2008 Annual Report of the SSI Program

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The Supplemental Security Income (SSI) program is a nationwide Federal assistance program adminis­tered by the Social Security Administration (SSA) that guarantees a minimum level of income for needy aged, blind, or disabled individuals. This section presents highlights of recent SSI program experience, a summary of important changes to the program in the last year, a discussion of current issues facing the SSI program, and a summary of the key results from the 25-year projections.
SSI program experience during the past year included the following:
During calendar year 2007, 1.9 million individuals applied for SSI benefits based on blindness or dis­ability, an increase of 1 percent over 2006. An additional 143 thousand applied for SSI benefits based on age, a decrease of 5 percent from 2006. In 2007, 844 thousand applicants were awarded SSI bene­fits, a decrease of less than 1 percent as compared to the 849 thousand awarded benefits in 2006.
On average during calendar year 2007, 7.0 million individuals received Federal SSI benefits on a monthly basis. This group was composed of 1.1 million aged recipients, 5.9 million disabled recipi­ents, and 68 thousand blind recipients. Of the 5.9 million blind or disabled recipients, 0.8 million were aged 65 or older. During the year, 7.9 million aged, blind, or disabled individuals received at least 1 month’s Federal SSI benefit.
On average during calendar year 2007, 2.3 million individuals received Federally-administered State supplementary payments on a monthly basis. This group was composed of 0.6 million aged recipi­ents, 1.7 million disabled recipients, and fewer than 50 thousand blind recipients. During calendar year 2007, 2.5 million individuals received at least 1 month’s Federally-administered State supple­mentary payment.
State expenditures for Federally-administered supplements, excluding fees for Federal administration, totaled $4.3 billion in calendar year 2007, up from $4.2 billion in 2006.
The percentage of SSI recipients participating in direct deposit reached 58 percent in fiscal year 2007. SSI recipient participation in direct deposit has increased gradually in recent years after experiencing a period of sharp growth when it more than doubled from 24 percent in 1995 to 49 percent in 2000.
In January 2008, 7.4 million individuals received Federally-administered monthly SSI benefits aver­aging $476. Of these, 7.1 million received monthly Federal SSI payments averaging $445, and 2.3 million received monthly State supplementation payments averaging $156.
Since the 2007 SSI Annual Report was transmitted to the President and Congress on May 30, 2007, the following legislative changes were made to the SSI program:
Public Law 110-161, enacted December 26, 2007
Provides certain Iraqi and Afghan aliens with special immigrant status, as described in section 101(a)(27) of the Immigration and Nationality Act. As special immigrants, these Iraqi and Afghan aliens are eligible for resettlement assistance, entitlement programs, and other benefits available to refugees admitted under section 207 of such Act (admission of refugees in emergency situations) for a period not to exceed 6 months.
Public Law 110-181, enacted January 28, 2008
Provides certain Iraqi aliens who have provided service to the United States with special immigrant status, as described in section 101(a)(27) of the Immigration and Nationality Act. As special immigrants, these Iraqis are eligible for resettlement assistance, entitlement programs, and other benefits available to refu­gees admitted under section 207 of such Act (admission of refugees in emergency situations) for a period not to exceed 8 months.
Public Law 110-185, enacted February 13, 2008
Provides that a credit or refund (rebate) under section 6428 of the Internal Revenue Code, as amended by the Economic Stimulus Act of 2008, will not be taken into account as income for purposes of SSI, nor con­sidered as a resource during the month of receipt or the following 2 months.
During the past year, the SSI program has continued to ensure that the neediest of aged, blind, and dis­abled Americans are provided with a minimum-level income for food, clothing and shelter. In administer­ing the program, SSA has continued to respond to those in need—in the field offices, on our 1-800 phone number, and in the communities—in order to verify that low-income Americans have access to this vital assistance of “last resort.” In January 2008, for example, SSA verified eligibility and certified payment of more than $3.7 billion to 7.4 million Federally-administered SSI recipients.
At the same time, however, the Agency’s ability to manage the labor-intensive SSI program has been threatened by years of funding shortages. Since FY 2001, SSA’s annual appropriation has averaged about $150 million less each year than the President’s request. In addition, SSA’s staffing levels are at their low­est since 1972—before the SSI program even began.2 This severe funding shortage and the resulting decrease in field office personnel may soon threaten SSA’s ability to administer the program.
Delayed Use of Program Integrity Tools
Resource shortages have required the Agency to make difficult choices as to what work gets done and what work remains undone. Stewardship-related workloads, such as nondisability redeterminations (peri­odic reviews that verify a recipient’s living arrangement, income, and resources) and continuing disability reviews (or CDRs—reviews that verify a recipient is still disabled according to Agency rules), have been steadily cut back in order to maintain frontline services, such as processing initial claims and reissuance of Social Security cards.
For example, during the period FY 2004 through FY 2007, SSI nondisability redeterminations processed by the Agency have dropped by over 50 percent—from 2.3 million in FY 2004 to 1.0 million in FY 2007. Historically, SSA has cited an estimated savings of $7 in program benefits for every $1 spent conducting additional redeterminations above our base workload volume. Thus, this drop in the number of redetermi­nations suggests the potential loss of over $3 billion in program dollars (which are general revenue funds).3 For the FY 2009 President’s budget, actuarial estimates reflect a program savings of approxi­mately $10 for every $1 spent conducting additional redeterminations above our base workload volume. The revised return on investment ratio provides an even grater rationale for conducting these important reviews.
During this same period, the total number of CDRs4 processed by the Agency has also dropped by more than 50 percent—from a high of 1.6 million in FY 2004 to less than 800 thousand in FY 2007. To some extent the effects of the reduced number of CDRs conducted has been ameliorated by better targeting of disabled beneficiaries whose medical condition may have improved, but improved processes can only par­tially mitigate the effects of reduced funding. SSA has historically saved an estimated $10 in lifetime pro­gram benefits for every $1 spent conducting CDRs; thus this reduction in CDR processing has potentially cost the taxpayer significant amounts of SSI program dollars.
Reduced Payment Accuracy
Payment accuracy, as measured by internal quality reviews, is perhaps SSA’s most comprehensive mea­sure of program performance. The SSI program’s accuracy rate has traditionally been relatively high com­pared to other Federal and State means-tested programs, benefiting from SSA’s organizational culture of getting the right benefit to the right person at the right time. In 2007, for example, Office of Management and Budget (OMB) analysis found SSI’s improper payment rate to be less than half as much as exists in the Medicare fee-for-service, Earned Income Tax Credits (EITC), or Medicaid fee-for-service programs.5
However, SSI payment accuracy is also beginning to reflect the strain of years of underfunding. Improper SSI overpayments are climbing in response to a five-year decline of stewardship-related activities. In FY 2006, the most recent year for which SSA has complete statistics, SSI payment accuracy (measured as per­centage free from overpayments) has dropped from 93.6 percent (in FY 2005) to 92.1 percent—a statisti­cally significant change. 1 Within the five prior fiscal years, the accuracy rate had never been below 93 percent.
Decline in Collection Arrangements to Recover Debt
Just as the decreased stewardship focus has increased SSI overpayments, efforts to maintain frontline ser­vice have also eroded SSA’s ability to collect this debt. In spite of advancements in systems and methods used to collect overpayments (such as cross-program recovery of SSI debt from Social Security payments, reporting to credit bureaus, and Federal tax refund offsets), lessened funding of SSI’s debt collection activ­ity has led to decreased percentages of debt in payment arrangements. Over the past five fiscal years (FY  2003–FY 2007) the percentage of SSI debt SSA is actively recovering has dropped from a high of 55 percent in FY 2003 to a low of 52 percent in FY 2007.1
Ongoing Challenges
As disturbing as these administrative trends appear, they are only one element of a funding and demo­graphic challenge that faces SSA as a whole. A growing beneficiary base, combined with limited funding and the smallest Agency workforce in more than 30 years, have stretched SSA’s resources to their limits. Over the next two decades, nearly 80 million Americans will become eligible for Social Security bene­fits—more than 10,000 per day. Adding to this challenge, SSA has already absorbed substantial non-core workloads resulting from the Medicare Modernization Act, and will possibly be tasked with significant new work under various immigration proposals pending with the Congress. Against this backdrop, SSA is also struggling to reduce the huge disability hearing backlog that has resulted from years of underfunding.
These problems will require creative solutions, and SSA is committed to working with the Congress and the Executive Branch in order to find them. SSA initiatives to manage larger workloads with fewer resources include:
Expanded telephone service Over the past decade, SSA has expanded automated services to effi­ciently serve the public. These upgrades have allowed nearly 17 million calls per year to be addressed solely through automation, freeing live telephone agents to address more complex questions.
Increased Internet capability SSA continues to expand and simplify online services, allowing beneficiaries to conduct more business from our SocialSecurity.gov website. During FY 2007, SSA received nearly 2.9 million transactions via the Internet. This increased access pattern has continued into the present year, with the first quarter of FY 2008 showing a 23 percent growth in Internet trans­actions as compared to the first quarter of FY 2007.
Improved automation of workloads SSA software enhancements have continued to reduce the percentage of claims and post-entitlement work that must be manually processed. For example, pro­cessing of SSI redeterminations and CDRs has become less labor intensive with the development of specific programs that generate required forms, track workloads, and automate systems inputs.
However, while productivity improvements are a part of the solution, there are limitations to gains that can be realized through automation. The simple truth is that SSA requires a certain level of resources to oper­ate effectively. Because of SSA’s large infrastructure (including over 1,400 field and hearings offices in cities and towns across America), mandatory cost increases such as rent, guards, postage, pay raises, and employee benefits require a minimum administrative budget increase every year of at least $400 million—far greater than what the Agency has received in recent years.
The SSI program has served as a vital safety net to millions of Americans for over 30 years, and the need for such last-resort assistance is unlikely to change in the coming decades. Because of the sheer amount of program outlays from general revenues, SSA considers proper oversight of this means-tested benefit to be critical. However, we are already seeing signs of how this stewardship can deteriorate in an environment where insufficient resources force the Agency to choose between payment timeliness and accuracy.
SSA remains dedicated to the most efficient and effective SSI administration possible. However, it must be acknowledged that, as a nation, we need to make difficult decisions as to our priorities. Given the proper resources, SSA can continue to maintain the high level of SSI payment accuracy that legislators and the public expect from us. But without this investment, administration of the SSI program will likely suffer from the ongoing imbalance between Agency resources and workload demands.
The major findings in the 25-year projections prepared for this report are summarized below:
Following small declines in the SSI recipient population in the late 1990s due to the combined impact of Public Law 104-121 and Public Law 104-193, modest growth in the SSI rolls resumed in 2000, and is expected to continue throughout the projection period largely due to the growth in the U.S. popula­tion. By 2032, the Federal SSI recipient population is estimated to reach 9.5 million. Expressed as a percentage of the total U.S. population, the number of Federal SSI recipients is projected to increase slightly from 2.28 percent of the population in 2007 to 2.53 percent by 2032 due largely to the chang­ing age distribution of the population.
Federal expenditures for SSI payments in calendar year 2008 are estimated to increase by $2.3 billion to $41.8 billion, an increase of 5.7 percent from 2007 levels. In constant 2008 dollars, SSI program outlays are projected to increase to $55.4 billion in 2032, a real increase of 1.2 percent per year.
When compared to the Gross Domestic Product (GDP), Federal SSI expenditures are projected to decline over time, from the current level of 0.29 percent of GDP in 2007 to 0.25 percent of GDP by 2032.

This percentage is artificially high because fiscal year 2007 expenditures included only 11 months of payments, since the payment due on October 1 of the fiscal year was paid in fiscal year 2006. If 2007 expenditures had included the usual 12 months of payments, administrative expenses would have been an estimated 7 percent of payments.

FY 2008 staffing is nearly 28,000 full-time equivalents (FTEs) below SSA’s historic high of 87,277 in 1978.

FY 2003 – FY 2007 performance data on CDRs, redeterminations, payment accuracy, and debt collection is from SSA’s Performance and Accountability Report, November 2006 and November 2007.

The number of these CDRs involving SSI benefits dropped by more than 60 percent from FY 2004 to FY 2007.

Office of Management and Budget report, Improving the Accuracy and Integrity of Federal Payments, January 31, 2008. Medicaid fee-for-service improper payments were rated at 23.5 percent of total payments. For EITC, the error rate was 30.6 percent, and for Medicare fee-for-service, 19.6 percent. OMB rated SSI improper payments at 7.4 percent of total payments.

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