Mason Reedus

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Dear Colleague Letter

DCL#:   LIHEAP-DCL-2023-04

DATE:   February 27, 2023

TO:   Low Income Home Energy Assistance Program (LIHEAP) Grant Recipients

SUBJECT:  Upcoming/Temporary Regular LIHEAP Block Grant Draw Down Freeze

ATTACHMENT(S):  N/A

The purpose of this Dear Colleague Letter (DCL) is to inform Low Income Home Energy Assistance Program (LIHEAP) grant recipients that the Office of Community Services (OCS) has identified a solution to the internal accounting issues arising from the Consolidated Appropriations Act (CAA), 2023 (Public Law 117-328), regarding the regular block grant funding for federal fiscal year (FFY) 2023. This solution will necessitate restricting drawdowns of regular block grant funds under award number 23****LIEA for the following dates March 1st-15th 2023.

Background

Due to the difference in how regular block grant funding was appropriated under the Continuing Resolution (CR) in the fall and the subsequent final budget, accounting changes are needed to the federal financial systems, including the Payment Management System (PMS), before the remaining FY 2023 LIHEAP funding can be released.

On February 22, 2023, OCS issued LIHEAP-DCL-2023-03 regarding the $1 billion in funding for LIHEAP under the Disaster Relief Supplemental (Disaster Supplemental) appropriation from the CAA and indicated another release of $560 million in regular (non-supplemental) funding would be forthcoming.

The Issue

In the fall, The U. S Department of Health and Human Services (HHS) received approval to release $3.4 billion of regular block grant funds under the CR funding to LIHEAP grant recipients on November 2, 2022 (see LIHEAP-DCL-2023-01), which represented 90 percent of the regular block grant funds available to recipients under the CR. Each year HHS works with OMB on a larger release of LIHEAP funding compared to other federal assistance programs due to the seasonal urgency of LIHEAP benefits. HHS reserves 10 percent of the CR funding pending the final budget because that typically covers any potential decrease in funding with the final budget and avoids HHS having to require recipients to return funding.

This year, the final budget (the CAA) appropriated a total of $4 billion in two separate line items—$1.5 billion in regular CAA funding and $2.5 billion in Disaster Supplemental funds from the CAA. Congress intended for this $1.5 billion and $2.5 billion to be treated as regular block grant funding; however, these two line items must be awarded by HHS into two separate Common Account Numbers (CAN) under award number 23****LIEA in the PMS. Because the CR funding of $3.4 billion was awarded in one CAN, the funding account from the CR has too much funding compared to the $1.5 billion account that was ultimately appropriated.

The Solution

OCS worked with a variety of offices and agencies across the administration to explore several options to address the reconciliation and accounting issues, while being mindful of the reporting burden on grant recipients. To be compliant with federal law, policies, and procedures, HHS determined it must create the two separate CANs under grant award 23****LIEA in order to account for the $2.5 billion and shift funding from the original CR account into the new CANs such that the original CAN does not exceed $1.5 billion total.

To move forward with the solution, the ACF Office of Grants Management (OGM) will need to de-obligate each grant recipient’s CR funding accordingly and subsequently obligate $2.5 billion in Disaster Supplemental funds from the CAA into a new CAN. Each recipient will maintain its FY23 grant number (23****LIEA), but it’ll be funded from 2 different CANs. This will not impact how a recipient will drawdown funds from PMS.

In order for HHS to complete this reconciliation on behalf of grant recipients, OCS needs to restrict the draw-down of regular block grant funding from the original CR CAN of G992201.  This will avoid recipients having to return funding pending the receipt of new funding. OCS has received approval to move forward with this reconciliation process.

To move forward with the solution, the ACF Office of Grants Management (OGM) will need to de-obligate grant recipient’s CR funding in excess of $1.5 billion in regular block grant funds from the CAA into that account.  OGM will also obligate $2.5 billion in Disaster Supplemental funds from the CAA into a new, separate account.

OGM will complete the de-obligation and re-obligation process between 3pm (ET) on Wednesday, March 1, 2023 and 11:59pm (ET) on Wednesday, March 15, 2023. During this time, grant recipients will be prohibited from drawing down regular block grant funding. Once funds are available again and normal financial activities can commence, OGM will issue two sets of Notice of Award (NOA) letters to grant recipients—one deobligating funds from the CR CAN and another NOA obligating funds into the new Disaster Supplemental CAN.

During the March 1-15, 2023 window when regular block grant funding will not be available, grant recipients may draw down funds from the Infrastructure Investment and Jobs Act (IIJA), both FY 2023 $1 billion supplemental allocations, and any remaining American Rescue Plan funds.

If you need to draw down any regular block grant funding for month ending closing or any other matter in advance of the freeze, you must do this by 11:59pm EST on Tuesday, February 28th.   Once the de-obligation of CR funding and the obligation of the Disaster Supplement funding has been completed, grant recipients will regain access to these funds in PMS. However, for grant recipients that have drawn CR funding in excess of the allotment, manual adjustments will be made in the PMS to move the excess charges from the CAA CAN to the Disaster Supplement CAN. This adjustment may take additional time to complete, and OCS will provide an update on the completion of these adjustments separately.

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