[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
       CHALLENGES FACING THE NEW COMMISSIONER OF SOCIAL SECURITY

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                and the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 12, 1998

                               __________

                           Serial No. 105-95

                               __________

         Printed for the use of the Committee on Ways and Means


                      U.S. GOVERNMENT PRINTING OFFICE
61-025                        WASHINGTON : 1999


                                     
                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky                WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
                     A.L. Singleton, Chief of Staff
                  Janice Mays, Minority Chief Counsel
                                 ------                                

                    Subcommittee on Social Security

                    JIM BUNNING, Kentucky, Chairman
SAM JOHNSON, Texas                   BARBARA B. KENNELLY, Connecticut
MAC COLLINS, Georgia                 RICHARD E. NEAL, Massachusetts
ROB PORTMAN, Ohio                    SANDER M. LEVIN, Michigan
JON CHRISTENSEN, Nebraska            WILLIAM J. JEFFERSON, Louisiana
J.D. HAYWORTH, Arizona               JOHN S. TANNER, Tennessee
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
                                 ------                                

                    Subcommittee on Human Resources

                  E. CLAY SHAW, Jr., Florida, Chairman
DAVE CAMP, Michigan                  SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana               FORTNEY PETE STARK, California
MAC COLLINS, Georgia                 ROBERT T. MATSUI, California
PHILIP S. ENGLISH, Pennsylvania      WILLIAM J. COYNE, Pennsylvania
JOHN ENSIGN, Nevada                  WILLIAM J. JEFFERSON, Louisiana
J.D. HAYWORTH, Arizona
WES WATKINS, Oklahoma

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.




                            C O N T E N T S

                              ----------                              
                                                                   Page
Advisory of March 3, 1998, announcing the hearing................     2

                               WITNESSES

Social Security Administration, Hon. Kenneth S. Apfel, 
  Commissioner...................................................     7
U.S. General Accounting Office:
    Jane L. Ross, Director, Income Security Issues, Health, 
      Education, and Human Services Division.....................    54
    Joel C. Willemssen, Director, Civil Agencies Information 
      Systems, Accounting and Information Management Division....    73
Social Security Administration, Office of the Inspector General, 
  Hon. David C. Williams, Inspector General; accompanied by 
  Pamela J. Gardiner, Assistant Inspector General for Audit......    89

                       SUBMISSIONS FOR THE RECORD

Social Security Advisory Board, Hon. Stanford G. Ross, statement.   135
                               __________
Daniel, D.C., Jr., Murfreesboro, TN, statement...................   141
Hanson, Michael P., Burbank, CA, statement.......................   147
National Association of Disability Examiners, Baton Rouge, LA, 
  Debi Gardiner, statement and attachment........................   151


 JOINT HEARING TO REVIEW THE CHALLENGES FACING THE NEW COMMISSIONER OF 
                            SOCIAL SECURITY

                              ----------                              


                        THURSDAY, MARCH 12, 1998

        House of Representatives, Committee on Ways and 
            Means, Subcommittee on Social Security, and the 
            Subcommittee on Human Resources,
                                                    Washington, DC.
    The subcommittees met, pursuant to notice, at 10:04 a.m., 
in room 1100, Longworth House Office Building, Hon. Jim Bunning 
(Chairman of the Subcommittee on Social Security) and Hon. E. 
Clay Shaw, Jr. (Chairman of the Subcommittee on Human 
Resources) presiding.
    [The advisory announcing the hearing follows:] 
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    Chairman Bunning. The Subcommittee will come to order. I'd 
like to welcome those who will be testifying. Today we are 
especially pleased to welcome the Members of the Human 
Resources Subcommittee, as together we review the challenges 
facing the new Commissioner of Social Security.
    Andy Jacobs, Barbara's predecessor, and I began working on 
separating the Social Security Administration from the 
Department of Health and Human Services soon after I was 
appointed to this subcommittee. Our efforts resulted in the 
enactment of Public Law 103-296 on August 14, 1994, finally 
making SSA an independent agency.
    Congress recognized that Social Security is too important 
to the American people to be kept in the basement in HHS, or 
the subject of political gamesmanship. By making SSA 
independent, we made every effort to ensure that SSA is removed 
from politics.
    We also intended that its management be based on good 
policy and sound financial principles, not on who sits in the 
White House or in the Speaker's chair. Congress depends on the 
expert advice of SSA's field managers, actuaries and 
policymakers to give us an accurate picture of what is 
happening with the program.
    In a bipartisan fashion, we must make decisions that affect 
the lives of millions of Americans. Congress also relies on SSA 
to effectively implement the law of the land. We all know that 
Social Security will not be able to honor all of its benefit 
commitments in the year 2029. And the Social Security 
subcommittee, through its hearings series, is fully exploring 
options for Social Security reform.
    However, this subcommittee has taken other actions which 
ultimately impact the long-term solvency of the Social Security 
trust funds. For example, we saved the Social Security trust 
funds $1.9 billion. That's money saved to ensure the retirement 
security for our seniors when we stopped sending disability 
checks to addicts, and instead provided for treatment.
    We have also authorized over $4 billion over the 7-year 
period to ensure that individuals who are no longer disabled 
are removed from the Social Security disability rolls. Every 
one dollar spent on continuing disability reviews saved six 
dollars in Social Security trust funds.
    These workloads must be given the priority attention they 
deserve by every agency employee. The regulations implementing 
the law must execute the clear intent of the law and must be 
adhered to.
    Clear priorities, effective long-term planning and strong 
attentive management at the highest level is critical for SSA, 
as its challenge and demand for information from the public and 
Congress increase.
    Congress provides SSA a substantial increase in its 
statutory authority to act independently beginning in March 
1995. If SSA fully uses this authority, it has the ability to 
set its own direction, as well as having a majority role in 
deciding the future of Social Security.
    Of course, SSA leadership will be the deciding factor in 
whether this occurs as Congress intended. After three years as 
an independent agency, SSA should be well on its way. We shall 
soon hear if that is the case.
    In the interest of time, it is our practice to dispense 
with opening statements excepts from ranking Democrat member. 
All members are welcome to submit statements for the record, 
and I yield to Congressman Kennelly for any statement she 
wishes to make.
    Mrs. Kennelly. Thank you, Mr. Chairman.
    Mr. Chairman, I am pleased to welcome today Social Security 
Commissioner Ken Apfel to discuss with us some of the 
challenges facing the Social Security Administration.
    Since his confirmation last fall, the Commissioner has made 
excellent progress in meeting many of the challenges facing the 
agency. Using his experience as a former associate director of 
the Office of Management and Budget, he has taken an active 
role in the Social Security solvency debate, and is well placed 
to provide a strong voice, both inside and outside the 
administration, in the discussions about the future of Social 
Security which we are all so interested in.
    In addition, under his leadership, the Social Security 
Administration is processing more continuing disability reviews 
more effectively than ever before. Based on hearings around the 
country, including my own town of Hartford, Connecticut, he has 
suspended the transmission of personal Social Security earning 
records over the Internet, and the agency is continuing to seek 
ways to make electronic information available to the public, 
while protecting the privacy and the security of personal 
records.
    Under Commissioner Apfel's direction, the agency has 
provided the Congress with a strategic plan that is among the 
most highly rated in Federal agency plans. In addition, SSA is 
far ahead of other agencies in the conversion of its computers 
in preparation for the year 2000.
    The agency has completed conversion of its central 
computers and is working with State Disability Determination 
agencies to prepare the State agency computer systems for the 
year 2000. I wonder, Commissioner, if we couldn't save some 
funds by spreading this information around to others who are 
nowhere near making the progress that you have made.
    And all this work is in addition to the work the agency is 
doing to review childhood disability cases. Clearly, SSA, under 
the new commissioner, has done a good job in meeting its 
challenges. There are certainly many more challenges remaining.
    However, backlogs of the Office of Hearings and Appeals 
continue to result in long delays for disabled applicants. 
Redesign of the Disability Determination process has been slow. 
And the suspense file of uncredited wages has not been pared 
back significantly.
    I look forward to discussing these matters with the 
Commissioner and I welcome him here this morning.
    Chairman Bunning. Chairman Shaw and ranking member Levin 
have agreed that they will not make any opening statement in 
order that we may expedite the hearing.
    First, we will hear from the Commissioner of the Social 
Security Administration, Mr. Kenneth Apfel.
    Mr. Commissioner, would you begin, please.

    STATEMENT OF HON. KENNETH APFEL, COMMISSIONER OF SOCIAL 
                            SECURITY

    Mr. Apfel. Thank you, Mr. Chairman.
    I am submitting a formal statement for the record. I have a 
very abbreviated statement that may not have been provided to 
the table. If it hasn't, it will be.
    Chairman Bunning. Would you put your mike a little closer 
so we can hear you.
    Mr. Apfel. I'm going to be providing a formal, lengthy 
written statement for the record, and I've got a brief 
statement that I hope you have copies of. I think it's being 
made right now, actually. So if you don't have it, you'll have 
it shortly.
    So thank you, Chairman Bunning, Chairman Shaw, Mrs. 
Kennelly, Mr. Levin and the members of the subcommittees, for 
inviting me to testify before you today.
    SSA is now approaching the end of its third year as an 
independent agency, and we're justifiably proud of our 
accomplishments, both as stewards of a public trust and of the 
programs that affect so many Americans' lives.
    One of the primary benefits of our independent agency 
status is that it's given SSA greater visibility throughout the 
Government and within the Executive Branch in particular. And 
as the Commissioner of an independent SSA, I can and will 
provide the stable leadership that was one of the goals of the 
independent agency legislation.
    Let me turn to the five priorities that I established upon 
being named Commissioner. The most immediate priority is 
ensuring the long-term solvency of the Social Security program.
    During his State of the Union address, the President 
proposed that the projected budget surpluses be reserved until 
we address the program's long-range financing problem. He said 
that we must save Social Security first. Toward this end, he is 
calling for a year-long national dialogue on how we can best 
achieve this goal. At the end of the year, there will be a 
White House Conference on Social Security and early next year, 
bipartisan negotiations on Social Security reform will begin.
    SSA will play a key role in this process. We are focusing 
our efforts on educating the public about Social Security today 
so that they will be better able to help determine the Social 
Security program of tomorrow. And I, as Commissioner, have been 
actively involved in discussions on policy matters since the 
day of my confirmation.
    A second priority for SSA is assuring program integrity. 
Nothing is more important to me than maintaining the public 
trust in and the integrity of Social Security. SSA will 
forcefully exercise its responsibilities in this regard. Where 
we identify problem areas, we will develop plans to correct 
them.
    A particular concern is the SSI program, which has been 
designated by the GAO as being at high risk. SSA is now at work 
assessing what corrective actions need to be taken in four 
areas of program concern: payment accuracy, continuing 
disability reviews, return to work and the entire disability 
determination process.
    Since the SSA became an independent agency, one of the 
reasons we have been able to make major gains in assuring 
program integrity and in fighting fraud and abuse is because 
the Administration has moved to strengthen IG capabilities.
    If Congress approves the IG budget request for this year, 
the staff will have been increased by 80 percent since 1995. 
Related to program integrity is our ability to ensure the 
agency's systems capabilities with regard to the Year 2000 
problem.
    We fully expect to make SSA Year 2000 compliant by this 
December, a full year ahead of deadline. I would like to note 
that SSA's efforts in this area have been rated as one of the 
best in Government, both by OMB and by Congress.
    My third priority for SSA is to guarantee equity for all 
claimants and beneficiaries. During my confirmation hearing, I 
pledged a top-to-bottom review of the implementation of recent 
changes in the SSI childhood disability provisions. I believe 
this review was needed because of public concerns about whether 
the new law and the regulations were being applied fairly.
    The review basically found that SSA and the State agencies 
were doing a good job, but there were some problems. Where 
specific problems have been identified, I have ordered 
corrective actions. SSA is taking steps above and beyond normal 
administrative actions to ensure that every child receives a 
fair assessment of his or her eligibility for benefits.
    I would also note that one of our initiatives for improving 
efforts to provide efficient and responsive program 
administration is our redesign of the disability process. I am 
concerned that it has taken SSA so long to accomplish this 
goal. I expect to be making some decisions to implement certain 
aspects of disability redesign nationally later this year. This 
is a very important priority.
    In speaking about the disability program, I want to commend 
the spirit and intent of legislation introduced yesterday by 
Chairman Bunning and Congresswoman Kennelly. That proposal was 
designed to help individuals with disability return to 
productive employment, a goal shared by this administration, 
and the impetus for the Ticket to Independence Act that we 
transmitted to Congress last year. We will work with lawmakers 
on both sides of the aisle to realize this very important goal.
    The last two priorities that I identified upon being named 
Commissioner involved improving internal agency processes. The 
first of these is strengthening SSA's long-range planning 
capability. SSA has been in the forefront of Government 
agencies in developing and implementing strategic management 
concepts.
    Over the next decade, SSA will face its greatest 
administrative challenge yet, handling the dramatic growth in 
disability and retirement workloads that will occur as the baby 
boom generation ages.
    For this reason, although the time frame for our current 
strategic plan is the next five years, I believe that we need 
to stretch our strategic planning horizon to 2010 and beyond.
    Finally, SSA is working to improve its policymaking 
process. Research lies at the heart of this process and we 
intend to expand research on issues critical to Social 
Security. We are also undertaking initiatives to ensure the 
integration of research with policy development, to expand 
staffing in both of these areas and to increase interaction 
with various stakeholder groups.
    In conclusion, let me say that I am committed to 
strengthening and protecting the Social Security programs that 
are now part of the fabric of American life. 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 here and now.
    We also face several challenges. As the Commissioner of an 
independent SSA, I accept those challenges. I look forward to 
working closely with the members of this committee on these 
very important endeavors.
    Thank you, Mr. Chairman.
    [The prepared statement follows:] 
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    Chairman Bunning. Thank you, Mr. Commissioner. I will start 
off with the questioning, and I am going to take the 5 minutes 
just like everybody else so that we can get through the many 
members here today.
    First of all, I was pleased to hear you discuss the many 
advantages of SSA being an independent agency. You discussed 
your personal involvement in meetings at the White House, 
serving on the Domestic Policy Council and the National 
Economic Council, to name a few.
    However, how independent are you in making decisions that 
affect your agency? What role does OMB play in the development 
of SSA legislation, policy and budget?
    Mr. Apfel. Well, the independent agency legislation, which 
was a very important piece of legislation, created the Social 
Security Administration and the Commissioner with greater 
visibility, greater accountability and clearly more stable 
leadership, which I think are all very important elements.
    The Social Security Administration remains an Executive 
Branch agency. However, the six-year term established for the 
Social Security Commissioner provides what I believe is the 
measured independence and authority within the agency----
    Chairman Bunning. Please just answer, because I only have 5 
minutes, please answer the question. How much--what role does 
OMB play in the development of SSA legislation, policy and the 
budget?
    Mr. Apfel. I was answering the question, Mr. Chairman. The 
legislation, as I said, did not create a fourth branch of 
Government. It created Social Security and its independent 
Commissioner as a part of the Executive Branch. Do we still 
deal with the Office of Management and Budget for budget 
formulation and for legislative proposals? Yes. That will 
continue, as it always has.
    We have an integrated responsibility throughout Government. 
I am a managing trustee of the Social Security and Medicare 
trust funds. If we look at, say, SES allocations, does the 
Social Security Commissioner determine independently how many 
SES staff it has? The answer would be no.
    Chairman Bunning. Let me ask you some follow-ups, because 
you answered my question.
    Did OMB review your testimony before it was finalized 
today? What changes did they ask you to make, and did you make 
any changes?
    Mr. Apfel. Actually, the answer is yes, there were some 
very minor changes that were made.
    Chairman Bunning. So OMB did request that you make changes 
in your testimony before today?
    Mr. Apfel. Absolutely.
    Chairman Bunning. Okay. Why did you choose to continue to 
submit virtually everything SSA to OMB for review, and by law, 
you are not required to do it.
    Mr. Apfel. The Social Security Administration remains an 
Executive branch agency.
    Chairman Bunning. No, by law. The law that we made in 1994 
gave you permission not to consult with OMB. That you would be 
in charge of the Social Security Administration. Now, please 
answer the question.
    By law, you are not required to do it, so why do you do it?
    Mr. Apfel. Mr. Chairman, I am responsible for the Social 
Security Administration. I am the Commissioner. I am also part 
of the Federal Government. I have a direct responsibility to 
report----
    Chairman Bunning. So am I, but I don't consult with OMB and 
the White House.
    Mr. Apfel. You're not an Executive Branch agency. The 
reality is I have a direct reporting relationship to the 
President of the United States. The Office of Management and 
Budget has responsibilities to oversee integrative activities 
throughout Government. There are many things that----
    Chairman Bunning. Your budget can be what you want it to 
be. My request of the Congress----
    Mr. Apfel. Mr. Chairman, I would point out that the 
legislation did specify that when the President submits his 
budget, the Commissioner's budget is submitted at that same 
time, and that was completed in this year's budget request.
    Chairman Bunning. That's correct, so you could come 
directly to the Congress and ask for whatever you choose to ask 
for, without submitting your budget to OMB.
    Mr. Apfel. And Mr. Chairman, the President submitted my 
budget.
    Chairman Bunning. Why would we make you an independent 
agency if we thought you were going to submit everything to OMB 
for approval?
    Mr. Apfel. The President's budget includes my budget 
request and it includes the President's budget request, 
consistent with the Federal law. It's appropriate, it's an 
important activity on both counts.
    Chairman Bunning. We want you to be independent. We think 
it's important for you to be independent of the White House, of 
HHS and everything else, so that we can have a relationship 
between the Congress and Social Security that is in the best 
interests of the recipients and those who are paying into the 
system.
    And if you're going to continue to submit everything to 
OMB, we're not going to have a good relationship.
    Mr. Apfel. Well, Mr. Chairman, I intend to submit 
testimonies to OMB. I think it's my responsibility as the 
Commissioner of Social Security and as the head of----
    Chairman Bunning. Well, then you're not an independent 
agency under the law.
    Mr. Apfel. The legislation created Social Security as an 
independent agency.
    Chairman Bunning. No, the law--I helped write the law, so 
please, if you want to get some experts up here to interpret 
what's in the law, we'll be glad to argue with you about it. 
But the law does not require you to submit anything to OMB. 
Your independent agency law does not require that.
    Mr. Apfel. The legislative history, Mr. Chairman, had a 
House version----
    Chairman Bunning. Legislative history, I am familiar with 
that, also.
    Mr. Apfel. As I am, too, sir.
    Chairman Bunning. Oh, you were involved in writing the law? 
And the legislative history of writing it?
    Mr. Apfel. No, but I have read it pretty carefully.
    Chairman Bunning. All right. Mrs. Kennelly.
    Mrs. Kennelly. Thank you, Mr. Chairman.
    Commissioner, take a deep breath. You can use two of my 
minutes to respond to the question so you can get your answer 
on the record fully.
    Mr. Apfel. I would say that the independent agency 
legislation, I believe, created the appropriate balance in 
creating an independent Social Security Administration outside 
of the entity of the Department of Health and Human Services, 
as a free-standing agency within the Executive Branch; with a 
six-year term for the Commissioner, who serves, unlike many 
other Cabinet-level appointments, not at the pleasure of the 
President, once confirmed by the Senate, but as an Executive 
Branch agency, clearly subordinate to the President.
    I believe that the balance established was appropriate. The 
creation of the Social Security Advisory Board, a bipartisan 
advisory board, to consult with the Commissioner was 
appropriate, helpful and very positive. So I am very pleased 
with the relationship that's been established. I believe it's 
appropriate for the American public, and I believe it's 
important for the Government.
    Mrs. Kennelly. Thank you. Commissioner, some people in my 
district and people in Washington have contacted me about the 
administration's proposal to assess a few on the attorney when 
SSA withholds payment for the attorney from the claimant's 
award of past due benefits, which we know has been standard 
procedure until now. People have argued that this fee will 
ultimately fall on the beneficiary. Can you comment?
    And the second question is some attorneys have suggested 
that if SSA is going to collect a fee, SSA ought to process the 
payment to the attorney within 45 days of the award notice.
    Could you comment on these ideas?
    Mr. Apfel. We did submit a legislative proposal yesterday 
to the Congress to impose a user fee on attorneys who represent 
clients through the disability system.
    Mrs. Kennelly. How much was that?
    Mr. Apfel. Well, it would be about $165 per case, which is 
the cost to the Social Security Administration for processing 
these activities. We believe this is appropriate compensation 
for the services we provide.
    Two, will these fees fall on beneficiaries? Well, as you 
know, Mrs. Kennelly, there is a limit on the amount that 
attorneys can collect from the past-due benefits and many of 
those claims are at the maximum amount. This $165 could not be 
shifted over to beneficiaries.
    I have discussed this matter with some of the organizations 
involved. They have concerns about the fee. They also have 
concerns about the Social Security Administration's ability to 
deliver services on a prompt basis.
    I think they've got a good point on our ability to provide 
their payments promptly. Therefore, I would like to consider 
that we would work together to find ways to first, establish a 
fee, but second, also to expedite ways that we can ensure that 
prompt payments are received by attorneys for this activity. So 
I think their second point has some real merit.
    Mrs. Kennelly. Commissioner, it's not the large cases or 
the maximum cases that I'm concerned about. What I'm concerned 
about is the attorney that has the smaller cases. As you know, 
low-income individuals have a hard time affording an attorney. 
If each case would cost an additional $165 up front for the 
attorney, the affordability issue may get worse.
    My concern is that this will keep people from wanting to 
represent people who need the services desperately because they 
are in a desperate situation. So I hope you will continue to 
discuss this before we get to a fee of $165.
    Mr. Apfel. We will, Mrs. Kennelly. I think that as budget 
resources become increasingly constrained, finding ways to 
establish user fees is one of the important things that we 
should look at.
    I think this is one that, for a relatively modest fee, will 
not significantly reduce the number of attorneys representing 
claimants. But that's what this debate is about, and we'd be 
willing to talk to you about that this year.
    Mrs. Kennelly. Thank you, because I have additional 
thoughts on it, and I will make an appointment to talk with you 
about this further.
    Mr. Apfel. Very good.
    Mrs. Kennelly. Thank you, Mr. Chairman.
    Chairman Bunning. Mr. Shaw.
    Chairman Shaw. Thank you, Mr. Chairman. Commissioner, I'm 
glad that in your opening statement you make reference to the 
probably most heralded statement in the State of the Union 
address--that we will save Social Security first.
    After the President said that, we all leaped to our feet 
and applauded. It was the most-applauded line of the evening. 
However, I cannot detect, in either the President's speech 
following or before that remark, nor in the budget that he 
submitted, that his budget is matching his rhetoric.
    Can you tell me what the President has done in his budget 
submitted to Congress to save Social Security first?
    Mr. Apfel. I'd be more than happy to, Mr. Chairman. The 
President, in his budget and in his State of the Union address, 
indicated that we should reserve the surpluses pending Social 
Security reform.
    That does not necessarily mean that every dollar of surplus 
would be provided to the Social Security programs.
    Chairman Shaw. What did it mean?
    Mr. Apfel. What it meant was that all dollars, all surplus, 
every dollar of surplus would be reserved pending action on the 
Social Security reform effort. In the meantime, the 
Congressional Budget Office has projected a potential surplus 
for even this year for the first time.
    The effect of that would be for those dollars to draw down 
the debt, to reduce the overall national debt in the short 
term, which is----
    Chairman Shaw. Let me interrupt you here. I'm a little bit 
confused. First of all, I think it's important to realize what 
creates a surplus. It's the budget. If you don't have a 
surplus, then you don't follow through on it. If you come up 
with new programs, new spending programs or tax cuts, you can 
eliminate the surplus, and there's never a surplus so you never 
have to deal with save Social Security first. Am I correct on 
that?
    Mr. Apfel. I didn't quite follow it. But I know, Mr. Shaw, 
that you've introduced, or are considering legislation to 
create some form of a mechanism to reserve those surpluses in 
some capacity. I know that Mr.----
    Chairman Shaw. Let me follow up so you can see exactly 
where I'm going with this.
    The law, as I thought we had enacted it, took Social 
Security off of the unified budget. Now, it doesn't appear that 
anybody around here, either in the House or in the White House, 
is following through on this.
    Now, if you take Social Security out of the unified budget, 
there'd be a large deficit. That deficit would be somewhere in 
the neighborhood of what, $70 billion?
    Mr. Apfel. In that vicinity.
    Chairman Shaw. So it appears to me that if we're going to 
follow through on what the President said of saving Social 
Security first, as we applauded the President, then the logical 
way to save Social Security is to take it out of the unified 
budget, get some honesty in accounting and say, hey, we still 
have a $70 billion deficit.
    And I want the record to reflect that you just shook your 
head, yes.
    Mr. Apfel. Well, let me say, Mr. Chairman, that it's clear 
that the Social Security surplus is $80, $90, almost $100 
billion this year, and the non-Social Security deficit is still 
$70, $80, $90 billion--we understand those.
    And the unified budget still requires that Social Security 
surpluses be included within the unified budget structure, 
although it is within other formulations in an off-budget 
formulation.
    Chairman Shaw. That's arguable.
    Mr. Apfel. That is one of the questions that should be 
debated this year, with the surpluses reserved; what is the 
budgetary treatment of Social Security? It's a legitimate issue 
that needs to be discussed as part of a Social Security reform 
endeavor.
    Chairman Shaw. I would say that it is dishonest and it is 
outrageous that either the Congress or the administration would 
use the Social Security system to mask a huge deficit that is 
still with us.
    And I think if somebody is going to get up and say, ``We 
want to save Social Security first,'' that they have an 
obligation to send an honest budget to Congress in which the 
Social Security surplus is not used in order to hide a huge 
Federal deficit that is still with us.
    Mr. Apfel. Mr. Chairman----
    Chairman Shaw. That money is committed, and as a matter of 
fact, we're short that money anyway. So it seems to me that the 
White House and the Congress should join hands and say we're 
not going to do that anymore. We need to get rid of the real 
deficit, which is still very much with us; and we need to no 
longer use the Social Security surplus to hide what really is a 
$70 billion deficit.
    Mr. Apfel. Mr. Chairman, in 1993 the non-Social Security 
deficit was nearly six percent of GDP. It's now down around one 
percent of GDP. There's been remarkable progress made, at least 
in part, on a bipartisan basis on deficit reduction and also 
economic growth. There have been amazing improvements here.
    What the President said a year and a half ago in the State 
of the Union address was let's balance the budget first--and 
that was a very important endeavor--and then move on to the 
generational issues of our day.
    What he said in this State of the Union address is we have 
now balanced the budget and we are projecting very modest 
surpluses in the future; let's reserve those surpluses, let's 
not spend them away, drain them for any other activities until 
we've addressed what to do about the long-term future of the 
Social Security system. And then determine what to do about any 
other surpluses that exist.
    Chairman Shaw. My time has expired, but I just want to say 
that the best spin master in the world cannot refute the fact 
that we are still using Social Security surpluses to balance 
the budget, and that is wrong.
    Thank you, Mr. Chairman.
    Chairman Bunning. Mr. Levin.
    Mr. Levin. That was, Mr. Shaw, an interesting discussion, 
and I think the President said in his State of the Union that 
without Social Security there would be a deficit, and that's 
why we should not spend any surplus until the Social Security 
issue is straightened out.
    Mr. Apfel. That's correct, sir.
    Mr. Levin. And saving Social Security first is even more 
important, because without the surplus, we would still have a 
deficit.
    But anyway, I want to go back to Mr. Bunning's question, 
because I don't quite understand the dynamic here. You 
submitted a separate SSA budget, is that correct?
    Mr. Apfel. The President did on our behalf, yes.
    Mr. Levin. Right. But you submitted it to the White House. 
You transmitted it, I should say. And then the President, in 
his own budget, did he have a separate provision for SSA?
    Mr. Apfel. Yes, the President submits----
    Mr. Levin. So essentially, you presented a separate budget 
from the President. The law requires that he transmit what you 
transmitted to him as a separate document, right?
    Mr. Apfel. Not as a separate document, as part of his 
overall budget. The budget allocations that I proposed to him 
are included in the President's budget as a separate account.
    Mr. Levin. Now, is what the President presented relative to 
SSA identical to what is in the document that was transmitted 
from you through the President's communication to us?
    Mr. Apfel. No. The Commissioner's budget, my budget, was 
about $250 million higher in spending than the allocations that 
the President provided in his budget for Social Security.
    Mr. Levin. So I don't see how anyone can argue that you 
haven't followed the purpose of your independence. You said to 
us, you have a request higher than the President, right?
    Mr. Apfel. Yes.
    Mr. Levin. In terms of your communications with the 
executive department, the President still has the veto power 
over what we appropriate for SSA, right?
    Mr. Apfel. Yes, sir, as part of the Labor HHS 
appropriations bill.
    Mr. Levin. So if he doesn't like what we appropriate for 
SSA, he could use that as a reason for vetoing the Labor HHS 
bill.
    Mr. Apfel. Yes, sir.
    Chairman Bunning. Mr. Levin, would you yield?
    Mr. Levin. Sure.
    Chairman Bunning. So we don't get lost in the formality of 
this, the Social Security Administration, under the Independent 
Agency Law, is entitled to submit directly to the Congress of 
the United States their own budget without going through OMB. 
That's what the law says; that is not what is being practiced.
    Mr. Levin. I'm not sure the law says there shall be no 
consultation.
    Chairman Bunning. I didn't say that. I said if there is a 
difference, we should see the difference. How can they be an 
independent agency if we don't see the difference between what 
OMB finally submits through the President on their behalf and 
as----
    Mr. Apfel. Mr. Chairman.
    Mr. Levin. That's exactly what happened.
    Mr. Apfel. The law specifies that when the President 
submits his budget request, included within that would be the 
budget requested by the Commissioner for the Social Security 
Administration.
    The President's budget request includes his government-wide 
appropriations estimates, including blank amount of money for 
the Social Security Administration. My budget request is also 
included. It is about $250 million higher. They are both 
included and transmitted to the Congress as part of the 
President's budget request.
    Mr. Levin. Mr. Bunning, that's exactly what happened.
    Chairman Bunning. We'll follow up on my own time. Thank 
you.
    Mr. Levin. All right. But Mr. Apfel is saying that what he 
submitted is different than the President suggested to us, so 
we have in front of us the President's position and Mr. Apfel's 
position.
    Mr. Apfel. That's correct.
    Mr. Levin. Thank you.
    Chairman Bunning. Mr. Hayworth. He's not here. Mr. Collins.
    Mr. Collins. Thank you, Mr. Chairman. I want to change 
directions a little bit and inquire about a particular area. I 
understand that the IG is increasing its audit work in the 
Office of Hearings and Appeals. I just want to ask what you and 
your office may be doing in this area.
    I understand that attorney fees in particular are very 
lucrative in this particular area, and that our Office or 
Hearings and Appeals or ALJ's have to collect those fees. The 
concern is that many of these attorneys come to court ill-
prepared for the hearing. There appear to be no standards for 
these attorneys to be prepared for the hearing.
    If they're ill-prepared, then it falls on the ALJ's to 
actually do the research and prepare the cases. And the ALJ's 
have no contempt authority. There is no required pre-hearing 
submission of information. I understand there is a local rule 
that would allow a five-day pre-hearing submission, but there's 
no authority to enforce it.
    Many of our ALJ's have no assistant. Several have had to 
buy their own computers. And this is an area where there is a 
tremendous backlog. The disability area accounts for 10 percent 
of the cases we have now in Social Security, and that's 
projected to increase to 20 percent over the next five years.
    What have you done in this area? What have you done to look 
at this particular area since you have become the new 
administrator?
    Mr. Apfel. Well, Mr. Chairman, this is one of the larger 
problem areas that we have, there's no doubt about it. Backlogs 
are serious, they are real. I'd like to talk about two or three 
different things.
    One is that we do expect to see those backlogs 
significantly reduced in the course through 1999. We've hired 
about 250 to 300 additional judges, bringing us up to about 
1,100 ALJ's now. So, we have put investments in this area, 
which I think are appropriate. Congress has supported that, and 
we're pleased.
    This is an area that we needed to build up more of our 
resources, but that, in and of itself, is not going to be the 
long-term story. What we need are some significant reengineered 
systems there with ALJ's, the Office of Hearings and Appeals, 
as well as the State DDSs, in terms of creating a more unified 
process, as well as trying to streamline the process.
    What I would like to see is that by the time the case lands 
on the desk of the ALJ, that there is a much more solid 
rationale at lower levels about why the decisions were made the 
way they were.
    Now, when it comes to the actual lawyer coming in the door 
and if that lawyer is ill-prepared, which is a point you 
brought up here, those hearings are de novo hearings, and I 
think that's probably appropriate. I think the ALJ ought to be 
able to have all the information provided on that case the day 
that that case is presented. If there's an area that needs more 
information getting that information, I think, makes good 
sense.
    But what I think the ALJ needs is a more solid 
justification about why these State DDSs have determined the 
case the way they did, so that there is a more consistent 
understanding of what the ground rules are. I think that would 
have the tendency----
    Mr. Collins. My time is going to run out. But you 
understand this is a problem area.
    Mr. Apfel. Absolutely.
    Mr. Collins. Okay. You've been on the job now since the end 
of September of 1997, and you understand this is a problem 
area. What have you specifically done to assist in this 
particular area for lawyers who come to court, come to the 
hearing rather, ill-prepared and there's no contempt authority, 
there's no authority for the ALJ's to actually reduce those 
lucrative fees for those ill-prepared lawyers.
    Have you done anything? Are you going to do anything? When 
are you going to do it? This is an area that is backlogging 
those who are applying for those benefits and many who deserve 
those benefits, and this is where a decision has to be made.
    What are you going to do in the very near future to correct 
these bad problems?
    Mr. Apfel. Well, as I said, sir, we intend to streamline 
the process.
    Mr. Collins. When?
    Mr. Apfel. There are a whole series of pilots that are 
underway to try to figure out how to move the process, to speed 
it up, to unify, so that we have a better consistency of 
application of rules between the ALJs and the State DDSs.
    On the specific issue that you mentioned, which I had not 
heard of, which is whether we should create contempt rules for 
attorneys that come in ill-prepared, I will look at this issue, 
but it's the first I'v heard of this one, sir.
    [The following was subsequently received:]

    Currently, SSA can bring proceedings to suspend or 
disqualify a person from acting as a representative in dealings 
with SSA if it appears that the individual has violated SSA's 
rules governing representatives. Additionally, if an 
Administrative Law Judge (ALJ) believes that there is relevant 
and material evidence available which has not been presented at 
the hearing, the ALJ can adjourn the hearing or, at any time 
prior to the mailing of the decision notice to the claimant, 
reopen the hearing for the receipt of such evidence.
    SSA has also published a Notice of Proposed Rulemaking 
(NPRM) which expands SSA's rules governing representatives. 
These regulations will protect the claimant and the process 
from those representatives who are incapable of providing or 
unwilling to provide meaningful assistance in expeditiously 
resolving pending claims. Representatives will be required to 
demonstrate by their performance that they have a working 
knowledge of the programs for which they wish to provide 
representational services. SSA will be authorized to bring an 
action to disqualify or suspend a person who does not meet our 
qualifications for a representative or who violates SSA's rules 
and standards governing representatives in their dealing with 
SSA.

    Chairman Bunning. The gentleman's time has expired.
    Mr. Collins. Well, it's not the first time I have mentioned 
it, it's not the first time I've heard of it. I've heard it 
from several people at ALJs. Thank you.
    Chairman Bunning. Okay. Mr. McCrery will inquire.
    Mr. McCrery. Thank you, Mr. Chairman. Mr. Apfel, welcome. 
I'd like to engage in some of these other topics. They're very 
interesting, but I want to concentrate my questions on the SSI 
program, particularly the SSI for children program. And I may 
want to submit some more questions to you in writing, if that's 
okay.
    Mr. Apfel. That's great.
    Mr. McCrery. Just following up quickly, though, on the ALJ 
question, do you know, off the top of your head, what 
percentage of Disability Determination Services decisions are 
overturned by administrative law judges?
    Mr. Apfel. It's on the order--the overturn rate is about 60 
percent. I'll get you that exact number for the record, sir. 
There are many reasons for that----
    [The following was subsequently received:]

    The hearing level allowance rate in fiscal year 1997 was 
54.5 percent.

    Mr. McCrery. Okay. It just seems high, doesn't it?
    Mr. Apfel. There are a number of reasons for that. Partly 
it is a question as to whether that individual has become more 
disabled; that's issue number one.
    Issue number two is: There's clearly different evidence 
provided at that stage than at the earlier stages. There's more 
information provided on the individual's case record so it's a 
fuller picture of the extent of disability.
    Three, because of attorneys and because of other sources of 
support, there is a significant amount of clarification of the 
record so the ALJ is looking at a more accurate picture, 
overall.
    But, at the same time, ultimately, what we've got to do as 
an organization--and I believe this strongly--is find ways to 
reduce the allowance rates at the ALJ levels, as well as 
increase the rates of approvals at the DDS levels. What I 
believe we've got to be able to do is have a more unified 
system so that people do not necessarily feel that they have to 
appeal time and time again, that the decisions are correct at 
the front end.
    So, ultimately, one of the ways to improve our system is to 
see that there is a more unified approach with higher approvals 
at the front end, lower approvals and overturns at the latter 
end--more legitimacy for the overall appeals process, which I 
think we need to have. We don't have it right now.
    It's one of the goals of the organization, it's one of my 
strong goals. I believe we've got to do more in this area. It's 
not going to be easy; I would love to say that within 3 months 
the whole thing will be corrected. It will not be, but it's 
something I want to work on a lot, and we will get better.
    Mr. McCrery. Well, I'm told by staff that the error rate is 
closer to 70 percent than 60 percent, either way it's very 
high, and I find it hard to accept that a 60 to 70 percent 
overturn rate can be explained away by the simple statement 
that there's more evidence presented at that level.
    Supposedly, when the determination is made by DDS, they 
have all the medical evidence that would support a finding of 
disability. And I know from that point until the ALJ, the 
claimant is asked to gather more evidence, go back to the 
doctor, get a clearer statement--all those things which can 
lead to a different determination, but 60 to 70 percent seems 
to me to be very, very high, and not explained simply by more 
evidence being presented.
    So I would just urge you--I think you're right to try to 
reach a point where there is more uniformity in the decisions 
at the DDS level and ALJ level, but I would urge you not to 
concentrate solely on the DDS level, but maybe look at the ALJ 
level. I think the ALJs are lawyers, too, aren't they? The ALJs 
generally are lawyers?
    Mr. Apfel. Yes they are.
    Mr. McCrery. And then there are lawyers appearing before 
those lawyers. So, I wish you'd look at both ends of that.
    Mr. Apfel. And, sir, we will. The----
    Mr. McCrery. Let me just get in one more thing because I do 
want to get some questions to you in writing, as well.
    Let's talk about SSI for children real quickly. Do you 
recall when the legislation was perfected here in the House--
not perfected, but introduced and passed through the Ways and 
Means Committee, and CBO presented an estimate of how many 
children would be removed from the rolls. Do you remember that 
estimate?
    Mr. Apfel. On the House-passed version, or----
    Mr. McCrery. Yes. Well, I'll take that, the House-passed 
version. It's about 185,000.
    Mr. Apfel. Well, actually, the final conference language 
was about 185,000.
    Mr. McCrery. Yes.
    Mr. Apfel. Yes, sir.
    Mr. McCrery. Yes, about----
    Mr. Apfel. 185,000 was the number that CBO, on the final 
legislation, estimated as to how many children would be----
    Mr. McCrery. 185,000.
    Mr. Apfel. They had a range in their estimate. Their 
midpoint estimate was 185,000 they had a significant range 
around that.
    Mr. McCrery. Well, yes, but 185,000 was the midpoint. Now, 
when Social Security Administration released its regulations on 
the program, what was the estimate then--of children who would 
be removed from rolls?
    Mr. Apfel. 135,000.
    Mr. McCrery. 135,000. So, for some reason, from the time 
that the legislation was adopted to the time that SSA 
regulations came out, we lost 50,000, an estimate of 50,000 
children that would be removed from the rolls. Now, since that 
time, you have a done a top-to-bottom review and you now are 
estimating how many children will be removed from the rolls?
    Mr. Apfel. After all appeals, about 100,000.
    Mr. McCrery. 100,000. Now, Mr. Apfel, considering that 
history of estimates of children to be removed from the rolls, 
as a result of legislative action and regulations written by 
your administration, how do you respond to critics, perhaps in 
the Senate, who tell you that your regulations are too harsh 
and they don't carry out the intent of the legislation that was 
passed by Congress?
    Mr. Apfel. Well, Mr. Chairman, the top-to-bottom review was 
aimed at ensuring that we were going the extra mile to give 
every child the best possible review----
    Mr. McCrery. And I applaud you for that.
    Mr. Apfel. And I know you did, and I thank you for that, 
sir. It is true that the estimates have come down some in terms 
of the number of children----
    Mr. McCrery. Some is an understatement.
    Mr. Apfel. The 135,000 to 100,000 is significant but it is 
real. There are some, as you know, in the Senate who believe 
that the regulations are still overly strict and I'll probably 
be testifying in about a week-and-a-half on that.
    Mr. McCrery. Yes, I'm asking how you respond to those.
    Mr. Apfel. Well, I haven't quite figured out how to respond 
when asked for a hearing a week-and-a-half from now, but what I 
would say, sir, is that the interim regulations were the best 
assessment of congressional intent at that time, which the 
General Accounting Office, when it reviewed the regulations, 
considered to be generally consistent with law. Now, we don't 
have the final regulations out yet, that's a long way away, 
very frankly.
    Mr. McCrery. Well, I would simply urge you to remind the 
Senators of the legislative history, the CBO estimate history, 
for this process, and that might help to quell----
    Chairman Bunning. The gentleman's time has expired. Mr. 
Coyne.
    Mr. Coyne. Thank you, Mr. Chairman. Commissioner, how many 
States out of the 50 States take advantage of the option of 
providing supplemental benefits to SSI recipients?
    Mr. Apfel. There's a number of States. I don't have the 
actual number; I will provide that for the record. Many States 
do provide a supplement over and above the amount that--my 
staff tells me it's approximately 35.
    Mr. Coyne. Thirty-five States provide the benefits?
    Mr. Apfel. Yes, State supplemens to the SSI program.
    Mr. Coyne. And, at the beginning of this process, they paid 
SSA a $1.67 fee for administering the check, and now you're 
proposing that that fee go up to $6 or $7.
    Mr. Apfel. Well, it's not proposing; it's now the law of 
the land. The fees were raised last year to cover the cost of 
Social Security for providing the service to the States for the 
SSI supplementation program for States.
    Mr. Coyne. Well, as you know, Pennsylvania used to absorb 
that cost, and now because it's become so costly do that, 
they're no longer going to absorb the cost, and the 
beneficiaries are going to have to absorb the increased cost of 
$6 or $7. Is there any way that you can cut back on the high 
cost of processing those checks?
    Mr. Apfel. It is our sense that this is a good estimate as 
to what our costs are. Many States cannot shift those costs 
over to beneficiaries because they are at a maintenance of 
effort levels. Some States that provide--as Pennsylvania does--
more than the State maintenance levels that are allowed, have 
the option to cut benefits for low income, elderly and disabled 
people.
    That's a State option. The Administration would rather the 
States not do that, needless to say. Many States can't, if at 
their maintenance levels, but States that are higher have that 
option, and I must say, we certainly don't look forward to 
seeing that happen, for States to take those actions.
    But that is a State's right, if it's providing more than 
the maintenance levels, to reduce payments. And it appears, 
from what you're saying, that Pennsylvania is considering that 
as a State action rather than coming up with the money within 
the State to pay for that service.
    Mr. Coyne. Would you anticipate that your automatic data 
processing efforts in the Administration will reduce the cost 
from $6 or $7 to something less for processing that? I mean, 
after all, the States that don't participate in exercising 
their option, their cases are reevaluated on a monthly basis, 
as well. And it seems to me that those States that are 
exercising the option and giving the supplement absorb the 
costs of the States that don't provide the additional 
supplement.
    Mr. Apfel. Mr. Coyne, I will look into this and determine 
what our out-year projections are in terms of what those costs 
are. We would then have to come back to Congress for 
legislative changes, but I will provide this to you.
    Mr. Coyne. To reduce the cost per check?
    Mr. Apfel. What our out-year costs would be for this 
activity, to determine whether those costs are going to decline 
in the future. I'll provide that to you.
    Mr. Coyne. Thank you.
    Chairman Bunning. We have less than 5 minutes until we have 
two votes, and we are going to recess for those two votes and 
we'll be back as soon as we can get here.
    [Recess.]
    Chairman Bunning. The Subcommittee will come back to order. 
Since I'm the only one here, I get to ask the questions. 
[Laughter.]
    I want to follow up on some prior statements and 
interpretations of the Social Security Independent Agency law. 
Congress deliberately gave SS statutory authority to submit a 
budget that cannot be changed by OMB--directly to the Congress. 
In other words, you can submit it without any changes made by 
OMB, in addition to the one that is submitted as part of the 
budget of the President.
    Please describe the major differences that you had in your 
budget that wasn't in OMB's and the President's budget, $250 
million additional.
    Mr. Apfel. There were three main differences. One of them 
actually turned out to be about $150 million that turned out to 
be unnecessary, given the declines that the actuaries projected 
in disability workloads. So I had been projecting originally, 
months before, somewhat higher disability caseloads. When the 
final estimates came out sometime in the end of December, it 
was lower, so about $150 million would be attributed to that.
    The other $100 million, about $50 million of that was for 
automation activities, and about $50 million of that was for 
overtime.
    Chairman Bunning. All right. Mr. Commissioner, for a long 
time, SSA was touted as the leader in addressing the Year 2000 
computing issue in the Federal Government, then last fall, GAO 
issued a report pointing out several risks with SSA's Year-2000 
effort. What assurances can you provide our subcommittees that 
you are adequately addressing these risks, and that the 
American public will not need to worry about disruption of 
their benefits when January 2000 arrives?
    Mr. Apfel. I would start by saying that I firmly believe--
and I can tell the American public not to worry about their 
benefits arriving. The benefits will arrive. The GAO identified 
three areas. I think they were very important areas that needed 
consideration, and we're acting on those areas.
    One of the areas had to do with the DDSs, the Disability 
Determination Systems, and the issues about their systems 
coming into compliance. 14 of the DDSs are now up to speed----
    Chairman Bunning. You're at what?
    Mr. Apfel. Fourteen of the 50 are now Year-2000 compliant. 
We expect all to be done.
    We had one jurisdiction that was looking problematic but 
now that's been dramatically turned around. It should be done 
within the next 3 to 4 weeks.
    Interfacing was the second area, making sure that our 
interfaces with the private sector, in terms of our records, 
wage reporting, etc.--we've made believe we're in very good 
progress, excellent progress in that area.
    Third was creating a contingency plan where we were in a 
position to assure that if something did go wrong, we had a 
backup plan. And we are developing that plan now. We expect to 
have that out within the next month.
    And I think those are important steps. Actually from the 
GAO testimony today, I believe it also indicates that we are 
making excellent progress. I consider this to be a major 
priority of the agency. It is a hard, major, tough issue. We 
expect to be Year-2000 compliant by the end of the year. We 
have a full year for testing and we think that's the right plan 
to go----
    Chairman Bunning. In other words, you're going to have it 
in-place, ready to go, and ready to be tested, by the end of 
1998?
    Mr. Apfel. That is our plan and our expectation, sir, for 
testing to take place next year.
    Chairman Bunning. So that the whole of 1999 can be used to 
test it.
    Mr. Apfel. That's exactly right. There are other systems 
that we need to give a careful look--actually this will take 
place in the beginning of 1999--that are not our main interface 
systems. They are telecommunications systems. We must work with 
the telephone companies around the country, so that their 
activities won't interface and hurt us. So there are activities 
that are taking place beyond Social Security proper, beyond the 
DDSs, beyond the employer records that are coming in, beyond 
our connections to Treasury----
    Chairman Bunning. I want to ask you one more question. Why 
do you think we gave the commissioner of Social Security a 6-
year term, in our independent agency bill?
    Mr. Apfel. One of the reasons that I think you did, which I 
think is incredibly important, is to provide long-term 
direction to the agency.
    Chairman Bunning. No matter who is in the White House or at 
OMB or in the speaker's chair; that's the reason. So that we'd 
have continuity, so if there is a change in 2000, that the 
continuity at the Social Security Administration remains 
constant. So I want you to know that you're an independent 
agency.
    Mr. Neal.
    Mr. Neal. Thank you, Mr. Chairman. Commissioner, one of the 
questions that frequently comes to our district offices--in 
conversations I've had with other Members--is the question of 
the amount of time that it takes to satisfactorily bring a case 
to closure, and I know that's been one of your priorities.
    It does cause some consternation among those who are 
awaiting the results. I have a woman in mind, in my district, 
who is very good at pursuing me at social events, and trying to 
find out if there is going to be some way to speed the hearing 
up, and I suggested repeatedly that the best we can do is send 
along a letter, you know, requesting that the process be 
expedited.
    And, as one of your priorities, maybe you could talk a bit 
about some of the reforms that you're offering.
     Mr. Apfel. You have every reason to be concerned because 
this has to be fixed. It's not a question that this is 
tolerable; we've got to bring down those backlogs.
    In the short term, what we have done is increase resources 
in the hearings process, as I indicated to Mr. Collins. We've 
increased the number of ALJs by about 250, up to about 1,100 
now. So there's more people handling these cases. We're seeing 
backlogs come down; we're seeing processing times reduced, 
which is important.
    But, in the long run, what we've got to do is bring to 
closure efforts that were started back in 1993 to create a 
redesigned disability process. One initiative is process 
unification--in other words, trying to make sure that the 
process at the disability level, the State level, and the 
appeals level, are more in sync, understanding and following 
the same ground rules in terms of the case. The second 
initiative is an automated system, which is going to take some 
significant hurdles to implement, but it's a very important 
priority. And third, a re-engineered process so that cases move 
through the process with greater efficiency for the public.
    All of these things need to take place. They're all long-
term, tough problems, every one of these three. I think we're 
making some progress on all three, and I hope to be able to 
move by the end of the year on more of these re-engineering 
initiatives, to be able to help improve them. So, on the front 
end, it's added resources, which I think have made an important 
difference. But, in the long run, we've got to change the 
culture, we've got to change the dynamic so that we can move 
these cases faster.
    Ultimately, what this comes down to is the legitimacy of 
our programs which is incredibly important to me as the 
Commissioner. The legitimacy of the Social Security programs, 
including our disability programs, must be broad-based. I think 
that the backlogs hurt that, and part of the way to strengthen 
the credibility and the importance of the Social Security 
Administration and the Social Security programs, is by 
addressing this issue. It's a very important priority to me.
    Mr. Neal. Thank you, Commissioner, very much. Thanks, Mr. 
Chairman.
    Chairman Bunning. Mr. Camp.
    Mr. Camp. Thank you, Mr. Chairman. Mr. Commissioner, I 
noted in your testimony that your first priority was the long-
term solvency of the system, and that's certainly something I 
think we all agree with. And that your second priority was to 
ensure program integrity. And obviously that's very much 
related, first and second.
    I noted that to do that, you, in your testimony, mention 
that you would like to redesign the disability process, and, 
obviously, I think that's very important, given this Associated 
Press story about one southern State where 180 members of one 
family were collecting Federal disability benefits until there 
was an investigation, and 90 of those members were removed from 
the rolls. Mr. Chairman, I would ask for permission to put this 
Associated Press story in the record of the committee hearing.
    Chairman Bunning. Without objection.
    Mr. Camp. The inspector general, as a result of finding 
this tremendous problem--which, I think, goes directly at the 
integrity of the system and ultimately the solvency of the 
system, if people who should not be receiving benefits are--
recommended that physicians that are not independent to make a 
fair judgment not be used, or continue to be used. And I know 
that your testimony describes that SSA is developing, ``a 
comprehensive plan which will strengthen the management of the 
SSI program and substantially reduce overpayments made to SSI 
recipients.''
    And my question is, just one, when will the results of that 
plan be available? Can you give a report on where you are in 
developing that plan so that we can ensure the public about the 
integrity of the system?
    Mr. Apfel. We are working on a comprehensive plan that 
looks at a whole series of activities. It is, if I could say, 
Mr. Camp, some things are on-stream all ready, other things 
need to be taken into account. We intend to get a plan to you 
later this year.
    If we look at ensuring program integrity in this front, Mr. 
Bunning has been a leader on CDRs, on Continuing Disability 
Reviews, to review the cases that are out there. This is one of 
the significant things that we are doing. Back in 1995, there 
were 200,000 CDRs performed; in FY 1998, we expect to be at 1.3 
million, moving up to 1.6 million a year. So, it's a very 
important element in this endeavor.
    Two, we have to do a better job of cross-matching data with 
employers to validate information about what a person's income 
is. There are a number of things that we already have on this 
front. We also get information on prisoners by cross matches 
with prisons. But this year we're planning to add nursing 
homes, to be able to ensure that if people go into nursing 
homes, we can capture that information. We're also matching 
with the new child support database that's being established, 
trying to find out earlier in the process whether people are 
getting earnings. And we're also, as you know, strongly 
supportive of the IG's significant increase in resources to be 
able to go after fraud.
    So there are a number of steps to this and we are 
developing a plan. We expect, I don't have an exact month----
    Mr. Camp. Well, that's what my question is, particularly 
the timing of the report given that it would be helpful if it's 
in time for legislative action before Congress adjourns. If you 
can give a month that you expect to sent the report up----
    Mr. Apfel. Actually, I can't give you a month. But we do 
anticipate completion of the strategic plan later this year, 
and I will see if we can speed it up as fast as possible 
because this is important. As was mentioned, we've got to 
assure the integrity of our programs because it's part of the 
legitimacy of what we do as an organization. It's a very high 
priority. We're putting a lot of resources into it, and we will 
continue to. And you'll see the plan.
    Mr. Camp. Well, I think it is a concern because the 
inspector general report showed that one in three of the 
recipients faked their disability during the review. So, 
clearly, there's a problem with the way the system is 
established now and I think the sooner that we can develop a 
plan that will reduce this kind--it's fraud and it's illegal 
and it shouldn't be happening. These are not people who are 
deserving recipients of the program. So, I guess, the sooner, 
the better. Thank you.
    Chairman Bunning. The gentleman from Missouri.
    Mr. Hulshof. Thank you, Mr. Chairman. Just a follow-up 
point, and really not to argue with you, Commissioner, but in 
your exchange with the chairman, you indicated that the 
President, in defending the budgets, that the deficits were 1 
percent of GDP, and I guess my immediate reaction that I want 
to put on the record is that at the same time, the tax take 
from the American family--looking that the President's Fiscal 
Year 1999 budget--is 20.1 percent of GDP, which is the second 
highest in the history of our country. So I throw that out for 
anyone to consider.
    Also, in your written testimony, regarding the legislation 
introduced yesterday by the chairman and Mrs. Kennelly, the 
``Ticket to Independence Act,'' you mention you commend the 
spirit and intent of the legislation. Let me put you on the 
spot: Do you support it and are you willing to endorse it 
today?
    Mr. Apfel. We haven't actually gone through the legislation 
line by line. There are a number of features in the ticket part 
of it, which affects Social Security, that we are very excited 
about. I know there are also tax provisions, there are also 
Medicare provisions, that I certainly can't speak to directly 
at this time.
    But in terms of the ticket proposal, we're very excited 
about the ticket proposal. There are some benchmark payments 
that we'd like to talk some about in the course of the 
legislative deliberations. But the overall thrust of the ticket 
proposal, we think, is a major improvement for the country and 
we're quite thrilled about it.
    Mr. Hulshof. Well, I walked back from our vote with Mrs. 
Kennelly, and she wanted me to ask that question. [Laughter.]
    SSA is going to spend about $1 billion to replace its 
current computer terminals with intelligent workstations and 
local area networks, and I think according to GAO, the 30,000 
workstations include computers that have 100 megahertz 
capacity. And I'm not a computer wiz, but aren't 100 megahertz 
computers seemingly obsolete, and doesn't that cause you some 
concern? Can't you buy these things at a Radio Shack or at a 
Best Buy or----
    Mr. Apfel. Well, this is a very important issue, which is, 
how much capability do we need in our IWS/LAN system. I 
strongly feel that the models that we're buying are exactly the 
right level for our organization. It would be a waste of 
taxpayer money to buy significantly more expensive systems. The 
100 megahertz, even though it isn't state of the art--that 
means it's cheap, for one thing--will handle our data needs for 
the next several years.
    When we move into computer unification in the disability 
front, we may need to upgrade each of those machines to 
somewhat go beyond the 100 megahertz. We can do that; we can do 
that cheaply.
    So, I think the most cost-effective method that we have is 
going forward, absolutely, with the models that we have. And my 
own belief is that going to more expensive computers would be a 
waste of taxpayer money.
    Mr. Hulshof. And I appreciate your position. I also note in 
your written testimony regarding the Year-2000 compliance 
coming up this December, you're ahead of deadline, and you've 
been commended for that, and I commend you as well, but then 
are we not, based upon what you just said, purchasing 
additional upgrades and the like, how do you propose to square 
the two? Do these purchases, will they hinder your effort in 
the Year 2000?
    Mr. Apfel. Not at all. The IWS/LAN is fully Year-2000 
compliant. There are a few of the old non-IWS/LAN workstations 
still kicking around that may not be, and those are going to be 
replaced. But IWS/LAN is all Year-2000 compliant, every one of 
those machines. And implementation of that is really not a 
major issue for Y2K.
    In terms of the upgrades, we may need some upgrades after 
we move on the disability computer automation efforts, but, 
certainly, that would also be Y2K compliant as well. I have no 
concern about Y2K compliance and the integration to our IWS/LAN 
systems.
    Mr. Hulshof. Thank you, Mr. Chairman.
    Chairman Bunning. The gentleman's time has expired.
    Mr. Commissioner, I fully recognize that the number of 
continuing disability reviews processed by SSA has increased by 
133 percent over the past 3 years, and I'm very pleased to see 
that progress. However, I remain deeply concerned that you are 
not utilizing the full amounts authorized in the law to ensure 
that individuals who are no longer disabled are removed from 
the rolls.
    Since 1997, the agency has spent roughly half of what has 
been authorized. You recently reported to this subcommittee 
that as of October 1 of last year, there were 3.8 million 
backlog SSDI cases, and 1.6 SSI cases. Of these, 80 percent of 
the SSDI cases, and 97 percent of the SSI cases, have never had 
a full medical CDR.
    Even in this year's President's budget, which I assume now 
that you signed off on, you requested only $355 million to 
conduct CDRs. That's only one-half of what has been authorized 
by the law.
    I know you were part of the process that brought about the 
legislation authorizing this spending, and know how difficult 
it was to achieve. Why aren't you spending this money, 
especially when you know that SSA's failure to consistently 
complete these CDRs has led to hundreds of millions of dollars 
in unnecessary costs each year, and is undermining the 
integrity of the program?
    Mr. Apfel. Mr. Chairman, thank you for recognizing my role 
in the creation in this very, very important piece of 
legislation to establish the cap. I believe this is a very 
important model that we can use in other areas for fraud 
activities and program integrity activities.
    We are on what I believe is a sustainable path on CDRs. 
What I have to do is figure out how to manage this organization 
and how to manage workloads and how to ensure our public 
responsibility.
    As you pointed out, we have gone up from 200,000 CDRs, back 
in 1995, up to 1.3 million in 1998; we're proposing 1.6 million 
in 1999. We believe this is a sustainable ramp-up in CDRs that 
we believe we can eliminate the backlogs in DI by the year 2000 
and in all of SSI by the year 2002 and then continue on a 
sustainable path in the future to continue this activity.
    I know of your strong commitment and that you believe that 
we should be doing more. I think we are doing more. I think we 
are doing it at about the right pace. This ramp-up is really 
unprecedented, to go from 200,000 just a few years ago to 1.6 
million.
    Chairman Bunning. Well you got $4 billion more dollars.
    Mr. Apfel. We think that's the right level of spending, the 
right ramp-up is taking place, so the organization can have the 
capacity internally to do the work and not create a cliff out 
there at the end, if we spike way up in the next two years, 
with all kinds of staff resources.
    Chairman Bunning. Can I ask you another follow-up? What 
percentage or reduction have you made in the CDR's, the backlog 
that we've had. In other words, are we at the same level? Are 
we reducing?
    Mr. Apfel. No, it's coming down from what about--I'll have 
to get you the exact number for the record.
    [The following was subsequently received:]

    The CDR backlog, as of October 1, 1997, was 3.8 million. Of 
these, 2.2 million are for title II (this includes 588,000 
concurrent title II/title XVI cases) and 1.6 million title XVI 
cases. Some of these cases are currently being worked as part 
of the FY 1998 workload. Cases remain part of the backlog until 
a CDR determination is made.
    The current CDR backlog consists of all cases whose medical 
review diary came due prior to October 1, 1997. the backlog 
does not include certain cases whose reviews have been 
deferred: individuals who would be eligible for a non-
disability benefit if disability ceased (windows age 60 and 
workers age 62) or individuals for whom the likelihood of a 
productive CDR is remote (individuals over age 65 or SSI 
recipients who were grandfathered-in from State welfare in 1974 
at the beginning of the SSI program).

    Chairman Bunning. Please. I would like that, because you 
promised me a seven-year program the last time we met, and I 
don't have the copy of it yet.
    Mr. Apfel. You don't. And I expect you will get that very, 
very soon.
    I have a few decisions I have to yet make on that, but it 
will be very soon. I believe----
    Chairman Bunning. I would appreciate when I might get that.
    Mr. Apfel. If you don't have it within a month.
    Chairman Bunning. We'll call you back and see?
    Mr. Apfel. Yes, yes.
    Chairman Bunning. Okay.
    Mr. McCrery, do you have any more questions?
    Mr. McCrery. No, thank you Mr. Chairman. I appreciate that 
Chairman Shaw will submit questions in writing.
    Chairman Bunning. Mr. Portman?
    Mr. Portman. Just a brief follow up, and this has to do 
with the disability program also and the redesign of that. This 
subcommittee has been at it for some time now under its 
previous leadership and under Mr. Bunning's leadership and, as 
you know, SSA made some commitments to make major redesigns. 
The program, I think, was a six-year plan. GAO did an analysis 
of it in December of 1996 and said Social Security is about 
one-third of the way through the six-year plan and at that 
time, GAO, at least, reported that little or no progress had 
been made in terms of the redesign. Their recommendation was 
that SSA focus, on those initiatives, most likely to actually 
reduce processing time and costs, were some of the key 
problems.
    Then last February, you all revised your redesign plan, you 
focused on eight key initiatives and it is my understanding, at 
least, the GAO believes that the success of that scaled-down 
plan, the more focused plan, may also be threatened because of 
delays, because the testing results were disappointing, and so 
on.
    I just wish you would give the subcommittee a report on 
that. I assume this question has not been raised already this 
morning. Particularly if you can tell us what progress is being 
made, how you have devoted to it in terms of resources, how 
much has been spent on this, what kind of results are you 
getting, and, you know, what your projections are for the 
future.
    Mr. Apfel. Sure. It's a real big issue and it is a very 
important issue for this organization. It has been for years. 
The Social Security Administration originally created a number 
of very broad-based, fairly separate pilots and now has 
centralized some of those pilots into a more unified structure. 
A number of the different elements are now being tested in one 
place and the results so far are pretty promising for those.
    I believe what we need to do, as soon as possible, is to 
get out of the testing stages and move to the decision stages 
on what to do. But we have got to make sure, in the process of 
making those decisions, that we consider an issue that I know 
is very important to this committee which is administrative 
costs as well as program costs. What's going to happen to 
program costs by these new models for these new activities as 
well as what is going to happen to administrative costs.
    I am confident that we are going to be able to make some 
decisions later this year that will assure neutrality on the 
program side and also save money on the administrative side on 
establishing some of these activities.
    One area that is incredibly important that we need to spend 
more time on relates to the automation issue for disability, 
which we discussed briefly. This is one that has tremendous 
payoff for the system as the IWS/LAN did for our organization.
    I believe, and it is clear, as the GAO points out, that 
this is a project that has slipped and I have to push hard to 
see what we can do about this one. Regarding the automation 
endeavor, I am going to be getting some outside consultation 
over the next three months about the appropriate path of the 
future to either validate the direction we are moving in or to 
determine a couple of alternatives.
    From my discussions with the disability determinations 
systems in the States, there is a belief that we need a unified 
platform and this is a very important thing for efficiencies 
through the organization.
    Mr. Portman. If I could just follow up for a moment because 
my time is lapsing here. It sounds like what you are saying, if 
I can summarize it and tell if I am inaccurate, is that perhaps 
you are beginning to focus on automation, some of the other 
issues, that help you do your existing job better but you are 
moving away from the fundamental redesign that you embarked on 
a couple of years ago.
    Mr. Apfel. No, sir. Absolutely not.
    Mr. Portman. So, you are still committed to total redesign 
of this program and coming up with----
    Mr. Apfel. I am fully--I would love to be able to say today 
that we are ready to move out of the testing stages and start 
three of the process changes. We are not there yet.
    We need to ensure that this is a cost-neutral approach in 
terms of entitlement dollars as well as a saver in 
administrative dollars. I am putting great pressure on the 
organization to move as rapidly as possible. I intend, at the 
end of the day, to see redesign change processes in a fairly 
significant way and that would be further strengthened by the 
automation, but you're right, if all we're doing is automating 
the current process, then you get a one-time, fairly modest 
return on your activities; what we need to be able to do is 
reengineer the process and then automate so we really get long-
term performance increases.
    Mr. Portman. I guess I'd make two quick requests and then 
the chairman has got to take my time me, which he will in a 
second, he turns my mike off. One, if you could give us some 
sense of what the cost is then, I think it is fair to say over 
a five or six-year period. Number two is what were your 
expectations originally in terms of work-year savings and have 
those been matched? I assume they have not. And what your 
expectations are now in terms of what the benefits might be to 
reach them.
    Thank you, Mr. Chairman.
    Mr. Apfel. I will provide that for the record, sir.
    [The following was subsequently received:]

                             redesign costs

    We spent approximately $9.24 million on disability process 
redesign in fiscal years 1995 through 1997. We expect to spend 
approximately $17.59 million in FY 1998, for total 4-year costs 
of $26.83 million. This does not include approximately $1 
million in FY 1996 and $8 million in FY 1997 for policy 
development support for the redesigned decision methodology, or 
FY 1998 costs for policy development and lab testing which are 
expected to reach between $9-$10 million. Total operating costs 
in FY 1999 and FY 2000 are expected to be somewhat higher than 
the FY 1998 level as initiatives are implemented. Until we make 
the decisions later this year concerning which proposals to 
pursue, it is impossible to predict what the future costs or 
savings will be.

                            redesign savings

    Original redesign estimates projected savings of about $305 
million dollars annually following implementation of the 
complete process. These figures included savings from other 
budgeted initiatives which were also encompassed by the 
redesign (e.g., the Reengineered Disability System and Local 
Computing Platforms). Major savings expected from redesign were 
built on streamlining disability case processing and the 
administrative appeals process.
    We do not expect to achieve the levels of savings 
originally anticipated in the redesign plan, although we do 
expect to improve customer service through reduced processing 
times and increased interactions and still save a significant 
number of workyears. Again, savings predictions are impossible 
until we make decisions later this year concerning which 
proposals to pursue.
    Our original timeframes and expectations have slipped for 
several reasons. Before implementation began, SSA responded to 
stakeholder concerns by agreeing to conduct more extensive and 
rigorous testing than was originally planned. This approach, 
coupled with an inclusive developmental process, extended the 
developmental and testing timeframes.
    Plus, the original reengineering assumptions were based on 
an ideal process. As implementation activities and plans 
evolved, issues which emerged were more time-consuming and 
complex than expected. Also, some external changes relied upon 
to support redesign activities did not occur. Based on a 
redesign assessment conducted at the end of 1996, SSA narrowed 
and focused attention on the four primary redesign tests along 
with development of key enablers.
    The Full Process Model (FPM) test continues to be our most 
critical redesign activity because it combines several features 
into one process, including streamlining the appeals process. 
Testing began in April 1997 and results to date have been very 
promising. We are seeing an accurate increase in the initial 
allowance rate and a synergistic impact of features working 
together. Earlier testing of both the single decisionmaker and 
adjudication officer process helped in the development of these 
concepts and are included as part of the FPM process. Our most 
significant redesign savings and customer service improvements 
are expected through this process model.
    Positive results are also coming from process unification 
activities which increase development and documentation done at 
the initial level. Process unification activities are 
contributing to a higher initial and reconsideration allowance 
rate which is offset by a lower allowance rate at the hearing 
level. This supports one of the primary goals of redesign: to 
allow cases that should be allowed at the earliest possible 
level.

    Chairman Bunning. Mr. Commissioner, I have 13 additional 
questions I am going to submit to you in writing and some of 
the other members of the panel, on both sides, have asked that 
they also be able to submit to you in writing, additional 
questions. We thank you for your testimony and we will ask the 
second panel to come forward.
    Mr. Apfel. A pleasure to be here sir.
    [Questions submitted by Congressman Levin, and answers 
provided by Commissioner Apfel, follow:] 
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[GRAPHIC] [TIFF OMITTED]61025A.025

    Chairman Bunning. The second panel testifying today is Jane 
Ross, the Director of Income Security Issues at the GAO; Joel 
C. Willemssen, the Director of Civil Agencies Information 
System at GAO; David Williams, the Inspector General of the 
Social Security Administration; and Mr. Williams is accompanied 
by Pamela Gardiner, Assistant Inspector General for Audit at 
the Office of Inspector General.
    Ms. Ross.

  STATEMENT OF JANE ROSS, DIRECTOR OF INCOME SECURITY ISSUES, 
                   GENERAL ACCOUNTING OFFICE

    Ms. Ross. Chairman Bunning.
    Chairman Bunning. Please pull the mike so we can hear you.
    Ms. Ross. Thank you for asking me to share GAO's 
perspective on the challenges that Social Security faces today. 
Our work shows that SSA recognizes the challenges we've 
identified and has taken, or plans to take, steps to address 
many of these problems. Nevertheless, the agency is moving too 
slowly and sometimes too narrowly to resolve most of its 
challenges.
    Commissioner Apfel must assert strong leadership to 
translate SSA's plans into timely action.
    Let's discuss solvency first. The national debate on Social 
Security solvency has begun. The President has made Social 
Security reform a top priority, and the Congress is beginning 
to discuss options.
    Policymakers and the general public need thoughtful and 
detailed analyses of the likely effect of the different 
proposals on workers, beneficiaries, and the economy. They also 
need to know the impact of implementation on SSA and other 
government agencies. Although SSA is uniquely positioned to 
inform policy makers and the public about long-term financing 
issues, it has not undertaken the range of research, 
evaluation, and policy analysis needed to fully contribute to 
the debate. SSA has not seized the opportunity to build its 
research, evaluation, and policy analysis capacity.
    Without an adequate number of skilled staff and a vital and 
responsive plan of work, the agency cannot fulfill its current 
and future role as the nation's expert on Social Security 
issues.
    With regard to SSI, as we have already heard this morning, 
last year GAO designated SSI as a high-risk program because of 
its susceptibility to fraud and abuse and because we don't 
believe it has been well managed. Because SSI, unlike OASI and 
DI, is means tested, SSA must collect and verify a great deal 
more information on income, resources, and living arrangements 
in order to determine initial and continuing eligibility.
    SSA is taking steps to address a number of weaknesses in 
SSI, and such efforts may help to correct some of the more 
obvious program weaknesses, but we believe that the problems of 
SSI are so fundamental that they require an in-depth program 
review to address root causes of the problem.
    While such a comprehensive strategy is not yet in evidence, 
SSA has committed, and the commissioner did again this morning, 
to this comprehensive action plan before the end of this fiscal 
year. This action plan will be effective only if it includes a 
set of measures to evaluate their progress and to hold the 
agency accountable for what it actually achieves.
    Looking next at SSI children, as you know the 1996 welfare 
reform law changed the childhood definition of disability, and 
SSA issued regulations to implement a stricter standard of 
severity than had existed in previous law.
    Nevertheless, some children with impairments, less severe 
than those in the new threshold, have been awarded benefits 
because some of SSA's medical listings are still below the new 
severities level.
    Some of these less severe listings are for impairments that 
are prevalent among SSI children, including mental retardation, 
cerebral palsy, and asthma. SSA is aware of the uneven severity 
levels in the listings, but hasn't yet established a schedule 
for updating them.
    Until it does, children will not be assessed against a 
uniform standard of severity.
    I'd like to just recap our findings on redesign, return to 
work, and CDR's.
    Making disability decisions is one of SSA's most demanding 
and administratively complex tasks. SSA has struggled to 
process initial applications and hearings more quickly. Yet 
disabled claimants still often wait more than a year for a 
decision.
    With regard to redesign, despite several years of work on 
redesigning the disability process, the overall results are so 
far disappointing.
    Some of the testing is delayed, while tests of individual 
changes are showing very little effect on timeliness or 
efficiency. On the other hand, SSA is also conducting an 
integrated test of several initiatives, and the early results 
there do appear promising.
    But if significant improvements in timeliness and 
efficiency can't be demonstrated soon, SSA will have to decide 
whether to proceed with its current design or take a different 
approach.
    With regard to return to work, we've already issued a 
series of reports, as you know, over the past many years 
recommending that SSA place a higher priority on helping DI and 
SSI beneficiaries maximize their work potential. The program 
currently encourages applicants to emphasize their inabilities, 
not their abilities.
    In the previous strategic plan, SSA pledged to pursue this 
objective through its Ticket to Independence, which would 
permit SSI and DI beneficiaries to obtain vocational 
rehabilitation or employment services from public or private 
vendors of their choice.
    We believe that SSA's sole focus on employment services, 
while a good beginning, will not be as successful as the more 
comprehensive return to work strategy similar to that reflected 
in the bill introduced yesterday by Mr. Bunning and Ms. 
Kennelly.
    Finally, on continuing disability reviews. We've also 
reported on the need to do more CDR's as required by law to 
help ensure the continuing medical eligibility of 
beneficiaries. As you know by 1996, more than 4 million 
beneficiaries were due, or overdue, for CDR's. And the Congress 
acted and authorized $4 billion to bring SSA up to speed by the 
year 2002.
    Last fall we testified to Mr. Bunning's committee on SSA's 
encouraging progress in conducting CDR's. For 1997, they 
considerably exceeded their goal, and now they have more 
ambitious goals for 1998 and 1999.
    Clearly the more quickly SSA can remove those who are no 
longer eligible, the more it can save in program costs.
    However, SSA still has to grapple with some technical 
issues before it can determine how expeditiously and at what 
costs it can become current on CDR's.
    In summary, SSA's issues are complex and solutions aren't 
easy to craft. The new commissioner will need to lead the 
agency with a sense of urgency to address its long-standing 
problems.
    Thank you very much. I'm ready to answer your questions.
    [The prepared statement follows:]
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    Chairman Bunning. Mr. Willemssen.

   STATEMENT OF JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES 
                      INFORMATION SYSTEMS

    Mr. Willemssen. Thank you, Mr. Chairman. Thank you for 
asking us to testify on information technology challenges 
facing SSA.
    Let me first discuss the Year 2000 issue that you 
previously brought up. SSA has made significant progress in 
assessing and renovating those mission-critical systems that 
are essential to the delivery of benefits.
    However, as we reported last fall, three key risk areas 
remain. One concerns the need for SSA to improve its oversight 
of states' disability systems.
    Second was making sure that SSA was adequately addressing 
the thousands of data exchanges it has with other 
organizations.
    And, third, SSA lacks contingency plans that would need to 
be activated in the event of systems failures.
    Our report made several recommendations on these areas. We 
are encouraged that SSA has agreed with them and is in the 
process of implementing those recommendations.
    Next, let me turn to SSA's IWS/LAN acquisition. As 
mentioned, this is about a $1 billion acquisition during the 
first phase that will include acquiring workstations and local 
area networks and as of March 1, SSA had completed installation 
of about 30,000 workstations and 800 local area networks.
    Last year, SSA's contractor for this, UNISYS, submitted a 
proposal to upgrade the workstation with a higher speed process 
or at additional costs. As mentioned, UNISYS noted in its 
proposal that it was having difficulty in finding the 100 
megahertz processors called for in the contract.
    It should be pointed out that in today's market, one can 
buy a processor about three times that speed. Nevertheless, as 
was mentioned by the commissioner earlier, SSA believes that 
the 100 megahertz processors will meet its needs.
    At the same time it is beginning to have some conversations 
with UNISYS on this issue.
    SSA has also acknowledged, and we have validated, that some 
of the initial workstations purchased off of the IWS/LAN 
acquisition were not Year 2000 compliant. However, through our 
own testing, we have confirmed that the operating system that 
SSA has now chosen for IWS/LAN will correct the particular Year 
2000 issue that we identified.
    Let me point out just a few other additional challenges 
related to the IWS/LAN acquisition. One, some state DDSs have 
recently raised concerns about their lack of control over the 
local area networks being installed and about inadequate 
response time on IWS/LAN service calls.
    Two, SSA does not currently plan to determine how IWS/LAN 
will contribute toward improving mission performance. 
Therefore, it is going to be difficult to assess how it will 
improve service to the public.
    Three, as previously mentioned, the development of RDS is 
encountering problems. And this has led to an additional 
planned nine-month delay, beyond the 28-month delay that we 
previously testified on.
    Four, and as discussed in our report being released today, 
SSA has recognized weaknesses in its software development 
capabilities and has put a program in place to address that.
    There are some key elements of that program that are 
missing. We have made recommendations on that, and, SSA, we're 
encouraged to say, is planning to implement those 
recommendations.
    That concludes the summary of my statement.
    [The prepared statement follows:]
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    Chairman Bunning. Thank you very much. David Williams.

   STATEMENT OF DAVID C. WILLIAMS, INSPECTOR GENERAL, SOCIAL 
  SECURITY ADMINISTRATION, ACCOMPANIED BY PAMELA J. GARDINER, 
             ASSISTANT INSPECTOR GENERAL FOR AUDIT

    Mr. Williams. Chairman Bunning, Chairman Shaw, and members 
of the subcommittee, thank you for the opportunity to appear 
here today.
    I would like to begin by acknowledging Commissioner Apfel's 
impressive beginning. I would also like to discuss areas where 
the Social Security Administration needs to focus its attention 
so that it may continue its development as an independent 
agency.
    I have identified eight areas where strengthening and 
attention are needed.
    The first challenge is the long-term solvency of the trust 
fund, communicating the seriousness of this matter to 
Americans, and engaging them in a discussion of the trade-offs 
inherent in any solution is imperative. I believe the 
initiative to conduct public forums is the right starting point 
in finding a solution.
    Second is the problem of erroneous wage reports held in 
SSA's suspense account. At the end of Fiscal Year 1997, the 
cumulative balance of employee wages held in SSA's suspense 
account exceeded $240 billion and it continues to grow. Unless 
corrected, suspended wages can reduce the amount of Title II 
benefits paid to individuals and their families. SSA must 
implement its newly established tactical plan to resolve 
suspended waits and evaluate its effectiveness.
    Third is the backlog of continuing disability reviews 
needed to confirm the individual's, that individuals continue 
to be entitled to benefits. As of 1997, there were 
approximately 4.1 million individuals who were overdue a CDR. 
SSA must focus its attention on reducing the number of cases 
awaiting a CDR, as well as reducing other work loads such as 
requests for appeal hearings, in order to safeguard the 
integrity of the disability program.
    The fourth area is fraud. GAO has included the SSI program 
in its list of high-risk programs because of such factors as 
self-reporting of income. The CDR backlog allows initial 
fraudulent claims to go undetected for long periods. Fraud is 
also found in other programs, including the disability 
insurance program. More serious levels of fraud involving 
identify theft crimes that are perpetrated with fraudulently 
obtained Social Security cards.
    The magnitude of SSA's programs have resulted in sizable 
volumes of fraud in SSA. I believe SSA is a very good place to 
fight government fraud for these reasons and because 
eligibility for Social Security benefits is a gateway to other 
benefits such as Medicaid, Medicare, and food stamps.
    The fifth area is SSA's progress in redesigning its 
processes for administering its programs. In redesigning these 
processes, SSAV will rely heavily on automated systems that 
manage benefits and target potential fraud. The redesign effort 
has progressed very slowly, including the automation portion. 
The anticipated benefits and improved efficiency and accuracy 
have not yet materialized. The redesign's timely completion and 
SSA's evaluation of its impact on savings are critical 
challenges.
    The sixth concern involves the complexity of SSA's 
programs. Over the years, SSA's programs have grown 
increasingly complex. Program complexity hinders SSA's ability 
to issue accurate payments and prevent fraud, and it promotes 
an excessive amount of litigation each year. Legislative and 
regulatory reform could eliminate underlying causes of problems 
in payment timeliness and accuracy.
    The seventh area is the adequacy of SSA's internal controls 
over its data processing systems. OIG and Price Waterhouse 
audits have noted numerous problems in safeguarding SSA's 
integrity. These problems included inadequate protection of 
sensitive information; insufficient testing to ensure 
continuity of operations in the event of an emergency; and 
inadequate procedures to prevent and detect embezzlement and 
misdirection of benefit payments.
    Adequate controls over data processing operations are 
critical to safeguarding highly-personal information and 
ensuring continuous public service. These systems must be 
protected.
    The last area is integrating service delivery operations. 
SSA currently provides public service through a network of 
field offices, program service and teleservice centers, and a 
data operations center. Technology improvements also present 
promising opportunities for efficiency. I believe SSA would be 
well served by a long-term service delivery strategy that 
integrates and streamlines service delivery organizations and 
technologies into an efficient service delivery network.
    In conclusion, it is evident that there are significant 
challenges facing Commissioner Apfel. I believe that, through 
the work of the OIG, especially under the Government 
Performance and Results Act, we will have an important role in 
keeping the Congress and the agency informed of progress in 
these areas.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]
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    Chairman Bunning. Mr. Shaw will inquire, please.
    Chairman Shaw. Thank you. Mr. Williams, you pointed out on 
page 3 of your testimony that the redesign of the process SSA 
will rely heavily on the automated systems to manage benefits 
and target potential fraud. The redesign effort has progressed 
very slowly, including the automation portion.
    What's the reason for that? Is it fully funded, as I 
believe it is, or is it a lack of desire? What's the problem?
    Mr. Williams. Ms. Gardiner has been closest to that work, 
Chairman Shaw, and I would like for her to respond to it. I'll 
be glad to add anything.
    Chairman Shaw. Please, Ms. Gardiner.
    Ms. Gardiner. Actually, it has more to do, it is funded and 
it has more to do with just a, the desires of the users in 
being identified and it also has to do with the IWS/LAN----
    Chairman Shaw. Pull your microphone down. I'm having a 
little trouble hearing you. Thank you.
    Ms. Gardiner. Also, I might add that Joel Willemssen will 
probably be able to provide even more detailed information 
because they have been looking at this specifically. But it is 
our understanding that it is fully funded. That that's not the 
issue. That the issue has to do more than defining user needs 
and if there are some complications, that the pilot test 
dealing with the single decision maker, and the disability 
claims manager and those tasks will tie into the hardware and 
software needs.
    Also, and since those are behind, the computer needs 
haven't been well defined and so, therefore, they are moving at 
a slower pace too.
    Chairman Shaw. Have you made some positive suggestions as 
to what they might be able to do to expedite this process?
    Mr. Willemssen. If I add, Chairman Shaw, one of the other 
key areas where SSA is weak in, is developing software for this 
kind of client/server nonmainframe environment. And SSA 
recognizes their weaknesses, they are starting to put in a 
program to address that, but until it is fully implemented, it 
is not going to be surprising that we continue to hear about 
delays with things like RDS because the institutionalized 
processes to know how to develop software aren't there yet and 
until they are there, you will have a larger risk of these kind 
of delays continuing to occur.
    So, we are, we are heartened to know that SSA recognizes 
its weaknesses and it is going to be moving out on it, they 
just need to do so quickly.
    Chairman Shaw. Is there talent available that can move? I'm 
still wondering, do you have to hire some people with different 
skills, send people back to school?
    Mr. Willemssen. Well, part of it, again, not going too deep 
technically here, but part of it is SSA's historically a major 
mainframe operation, and they have some very skilled folks who 
know how to do that.
    With this IWS/LAN acquisition they will be moving into a 
different type of environment that takes different types of 
skills and it is not something that they are going to be able 
to do overnight.
    And it is also not something to go out and just hire a hot-
shot programmer. You have to institutionalize your processes on 
things like defining requirements, tightly managing the 
configuration, having a quality assurance program, those kind 
of key processes are not at the level they need to be at this 
point in time.
    Mr. Williams. Mr. Chairman.
    Chairman Shaw. I'm not sure I understand the answer or I'm 
not sure I've gotten an answer.
    Mr. Williams. There is this sort of chicken-and-egg problem 
of the computers supporting the effort that is undefined and 
the undefined effort needing to know how computer services will 
be able to support them. Social Security is stuck on this 
initiative and preceding too slowly.
    Chairman Shaw. As far as appropriations, we're okay, I 
guess. Is there something that Congress should do? I guess that 
is what I should be asking. The problem is, if it is a question 
of spending more money to expedite the process of finding the 
fraud, then I would say that would be a good investment. We 
would probably save more by ferreting out fraud than we would 
spend in getting some real experts in who knew how to do this 
thing, or just contracting it, or go out and contract it in the 
private sector. Tell them to put this type of system in.
    Mr. Williams. I know of no time in which we have come to 
you and asked for an investment in which you haven't given it 
to us. The problems are our own. There have been some 
disappointments with regard to the accuracy rates of some of 
the pilots. That has slowed us down. There has been some 
resistance on the part of the ALJs that I'm hearing about with 
regards to accepting the adjudication officer. Those aren't 
problems of investment, those are our fault.
    Chairman Shaw. I would ask for a couple of more minutes. 
There is another area I want to get into, and I see there are 
only two of us up here to ask questions.
    I'm referring now to an article that was in the Washington 
Times entitled ``Study Uncovers Such SSA Abuse Investigating 
the El Paso Situation.''
    Congratulations, by the way, are in order for your good 
work in that area.
    Mr. Williams. Thank you.
    Chairman Shaw. Can you describe for the committee some of 
your ongoing efforts in this area, and especially, what impact 
the changes in the welfare reform law have had on your work? 
Does the SSA need other legislative tools from Congress to make 
sure that the SSI benefits are going only to those who should 
be eligible? The article that I am referring to talks about 
noncitizens collecting SSI who are not entitled to it under the 
welfare law. They weren't here when the law was passed and the 
article goes on to say that they are coming across from Mexico, 
picking up their check, and going back into Mexico. They don't 
even live here.
    It also brings out the fact that these addresses were 
missing, and that many addresses really are post office boxes.
    Mr. Williams. That exactly captures the nature of the 
problem and the target of the investigation.
    We've tried to launch five major operations since my 
arrival. One of them is Border Vigil and that is the operation 
to which you are referring, Mr. Chairman. That is a very 
welcome offer to try to help us strengthen, and we do have some 
ideas and we would like to work with your staff to try to 
discuss those.
    I'd be really negligent if I didn't say that you have 
already been there, Chairman Bunning was the first to identify 
critical needs inside my office. The committees have given us 
great ideas for how to form and shape and target the attacks on 
the problem of fraud. You already have been there. We do have 
some ideas we'd love to talk to you about. I do want to quickly 
get to the impact of welfare reform though after thanking you.
    The impact on the area of prisoners has been very 
important. We believe that, as a result of that reform, we can 
save over $3.4 billion during the seven-year period that this 
will impact.
    In the area of fugitives, we are just getting off the 
ground, we feel very good about that. It is infuriating that 
the government would finance the flight of a fugitive from its 
own justice system. We need to end that and we intend to do so.
    Chairman Shaw. Did you say we are saving over $3 billion by 
not sending the checks into prisons?
    Mr. Williams. That's correct. It had an enormous impact.
    Chairman Shaw. Congratulations.
    Mr. Williams. We, with regard to the fugitives, had an idea 
to extend the debarment of fugitive benefit eligibility to the 
Title II program from the Title XVI program. We think that this 
is a great area to attack and we think that it is infuriating 
that we would inadvertently finance this kind of enterprise.
    You asked about some of the other operations. Inside Border 
Vigil, we're also moving along the Canadian border with 
investigations similar to the ones conducted on the Mexican 
border.
    Chairman Shaw. How about south Florida? Miami? Fort 
Lauderdale?
    Mr. Williams. We have. As a part of operation Border Vigil, 
we're going into Caribbean countries. We're also very 
interested in Puerto Rico. Those nations have an impact inside 
Florida. There is a big interaction between Florida and several 
Caribbean nations that we have targeted.
    So, yes we are and that is a good area to look at. It's a 
little more conceptual as a border than Mexico and Canada, but 
it's very much a target of our operations.
    Chairman Shaw. Great. Thank you. Jim.
    Mr. McCrery. Thank you, Mr. Chairman.
    Ms. Ross, I don't know if you were here when I questioned 
Mr. Apfel about the CBO estimates that were made at various 
times during the legislative process----
    Ms. Ross. Yes, I was.
    Mr. McCrery [continuing]. On welfare reform. But I think 
you are familiar with those numbers. The conference report on 
welfare reform with respect to SSI for children said that 
185,000 children would be removed from the roles based on the 
legislative language that was adopted in the conference report.
    Then there was a later iteration after some tinkering that 
said 165,000, I think. And then when the SS, Social Security 
Administration issued their regulations to implement the 
legislative language, the estimate was dropped to 135,000. Then 
there was a top-to-bottom review and somehow, after that, and 
some further changes, I guess, in the implementation, the most 
current estimate gives about 100,000 children to be removed 
from the roles.
    Is that your understanding of the history of these 
estimates?
    Ms. Ross. That's my understanding, precisely, yes.
    Mr. McCrery. Given that, would you say that the Social 
Security Administration is carrying out the legislative intent 
of the Congress?
    Ms. Ross. A few months ago we were asked to look at how the 
social security regulations related to the welfare reform 
legislation, and we did so. We concluded that the 
interpretation that SSA was representing in its regulations was 
consistent with the new definition of childhood disability in 
the law.
    Mr. McCrery. That was the initial offering by the Social 
Security Administration for their regulations; is that correct? 
This is not the top-to-bottom review?
    Ms. Ross. It's the interim final regulations that they have 
out, yes.
    Mr. McCrery. And that's the estimate of 135,000 children to 
be removed from the rolls; is that correct?
    Ms. Ross. Yes.
    Mr. McCrery. And after looking at that, you said, well, 
these regulations you thought fairly implemented the 
legislative intent?
    Ms. Ross. That's right, that the regulations had the level 
of severity that we understand was consistent with what the 
Congress was talking about.
    Mr. McCrery. So what has happened since that time and now, 
when we have an estimate of 100,000 children?
    Ms. Ross. I think it's in the implementation of the 
regulations, not in a change in the estimates. First of all, it 
is hard to estimate----
    Mr. McCrery. Sure.
    Ms. Ross [continuing]. These numbers. I haven't done it, 
but I am pretty sure that it would be difficult. I think what's 
really important to pay attention to is that this regulation is 
applied consistently and accurately. One of the things found in 
the top-to-bottom review was that there was some inconsistency, 
and there were some states that had particularly inaccurate 
both allowance and disallowance rates.
    So I think SSA is trying to go through a process of being 
able to do this consistently and accurately, and the result has 
been that fewer people are going to be removed from the rolls. 
But I think we want to keep our eye on whether they have a good 
process.
    Mr. McCrery. Yes, I appreciated your testimony about the 
uniformity of standards and how that is lacking right now in 
the process.
    Ms. Ross. That's true.
    Mr. McCrery. Unfortunately, we didn't have time to ask 
Commissioner Apfel about that, but it is one of the questions 
that I will submit to him in writing. So I appreciate your 
bringing that to our attention.
    Basically, though, getting back to the numbers and your 
assessment, given that since you made your assessment of the 
regulations and the estimate at that time was 135,000 children 
to be removed from the rolls, and now the newest estimate is 
100,000, can any reasonable person conclude, in your opinion, 
that the Social Security Administration is too harshly 
implementing the intent of the Congress?
    Ms. Ross. I suppose someone who had a different view could 
think that it was being implemented too harshly, but, again, I 
think the more important issue----
    Mr. McCrery. No, no, no, Ms. Ross. I understand there are a 
lot of people who think the law is too harsh.
    Ms. Ross. Right.
    Mr. McCrery. I'm talking about the Social Security 
Administration's implementation of the congressional language. 
In your opinion, are they acting too harshly in implementing 
the legislative language?
    Ms. Ross. No, we think that what they're doing in having a 
severity standard of either two marked impairments or one 
extreme impairment is totally consistent with what the Congress 
asked for. I think it's important that we be sure they do that 
correctly by continuing to monitor the way they're doing their 
reviews and by looking at having expanded quality assurance 
samples, and so on. So that then you could not only say that 
SSA used at the right standard, but that the standard was being 
applied fairly.
    Mr. McCrery. Thank you.
    Chairman Bunning. I have approximately 17 questions that 
I'm not going to ask. I'm going to submit them to you in 
writing, so that you can respond in writing.
    [Questions asked by Chairman Bunning and the respective 
answers provided by Mr. Huse, Ms. Fagnoni, and Mr. Willemssen 
follow:]
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    Chairman Bunning. I have one question for Ms. Ross. In your 
view, is Social Security Administration taking the fullest 
advantage of the expanded statutory authority Congress gave it 
in 1994, and is SSA operating independently to the fullest 
extent that it could really operate independently? I want to 
make sure that we get an answer of your opinion on independence 
of the agency because that was the full legislative intent when 
we passed the law in 1994.
    Ms. Ross. You'll have to forgive me, Mr. Chairman. I didn't 
go back and review some of our earlier reports on this, but 
I'll do the best I can and supply anything else for the record.
    We did a study at the time that SSA became an independent 
agency, and at that time we tried to look at what the law said 
and what the law simply permitted. Our understanding of the 
law--this is GAO's lawyers, not just me--was that the way the 
Social Security Administration is operating now is appropriate, 
given the way the law was formulated and precisely what it 
said. That was our conclusion at the time three years ago, and 
we haven't had any occasion to re-examine this issue or think 
that we would change our opinion.
    Chairman Bunning. In other words, if I asked you to go back 
and do an examination now that would be an updated version of 
whether you think they are or not, you couldn't give us a re-
evaluation of where they're at now?
    Ms. Ross. We'd be happy to give you a reappraisal. I don't 
know of any events that are different now, but we would be 
happy to look at it again--especially I am volunteering the 
services of the GAO lawyers in this regard.
    Chairman Bunning. The GAO lawyers. Can we keep them out? 
[Laughter.]
    Thank you all for your testimony.
    All right, Clay, go ahead.
    Chairman Shaw. I don't have a question. I just wanted to 
just bring something to the attention of the Subcommittees. 
That figure that was given in excess of $3 billion that's being 
saved on the prisoner program and not sending checks into the 
jailhouse, that was scored by the OMB and CBO as a savings of 
about $100 million. So the success here has been really 
incredible.
    I think it was Mr. Herger on my subcommittee who brought 
this to the attention of the--committee, and I think Mr. 
Collins had a sheriff that testified in this area. I think that 
the vigilance of the Congress here has really paid off far 
beyond the expectations of bean counters.
    Mr. Williams. Thank you, sir. We're about to launch the 
fugitive effort, and we think that's going to have a big 
impact, too. That's gratifying to hear. Thank you.
    Chairman Bunning. Jim?
    Mr. McCrery. Just generally, Mr. Chairman, based on the 
astounding results of just this one foray into stopping abuse 
in the SSI system, Ms. Ross and Mr. Williams, are you of the 
opinion that an overall review of the SSI program, particularly 
for adults, is in order, particularly looking at fraud and 
abuse in the program?
    Mr. Williams. My office intends, with Ms. Gardiner and some 
of the investigators, we intend to look at each benefit that is 
offered by social security and focus on the points at which we 
are vulnerable to fraud, and we think that kind of look is 
appropriate. We were impressed, too, by how much was 
accomplished and by, how much good there is to be done by such 
a fraud vulnerability study. We intend to then convert that 
into an aggressive task force that looks at how to plug those 
holes as we identify them in various benefit programs. Of 
course, disability is the highest dollar program at risk and 
that's probably where we'll begin.
    Mr. McCrery. And we haven't even mentioned the Georgia case 
today, but we're all aware of that shining example of fraud in 
the SSI program.
    Ms. Ross, I know your agency has identified SSI as a high-
risk program.
    Ms. Ross. We have.
    Mr. McCrery. So I assume you agree that an overall review 
is in order?
    Ms. Ross. Well, we do, and I'd like to take a minute or two 
to explain. For several years, we've been doing these pieces of 
investigation related to SSI--prisoners, not reporting that 
recipients are in nursing homes, a variety of things of that 
sort. But at some point we decided that there was something 
else going on here, and that we were not helping to solve the 
problem by looking at it piecemeal. We've now been engaging in 
a study of why it is that this continues to happen in the 
various parts of the Social Security Administration. Why does 
SSI turn out to be so troubled? We've been developing a notion 
of a couple of root causes, which is what I think SSA has to go 
after.
    First of all, we see that the agency has been reactive in 
terms of SSI and not proactive. They don't initiate policy. 
They haven't provided legislative proposals. They simply 
operate the program. But possibly more importantly, they treat 
SSI as if it were an entitlement program. They treat it pretty 
much the same way they treat the OASI and DI programs. They 
operate as if SSI were an entitlement. They aren't nearly 
vigilant enough considering it's a welfare means-tested 
program.
    We're expecting, based on the promises that we heard today 
and in SSA's strategic plan that they will have a comprehensive 
plan that starts to get at not just these little pieces of a 
problem here and a problem there, which I grant adds up to a 
lot of money, but that they somehow changed the way they 
operate the program fundamentally, so they stop having all 
these little things for us to run after.
    Chairman Bunning. That just emphasizes the need for 
oversight, and the need for your new review of SSA and where 
they're at, because that means that they're not independent and 
they're not acting independently because of the oversight that 
the administration puts into the SSA and SSI and SSDI. If 
anybody's interested in a new program for SSDI, you ought to 
look at the bill we introduced yesterday. It is going to save 
approximately, for every 1 percent of the disability people 
that we get back on return to work, $3 billion for each 1 
percent of return to work. So that's the estimate, Clay.
    Thank you all for your testimony. We appreciate it.
    [Whereupon, at 12:29 p.m., the Subcommittees adjourned 
subject to the call of their Chairs.]
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