A cut of $1.3 billion in Social Security personnel and administrative costs to meet federal budget targets could cripple administration of the program and cause the trust funds to lose as much as $15 billion through improper benefit payments over the next year, Social Security Commissioner Gwendolyn S. King has warned officials of the Department of Health and Human Services (HHS).

In an internal memorandum obtained by The Washington Post, King told HHS Assistant Secretary for Budget and Management Kevin Moley that cuts in personnel that may be imposed Oct. 1 to meet federal budget targets under the Gramm-Rudman-Hollings Act would cause "inability to keep pace with routine changes to the benefit rolls {which} could result in incorrect payments to beneficiaries in the range of $10 billion to $15 billion" in the year starting Oct. 1.

Overpayments could occur if there were too few staff members to review payments to ascertain their accuracy, monitor disability payment recipients to see if they remain disabled, and discontinue benefits to dependents when they turn 18 and to recipients after they die.

King said it made no sense to allow billions of dollars in potential losses from incorrect benefit payments in order to save $1.3 billion in personnel and administrative costs.

King's memo asked that proposed mandatory furloughs of personnel without pay be delayed until Jan. 1, instead of starting Oct. 1, so that in case the budget cuts in Social Security are nullified by a congressional-White House budget deal, no "irreversible" damage to the program will have occurred.

Under the budget law, Social Security benefit payments cannot be cut to meet budget targets, but personnel and administrative funds can. If Congress and the White House agree on new budget cuts, they can designate which departments' budgets will be reduced. If they fail to agree, however, an automatic cut formula applies as of Oct. 1 that would reduce most federal programs and departments by 31.9 percent.

King said that if this occurs, Social Security employees would have to be furloughed without pay for between 85 and 98 days each over the course of fiscal 1991.