Statement by Scott Patterson,
Acting Director of Evaluation and Technical Service, SSA/OIG,
before the Representative Payee Advisory Committee

February 15, 1996

Assessment of Payee Risk
Testimony Before the
Representative Payee Advisory Committee


Good morning, Madame Chair and members of the Representative Payee Advisory Committee. I am Scott Patterson, Acting Director of Evauation and Technical Services, for the Office of the Inspector General of the Social Security Administration (SSA). I am joined by Dan Blades, Deputy Inspector General, and Deborah Harvey and Brian Pattison, senior evaluators from our San Francisco office. The representative payee program is an important service to beneficiaries that SSA must assure is administered effectively.


The SSA administers two programs under the Social Security Act--title II (retirement, survivors, and disability insurance) and title XVI (supplemental security income). These two programs provide monthly benefit payments of about $30 billion to approximately 50 million beneficiaries who are aged, disabled, or survivors. There are approximately 6 million individuals, or slightly over 10 percent, who cannot handle their own finances. The SSA is authorized to appoint representative payees to assist beneficiaries. Payee responsibilities include:

  • frequently monitoring the beneficiary's well-being for food, shelter, clothing, medical care, and personal needs;
  • notifying SSA of situations that affect the beneficiary's entitlement to benefits;
  • submitting an annual accounting to SSA showing how the payee used the benefits;
  • answering questions on the accounting form about custody and conserved funds; and
  • informing SSA of changes in the payee's own circumstances that would affect the payee's performance.

According to SSA, it costs approximately $150 million a year to administer the representative payee program, of which about $60 million is for the annual accounting process.

The SSA requested that we provide information to assist them in addressing the requirements for annual accounting. Our study's objective is to (1) assess how different categories and types of payees handle their responsibilities and (2) determine the relative risks of improper use of benefits by the category and type of representative payees. Currently, SSA believes that some categories and types of representative payees are less likely to misuse benefits or fail to fulfill their responsibilities than others. The SSA's · assumptions are (1) parents, acting as representative payees for their minor children, present the lowest risk and (2) nonrelative, noncustodial payees present the highest risk.

BeforeI discuss our preliminary results, I will briefly describe our study's methodology. I believe it will show the depth and objectivity of the fieldwork. The extensive fieldwork will strengthen the potential impact of our results on representative payee accounting.


Our sample size was designed to analyze and describe the relative risks of both the universe of payees and many categories and types of representative payees. In September 1994, SSA prepared a computer file of titles II and XVI beneficiaries with representative payees who received benefits between October 1993 and September 1994. From this file, we extracted a sample of 3,010 representative payee cases for our study. The cases were equally divided for each of the following:

1. relatives and nonrelatives,

2. custodial and noncustodial payees and

3. title II and title XVI programs.

We then mailed the SSA accounting forms to the selected payees. When payees completed the forms and returned them, we analyzed the information and sent the case to our study interviewers. We then also sent non-responder cases (payees who did not return the form) to the interviewers. More than 235 study interviewers conducted fieldwork from October 1994 through January 1996.

As of January 31, 1996, we had received 3,004 completed cases (or 99.8 percent of 3,010 cases) from the study interviewers. We are now analyzing these data and want to share some preliminary results. However, we have not yet weighted the preliminary results nor have we determined the statistical significance of these results.


We generally found that the custodial relationship has a greater impact on payee performance and use of funds than the assumption that risk is based on relationships between payees and beneficiaries. Noncustodial payees were more likely to exhibit poor performance than custodial payees. However, custodial payees were more likely to improperly use benefits than noncustodial payees. The current accounting process often failed to identify these payees.

Custodial and noncustodial payees include parents, other relatives, and nonrelatives such as institutions, agencies and their officials, and friends.


We identified approximately 150 of 3,010 cases exhibiting poor performance. Of the 150 payees, 60 were custodial payees and 90 were noncustodial payees. We relied on the interviewers to identify poor performance. The interviewers identified poor performance based on SSA's stated responsibilities for representative payees. They found that payees:

1. failed to manage benefits--they turned the benefits over to someone else to perform the payee task or gave the benefits directly to the beneficiary;

2. failed to complete an accounting form--these payees were often volume payees and repeatedly failed to complete SSA's accounting form each year; and

3. failed to report changes in beneficiary's circumstances--these failures often resulted in overpayments.

Use of Funds

We identified at least 36 of 3,010 cases, or about 1 percent, exhibiting possible improper use of funds. According to SSA's records, 22 were custodial and 14 were noncustodial payees. However, we later found that only 11 of the 36 payees were custodial payees. We relied on the interviewers to identify payees who had improperly used funds. They found that these payees did not use the benefits for the beneficiary. For example,

  • a mother falsely claimed custody of her son when she applied for his title II and, later, title XVI benefits. However, she never contributed to the care of this child. The true custodian paid the entire cost of care since she brought the child home from the hospital when he was 3 days old; and
  • a State social service agency commingled funds for all beneficiaries in their care and could not properly account for the use of funds for each beneficiary.


We identified two other problem situations--a volume payee and beneficiaries in prison.

Problem Situation #1:

We identified one problem volume payee--54 of 3,010 cases in our sample. This State social service agency serves as payee for more than 2,000 child beneficiaries. We found that this agency:

  • failed to complete and return the accounting form;
  • failed to inform SSA of important changes in beneficiaries' circumstances

    where and with whom the beneficiary is living, and

    conserved funds which exceeded resource eligibility limits; and

  • lacked sufficient records to identify how beneficiary's funds were used--an inability to provide us with financial information about a specific beneficiary because the agency had no record of having received benefits for the individual.

Our office has initiated a financial audit of this agency.

Problem Situation #2:

We identified approximately 30 of 3,010 cases in which the beneficiary was in prison during the accounting period. We also found that their payees often failed to inform SSA of ·the change in the beneficiaries' circumstances so that SSA could suspend benefits. Consequently, these beneficiaries were overpaid.

The Annual Accounting Process

The current accounting process does not effectively detect possible problem payees. From the 150 cases of poor performance and 36 cases of improper use of funds, we found cases in which:

  • the payee filled out the accounting form in a manner that produced no further contact,
  • problems with the accounting form could be cleared with a simple telephone call, and
  • the payee did not return the accounting form--although this is an indication of potential problems, we found that workloads related to processing non-responding payees has low priority.

After we complete an in-depth analysis of all the data we collected, we expect to report our results to the Commissioner of Social Security. We appreciate the opportunity to share this very preliminary look at our data. At this time, we would be happy to respond to any questions that the committee may have for us.