Top Government Benefits Regulator Hobbled by Dwindling Funds (1)

The US Labor Department’s top employee benefits regulator is straining to keep up with its oversight responsibilities amid years of declining resources, a new government watchdog report says.

DOL’s Employee Benefits Security Administration needs to develop a systematic decision-making process for managing a decline in annual appropriations, the Government Accountability Office recommended in a report made public Thursday. Better management controls would allow EBSA to reallocate dwindling funds more quickly and effectively, the GAO said.

The agency oversees roughly 2.8 million private-sector health, 765,000 retirement, and 619,000 welfare benefit plans covering 153 million workers and retirees. The GAO report found that budget constraints have left the agency with an enforcement capacity of fewer than one investigator for every 12,600 plans it regulates at current staffing levels.

The report, which was produced at the request of Democrats on the House Committee on Education and the Workforce, illustrates the bind more than a decade of under-funding has put on the federal agency responsible for protecting worker pensions and employer-sponsored health plans, said Ranking Member Bobby Scott (D-Va.) in an emailed statement Thursday.

House Republicans postponed a partisan annual spending measure this week that would slash EBSA’s annual funding by more than $38 million. The agency appropriations package, which is separate from the stop-gap funding bill, has low prospects in the Senate, and President Joe Biden has pledged to veto any such budget-reduction measure.

“As EBSA’s oversight responsibilities expand to advance our shared, bipartisan priorities, we should be making the investments in EBSA that reflect our commitment to ensuring access to affordable health care coverage and secure retirement benefits,” Scott said in the statement.

Republicans on the Education and Workforce Committee have been publicly criticizing EBSA for dragging out its private-sector enforcement efforts. Committee Chair Virginia Foxx (R-N.C.) has called on senior agency officials to participate in committee interviews to address accusations that investigations last too long, costing private-sector money and resources.

EBSA’s annual appropriation has generally remained unchanged since 2013 and has failed to keep up with inflation costs or additional oversight burdens mandated by Congress, the GAO report found. Relative to GDP, its 2021 funding was 10% lower than 2013, despite new unfunded responsibilities under the SECURE (Pub. L. No. 116-94) and SECURE 2.0 (Pub. L. No. 117-328) Acts.

Congress did provide an additional $14 million in funding under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. No. 116-136) in 2020, the No Surprises Act of 2021 (Pub. L. No. 116-260), and the American Rescue Plan Act of 2021 (Pub. L. No. 117-2), the report noted.

EBSA has also reported a decline in full-time-equivalent staffing over the last decade. The agency employed just over 800 full-time equivalent workers as of March 2023, according to data from the US Office of Personnel Management. In 2013, the agency had 977 full-time workers, the majority of which were tasked with enforcement and participant assistance.

Operating expenses for wage scale increases, rent, security, and information technology services have all risen, putting additional financial strains on the small agency, the GAO report said.

If EBSA were to receive even lower appropriations next fiscal year, “programs and priorities would have to be modified,” senior officials told the GAO, but the agency doesn’t maintain a detailed plan for how it would accommodate reallocated resources. In the interim, the agency has focused on high monetary enforcement recoveries and establishing timeliness and monetary investigation benchmarks.

“It is not clear how EBSA would respond to increased responsibilities, unanticipated funding, or funding that is lower than requested. A clear, systematic, and thoroughly documented decision-making process could put EBSA in a better position to make informed decisions regarding resource reallocations due to changing circumstances,” the report stated.

In response to the GAO report, EBSA said it will “explore additional ways to formally document its internal processes.”