State Social Security Administrator Program Funding

June 17, 2024
Circular Letter: 200-030-24
Topic: Announcements

To: Public Employers with an Existing Section 218 Agreement

Purpose

The purpose of this Circular Letter is to inform you of the implementation of administrative fees effective July 1, 2024, to cover the cost associated with administering the State Social Security Administrator (SSSA) program.

Background

The Social Security Administration (SSA) requires each state to designate an official to act for the state in administering the Section 218 Agreement. A Section 218 Agreement is a voluntary agreement between the state and the SSA to provide Social Security and Medicare coverage for state and local government employees. In 1955, the governor’s office designated the California Public Employees’ Retirement Systems (CalPERS) as the SSSA, per Government (Gov.) Code section 22004 of the Public Employees’ Retirement Law (PERL). As the official SSSA, we have the following roles and responsibilities:

• Serve as the liaison between SSA, Internal Revenue Service (IRS), public entities, and stakeholders
• Process modifications for public entities to provide coverage for their employees
• Maintain Section 218 related records
• Perform education and outreach including webinars about Social Security and Medicare coverage for public employers
• Conduct the Annual Information Request (AIR) to ensure tax compliance with respect to Social Security and Medicare withholding for all public entities in California

From 1955-1986, the SSSA was also responsible for collecting Social Security and Medicare withholdings for all public employers in California. The Omnibus Budget Reconciliation Act of 1986 moved the responsibility of collecting taxes from the SSSA to the IRS. The SSSA has been operating since 1987 using the interest that was earned from the Social Security and Medicare tax holding account. In 2019, the fund diminished and was no longer able to pay for the expenses required to continue to operate the SSSA program, so the SSSA started collecting the Annual Maintenance Fee. The fees collected exceeded the amount needed to fund the next fiscal year’s expenditures. Therefore, we did not collect fees for the 2021-22 and 2022-23 fiscal years. The SSSA has now reached its minimum fund threshold and will be assessing the Annual Maintenance Fees beginning July 1, 2024, at a reduced fee schedule to meet projected funding needs. The SSA does not provide any funding for the SSSA program. Additionally, per Gov. Code section 20176 of the PERL, we are prohibited from using any retirement funds to cover expenses not related to the cost of the administration of the retirement system. Gov. Code sections 22551 and 22552 authorize us to collect administrative and contracting fees.

Fees

There are two types of fees that will be assessed. The first is a contracting fee of $650 to establish a new Section 218 Agreement, or to amend an existing Section 218 Agreement, for Social Security and/or Medicare coverage. The second is an annual maintenance fee for all employers that have an existing Section 218 Agreement. This fee is based on the number of employees currently employed with your agency. Annual maintenance fees will be assessed using the criteria below. The invoice will be generated annually when the SSSA AIR is sent to your agency.

Payment of Fees

Payments can be submitted through the Electronic Funds Transfer (EFT) debit method, automated clearing house (ACH) method, by check, or online through the Electronic Payment Gateway. The EFT debit method is preferred and can be set up in myCalPERS at no additional charge. Refer to the myCalPERS Electronic Funds Transfer Student Guide (PDF) for instructions on setting up the EFT or ACH payment methods and making payments.

If you are submitting payments via check, attach the invoice and mail to:

Questions

To learn more, visit Understanding State Social Security Fees.

If you have questions, email the SSSA Office at sssa@calpers.ca.gov, or call the SSSA directly at (916) 795-0810. You may also call our CalPERS Customer Contact Center at 888 CalPERS (or 888-225-7377888-225-7377).

Brad Hanson, Chief
Employer Account Management Division