to the Social Security Board, established by the said Social Security Act; to make such reports as said Board may from time to time require; to comply with such provisions as said Board may from time to time find necessary to assure the correctness and verification of such reports; to put into effect such methods of administration, authorized by this act, as are found by said Board to be necessary to the efficient operation of said plan;

* *

"The representatives of the Social Security Board will cooperate with the chief of the Ohio Division of Aid for the Aged, and assist him in every way to carry out the provisions of the Ohio law, to the end that this law may accomplish its full beneficent purpose of providing security to the needy aged. "It is the practice in Ohio to send out the monthly checks for assistance after the middle of each month. We are advised that the checks for September have just gone out. Therefore, there is ample time before the next checks are sent out to Ohio's needy aged for the chief of the Ohio Division of Aid for the Aged to make the necessary improvements in administration as set forth in the findings of the Board and as required by both the Social Security Act and the Ohio law."

UNITED STATES OF AMERICA-BEFORE THE SOCIAL SECURITY BOARD

Arthur J. Altmeyer (Chairman), George E. Bigge, Mary W. Dewson, members of the Board.

IN THE MATTER OF HEARING PURSUANT TO SECTION 4 OF THE SOCIAL SECURITY ACT, ON THE ADMINISTRATION OF THE PLAN FOR OLD-AGE ASSISTANCE IN THE STATE OF OHIO

DECISION

The Social Security Board, pursuant to section 4 of the Social Security Act, after due notice to the State agency administering the Ohio plan for old-age assistance, the Division of Aid for the Aged of the Ohio State Department of Public Welfare. having conducted on September 6, 1938, a hearing relative to the administration of said plan, hereby finds from the evidence before it, as follows:

FINDINGS

I. Jurisdiction and Responsibility of Board

The Ohio plan for old-age assistance was first approved by the Social Security Board on March 31, 1936. A revision of the plan was submitted in July 1937, and approved by the Board August 3, 1937.

Title I of the Social Security Act places upon the Social Security Board the responsibility of approving State plans for old-age assistance meeting the requirements set forth in section 2 (a) of said act. A further responsibility is placed upon the Board, if, after reasonable notice and opportunity for hearing to the State agency administering such a plan, the Board finds that in such administration there is a failure to comply substantially with any provisions required by said section 2 (a), to notify such State agency that further payments will not be made to the State until the Board is satisfied that there is no longer any such failure to comply.

On August 19, 1938, notice of this hearing was sent to the Division of Aid for the Aged of the Ohio State Department of Public Welfare, the State agency administered the plan, stating the aspects of the administration of the Ohio plan which did not appear to conform to requirements of section 2 (a) of the Social Security Act. The notice set the date of the hearing for August 29, 1938. At the request of the division of aid for the aged, the date of the hearing was postponed to September 6, 1938. The hearing was held on the date requested by the State agency and the testimony recorded. No representative of the said State agency appeared at said hearing. On September 8, 1938, a transcript of the testimony was sent to the said State agency with notice of a further opportunity to present evidence and arguments concerning the administration of the Ohio old-age assistance plan. The said State agency has not availed itself of such opportunity.

Throughout the period during which the Ohio plan has been in operation the Social Security Board has observed deficiencies in the administration of the plan. Despite the fact that the State agency's attention was brought to such

deficiencies, and despite the fact that representatives of the Board made sug gestions for improvements in the administration of the plan and the State agency gave assurances that improvements would be made, reports to the Board from its staff have indicated that the administration of the plan has become more and more inefficient.

II. Noncompliance as to Efficient Administration

(1) There has been a lack of effective administrative direction and control of the agency. There has been repeated interference with orderly procedures by the Governor. Executive responsibility within the agency has been diffused through the appointment of a business manager who was not administratively responsible to the chief of the division. Department heads have functioned without direction or supervision. Policies and procedures have been established by various department heads without regard to their effect on the total operations of the agency. Because of this lack of responsible direction and control the division has developed into a cumbersome and uncoordinated agency, seriously deficient in its ability to give prompt and equitable treatment to applicants and recipients.

(2) The personnel provisions of the Ohio old-age assistance plan have not been complied with, and there has been wholesale violation of the Ohio civilservice laws and rules. A majority of the emloyees are without civil-service status, and a large number of such employees have been retained long after the period allowed for provisional, temporary, or emergency appointments under the civil-service act. The substitution of personal and political considerations for the merit system in the selection of employees has given the division a large number of workers whose lack of experience and competence has further contributed to the inefficiency of the agency in its dealings with ncedy aged persons.

(3) There have been serious and excessive delays in the handling of applications for assistance. The records show that a large number of applications have been pending over a long period of time. Similar delays have occurred between the time and subdivision offices have recommended necessary increases in awards, due to change in circumstances, and the time these increases have been made effective by the State office.

(4) There has been a failure to establish adequate basic policies and procedures with respect to

(a) Eligible persons who because of their physical or mental condition were unable to handle their assistance grants. Aid to such persons has often been denied, grants canceled, and cases closed.

(b) Recipients residing in private institutions: Restrictions on the use of grants have occurred because of the lack of definite policy.

(c) Responsibility of relatives: The agency has failed to make clear and definite policies on this important phase of administration, with the result that confusion and uncertainty prevail throughout the local offices and are reflected in unnecessary hardship on applicants.

(d) Service to applicants and recipients: The responsibility of the agency has not been made clear to the local staffs in the matter of assisting applicants to procure needed proof of eligibility, or helping them with, their personal problems, such as securing medical care and finding decent living quarters.

This failure to adopt uniform policies and procedures for the use and guidance of the subdivision offices throughout the State has resulted in applicants and recipients being treated differently in different parts of the State.

(5) Blanket increases in awards have been made, upon instructions from the Governor, which nullified to a large extent the granting of assistance on the basis of ascertained need. As a result of such practices, awards in some instances have been increased above the legal maximum and afterwards canceled outright because of the excess, although recipients were still in need. Another result of this unplanned procedure has been that at the time recipients on the rolls received increased awards, aid was being denied equally needy applicants because of alleged shortage of funds. Efficient administration contemplates that funds available shall be used in such a way as to insure similar treatment of all eligible persons in similar circumstances. Any other type of administration results in discrimination.

(6) There has been discrimination in the handling of complaints. Little attention is given to complaints made direct to the agency, while complaints addressed to the Governor have been given primary attention. Efficiency in operation would insure that all complaints would be treated upon their merits

in line with policies and procedures uniformly applicable to all eligible persons, regardless of the method used by them to bring their grievances, real or supposed, to the attention of the responsible State agency.

(7) The accounting system in operation does not accurately reflect at all times the total amount of property held in trust for recipients and the total number of cases. Although the rights of recipients and potential recoveries by the State and Federal governments are involved, properties are placed in trust with private individuals over whom little or no administrative control is exercised by the division.

Audits made by the Social Security Board covering a period extending from the date on which grants were first made to the last day of December 1937 show exceptions taken by the auditors amounting approximately to $1,900,000. These audits also show that the proportions of exceptions noted to the total payments have progressively increased, and if the ratio as shown by the last audit is applied to the period since that date, exceptions would amount to a total of 22 million dollars.

The audits further indicate that the case records in the State office do not include evidence of the validity of a large percentage of the payments made by the State. The large amount and number of proposed exceptions will necessarily involve a very substantial loss of time, labor, and money on the part of the State agency which would not have been necessary if such cases had been adequately investigated and recorded in the first place, and in a substantial number of cases it is highly improbable that the State will be able to justify the payments made.

III. Noncompliance With Accurate Reporting Provisions

(1) Statistics furnished by the State upon which the Social Security Board necessarily relies in determining the amount of grants made to the State have been based upon inaccurate reports. Due to variations between the counties' methods of counting applications, the total figures reported by the State do not include all the applications that have been made.

(2) Inaccurate reports have been made of money expended by the State because of failure of the State agency to report properly on canceled warrants and failure to report supplemental pay rolls.

(3) The State agency has been unable to furnish the Board with estimates which reflect contemplated changes in policies, additions in the number of grantees, or increases in amount of awards, due to lack of coordination between operating and fiscal units of the division.

(4) The State agency has failed to properly record payments made to "suitable persons" for the benefit of aged individuals. Under the provisions of the Social Security Act, Federal funds may not be used in payment to persons other than the aged individual or his legally appointed guardian. The failure to record payments to such "suitable persons" makes it impossible for the Social Security Board to make accurate computation of Federal grants to the State.

IV. Noncompliance With Fair-Hearing Provision

Fair hearings have not been extended to dissatisfied applicants and recipients except in relatively few instances involving narrow legal questions. Adequate procedures have not been adopted for informing applicants denied assistance or dissatisfied recipients of their right to a fair hearing and many applicants and recipients, through ignorance of their rights, have been and are deprived of an opportunity for a fair hearing.

The agency has not set up adequate and equitable procedures for the handling of complaints as one step in the process for providing opportunity for fair hearings to dissatisfied applicants and recipients. It has not provided opportunity for fair hearings with respect to matters of importance to recipients, especially with respect to complaints regarding inadequate awards and delays on applications for assistance.

CONCLUSIONS

Upon the basis of the foregoing findings, the Social Security Board concludes that in the administration of the Ohio plan for old-age assistance there is a failure to comply substantially with:

1. The provision of section 2 (a) (4) of the Social Security Act, requiring the granting to any individual whose claim for assistance is denied, an opportunity for a fair hearing before the State agency.

2. The provision of section 2 (a) (5) of the Social Security Act, requiring such methods of administration as are necessary for the efficient operation of the plan.

3. The provision of section 2 (a) (6) of the Social Security Act, requiring the compliance with such provisions as are necessary to assure the correctness and verification of reports to the Social Security Board by the State agency. 4. Section 15a of the Ohio Old-Age Assistance Law, General Code 1359, effective May 10, 1937, providing among other things the following:

"The division shall also have the duty and authority to submit the plan for old age assistance embodied in this act and in the rules and regulations made under authority of this act to the social security board, established by said the 'social security act'; to make such reports as said board may from time to time require; to comply with such provisions as said board may from time to time find necessary to assure the correctness and verification of such reports; to put into effect such methods of administration, authorized by this act, as are found by said board to be necessary to the efficient operation of said plan; to administer and expend, pursuant to this act, all sums paid to the state of Ohio by the secretary of the treasury of the United States as authorized by said act of congress or any act amendatory thereof, and to pay to the United States, from moneys appropriated for the purpose of administering this act, such share or portion of the net amount collected by it from the estate of any recipient of aid, pursuant to this act, as may be required by said act of congress or any act amendatory thereof."

(5) Said section 15a of the Ohio law providing in part as follows:

*

"Every rule and regulation of the division governing the method of appeal from decisions of a subdivision, * * shall provide for granting to the individual concerned such opportunity for a fair hearing as may be necessary to meet the conditions in that behalf, prescribed by or under authority of section 2 (a) (4) of title I of the act of the congress of the United States, known as the 'social security act.'"

In order to comply with these requirements of State and Federal law, the Ohio Division of Aid to the Aged must do and perform the following acts or take the steps necessary to accomplish the following results, as the case may be:

(a) Prepare and submit to the Social Security Board a detailed statement of steps which can and will be taken by the State agency to simplify the process of procedures of the said division in the determination of need in respect of all persons who may be eligible for old-age assistance and in respect to the making of awards.

(b) Prepare and submit to the Board a detailed statement of steps which can and will be taken by the officials of the State agency to investigate the need of all recipients whose awards have been increased without investigation of the individual circumstances in such cases, and to alter the awards in these cases so that they will conform with the results of the investigation.

(c) Prepare and submit to the Board a detailed statement of steps which can and will be taken by the officials of the State agency to investigate the circumstances of applicants with respect to whom no investigation has been made, to determine their eligibility, the amount of the awards to which they are entitled, to insure prompt payment of such awards, and to notify promptly such applicants of the action taken by the State agency.

(d) Give notice to all persons whose applications are denied by the State agency of their right to a fair hearing which will be held in accordance with State and Federal law.

(e) Render an accurate report to the Board of the number of applications now pending, the number of eligible recipients receiving awards, and the amount of moneys heretofore expended by the State agency and establish a reporting system which will hereafter insure accurate monthly reports to the Board of the number of applications now pending, the number of eligible recipients, and the moneys expended.

(f) Prepare and submit to the Board a detailed statement of steps which can and will be taken by the officials of the State agency to establish accounting controls that will show the number and value of properties held in trust by the State agency and the number and value of the insurance policies assigned to the State agency.

(g) Prepare and submit to the Board a detailed statement of steps which can and will be taken by the State agency to coordinate the work of the various

employees, officials, and sections of the said agency, so as to avoid overlapping of jobs and functions and to insure that the acts of all employees and officials of the said agency will be in accordance with the authority and responsible direction of the chief executive officer thereof.

(h) Prepare and submit to the Board at the earliest possible date a manual which will contain all rules and regulations of the State agency and a statement of all its policies and procedures governing the administration of old-age assistance in the State of Ohio.

(i) Prepare and submit to the Board a detailed statement of steps which can and will be taken by the State agency to instruct the employees of the division in the application of such policies and procedures and in the performance of the duties assigned to such employees.

(j) Determine what individual employees of the division are not qualified in accordance with the law to perform the duties assigned to them, apply to the civil service commission of the State for lists of eligible persons, and replace unqualified employees with qualified employees as rapidly as this can be accomplished under the powers conferred upon and the facilities available to the officials of the State agency and the Ohio Civil Service Commission.

(k) Prepare and submit to the Board a detailed statement of steps which can and will be taken by the officials of the State agency to employ sufficient qualified persons to fulfill the foregoing requirements.

(1) Prepare and submit to the Board a detailed statement of the steps which can and will be taken by the State agency to insure that all employees of the State agency shall perform their duties solely in the interest of a nonpolitical, nondiscriminatory administration.

Done at Washington, D. C., this twenty-ninth day of September, One Thousand Nine Hundred and Thirty-Eight.

By

SOCIAL SECURITY BOARD,

Chairman.

(Thereupon the subcommittee at 12:45 p. m., Wednesday, July 12, 1939, adjourned, to meet next Wednesday at 10 a. m.)