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Cuts Weakening Social Security Administration Services

Policymakers Can Address Through 2017, 2018 Funding

UPDATED
March 15, 2017

Years of Social Security Administration (SSA) funding cuts have hampered the agency’s ability to serve the American people, but President Trump and Congress can begin to address the problem when they turn to funding the government for the rest of fiscal year 2017 and for 2018. 

The current 2017 spending measure, set to expire at the end of April, froze funding for basic SSA functions like staffing field offices and call centers at last year’s level.  The final full-year appropriation bill for 2017 needs to increase resources for these basic operations as well as continue the funds the temporary spending bill provided for hiring administrative law judges and the support staff needed to reduce the backlog in disability hearings.

SSA’s need for additional resources will not end in 2017.  SSA also will need funding in 2018 that keeps pace with inflation and increasing workloads, as baby boomers continue to age and the numbers of applicants and beneficiaries continue to grow.

SSA’s core operating budget shrank by 10 percent from 2010 to 2016... even as the demands on SSA reached record highs.SSA’s core operating budget shrank by 10 percent from 2010 to 2016 in inflation-adjusted terms even as the demands on SSA reached record highs.[1] The freeze on SSA’s operating funds in the 2017 continuing resolution (CR) only stressed the agency further. Anticipating the CR, SSA imposed a hiring freeze in the spring of 2016 and then eliminated nearly all overtime when the CR began.  With the hiring freeze, SSA isn’t filling positions that open up due to attrition, so the staff is steadily shrinking.  Due to inadequate funding, fewer people are serving the public, they’re working shorter hours, and service is deteriorating. Beneficiaries and taxpayers are paying the price:

  • SSA has lost 1,400 field staff since the hiring freeze began. As a result, 18,000 field office visitors every day must wait more than an hour for service. Nearly half of visitors must wait at least three weeks for an appointment.
  • SSA’s teleservice centers have 450 fewer agents than they need to handle the 37 million calls they receive each year. As a result, most callers to SSA’s national 800 number don’t get their questions resolved. The average wait for an agent is 18 minutes, and nearly half of callers hang up before connecting. Another 13 percent of callers get busy signals.
  • SSA has been able to hire more staff to address appeals for disability benefits, in part due to the $150 million in dedicated funding that policymakers provided for this purpose in 2017.  As a result, SSA has made initial progress in reducing its record backlogs. But that progress will disappear unless the President and Congress continue to provide adequate funding in the final 2017 appropriation bill and in future years.
  • The hiring freeze and cutbacks in overtime have hampered SSA’s ability to complete behind-the-scenes work, leading to growing delays in processing applications or changing benefits when a beneficiary’s circumstances change. This creates unnecessary hardship for beneficiaries. It also costs taxpayers, since it allows overpayments to build up and delays their collection — increasing the risk that they will never be recovered. By the end of 2016, the number of pending behind-the-scenes tasks had more than doubled.

During his campaign, President Trump repeatedly promised to protect Social Security — saying, for example, “we’re not going to hurt the people who have been paying into Social Security their whole life.”[2] Protecting Social Security benefits, however, isn’t sufficient. SSA cuts are hurting hard-working people who have earned benefits and paid for high-quality service.  The money to administer Social Security comes from workers’ contributions to Social Security — not from the general treasury — but policymakers limit the amount SSA may spend.[3] 

Budget Cuts Squeeze Social Security Even as Workloads Reach Record Highs

SSA’s operating budget shrank 10 percent from 2010 to 2016 in inflation-adjusted terms, just as the demands on SSA reached all-time highs as baby boomers reached their peak years for retirement and disability, as Figure 1 shows.  Budget cutting — due mostly to the 2011 Budget Control Act’s (BCA) tight caps on annual appropriations, as further reduced by sequestration — has squeezed SSA’s operating budget from an already-low 0.9 percent of overall Social Security spending to just 0.7 percent, forcing the agency to do more with much less.[4]  The cuts have hampered SSA’s ability to perform its essential services, such as determining eligibility in a timely manner for retirement, survivor, and disability benefits; paying benefits accurately and on time; responding to questions from the public; and updating benefits promptly when circumstances change.

Figure 1
Social Security Administration Faces Increased Workload with Fewer Resources

The CR that funds the government through April 28, 2017, provides SSA with funding that’s nearly equal to its 2016 levels for core operating expenses.[5] SSA, however, serves a growing population, so flat funding forces the agency to do more with less. SSA now serves 369,000 more beneficiaries than it did at the end of fiscal year 2016.[6]  In addition, SSA’s costs — for salaries, benefits, guard services, rent, and so on — grow due to inflation, which flat funding also doesn’t cover.  Consequently, the agency imposed a hiring freeze starting in May 2016, which has already meant a loss of 1,400 field staff.  And, SSA severely restricted overtime, reducing costs but leading to benefit processing delays.

On the other hand, the CR provides dedicated additional funding ($150 million on an annualized basis) for SSA to hire the staff needed to reduce the backlog in hearings for disability benefits. After the backlog climbed every month for years — ultimately reaching a record high in December 2016 — SSA began to reverse the trend, reducing the number of pending cases in both January and February 2017.  For the progress to continue, policymakers must include the full $150 million in dedicated funding in the full-year SSA funding bill.

The final 2017 appropriation bill could include an across-the-board cut to federal agency operating funds — as the CR does, though it could be larger in the final bill to offset increases in programs Congress decides need additional funding — that would further reduce SSA funding.  Even a small cut to SSA’s operating budget would have a noticeable negative impact on agency operations. The agency has already cut significantly to operate under extremely tight budgets; along with the hiring freeze, closed field offices, and shortened field office hours, it also has increased automation and reduced the number of Social Security statements that it produces and disseminates. Further cuts would force the agency to furlough employees or shutter more field offices.

Budget Cuts Force Field Office Clients to Wait

The public can conduct business at SSA field offices in almost every community in America. Social Security field staff assisted 43 million visitors in 2016.[7]  People visit field offices to apply for benefits, replace lost Social Security cards, report changes in their names (due to a marriage or divorce, for example), and other reasons. 

With the hiring freeze, SSA has lost 1,400 field office staff.[8]  Unless SSA gets adequate funding to end its freeze, staff losses will keep mounting. Since 2010, SSA has lost 3,200 field staff.[9]  In addition, budget cuts forced SSA to cut overtime dramatically when the CR went into effect, creating additional processing delays.[10] 

The budget cuts and hiring freeze have taken a toll on customer service.  Field offices must serve nearly the same number of visitors with fewer staff (and in fewer hours, because of previous cuts to field office hours).[11]  Nearly 18,000 visitors to SSA’s field offices waited more than an hour for service each day in December 2016.[12]  Almost half of visitors must wait more than three weeks for an appointment — and an increasing number must wait more than seven weeks.  A quarter of calls to field offices go unanswered, an increase over last year.  As staff losses snowball, customer service will worsen.

Most Callers to SSA Don’t Resolve Their Questions

SSA’s national toll-free telephone number is the gateway to the agency’s services, fielding 37 million calls in 2016. [13] Agents take claims for retirement benefits, set up appointments, and answer questions about SSA’s programs; automated services are also available 24 hours a day, seven days a week.  

As of December 2016, SSA’s teleservice centers have 450 fewer agents than they need to handle the 37 million calls.[14] If the hiring freeze continues throughout 2017, SSA will end the year with 800 fewer agents than it needs. As a result, busy rates and hold times will continue climbing — and fewer people will get the service they need.

Figure 2
Social Security Administration's Phone Service Has Deteriorated

Due to staff shortages, most callers to SSA’s 800 number don’t get their questions resolved.  The average wait for an agent is 18 minutes (see Figure 2), and nearly half of callers hang up before connecting. Another 13 percent get busy signals. In 2010, waits averaged about 3 minutes and busy rates were 5 percent.[15] Phone service has worsened considerably since last year.

Fragile Progress on Reducing Record-High Disability Appeals Backlog

SSA pays disability benefits through the Social Security Disability Insurance (DI) and Supplemental Security Income (SSI) programs to workers with impairments severe enough that they can’t support themselves and their families.[16] The average processing time for initial claims has held fairly steady in recent years at three to four months.  Denied applicants who appeal, however, must typically wait at least another year before an administrative law judge decides their case.

With rising workloads and funding cuts, the hearings backlogs mounted. [17]  The number of pending cases, which was shrinking before the funding cuts, climbed nearly 60 percent, as Figure 3 shows, from about 700,000 in 2010 to over 1.1 million in December 2016 — an all-time high.[18]  Meanwhile, the average wait for a hearing decision rose 50 percent, to 18 months in 2016.[19] Waits are as high as two years in some areas.[20]

Figure 3
Disability Insurance Appeal Backlogs at Record High

The hearings backlog has a high human cost.  Waiting a year and a half for a final decision, as a typical appellant does, causes financial and medical hardship.  Some applicants lose their homes or must declare bankruptcy while waiting.  Their health often worsens, and some die.[21] 

The 2017 CR provides SSA with $150 million in dedicated funds (on an annualized basis) to reduce the hearings backlog — but the agency’s initial progress won’t continue if the President and Congress don’t provide sustained and adequate funding. SSA has developed a multi-year plan to eliminate the backlog and cut wait times for hearings in half.[22]  It requires hiring 250 new judges in 2016, 2017, and 2018.  Along with judges, SSA must hire staff to write decisions, schedule hearings, compile files, and perform the other tasks needed to close an appeal.  More hearings also will require more contracts with medical experts, vocational experts, and interpreters.  In addition, the plan calls for management improvements, sophisticated data analytics, and IT investments.

As it begins to implement its plan to reduce the backlogs, SSA has hired more disability appeals staff.  In 2016, it also hired 264 judges, but it couldn’t hire the necessary staff to support them because of budget constraints.  After receiving the CR’s dedicated funding, SSA hired more hearings office staff in 2017.[23]

SSA’s initial investments in reducing the disability backlog are beginning to pay off.  The backlog climbed every month for years before reaching its December 2016 record high, but SSA then began to reverse the trend, reducing the number of pending cases in both January and February 2017.

Even if policymakers provide the full $150 million in dedicated funding for 2017, however, that will only enable SSA to hire 175 new judges, 75 short of what’s required by SSA’s plan, slowing progress toward eliminating the backlog.[24]  Implementing the 2018 phase of the plan will also require sufficient funding.

Behind-the-Scenes Delays Hurt Beneficiaries, Cost Taxpayers

In addition to providing visible, front-line service, SSA does a lot of behind-the-scenes work to pay benefits accurately and on time. SSA’s payment service centers handle tasks such as awarding widows’ benefits when their spouses die, issuing back payments for DI beneficiaries who had to wait for a hearing, and adjusting benefits for retirees and disabled workers with earnings.  They also handle overflow work from field offices — which is increasingly important when budget cuts hamper field office workflow.[25]

Because of budget cuts, beneficiaries wait far too long — four months, on average — for SSA to complete these tasks, which are necessary to assure accurate and timely benefit payments. For example, a widow may wait months after her husband dies to begin receiving her survivor’s benefit. A disabled worker who promptly reports his earnings when he returns to work may receive months of overpayments, which he will then have to repay.  By the end of 2016, the number of pending behind-the-scenes tasks had more than doubled.

Behind-the-scenes backlogs also cost taxpayers. Shortchanging SSA’s administrative funding allows overpayments to build up and delays their collection — increasing the risk that they will never be recovered, despite SSA’s best efforts.

Policymakers Can Spare Beneficiaries and Taxpayers Further Harm

With more investment, SSA can continue to reduce its backlogs and improve service. Failing to invest in customer service, in contrast, is penny-wise and pound-foolish.  As President George W. Bush’s Social Security Commissioner, Michael Astrue, told the Senate in 2012, “At some point, we will have to handle every claim that comes to us, every change of address, every direct deposit change, every workers’ compensation change, every request for new or replacement Social Security cards.  The longer it takes us to get to this work, the more it costs to do.”

End Notes

[1] For a more in-depth analysis, see Kathleen Romig, Budget Cuts Squeeze Social Security Administration Even as Workloads Reach Record Highs, Center on Budget and Policy Priorities, June 3, 2016, http://www.cbpp.org/research/retirement-security/budget-cuts-squeeze-social-security-administration-even-as-workloads.

[2] Stephanie Condon, “The gloves come off in the CBS News Republican debate,” CBS News, February 14, 2016, http://www.cbsnews.com/news/highlights-and-analysis-the-gloves-come-off-in-cbs-news-republican-debate/.

[3] The Limitation on Administrative Expenses (LAE) account of the Labor-HHS-Education appropriation provides SSA’s administrative budget.  The LAE account is funded by the Social Security and Medicare trust funds for their share of administrative expenses, by the general fund for Supplemental Security Income’s (SSI) share of administrative expenses, and through user fees. 

[4] All dollar figures refer to inflation-adjusted amounts by fiscal year.  We did not include the $150 million appropriation in 2016 for the renovation of SSA’s Altmeyer building as part of its core operating budget since those funds are not available for administering the program.  Along with the core funding addressed in this paper, recent appropriation bills provide extra funds exclusively for program integrity work, a special adjustment that lies outside the Budget Control Act’s annual spending caps.

[5] The continuing resolution includes an across-the-board cut of 0.1901 percent. The funding for SSA’s Limitation on Administrative Expenses account is $21 million less than in 2016.

[6] SSA served 65.782 million Social Security and SSI beneficiaries in September 2016, and 66.151 million in January 2017. SSA, Monthly Statistical Snapshot, Table 1, https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/2017-01.html.

[7] SSA, Fiscal Year 2016 Agency Financial Report, https://www.ssa.gov/finance/2016/Full%20FY%202016%20AFR.pdf.    

[8] There are about 1,200 field offices nationwide. SSA, Annual Statistical Supplement, 2016, Table 2.F1, https://www.ssa.gov/policy/docs/statcomps/supplement/2016/2f1-2f3.html.

[9] Field office staff fell from 30,600 at the end of fiscal year 2010 to 28,400 at the end of fiscal year 2016.  As of February 17, 2017, staffing fell to 27,400. Sources: SSA, Field Office Historic Staffing; National Council of Social Security Management.

[10] SSA, SSA Budget Update, December 2016.

[11] After the 2011 budget cuts, SSA cut back on field office hours. Currently, SSA field offices are open only 31 hours a week.

[12] SSA, The State of Services, December 2016.

[13] SSA, Fiscal Year 2016 Agency Financial Report, https://www.ssa.gov/finance/2016/Full%20FY%202016%20AFR.pdf.

[14] SSA, The State of Services, December 2016.

[15] SSA, Annual Performance Report, 2014-2016, http://www.ssa.gov/agency/performance/2016/FINAL_2014_2016_APR_508_compliant.pdf.

[16] For Social Security and SSI, disability is defined as the inability to earn above the substantial gainful activity (SGA) threshold ($1,170 per month in 2017) because of a medically determinable physical or mental impairment(s) which can be expected to result in death or last at least 12 months.

[17] In addition to funding constraints, inefficiencies in the administrative law judge hiring process have hampered SSA’s ability to fill vacancies.  (See Statement of Carolyn W. Colvin, Acting Commissioner, Social Security Administration, Before the House Appropriations Committee, Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, February 26, 2015, https://www.ssa.gov/legislation/testimony_022615.html.)  However, the Bipartisan Budget Act of 2015 addressed the hiring problem, and the Office of Personnel Management is working to implement the improvements.

[18] SSA, Annual Statistical Supplement, Table 2.F9, 2011-2015; SSA Budget Overview, February 2016, https://www.ssa.gov/budget/FY17Files/2017BO.pdf.    

[19] SSA, Hearing Office Average Processing Time Ranking Report, FY 2017 (For Reporting Purposes: 10/01/2016 through 01/27/2017), https://www.ssa.gov/appeals/DataSets/05_Average_Processing_Time_Report.html.

[20] SSA, Hearing Office Workload Data, FY 2017 (For Reporting Purposes: 10/01/2016 through 01/27/2017), https://www.ssa.gov/appeals/DataSets/02_HO_Workload_Data.html

[21] Kathy Ruffing, “No Surprise: Disability Beneficiaries Experience High Death Rates,” Center on Budget and Policy Priorities, April 4, 2013, http://www.cbpp.org/blog/no-surprise-disability-beneficiaries-experience-high-death-rates.

[22] Because processing cases takes time, some appeals will be pending even when the backlog has been eliminated.

[23] Isaac Shapiro, “Federal Employment at Record Lows as a Share of Employment, Population−Yet Trump May Freeze Hiring,” January 12, 2017, Center on Budget and Policy Priorities, http://www.cbpp.org/research/federal-budget/federal-employment-at-record-lows-as-a-share-of-employment-populationyet.

[24] SSA, “Plan to Use the Fiscal Year 2017 Continuing Resolution Anomaly Funding to Reduce the Disability Hearings Backlog.”

[25] Romig, Budget Cuts Squeeze Social Security Administration.