OFFICE
OF
THE INSPECTOR GENERAL
SOCIAL SECURITY ADMINISTRATION
The Office of Operations’ Staffing
Plans Under the American
Recovery and Reinvestment Act
November 2009
A-09-09-29157
QUICK RESPONSE
EVALUATION
MEMORANDUM
Date: November 17, 2009 Refer To:
To: The Commissioner
From: Inspector General
Subject: The Office of Operations’ Staffing Plans Under the American Recovery and Reinvestment Act of 2009 (A-09-09-29157)
The attached final report presents the results of our review. Our objective was to assess the Office of Operations’ staffing plans associated with funds provided under the American Recovery and Reinvestment Act of 2009.
If you wish to discuss the final report, please call me or have your staff contact Steven L. Schaeffer, Assistant Inspector General for Audit, at (410) 965 9700.
/s/
Patrick P. O’Carroll, Jr.
Attachment
QUICK RESPONSE
EVALUATION
The Office of Operations’ Staffing
Plans Under the American
Recovery and Reinvestment Act
A 09 09 29157
.
November 2009
Mission
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.
Authority
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.
Vision
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.
Background
OBJECTIVE
Our objective was to assess the Office of Operations’ (Operations) staffing plans associated with funds provided under the American Recovery and Reinvestment Act of 2009 (ARRA).
BACKGROUND
ARRA provided the Social Security Administration (SSA) an additional $500 million to process disability and retirement workloads. Of that, $40 million may be used for health information technology research and activities to facilitate the adoption of electronic medical records in disability claims. ARRA funds will help SSA address increasing disability and retirement workloads caused by a combination of the economic downturn and the leading edge of the baby boomer retirements. SSA estimates that in Fiscal Year (FY) 2009, disability and retirement claims will increase by 600,000 from FY 2008.
At the time of our review, Operations had been allocated $251 million of SSA’s ARRA funds. The remaining $249 million was allocated to State disability determination services, to the Office of Disability Adjudication and Review, and for information technology improvements. Operations is using its ARRA funds to process disability and retirement workloads in SSA field offices, program service centers, and teleservice centers and hired 1,531 new employees. Operations plans to use ARRA funds for overtime work by SSA employees.
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, a funding table showing the obligation and outlay timing, the major milestones and completion dates, the agency’s monitoring process, performance measures to test effectiveness, and a description of how the agency will make the information available to the public.
To perform this review, we interviewed SSA employees from the Offices of Operations and Budget, Finance and Management. We also reviewed SSA’s Agency-wide and program-specific ARRA plans to evaluate its efforts to implement and administer the $251 million allocated to Operations.
Results of Review
Operations developed an appropriate plan for its $251 million in ARRA funds to process disability and retirement workloads. At the time of our review, Operations had already hired 1,531 employees in front-line positions who will be trained to process disability and retirement workloads. In addition, Operations planned to use approximately $53 million of its ARRA funds for employees to work overtime to process disability and retirement workloads. However, we identified the following matters for attention to ensure ARRA funds are properly accounted for and efficiently used, and their benefits fully disclosed.
• SSA uses a cost allocation methodology that charges ARRA funds based on the average workyear cost to process disability and retirement workloads. The charges based on this methodology are approximately $195 million. However, the actual costs of the 1,531 new employees’ salaries and benefits will only be approximately $101 million.
• SSA did not disclose the cost of training time. We believe SSA’s workload plan should separately disclose the estimated $18 million in training costs since it is time spent in training rather than processing disability and retirement workloads.
• The performance measures did not identify all the anticipated benefits of the ARRA funds.
OPERATIONS’ PLANNED USE OF ARRA FUNDS
Operations planned to use its $251 million in ARRA funds to hire 1,531 employees and for overtime work by employees. This includes about $89 million in FY 2009 and $162 million in FY 2010.
Fiscal Year New Hires Overtime Total
2009 $ 63 million $26 million $89 million
2010 135 million 27 million 162 million
Total $198 million $53 million $251 million
Operations determined where the 1,531 new hires would be placed based on several factors, including projected workload volume, national and regional level productivity, Agency plans for discretionary workloads (such as Supplemental Security Income [SSI] redeterminations and continuing disability reviews), the number of permanent staff on-duty, projected attrition, and unique staffing shortages within specific regions. The
needs of all Operations’ components were considered, including field offices, the national 800-number network (teleservice centers), program service centers, and the Office of Central Operations.
The regional offices determined where their share of the new hires would be placed based on where employees were most needed in their respective region. The primary factors included workload projections, pending workloads, and office staffing levels. The following table shows Operations’ planned new hires by region and by type of office.
SSA Region Field Offices Program Service Centers Teleservice Centers
Total
Boston 24 N/A 0 24
New York 79 16 9 104
Philadelphia 120 0 22 142
Atlanta 364 0 32 396
Chicago 167 7 7 181
Dallas 152 0 14 166
Kansas City 20 33 0 53
Denver 25 N/A 4 29
San Francisco 194 35 0 229
Seattle 38 N/A 13 51
Office of Central Operations N/A 156 0 156
Total 1,183 247 101 1,531
ARRA FUNDS NEEDED FOR NEW HIRES
We found that SSA’s cost allocation methodology for the 1,531 new employees will result in ARRA funds being charged approximately $94 million ($33.5 million for FY 2009 and $60.5 million for FY 2010) over the estimated salaries and benefits expected to be incurred for these new employees. This occurred because SSA allocated ARRA funds based on an average salary and benefits for all Operations employees. However, the average salaries for the new hires were much lower than the average for all Operations employees. Specifically, SSA’s Office of Budget used an average annual salary and benefits total of $85,000, which is substantially more than the average of $47,487 for new employees in SSA’s highest locality pay area and $40,517 in the lowest locality pay area. SSA indicated that it uses this cost methodology because it believes it better reflects the cost of the work processed.
As shown in the following table, we estimate that about $94 million (47.5 percent) of the $198 million budgeted for salaries and benefits for FYs 2009 and 2010 will not be used to pay the salaries of new hires. According to SSA’s estimate, the actual salaries and benefits for the new hires will be approximately $109 million. We believe SSA’s estimate is high, and expect the actual costs will be between $93 and $109 million.
Cost
Basis
Number of New Hires
Average Annual Salary and Benefits Years of Salary Payments
(April 2009 thru
September 2010)
Total Estimated Cost of New Hires Difference in ARRA Charges and Actual Salaries and Benefits
SSA Budget Estimate
1,531
$85,000
1 ½ years
$195 million
N/A
Average New Hire (highest locality pay)
1,531
$47,487
1 ½ years
$109 million
$86 million
Average New Hire (lowest locality pay)
1,531
$40,517
1 ½ years
$93 million
$102 million
Transparency and Accountability of ARRA Funds - We believe SSA should disclose its cost allocation methodology, the costs of new hires, and any overtime for processing disability and retirement workloads funded from the ARRA appropriation. SSA is charging salary and benefits to the ARRA appropriation beyond the costs incurred for new hires. As of August 2009, SSA’s disability and retirement workload plan did not disclose how it was allocating costs from the ARRA appropriation. During the course of our review, we advised SSA that it should provide improved transparency and disclose its cost allocation methodology. SSA’s workload plan should also disclose the impact of charging the average salary and benefits of all Operations employees compared to the actual costs of new hires. SSA agreed with our recommendation to improve transparency and revised its disability and retirement workload plan accordingly (See Appendix D). SSA’s workload plan can also be found at www.ssa.gov/recovery and www.recovery.gov.
TRAINING REQUIREMENTS FOR NEW HIRES
The 1,531 new employees hired to process disability and retirement workloads will need training to perform their jobs. This includes classroom and on-the-job training with mentors. During training, the new employees will not make significant contributions to SSA’s productivity goals. As a result, SSA will not realize the benefits of hiring these employees until they have completed their training and gained experience. In addition, Operations will use experienced employees to train the new hires. Operations hired employees in the following positions:
• service representatives who provide information to, and assist, claimants and beneficiaries with various disability and retirement matters,
• claims representatives who process disability and retirement claims,
• claims and benefit authorizers who process claims and post-entitlement actions for current beneficiaries,
• teleservice representatives who provide information to callers to SSA’s national
800-number network, and
• miscellaneous earnings positions to process earnings-related workloads.
The following table shows the amount of training required for each position and the estimated ARRA funds that will be used to train the new hires.
Position Type
Number of Employees Average Annual Salary and Benefits
Length of
Training
ARRA Funds
to be Used
on Training
Service Representative 631 $36,767 3 months $5.8 million
Claims Representative 559 41,503 3 months 5.8 million
Benefit Authorizer 143 40,909 8 months 3.9 million
Claims Authorizer 51 43,697 6 to 8 months 1.3 million
Teleservice Representative 101 39,604 3 months 1.0 million
Other 46 34,783 5 days to 3 months 0.2 million
Total 1,531 $18.0 million
To fully disclose the use of ARRA funds, we believe SSA’s workload plan should disclose the estimated $18 million in training costs separately, since it is time spent in training rather than processing disability and retirement workloads.
MEASURING PERFORMANCE RESULTS OF ARRA FUNDING
The 1,531 Operations employees hired under ARRA and employees who work overtime will process a wide range of disability and retirement workloads. However, SSA’s Disability and Retirement Workload plan has only one performance measure for Operations—the number of retirement and survivors claims processed. SSA officials stated that OMB approved the Agency’s plan to have only this one measure. 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 currently used to report an Agency’s program performance in relation to the ARRA
goals should be retained (in terms of incremental change against the 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 reported clearly, accurately, and in a timely manner.
SSA’s 2008 Performance and Accountability Report contains 26 performance measures that track SSA’s progress in meeting its goals and objectives. This includes the following seven performance measures related to Operations’ employees’ processing of disability and retirement workloads.
1. Minimize the average processing time for initial disability claims to provide timely decisions.
2. Improve service to the public by optimizing the speed in answering 800-number calls.
3. Improve service to the public by optimizing the 800-number busy rate for calls offered to Agents.
4. Process SSI non-disability redeterminations to reduce improper payments.
5. Number of periodic continuing disability reviews processed to determine continuing entitlement based on disability to help ensure payment accuracy.
6. Percent of SSI payments free of overpayment and underpayment error.
7. Percent of Old-Age, Survivors and Disability Insurance payments free of overpayment and underpayment error.
We also believe SSA should report the overall processing time for disability claims. 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 similar measures that assess the impact of ARRA funds on the timeliness of processing disability claims.
Operations’ new hires and employees working overtime may use ARRA funds that impact the above performance measures. The new hires may not have a significant impact initially because they require training. However, SSA should realize substantial benefits from the 1,531 employees after their training is completed, especially in FY 2010. Accordingly, SSA should develop performance measures that disclose these impacts to the public.
In response to our draft report, SSA stated it agreed there are additional performance measures it could use. However, SSA believes the number of retirement and survivors claims processed has the greatest impact and visibility with the American public.
Matters for Consideration
ARRA provided SSA with $500 million to help address the increasing disability and
retirement workloads. SSA allocated $251 million of these funds to Operations. Operations has hired 1,531 employees, established a tracking mechanism to account for these employees, and established an Internet site to provide transparency to the public in how it uses ARRA funds. 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:
• Disclosing that its methodology will result in ARRA funds being charged approximately $94 million more than the new hires’ actual salaries and benefits.
• Disclosing the costs associated with new hire training since it is time spent in training rather than processing disability and retirement workloads.
• Tracking and reporting how ARRA funds used for new hires and overtime in Operations will impact the Agency’s existing performance measures related to processing disability and retirement workloads.
In response to our draft report, SSA modified its Disability and Retirement Workload plan to disclose the impact of charging an average workyear cost and the training costs. However, SSA did not include additional performance measures related to processing disability and retirement workloads. The Agency’s comments are included in
Appendix C.
Appendices
APPENDIX A – Acronyms
APPENDIX B – Scope and Methodology
APPENDIX C – The Social Security Administration’s Statement of Agency Position
APPENDIX D – The Social Security Administration’s Disability and Retirement Workload Plan
APPENDIX E – OIG Contacts and Staff Acknowledgments
Appendix A
Acronyms
ARRA American Recovery and Reinvestment Act of 2009
FASAB Federal Accounting Standards Advisory Board
FY Fiscal Year
OIG Office of the Inspector General
OMB Office of Management and Budget
Operations Office of Operations
SSA Social Security Administration
SSI Supplemental Security Income
Appendix B
Scope and Methodology
To accomplish our objective, we:
• Reviewed the American Recovery and Reinvestment Act of 2009 (ARRA) and the Office of Management and Budget’s guidance on implementing ARRA.
• Interviewed Social Security Administration (SSA) employees from the Offices of Operations and Budget, Finance and Management.
• Reviewed SSA’s Agency-wide and program-specific ARRA plans to evaluate its efforts to implement and administer the $251 million allocated to Operations.
We performed our review during April through October 2009 in Richmond, California. We conducted our review in accordance with the President’s Council on Integrity and Efficiency’s Quality Standards for Inspections.
Appendix C
Statement of Agency Position
STATEMENT OF AGENCY POSITION
THE OFFICE OF THE INSPECTOR GENERAL (OIG) QUICK RESPONSE EVALUATION, “THE OFFICE OF OPERATIONS’ STAFFING PLANS UNDER THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009” (A-09-09-29157)
We appreciate the insights OIG offers in its Quick Response Evaluation and the Evaluation’s recommendation for additional disclosure and transparency in documenting our use of American Recovery and Reinvestment Act (ARRA) workload funding. In fact, we have updated our planning documents to clearly describe the agency’s methodology for both budgeting and accounting for our ARRA funds.
Our understanding is that OIG agrees that the updated plans are sufficiently transparent and informative. Our updated plan is available to the public through our public website at SocialSecurity.Gov.
We considered OIG’s observation that we could use additional performance measures. However, we believe the measures in our planning document have the greatest impact on and visibility to the American public.
Finally, the ARRA gave us $500 million to process the increased number of retirement and disability claims and appeals we are seeing because of the economic downturn and the beginning of the baby boomer retirement wave. In fiscal year (FY) 2009, we used a significant portion of the ARRA funding to increase our workload processing capacity, which allowed us to hire over 2,400 new employees and provide additional overtime. In FY 2009, ARRA funds enabled the agency to process an additional 33,000 hearings, 53,000 initial disability claims, and 317,000 retirement and Supplemental Security Income aged claims.
Retirement and disability workloads are not standalone workloads that new employees can process independently. Instead, they perform some of the many tasks involved in processing claims and appeals to completion alongside other employees. Attributing only the salary/benefit costs of new employees hired with ARRA funds would understate the cost of processing these workloads. Therefore, to determine the cost of processing the additional workloads funded by ARRA, we calculated the costs attributed to all employees involved in completing these workloads. Please note that, in calculating costs, we only included direct salary and benefit expenses for employees involved in handling these workloads. No other expenses, such as travel, space, or overhead, were charged to ARRA funding.
Appendix D
Disability and Retirement Workload Plan
Appendix E
OIG Contacts and Staff Acknowledgments
OIG Contacts
James J. Klein, Director, San Francisco Audit Division
Joseph Robleto, Audit Manager
Acknowledgments
In addition to those named above:
Jim Sippel, Senior 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
A-09-09-29157.
DISTRIBUTION SCHEDULE
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.