Unpaid furloughs in California delay federal disability benefits, cost state money

From the San Jose Mercury News:

SACRAMENTO — When Gov. Arnold Schwarzenegger recently began sending state workers home on unpaid leave one day a month, he said the state needed to tighten its belt to save the cash-strapped state money. But in one instance, the furloughs are actually costing California millions of dollars.

The governor, in the interest of fairness and simplicity, has insisted that his unpaid time off policy, which covers about 235,000 workers, be implemented across the board. So that means no exceptions even for the one state agency — a team of nearly 1,400 employees who review claims for federal disability payments — funded entirely by the feds.

Sending those employees home one day a month means the state will forgo about $10 million — or 5 percent of the agency's $210 million annual budget — from Washington, without saving state government any money. Meanwhile, it's taking the agency longer to process claims, delaying disability benefits at a time when such requests are soaring.

"There really is no reason to do this, it's a no-brainer," said Pete Spencer, the regional commissioner for the U.S. Social Security Administration, which oversees the disability claims program. "If the governor is saying he wants to take all the money the federal government is offering, this is one area he's not doing it."

Spencer wrote to the governor twice since November to explain the problem, and early last month received from Schwarzenegger what appeared to be a form letter in response.

"To solve a budget crisis that reached monumental proportions, I was forced to make some tough choices, including furloughing state employees," the governor wrote. The letter did not acknowledge that furloughing the disability agency's workers would not shave state expenses because all its costs are paid by the federal government.

Other state officials said all employees need to be treated equally.

"There's an equity issue there," said John Wagner, the Schwarzenegger administration's director for the California Department of Social Services.

But critics say the disability agency deserves an exemption because, as the only California agency funded purely by the federal government, it is unique.

Spencer said the furloughs are prolonging the amount of time it takes for the agency to review benefit claims, forcing disabled people who qualify to wait longer for help. Also being put on the back burner are reviews of existing recipients to check whether they still qualify for benefits.

Paring ineligible people from the rolls saves California money because the state pays a share of disability benefits, known as Supplemental Security Payments.

The policy is also at odds with the federal stimulus plan, which included $500 million to speed processing of disability claims. Economists say benefits payments to low-income people are one of the more effective ways to stimulate the economy because such recipients tend to spend most of the money.

"This is an anti-stimulus action," Spencer said of the furloughs.

The federal government paid out more than $1 billion in fiscal 2008 to disabled people who qualified for benefits during the year. And caseloads are up more than 12 percent in recent months.

More than a dozen other states have exempted federally funded departments from hiring freezes or furloughs, including New York, Pennsylvania and Ohio, according to the federal government.

The issue has caught the attention of California's congressional delegation. Twenty-three Democratic House members wrote the governor in February and complained that furloughing the disability agency employees makes no sense.

"During these tough economic times, we cannot afford a plan that impedes assistance to the disabled," the lawmakers wrote, "especially when that plan fails to achieve its stated goal of cost savings to the state."