Prepared remarks submitted: This testimony discusses one key proposal of the Governor’s Human Service Budget – managing the SSI State Supplement.  As part of his SFY 2012-13 Executive Budget, Governor Andrew Cuomo has included a long overdue initiative for the state to take over the administration of New York’s Supplemental Security Income (SSI) state supplemental payment from the federal Social Security Administration.  Following the lead of a recommendation by his Spending and Government Efficiency (SAGE) Commission in their December 15, 2011 report, the Governor’s proposal will result, when fully implemented, in savings of $90 million annually.  The Empire Center for Public Policy fully supports this state takeover  – it is a perfect example of the efficiencies that can be achieved from close scrutiny of wasteful practices and modest upfront staff and system investments to yield long-term savings.

On average, over 680,000 either aged or disabled New Yorkers receive monthly federal and state supplemental SSI payments annually.  The total annual state supplement benefit in 2011 was $650.8 million.  Overall federal and state SSI payments to participants totaled about $4.7 billion.

New York chose from the inception of the state supplement to contract out the payment process to the Social Security Administration, which combines the monthly federal and state payments into one deposit or check.  The annual cost of this service has become exorbitant at $10.94 for each individual benefit issued, far more than the actual cost of delivering the benefit.  The cost also rises each year based on automatic inflation adjustments in federal law.  Efforts to request that SSA voluntarily lower the cost were consistently ignored, leaving the only solution being to build a state system and process to effectively replace what has become a price gouging service from SSA.  When the SSI takeover is fully implemented it will reduce this per benefit issuance cost to under $2.00 or by over 80%, generating the nearly $90 million in annual savings.

Forty-four states provide a monthly state supplement to all recipients of SSI and the vast majority of them administer it themselves.  Pennsylvania and Rhode Island have brought their SSI state supplements in house over the last several years and Massachusetts is in the process of doing the same.  Only New York and a few other states including California and New Jersey remain outliers in still contracting with SSA for what is a reasonably simple payment process.

While New York’s SSI state supplement is more complicated than those of most states, with multiple categories of payments, assuming the responsibility from the feds will still be relatively simple.  The upfront one-time thirty-month costs for building, launching and maintaining the state payment system will be vastly outweighed by the annual long-term savings.  At the time of the final switchover in October 2014, all current SSI supplement recipients will be automatically covered at their existing payment levels.  Anyone applying after the switchover will first need to apply for and be determined eligible for federal SSI benefits, which is unchanged from how the current program operates.  Most of the information to operate the supplement in-house will still be fully available from the Social Security Administration.

I was previously the Deputy Commissioner of the Center for Employment and Economic Supports at the Office of Temporary and Disability Assistance.  I have a thorough knowledge of the importance of moving in this direction because in that role, one of my responsibilities was overseeing policy in regard to the SSI state supplement.  For a number of years the topic of taking over the SSI state supplement was raised at the agency level, but it either fell on deaf ears or died in informal legislative negotiations.  Advocates claimed it would confuse SSI recipients and unions expressed concerns that it might displace public sector jobs – both are inaccurate.

The change will, in effect, be invisible to recipients.  The process will be automated and the total monthly amount going into SSI recipient accounts from two deposits instead of one will be the same.  SSI is currently moving fully from the last vestiges of check writing to direct deposit for all recipients.  Additionally, the Governor proposes using state workers rather than contractors to operate the new payment system, thereby eliminating public employee union concerns. There is simply no rational reason for not moving forward at a time when the state needs to realize any and all savings to close structural deficits.  The Governor’s proposal is sound, sensible and prudent and deserves the full support of the legislature.

 

You may also like

Testimony: FY2018 New York State Budget – Taxes

Lawmakers should allow the state's surcharge on high incomes to expire because of its volatility as a revenue source and its impact on the state's competitiveness, E.J. McMahon, the Empire Center's research director, testified. Read More

Testimony: FY2016 New York State Budget

Changes made last year to the Corporation Franchise Tax and Estate Tax codes will help make New York a more attractive and competitive place to live, work and do business. However, there remains much to do. Read More

Testimony: FY2015 New York State Budget

Governor Cuomo’s 2014-15 Executive Budget would devote more resources to initiatives described as “tax cuts” than any state budget we’ve seen in quite a few years. This in itself is an encouraging sign of the recognition that New York needs to do more to shed its reputation as a high-cost, high-tax state. Read More

Senate Testimony on State Tax Reform

This committee has chosen an opportune moment to review New York’s state tax code and consider reform options. Wall Street, the state’s cash cow for 20 years, is now retrenching. And in an era of slower economic growth, many businesses will be less willing to shoulder costs they can avoid by moving elsewhere. Needless to say, by various measures, most states can offer a lower-cost environment than New York. Read More

Edmund J. McMahon Testifies on Benefits of Outsourcing Public Services before the New York State Senate Labor Committee

Good morning, Senator Velella, and thank you for this opportunity to speak before your committee today. My name is Edmund J. McMahon, and I am senior fellow for tax and budget Read More

Edmund J. McMahon Testifies Before the New York City Council Committee on Waterfronts

Thank you, Council Member Yassky. My name is Edmund J. McMahon, and I am senior fellow for tax and budgetary studies at the Center for Civic Innovation of the Man Read More

Edmund J. McMahon Testifies Before the Senate Commission on Corporations, Commissions and Authorities

Good morning, Senator Leibell, and thank you for this opportunity to testify today. My name is Edmund J. McMahon, and I am senior fellow for tax and budgetary studies at the Manhattan Institute for Policy Research.  T Read More

EJ McMahon Testimony: Assembly Committee on Real Property Taxation

Economic conditions have obvious implications for the work of this Committee and for the Legislature in general. We are in the midst of a potentially severe and long-lasting global recession. But for New York State, the recession is only part of the problem. Fueled by the super-heated profits of the securities industry, mixed with gains from a now-popped real estate bubble, the surge in state tax revenues over the past five years was as big as anything New York has experienced during any previous five-year stretch in the last 35 years. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.