making a CAP work:

• Advertising & outreach. Customers can only participate in a CAP if they know it exists, and so utilities have to educate their customers with advertising and outreach activities. Some customers won’t get the message due to language barriers or because they won’t bother to read or listen to appeals.
• Weighing participation. Once they know about a CAP, customers will evaluate their own eligibility and weigh the procedural costs of applying against their expected benefits. Some customers will decide that participation is not worth the time needed to apply – especially if they will need to take the bus or arrange for childcare in order to apply.
• Trust & cooperation. Some customers won’t apply because they don’t trust the government and don’t want to share their income, household size, or other personal information with the utility. Some won’t apply because they refuse to accept assistance as a matter of principle or pride.
• Certification & audit. Once customers do apply, utility staff or third-party administrators must certify their eligibility; some won’t qualify. Customers who ultimately enroll will have to re-apply periodically to maintain their CAP eligibility. Occasional audits will identify participants who shouldn’t have qualified; those customers will be kicked out of the program. Mistakes and fraud will occur sometimes.
  

Is it any wonder that few customers wind up enrolling in CAPs?

Patterns of participation

We really don’t know what helps or hurts water/sewer CAP participation because there has never been a rigorous, systematic study of CAP design, implementation or impact.** Participation rates in the handful of utilities I’ve worked with range from below 5% to more than 70% of eligible customers, but most see participation well below 30%. Philadelphia’s celebrated TAP program gets about 25% participation.

These lackluster figures are not surprising to those who study means-tested public assistance programs in the U.S.. Consider participation in these federal assistance programs:

• SNAP (formerly known as Food Stamps): 84% participation.
• TANF (formerly AFDC or “welfare”): 47%.
• Social Security Disability Insurance: 45%.
• Low Income Home Energy Assistance Program (LIHEAP): 16%.

The last of these is the most relevant to water/sewer utilities, as LIHEAP is the model for the new federal water bill assistance program. SNAP, TANF, and SSDI provide much greater benefits than LIHEAP—hundreds to more than a thousand dollars monthly. These are decades-old, professionally administered programs, and still they struggle with enrollment. Frankly, it’s a wonder that any water utility manages to achieve participation of 30% or more. Like a baseball player, a utility that manages to bat above .300 is probably an all-star.

What to do?

None of this means that CAPs are useless; these programs can be very important for those who receive benefit But nobody really knows what works and what doesn’t with water/sewer CAPs, so federal and state agencies should resist dictating CAP design and implementation tactics. Instead, utilities should be encouraged to try lots of approaches, experiment, and measure and report outcomes. For example, utilities could try multiple CAP advertising and outreach methods targeted at random to different neighborhoods or households, and then measure which (if any) correlate with participation. Utilities can try different forms, enrollment, and renewal procedures. These measures should be isolated to the extent possible in order help gauge how much procedural changed affects participation. Utility managers should resist the urge to simply imitate what other communities have done without evidence that their measures worked.

Most of all, utility managers and policymakers from Capitol Hill to City Hall should be sober in their expectations about what CAPs can accomplish in pursuit of affordable water. Utilities can do everything right and still reach fewer than half of the customers who need help. A baseball team can’t win with hitting alone—pitching, fielding, and baserunning are just as important.^† Just so, meeting the affordability challenge will require a comprehensive strategy that includes economies of scale, technology, rate design, and resource efficiency alongside means-tested CAPs.

*Happily missing from the new bill is a program name that generated the hideous acronym LIHDWWEAP. Hooray!

**Frequent readers will recognize this common refrain. A new article in WIREs Water reviews research on policy strategies for water affordability and shares my basic outlook on the state of the science: ¯\_(ツ)_/¯

†Ted Williams’ 1941 Boston Red Sox led the American League in batting with a team average .283, but finished 17 games behind the New York Yankees. The Yankees’ balanced hitting, pitching, and defense led them to an AL Pennant and World Series victory that year—a lesson to baseball and utility managers alike.