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ATTACHMENT VIII

MINOR AND NECESSARY CHANGES IN THE
CALCULATION OF CERTAIN SOCIAL
SECURITY BENEFITS WOULD RESULT IN
LARGE SAVINGS

GAO REPORTS

Letter report on reductions in erroneous Social Security payments and in administrative burdens when benefits are determined on a retrospective monthly basis,

HRD-78-114, May 26, 1978

Letter report on potential savings to the Social Security system if benefits were calculated to the nearest penny, HRD-78-160, September 8, 1978

COGNIZANT LEGISLATIVE COMMITTEES

Senate Committee on Finance

House Committee on Ways and Means

STATEMENT OF THE RECOMMENDATION

GAO recommended in its May 1978 report that the Social Security Act be amended to change the basis for determining Supplemental Security Income eligibility and benefit payment amounts from a quarterly accounting period to a retrospective monthly accounting period, with a 1-month lag.

GAO recommended in its September 1978 report that Congress amend the Social Security Act to require calculation of Social Security Retirement and Survivors Insurance Benefits to the nearest penny.

Both reports include suggested legislative language.

DISCUSSION OF THE PROBLEM

Accounting method for Social

Security benefit payments

The original Supplemental Security Income legislation

generally requires Social Security to determine Supplemental

Security Income eligibility and benefit payment amounts on
a quarterly basis. Social Security computes benefits pro-
spectively; therefore, benefits are based on the income a
recipient expects to receive over a projected 3-month period.
Once computed, these payments are disbursed in equal monthly
The quarterly computations were established

installments.

to minimize changes in the monthly benefit payments caused by

income variations.

This requirement has resulted in substantial overpayments
In 1976 alone,

to Supplemental Security Income recipients.

Social Security's Office of Quality Assurance estimated that at

least $39 million of overpayments occurred because of the present accounting method.

Method of calculating Social
Security benefit payments

Presently the Social Security Act requires that benefit payments be rounded up to the next highest dime. GAO computed a potential savings of $386 million to the Social Security Retirement and Survivors Insurance program for the period 1980 through 1986, if benefits were calculated to the nearest penny. A savings, although somewhat smaller, would also be achieved for the Disability Insurance program.

LEGISLATIVE INITIATIVES/POLITICAL SENSITIVITIES

Section 232 of the Social Security Welfare Reform Amendments

of 1979, introduced in both the House and Senate as H. R. 4321 and

S. 1290, respectively, amends the currently used prospective quarterly accounting method in favor of a retrospective monthly accounting

period. Although this method of accounting would be an im

provement over that currently used, GAO believes that computing

payments.

benefits on this basis alone would not fully reduce erroneous However, by allowing a 1-month lag between the month used for eligibility determinations and benefit calculations

and the month payments are made to recipients, reductions in erroneous payments and in Social Security administrative burden should be realized. The 1-month lag is intended

to provide Social Security with sufficient time to

-process an initial eligibility determination or

reported benefit status change,

-notify recipients of their right to an evidentiary

hearing, and

calculate a benefit payment amount before any erroneous payments are disbursed.

ATTACHMENT IX

CONSOLIDATION AND RATIONALIZATION
OF FEDERAL FOOD ASSISTANCE PROGRAMS

IS NEEDED

GAO REPORT

"Federal Domestic Food Assistance Programs-A Time For
Assessment and Change, CED-78-113, June 13, 1978

COGNIZANT LEGISLATIVE COMMITTEES

Senate Committee on Agriculture, Nutrition, and Forestry

House Committee on Agriculture

House Committee on Education and Labor

STATEMENT OF THE RECOMMENDATION

GAO recommended that the Congress:

-On the basis of a proposal involving consistent income and asset program standards, which GAO recommended be developed by the executive branch, adopt a uniform definition of the term "needy" and establish consistent criteria for determining who is eligible for Federal food assistance programs; these criteria

should include income and asset eligibility requirements as well as allowable exclusions and deductions from countable income and assets. In addition, consistent administrative procedures among the programs regarding accounting periods for measuring income and veri

fication requirements for such eligibility factors as income and assets should be provided.

---Approve an explicit national policy on the

appropriate levels of food assistance to be

provided to needy Americans by the Federal

Government.

-Consolidate major Federal food assistance programs
by bringing under one program Federal cash and
commodity assistance currently provided by the school
lunch and school breakfast programs and evaluate the
need for Federal reimbursement of free milk served
under the special milk program in elementary schools
and child care institutions already participating

in the school lunch, school breakfast, and/or child
care food programs.

--Authorize the Secretary of Agriculture to implement individualized food stamp allotments nationwide

if demonstration projects, which GAO recommended be undertaken by the Department of Agriculture, show the administrative feasibility of such allotments. --On the basis of the results of a feasibility study,

which GAO recommended be carried out by the executive branch, eliminate the receipt of duplicative benefits, particularly between the food stamp and school lunch programs, by allowing consideration of benefits received from one Federal food assistance program when determining

eligibility and benefit levels for other Federal food assistance programs.

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