PURPOSE

To provide an overview of the current Lifeline and Life Support Programs and to request endorsement of proposed changes.

BACKGROUND

The City Council (Council) asked that staff review the current Lifeline and Life Support Programs to ensure they are consistent within the industry and meet the contemporary needs of our community.

The Lifeline and Life Support programs were put in place over 20 years ago to help specifically defined customer groups pay for their municipal services.  Through these Programs the City assists those segments of the community that have limitations on their ability to earn an income or to mitigate the financial impact of a household member�s medical requirements.

These customer groups have become known as Lifeline customers and Life Support customers.  Lifeline customers are those customers 62 years and older, with limited household income or those customers who have a disabled person living in their household, with limited household income.  The Life Support program is for customers who use specific essential medical equipment requiring electricity to operate.

Eligibility criteria and program benefits are outlined in two documents.  The Burbank Municipal Code (BMC) which exempts Lifeline and Life Support customers from payment of the Utility User�s Tax (UUT) and ties the income requirements to the U.S. Department of Housing and Urban Development (HUD) program requirements for Public Housing and Section 8 Programs. And, the Burbank Fee Resolution which lists the income levels, waives the customer service charge, and provides reduced rates for electric, sewer, garbage and refuse fees.  Together, these discounts are called the Lifeline Rate.  Currently we have 2251 customers enrolled in the Lifeline Program and 86 enrolled in the Life Support Program, thus 2337 customers are on the Lifeline Rate receiving about $700,000 in discounts each year.

ANALYSIS

Lifeline Program

To determine the relevance and appropriateness of the Lifeline Program several elements must be examined:  eligibility; income requirements; and discount level. 

Eligibility - Which customer groups receive the discount? 

The Lifeline Program offers financial assistance to those customers in the community that have limitations on their ability to earn an income or to mitigate the financial impact of a household member�s medical requirements.  The essential principle being to provide on-going assistance to those customer groups whose personal and financial circumstances are not of a temporary nature and are unlikely to improve.  For those customers who do not meet the Lifeline requirements, but are enduring a temporary financial set back such as the loss of a job or death of a spouse, Project Share funds and payment arrangements are available. 

In a survey of local utilities (Attachment), about half have financial assistance programs for customers who meet only the low-income threshold.  The remaining organizations, including Burbank, have programs with two criteria: either low income combined with an age requirement or low income combined with being the head of a household with a disabled family member.  Thus, Burbank�s Program is within the realm of what other utilities offer.

Income � What are the income requirements?

The income requirements for the Lifeline Program are spelled out in the BMC and are tied to the U.S. Department of Housing and Urban Development (HUD) requirements for Public Housing and Section 8 Programs.  This is the same standard used by the City�s Housing Authority to determine eligibility for federal housing assistance.  According to this standard, to receive program benefits, a one-person household cannot earn more than $20,850 a year, households with two people cannot earn more than $23,800 a year, and with three people, $26,800.   Using this standard, approximately 2,200 households receive the Lifeline benefit.

Many utilities have adopted the State�s CARE guidelines for their assistance programs, which is slightly more generous than the HUD guideline, with the exception of the two-person household.  The HUD and CARE annual income guidelines are shown below.

Staff considered recommending adoption of the CARE guideline however chose not to for two reasons.  One, the HUD guidelines are established by region and take into account regional economic differences making it a more relevant guideline for the Burbank community.  And, two, the majority of our Lifeline participants are two person households and these households are slightly disadvantaged by the CARE guideline.  

Discount level � What discounts do eligible customers receive?

Burbank� Lifeline program is very generous relative to other utilities� programs, amounting to about a 50% discount on energy along with reduced fees for Public Works services.  Other utilities offer discounts of about 20-30% on a customer�s energy usage; most without waiving the Customer Service Charge, Utility Users Tax, or discounts on Public Works services.

Burbank�s support level equates to approximately .7% of BWP�s annual budget.  This is exceeded only by Imperial Irrigation District with 1.13% of their budget supporting their program.  The City of Glendale spends .44%, with the remainder of the surveyed cities coming in at .05% to .27% of their annual budget supporting their assistance programs.

In addition, Burbank�s current program design offers the added benefit of applying the discounted rate on the first 400 kWh used.  Burbank�s non-Lifeline residential rates have three tiers.  The first tier, up to 250 kWh, was designed to be at a level where the majority of families could enjoy essential services.  Any use over 250 kWh could be considered discretionary.  About 50% of current Lifeline customers use 250 kWh or less with the average usage being about 350 kWh.  

Does the program meet the Burbank community�s need? � Approximately 2,200 customers receive the Lifeline Rate.   According to the most recent census data about 10,000 households in Burbank have total earnings less than $24,999.    Unfortunately, the census data can not provide information about the size of these households, disability status, nor the age of the people in the households.  Rather, the census bureau staff suggested a federal agency guideline, such as HUD, be used which takes into account what income level might be considered a hardship within a certain region.

Staff spoke with the City�s Housing Authority which uses the same income guideline as the Lifeline Program.  Based on this guideline, they provide assistance to approximately 1,100 Burbank households with another 1,300 on the waiting list who qualify for assistance but for whom funds are not available at this time.   Staff also checked with the Gas Company which uses the CARE guideline for their low income program eligibility.  Based on this guideline, the Gas Company provides assistance to about 4,500 Burbank customers. 

Since neither the Housing Authority nor the Gas Company take age or disability status into account when qualifying customers for their programs, it seems reasonable that Burbank�s current program participation level of 2,200 customers is reaching the targeted customer groups and those most in need of this assistance.

Life Support Program

The BMC defines Life Support customers as those who have a member of their household using a respirator, iron lung, or kidney dialysis machine.  Over the years the program has evolved to include a broader range of life support equipment than those specified such as equipment for sleep Apnea disorder.  The practice seems consistent with the intent of the language and merely reflects advances in technology and equipment.

The BMC specifically exempts Life Support customers from payment of the UUT regardless of income, disability status, or age.   Over the years these customers have been rolled into the general Lifeline Program and receive benefit of all elements of the Lifeline Rate: waiver of the customer service charge; discount on energy use; and discount on Public Works charges.  

About half of the surveyed utilities offer a discount on energy charges if a family member requires specific essential life support equipment which uses electricity.  Like Burbank, most utilities require only a physician�s certification that certain life support equipment is required to qualify for the program.  Income or financial need is not considered as additional criteria for eligibility. 

However, offering the Lifeline Rate to customers that have not demonstrated a financial need seems inconsistent with the Program�s intended philosophy.  Staff recommends that customers requiring life support equipment be subject to the same income requirements as other customers receiving the Lifeline Rate.

FISCAL IMPACT

$700,000 has been budgeted in the Public Benefits Program to support the current Lifeline and Life Support Programs.  Any significant change to the current program would require a reallocation of those funds.

CONCLUSION & RECOMMENDATION

Burbank�s Lifeline Program is typical of other utilities� assistance programs.  The Program provides assistance to those customers in the community who have limited ability to improve their financial situation.  

However, extending the Lifeline Rate to Life Support customers seems inconsistent with the general philosophy to provide assistance to those who have an economic need.   Thus, staff recommends modifying the Life Support Program to include an income requirement similar to the Lifeline Program.  This could be achieved by expanding the BMC definition of disabled to include customers on life support equipment and deleting the BMC sections that separate Life Support customers from other customer groups.  This requires a change to the BMC.

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