U.S. May Seize California State Disability Office

California and New Jersey are so slow in handling disability cases that the Social Security Administration is considering the drastic step of taking direct federal control of the disability programs now operated by the two states.

“We must be fully prepared to take any necessary steps to partially or completely federalize a state (agency) when it is not performing as required,” Social Security Commissioner Gwendolyn S. King has told her staff, according to a memo obtained by The Times.

King said in an interview Thursday that she has decided to give the states six months to make significant improvements in their backlogs and error rates or she will be prepared to run the programs from Washington, replacing state managers and employees with federal workers.

The federal Social Security system provides the funds, but each of the 50 states runs its own disability program and hires its own workers to determine if residents are entitled to benefits. The program provides payments for persons who cannot work because of physical or mental problems.

The federal government has never before seized or attempted to operate one of the programs.

California and New Jersey are the poorest in overall performance when a combination of delays, errors and productivity are evaluated. Nationally, it takes an average of 74 days from the time a person files a claim until the disability payments are awarded or denied. It takes an average of 105 days in California and 101 days in New Jersey.

Until her staff prepares a detailed plan, “it is difficult for me to say how deep an intervention we would have to make,” King said. “My expectation is we would be able to utilize as many state employees as would be willing to work with us,” she said.

More than other states, California and New Jersey have been swamped by a rising tide of disability applications involving the homeless and victims of AIDS, according to Stan Kress, president of the National Assn. of State Disability Directors.

“They have suffered way more than other states,” with cases increasing at twice the rate of national growth, said Kress, who is director of disability determinations in Idaho.

“My view is circumstances have been above and beyond their control,” Kress said.

But King doesn’t accept this explanation.

“I’m not sure what the excuses are,” she said. “We have a responsibility to ensure that people receive service. When a state is in difficulty, we have a responsibility to assist the state and turn the situation around or else move in and manage it.”

King has given her staff two weeks to prepare information on the formal steps needed to seize a state program and the number of employees needed to improve service and reduce the backlog of cases.

California officials were surprised by the threatened takeover.

“It’s news to us. We have not had any notice in writing from the federal government at this point,” said Kathleen Norris, director of public affairs at the State Department of Social Services in Sacramento.

“Our disability evaluation (system) is working very hard and we have a high accuracy rate,” she said. “The performance standard is such that it would surprise me” if the federal government chose to take over the program.

There was no immediate comment from New Jersey officials.

California examiners who evaluate individuals’ claims each handled an average of 179 cases last year, compared with a national figure of 209. “In fairness, California is getting 20% more new cases than anticipated,” said Social Security Commissioner King. “They are inundated with work but are not as productive” as other states.

California and New Jersey also have unusually high error rates, with more instances of benefits incorrectly awarded or mistakenly denied, according to King.

The growing backlog of cases is a national problem--the number of pending applications grew from 306,700 in 1989 to 355,600 last year. The California backlog climbed to 56,000 last Sept. 30, the end of the federal fiscal year, up from 47,000 a year earlier. New Jersey’s backlog rose to 11,900 up from 7,900.

About 271,000 people in California considered unable to work are receiving disability benefits under a program for persons who once worked regularly and paid Social Security taxes. Another 500,000 persons receive disability benefits under a program called Supplemental Security Income, designed to help the poor. This program is linked to income and recipients include disabled children as well as adults.

King said that she has given a mandate to her regional commissioners, Linda McMahon in the West and Peyter DiSturco in the East, to support California and New Jersey officials in efforts to reduce the delay in processing and to improve the error rate. If the states are not successful, the federal government will take over.

Federal budget officials recently gave the Social Security Administration additional funds for the disability programs. But Kress, the head of the national group of disability department directors, says that the money cannot help California and New Jersey rapidly enough to meet King’s demands for improvements.