An empirical investigation of the 1995 Weatherization Assistance Program funding formula

The Weatherization Assistance Program (WAP) is a federal block grant program established in 1976 to assist low-income households in reducing their energy bills and improve their health and safety through a variety of weatherization and related services. The manner in which WAP funding is distributed among states has been a contentious issue since the inception of the program, and in 1995, the Department of Energy developed a new allocation mechanism. The purpose of this paper is to describe the 1995 WAP funding formula and to provide an empirical analysis of alternative formulae. The central tenet of the paper is that it is not possible to define the need for weatherization assistance in a unique manner, and this ambiguity and confusion is one of the primary reasons why a distribution “formula” cannot be derived to satisfy the main stakeholder groups. The purpose of this discussion is not to “refute” or “validate” the WAP funding formula, but rather, to demonstrate the main assumptions implicit in the procedure and to point out methodological issues and the choices and trade-offs inherent in any formula development.