EBSA Faces Budgeting Constraints as Responsibilities Increase

While the Department of Labor’s Employee Benefits Security Administration’s budget has largely remained flat over the last 10 years, the agency’s responsibilities have grown, especially with the passage of the SECURE 2.0 Act of 2022, according to a recent report by the Government Accountability Office. 

The GAO studied EBSA’s resources and planning with respect to its responsibilities to conduct oversight of health and retirement benefits. Despite issues with funding and declining resources, the GAO found that EBSA has taken several steps to manage its limited resources, such as focusing on enforcement cases with high monetary recoveries and moving trainings online.  

Because EBSA’s budget remained flat between 2013 and 2021, the department experienced a substantial decline in staffing, stated Representative Bobby Scott, D-Virginia, the top Democrat on the House Committee on Education and the Workforce, who along with a fellow committee member, Representative Frederica S. Wilson, D- Florida, requested the report. 

For example, the costs supported by EBSA’s working capital fund, which comes from fees collected by EBSA, increased by more than $8.8 million between 2015 and 2017, which required a reduction in full-time employees. Specifically, EBSA officials noted it experienced a decline of more than 180 “full-time equivalents” in 2021 from its peak level of roughly 980 FTEs in 2013. 

As of September 2022, EBSA oversaw roughly 747,000 employer-sponsored retirement plans and about 2.5 million group health plans. The retirement plans hold, according to EBSA, an estimated $12 trillion in assets as of fiscal year 2022.  

Officials said the agency increasingly relies on supplemental funding because its expenses have continued to increase while the base budget has been flat. 

This fact pattern poses a challenge as the agency has received many new responsibilities under laws including the Patient Protection and Affordable Care Act, the Families First Coronavirus Response Act, the CARES Act, the No Surprises Act of 2021 and SECURE 2.0, among others. 

In addition, EBSA has identified areas in which it would like to expand, such as dedicating a full division to its missing participants program and modernizing its efforts to respond to “hard-to-value” assets, such as alternative investments and private equity. Officials also said they would like to increase and be more proactive in EBSA’s enforcement of the Multiple Employer Welfare Arrangements, which have been a chronic problem for the agency, according to the GAO. 

The GAO found that stakeholders had a mix of opinions about EBSA’s responsibilities and enforcement priorities.  

A representative with a consumer advocacy organization for pension and retirement security said the missing participants program is a “valuable oversight program that has been very effective based on the amount of money recovered per investigator.” But representatives from a health care research organization said EBSA has “missed opportunities to provide proactive consumer support to participants in the healthcare plans it oversees.” 

“Since EBSA enforcement inquiries are often based off participant complaints, the representatives suggested EBSA should provide more education and outreach to participants that may not understand their plan or how to seek assistance when they require plan-related support,” the report stated. 

Although EBSA officials said they use several strategies to manage declining resources, the GAO stated that the agency does not have a clear or systematic decisionmaking process for doing so.  

One strategy EBSA officials cited was calculating and planning resource reallocations for MEWAs and detailing the resource needs in a white paper. However, the agency’s process for using white papers to calculate resource reallocations is not acknowledged in planning documentation, according to the GAO. 

EBSA planning documents also noted that if the agency received a lower funding amount than requested, some programs and priorities would have to be modified, but the GAO report revealed that these documents do not include a detailed plan for reallocating resources to accommodate these modifications.  

“For example, the goal for transitioning and preparing staff hired for the missing participants program was not included in the planning documents we reviewed,” the report stated. 

It is unclear how EBSA would respond to increased responsibilities, unanticipated funding or funding that is lower than requested, according to the GAO. 

“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. 

The GAO recommended that the Secretary of Labor should “direct EBSA to develop and document a systematic decision-making process for oversight responsibilities and allocating staff in a changing budget environment, which could be incorporated within current planning documents.”