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STATE OF NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES 325 NORTH SALISBURY STREET JAMES b. HUNT, JR TOM GILMORE SARAH T. MORROW. M.D. M.P.H. SeptembEr 24~ 1980 TELEPHONE Dear Chairman of County Commissioners, Because the department of social services in your county w~ll be heavily i~volved'io administration of this winter's euergy assistance program, this letter is to iuform you of the current status of this program. The State Plan, containing a number of waiver requests aimed at cutting administrative costs, was submitted September 15. A large number of the letters received during the pnblic co,~eut period expressed concern that payments wonld be made directly to eligible households rather than to their fuel suppliers. My staff made a thorough study of the vendor payment type of system. Two conclusions were reached that led to choosing the direct cash payment method: a vendor system would cost $800,000 to $1 million over and above a direct payment system and the stringent "consumer-oriented" contracts required between vendors and the State would dissuade many suppliers from participating io the program. In devising the Low Income Energy Assistance Program, Coegress was trying to prevent the problems of previous programs. In so doing, they designed a much more complex progEam to administer and yet also limited the amount of a state's Federal allotment that can be used for administration (up to 5% of total program costs) and for the first time required non'Federal matching of administrative costs (a minimum of 50% of total administrative costs must be from non-Federal sources). Although the State is seeking a waiver of the non-Federal matching requirement, tbe paramonnt consideration in developing the proposed Plan has had to be minimizing administrative costs chargeable to the program. In areas where regulatioos allow options, the least costly was chosen (such as direct cash paymeuts instead of a vendor system). Where options weren't offered, waivers have been requested. For example, a request has been made to waive the verification requirement for noo-categor'ical households (those households that do not have a member receiving either AFDC, SSI or Food Stamps). These choices have been difficult becaose the more cost]y options and Strict regulations were put ioto law to overcome criticisms of the past. While a great deal of uncertainty will exist regarding the program until decisions are reached on waiver requests, (it has been indicated that these d~cisi0ns will be made by October 15) it is knOWn that the county departments will have responsibility in a number of areas: obtaining supplemental data on AFDC, (Aid to Families with Dependent