Social Security Administration: Administrative Budget Issues

Social Security Administration: Administrative Budget Issues

Social Security Administration:
Administrative Budget Issues
Christine Scott
Specialist in Social Policy
August 20, 2009
Congressional Research Service
7-5700
www.crs.gov
RS22677
CRS Report for Congress
P
repared for Members and Committees of Congress

Social Security Administration: Administrative Budget Issues

Summary
The Social Security Administration (SSA) administers the Social Security program (Old-Age,
Survivors and Disability Insurance, or OASDI) and the Supplemental Security Income (SSI)
program, and provides administrative support to Medicare and several other federal programs.
Total SSA spending in FY2008 was about $658 billion, about 99% of which was mandatory
spending on benefit payments.
This report focuses on SSA’s administrative spending, which is discretionary and amounts to
about 1% of SSA’s total spending. This funding is provided in the Labor, Health and Human
Services, Education, and Related Agencies appropriations bill. In FY2008, SSA’s total
administrative expenses were about $9.7 billion. About half of this funding was for administering
Social Security (OASDI) benefits, 30% was for administering SSI benefits, 18% was for
providing administrative support for Medicare, and another 1% was for SSA’s Office of Inspector
General (OIG). (The OIG has its own account; all of the other funding is included in the
Limitation on Administrative Expenses (LAE) account.)
Over the past several years, SSA’s administrative responsibilities have increased, creating
pressure on the agency’s budget. Two major factors have contributed to SSA’s workload: (1)
legislative changes related to Medicare and (2) growing benefit rolls, which are expected to
increase further as the baby boomers retire. As the SSA workload has increased, so too have
backlogs of pending disability claims and hearings. Additionally, the number of SSI
redeterminations and Continuing Disability Reviews (CDRs) SSA has completed has declined
substantially. These reviews determine whether current Social Security and SSI beneficiaries
continue to be eligible for benefits, and save money over the long term.
This report includes information on the 2009 stimulus package (The American Recovery and
Reinvestment Act of 2009, P.L. 111-5) and FY2009 omnibus appropriation (P.L. 111-8). For a
more detailed treatment of SSA’s administrative budget and responsibilities, as well as other
issues, please see CRS Report R40207, Social Security Administration: Workloads, Resources,
and Service Delivery, by Christine Scott.
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Social Security Administration: Administrative Budget Issues

Contents
Background ................................................................................................................................ 1
Total SSA Spending .............................................................................................................. 1
SSA’s Administrative Budget ................................................................................................ 1
Requests and Appropriations for SSA Administrative Expenses................................................... 3
Funding for SSA in 2009 Stimulus Package........................................................................... 4
Administrative Workload at SSA.................................................................................................4
SSA’s Administrative Workload ............................................................................................ 4
Increasing Workload ............................................................................................................. 4
Increasing Backlogs .............................................................................................................. 6
Decreasing Program Integrity Activities ................................................................................ 6

Figures
Figure 1. Total Social Security Administration Outlays, FY2008 ................................................. 1
Figure 2. SSA Budget Authority for Administrative Expenses, FY2008 ....................................... 2
Figure 3. Social Security Benefits Claims Processed, FY1996-FY2008 ....................................... 5
Figure 4. Pending SSA Hearings, FY1996-FY2008 ..................................................................... 5
Figure 5. SSI Redeterminations and Continuing Disability Reviews Completed, FY1996-
FY2008.................................................................................................................................... 6

Tables
Table 1. SSA Limitation on Administrative Expenses (LAE) Account, FY1996-FY2010 ............. 3

Contacts
Author Contact Information ........................................................................................................ 7
Acknowledgments ...................................................................................................................... 7

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Social Security Administration: Administrative Budget Issues

Background
The Social Security Administration (SSA) administers the Old-Age, Survivors and Disability
Insurance (OASDI) program, better known as Social Security. Social Security provides
retirement, disability, and survivor benefits to qualifying workers and their families. SSA also
administers the Supplemental Security Income (SSI) program. SSI provides benefits for low-
income aged, blind, and disabled individuals. Finally, SSA provides administrative support to
Medicare and several other federal programs.
Total SSA Spending
Total SSA spending was $658 billion in FY2008, or about 22% of overall federal spending.1 The
substantial majority of SSA’s spending in FY2008 ($607 billion, or 92% of the total) was for
Social Security (OASDI) benefit payments, as shown in Figure 1. Another 6% ($41 billion) was
for SSI benefit payments. Spending on Social Security and SSI benefits is mandatory, which
means it is authorized by permanent law. Though Congress can change the level of spending for
mandatory programs, these programs are not subject to the annual appropriations process. The
remaining 1% of SSA’s budget ($9.7 billion in FY2008) was for administrative costs. Spending
on administrative costs is discretionary, which means that it is subject to the annual
appropriations process and Congress can change it each year.
Figure 1. Total Social Security Administration Outlays, FY2008
OASDI
benefits
SSI
benefits
Admin.
expenses

Source: SSA, Justification of Estimates for Appropriations Committees, Fiscal Year 2010, at http://www.ssa.gov/
budget/FY10%20Consolidated%20CJ%20and%20APP.pdf. (Hereafter referred to as SSA Budget Justification,
FY2010.)
SSA’s Administrative Budget
This report focuses solely on the discretionary portion of SSA’s budget, which is used to fund
administrative expenses and is included in the Labor, Health and Human Services, Education, and
Related Agencies appropriations bill.2 These discretionary funds allow SSA to administer Social

1 Office of Management and Budget, Budget of the United States Government: Fiscal Year 2010, May 2009, at
http://www.whitehouse.gov/omb/budget/. Hereafter referred to as President’s Budget, FY2010.
2 CRS Report RL34577, Labor, Health and Human Services, and Education: FY2009 Appropriations, coordinated by
(continued...)
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Social Security Administration: Administrative Budget Issues

Security and SSI.3 They also allow SSA to provide administrative support for Medicare,
Medicaid, Railroad Retirement, and Supplemental Nutrition Assistance (SNAP, formerly known
as Food Stamps), and to verify employment eligibility. All of these activities are included in the
Limitation on Administrative Expenses (LAE) account in the President’s Budget.4 In some years,
Congress has provided for additional spending on Continuing Disability Reviews (CDRs) above
the LAE. SSA’s administrative budget also provides resources for the Office of Inspector General
(OIG) in a separate account. The OIG investigates and prosecutes waste, fraud, and abuse in
SSA’s programs.
In FY2008, SSA’s administrative expenses totaled $9.7 billion.5 As shown in Figure 2, about half
of SSA’s administrative expenses in FY2008 ($4.9 billion) were spent on administering Social
Security (OASDI), which was financed from the OASDI trust funds. About 31% ($3.0 billion)
was for administering SSI, which was financed with general revenues. Another 17% ($1.7 billion)
was spent to provide administrative support for Medicare, which was financed from the Hospital
Insurance and Supplementary Medical Insurance trust funds. Finally, 1% ($92 million) was for
the OIG, which was financed from general revenues through a separate account.
Figure 2. SSA Budget Authority for Administrative Expenses, FY2008
SSI
31%
OASDI
51%
Medicare
OIG
17%
1%

Source: SSA Budget Justification, FY2010.
Note: Administrative expenses for OASDI, SSI, and Medicare are funded through the LAE account in the
President’s Budget. The Office of Inspector General (OIG) is funded through the OIG account.

(...continued)
Pamela W. Smith.
3 SSA also provides benefits for certain veterans of World War II who reside outside of the United States.
4 The limitation on administrative expenses prevents SSA from having an unlimited administrative budget from the
Social Security (OASDI) and Medicare trust funds, which finance administrative costs for OASDI and administrative
support for Medicare, respectively. In the congressional budget process, SSA’s administrative budget is included in
function 650 (Social Security), function 570 (Medicare), and function 600 (Income Security). See CRS Report 97-684,
The Congressional Appropriations Process: An Introduction, by Sandy Streeter.
5 Funding for the LAE account is initially financed from the Social Security and Medicare trust funds. The trust funds
are subsequently reimbursed with general revenues for the administrative expenses not related to Social Security or
Medicare, including SSI administrative costs.
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Social Security Administration: Administrative Budget Issues

Requests and Appropriations for SSA
Administrative Expenses
Table 1 presents the Social Security Commissioner’s request, the President’s request, and the
final appropriation amount for SSA’s LAE account from FY1996 to FY2010, where applicable.
As of this writing, Congress has not passed an appropriation for FY2010.
Table 1. SSA Limitation on Administrative Expenses (LAE) Account, FY1996-FY2010
($ in millions)

Commissioner’s
President’s
Final
Request
Budget
Appropriation
FY2010 11,793
11,451
N/A
FY2009 10,395
10,327
10,454a
FY2008 10,420
9,597
9,745b
FY2007 10,230
9,496
9,298
FY2006 10,106
9,403
9,109
FY2005 9,310
8,878
8,733
FY2004 8,895
8,530
8,313
FY2003 7,974
7,937
7,885
FY2002 7,982
7,574
7,562
FY2001 7,356
7,134
7,124
FY2000 6,908
6,706
6,572
FY1999 6,640
6,448
6,418
FY1998 6,654
6,521
6,409
FY1997 6,239
6,582
6,407
FY1996 N/Ac 6,209 5,865
Sources: OMB, Budget of the United States Government: Appendix, SSA, Budget Justification, FY2002-FY2010.
Notes: This table does not include SSA administrative funding provided outside the LAE appropriation: research
funding, the OIG account (about 1% of SSA’s total administrative expenses), $1,092 million from the 2009
stimulus package, $500 million in start-up costs for the Medicare Modernization Act in FY2004, supplemental
appropriations for Hurricane Katrina and 9/11, and research funding in the Commissioner’s Request.
a. This amount does not include the $1,092 million in funding from the stimulus package, P.L. 111-5.
b. The appropriation for FY2008 includes an across-the-board cut of 1.747%.
c. There was no Commissioner’s Request in FY1996 because SSA became an independent agency in March
1995.
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Social Security Administration: Administrative Budget Issues

Funding for SSA in 2009 Stimulus Package
The American Recovery and Reinvestment Act of 2009 (P.L. 111-5) provides more than $1 billion
in supplemental appropriations to SSA for administrative expenses and also provides for a one-
time $250 payment to all SSI recipients and adult Social Security beneficiaries.6
Of the more than $1 billion appropriated to SSA for administrative functions, $500 million is to
replace the agency’s National Computer Center and $500 million is to be spent by the agency on
the processing of Social Security retirement and disability cases, with up to $40 million of this
amount available for health information technology research and activities. In addition, the SSA
Inspector General (IG) is appropriated $2 million to provide audit and oversight over SSA
activities funded by the act.
In addition, every SSI recipient and adult Social Security beneficiary will receive a one-time
economic recovery payment of $250 under this act. SSA is appropriated $90 million to assist the
Department of the Treasury with the administration of these payments.
Administrative Workload at SSA
SSA’s Administrative Workload
SSA’s administrative responsibilities are varied. In FY2008, SSA’s workload included paying
Social Security and SSI benefits to more than 55 million people, issuing 18 million new and
replacement Social Security cards, and issuing 149 million Social Security statements. SSA also
provides substantial administrative support for the Medicare program. SSA enrolls Medicare
beneficiaries, withholds Parts B and D premiums, and calculates income-related Part B
premiums. SSA also identifies low-income beneficiaries who might be eligible for Part D drug
benefit subsidies and makes low-income subsidy determinations.
Increasing Workload
SSA’s administrative responsibilities have increased, creating pressure on the agency’s budget.
Two major factors have contributed to SSA’s workload: legislative changes and increasing benefit
rolls. The Medicare Modernization Act (MMA, P.L. 108-173) created ongoing administrative
responsibilities for SSA, as outlined above; SSA received additional funding in FY2004 for
MMA start-up costs.

6 For more details, see CRS Report R40188, Social Security Provisions in the American Recovery and Reinvestment
Act of 2009, by Scott Szymendera.
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Social Security Administration: Administrative Budget Issues

Figure 3. Social Security Benefits Claims Processed, FY1996-FY2008
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
-
96
97
98
99
00
01
02
03
04
05
06
07
08
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
FY
Retirement and survivors claims
Disability claims

Source: SSA, Performance and Accountability Reports, FY1998-FY2008, at http://www.ssa.gov/finance.
Note: Disability claims include only Social Security Disability Insurance (DI) benefits, not SSI benefits. All initial
disability claims are processed by state Disability Determination Services (DDS).
As shown in Figure 3, the number of initial Social Security benefit claims processed is also
rising, from 6.0 million in FY2004 to 6.8 million in FY2008, a change of 13% in five years. The
number of retirement claims is expected to grow further as baby boomers become eligible for
benefits in 2008. Disability claims are also expected to increase. Finally, during recessions, the
number of applicants for Social Security and SSI benefits typically increases.7
Figure 4. Pending SSA Hearings, FY1996-FY2008

800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
96
7
98
99
00
1
02
03
04
05
06
07
08
FY
FY9 FY
FY
FY
FY0 FY
FY
FY
FY
FY
FY
FY
SSA hearings

Source: SSA, Performance and Accountability Reports, FY1998-FY2008.

7 “Challenges Facing the Social Security Administration: Present and Future–Report to the President-Elect Transition
Team,” letter from Social Security Advisory Board to Susan M. Daniels and James Roosevelt, Transition Team for the
President-Elect, December 16, 2008, http://www.ssab.gov/.
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Increasing Backlogs
As the SSA workload has increased, so too have the backlogs of pending claims and hearings.
SSA’s backlogs primarily affect disabled applicants for Social Security and SSI benefits. For
example, the number of hearings pending grew about 20% over the past five years, from about
636,000 in FY2004 to about 761,000 in FY2008, as shown in Figure 4 above.
Decreasing Program Integrity Activities
SSA has been completing fewer SSI non-disability redeterminations and fewer Continuing
Disability Reviews (CDRs). These reviews determine whether current SSI beneficiaries and
Social Security disability beneficiaries continue to be eligible for benefits, thus maintaining the
integrity of the programs and saving money over the long term. SSA estimates that for each dollar
spent on an SSI redetermination $7 is saved, and for each dollar spent on a CDR $10 is saved.8
The President’s Budget and the congressional budget resolution for FY2010 would each provide
SSA with administrative funding above discretionary spending caps in order to complete more
SSI redeterminations and CDRs. From FY2004 to FY2008, the number of SSI redeterminations
decreased by about half, from about 2.3 million to about 1.2 million, as shown in Figure 5. At the
same time, the number of CDRs decreased by about one-third, from about 1.6 million to about 1.1
million.
Figure 5. SSI Redeterminations and Continuing Disability Reviews Completed,
FY1996-FY2008
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
6
8
0
2
4
8
FY9 FY97 FY9 FY99 FY0 FY01 FY0 FY03 FY0 FY05 FY06 FY07 FY0
SSI redeterminations
CDRs

Source: SSA, Performance and Accountability Reports, FY1998-FY2008.

8 SSA Budget Justification, FY2010.
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Author Contact Information

Christine Scott

Specialist in Social Policy
cscott@crs.loc.gov, 7-7366

Acknowledgments
This report was written by Kathleen Romig. All questions should be directed to the current author.

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