THE INSPECTOR GENERAL
SOCIAL SECURITY ADMINISTRATION
Disability Determination Services’
Staffing Under the American
Recovery and Reinvestment Act
By conducting independent and objective audits, evaluations and investigations, we inspire public confidence in the integrity and security of SSA’s programs and operations and protect them against fraud, waste and abuse. We provide timely, useful and reliable information and advice to Administration officials, Congress and the public.
The Inspector General Act created independent audit and investigative units, called the Office of Inspector General (OIG). The mission of the OIG, as spelled out in the Act, is to:
Conduct and supervise independent and objective audits and investigations relating to agency programs and operations.
Promote economy, effectiveness, and efficiency within the agency.
Prevent and detect fraud, waste, and abuse in agency programs and operations.
Review and make recommendations regarding existing and proposed legislation and regulations relating to agency programs and operations.
Keep the agency head and the Congress fully and currently informed of problems in agency programs and operations.
To ensure objectivity, the IG Act empowers the IG with:
Independence to determine what reviews to perform.
Access to all information necessary for the reviews.
Authority to publish findings and recommendations based on the reviews.
We strive for continual improvement in SSA’s programs, operations and management by proactively seeking new ways to prevent and deter fraud, waste and abuse. We commit to integrity and excellence by supporting an environment that provides a valuable public service while encouraging employee development and retention and fostering diversity and innovation.
Our objective was to assess the Social Security Administration’s (SSA) staffing plan associated with funds provided to disability determination services (DDS) under the American Recovery and Reinvestment Act of 2009 (ARRA).
ARRA provided SSA an additional $500 million to process retirement and disability workloads. ARRA funds should help SSA address increasing disability and retirement workloads caused by the combination of the economic downturn and the leading edge of the baby boomer retirements. In Fiscal Year (FY) 2009, SSA expected disability and retirement claims to increase by 600,000 over FY 2008.
At the time of our review, $87 million of SSA’s ARRA funds for FYs 2009 and 2010 had been allocated for labor costs of DDS employees and additional overtime, including indirect costs. The labor costs included hiring 300 new DDS employees. The remaining $413 million was allocated to the Offices of Operations and Disability Adjudication and Review, as well as for health information technology (IT) research and activities to facilitate the adoption of electronic medical records in disability claims.
The Office of Management and Budget (OMB) issued guidance on spending and accounting for ARRA funds. Specifically, OMB requires agency-wide and program-specific plans regarding ARRA spending. These plans must include the program purpose, types of activities and projects that will be performed, and a funding table showing the agency funding listed by program, project, and activity categories. Funds returned to the program or any offsetting collections received as a result of recovery actions are to be specifically identified. The plans must also include major milestones with planned delivery dates, the agency’s monitoring process, performance measures to test effectiveness, and a description of how the agency will make measured results available to the public.
To carry out its responsibilities, SSA created an Agency Wide ARRA Plan and a program-specific Disability and Retirement Workload Plan. OMB approved these plans in May 2009. SSA has revised the Disability and Retirement Workload Plan since its May approval. Appendix D contains the Disability and Retirement Workload Plan as of November 2009.
Results of Review
SSA developed an appropriate plan for the $87 million in ARRA funds it was given to process disability workloads. At the time of our review, DDSs had hired all 300 of the ARRA-funded employees who will be trained to process disability workloads. In addition, SSA planned to use $23 million of the ARRA funds for DDS employees to work overtime processing disability workloads and $10 million for DDS indirect costs. However, we identified the following matters for consideration to ensure ARRA funds are properly accounted for and efficiently used and their benefits are fully disclosed.
• SSA used a cost allocation methodology that charged ARRA funds based on the average workyear cost to process disability and retirement workloads instead of the actual cost. In our November 2009 report on ARRA funds allocated to SSA’s Office of Operations, we recommended SSA disclose its cost allocation methodology, the cost of new hires, and any overtime for processing disability and retirement workloads funded from the ARRA appropriations. In response to our recommendation, SSA revised its retirement and disability workload plan to make the recommended disclosures.
• The one performance measure for DDSs in the Disability and Retirement Workload Plan will not disclose all the anticipated benefits of the ARRA funds.
PLANNED USE OF ARRA FUNDS FOR DDSs
According to SSA’s Office of Budget, SSA planned to use $87 million in ARRA funds for DDS salaries and benefits, overtime, and indirect costs (see Table 1). This includes $17 million in FY 2009 and $70 million in FY 2010.
TABLE 1: SSA’S PLANNED USE OF ARRA FUNDS FOR DDS
FY Salaries/ Benefits
(in millions) Overtime
(in millions) Indirect Costs
(in millions) Total
2009 $ 4 $ 11 $ 2 $17
2010 50 12 8 70
Total $54 $23 $10 $87
The planned use of ARRA funds included hiring 300 DDS employees. SSA determined where the 300 new DDS employees would be placed based on several factors, including DDS staffing information provided by the regional offices. The DDS staffing information contained staffing levels, attrition rates, workload receipt projections, and hiring authority. Based on this information, SSA distributed DDS hiring authority and overtime to its regional offices as shown in Table 2.
TABLE 2: ALLOCATION OF ARRA-FUNDED DDS NEW HIRES AND OVERTIME TO THE REGIONAL OFFICES
Regional Office DDS New Hires Overtime Workyears
Boston 12 23.6
New York 29 6.8
Philadelphia 31 15.5
Atlanta 118 23.7
Chicago 41 25.6
Dallas 17 16.9
Kansas City 5 5.5
Denver 2 0.4
San Francisco 28 16.1
Seattle 17 6.1
Total 300 140
According to the Office of Disability Determinations (ODD), the regional offices determined where their share of the new hires would be placed based on where employees were most needed in their respective regions. As of September 25, 2009, SSA reported that all 300 new DDS employees had been hired.
ARRA FUNDS NEEDED FOR NEW HIRES
SSA’s cost allocation methodology for the 300 new DDS employees will most likely result in ARRA funds being charged more than the actual salaries and benefits incurred for them. Specifically, SSA determined the labor costs to be charged to its ARRA funds for these 300 new DDS employees using average annual salaries and benefits for all DDS employees. The average annual salaries and benefits were $78,950 and $83,780 for FYs 2009 and 2010, respectively. However, the average annual salaries for new DDS employees are most likely lower than the average for all DDS employees. We requested from SSA the average salaries and benefits for new DDS employees and were informed it was unavailable because SSA did not collect or use that information. Therefore, we are unable to show the amount that ARRA funds will be charged over the actual salaries and benefits incurred for these new DDS employees.
In addition, SSA’s Office of Budget estimated that 13 percent of total salaries, benefits, and overtime would be charged to ARRA funds for indirect costs. This results in ARRA funds being charged $10 million in indirect costs. Since the indirect costs were calculated based on average salaries and benefits instead of actual, ARRA funds will most likely be charged more than the actual amount of indirect costs incurred in DDS operations.
Prior to November 2009, SSA’s Disability and Retirement Workload Plan did not disclose how it was allocating costs to the ARRA appropriation. Based on the recommendation from a prior OIG review, SSA revised the plan to disclose its cost allocation methodology for ARRA funds (see Appendix D). SSA’s workload plan can be found at http://www.ssa.gov/recovery/ and http://www.recovery.gov/.
The DDS employees funded by ARRA will process a wide range of disability workloads. However, SSA’s Disability and Retirement Workload Plan has only one performance measure for DDSs—the number of initial disability claims processed. As a result, SSA does not plan to report to the public the full benefit of the ARRA funds provided to SSA.
OMB’s guidance requires that agency Recovery Program Plans include performance measures that reflect expected quantifiable outcomes that are consistent with the intent and requirements of the legislation. The OMB guidance also states that the measures used to report an Agency’s program performance in relation to the ARRA goals should be retained (in terms of incremental change against present level of performance of
related agency programs or projects/activities specified in the plan). Finally, one of the accountability objectives in the OMB guidance is that the use of all funds are to be transparent to the public, and the public benefits of these funds are to be reported clearly, accurately, and timely.
SSA has 25 performance measures that track its progress in meeting its goals and objectives. The following two performance measures specifically relate to DDS’ processing of disability workloads and we believe, would be beneficial performance measures to report in SSA’s Disability and Retirement Workload Plan.
Minimize the average processing time for initial disability claims to provide timely decisions.
Number of periodic continuing disability reviews processed to determine continuing entitlement based on disability to help ensure payment accuracy.
In addition, SSA is facing a considerable increase in initial claims receipts due to the declining economy. As of October 2009, initial claims pending have grown to about 784,000 cases. SSA now expects 350,000 more initial disability claims than first projected for FY 2010 and estimates that the pending level could reach over 1 million by FY 2010. We believe performance measures in the Disability and Retirement Workload Plan related to initial claims pending would be beneficial since several million dollars in ARRA funds are being used for DDS labor costs associated with processing such critical workloads as reducing initial pending claims.
We also believe SSA should report the overall processing time for disability claims, from the date of application until the date SSA denied or awarded the claim. In response to a 2008 OIG report, SSA agreed this performance measure would be useful to the Agency, Congress, the public, and disability claimants. A Department of Veterans Affairs program-specific plan includes two measures that assess the impact of ARRA funds on the timeliness of processing disability claims, from the date the claim is received to the date of completion.
DDS new hires may use ARRA funds that impact these performance measures. However, the performance measures may not initially reflect the impact of the 300 new DDS employees on the disability programs since they require extensive training. In fact, each DDS conducts its own training and mentoring of new hires, and it generally takes 2 years for a disability examiner to become fully productive. In addition, experienced DDS employees provide the training that takes them away from processing disability claims. However, SSA should realize substantial benefits from the 300 employees after their training is completed, especially in FY 2010. Accordingly, SSA should disclose the impact of training on the performance measures.
In response to our draft report, SSA stated that it considered our observation on using additional performance measures. However, SSA believes the measures in the Disability and Retirement Workload Plan have the greatest impact on and visibility to the American public.
Matters for Consideration
ARRA provided SSA with $500 million to address the increasing disability and retirement workloads. SSA allocated $87 million of these funds to DDSs for labor costs, overtime, and indirect costs. These funds allowed DDSs to hire 300 additional employees and pay the labor costs of processing critical workloads. To ensure SSA fully complies with OMB’s guidance for establishing adequate performance measures and tracking the impact of the ARRA funding, we believe SSA should consider the following.
• Including additional performance measures in its Disability and Retirement Workload Plan related to minimizing the average processing time for initial disability claims, the number of periodic continuing disability reviews processed, initial claims pending, and overall processing time for disability claims.
• Tracking and reporting how ARRA funds used for new hires and overtime in DDSs will impact the Agency’s performance measures related to processing disability workloads.
APPENDIX A – Acronyms
APPENDIX B – Scope and Methodology
APPENDIX C – Fiscal Year 2009 American Recovery and Reinvestment Act Hiring
APPENDIX D – Disability and Retirement Workload Plan
APPENDIX E – OIG Contacts and Staff Acknowledgments
ARRA American Recovery and Reinvestment Act of 2009
C.F.R. Code of Federal Regulations
DDS Disability Determination Services
FY Fiscal Year
GAO Government Accountability Office
IT Information Technology
ODD Office of Disability Determinations
OIG Office of the Inspector General
OMB Office of Management and Budget
Pub. L. No. Public Law Number
SSA Social Security Administration
U.S.C. United States Code
Scope and Methodology
To accomplish our objective, we:
• Reviewed the American Recovery and Reinvestment Act of 2009 (ARRA).
• Reviewed Office of Management and Budget (OMB) Memorandums.
o M-09-10 Initial Implementing Guidance for the American Recovery and Reinvestment Act of 2009
o M-09-15 Updated Implementing Guidance for the American Recovery and Reinvestment Act of 2009
• Reviewed the Social Security Administration’s Agency-wide ARRA Plan and the Disability and Retirement Workload Plan approved by OMB.
• Interviewed staff from the Offices of Disability Determinations (ODD) and Budget, Finance and Management.
We performed our review in Kansas City, Missouri, from April through October 2009. The entity reviewed was the ODD under the Deputy Commissioner for Operations. We conducted our review in accordance with the Quality Standards for Inspections issued by the President’s Council on Integrity and Efficiency.
Fiscal Year 2009 American Recovery and Reinvestment Act (ARRA) Hiring
Region/State Budgeted ARRA Hires Actual ARRA Hires as of October 2009 Region/State Budgeted ARRA Hires Actual ARRA Hires as of October 2009
Boston 12 12 Dallas 17 17
Connecticut 1 Arkansas 0
Maine 2 Louisiana 0
Massachusetts 5 New Mexico 0
New Hampshire 0 Oklahoma 0
Rhode Island 4 Texas 17
Vermont 0 Kansas City 5 5
New York 29 29 Iowa 0
New Jersey 25 Kansas 5
New York 4 Missouri 0
Puerto Rico 0 Nebraska 0
Philadelphia 31 31 Denver 2 2
Delaware 0 Colorado 1
District of Columbia 10 Montana 0
Maryland 0 North Dakota 0
Pennsylvania 0 South Dakota 0
Virginia 19 Utah 1
West Virginia 2 Wyoming 0
Atlanta 118 118 San Francisco 28 28
Alabama 1 Arizona 6
Florida 42 California 22
Georgia 2 Hawaii 0
Kentucky 0 Nevada 0
Mississippi 0 Seattle 17 17
North Carolina 36 Alaska 3
South Carolina 17 Idaho 0
Tennessee 20 Oregon 13
Chicago 41 41 Washington 1
Illinois 2 Total 300 300
Disability and Retirement Workload Plan (Updated November 2009)
OIG Contacts and Staff Acknowledgments
Mark Bailey, Director, Kansas City Audit Division
Tonya Eickman, Audit Manager, Kansas City Audit Division
In addition to those named above:
Karis Crane, Auditor
For additional copies of this report, please visit our web site at www.socialsecurity.gov/oig or contact the Office of the Inspector General’s Public Affairs Staff Assistant at (410) 965-4518. Refer to Common Identification Number
Commissioner of Social Security
Office of Management and Budget, Income Maintenance Branch
Chairman and Ranking Member, Committee on Ways and Means
Chief of Staff, Committee on Ways and Means
Chairman and Ranking Minority Member, Subcommittee on Social Security
Majority and Minority Staff Director, Subcommittee on Social Security
Chairman and Ranking Minority Member, Committee on the Budget, House of Representatives
Chairman and Ranking Minority Member, Committee on Oversight and Government Reform
Chairman and Ranking Minority Member, Committee on Appropriations, House of Representatives
Chairman and Ranking Minority, Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Committee on Appropriations,
House of Representatives
Chairman and Ranking Minority Member, Committee on Appropriations, U.S. Senate
Chairman and Ranking Minority Member, Subcommittee on Labor, Health and Human Services, Education and Related Agencies, Committee on Appropriations, U.S. Senate
Chairman and Ranking Minority Member, Committee on Finance
Chairman and Ranking Minority Member, Subcommittee on Social Security Pensions and Family Policy
Chairman and Ranking Minority Member, Senate Special Committee on Aging
Social Security Advisory Board
Overview of the Office of the Inspector General
The Office of the Inspector General (OIG) is comprised of an Office of Audit (OA), Office of Investigations (OI), Office of the Counsel to the Inspector General (OCIG), Office of External Relations (OER), and Office of Technology and Resource Management (OTRM). To ensure compliance with policies and procedures, internal controls, and professional standards, the OIG also has a comprehensive Professional Responsibility and Quality Assurance program.
Office of Audit
OA conducts financial and performance audits of the Social Security Administration’s (SSA) programs and operations and makes recommendations to ensure program objectives are achieved effectively and efficiently. Financial audits assess whether SSA’s financial statements fairly present SSA’s financial position, results of operations, and cash flow. Performance audits review the economy, efficiency, and effectiveness of SSA’s programs and operations. OA also conducts short-term management reviews and program evaluations on issues of concern to SSA, Congress, and the general public.
Office of Investigations
OI conducts investigations related to fraud, waste, abuse, and mismanagement in SSA programs and operations. This includes wrongdoing by applicants, beneficiaries, contractors, third parties, or SSA employees performing their official duties. This office serves as liaison to the Department of Justice on all matters relating to the investigation of SSA programs and personnel. OI also conducts joint investigations with other Federal, State, and local law enforcement agencies.
Office of the Counsel to the Inspector General
OCIG provides independent legal advice and counsel to the IG on various matters, including statutes, regulations, legislation, and policy directives. OCIG also advises the IG on investigative procedures and techniques, as well as on legal implications and conclusions to be drawn from audit and investigative material. Also, OCIG administers the Civil Monetary Penalty program.
Office of External Relations
OER manages OIG’s external and public affairs programs, and serves as the principal advisor on news releases and in providing information to the various news reporting services. OER develops OIG’s media and public information policies, directs OIG’s external and public affairs programs, and serves as the primary contact for those seeking information about OIG. OER prepares OIG publications, speeches, and presentations to internal and external organizations, and responds to Congressional correspondence.
Office of Technology and Resource Management
OTRM supports OIG by providing information management and systems security. OTRM also coordinates OIG’s budget, procurement, telecommunications, facilities, and human resources. In addition, OTRM is the focal point for OIG’s strategic planning function, and the development and monitoring of performance measures. In addition, OTRM receives and assigns for action allegations of criminal and administrative violations of Social Security laws, identifies fugitives receiving benefit payments from SSA, and provides technological assistance to investigations.