The Weatherization Assistance Program (WAP) is a federal block grant program administered by all 50 states and the District of Columbia through community action agencies, state energy offices, local government, and other nonprofit organizations to provide weatherization services to eligible households. The WAP was established in 1976 to increase the energy efficiency, reduce the energy expenditures, and improve the health and safety of low-income households, especially those households that are particularly vulnerable such as families with children, persons with disabilities, and the elderly. The manner in which WAP funds have been allocated to states, however, has been a contentious issue since the inception of the program. Southern states have argued that too much of the federal funding goes to cold-climate and rural states. Northern states disagree. In 1990, Congress amended the Energy Conservation and Production Act and required the Department of Energy to develop a new funding formula. The Department of Energy currently uses a three-factor formula developed in 1995 in conjunction with a two-factor formula developed in 1977 and a hold-harmless provision to allocate WAP funding. The purpose of this paper is to explain the WAP allocation mechanism and the assumptions associated with the 1977 and the 1995 funding formula. The factors that compose each funding formula are critically assessed and various implementation issues are reviewed, including the selection of the trigger point and program capacity levels. It is not possible to define the need for weatherization assistance objectively and in a unique manner, and this ambiguity is the main reason why the WAP allocation mechanism is expected to remain a lively topic of debate and contention. (C) 2003 Elsevier Ltd. All rights reserved.