Social Security Highlights Problems Caused By State Furloughs

From Federal Computer Week:

The Social Security Administration has started an interactive online map to highlight the 19 states that have lost $65 million in federal funds collectively by furloughing workers whose salaries are paid by the SSA.

Under a joint federal-state funding relationship, SSA pays the full salaries of state employees who do initial processing of disability claims under the federal Disability Determination Services program.

As a budget-reduction measure, governors in recent months have adopted furloughs for their state workforces. The mandatory time off without pay included the disability-processing workers in 19 states, despite cautions from SSA not to include them.

OIG Report On State Agency Furloughs

Social Security's Office of Inspector General (OIG) has issued a report on the Social Security Administration's response to furloughs of state employees who make initial and reconsideration determinations on disability claims for the agency. A number of states in financial difficulty have furloughed these employees even though their salaries and all other expenses are paid by the federal government. The reason always given for this is that the states want "to be fair to other state employees." I have extracted a chart from the report showing the numbers of cases involved per state and what Social Security has done in response. Click on the chart to see it full size.

Here is an interesting paragraph from the report (footnotes omitted):

SSA [Social Security Administration] explored other options to address the effect of State furloughs, such as contracting with private companies and federalizing the State DDSs [Disability Determination Services]. However, these options would likely involve legislative changes, as the Social Security Act, in effect, requires that most disability determinations be processed by State DDSs. Additionally, SSA estimated that federalizing the State DDSs would be more costly than the current framework—costing approximately $4 billion over the first 4 years.

Furloughs May Continue In California

From the Contra Costa Times:

For more than a year, state workers who go through disability applications were ordered by [California] Gov. Arnold Schwarzenegger to take two or three unpaid days off each month.

That's a practice that disability advocates say has hurt disabled workers and state employees but hasn't helped the state.

But it's a practice that could continue, though to a lesser degree, after Schwarzenegger leaves office. ...

[T]he Social Security Administration has sent a letter to Gov.-elect Jerry Brown, asking him to ensure that SSDI processors are "exempt from any sort of furloughs or pay freezes or overtime restrictions."

It's not clear, though, if anything will change under Brown's leadership. Brown spokesman Evan Westrup pointed out that the once-per-month furloughs are now part of a new contract between the state and the union representing SSDI processors and that undoing those furloughs could require renegotiating that contract.

NJ Reduces State Supplementation Of SSI

First, let me give some history. The Supplemental Security Income (SSI) program was introduced in the 1970s. It replaced earlier state programs of aid to indigent people who were of old age or disabled. At the time it was introduced, a number of states were paying higher benefit rates than the new SSI program. States were allowed to supplement the SSI benefits to bring them up to their previous level. Many states still supplement SSI benefits for their residents. The states transfer the money to Social Security which gives SSI recipients one check or direct deposit that includes both the basic SSI rate and the state supplementation. However, states are not obliged to continue the state supplementation.

Social Security has put out an emergency message saying that the state of New Jersey is reducing its state supplementation beginning in January 2011. California has already done this. I will be surprised if other states do not follow suit.

State Government Furloughs And Social Security

Social Security has posted an impressive website giving information about the effects of state government employee furloughs on Social Security disability claim adjudication. Social Security is dependent upon state government employees to make initial and reconsideration determinations upon disability claims. Many states have furloughed these employees even though all costs associated with them are paid for by Social Security. This website brings home just how widespread the problem is, how long it has been going on and how much it is costing.

I am curious. Have these furloughs been an issue in gubernatorial races around the country, particularly in California?

Lots Of Pain For No Gain

An Op Ed piece appearing in the Los Angeles Times, written by Michael Astrue, Commissioner of Social Security, and Yvonne Walker, president of The Service Employees International Union (SEIU), which represents employees of the California Disability Determination Services Department:

Gov. Arnold Schwarzenegger may have a cameo role in a current film, but the real "Expendables" appear to be disabled Californians, the state employees who make disability decisions for the Social Security Administration and the federal dollars he is throwing away. Long before he was governor, bodybuilder Schwarzenegger lived by the motto "No pain, no gain." However, as California's chief executive, his policy of furloughing even those state employees whose salaries are federally funded has given rise to a new axiom: "Lots of pain for no gain."

Social Security pays 100% of the salaries and overhead for workers in California's Disability Determination Services Division (DDSD) — bringing in more than $211 million a year to the state. These employees make medical determinations for Social Security payments. As a direct result of their work, each month Social Security pays $1.3 billion in disability benefits to more than 1.3 million California residents.

Furloughing DDSD employees does not save California a single penny. It has done nothing to reduce the $19-billion general fund deficit. Instead, the state loses the federal funds allocated for the DDSD. Most tragically, it imposes a financial burden on California's disabled citizens by delaying millions of dollars in federal disability benefits and medical coverage to those in need.

To meet the needs of California residents, the Social Security Administration is redirecting thousands of backlogged California cases to Arkansas, Oklahoma and Texas. The cost of processing such cases will total millions of dollars — federal dollars that would have gone to California, had the governor chosen to exempt the DDSD workers from furloughs.

More Furloughs In California

The Associated Press reports that California governor Arnold Schwarzenegger has ordered a new round of furloughs for state workers until the legislature passes a budget. Apparently, this includes employees of the state Disability Determination Service (DDS) that makes initial and reconsideration determinations on Social Security disability claims.

State workers had already been furloughed a total of 46 days over the last year under a previous furlough order. That order had just ended in June.

Astrue Sides With Union

A press release from Social Security:

Michael J. Astrue, Commissioner of Social Security, today announced that the agency is submitting legislation to Congress that would prohibit states, without the Commissioner’s prior authorization, from reducing the number of state personnel who make disability determinations for Social Security or the hours they work below the amount the agency authorizes.

“It is long past time that states end these unconscionable furloughs and hiring freezes that needlessly harm citizens with disabilities,” Commissioner Astrue said. “States realize no fiscal savings whatsoever from these actions and this legislation would prevent needless delays in the disability determination process. I am grateful for the President’s support and urge Congress to move quickly to help us make this provision the law of the land.”

More than a dozen states have implemented furloughs and hiring freezes that affect the federally paid state workers who make disability determinations for Social Security. The state agencies that employ these workers in their disability determination service (DDS) components receive 100 percent of their funding from the Federal government. Accordingly, states do not save any money by imposing furloughs and hiring freezes on federally funded employees. Rather, they slow benefits to some of the most vulnerable citizens – for example, furloughs in California in fiscal year 2010 delayed payment of over $11 million in benefits to more than 40,000 citizens with disabilities. State-imposed furloughs and hiring freezes also reduce state income tax revenue and increase unemployment in the state.

“The members of Local 1000 have always believed that furloughing federally funded positions doesn’t make economic sense and that has been proven in California during these past 18 months that Governor Schwarzenegger has imposed furloughs on state employees,” Yvonne Walker, President of Service Employees International Union Local 1000 said. “I applaud Social Security for initiating legislation that would prevent further bad economic policy from going forward. This provision will not only help DDS workers, but the claimants who rely on the services our members provide.”

“We commend the Commissioner for his forceful and dedicated leadership in taking this bold action,” said Susan X. Smith, President of the National Association of Disability Examiners (NADE). “Our members are witness to the impact the current economic recession has had for disabled citizens and we are working hard to meet the dramatic increase in claims for benefits. These furloughs further compound the problems faced by disabled citizens by creating unnecessary delays in the processing of their claims. NADE urges quick action with regards to this legislative proposal.”

Some States Look To Social Security

From the New York Times:

Lawmakers in Maine have found an unusual tool for tackling their state’s pension woes: Social Security.

Just as workers in the private sector participate in Social Security in addition to any pension plan at their companies, most states put their workers in the federal program along with providing a state pension.

Maine and a handful of others, however, have long been holdouts, relying solely on their state pension plans. In addition, most states have excluded some workers ...

Now, Maine legislators have prepared a detailed plan for shifting state employees into Social Security and are considering whether to adopt it. They acknowledge it will not solve their problem in the short term but see long-term advantages.

Some variation on this idea could ultimately appeal to other states grappling with their own exploding pension costs and, in extreme cases, quietly looking for help from Washington. ...

I Still Don't Understand

From the Metrowest Daily News:

The potential loss of more than $600 million in federal aid once deemed a sure thing has had Massachusetts Democrats scrambling to rebuild the state budget behind closed doors, warning publicly of layoffs and steep program cuts if the funds fall through. ...

According to Patrick administration officials, the federal government owes Massachusetts $160 million in Social Security payments that Massachusetts had erroneously made for the last 35 years. The federal government has acknowledged the error, prompting state officials to include the $160 million in spending plans for the fiscal year that begins July 1. ...

At issue is the way the Social Security Administration handles disability claims.

[State] Health and Human Services Secretary JudyAnn Bigby told the News Service at the time that the federal agency often declines applications for disability payouts on an applicant's first attempt. However, if an applicant appeals the rejection, the state then covers health care costs for that person until the matter is resolved. If the applicant is ultimately approved, the SSA is supposed to reimburse the state for that interim coverage.

Bigby said 30 other states are expected to be in line for Social Security reimbursements.

I posted an item from the Boston Herald about this last November. I still do not understand what their theory is or why they were so confident that Social Security was going to write them a huge check. It seems to me that it would be Health and Human Services rather than Social Security writing the check since it appears to be Medicaid money they want reimbursed. I doubt that the matter is simple. If it was I am sure this would have been caught decades ago.

I Don't Care About Your Back Pay! I Just Want You Back At Work!

From the Sacramento Bee:

An Alameda County judge on Thursday ordered back pay for tens of thousands of state workers who he had previously ruled were illegally furloughed by Gov. Arnold Schwarzenegger.

Judge Frank Roesch told the state to "immediately pay all employees of respondent departments and agencies their full salary without any reductions … and cease and desist the furlough of such employees."

Schwarzenegger spokesman Aaron McLear said Thursday night that the governor would appeal....

If upheld on appeal, the judge's order would cost the state more than $1 billion that officials thought they would save when furloughs were instituted a year ago.

Roesch's decision affects employees in nearly 70 departments that receive all or most of their budget money from sources other than the state's general fund [which would include California Disability Determination Services employees since their wages are paid by the Social Security Administration], regardless of their union affiliation.

Query: If the backpay award holds up, will Social Security reimburse the state for the backpay to Disability Determination employees?

Social Security Press Release On California Furlough Bill

A press release from Social Security

Michael J. Astrue, Commissioner of Social Security, today called for the California State Assembly to quickly pass Senate Bill 29. This bill, which already has passed the State Senate, would end the practice of furloughing Federally-funded state employees, a practice recently held to be illegal by a California superior court judge.

About 1,500 employees in this category are responsible for reviewing applications for Social Security disability benefits in California. California's taxpayers, state employees, and disability applicants all are harmed by these furloughs, and no one benefits. Each furlough day costs the state about $850,000 in administrative reimbursements and delays the payment of over $420,000 in much needed Social Security benefits to residents’ with disabilities.

“Furloughing disability examiners is incomprehensible under any circumstances, and it is callous in a recession of this magnitude,” Commissioner Astrue stated. “Congress authorized half a billion dollars under the Recovery Act to hire staff to reduce disability backlogs, and California is thwarting Congress by unilaterally reducing staffing in a punitive way that also hurts the State’s coffers.”

“It is time for Governor Schwarzenegger to renounce his failed furlough policy by withdrawing his veto threat of Senator Steinberg’s Bill 29 and by declining to appeal the decision in the furlough lawsuit. Fairness, compassion, and common sense all require that result.”

It makes sense that the Commissioner would do this but it is still weird that he would be asking a state legislature to pass a bill and a governor not to veto the bill. Why would the governor threaten to veto this, anyway?

Incomprehensible

From the Boston Herald:

Thousands of disabled Bay Staters in dire need of federal aid are facing longer delays after a Patrick administration decision to furlough more than 80 percent of the workers handling their claims, officials and advocates say.

The move sets up a battle between the state and the federal government, with the nation’s top Social Security honcho calling Gov. Deval Patrick decision “incomprehensible” and saying he cannot rule out legal action.

“I can’t conceive of how anyone would think this would make any sense,” U.S. Social Security Commissioner Michael J. Astrue told the Herald. “Massachusetts isn’t saving money. I just think it’s incomprehensible.”

Astrue said the Patrick administration told him that 228 of 272 employees in the state’s two Disability Determination Services Offices, which process thousands of disability applications a year, are to be furloughed. So far, 14 DDS managers have been furloughed. Astrue questioned the logic in furloughing the workers when the office is federally funded.

Plain Dealer On Furloughs

An editorial in the Cleveland Plain Dealer:

Ohio, by furloughing federally paid state employees who screen Social Security disability claims, is penny-foolish and pound-foolish, too, the U.S. Social Security commissioner said during a recent visit to Cleveland. He has a point.

Because of Ohio's budget troubles, state employees represented by five unions agreed last year to take 10 unpaid days off per year for two years. They're "cost savings days," but everyone calls them furlough days.

Bureau of Disability Determination employees are among those taking furloughs, though they are paid by the federal government, not Ohio. Commissioner of Social Security Michael Astrue said that by furloughing them, Ohio will lose $6.9 million in federal money.

Furloughs will also add to their case-review backlogs. To their credit, state employees have in the last four months closed 5,000 more disability cases than in the year-earlier period. But in the meantime, more cases are being filed. From 2008 to last year, Ohio claims rose 59 percent, far steeper than the 40 percent U.S. rate. Ohio's backlog nears 46,000 cases.

A Strickland spokeswoman said Ohio can't exempt Disability Determination employees from furloughs because the state's contracts with employee unions require "parity" in givebacks. That is, givebacks must be uniform. Gov. Ted Strickland himself warned last summer that violating parity could jeopardize the $90.3 million in give-backs his negotiators won from unionized state employees.

But an Ohio Civil Service Employees Association (AFSCME Local 11) spokesman says that its contract gives a state agency the right, if it cites an "operational need," to prevent an employee from taking furlough days. (Then, at the end of each fiscal year, the agency must pay an employee for time worked on "prevented" furlough days.) And the union spokeswoman said such an agency decision wouldn't require reopening the union's contract with the state.

Strickland's spokeswoman countered that the contract clause in question "was intended for extraordinary, specific operational emergencies" -- say, if a furlough day for workers in the Taxation Department's mailroom fell on April 15. Contract wording, however, doesn't appear to be nearly that limiting.

She added that trying to spare an entire class of state employees (such as those reviewing disability applications) from furlough days "would likely lead to legal challenges that [it] violated parity."

The Strickland administration, possibly fearing union grumbling in an election year, is lawyering a molehill into a mountain.''

Commissioner Says Ohio Shoots Itself In Foot

From the Cleveland Plain Dealer:

Commissioner of Social Security Michael Astrue said Ohio is losing millions of dollars and contributing to the backlog of disability cases by furloughing state workers paid with federal funds.

Astrue, who met with The Plain Dealer editorial board Thursday, also said the furlough of workers who process disability requests will delay 14,600 claims and postpone almost $3 million in federal benefits to Ohio residents.

According to Asture, Ohio will lose $6.9 million in federal money by imposing a 20-day furlough to each of the 627 employees of the Ohio Bureau of Disability Determination over two years. The furlough began last summer.

California May End Furloughs Of State Employees Who Make Disability Determinations For Social Security

From the New York Times:

Gov. Arnold Schwarzenegger took his first shot at closing California’s impending $20 billion budget gap on Friday ...

Mr. Schwarzenegger also proposed ending the furloughs for state workers, which were begun last year by the administration and were overturned in part in court battles waged by some unions. In their place, the governor said that he would like to see 5 percent pay reductions across the board, and that he wanted state employees to contribute an additional 5 percent toward their retirement costs.

Press Release On California Decision

A press release from Social Security:

Michael J. Astrue, Commissioner of Social Security, issued the following statement regarding two recent decisions of the California Superior Court for the County of Alameda:

"When it comes to the furlough of state employees whose jobs are paid for by federal funds, California Superior Court Judge Frank Roesch ruled state officials have 'abused their discretion' and that 'such a policy is arbitrary, capricious and unlawful.' I could not agree more.

For more than a year, I have made the case that these furloughs cost states money, hurt their most vulnerable citizens, and harm hard-working civil servants. California’s furlough of Disability Determination Service (DDS) employees costs the state $849,000 per furlough day in administrative funding. More importantly, each furlough day results in a delay costing California’s disabled citizens over $420,000 in much-needed Social Security benefits. For the sake of the citizens of California, I call on Governor Schwarzenegger to reject his own failed policy and not appeal the court's ruling.

Social Security funds 100 percent of DDS employees’ salaries as well as all overhead costs -- about $2 billion nationwide this year. These funds cannot be used by the states for any other purpose, so states do not save a single penny by furloughing employees in the DDSs – they only slow getting benefits to the disabled, unduly harm its civil servants, and cost the state needed tax revenue. Nevertheless, about a dozen governors are imposing similar across-the-board hiring freezes or furloughs that also affect DDS employees. I sincerely hope Congress will use its oversight authority to investigate not just California, but the other states that are using -- or have used -- furloughs and hiring freezes for positions that are fully funded by the Social Security Administration and other federal agencies."

To read the entire decision in Service Employees International Union Local 1000, and Yvonne Walker v. Arnold Schwarzenegger, et al., click here.

To read the entire decision in Union of American Physicians and Dentists v. Arnold Schwarzenegger, et al., click here.

To read the California state report, click here.

To read a letter from Vice President Biden to the Governors, click here.

What gets me is that the reason given for refusing to exempt state employees whose salaries are not paid for by state money is that state employees who were not exempted from the furlough would get angry yet state employee unions are suing to get some employees exempted from the furlough even though those unions presumably represent employees who would not be exempted from the furlough. I would like to put this all down to the fact that the nuttiness of California politics but much the same thing is happening in several other states.

California Court Enjoins Furloughs

I was not expecting there to be news about Social Security on New Year's Day, but there is. State budget problems have become a major headache for Social Security. States are furloughing employees and imposing hiring freezes. These actions usually affect the state disability determination agencies that make determinations on Social Security disability cases at the initial and reconsideration levels. This is happening even though the furloughs and hiring freezes do nothing to help state budgets since all salaries and costs associated with the disability determination agencies are picked up by the federal government. State governors seem to believe that the fair thing is to treat all their employees the same.

The state that has the worst budget problems is California. It was had the worst furloughs of state employees, including disability determination emploees. This has had a dramatic effect upon disability determination in that most populous of all states.

One response to this mess has been litigation. Social Security did not start this litigation but has filed a "Statement of Interest" with the California court. It is extremely unusual for any federal agency to take an official position in a case pending in a state court other than to file papers to remove a case to federal court or to assert that a state court lacks authority to compel the federal agency to do anything. The Los Angeles Times reports on what happened yesterday in that litigation:

An Alameda County Superior Court judge Thursday ordered Gov. Arnold Schwarzenegger to halt thrice-monthly furloughs for tens of thousands of state workers, saying the administration overstepped its authority in approving the unpaid days off. ...

He said that the governor's use of furloughs was an "abuse of discretion" and that he "violated a mandatory duty to take into account the agencies' varying needs before reducing workplace hours."

The governor plans to appeal Roesch's decision and noted that the order blocking the furloughs would be stayed until the appeal is ruled on, said Aaron McLear, a spokesman for Schwarzenegger.

Effects Of Furloughs In California

From a report of the California State Senate Rules Committee:

Disability Programs. We found that by taking workers off the job as many as three days a month, furloughs have delayed tens of millions of dollars in monthly checks for people with long-term disabilities. Among our specific findings about the federal Social Security Administration disability programs:
• Federal disability benefits of $68 million to $99 million a year will be delayed for thousands of qualified Californians because furloughs have slowed the processing of applications.
• Each furlough day delays the processing of an estimated 1,476 applications for federal disability benefits, with a corresponding delay of $420,800 in benefits for blind, needy or disabled people.
• The backlog of applications for Social Security disability benefits in California is growing.
• An estimated 27,000 hours of labor per month are lost to furloughs in the programs that determine which Californians qualify for disability benefits.
• The average amount of time off taken by the state workers who determine eligibility for federal disability benefits increased by 47% between the third quarter of 2008 – before furloughs – and the same quarter in 2009.
• Furlough of the people who determine eligibility will cost the state between $18 million and $31 million a year in salaries and other administrative costs that would have otherwise been paid by the federal government – with a corresponding loss of at least $1.4 million in state income taxes.
• Federal officials have gone to court to argue that California’s furloughs hinder delivery of benefits that can prevent homelessness for vulnerable Californians.
• They have also warned California officials that federal regulations require states to avoid labor restrictions that impinge prompt payment of benefits.

California is furloughing disability determination employees even though their salaries are paid for by federal funds. Furloughing these employees saves the state government no money. In fact these furloughs worsen the state's budget situation since it reduces the taxes paid by those state employees. More importantly, the recipients of Social Security disability benefits do pay sales taxes and the money they spend provides for employment for others who do pay income taxes. There is no rational explanation for what California and several other states are doing.

MSNBC On Claims Surge

From MSNBC:

According to the Social Security Administration, which runs the two main federal disability programs, new claims for disability benefits rose nearly 17 percent nationwide in fiscal year 2009, to 3 million. Disability filings are projected to rise another 10 percent in fiscal 2010, to 3.3 million new claims ...

Michael Astrue, commissioner of the Social Security Administration, understands the frustration of ... [those] who help disability applicants navigate the system.

“If I were in their shoes, I’d be concerned too,” Astrue said, acknowledging that his organization doesn’t have the best track record when it comes to processing claims in a speedy and efficient manner. In some parts of the country, disability applicants can wait years before they get a final decision.

“Where we’re having the biggest problems are states that have a combination of two things: One, the economy is very bad; and two, the state has embraced furloughs," Astrue said. "California, Wisconsin, Ohio are three of the states where we’re really struggling now.”