SSA: Cycling Payment of Social Security Benefits

Published by the Government Accountability Office on 1997-02-25.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Office of the General Counsel


      February 25, 1997

      The Honorable William V. Roth, Jr.
      The Honorable Daniel Patrick Moynihan
      Ranking Minority Member
      Committee on Finance
      United States Senate

      The Honorable Bill Archer
      The Honorable Charles Rangel
      Ranking Minority Member
      Committee on Ways and Means
      House of Representatives

      Subject:   Social Security Administration: Cycling Payment of Social Security

      Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on
      a major rule promulgated by the Social Security Administration (SSA), entitled
      "Cycling Payment of Social Security Benefits" (RIN: 0960-AE31). We received the
      rule on February 12, 1997. It was published in the Federal Register as a final rule
      on February 11, 1997. 62 Fed. Reg. 6114.

      The final rule establishes additional days throughout the month on which Social
      Security benefits will be paid. Currently, all payments are issued by the third of
      each month. This payment schedule has led to a deterioration of service that SSA
      has been able to provide for recipients, either over the telephone or in face-to-face
      meetings, because of the workload peak. Spreading the payments out over the
      course of a month will alleviate this problem. The rule change does not affect
      current beneficiaries.

      Enclosed is our assessment of the SSA's compliance with the procedural steps
      required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.
      Our review indicates that the SSA complied with the applicable requirements.

If you have any questions about this report, please contact James Vickers, Assistant
General Counsel, at (202) 512-8210. The official responsible for GAO evaluation
work relating to the Social Security Administration is Jane Ross, Director, Income
Security Issues. Ms. Ross can be reached at (202) 512-7215.

Robert P. Murphy
General Counsel


cc: Mr. Brian Coyne
    Chief of Staff
    Office of the Commissioner
    Social Security Administration

Page 2                                                             GAO/OGC-97-24

       ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
                                ISSUED BY
                             (RIN: 0960-AE31)

(i) Cost-benefit analysis

The Social Security Administration prepared an assessment of the benefits and
costs attributable to the final rule. The benefits, according to the assessment, will
include better service for social security beneficiaries, the business and banking
communities will not have to have the capacity (in both personnel and data
processing capability) to handle the current first week of the month surge of 47
million benefit payments and the operational risk of processing that number of
payments in a 1 to 4 day window will be reduced.

The assessment found that the costs were difficult to quantify because of the
gradual enrollment of new beneficiaries. Some banks may modify the time of the
month the banks issue monthly statements and the manner in which they offer
electronic bill payment services. SSA expects no additional program costs
associated with final rule and that the administrative costs will be minimal, less
than $1 million.

The social security trust fund will accrue additional interest because the benefits
will be disbursed later in the month. This interest is expected to result in an
annualized transfer to the trust funds between 1997-2001 of $155 million with the
May 1, 1997, effective date of the final rule.

Finally, the assessment discusses three alternatives which were considered and the
reasons why they were rejected and the approach expressed in the final rule was

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,
607 and 609

Recipients of Social Security benefits are not small entities within the definition of
the Regulatory Flexibility Act and therefore, the final rule will not have a significant
impact on a substantial number of small entities.

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform
Act of 1995, 2 U.S.C. §§ 1532-1535

Provisions of final rules that relate to Social Security benefits are excluded from the
Unfunded Mandates Reform Act of 1995 by section 4 of the Act. 2 U.S.C. § 1503(7).

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

The rule was promulgated using the notice and comment procedures of 5 U.S.C.
§ 553. On January 26, 1996, SSA published a notice of proposed rulemaking in the
Federal Register. 61 Fed. Reg. 2654.

SSA received 17 comments in response to the notice and responds to the comments
in the preamble to the final rule. SSA clarified the final rule in response to a
comment to make clear that all Old-Age, Survivors, and Disability Insurance
beneficiaries whose Medicare premiums are paid by the state in which they live are
excluded from payment cycling.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

The final rule does not impose any information collections which are subject to the
Paperwork Reduction Act.

Statutory authorization for the rule

Sections 205(a) and 702(a)(5) of the Social Security Act, 42 U.S.C. §§ 405(a) and
902(a)(5), permit the Commissioner to make rules and regulations and establish
procedures to carry out the Social Security Act.

Executive Order No. 12866

The final rule was determined to be a "significant regulatory action" under
Executive Order No. 12866 requiring review by the Office of Information and
Regulatory Affairs, Office of Management and Budget (OIRA). OIRA approved the
final rule on December 9, 1996, as complying with the requirements of the order
based on the information supplied by SSA, including a planned regulatory action
document describing the reason for the rule and an assessment of the costs and
budgetary impact of the rule.

SSA did not identify any other statute or executive order imposing procedural
requirements relevant to the final rule.

Page 2                                                               GAO/OGC-97-24