CHICAGO (Reuters) - If you want to understand the fight over Social Security’s future, look no further than your annual benefit statement - if you can find one.
The Social Security Administration stopped mailing annual statements in 2011 in a budget-cutting move that saves $70 million annually. The SSA rolled out an online statement the following year, but only 10 million American wage earners have signed up. That’s a paltry 6 percent of all workers.
The shift may not sound like a big deal given that so much of our personal finances has moved online, but the paper statement was an important annual reminder and education tool. The weak uptake for online services means young people who aren’t yet focused on retirement no longer get an explanation of where their payroll taxes are going. And older people close to retirement aren’t getting a critical projection of what they will receive at various claiming ages.
The loudest battles over Social Security are about potential benefit cuts like the recently vanquished “chained CPI” proposal. But another, less noticed fight has been going on for years. It’s aimed at undermining Social Security through systematic budget cutting by Congress of the operating budget of the SSA, the agency charged with providing customer service to the public.
The SSA has received less than its budget request in 14 of the past 16 years. In fiscal 2012, for example, SSA operated with 88 percent of the amount requested ($11.4 billion).
“It’s part of a raging fight by conservatives to get rid of the government’s footprint wherever possible,” says Nancy Altman, co-director of Strengthen Social Security, an advocacy group.
The SSA’s budget has been restored somewhat, with a fiscal 2014 budget of $11.7 billion. And President Barack Obama’s 2015 budget request is $12 billion, an amount that includes $100 million for modernization of online and in-person services and new funding aimed at prevention of fraudulent or duplicative benefit claims.
But Congress had no business squeezing the SSA budget in the first place. The agency is funded by the same dedicated funding stream (payroll taxes) that funds benefits, and the SSA’s administrative costs are just 1.4 percent of all outlays. The SSA exists to provide customer service to all of us as part of the taxes we pay into the system.
The cutbacks have sparked a broad deterioration of services as demand rises with the aging of the population.
Congress has directed the SSA to develop plans to reach more people with annual statements, either via mail or online. “We’re looking at whether it makes sense to do interim mailings - maybe when someone turns 25, or for everyone who is over 60 years old and getting closer to retirement,” Carolyn Colvin, the SSA’s acting commissioner, told me in an interview last week. “Or, it could be something we send to everyone once every five years. We haven’t decided yet.”
The agency also is boosting efforts to boost sign-up for "My Social Security" accounts, which offers the online statement downloads (1.usa.gov/1d3xvuZ).
Budget cuts have forced sharp reductions in SSA staff and field service offices. Nationwide, staff is down to 62,000 from a peak of 70,000 in the 1990s. Since fiscal 2010, the agency has consolidated 92 field offices into 46 offices and has closed 521 contact stations (mobile floating service facilities that set up shop in other government offices).
Visitors to field offices waited more than 30 percent longer in fiscal 2013 than in 2012. Busy signals on the SSA’s toll-free customer assistance line (800-772-1213) doubled in fiscal 2013 over the previous year.
The cutbacks have forced transformation of a broad range of services. The SSA has all but eliminated paper benefit checks, requiring most beneficiaries to be paid via direct deposit to a bank account or debit card.
Colvin says she is using the restored budget to rebuild staff in field offices, for a toll-free call-in operation and for hearing officers. But she says Social Security’s customer service must continue to move into electronic territory.
“We’ll also need face-to-face services for some people, but most customers will prefer to interact with us online or by phone,” she says.
A major test of that theory will come later this year, when SSA field offices stop providing two paperwork services that served 11 million customers last year: benefit verification forms and printouts of Social Security numbers. The forms often are required by state and local government agencies for services such as low-income housing and food stamps.
Colvin says Social Security number printout services will stop on August 1, and benefit verification forms will end October 1. The SSA is encouraging other government units to get the verification they need from the SSA website, or to encourage customers to go online or use the 800 number.
“It’s a tough decision, but there are other ways to get that information,” Colvin says. She adds that the cutoff will be soft. “We’ll provide the forms to people the first time around, and let them know that they won’t be able to get them in the offices the next time around.”
But Altman argues that the SSA has an obligation to provide paper-based and one-on-one services to customers who want them.
“The Social Security population still has a significant percentage that likes to get paper checks, and to be able to go in and talk to someone. They’re not that comfortable putting their financial information on Internet. Our view is that people are paying for these services and should be able to get them.”
(The writer is a Reuters columnist. The opinions expressed are his own.)
For more from Mark Miller, see link.reuters.com/qyk97s
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Editing by Douglas Royalty)