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Testimony of Kenneth S. Apfel, Commissioner of Social Security Concerning the Challenges Facing the Social Security Administration

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White House Conference on Social Security

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.


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.


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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Other Administration Statements

Save Social Security First (article by Gene Sperling)

Secretary Robert E. Rubin testimony on Social Security before the Senate Finance Committee

White House Conference on Social Security: Press Briefing by Gene Sperling

Deputy Secretary Lawrence H. Summers testimony on Social Security before the Senate Finance Committee

Clinton Has Done His Part (article by Gene Sperling)

Remarks by Treasury Deputy Secretary Lawrence H. Summers before the Senate Budget Committee Task Force on Social Security

Assistant Secretary David W. Wilcox testimony on Social Security before the Ways and Means Committee

New Directions in Retirement Income: Social Security, Pensions and Personal Savings

Testimony of Kenneth S. Apfel, Commissioner of Social Security Concerning the Challenges Facing the Social Security Administration

Testimony Before House Ways and Means Subcommittee on Social Security — 2/26/98

Testimony Before Senate Budget Committee Task Force on Social Security - 2/24/98