COLUMN-Ex-heads of U.S. Social Security Administration offer plan to fix agency's customer service

(The opinions expressed here are those of the author, a columnist for Reuters.)

By Mark Miller

CHICAGO, June 5 (Reuters) - A worsening customer service crisis at the Social Security Administration has prompted three of its former commissioners to urge the U.S. Congress to fix the annual budgeting process that has starved the agency of the resources it needs to do its job.

A letter calling for administrative budget reforms signed by the former commissioners - two appointed by Democratic presidents, and one by a Republican - will be delivered to congressional leadership later on Wednesday.

An advance copy of the letter was provided to this column by the authors, and by advocates pushing for reform of the Social Security budget process. It will be sent to 19 key lawmakers, including the leadership of both parties and the chairs and ranking members of all the key congressional committees controlling budget, appropriations and finance.

To read the letter and view the list of recipients, see: (https://bit.ly/2KnIt3C)

The Social Security beneficiary rolls are growing quickly as the nation ages - this year, the agency is expected to pay $1.1 trillion in benefits to 69 million recipients of retirement and disability benefits, and Supplemental Security Income. The agency forecasts that its beneficiary rolls will increase 43% over the next two decades.

But Congress cut the agency’s budget nearly 11% between fiscal years 2010 and 2019, after adjusting for inflation, according to the Center on Budget and Policy Priorities, while the number of beneficiaries grew by more than 16%. (For fiscal 2020, the House Appropriations subcommittee has approved legislation that includes a slight $300 million increase in the agency’s budget, to $11.4 billion.)

Social Security has responded to the cuts by closing 67 of the field offices that provide critical service to the public since 2010. Wait times have soared on its toll-free phone line, and there is a very large backlog of disability insurance claims waiting for decisions on appeal.

The Social Security administrative budget is funded through the same payroll taxes that fund benefits. Currently, workers and employers split a 12.4% tax. Social Security benefits were removed from the federal budget under legislation enacted in 1990, but administrative expenses continued to be counted due to an interpretation of the legislation by the Office of Management and Budget.

Since passage of the 2011 Budget Control Act, which places caps on nondefense discretionary spending, the Social Security budget has been forced to compete with other federal spending priorities - for example, the National Institutes of Health. The struggle to manage federal spending under those caps is starting to heat up again as Congress begins turning its attention to the budget for next year. (https://reut.rs/2EQGst8)

THE PROBLEM WITH CAPS

The trio of former commissioners is proposing a legislative fix to the problem. The letter to be sent to Congress on Wednesday is signed by Ken Apfel, who served as commissioner during the Clinton administration, Jo Anne Barnhart, who was nominated by President George W. Bush and served from 2001 to 2007; and Carolyn Colvin, who served from 2013 to 2017 during the Obama administration.

The former commissioners propose that Congress eliminate the requirement that the Social Security administrative budget be included in the caps. Congressional appropriations committees would still approve the agency's budget. "But importantly," they write, "the Committees would be able to approve the funding that would be needed for the Social Security Administration to provide adequate service to the public."

The letter notes that the agency operates very efficiently - since 1989, administrative expenses have been less than 1% of its budget. Social Security also has moved to improve efficiency through initiatives aimed at serving the public online and via its toll-free number, and by beefing up program integrity programs aimed at rooting out fraud.

But the commissioners note that 858,000 people were waiting for appeals hearings before administrative law judges on disability benefit applications in fiscal 2018. In the same year, the average wait time for callers to the Social Security toll-free number was 24 minutes, up from 13.6 minutes in fiscal 2016 - and 15% of callers received a busy signal. Social Security’s processing centers, which handle claims after beneficiaries are determined to be eligible, face an enormous backlog of 2.9 million cases this year.

In an interview, I asked Barnhart about the decision to cooperate across party lines - somewhat rare these days - on the proposal by the three commissioners. She noted that Congress made the Social Security Administration an independent agency in 1995 - a signal that it wanted to remove it from politics. “Social Security touches every single American in the course of their lives, and political party has nothing to do with public service,” she said.

“Social Security has a two-pronged standard for its performance - providing benefits in a timely and accurate way,” she added. “Accuracy is really not an issue, and Congress has actually allocated additional funding for program integrity activities in recent years, so the agency is doing a really good job there. It’s timeliness that is really falling short - people who have paid into the system are really getting deficient public service. It has been a problematic situation for a while, and it is trending in the wrong direction.”

The ex-commissioners' proposal to remove the agency from budget caps is moderate compared with proposals by progressives to fix Social Security’s budget. (https://reut.rs/2HJwldz) Two key sponsors of Social Security expansion legislation - Senator Bernie Sanders and Representative John Larson - have proposed that Social Security’s administrative budget be set automatically at 1.5% of benefits paid.

Barnhart argues for maintaining annual congressional approval of the agency’s budget. “With the fluctuations in claims that happen over time, locking yourself into something specific like that doesn’t allow for variation,” she said. “And frankly, it undermines the ability of Congress to conduct oversight. This isn’t about giving the agency a blank check.”

Mark Miller is a journalist and author who runs the RetirementRevised.com website. For more from Mark Miller, see http://link.reuters.com/qyk97s. Follow us on Twitter @ReutersMoney or at http://www.reuters.com/finance/personal-finance (Reporting and writing by Mark Miller in Chicago Editing by Matthew Lewis)