Testimony of Kenneth S. Apfel, Commissioner of Social Security House Committee
on Ways and Means, Subcommittee on Social Security and Subcommittee on Human
Resources
March 12, 1998
Chairman Bunning, Chairman Shaw, and Members of the Subcommittees:
Thank you for your invitation to testify today concerning the challenges facing
the Social Security Administration (SSA).
Today I would like to discuss SSA's stewardship as an independent agency in
the Executive Branch of the public trust and of the programs which touch the
lives of so many people. While I have been Commissioner for only five months,
I have been very impressed with the commitment of SSA's employees and with how
much has been accomplished in such a short time. We are now approaching the
end of our third year as an independent agency, and we are justifiably proud
of the accomplishments of our 65,000 employees (and the 15,000 State employees
who carry out our programs in the State DDSs). Social Security is a fundamental
part of American society, and every month, as it has for almost 60 years, we
make accurate and timely payments to more than 48 million Americans.
On September 29, 1997, the day I was sworn in as Commissioner, I shared with
all SSA employees the five areas that I see as the agency's immediate priorities
and which I plan to focus on during my tenure: Addressing the long-term solvency
of the program; Assuring program integrity; Providing responsive service and
guaranteeing equity for all claimants and beneficiaries; Strengthening our long-range
planning; and Improving our policy making process.
Today I will discuss what we have done and plan to do to meet each of these
challenges, but I would first like to begin with a brief discussion of SSA's
status as an independent Agency.
SSA as an Independent Agency in the Executive Branch
When the President and Congress enacted legislation establishing SSA as an independent
agency, one of the primary goals stated for doing so was to provide the agency
with stable leadership. Congress was concerned by a high rate of turnover and
the resulting instability that characterized SSA's top management in the years
before SSA became independent. I am deeply honored to be the first confirmed Commissioner
since enactment of that legislation to provide the sustained leadership that the
Congress expects and the agency needs. But what other advantages have flowed from
this momentous legislation? Independent agency status has given SSA greater visibility
throughout government as a whole and within the executive branch in particular.
As Commissioner of Social Security, I consult directly with the President, Vice
President, and other Cabinet officers, and issues related to Social Security are
raised to the level of importance that they deserve. I attend Cabinet meetings,
serve with the President's senior advisors on the Domestic Policy Council (DPC),
and actively participate in the National Economic Council (NEC). In addition,
I serve as a member of the President's Management Council. The independent agency
legislation also provides that I serve as a member of both the Social Security
and Medicare Boards of Trustees.
As you know, the DPC oversees development and implementation of the President's
domestic policy initiatives and ensures coordination and communication among
the heads of relevant Federal offices and agencies. The NEC coordinates the
economic policy making process and provides economic policy advice to the President.
The President's Management Council considers management issues that affect all
executive branch agencies. My presence on these advisory bodies helps to assure
that economic, policy and management issues that could affect Social Security
are carefully considered within the Administration. In addition, SSA now works
directly with OMB on budget and policy issues. The Commissioner s annual budget
for SSA is submitted by the President to the Congress without revision, together
with the President s annual budget for SSA.
But the independent agency legislation strengthened the agency in other ways.
For example, the legislation called on the Office of Personnel Management (OPM)
to provide SSA with a substantially greater number of slots in the Senior Executive
Service (SES) than it had prior to its independence. I am pleased to report
that the OPM has granted SSA an additional 34 SES positions, an increase of
nearly 40 percent over the number that were available prior to independence.
The legislation that established SSA as an independent agency mandated the
creation of a seven-member Advisory Board to make recommendations on policies
and regulations relating to SSA's major programs. We are extremely fortunate
to have the guidance of the Advisory Board, and I am pleased that SSA and the
Board have established a cooperative and productive relationship. Reports issued
by the Advisory Board concerning the need for an improved policy process, expanding
our research efforts, and promoting public understanding of the programs have
been valuable tools to improve our efforts in these areas.
SSA has also gained significantly by having its own Office of the Inspector
General (IG). Our IG is extremely important in SSA s efforts to control program
fraud and abuse. The IG's mission is to protect the integrity of SSA's programs.
To strengthen its capacity to achieve this mission, SSA has significantly increased
the resources available to the IG. When SSA was first established as an independent
agency in March 1995, the IG s Office was relatively small. Since then, however,
SSA has moved aggressively each year to increase the staff available to the
IG. If the Congress approves the request made for the IG in the President's
FY 1999 budget, the staff of SSA's IG will have increased 80 percent since 1995.
Social Security is inextricably linked with other executive branch agencies.
It interacts with other agencies in the executive branch daily. The Treasury
Department, the Office of Personnel Management, the Justice Department--all
play an important role in assisting SSA in doing its business. Similarly, SSA
assists other agencies in performing their duties. For example, SSA works with
the Department of Health and Human Services in administering the Medicare program.
Addressing the Long-Term Solvency of the Program.
I would now like to turn to a discussion of the first of the five priorities
that I believe face SSA today. The long-term solvency of the Social Security
system is the most urgent of our immediate priorities. As you know, President
Clinton in his State of the Union address called for a national dialogue during
the coming year to engage all Americans on this critically important issue.
As an agency, we have a responsibility to make sure that information is available
for people to understand the essentials of the program as we examine how best
to strengthen Social Security for the future. As President Clinton announced
in his State of the Union message, we should not commit the projected budget
surpluses for any other use until we have taken all necessary measures to strengthen
the Social Security system. The President's message was simple and very clear:
Save Social Security first.
The next step is to engage in a major national dialogue. President Clinton
has called on the American Association of Retired Persons and the Concord Coalition
to jointly hold a series of nonpartisan regional forums throughout the country
on Social Security. The President, the Vice President, and members of the Cabinet
will participate in these forums, as well as events organized by the Pew Charitable
Trust. These forums and events will bring together a diverse group of experts
and members of the public who share a concern about Social Security and will
foster an open discussion about the challenges and options to consider.
The forums and events will give participants an opportunity to express their
views and give the President and Congress a chance to hear those views. The
first forum will be in Kansas City, Missouri, on April 7, and the first interactive
video teleconference sponsored by the Pew Charitable Trust will be on March
21. The March 21 conference will link people in 10 cities and allow about 100
people to participate in each city. The Pew Charitable Trust plans to hold five
additional meetings in April and May.
The President is encouraging all Americans to attend a Social Security conference
or forum--or to organize or host one if there are not any planned nearby. We
need the views of all Americans on this issue.
By the end of the year, the President will host a bipartisan White House conference
on Social Security as a culmination of these events. This conference will be
followed by bipartisan negotiations with the congressional leadership on how
best to accomplish reform; to achieve, as President Clinton has said, a landmark
for our generation--a Social Security system that is strong in the 21st century.
During my first months as Commissioner, I have taken personally the President's
call to ensure Social Security's solvency and enhance the public's understanding
of our programs. I have been traveling around the country, speaking to senior
citizens and college students and ages in between, to encourage people to think
about Social Security and its history and how we can prepare the program to
meet the challenges of a retiring baby boom population.
SSA's public information outreach activities include an ongoing effort to
educate the public about the need to save and plan for retirement. Our public
education campaign is focused on ensuring that Americans have a clear understanding
of the Social Security program of today so they can help shape the Social Security
program of tomorrow. Our efforts in this area are consistent with the approach
recommended by the Advisory Board in its recent report, "Increasing Public Understanding
of Social Security." We recognize that we have a responsibility to increase
the public's knowledge about our programs and to clearly communicate the benefits
we provide, and we appreciate the Advisory Board's support of our efforts.
What do I want all Americans to understand about the program? I want all Americans
to understand what Social Security has meant to older Americans. The plight
of older Americans was once a disgrace. Now, Social Security provides them with
an assured measure of economic security. It also provides many of them, and
their children, the advantages that only living independently can offer.
I want all Americans to know that Social Security is more than a retirement
program. I want younger people to know that not only will Social Security be
there for them in the future, it is there for them NOW. How many people know
that 1 out of every 3 Social Security beneficiaries is not a retiree but a disabled
worker, or a member of his or her family, or a survivor of a worker who has
died? They need to know that.
I want all Americans to know that Social Security was never intended to provide
for all of a worker's retirement income needs. Pensions and personal savings
have always been and should be part of a sound financial retirement plan.
I want all Americans to understand that the changing demographics of the country
are the primary driver of the need for change. There is an unalterable dynamic
at work: by 2030, there will be nearly twice as many older Americans as there
are today, putting great strains on our retirement system.
I want all Americans to understand the economic facts about Social Security.
Beginning in 2012, non-interest income will be insufficient to cover benefit
payments. Beginning in 2019, the trust funds will start declining and, if no
changes are made to the current program, will be exhausted by 2029. After the
trust funds are exhausted, annual revenues will cover three-quarters of current-law
benefits.
Finally, I want all Americans to understand one important fact: any option
for change, however attractive, will require tradeoffs. Strengthening the Social
Security system involves complex issues, and the advantages and disadvantages
of each option for change will have to be discussed and examined.
As we begin this dialogue, we would do well to question whether changes to
the program preserve and protect these important accomplishments: whether Social
Security continues to be a benefit people can count on; whether the elderly,
disabled, and survivors of workers are protected from financial hardship; whether
the program is efficient; whether the program is universal and fair; and whether
the program is maintained as a public trust. The dialogue about how we ensure
the solvency of Social Security in the 21st century will need to include these
critically important questions.
Assuring Program Integrity
The second immediate priority facing the Social Security Administration is ensuring
the integrity of our programs. The public rightfully expects us to be vigilant
stewards of their tax dollars. So I want to be clear that SSA must continue to
improve the administration of its programs while continuing to have zero tolerance
for fraud. The following are some areas where we are moving to improve the administration
of the programs entrusted to us.
SSI High Risk
SSA is committed to improving the management of the Supplemental Security Income
(SSI) program. The SSI program is demanding and complex, and we recognize that
within some areas of the program we need to do better. We are evaluating ways
in which we can simplify program administration, but one thing is clear: While
there are some things we can do now to improve our performance, other changes
will require a long-range, sustained effort. The Agency is committed to meeting
this challenge.
As you know, the SSI program has been designated by the General Accounting
Office as being at "high risk." The reason cited by GAO for this designation
was that about $1 billion in overpayments were made to SSI recipients in fiscal
year (FY) 1996. Overpayments occur in the SSI program for a variety of reasons.
Sometimes they occur because SSA does not have complete information regarding
income and resources or because the information required for the determination
of eligibility can only be estimated, as in the case of wages or other income
that is anticipated to be earned or received in the future. In other cases it
is because the beneficiary fails to understand the necessity of reporting a
change that may affect eligibility. And sometimes they occur as a result of
fraud. Some of the overpayments are recovered through deductions from subsequent
SSI payments. Given the diversity of reasons that overpayments occur, SSA is
developing a comprehensive plan which will strengthen the management of the
program and substantially reduce the overpayments made to SSI recipients. There
are several dimensions to this plan. They are: to enhance the accuracy of payment
determinations; fraud prevention; and developing a more robust SSI debt collection
process.
First let me discuss plans to improve the accuracy of payment determinations.
One of SSA's primary goals is timely and accurate verification of financial
eligibility.
Expansion of data exchanges and increasing their frequency are critical elements
for improving financial eligibility verification. Within a year, we will expand
nationwide our current computer matching pilots to detect earnings and nursing
home admissions of SSI recipients.
SSA is vigorously working to prevent overpayments before they occur by increasing
the number of redeterminations of SSI eligibility SSA conducts. To accomplish
this, the President's FY 1999 budget request includes $50 million in new funding
to increase the number of non-disability redeterminations of eligibility. If
Congress provides these funds, they will allow SSA to increase our FY 1999 reviews
of SSI cases from an estimated 1.8 million to 2.1 million. The increase of 268,000
redeterminations of eligibility would result in a projected net program savings
of $223 million over a 7-year period.
Return to Work
The President's FY 1998 and 1999 budgets both contained a proposal for a "Ticket
to Independence," a customer-driven approach for helping our beneficiaries with
disabilities obtain the services they need to return to work. As you know, Chairman
Bunning and Representative Kennelly have developed legislation in this area, and
I would like to thank them for their efforts on this important issue. We are particularly
pleased that many elements of the President s proposal are contained in the bill
that was introduced yesterday. We look forward to working with this Committee
on this important issue in the months ahead. I am hopeful that, during this session,
Congress will pass legislation needed to help Americans with disabilities participate
in the workforce.
CDRs
Another way in which we ensure the integrity of the SSI program as well as the
DI trust funds, is through continuing disability reviews (CDRs). During FY 1996,
SSA processed roughly half a million periodic CDRs, with estimated lifetime savings
(including Medicare and Medicaid) of nearly $2.5 billion. Under President Clinton's
leadership, SSA has processed more CDRs more cost-effectively than ever before.
During FY 1997, we processed over 690,000 periodic CDRs, a 38 percent increase
over 1996. In FY 1998, we expect to process over 1.2 million periodic CDRs, more
than double number of CDRs in 1996. Our improved profiling/mailer process provides
a high level of confidence in both our ability to achieve our estimated workload
targets and in the accuracy and reliability of the decision resulting from our
case reviews.
Our achievements in processing CDRs over the last two years demonstrate Congress'
and the Administration's commitment to addressing this crucial workload, and
I would like to take this opportunity to thank the members of the Subcommittees
for their invaluable assistance in making the required additional resources
available to us. Discretionary cap adjustments for additional funds have been
authorized to enable SSA to become current in the processing of title II CDRs
by FY 2000 and title XVI CDRs by 2002, and to stay current in the future. We
are proud of our recent accomplishments and are confident that our CDR strategy
will lead to reliable and cost-effective monitoring of the disability rolls.
Debt Collection
A robust debt collection system is an essential element in strengthening the integrity
of the SSI and Social Security programs. SSA has a long-standing commitment to
debt management and we are continually engaged in projects that improve our performance.
In 1997 alone, SSA collected $1.7 billion in debts owed to it. Of that total,
$1.2 billion was returned to the Social Security Trust Funds while about $437
million in recovered SSI overpayments were returned to the Treasury's general
fund.
SSA recovers more than 80 percent of the Social Security debt that it is owed
when an individual remains on the benefit rolls, but is unable to match that
performance when an individual leaves the benefit rolls. To enable SSA to strengthen
SSI debt collections, the President's budget includes a provision that will
help. This provision would authorize SSA to collect SSI overpayments from an
individual's OASDI benefits. Nearly half of all uncollected SSI overpayments
were paid to people currently receiving OASDI benefits. Although SSA currently
may recoup SSI overpayments from current SSI benefits or recoup OASDI overpayments
from OASDI benefits, SSA does not have the authority to collect an SSI overpayment
from OASDI benefits in the absence of the beneficiary's express permission.
This provision will significantly strengthen SSA's ability to recover SSI
overpayments, and I would like to take this opportunity to request the assistance
of all members of these Subcommittees to provide SSA with this important tool.
I want to make it clear, however, that the nature of SSI as a needs-based
program must be taken into account in resolving any overpayment.
There is, as you know, a provision in SSI law which allows for waiver of overpayments.
Generally, an overpayment will be waived when SSA determines that an individual
was "without fault" in causing the overpayment and needs substantially all of
his or her current income for ordinary and necessary living expenses. When waiver
is appropriate and it has been requested, we will waive collection.
Now I would like to turn to measures we have developed to deter fraud.
Anti-Fraud Initiatives
As I mentioned earlier in my testimony, we have taken steps since SSA became independent
to strengthen the IG. A strong IG, working together with SSA's employees in local
offices, is the most effective means we have to control fraud and abuse in the
programs we administer.
The efforts of the IG, with the help of referrals from SSA staff, have paid
off in terms of both monetary savings and improved program integrity.
The IG's Office of Investigations in FY 1997 recovered over $64 million in
fines, judgments, and restitutions. Because the integrity of the Social Security
number (SSN) is important to SSA's mission, the IG also vigorously pursues investigations
of Social Security number (SSN) misuse, even though most of these allegations
do not equate to immediate savings to programs administered by SSA.
In response to concerns raised by staff in SSA field offices along the U.S.
border, SSA s IG implemented its Southwest Tactical Operations Plan (STOP) with
a pilot in El Paso, Texas. The purpose of the pilot was to determine if individuals
were fraudulently receiving SSI payments while living outside the United States.
The IG's efforts under the STOP pilot have been very successful. IG investigations
have resulted in the suspension of benefits to about one-quarter of the individuals
investigated. The projected 5-year savings stemming from these investigations
is estimated to be about $2.9 million. As a result of the success of this pilot,
we are extending it to all border areas in the U.S.
Another area of vulnerability of the SSI program to fraud lies in claims taken
from individuals who do not speak English. It has often been a common practice
that such applications would be taken through the assistance of a "middleman"
who would assist the individual in his or her dealings with the Government.
However, cases came to our attention where the middlemen, who would serve as
interpreters, were providing SSA with misleading or incomplete information.
SSA acted to reduce the SSI program's exposure to fraud of this type. We worked
with the leadership of foreign language communities to promote trust and to
help change some immigrants' belief that they need the services of a "middleman"
when they conducted business with the Government. In addition, we increased
substantially the number of employees in local offices who were bilingual to
serve as interpreters in cases involving individuals who do not speak English.
These measures have been highly successful in bolstering the accuracy of the
information SSA has about claimants who do not speak English and has reduced
the SSI program's vulnerability to this type of fraud.
Although we have been making significant strides in addressing fraud in the
operations and programs of Social Security, we realize that there is a lot more
to be done. Accordingly, SSA has established a National Anti-Fraud Committee,
comprised of SSA's executive leadership, to oversee the implementation and coordination
of SSA's national strategies to eliminate fraud. The National Anti-Fraud Committee
is supported by ten regional committees comprised of regional executives who
have the primary duty to oversee local policies and strategies to effectively
combat, detect, and investigate potential fraud involving Social Security programs
and employees. In addition, the Committee began hosting annual conferences in
1996 to focus attention on fraud and to provide an open forum for discussing
issues, concerns, and solutions. Systems Security
I want to make clear how important I believe it is that we maintain the confidentiality
of the information in SSA's systems. Nothing is more important in operating
our programs than ensuring that the public has confidence in us that the information
placed in our trust is secure. We are constantly reevaluating and, when necessary,
upgrading the security features necessary to provide that confidence.
This means that, using comprehensive systems controls, we carefully restrict
data access within SSA to its intended use. Our employees are continuously reminded
of their responsibilities to safeguard personal data and their use of SSA's
data files, all of which contain sensitive personal information about the people
we serve, and are carefully monitored to prevent any misuse.
Under SSA's access authorization process, only persons with a "need to know"
in order to perform a particular job function are authorized to access SSA's
data files. This process not only authorizes access, it also determines what
a person can do once access is authorized. Additionally, persons who are approved
for access are assigned a personal identification number and password by SSA
security personnel. Once access to the system is authorized, the security software
controls what the employee is allowed to do. Finally, SSA audits and monitors
the actions individual employees take when using our systems.
SSA's response to the findings of a recent IG contract audit performed by
Price Waterhouse reflects our commitment to continuous improvement. While I
am pleased to report that the audit concluded that SSA's system of accounting
and internal controls were in compliance with the internal control objectives
issued by the Office of Management and Budget, the auditors identified five
reportable conditions that needed management attention. We are moving ahead
in these areas, and to date have resolved two of the five areas, and plan to
resolve the remaining three as soon as possible.
Year 2000
I do not want to leave the subject of systems without a discussion of our Year
2000 efforts. Preparing for the year 2000 is unquestionably the biggest challenge
the information technology industry has ever faced. In SSA, our national data
center runs hundreds of systems that are supported by over 33 million lines of
in-house computer code, as well as hundreds of vendor products. When SSA opens
for business on January 3, 2000, everything that's operating in our data center
to support SSA's business operations will have undergone Year 2000 renovation
and testing.
We began to develop a strategy as early as 1989 to make sure that the payments
we make to more than 48 million beneficiaries will not be in jeopardy. As of
January 31, 1998, 88 percent of SSA's mission critical systems slated to be
repaired are already Year 2000 compliant, and we expect to complete our work
and test these changes by this December--a full year ahead of the deadline.
As you know, SSA relies extensively on data exchanges with other agencies,
States, and employers to administer its programs. To assure continuity of administration,
we must also make sure that Year 2000 problems do not impede our ability to
conduct these data exchanges. We have been in contact with all of our data-trading
partners regarding the format and schedule for making these data exchanges Year
2000 compliant and are working to implement them as well. Thus far, half are
completed and we are working to implement the remaining half by this December.
In addition, SSA has assumed a large role in overseeing and managing the renovation
of the systems used by the State Disability Determination Services (DDS). As
of January 31, 1998, twelve DDS systems have been renovated, tested, and certified
as being Year 2000 compliant. We expect that all of the DDSs will be compliant
by the end of this year.
SSA is justifiably proud of its leadership among Government agencies in converting
its massive computer systems to recognize a four-digit date at the turn of the
century. SSA's achievements in this area have been rated as the best in Government,
both by the Office of Management and Budget and the Congress.
Guaranteeing Equity for All Beneficiaries and Claimants
Another of the immediate priorities challenging SSA is providing responsive service
and quaranteeing equity for all beneficiaries and claimants, including children.
SSI Children
When I became Commissioner last year, one of the first challenges I faced was
to ensure that the new childhood disability standard established by Congress had
been implemented fairly and accurately. So let me now turn to a discussion of
that issue.
Over the past quarter century, SSI has helped families of children with disabilities
meet their special needs. The SSI program has come to represent an important
safety net to some of our most vulnerable families. That is why during my confirmation
hearing before the Senate Finance Committee, I made a commitment to conduct
a "top-to-bottom" review of the implementation of the changes to the SSI childhood
disability program brought about by the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996. I believed that this review was needed because of
public concern with the implementation of the new law. I believed that the Congress,
the President and the American people deserved to know whether the law and the
regulations were being applied fairly.
The review showed that overall the Social Security Administration's (SSA's)
and the State Disability Determination Services, which make disability determinations
for the agency, have done a good job of implementing the review of the cases
of those children who were affected by the changes in the law. Of the approximately
one million children receiving SSI benefits based on disability, about 288,000
were subject to redetermination under the new law, and most of these cases were
handled properly. However, the review also found some inconsistencies in the
application of the rules and in compliance with SSA instructions. Where specific
problems have been identified, I have directed that the agency take corrective
actions. And, because of my concern for the welfare of children, a concern I
know we all share, SSA is taking steps above and beyond normal actions to ensure
that every child receives a fair assessment of his or her eligibility for benefits.
The review identified three specific areas of concern: processing of cases
classified in SSA's records as having mental retardation; the quality of case
processing in certain areas; and the adequacy of the information SSA was providing
beneficiaries on their rights to appeal a cessation determination and to request
that benefits be continued through the appellate decision.
When SSA published its interim childhood disability regulations in February
1997, we estimated that, of the approximately one million children receiving
benefits, 135,000 would eventually be determined ineligible for SSI benefits
after all appeals. Now that the redeterminations are mostly completed, and in
view of the actions dictated by the findings of the review, the estimate has
been revised downward to about 100,000 children who will lose eligibility after
all appeals.
I am pleased to report that on February 18, 1998, we sent over 70,000 notices
to families of children determined ineligible who may not have understood their
rights to appeal the decision to terminate their benefits. Additionally, on
March 10, we completed training for essentially all of our 15,000 adjudicators,
including administrative law judges (ALJ), on childhood issues, such as mental
retardation and evaluation of maladaptive behaviors, that were problematic in
adjudicating these claims. This training was held in preparation for the completion
of the rereviews. We expect to have the initial reviews completed by the end
of this fiscal year. Where continuance accuracy was found to be below threshold,
we will give childhood disability cases priority review.
Disability Redesign
Providing responsive service means that we administer our programs as efficiently
as possible, and one of our projects for achieving this goal is our redesign of
the disability process. I am concerned that it has taken SSA so long to accomplish
this initiative and I expect to be making some decisions to implement certain
aspects of disability redesign nationally in the near future.
I would like to mention three major components of disability redesign: process
unification; an integrated disability computer system; and modifications to
the disability claims process.
Our goal is to achieve similar results on similar cases at all stages of the
process, through consistent application of laws, regulations, and rulings with
minimal or no impact on program costs. I know that this subcommittee has long
been interested in differences in adjudicative outcomes between our state adjudicators
and the ALJs. In order to reduce these differences, we needed to minimize those
factors, within our control, which contribute to the variance in allowance rates
between the DDSs and the ALJs.
So far, we have seen an increase in initial and reconsideration allowance
rates from fiscal year 1995 to fiscal year 1997, and a corresponding decrease
in allowance rates at the hearing level. The ALJ allowance rate has decreased
from about 65 percent in 1995 to 54.5 percent in 1997. At the same time, our
quality remains high.
Based on our preliminary analysis, we appear to be making more correct decisions
earlier in the process, serving our customers better, and cutting administrative
costs without increasing program costs. If on further analysis, these conclusions
hold up, we will be continuing our current activities in this area, as well
as beginning new activities.
An important element of redesign is automating the initial claims process
and integrating the 54 state DDS systems with each other and with the Federal
system. The Redesigned Disability System (RDS) is envisioned to accomplish this
goal.
Although we are currently testing an early release of RDS in Virginia and
the Federal DDS, the software has not performed as we anticipated it would.
Therefore, I have determined that the RDS be independently evaluated, and have
ordered that a contract be awarded for this purpose. The contractor will conduct
an evaluation and provide recommended options for how we might proceed. We are
discussing this issue with the DDSs and the regions to ensure that the contractor
addresses all of their concerns in its evaluation. I am looking forward to awarding
this contract soon. It is important to remember that SSA and its partners in
the States share a common goal in providing the best system affordable for processing
disability claims. We all support this goal and are working together toward
its achievement.
The third major component of redesign, modifications to the disability claims
process to improve customer service and eliminate hand-offs, is now proceeding
on a number of fronts. We are piloting many different variations of these modifications
both singularly, and in combination in several States. These pilots will yield
significant data on which I will base my decisions.
As a final note on this subject, I want to reemphasize the importance I have
placed on pushing forward with the redesign activities. Although we do not expect
the final product to be exactly the same as envisioned in the original plan,
we do expect to build a process which will improve the level of service we provide
to claimants with disabilities from their initial contact with SSA through final
administrative appeal.
EFT 99
One of the more immediate challenges facing SSA is implementation of the EFT99
provision of the Debt Collection Improvement Act of 1996. This provision requires
all Federal payments, with the exception of tax refunds, to be made electronically
by January 1, 1999. This will affect how benefits are delivered to more than 10,000,000
recipients of SSA benefits each month. SSA is working closely with the Treasury
Department to identify reasonable and low cost methods of delivering benefits
to the large portion of SSA check recipients who are unbanked. Working with Treasury,
we are looking at a broad range of approaches to meeting this mandate, including
increased use of direct deposit, low-cost electronic transfer accounts (ETA),
electronic benefits transfer (EBT), and broad-based waivers for recipients for
whom compliance with EFT99 would represent a hardship.
800 Number Service
In fiscal year 1997, the Social Security Administration served over 55 million
individuals who called our 800 number, making it one of the largest toll-free
service systems in the world. I am proud of SSA's achievements in providing prompt,
accurate, and courteous service to the many Americans who use this service annually.
It is especially gratifying that SSA's achievements in this area were recognized
in 1995 by Dalbar Associates, an independent auditing agency, which rated SSA's
toll-free telephone service as one of the best--compared to a number of private
sector companies renowned for customer service.
Our commitment to providing world-class service is to achieve customer accessibility
to SSA's 800 number as well as to provide accurate and courteous service. I
am pleased to report that SSA's 800 number service met our fiscal year 1997
agency performance objective.
That objective, which remains in place for FY 1998, is that 95 percent of
the calling public will successfully access the 800 number within 5 minutes
of their first attempt. In addition, the courtesy of SSA's 800 number representatives
was rated high--at 98 percent--by the calling public. Response accuracy was
maintained at 98 percent--that is, 98 percent of representative responses and
transactions processed were free of beneficiary payment errors.
Using Technology
A key to our ability to manage our workloads now--and in the future--is to use
technology extensively and imaginatively. The FY 1999 budget request supports
our efforts to manage and expand our use of technology. At the time SSA became
an independent agency, one of our first tasks was the implementation and distribution
of Intelligent Workstation/Local Area Network (IWS/LAN) equipment to approximately
55,000 employees.
IWS/LAN will support many of our agency's future needs. It provides the infrastructure
that allows for the redesign of our claims processes. In addition, it is the
foundation for on-line "help" systems and state of the art interactive training
that ensures SSA employees provide timely and accurate information to our customers.
We began installing IWS/LAN in late 1996, and as of February 1998, we have installed
almost 30,000 workstations on almost 800 LANs. Over 27,500 employees have been
trained to use this new technology and hundreds of SSA employees have been trained
to provide technical assistance to other employees. By the second quarter of
1999, we expect to have this equipment installed in all our field offices and
other operations serving the public.
We expect that the current level of IWS/LAN technology will save 2,300 workyears
annually by FY 2000. In addition, the technology will facilitate additional
business process improvements to further reduce costs and improve service. Moreover,
IWS/LAN serves as the business platform from which we plan to develop and launch
additional systems initiatives to achieve further efficiencies that will strengthen
SSA's ability to handle the work associated with the retirement of the baby
boom generation.
Strengthening Long-Range Planning
SSA has accomplished much over the last decade in developing and implementing
the concepts of strategic management that the Government Performance and Results
Act of 1993 (GPRA) espouses. Our current strategic plan, Keeping the Promise,
is the third plan our agency has produced, and has been recognized as one of the
best plans in Government. Long recognizing that strategic planning does not end
with the issuance of a plan, we also have established a system of strategic management
that we continually have refined and improved over the years to help ensure that
our strategic plans direct, and not merely reflect, the agency's priority-setting
and decision-making process. And, as other government management reforms have
been enacted, such as the Information Technology Management Reform Act, we have
integrated these requirements into our agency strategic management system.
Another vehicle the agency uses to guide its planning is the Accountability
Report. The Report presents financial, programmatic, and performance data to
provide a comprehensive picture of how SSA uses its budgetary authority to maintain
the public's trust. SSA was the first agency to issue an accountability report,
and I am proud that SSA's strategic plan and accountability report have been
given high marks by the Congress.
Over the next decade, SSA will face perhaps its greatest administrative challenge
yet, handling the dramatic growth in workloads that will occur as the baby boomers
reach their disability-prone years, and then retirement age. Although the time
frame addressed by our current strategic plan is the next five years, through
the year 2002, we need to stretch our strategic planning horizon much further
out, to 2010 and beyond. We need to position the agency's resources and processes
to accommodate these emerging workloads.
It will require that we think in a cohesive way about how we are going to
look in 2010 and beyond, and what we should be doing now to work toward that
vision. For example, what will be our future customer's service expectations
and how will we meet them? How can we achieve the efficiencies needed to enable
the agency to handle increasing workloads within the context of current budgetary
resources?
At the same time that we must prepare for the retirement of the baby boom
generation, SSA is planning to meet a retirement wave of its own employees.
A January 1998 study showed that SSA faces a potentially significant loss of
knowledge and experience over the next 5 years, when over 80 percent of all
SSA employees Grade 13 and above will be eligible for optional and early retirement.
This will present challenges but it will also provide opportunities.
To ensure that SSA remains a world class organization, we are aggressively
planning for future leadership. We are working to provide the necessary tools
and training to achieve a highly skilled, high-performing, and diverse workforce,
one that will serve SSA's diverse customers in the 21st century. We will continue
to provide ongoing training to all employees based on the needs and skills of
those employees. In addition, we have assessed the strength of our management
cadre and have undertaken new initiatives, including implementing national management
career development programs from entry level to SES, the accelerated hiring
of Presidential Management Interns, and the establishment of a revitalized competency-based
management curriculum.
Improving Our Policy Making Process
Since becoming an independent agency, SSA has taken a number of steps to strengthen
the research and policy development capability needed to respond to critical issues
faced by its programs, and we will continue to pursue efforts to strengthen policy
development at SSA in the years ahead. SSA's policy staff serves as an agency
catalyst for innovative research and policy development, supplementing core staff
with consultants, Intergovernmental Personnel Act assignments, contracts and grants.
SSA has pursued several means of building our research capacity. A streamlined,
simplified mechanism was instituted at SSA last year that facilitates awarding
contracts for research. Under this mechanism, four firms are under contract to
SSA for a five-year period, making them available without having to award a specific
contract for a single research project. Instead, these firms conduct policy evaluation
work through a much-expedited task order process. Looking to the future, SSA plans
to expand research on issues critical to Social Security, through a Retirement
Research Consortium which should be in place by the end of FY 1998. This consortium
will initially involve two university-based multi-disciplinary centers that, under
contract with SSA, will plan and conduct a broad research program, facilitate
data sharing for research, disseminate knowledge broadly, and provide training
to SSA employees involved in research endeavors.
SSA's research budget allocation is nearly $49 million in FY 1998 (of which
about $17 million is new money and the remainder carried over from previous
years); the President's budget has requested $30 million for FY 1999. The major
areas toward which our research will be targeted include solvency research (retirement
policy research and disability growth), rehabilitation/return-to-work, and policy
evaluation.
The Disability Evaluation Study (DES) is a national survey designed to understand
recent growth in the disability programs, as well as potential future growth.
By screening a nationally representative sample of adults, including not only
survey questions but also reviews of medical records and medical examinations,
we will be able to estimate how many adults meet our definition of disability,
regardless of income or work status, and better understand what enables individuals
who are disabled to remain in the workforce. This research will help us design
a better disability decision methodology, while understanding what impact any
changes would have on people with disabilities.
Other initiatives include development of ways to provide for better interaction
with the various stakeholders in the policy process and the development of policy
integration initiatives to ensure that policy development is organized and consistent,
not only within the agency, but also across the other Federal programs which
serve the same populations. This process is also designed to ensure the integration
of research with policy development. To facilitate the interaction among policy
developers and policy users within SSA, groupware applications have been developed
and are currently being tested. This technology will allow policy users to weigh
in on policy proposals as they are being developed and will also facilitate
the interpretation of policy instructions after policies are implemented.
Conclusion
Throughout its 60-year history, Social Security has made a difference in the lives
of Americans, young and old. We have an obligation not only to strengthen the
program's financial outlook in the 21st century, but to be responsible and careful
stewards of our programs in the here and now. Ultimately, our efforts will be
judged on whether we have protected and strengthened Social Security. As Commissioner,
I accept this challenge. We have ambitious goals and we will do everything we
can to achieve them. As we move SSA into the 21st century, I look forward to working
closely with the members of this Committee in that spirit on this important endeavor.
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