As part of his State Fiscal Year 2012-13 Executive Budget, Gov. Andrew Cuomo has included a long overdue initiative to take over the administration of New York’s Supplemental Security Income (SSI) state supplemental payment from the federal Social Security Administration. Following a recommendation by his Spending and Government Efficiency Commission in their Dec. 15 report, the governor’s proposal will result, when fully implemented, in savings of $90 million annually.

Legislators and taxpayers should fully support this state takeover. It is a perfect example of the efficiencies that can be achieved from close scrutiny of wasteful practices.

The SSI program pays benefits to disabled adults and children who have limited income and resources. SSI benefits also are payable to people 65 and older without disabilities who meet the financial limits. Approximately 680,000 aged or disabled New Yorkers receive monthly federal and state supplemental SSI payments. The total annual state supplement benefit in 2011 was $650.8 million. Overall federal and state SSI payments to participants total just under $4.7 billion annually.

New York has always contracted out the SSI supplement payment process to the Social Security Administration (SSA). The annual cost of this service is exorbitant at $10.94 for each individual benefit issued. 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 state takeover as the only solution to end 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 or by over 80 percent, generating the nearly $90 million in annual savings.

New York and a few other states, including California and New Jersey, are the last outliers in still contracting with SSA for what is a reasonably simple payment process. 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. But, when recommended previously in New York at the agency level, the takeover was not solidly endorsed, as the governor to his credit now has done.

While New York’s SSI state supplement is more complicated than most states, with multiple categories of payments, assuming the responsibility will still be relatively simple. The one-time cost for developing a state system to issue benefits will be vastly outweighed by the annual long-term savings. At the time of the switchover, 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. Most of the information to operate the supplement in-house will remain fully available from SSA.

Some may continue to resist — claiming that the change may confuse recipients because they will receive two deposits monthly instead of one. However the total monthly amount going into their account will be the same. At the federal level, SSI has moved away from the last vestiges of check writing to direct deposit for all recipients. This leaves no rational excuse 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. It deserves the full support of all concerned. This one should be, in basketball terms, a layup.

Read article at Manhattan Institute