The fourth pillar of affordability is income-qualified assistance
simplify, simplify, simplify
...in which I lay out a framework for water utilities that want to set up customer assistance programs.
This is the latest in a series of posts outlining five pillars of affordability strategy for water and sewer utilities. None of these pillars is sufficient on its own, but together they offer a practical way for utility leaders to think about affordability strategically. Previous posts described the first three pillars of affordability—quality, efficiency, and rate design—which help every low-income customer and so should form the core of any affordability strategy.
Thing is, even when utilities provide excellent service, operate efficiently, eliminate taxes on water/sewer services, and price progressively, some people may still to struggle to pay their bills.
- Income qualification (customers have to have income below some threshold to participate); and
- Some reduction in the amount that participants must pay to the utility
So in response to the great interest in this topic, in the next four posts I'm going to lay out a basic CAP framework for utility leaders who want to help customers in need, but don't have staff capacity or consulting budgets for more elaborate, bespoke program designs.
A line from Walden captures the essential vision of the kind of CAP I have in mind: “Simplicity, simplicity, simplicity!” Thoreau declared. “Let your affairs be as two or three, and not a hundred or a thousand; instead of a million count half a dozen.”
Utility bills were very affordable in Thoreau's day! But then, he also died from tuberculosis.
In the interest of brevity, I’m going to focus on CAPs for customers who pay bills directly to their utilities, which means this post won’t address multifamily residents, renters whose water/sewer costs are built into their leases, or private well and septic system users. I’m also going to leave aside programs aimed at demand reduction, like fixture retrofits or landscape audits and turf replacement.
With all that in mind, let’s start with the first, most important CAP question:
Who to help?
Crafting a CAP starts with defining a target population. Some CAPs are only for seniors or disabled people; others are available to any customer whose income falls below some threshold. Sometimes those thresholds vary by household size. Some CAPs set income eligibility as some percentage of the Federal Poverty Level or local median income. In every case, CAP eligibility involves some combination of household resources (e.g., income) and social characteristics (e.g., number of people, age, disability status). Who deserves help? Who doesn’t?
Value judgements are embedded in any CAP’s eligibility rules. These policies are rooted in social constructions of who is deserving and undeserving. A program that helps seniors but not families with children indicates a judgement that the old are more deserving than the young. A program with a lower income eligibility threshold reflects a judgement that assistance is only for the very poor; a higher threshold indicates a judgement that lower-middle class households deserve help.
At what point are water/sewer bills no longer just the customer’s problem, but the utility’s problem, too? Should different rules apply to veterans, seniors, or disabled people? Should households with children receive more than those without kids? Should undocumented immigrants receive assistance? How about convicted felons?
These questions are about community values.
Agonizing choices
When I work with utilities and speak to community meetings about CAPs, I stress that there are no scientific answers to such ethical questions.
Long, awkward silence and uncomfortable shifting in seats follows—and with good reason! These are hard questions, and decades of experience with anti-poverty programs demonstrate that eligibility judgements are fraught with hazards.
When faced with a tough value decision, a common tactic is to look at other utilities policies and then follow suit. That’s a reasonable starting point for deliberation, but comparisons to other communities don’t necessarily lead to good decisions. If a low-income family in San Diego is struggling to pay its water bill, the fact that they’d be eligible for assistance in San Antonio but not in San Francisco isn’t very relevant. Setting CAP eligibility for your utility by copying other utilities’ rules is like buying shoes by measuring other people’s feet. Resist the urge to mindlessly adopt the same rules the utility down the road uses—chances are they just copied someone else!
There’s also a tendency to appeal to some authority like the U.S. government or World Health Organization in order to avoid difficult questions, but that doesn’t really get us off the ethical hook, either. Say we set the Federal Poverty Level† as our CAP’s only eligibility standard, which the federal government conveniently updates every year. Currently poverty income is $27,750 annually for a 4-person family. Sensible enough, but that means a family that earns $2,300 a month qualifies for our CAP, but one that earns $2,325 a month does not. It’s hard to say that the marginal $25 makes much difference, but it could be the difference between getting assistance or not. It would be tough to explain to a working class mother that the extra $25 she earned this month disqualifies her from our CAP while the felon next door gets a discounted bill.
In the end, policymakers must set CAP eligibility rules that reflect their communities’ values. Those values are likely to evolve over time, so periodic review and adjustments are a good idea.
Simple advice
I don’t have any special insight about who deserves water/sewer bill assistance and who does not. I’m not a moral philosopher, I’ve not received any divine intervention on the issue, and I would not presume to declare here that my judgements are superior to those that emerge from deliberation through duly elected democratic institutions. But in my view, basic water and sewer service is something of a public good—or more accurately, a merit good—insofar these services limit the spread of disease and reduce overall health system costs. With that in mind, we ought to err on the side of generous eligibility for CAPs.
For utility leaders who want to help needy customers but are daunted at the thought of setting up their own eligibility criteria, the simple path is to declare participants on any existing income-qualified programs automatically eligible for the water/sewer CAP. There’s a good chance that a customer who needs water bill assistance is also getting help from programs like SNAP, TANF, LIHEAP, SSI, SSDI, and/or Section 8. Adopting these programs’ eligibility rules has some intuitive appeal and avoids the task of creating entirely new frameworks. Where other agencies allow information sharing, utilities should consider automatic CAP enrollment for customers who participate in these other programs.
Other income-qualified assistance programs have their own problems, of course, and adopting other programs’ rules is still something of an appeal to authority that might not align with local values. Relying on other programs' eligibility processes will inevitably miss some people who we might want to help, or help some people who we might want to exclude. But there’s an air of American philosophical pragmatism in simply doing what works reasonably well with the resources at hand, which makes it a morally defensible alternative.**
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As we’ll see in future posts, blanket adoption of other programs’ eligibility rules also reduces utilities’ administrative costs and customers’ administrative burdens. Next time I’ll turn from “who gets assistance?” to “how much assistance?” That's a tough one, too.
*I figure that a rigorous, systematic study of CAPs would probably take two years and around $1 million. Interested in funding one? HMU!
†The Federal Poverty Level is itself a strange creature with a weird origin story. Put simply, the FPL reflects the price of food required to meet 1960s-era nutritional guidelines.
**Especially in the case of SNAP, which has very high participation rates.