Social Security Administration FY 2018 Budget Observations

Last month, the Office of Management and Budget (OMB) submitted an updated and complete FY 2018 budget request with detailed spending plans for each Executive Branch department and agency, including the Social Security Administration (SSA).

Total Discretionary Funding

The federal budget provides the SSA with $10.5B in total discretionary funds for fiscal year (FY) 2018, $334M (+3.3%) over the FY 2017 enacted level.

Discretionary funding priorities include:

• Improving customer service, reducing wait times and hearing backlogs, modernize IT infrastructure
• $101M in new budget authority as part of the Supplemental Security Income (SSI) appropriation to support extramural research and early intervention demonstration projects
• Nearly $1.4B specifically for conducting SSI Continuing Disability Reviews (CDRs) and Non-Disability redeterminations, which would allow SSA to conduct about 557,000 SSI CDRs and 2,822,000 redeterminations.

Total IT and New Development Budgets

For FY 2018, the SSA is seeking $1.6B for IT spending, up roughly $26M (+1.6%) from the enacted FY 21017 level and down $57B from the final FY 2016 level. I went back and looked at last year’s FY 2017 budget request and SSA had requested nearly $1.8B for FY 2017 and reported an enacted FY 2016 IT budget of $1.5B, so they spent $200M more than estimated in FY 2016 and are now estimating they’ll spend $200M less than originally requested for FY 2017. A roughly 12% swing in estimated-versus-final IT budget is not insignificant, but the final FY 2016 spend fell $15M above what SSA had requested for that year

The SSA may be shifting a larger relative proportion of their IT budget in FY 2018 to steady state or Operations and Maintenance (O&M) efforts over Development/Modernization/Enhancement (DME) funding categories, a reversal in course over the last few years. The SSA’s $556M of total DME funds for FY 2018 would be a $21M (+3.9%) increase over the FY 2017 level of $535M. That would put FY 2018 DME at nearly 34% of SSA’s total IT budget. While that is slightly above what is projected for FY 2017 it is nearly $80M less than what was allocated in FY 2016, when DME accounted for 37% of SSA’s total IT budget. (See table below.)

Noteworthy IT Programs

Looking at the specifics of the SSA’s IT investments and initiatives provides insight into the agency’s immediate priorities and future direction. Here are some initiatives that stand out among others due to relative size, budget growth, and/or proportion of new development spending.

IT funding highlights include:

• Infrastructure Operations & Maintenance – Consistently the single largest IT budget line item from year to year, this initiative accounts for 51% of SSA’s overall IT budget and consists of the O&M portion of their Infrastructure Portfolio, including data center, office automation and telecommunications. The FY 2018 budget allots $840M, up 8.1% and is entirely categorized as O&M spending.
• Non-Major Infrastructure DME – The consistently second largest IT budget line at the SSA, this initiative accounts for 13.6% of SSA’s IT budget and focuses on infrastructure DME costs for data center, office automation and telecommunications efforts. The $225.2M budget for this line item rises 26% for FY 2018 and would be up 9% from what was spent in FY 2016. Together these two Infrastructure initiatives account for 65% of the SSA’s total FY 2018 IT budget.
• IT Modernization – This $122M 100%-DME-investment focuses on modernizing SSA’s IT infrastructure into a set of digital services and accounts for 7.4% of SSA’s FY 2018 IT budget. This is listed as a new investment in the FY 2018 IT budget, but in previous year’s budget a program of the same name focused on efforts to modernize the agency's legacy software and environment. That line item has been renamed in the current budget to Advanced Technology Initiatives and receives $139K, compared to $31M in FY 2017.
• IT Security & Compliance – This $121M investment category captures all costs associated with IT Security resources setting policy, establishing process and means, and measuring compliance and responding to security breaches. Funding for FY 2018 is up $2.6M (+2.2%) and consists of 51% DME funds. This investment line accounts for 7.3% of SSA’s total IT budget.
• IT Management – This $126M investment is for IT Management, Strategic Planning, Enterprise Architecture, Capital Planning, Project Management Offices, IT Budget/Finance, IT Vendor Management, 508 Compliance, General IT policy/reporting, and IT Governance. After a large $120M increase in FY 2017 from $14M in FY 2016, this investment line is trimmed $7.7M for FY 2018 and consists of 34% DME funds.

IT Modernization

In their budget description, SSA notes that the database systems that they use are 40 years old and that infrastructure is no longer considered to be adequate to meet the current demands for their services. SSA has worked to modernize their IT incrementally over several years through smaller, individual efforts. Last year, they began to approach a multi-year effort at agency-wide modernization.

To that end, their FY 2018 budget requests over $100M to support an IT modernization effort. The foundation for this effort was laid by incorporating agile methodology in their engineering practices and restructuring their legacy data to better match its intended uses. This budget pursues continued modernization plans by replacing core legacy systems with new code to improve operations and reduce the high overhead it consumes to maintain existing legacy code.

A second aspect of the modernization is to consolidate the existing legacy systems siloes into a flexible platform that aligns with current work processes. The latest budget also supports moving more functions to common cloud services to reduce duplication and improve data sharing. Finally, SSA’s IT modernization would improve cybersecurity and the budget supports this as well as licensing of cybersecurity software, retaining skilled talent, and continuing to update systems to meet federal cybersecurity performance measures.