[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
SOCIAL SECURITY'S READINESS FOR THE IMPENDING WAVE OF BABY BOOMER
BENEFICIARIES
=======================================================================
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 SIXTH CONGRESS
SECOND SESSION
__________
FEBRUARY 10, 2000
__________
Serial 106-86
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
65-267 CC WASHINGTON : 2001
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
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 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
WES WATKINS, Oklahoma LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Social Security
E. CLAY SHAW, Jr., Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia SANDER M. LEVIN, Michigan
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois BENJAMIN L. CARDIN, Maryland
KENNY HULSHOF, Missouri
JIM McCRERY, Louisiana
Subcommittee on Human Resources
NANCY L. JOHNSON, Connecticut, Chairman
PHILIP S. ENGLISH, Pennsylvania BENJAMIN L. CARDIN, Maryland
WES WATKINS, Oklahoma FORTNEY PETE STARK, California
RON LEWIS, Kentucky ROBERT T. MATSUI, California
MARK FOLEY, Florida WILLIAM J. COYNE, Pennsylvania
SCOTT McINNIS, Colorado WILLIAM J. JEFFERSON, Louisiana
JIM McCRERY, Louisiana
DAVE CAMP, Michigan
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 February 3, 2000, announcing the hearing............. 2
WITNESSES
Social Security Advisory Board:
Hon. Stanford G. Ross, Chair................................. 7
Sylvester J. Schieber, Ph.D., Member......................... 17
U.S. General Accounting Office, Cynthia M. Fagnoni, Director,
Education, Workforce and Income Security Issues, Health,
Education, and Human Services Division; accompanied by Joel C.
Willemssen, Director, Civil Agencies Information Systems,
Accounting and Information Management Division................. 30
______
Coates and Jarratt, Inc., James E. Burke......................... 75
McTigue, Hon. Maurice P., Q.S.O., George Mason University........ 87
National Quality Program, National Institute of Standards and
Technology, Technology Administration, and U.S. Department of
Commerce, Harry S. Hertz....................................... 81
SUBMISSIONS FOR THE RECORD
Matsui, Hon. Robert T., a Representative in Congress from the
State of California............................................ 6
National Association of Disability Examiners, Zachary, LA, Terri
Spurgeon, statement............................................ 99
Steinberg, Michael A., Michael Steinberg & Associates, Tampa, FL,
statement...................................................... 102
SOCIAL SECURITY'S READINESS FOR THE IMPENDING WAVE OF BABY BOOMER
BENEFICIARIES
----------
THURSDAY, FEBRUARY 10, 2000
House of Representatives,
Committee on Ways and Means,
Subcommittees on Social Security and Human
Resources,
Washington, DC.
The Subcommittees met, pursuant to notice, at 11:23 a.m.,
in room 1100, Longworth House Office Building, Hon. E. Clay
Shaw, Jr. (Chairman of the Subcommittee on Social Security)
presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 3, 2000
No. SS-9
Shaw Announces Hearing Series to
Examine Social Security's Readiness for the Impending Wave of Baby
Boomer Beneficiaries
Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced
that the Subcommittee will hold a series of hearings to examine Social
Security's readiness for the impending wave of Baby Boomer
beneficiaries. The first hearing in the series is a joint hearing by
the Subcommittees on Social Security and Human Resources, and will
focus on current and future service delivery challenges that the Social
Security Administration is facing in the 21st Century. The hearing will
take place on Thursday, February 10, 2000, in the main Committee
hearing room, 1100 Longworth House Office Building, beginning at 11:00
a.m.
Subsequent hearings in the series will be announced at a later
date.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include members of the Social Security Advisory Board,
representatives from the U.S. General Accounting Office, and service
delivery experts. However, any individual or organization not scheduled
for an oral appearance may submit a written statement for consideration
by the Committee and for inclusion in the printed record of the
hearing.
BACKGROUND:
The services that the Social Security Administration (SSA) provides
impact the lives of nearly all Americans. For example, in 1999 SSA paid
benefits to more than 45 million retired and disabled workers and their
families and to more than 6.6 million Supplemental Security Income
recipients, processed 250 million reports of earnings and more than 6
million initial claims for benefits, handled more than 26 million
visitors requesting services at 1,300 field offices, fielded 80 million
calls to the 800-number service, issued 16 million new and replacement
Social Security numbers, and provided 30 million Social Security
Statements to help individuals plan for their financial future.
As America enters the 21st Century, SSA will face increasing
challenges. SSA workloads are projected to begin increasing rapidly
within the next decade as the huge Baby Boom generation enters its peak
disability years prior to reaching early retirement age starting in the
year 2008. Social Security retirement and disability workloads are
projected to rise 16 percent and 47 percent, respectively, between now
and the year 2010. Claims under the Supplemental Security Income (SSI)
program, which is administered by SSA and provides cash benefits to
poor disabled and elderly individuals, are expected to grow 12 percent
between now and the year 2020. At the same time, Social Security
programs are becoming more complex, with initiatives to prevent fraud
and abuse, complete continuing disability reviews, provide increased
rehabilitation and employment services for the disabled, and perform
reviews to determine whether SSI beneficiaries continue to meet the
program's income and resource requirements. These factors, combined
with recent workforce downsizing and the coming retirement of large
numbers of SSA's aging workforce, will place tremendous pressures on
the Agency to meet the public's need for service in the 21st century.
In announcing the hearing series, Chairman Shaw stated: ``Ensuring
the Social Security Administration delivers quality service in a timely
way is more than a goal--it's a necessity for American workers and
families. Workers pay their hard-earned wages for their Social Security
benefits. It's their program and they deserve not only all the benefits
they paid for, but the highest quality of service as well. Our goal is
to ensure that happens without any glitches, despite the Social
Security Administration's many challenges ahead.''
FOCUS OF THE HEARING:
This hearing will focus on the Social Security Administration's
service delivery practices, key service delivery challenges in the
future, and effective strategies to address these challenges.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch
diskette in WordPerfect or MS Word format, with their name, address,
and hearing date noted on a label, by the close of business, Thursday,
February 24, 2000, to A.L. Singleton, Chief of Staff, Committee on Ways
and Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
purpose to the Subcommittee on Social Security office, room B-316
Rayburn House Office Building, by close of business the day before the
hearing.
FORMATTING REQUIREMENTS:
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witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
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but will be maintained in the Committee files for review and use by the
Committee.
1. All statements and any accompanying exhibits for printing must
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including attachments. Witnesses are advised that the Committee will
rely on electronic submissions for printing the official hearing
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2. Copies of whole documents submitted as exhibit material will not
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3. A witness appearing at a public hearing, or submitting a
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The above restrictions and limitations apply only to material being
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and the public during the course of a public hearing may be submitted
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Note: All Committee advisories and news releases are available on
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The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
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materials in alternative formats) may be directed to the Committee as
noted above.
Chairman Shaw. Welcome. I apologize for being a few minutes
late starting, but I would like to welcome all of you to the
joint hearing of the Human Resources and Social Security
Subcommittees.
Yesterday, Chairman Archer raised an issue that is very
disturbing to me and to many of us, and I am sure it is
disturbing to the Subcommittee Members on both sides of the
aisle. I'm referring to the computer hackers disabling major
Internet Web sites and accessing consumer credit information.
We are concerned because the Social Security Administration's
computer systems guard the most sensitive records of the
American people, their wage and other personal information.
I know Social Security has world-class security measures in
place, and I am sure this is a top priority for the
Commissioner, but I want to comment publicly that the Social
Security Administration has the full support of this Committee
to help protect the privacy of the American people. Such was
stated yesterday by Chairman Archer. We must catch these
Internet hijackers and put an end to this cyberterrorism. There
is nothing funny or smart about it. It is criminal activity and
they should be punished.
Today's hearing is about Social Security's current and
future service delivery challenges. Social Security touches
nearly every American family. In 1999, the Social Security
Administration paid Social Security and SSI benefits to more
than 50 million beneficiaries. Without a doubt, continuing to
provide timely, accurate benefits and world-class service will
remain Social Security's number one mission in the years ahead.
This mission will become more complicated as the huge baby
boomer generation enters its peak disability years and then
enters retirement age starting in 2008.
By 2010, Social Security retirement benefits claims are
expected to rise by 16 percent and disability claims by 47
percent. The rapid rise in disability claims is especially
noteworthy since we know disability cases are the most complex,
time consuming, and expensive from an administrative
standpoint. For an agency facing a wave of retirement by its
own workers and high expectations from customers, there is a
great challenge. This is no idle concern.
Although Social Security is widely regarded as among the
best administered Federal programs, and it is, the need to
improve public service was highlighted in a recent report by
the bipartisan Social Security Advisory Board. The report
concluded, and I quote, ``There is a significant gap between
the level of services that the public needs and that which the
agency is providing. Moreover, this gap could grow to far
larger proportions in the long term if it is not adequately
addressed.''
This is our purpose today, to examine what Social Security
is doing now to prepare for the even greater challenges of
tomorrow. In addition to the Advisory Board and General
Accounting Office, we will hear from experts on how high
performing public and private organizations have prepared for
emerging challenges and thrived. We have even booked a
futurist--new word to me--to help us to do some deep thinking
about changing values, attitudes, customer service preferences,
and technologies that will affect Social Security's ability to
provide services for the impending wave of baby boomers.
For those who think that it's just too much action to pack
into one hearing, you are right. That is why the Social
Security Commissioner, Ken Apfel, will join us at an upcoming
meeting about Social Security's plans to respond to such
challenges. Today's hearing will put those plans in context.
That way, we will have a better chance of assessing what the
right track is and whether Social Security is on it when it
comes to delivering the services to the public in the 21st
century.
I now yield to my co-chairman of this hearing, Nancy
Johnson.
Chairman Johnson of Connecticut. Thank you, Chairman Shaw.
I just want to welcome those who are testifying.
I share the Chairman's great alarm at the security
challenges that the Social Security system faces. Of all of our
government agencies, the Social Security computers contain more
personal data routinely and across the board than any other
system, and it is extremely important that we meet the
challenge of security. And while I know they are serious and
dedicated about this, as we witness new abilities to enter our
systems, we really are going to have to look at new
possibilities for security. So it is a tremendous challenge,
but it is an extremely important one. We will not be able to
govern if we cannot protect private information.
I also want to mention that, unfortunately, I am not going
to be able to stay through the whole hearing, and I just wanted
to extend a special welcome to the former member of Parliament
from New Zealand who is here as a distinguished visiting
scholar and from whom we will hear on the last panel, Hon.
Maurice McTigue.
We do have an excellent series of witnesses, and I would
like to move on with the hearing. So welcome to you all and
thank you, Chairman Shaw.
Chairman Shaw. Mr. Cardin.
Mr. Cardin. Thank you, Mr. Chairman. First, I would like to
put into the record the opening statement from Mr. Matsui, the
Ranking Member on the Social Security Committee, if I might;
and, Mr. Chairman, let me also acknowledge that we have on the
floor today a bill from the Ways and Means Committee, so I am
going to have to leave also and I apologize for that. These
conflicts do occur.
Mr. Chairman, we may spend a good portion of this year
debating on how much of the overall Federal budget surplus
should be Social Security and Medicare. At the very least,
there appears agreement not to spend any of the Social
Security-generated surplus other than use for Social Security.
However, saving Social Security money while allowing the
disbursement system for those funds to deteriorate may be a
hollow victory for our elderly and disabled Americans who
depend on the timely assistance from our insurance system that
they paid into.
I am therefore pleased, Mr. Chairman, that you are holding
these hearings to examine the readiness of the Social Security
Administration to provide reliable service when the baby boomer
generation retires. In this context, there is one question our
Subcommittee must address head on. How long can a shrinking
work force cope with a growing workload before the quality of
service is affected? Over the last 15 years, the number of
full-time employees of SSA has declined from 80,000 to 63,000
while the amount of work performed by that agency has grown
substantially.
Mr. Chairman, I might tell you that many of those 63,000
live in the Third Congressional District of Maryland. I am very
proud of the work that SSA employees do every day of the week
in their public service on behalf of the citizens of this
nation. They work very hard. They are very dedicated and they
have been working with less and less resources every year.
The increase in SSA's workload is projected to continue to
grow over the next decade, 16 percent for retirement cases, 47
percent for disability cases, and 10 percent for SSI claims.
Increased efficiencies due to technology advances or system
improvements may moderate the impact of workload increases on
SSA, but we all need to acknowledge that there is a core work
force that is needed at SSA in order to handle the
applications, answer questions, and determine eligibility.
Mr. Chairman, I look forward to our witnesses addressing
these work force issues as well as providing their advice on
special steps that SSA should take to improve the service it
provides to millions of Americans. Thank you.
Chairman Shaw. And thank you, and without objection, your
full statement, that of Mr. Matsui, and all the Members of both
these Subcommittees will be placed in the record.
[The opening statement of Mr. Matsui follows:]
Opening Statement of Hon. Robert T. Matsui, a Representative in
Congress from the State of California
Thank you, Mr. Chairman.
I want to commend you for holding this hearing on the
challenges facing customer service delivery at the Social
Security Administration. By now, it is common knowledge that
long-term demographic trends will pose a challenge for the
financing of the Social Security program in the years ahead.
However, the challenges that these and other trends will create
for the administration of the Social Security and SSI programs
are less widely discussed.
Consequently, I look forward to hearing from our witnesses
today about the customer service challenges those trends will
create and about the initiatives that SSA has already
implemented or is currently developing in order to meet those
challenges.
We all know that as the Baby Boom generation retires, SSA
will experience rapid workload growth. At the same time,
however, SSA will experience the loss of a significant
proportion of its workforce since many of its employees are
Baby Boomers themselves. SSA must begin to plan now to ensure
that it is prepared to handle these events when they occur.
The task at hand is vitally important. With the possible
exception of the Internal Revenue Service, the American people
interact with the Social Security Administration more than any
other federal agency. As a result, for many Americans the
Social Security Administration is the face of the government.
They equate the manner in which SSA delivers services with the
government's responsiveness in general to the problems they
face and the needs they may have.
Recent studies indicate that SSA is performing fairly well
with regards to customer service. Last December, SSA scored an
82 out of a possible 100 on the American Customer Satisfaction
Index compiled by the University of Michigan Business School
and the American Society for Quality. In contrast, the
aggregate score for the federal government as a whole was 68.6.
We should also keep in mind that SSA was at the forefront
of the federal government's efforts to prevent Y2K-related
computer problems, easily the largest and most pressing service
delivery issue the government has addressed in recent years.
Despite these successes, progress still needs to be made on
a number of service delivery problems, such as the length of
time necessary to complete a disability appeal. While it is
incumbent upon the Congress to highlight these problems and to
ensure that SSA is administering its programs properly, it is
also incumbent upon the Congress to provide SSA with the
resources it needs to meet a growing workload.
The FY 2000 appropriation for SSA's administrative budget
that Congress enacted last year was $6.572 billion, $134
million below the $6.706 billion requested by the President.
SSA projects that, as a result, the agency will be able to
process 169,000 fewer disability claims, 91,000 fewer
retirement/survivors claims, and answer 3 million fewer
telephone calls to its national 800 number.
While we must receive every assurance from SSA that the
agency is utilizing its existing resources in the most
efficient manner possible, I strongly hope that we will not
repeat this short-sighted approach to budgeting when we
consider the agency's FY 2001 appropriation this year.
I want to thank all of the witnesses for being here, and I
look forward to hearing your testimony.
Thank you.
Chairman Shaw. Our first two witnesses, Mr. Ross and Mr.
Schieber are members of the Social Security Advisory Board.
This Advisory Board was set up back in 1994 as a bipartisan
board which was supported by the Administration as well as by
the Congress in order to take a close look and give us a road
map on how we can do better in providing the Social Security
functions to the people that it's designed to serve.
Welcome to both of you, and, Mr. Ross, if you would start
out on the testimony. Thank you for being with us.
STATEMENT OF HON. STANFORD G. ROSS, CHAIR, SOCIAL SECURITY
ADVISORY BOARD; AND FORMER COMMISSIONER, SOCIAL SECURITY
ADMINISTRATION
Mr. Ross. Mr. Chairman, Chairman Johnson and Members of the
Subcommittees, I want to thank you for your invitation to
testify. This is an opportunity for the Social Security
Advisory Board to address the issue of how the Social Security
Administration can better fulfill its obligation to serve the
American people.
With your permission, I would like to submit my full
statement for the record and briefly summarize some of the
major points.
Chairman Shaw. Without objection, the full text of the
testimony will be placed in the record, as it will for all the
witnesses today, and you may proceed as you feel most
comfortable. Thank you.
Mr. Ross. I'm going to be sharing my time with Sylvester
Schieber who is member of the Board. As the chair of the Board,
I'm going to try to present the basic thrust of what we learned
in over 2 years of study.
First of all, I want to make it clear that when Congress
created our Board in 1994, it was given a mandate to make
recommendations for how the Social Security Administration can
improve its service to the public. We did not volunteer for
this task. This task was part of the job that you wanted the
Board to do.
When we began our work, we had no preconceptions, but by
the time we finished after 2 years and issued our 85-page
report last September, we had the unanimous endorsement of all
of the members of the Board, Democrats and Republicans, and
most importantly our report was issued in a nonpartisan spirit.
It was a professional job.
The bottom line of that report is as follows: The Social
Security Administration has serious problems that need prompt
attention. Most importantly, there are not only current
problems that need attention, but it is absolutely clear that
the problems will get worse in the future if not addressed now.
It takes a long time to get to the situation that the agency is
now in, and there are no quick fixes. It's not going to be easy
to get out of it, but the time to start is clearly now.
This is a situation that the public will feel directly if
the tide is not reversed. So the time to do something is now
before you have a lot of public discontent. We have come to the
Congress to try to get the Congress to deal with this set of
issues.
All is not bleak. The Social Security Administration is
fortunate to have an experienced and dedicated work force and a
management that ranks among the top of government agencies.
Having said that, though, those assets do not justify
complacency because they alone have not been adequate so far to
deal with the problems that face the agency. SSA needs to move
forward on its problems urgently. It needs to change, but it
also needs resources to help it make the changes that are
needed.
What are the problems? Problems manifest themselves most
obviously in overcrowded waiting rooms where waits of 2, 3, or
4 hours are not uncommon, inconveniencing many people who come
to the office to get a Social Security card or file a claim and
putting pressure on overworked employees to process work faster
even if it means cutting corners. There are large backlogs in a
number of areas of the agency's work, which means that work
does not get done in a timely manner, and there is also broad
consensus among staff in the field that the quality of work and
program integrity are at times seriously threatened.
To deal with workload pressures, the agency is continually
shifting work from one component to another, addressing one
problem while creating a new one. A prime example of this
robbing Peter to pay Paul is how the agency deals with the 800
number. To meet the goal of answering 95 percent of calls in 5
minutes, SSA has been diverting employees from their own
important work to answer the telephone. This is generating
delays in other parts of the agency and producing even more
telephone calls. A vicious cycle has been created that is
undermining the quality of service agency-wide.
Despite agency efforts, 800 number service remains far from
satisfactory. As Chart 1 shows, of the 79 million calls to the
800 number in 1999, 20 million either resulted in a busy signal
or were abandoned before receiving service. Thus only 75
percent of the public's calls actually received service.
Moreover, this performance will only go down in 2000 under the
budget that has been proposed thus far. That budget shows only
57 million calls being answered in 2000, so even if there were
no more calls, that 75 percent would be down to about 70, and
if calls increase, it could even go from 75 percent to two-
thirds.
I do not think that is adequate telephone service. What are
the causes? What are the roots of this problem? The telephone
is just a prime example. Prolonged downsizing has contributed
to the agency's problem. As Chart 2 shows, since 1982
employment at SSA has declined by 27 percent, and most
importantly the number of employees in the field has declined
by more than 29 percent. Downsizing has occurred across
government, and in Chart 3 we have compared SSA to two other
agencies that have service delivery functions, the IRS and the
Department of Veterans Affairs, and Social Security has
declined more where as the IRS has even gotten increases.
Changes in the managerial structure have also been an issue
and created difficulty. There are far fewer managers, and the
managers are less able to monitor, to check, to try to provide
the kind of quality control that they have previously provided.
The impact of past staffing cutbacks and managerial changes
will be felt even more acutely over the next decade when a
large portion of the agency's seasoned work force is expected
to retire.
Chart 4 shows that the number of retirees will almost
double between now and 2007, and this retirement wave will be
occurring at the same time that the baby boomer generation will
increase the numbers who need to be served, which is shown on
Chart 5. A significant portion of this growth, too, will be in
the DI and SSI disability programs which are highly complex to
administer.
In general, the agency's work is growing more complex.
Disability applications, for example, increasingly involve
mental impairments which are frequently difficult to evaluate
and require careful judgment. The legislation passed last year
to help the disabled return to work will add to the agency's
responsibilities. And yet, as far as I know and I received a
briefing yesterday, there is no money in the budget
specifically designated to address the new responsibilities and
needs that will be created by the new legislation.
I could say more, but time is short, but I hope I will have
said enough to convince you that SSA cannot continue with
business as usual if it is to meet its growing challenges. The
Board has made several basic recommendations for how the agency
should proceed to begin to meet these challenges.
First, the agency needs a service delivery plan that sets
fourth for the short- and long-term how it expects to handle
its growing workloads, whether through staffing increases,
technological improvements, changing the way the agency does
its business, or a combination of these approaches. It needs
the work force plan that was called for by the 1994 legislation
and which has not yet appeared, and that work force plan needs
to be tied in with an information technology strategy so that
people are trained and hired to do the right jobs based on the
rapidly changing technology that is available.
Second, the agency needs to make dramatic improvements in
its telephone service and systems capabilities and accelerate
significantly the use of new technologies.
Third, the agency needs to address longstanding
institutional problems. These include a culture that
discourages open discussion of problems, which means that
problems are not being addressed in a forthright way. Also,
there are major weaknesses in communication between SSA's
headquarters and operations in the field, including the state
disability agencies, which undermine the ability of those in
the field to understand agency policies as well as the ability
of headquarters to benefit from the experience and ideas of
employees in all parts of the agency. Further, SSA's
administrative structure spreads responsibilities over too many
components, making communication, coordination, team work, and
timely decisionmaking difficult to achieve.
Changes in SSA's structure and business processes are
crucial if the agency is to the meet its future challenges, but
the agency will need additional resources as well, both in the
short term and long term. The upcoming retirement wave and the
aging of the baby boomers make it critical for the agency to
begin quickly to hire and train a work force for the future. We
believe as a Board, and it is unanimous, an important first
step is that the agency's administrative budget, like its
program budget, should be explicitly excluded from the
statutory cap that imposes an arbitrary limit on the amount of
discretionary domestic spending.
The agency's budget should be work-based, not based on
artificial constraints. The American people, by their
contributions, are paying for the program and for the service,
and they ought to get the service which they need and to which
they are entitled. It is time for a work-based budget to be
given to the agency.
In conclusion, I want to commend Commissioner Apfel and the
agency for beginning to respond positively to the findings and
recommendations in the Board's report. They have started to
take some steps to address a number of problems that are
described in our report, but they will need the help of the
Congress and the administration if they are to be successful.
Let's make no mistake. There is a long way to go. Staying
the course will require years of consistent work. The agency
reached its present condition over a long period, and there are
no quick fixes. But the important thing--the vital thing--is to
get started now, this year.
Thank you very much, Mr. Chairman.
[The prepared statement follows:]
Statement of Hon. Stanford G. Ross, Chair, Social Security Advisory
Board (former Commissioner of Social Security Administration)
Chairman Shaw, Chairman Johnson, and members of the
Subcommittees on Social Security and Human Resources, I want to
thank you for your invitation to the Social Security Advisory
Board to testify on the subject of Social Security's service to
the public. I am accompanied today by Sylvester Schieber, a
member of the Board, who is filing his own testimony. I hope
that these hearings, coming as they do at the beginning of this
second session of the 106th Congress, will provide the impetus
for the prompt action that is needed to ensure that the Social
Security Administration can fulfill its current and future
obligation to serve the American people.
Although most people are aware of the financing deficit
that the Social Security program faces over the long term, few
are aware of the Social Security Administration's serious and
growing service delivery problems. On behalf of the Board, I
welcome this opportunity to begin a public discourse on what
needs to be done to ensure that these problems are
appropriately addressed. In the report on service that we
issued last September, we set forth our unanimous
recommendations for the actions we believe are necessary.
When the Congress created the independent, bipartisan
Social Security Advisory Board in 1994, you included in its
mandate a specific charge that the Board make recommendations
for how the Social Security Administration can improve its
service to the public. Responding to that charge has been one
of the Board's highest priorities. Over the course of more than
two years, we talked with thousands of SSA and State disability
agency employees in all regions of the country. We examined
agency reports and statistics, and we held hearings to hear the
views of the public. As with all the studies that we have
undertaken, we have worked in a spirit of nonpartisanship, with
the objective of serving the best interests of the agency and
the public. While we have at times been critical of the agency,
we have tried to be constructive.
SSA has significant strengths, including an experienced and
dedicated workforce and a management that ranks among the top
of government agencies. But it is also presently experiencing
serious problems and, more importantly, problems that will only
grow disastrously if left unattended. We are grateful for the
opportunity to share with you the findings and recommendations
that emerged from our study.
Problems of Service Delivery--An Untold Story
Social Security's problems in serving the public have been
an untold story so far as the American people are concerned.
But they are a story well known to those who are serving the
public on the front lines. The response of Social Security and
State agency employees around the country to the Board's report
on service delivery has been overwhelmingly supportive.
Employees in all parts of the system -including field offices,
teleservice centers, program service centers, and State
disability agencies -have called and written to express their
appreciation that the Board has recognized their concerns and
is giving voice to a situation that urgently needs to be
addressed.
The employees who carry out the agency's work have a
tradition of loyal service to the agency and the public. They
share a ``can do'' attitude that has helped the agency to cope
with the many administrative crises that it has faced over the
years. But as workloads have grown and become more complex and
resources have dwindled, these highly motivated employees have
become increasingly concerned about their capacity to provide
aged and disabled individuals with what they believe is an
appropriate level of service.
SSA's Service Delivery Problems are National in Scope
SSA's service delivery problems are being experienced in
all regions of the country. Although most acute in urban areas,
they are prevalent in suburban and rural areas as well. In our
discussions with managers and other employees in the field, we
heard repeated accounts of overcrowded waiting rooms, where
waits of 2, 3, or 4 hours are not uncommon. These long lines in
waiting rooms are not only causing serious inconvenience to
those who need a Social Security card or want to file a claim
for benefits, they are putting pressure on employees to process
their work faster, even if it means cutting corners. An agency
executive told the Board that ``employees no longer have the
time to cross the t's and dot the i's.''
The effects can be serious. For beneficiaries and claimants
it can mean an inaccurate benefit check or failure to file a
properly documented disability claim. For the agency and the
public at large it can mean overpayments, failure to follow up
on potential fraud, or erroneous issuance of a Social Security
card.
Although the agency's indicators are generally positive,
there are signs of problems. For example, despite the agency's
increasing emphasis on collecting overpayments, the amount of
outstanding debt owed to the agency due to overpayments has
increased steadily over the last 5 years. At the end of fiscal
year 1994, outstanding debt was $4.l5 billion. By the end of
fiscal year 1999, outstanding debt was $6.52 billion, a 57
percent increase.
SSA has a large backlog of postentitlement actions in its
field offices, actions that are necessary to maintain the
accuracy of the benefit rolls. These actions involve changes in
income or resources, changes in address or living arrangements,
or other changes that can affect eligibility or payment amounts
or the accuracy of the benefit rolls. Data from SSA show that
the volume of pending postentitlement actions increased from
1.4 million at the end of fiscal year 1995 to more than 2
million at the end of 1999.
The results of a recent survey of field office managers
underscore the concern about the quality of service that SSA is
able to provide. The survey, conducted by the National Council
of Social Security Management Associations, included 111
managers representing a cross-section of offices from all
regions, ranging from large metropolitan offices to small rural
offices. While three-quarters of those responding rated the
quality of their office's Social Security claims work as good
or excellent, only about half rated their Social Security
postentitlement work as good or excellent, and half rated their
SSI claims work, as only fair or poor. Sixty percent rated SSI
postentitlement work fair or poor.
To deal with workload pressures, the agency often shifts
work from one component of the agency to another, so while one
problem is addressed, a new one is created. A striking example
of this is what is happening with the agency's 800 number. For
years, SSA has been trying to shift as much of its workload as
possible to the 800 number in order to cut down costs. An
agency goal has been to answer 95 percent of calls in 5
minutes, and to meet this goal, SSA has been diverting
employees in its program service centers from their own
critical work to answer the telephone. As a result, issues that
field offices have sent to program service centers for
resolution are taking longer and longer to process. At the end
of fiscal year 1999, there were more than a million items
pending in the program service centers, a 15 percent increase
from a year earlier. Benefits are being delayed. This generates
even more calls from frustrated claimants who are trying to
find out what is happening to their claims. A vicious cycle has
been created, and overall agency service is suffering.
SSA's statistics show that the agency has been meeting the
goal of answering 95 percent of calls in 5 minutes, but what
this means requires clarification. In fiscal year 1999, 79
million calls were placed to the 800 number. Nearly 7 million,
or 9 percent of these callers, got a busy signal. Of the 72
million calls actually received by the 800 number, 13 million,
or 18 percent, were abandoned, either while callers were
waiting for someone to handle the call or before they were able
to navigate SSA's automated service. In the end, only 59
million callers out of 79 million or some 75 percent actually
talked to an SSA employee or finished using SSA's automated
service.
Impact of Prolonged Downsizing
Although the agency's current service delivery problems
stem from a combination of factors, the prolonged period of
downsizing SSA has experienced over the last couple of decades
has been an important factor. Since 1982, employment in SSA has
declined by 27 percent, from 88,600 in 1982 to 64,600 in 1999.
The number of employees in the field has declined even more, by
more than 29 percent, from 59,800 to 42,300. We believe the
agency cannot sustain any further reductions, and in fact now
faces staffing shortages in key parts of its organization.
Downsizing has occurred across government, by some 14
percent overall. But the impact has not been evenly spread
across agencies. SSA's cuts have been disproportionately large,
particularly when compared with what has happened in two other
agencies that also have significant service delivery
responsibilities. Although in recent years the IRS has
experienced cutbacks, over the 1982-1999 period employment in
the agency grew by 19 percent. Over this same 17-year period,
employment in the Department of Veterans Affairs declined by
seven percent, after experiencing substantial growth until
1993.
The Looming Retirement Wave
The impact of SSA's past staffing cutbacks will be felt
acutely over the next decade. Years of downsizing and severe
restrictions on hiring have given the agency a rapidly aging
workforce. The average age of Social Security's employees
increased from 41 to 46 over the last decade. A major reason
the agency has been able to cope with its growing workloads as
well as it has is that its workforce is currently highly
experienced and there are experienced managers in the field.
But a large portion of this seasoned workforce is expected to
retire within the next 10 years. Based on the agency's
projections, the number of retirees each year is expected to
more than double, from 1,350 in 1999 to almost 3,000 a year in
2007 through 2009.
Compounding the problem is the fact that certain field
positions will be particularly hard hit. SSA predicts that
between 6 and 7 percent of its managers and supervisors in the
field will retire in each year between 2004 and 2008. This will
come on top of a reduction in the number of managers that many
in the agency believe is already undermining the quality of
work by reducing the amount of training and quality review that
is being done in the field. SSA has the very large challenge of
hiring and training replacements who will be able to carry out
the agency's work as efficiently and effectively as has been
done in the past.
Future Workload Growth
The agency's large wave of retirements will occur at the
same time that the workload is expected to grow rapidly. Over
the last decade, the number of people receiving Social Security
and Supplemental Security Income benefits has grown at a rate
significantly faster than the population as a whole. This
disproportionate growth will accelerate as the baby boom
generation ages, placing increasing pressures on the Social
Security Administration to find ways to keep pace. These
pressures will be exacerbated by the fact that a significant
portion of the growth will be in the DI and SSI disability
programs, both of which are extremely time consuming for the
agency to handle. Between 1999 and 2020, the general population
is expected to grow by about 16 percent. But SSA's actuaries
expect the number of Old-Age and Survivors beneficiaries to
grow by 51 percent, while the numbers of DI and SSI disability
beneficiaries are expected to grow by 71 percent and 17 percent
respectively.
Growing Administrative Complexity
The agency's work is also growing more complex. For
example, disability applications increasingly involve mental
impairments, which can be very difficult to evaluate and tend
to require carefully informed judgment. The agency's new
emphasis on program integrity requires employees to spend
increasing amounts of time on continuing disability reviews and
SSI redeterminations. The job of issuing Social Security
numbers has become more complicated and time consuming for the
agency as the number of non-English speaking individuals
applying for numbers has grown. Higher levels of immigration
are a factor. Immigrants often are not readily able to provide
all of the documentation that is needed. The number of
immigrants admitted to the United States has climbed from
531,000 in 1980 to an annual average of more than 770,000. SSA
now has employees who speak more than 90 languages.
SSA is also being asked to fill needs not being met
elsewhere. Many of those who call or come into the office are
seeking help with Medicare, Medicaid, Food Stamps, or other
matters not directly related to SSA's program responsibilities.
Employees in the field tell us that more and more Medicare
beneficiaries are turning to SSA for information and advice
because of the increasing complexity of the law and because no
other resource is available in their community to provide this
service. In fiscal year 1999, SSA processed more than 65
million workload items relating to Parts A and B of Medicare,
requiring about 1,400 agency workyears.
The legislation passed last year to help the disabled
return to work will add to the agency's responsibilities. Even
if much of the work is contracted out to other public or
private entities, the public will expect Social Security's
employees to be able to answer their questions about the new
program, and to explain the rules and the value of the services
that are being offered.
What SSA Needs to Do
SSA cannot continue business as usual if it is to meet
these growing challenges. Although employees at all levels of
the agency value quality service and are working hard to
deliver it, their ability to do so is increasingly at risk. The
agency needs to focus much more sharply than it has in the past
on the question of what it needs to do to meet its future
challenges. The Board has made several overarching
recommendations for how the agency should proceed.
Establish a Service Delivery Plan for the Short Term and the
Long Term
Although SSA's strategic plan includes providing ``world-
class'' service as one of the agency's strategic goals, the
strategic plan does not purport to be a detailed service
delivery plan and includes only limited discussion of how the
agency expects to achieve this goal. We recommend that SSA
establish a service delivery plan that will set forth how it
expects to handle its growing workloads, whether through
increases in staffing, technological improvements, changes in
the way the agency processes its work, or a combination of
these approaches. The plan should address both the short term
and the long term.
Planning should not be a one-time exercise. The agency
should establish a permanent planning process that will enable
it to adapt its plan as needed to reflect the changes in law,
technology, and beneficiary characteristics that will
inevitably occur.
Improve Service Delivery Practices and Strategies
Second, the agency needs to make major improvements in its
service delivery practices and strategies. If SSA is to meet
its goal of providing high quality service, it will have to
make dramatic improvements in its telephone service and systems
capabilities, and accelerate significantly its ability to use
new technologies in conducting its work.
In deciding where and how to focus its efforts, the agency
should follow the example of the best private and public
entities and become much more oriented toward understanding the
needs and expectations of its clients. To do so will require
far better measurement tools than it is currently using.
At present, there are many basic questions for which the
agency has insufficient answers. For example: What are the
service delivery needs and expectations of SSA's different
client groups? Should the agency be developing different
service delivery strategies for different client groups? Are
SSA's current 800 number standards lower or higher than the
public wants and expects? Would people prefer to call the 800
number or their local field office and, if so, why?
Only by getting answers to questions such as these will the
agency have a valid basis for setting its goals and for
planning how various components of the agency will be used in
delivering service.
The Board has heard numerous concerns about how the agency
sets its quality goals and the way it measures performance.
Many of the agency's own employees believe there is an
overemphasis on process rather than outcomes and that for
various reasons agency data sometimes fail to provide a true
picture of the quality of service that is being delivered.
Because goals and performance measures tend to drive the work
of the agency, we believe SSA needs to give high priority to
improving these measures and the way they are being used,
taking guidance from successful private and public entities.
Address Longstanding Institutional Problems
Third, we urge the agency's leadership to address
longstanding institutional problems. Although these problems
relate to all of the agency's work, they directly affect SSA's
ability to serve the public. These are problems that have grown
over many years and to some degree are endemic to any large
institution. To address them will require changing the culture
of the agency. These problems include an agency culture that
discourages open discussion and timely identification and
resolution of problems and weaknesses in communication between
SSA's headquarters and operations in the field. The agency also
has an administrative structure that spreads responsibility
across many components, making communication, coordination,
teamwork, and timely decision making difficult to achieve. This
problem of dispersion of accountability manifests itself
particularly in the areas of disability and SSI, where some of
the most serious service delivery problems occur.
SSA's leadership needs to send a convincing and consistent
message throughout the agency that open discussion of problems
is both needed and expected, and that ideas for resolving
problems will not only be welcomed, but rewarded. The agency
also needs to develop and institutionalize better tools of
communication between management in headquarters and employees
who work in the field and in State disability agencies. The
problem of dispersion of responsibility across many components
of the agency with parallel responsibilities needs urgently to
be addressed in order to enhance accountability for achieving
results. Trying to promote better teamwork is an obvious
approach, but organizational changes may be needed as well in
order to satisfactorily address the problems that we have
identified.
The Agency Needs the Support of the Administration and the
Congress
Finally, although all of the changes that I have been
describing are within the purview of the agency itself, there
is one area in which it must have the support of both the
Administration and the Congress. The upcoming retirement wave
makes it critical for the agency to begin quickly to hire and
train a workforce for the future. The 1994 legislation making
SSA an independent agency called for the development of a
comprehensive workforce plan that would serve to clarify the
agency's human resource needs. SSA's requests for
appropriations should reflect the real needs of the agency to
provide high quality service to the public. We urge the
Administration and the Congress to provide the funds that will
be necessary to meet those needs.
The Board is unanimous in urging that the agency's
administrative budget, like its program budget, be explicitly
excluded from the statutory cap that imposes an arbitrary limit
on the amount of discretionary government spending. Both
workers and employers contribute to the self-financed Social
Security system, and are entitled to receive service that is of
high quality. It is entirely appropriate that spending for
administration of Social Security programs be set at a level
that fits the needs of contributors and beneficiaries, rather
than an arbitrary level that fits within the current government
cap on discretionary spending.
Conclusion
In closing, I want to commend Commissioner Apfel and the
agency for beginning to respond positively to the findings and
recommendations in the Board's report. They have taken some
steps to begin to address a number of problems that we
described in our report. The Commissioner has established a
process for developing a service delivery vision for the
agency, and steps are being taken to assess the agency's
workforce needs in future years.
But make no mistake there is a long way to go. Staying the
course will require years of consistent effort. The agency
reached its present condition over a long period and there are
no quick fixes. But it is vital to get started now and I
believe the Commissioner is doing this.
I assure you that the Board intends to follow up on the
work it has done on service to the public. We expect to monitor
carefully the progress that the agency is making to make sure
that there is progress in fact as well as in words. We are
currently studying how we can work with the agency on a joint
undertaking to improve the way the agency measures customer
service.
The functions performed by SSA touch nearly every
individual in immediate and direct ways. Employers, workers and
their families, and beneficiaries are all affected by how well
the agency does its job, and we all have a stake in its
success. Our assessment is that SSA is fundamentally strong,
and with strong leadership and the support from the
Administration and the Congress that it needs, there is no
reason why it cannot meet the very large challenges that it
will be facing in the coming years.
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[An attachment is being retained in the Committee files.]
Chairman Shaw. Thank you, Mr. Ross.
We have a vote pending at this time. So it would be a good
time to break, and I'm going the break until a quarter after
twelve. That would give people here a chance to run downstairs
and get a sandwich or something if you would like. It will not
give you a lot of time, but we will go ahead and break for one-
half hour and we will then reconvene and then, Mr. Schieber, we
will of course start off with you and then there will be
questions. Thank you.
[Recess.]
Chairman Shaw. I apologize for the lack of attendance that
we have here, but there are a number of things going on,
including a Ways and Means bill on the floor of the House. So I
know that a lot of our Members are working there with that.
Mr. Schieber.
STATEMENT OF SYLVESTER J. SCHIEBER, MEMBER, SOCIAL SECURITY
ADVISORY BOARD
Mr. Schieber. Mr. Chairman, Members of the Subcommittee, I
would like to thank you for the invitation to testify here
today.
As Mr. Ross indicated in his discussion, all of the members
of our Advisory Board are in full agreement on the findings and
recommendations of our report on service delivery. For me,
personally, getting to those findings and recommendations
created some considerable ambivalence. I come from a private
sector background, and I think I'm naturally receptive to many
of the changes that are occurring at Social Security. Work
force downsizing, leveling of managerial hierarchy,
implementing technology, customer satisfaction are concerns for
survival in business today. Though I embrace these practices
generally, I am troubled by their adaptation in Social
Security's case.
My impression, and I believe that other board members
agree, is that the staffing levels of the agency are largely
dictated by budget and personnel goals with little regard for
the agency's dynamic workloads. To the extent that the workload
is considered, many people in the agency have little faith in
the work force measurement systems that are used, and I think
we are at a point now where the agency should seriously
consider replacing downsizing with right-sizing as has become
much more prevalent in the private sector.
Staffing issues must be addressed forthrightly by the
agency, and it must engage both the administration and Congress
to have the resources that are needed to fulfill its charter.
The managerial staff ratios that have been religiously adopted
by the agency do not reflect the managerial needs of the
organization. The agency should strengthen its management
structure at headquarters and ensure that field managers have
the flexibility and tools to manage their offices effectively.
SSA should improve its measurement of the needs and
expectations of the people it serves and its benchmarking
against external organizations. Some of the goals that SSA has
made central to its operation, such as answering 95 percent of
800 calls in 5 minutes, do not reflect current private sector
standards. Last year, we had an expert come visit the Board who
advised that the goal of the answering of 90 percent of calls
within 30 to 60 seconds is now the market standard. Internet
access is replacing phone transactions, in many instance
driving down costs while improving customer satisfaction in the
private sector.
Measures of good service from just 5 years ago are no
longer sufficient. Despite the fact that the 95-5 standard may
not be up to speed, the agency's singular focus on it is
resulting in downgrading of other services. Pulling staff off
of program service center activities to answer phones simply
delays the processing that's supposed to go on in the PSC
centers. Once a periodic duty, today PSC personnel spend
virtually the whole year servicing the 800 system. The problem
is exacerbated by Social Security's antiquated phone system and
software.
The agency needs to become much more adept in acquiring and
integrating new technologies. Its IWS/LAN project to place new
computers in all of SSA's offices went out for bids in
September 1994, but the contract was not awarded until 1996,
and the national roll-out of these systems is still underway.
Few companies in highly service-oriented business today rely on
1994 systems and technology. I wonder how many offices here on
Capitol Hill are still using 1994 vintage computers and
operating systems.
If the agency is to keep up with its needs, it must find
quicker ways to acquire state-of-the-art systems and to bring
them online. In addition to the hardware problems, we heard
repeated concerns about the development of and implementation
of software systems. Staffing limits are based on system roll-
out schedules that are not met. This phenomenon simply
compounds the difficulties imposed on field office operations
by excessive staff reductions.
The Board's service report did not address the structural
problem of the agency's disability determination and appeals
processes which are central to many of the agency's service
delivery problems. We did address these matters in an earlier
report. My own personal concern coming out of this is that the
current disability administration model is so badly flawed that
it cannot be successfully implemented. I believe this is a
subject that needs to be reviewed again by the agency, the
Board, and Congress as Congress did back in the 1970s.
Downsizing a work force by natural attrition, as Social
Security has done in recent years, results in significant work
force aging. The average age of Social Security's work force
has increased by more than 5 years over the past decade. Within
the next decade, a disproportionate share of Social Security's
workers will retire.
The personnel situation at Social Security provides
significant risks on at least three fronts. The first relates
to a lack of infusion of new blood and new ideas into the
organization dating back more than 15 years. The second relates
to the potential of an abnormally large number of retirements
at the time the beneficiary population is going to explode. So
you are going to have new people without much background and
understanding of the system taking charge. And the third
relates to the loss of a whole generation of workers who should
be maturing into senior positions as these current older
workers matriculate out of the system into retirement. The
agency simply cannot put off hiring any longer.
In closing, let me say that because large bureaucracies are
difficult to move, making some of the changes that we
recommend, particularly those that involve changing the agency
culture, will take strong leadership. You will hear the agency
has many initiatives to address the problems raised in the
Board's report, but it has to address them far more
aggressively than it has in the past if it is to meet the
changes that it will face in the coming decade. I believe that
it needs more resources than are being called for in the
President's proposed budget if it is to meet these challenges.
Thank you very much.
[The prepared statement follows:]
Statement of Sylvester J. Schieber \1\, Member, Social Security
Advisory Board
Chairman Shaw, Chairman Johnson, and members of the
Subcommittees on Social Security and Human Resources, I thank
you for the invitation to testify.
---------------------------------------------------------------------------
\1\ Sylvester J. Schieber, Ph.D., is Vice President of Research and
Information at Watson Wyatt Worldwide. He has been a member of the
Social Security Advisory Board since January 1998. The views presented
in this statement are his own and do not necessarily reflect the views
of other members of the Advisory Board or of Watson Wyatt Worldwide or
any of its other associates.
---------------------------------------------------------------------------
As Mr. Ross has indicated, the Board's report on service
delivery was the work of all the members of the Board. We are
in full agreement on the findings and recommendations. For me
personally, getting to those findings and recommendations
created considerable ambivalence.
I have spent most of my career in private enterprise.
Although I am a working manager, I have been in management
positions for more than 20 years. I work in an industry and
business that is highly competitive. In that context, I have
personally had to deal with ongoing market pressures to produce
more and better work with steadily diminishing resources. Given
this background, I am naturally receptive to many of the trends
that are occurring at Social Security. Downsizing a workforce
has been a personal experience, one that I should note I did
not relish. Elimination of unnecessary levels of managerial
hierarchy is a gospel in our business. The use of technology is
what allows these things to occur. For the business in which I
work, customer satisfaction is a condition for survival.
Despite my receptivity to all of these considerations, I am
troubled by their adaptation in the administration of the
programs under the Social Security umbrella. I would like to
take the opportunity today to elaborate on several points that
I think are particularly important.
The Board states in its report that the agency
cannot sustain any further reductions in its staff and in fact
now faces staffing shortages in key parts of the organization.
It is my impression, and I believe that of other Board members,
that staffing levels in the agency have been largely dictated
by budget and personnel goals that have not seriously
considered the agency's workload and how it is changing. To the
extent workload is considered, many if not most of the people
in the agency have almost no faith in the work measurement
system now used to measure the work they do. The private sector
has replaced ``downsizing'' with ``rightsizing,'' and this
should be the agency's objective as well. This problem needs to
be addressed forthrightly by the agency, and the agency needs
to engage with the Administration and the Congress to get the
resources that it needs to satisfactorily fulfill its charter.
The managerial-staff ratios that have seemingly
been religiously adopted by the agency do not reflect the
managerial needs of the organization. The agency needs to
strengthen its management structure in headquarters and ensure
that managers in the field have the flexibility and tools they
need to manage their offices effectively.
SSA needs to do a much better job than it is
currently doing of measuring the needs and expectations of the
people it serves and of benchmarking its service goals against
external organizations. Some of the goals that SSA has made
central to its operations, such as answering 95 percent of
calls in 5 minutes, do not reflect present day private sector
standards. We heard repeatedly that SSA had been judged number
1 in its provision of 800 level service by a DALBAR survey done
in 1995. To give you a sense of the dynamics in the private
market place, my employer was rated number 1 in a 1995 DALBAR
survey of defined contribution retirement plan record keepers
in the United States. By 1999 we exited that business because
the linkage of record keeping to mutual fund investing had
eliminated our utility as a provider of these services.
Standards for telephone service have been rising. Last year an
expert in the private sector advised the Board that a goal of
answering 90 percent of calls within 30 to 60 seconds -not 95
percent in 5 minutes -is now the market standard. Measures of
good service from just five years ago are no longer sufficient.
Despite the fact that the 95-5 standard may not be
up to grade, the agency's singular focus on it is resulting in
the downgrading of other service levels. Pulling staff off of
Program Service Center (PSC) activities to answer the phones
simply delays case processing which generates additional calls.
The use of PSC staff on the 800 system was originally intended
to cover only a few days a year when call levels spiked,
specifically days around the first of each month, a day or two
after holidays, and so forth. Now PSC staff are pulled into
supporting the 800 system virtually year round. This problem is
exacerbated by the antiquated phone system used by the agency
and its underlying software.
The agency needs to become much more adept at
integrating new technologies into its processes. Systems
improvements are being introduced far more slowly than in the
private sector. In the 1940s, 1950s, and 1960s SSA was a
pioneer in using computer technology but today it is lagging
behind. Partly this is a procurement issue that can only be
resolved with streamlining of governmental procedures. The
agency's IWS/LAN project, which involves placing new computer
equipment in all of SSA's offices throughout the country, went
out for bids in September 1994, but the contract was not
awarded until June 1996 and national rollout is still
continuing. Rapid systems advances mean that SSA's equipment is
already out of date even before it has been universally
implemented. If the agency is to keep up with its needs, it has
an urgent need to find quicker ways to get state-of-the-art
equipment to its employees.
In addition to the hardware problems, we heard
repeated concerns about the development and implementation of
software systems. Staffing levels often are based on promised
system rollout schedules that are not met. This phenomenon
simply compounds the difficulties imposed on field office
operations by excessive staff reductions.
As we point out problems, we should also point out
that the agency is required to perform some highly complicated
tasks. I refer specifically to the administration of the
disability programs. The Board's report did not address the
structural problems of the agency's disability determination
and appeals processes, which are central to many of the
agency's service delivery problems. In the 1970s, the Congress
made a careful study of the Federal-State relationship between
SSA and the State Disability Determination Services. It also
examined the appeals process, including the Office of Hearings
and Appeals and the courts. My own personal concern is that the
current disability administration model is so badly flawed that
it cannot be successfully implemented. I believe these are
subjects that need to be reviewed again by the agency, the
Board, and the Congress.
Having sat across a desk from more than one
employee whom I had to terminate because of staff downsizing, I
appreciate that a preferred way to accomplish such goals is
through natural attrition. If such a policy is implemented over
a long time frame, as it has been in the case of the agency,
the end result is a significant aging of a workforce. The
average age of Social Security's workforce has increased by
more than five years over the past decade. Within the next
decade a disproportionate share of current workers will retire
from Social Security. The personnel situation at Social
Security poses significant risks on three fronts. The first
relates to a lack of infusion of new blood and ideas into the
organization dating back more than 15 years. The second relates
to the potential of an abnormally large number of retirements
at the time the beneficiary population explodes with baby
boomers' eligibility. The third relates to the loss of a whole
generation of workers who should be maturing into senior
positions as older current workers pass into retirement. The
agency cannot put off hiring any longer.
In closing, let me say that because large bureaucracies are
difficult to move, making some of the changes we recommend--
particularly those that involve changing the agency culture--
will take strong leadership. Having a confirmed Commissioner
has improved the agency's ability to take the necessary action.
You will hear that the agency has many initiatives to
address the problems raised in the Board's report. But it will
have to address them far more aggressively than it has in the
past if it is to meet the challenges it will face in the coming
decade.
Chairman Shaw. Thank you. Mr. Schieber, I would like to
pursue the last part of your statement with regard to the work
force and new hires and the fact that these retirements are
going to coincide with the baby boomers coming into the agency.
In the 104th Congress, we authorized an additional $4 billion.
That was during a 7-year period for the agency to reduce the
backlog of the continuing disability reviews. I gather from
your testimony, are you referring only to the retirement area
or also in the disability area?
Mr. Schieber. I'm talking about the whole agency. As we
have visited a number of regions as we were developing our
research, we repeatedly heard in the field about the large
number of people, significant numbers of people in management
positions that are going to be eligible to retire within the
next 3 to 5 years. There is significant concern within the
organization about the availability of people to move up in the
system and really provide the institutional knowledge,
institutional wisdom to keep things going.
Chairman Shaw. What would you do differently?
Mr. Schieber. I think they need to begin to hire people and
get them on board and possibly even attract people in mid-
career that can come in and assume leadership roles over the
next few years. They have begun the necessary actions. They ran
a retirement window last year providing early retirement
incentives, I think in August and September of last year,
offering early out for some workers so they could simply create
some vacancies to hire new blood. But they need to do more of
it.
Chairman Shaw. What is the percentage of the people that
you see in management that will be retiring over the next 5 or
10 years? Mr. Ross, you might chime in on this too if you want.
Mr. Ross. OK.
Mr. Schieber. We heard some fantastic numbers in some of
the senior grades of the majority of people eligible to retire
within the next 5 years, even numbers approaching 70 and 80
percent in some cases.
Chairman Shaw. Kim has just handed me a GAO study that I
suppose you have reviewed which is, indeed, frightening. The
percentages eligible to retire between--well, this was between
1999 and 2009. GS-1 to 11 was 50 percent; GS-12, 64; 13, 74;
14, 83, 86, 84, 54. What has caused that? It seems that an
agency ongoing like this would have a natural turnover with the
growth.
Mr. Schieber. What has happened is you have had this very
significant downsizing that has been going on for about 15
years, and these agencies do not like to lay people off. So
what they're doing is they are using natural attrition to do
the downsizing. If you are using natural attrition and not
enough people are walking out the door, you simply cannot bring
very many new people in. That is what has happened. And the
work force ages very rapidly in that kind of condition. I have
seen it in private sector companies also.
Mr. Ross. Let me just add one thing that underscores an
aspect of this. Because of so much pressure on the work force,
particularly in the field offices, some of these people may
retire even earlier than they have historically. There is a
great deal of burnout and the loss here cannot be described
just in numbers. The field force in particular is still very
customer oriented. They really do believe in service and
dealing with the people who come in the door and who manage to
get them on the telephone. But unless there is some real
overlap between the new hires and these people who have the
historic institutional memory and values, you are going to be
getting different kinds of people. You really do need this
overlap.
You cannot wait until somebody leaves and then think you
are going the get somebody in who is really a replacement,
because you will never replace that institutional memory unless
they have had a period of mentoring and being part of the
traditional organization. What's going on is really dangerous,
particularly with the staff burnout.
Those figures that have been referred to, could easily get
worse. These are just best estimates.
Mr. Schieber. The situation is that today not everybody
retires when they are eligible, but if you start to see a
massive infusion of eligible beneficiaries coming online,
increasing the work burden at the local office level without a
commensurate increase in resources, you have people that can
walk out the door because they are eligible for a pension.
Under increased work burdens they are going to be more likely
to do it sooner than they have in the past. That is the
probability. That is the risk.
Chairman Shaw. Let me switch gears for just a moment to
you, Mr. Ross. You recommended that Social Security establish a
service delivery plan over both the short term and the long
term. I want to know why this has not been developed until now.
As you know, the SSA came up with a plan to redesign the
disability program 7 years ago, and the plan still is in the
progress of being implemented. There have been many questions
raised all along about whether the redesign has really changed
anything, and what is the difference between a service delivery
plan that you are referring to versus the re-design of the
disability program plan, and what needs to be done differently?
Mr. Ross. The agency has historically at various times
tried to get a service delivery plan together, and by that I
mean a kind of comprehensive analysis of what it's going to
take, what sort of business processes, what kind of human
resources, what kind of technology strategy you are going to
follow, where is the work going to be done, who is going to do
it. The problem historically the agency has had in doing this,
and why it's never been accomplished, is that if you get all
the components represented, they wind up fighting for turf and
jobs and whatever, and it's sort of a stalemate that is
produced.
The only way out of that kind of situation is with very
strong leadership. You need somebody who hears everybody, talks
to all the stakeholders but then says, ``This is the way it's
going to go,'' and you put in place a plan. It's not immutable.
It would be subject to change. Things change. Technology
changes. The workload changes, but you have got to have
something that people can relate to so they know what they are
going to be doing in the future and where. The agency is
totally lacking in that understanding at present.
Chairman Shaw. Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman. Thank you, gentlemen.
As you read over, Mr. Ross, your report and, Mr. Schieber,
I did not get back in time to hear all of your comments, and
listening to you, Mr. Ross, as you went through the current
problems and also some recommendations, as someone who has been
in a small business for 35-plus years, you quickly can see
where the problem lies here and it's in people. When you name
each one of these, overcrowded waiting rooms, long waits,
someone is not there to service these people, or the ones who
are there are not servicing these people. The workloads, and
it's going to get worse as you say, the telephone services,
managerial services, all of these pertain to people.
I am reminded that when we created this independent agency
that there was a request that--I say request. It was part of
the legislation that the agency is to submit a work force
analysis. The agency. I do not believe we have received that
analysis from the agency itself.
There is one area that I would like for you to maybe
further explain, and, too, it goes back to the people within
the agency, and that is that you refer to the culture in the
agency. Would you like to further explain what you are meaning
by culture?
Mr. Ross. Yes, I would. By culture I mean the sort of
habits, patterns of thought, processes that get built into any
institution. There are some good things in the SSA culture,
particularly in the field. They do care about the
beneficiaries, the claimants, the people that come in to get a
card. But for the agency as a whole, and I would say it's
particularly true in Baltimore at the higher levels where there
is less contact with the people that are being served, there is
a tendency to brush aside problems, to ignore them, to say,
``Oh, we have heard that before, we know what's going on,'' and
there is very little premium put on really bringing to the top
management, to somebody who could make a difference, the
Commissioner for example, a forthright statement of the issues
and some options for dealing with them.
For too long there has been a tendency to sort of keep the
problems away, keep them kicked under the rug, and not really
pursue them. In part, this is because there have been too many
Commissioners who have come and gone, Now clearly when the
independent agency legislation was passed in 1994, the Congress
felt that one of the things that we would get out of it would
be the agency coming up and honestly describing its problems so
that the Congress could address them, give it some help and do
things, get on with what the people being served need.
Senator Moynihan's floor statement--he was the principal
sponsor on the Senate side--said this very explicitly, ``We
want to hear about it, and we want to deal with it. We do not
want to wake up some morning and find out that there are all
these unaddressed problems. We care about this agency.'' And
that legislation went through on a fully bipartisan basis in
both houses. Well, here we are 6 years later and that is not
being done, and we cite in our report numerous examples of
where the Congress still had to find the problem, ask the
agency about it, and then get some sort of tepid acknowledgment
of it.
Mr. Collins. Well, the light is caution there. You are
drawing a distinct difference between the Baltimore office and
the field offices, the waiting rooms, the long lines, the
telephone ringing in the field offices, and that's where we
have a shortage of personnel, but we have an abundance in
personnel in the Baltimore office.
Mr. Ross. I am not so sure about that. I would hesitate to
say. I think people care and are dedicated in Baltimore. The
major thrust of what I was saying, though, when you have to man
those front windows and see the people you are serving, it
gives you a different perspective.
Mr. Collins. Well, I have very few complaints from my
office in the Georgia and the field offices. I mean they are
trying to do their best there, but we have had testimony here
over the last three or 4 years since I have been on this
Subcommittee referencing the Federal Employees Union and how
the union itself has actually prohibited or prevented or
delayed or deterred action within the office. Well, that has to
be in the headquarters area of Social Security, not in that
field office.
Did you sense any problems with the union itself as it
relates to this culture problem that you are talking about?
Mr. Ross. I think the field force is heavily unionized too.
I do not think that's just a phenomenon of headquarters. I
think the union has very definite concerns. One would hope that
they would share the concern for the agency's need to serve the
public and they would balance that concern with their demands
related to various things.
Mr. Schieber may want the add to this. We did not get
deeply into the role of the unions. Our focus was less on who
shot Jack, because this is clearly a development over many
Presidents and many Commissioners. But the question for the
future is where do you need to go and how do you get people
tied to a plan for addressing the agency's problems. So I
cannot really fully answer your question.
Mr. Schieber. I think that the union, the very presence of
unions in the field offices and in the whole operation has made
the administration of the program more difficult. But I think
some of what has evolved here may actually have created the
environment that led to the unions and the unions' positions.
If you have people in work environments where they see their
workload going up consistently and resources available to
handle that workload declining, and these people do not have
the sense that management is really paying attention to what's
going on and cares about the situation, after a while what
happens is the workers decide that they are going to get
together and they are going to put together a sufficient force
that they can command management's attention.
The big problem that usually occurs when things get to that
situation in a workplace is that all of a sudden you have both
parties worrying about the letter of the real or implied work
contract. Workers refuse to take a call at 7:59 in the morning
when the work day does not start until 8. Management worries
about what happens at 4:28 in the afternoon when the work day
lasts until 4:30. Everyone ends up worrying about what people
are doing one minute to the next minute and what the precise
work agreement is and they forget the substance of the primary
task.
I think that the unions are a complicating factor, but in
some regards you can understand why they are there and have
complicated matters. Somehow we need to get this agency back
together with every party pulling on their oar all trying to go
in the same direction. That's part of the challenge here, I
believe.
Mr. Collins. Well, I believe you are exactly right. That is
normally what causes problems within a work force, is when
management itself and the higher-ups do not listen to those who
are actually doing the work. There becomes this resistance that
builds up and it gets worse and worse and worse.
Mr. Schieber. Absolutely.
Mr. Collins. Do you think that those who are in the head
positions at the Social Security Administration can handle this
situation and make the constructions needed? Maybe we should
not say can. Do you think they will?
Mr. Schieber. I think that we have gotten their attention
with our report and some of the prior reports. There are many
issues that need to be addressed. For example, we are now
seeing the implementation of the new union in the
administrative law judge area where, if you really think about
it, at least from where I come from, is mind boggling. So
here's a lot of work to do.
I do believe that we have gotten some people's attention.
Not everybody is happy with us for what we have said, but at
least we have begun to lay out a road map.
Mr. Collins. Well, the frustration among the administrative
law judges is the reason they made the decision to organize,
and that frustration runs throughout the labor force at Social
Security.
Thank you, gentlemen. Thank you, Mr. Chairman, for your
leniency.
Chairman Shaw. Just one final question. This report has
been presented to the Commissioner, I suppose, in person. What
type of response have you all received?
Mr. Ross. I think the Commissioner is trying to take steps,
and you will hear about some of them when he testifies in the
next couple of weeks. I know you are planning to schedule him.
I think it is important to keep the right perspective on this.
There are no quick fixes. It took a long time to get here. It
is going to take a long time of continual work to reverse
course.
To me, the absolutely most important thing, though, is to
get started now. It is like the moment when the tide has been
going out and it starts to come in. We need a clear signal from
the Congress and the administration that they are going to turn
the tide on this situation. I think it is wrong to just sit
still and wait until you start to hear about problems and
complaints back in your districts which could produce a sort of
IRS situation which then requires a drastic remedial process. I
think this is a case where the patient should be taken into the
intensive care ward right now and given the things that are
needed and put back going in the right direction, healthy and
out of danger.
I think the important thing now is taking the first steps
and changing the direction, and I think that you will hear from
the Commissioner that he is going to try to do that.
Chairman Shaw. Well, thank you both for doing a very fine
job and being with us here now this afternoon. Thank you very
much.
[The following questions were submitted by Chairman Shaw to
Dr. Schieber and Mr. Ross, and the respective answers, follow:]
QUESTIONS FOR THE RECORD
1. What in your view is the most important thing the Social
Security Administration must do to ensure they are ready to
effectively deliver service in the 21st Century?
SSA urgently needs to address directly how it expects to
meet the serious service delivery challenges that it faces both
in the short term and the long term. It should develop a
service delivery plan that presents a straightforward
assessment of the agency's human resource and technological
needs. In addition, SSA should engage with the Administration
and the Congress to work toward getting the resources that it
needs to provide high quality service to the public.
2. The Social Security Administration has a strong
reputation among the American people, which some might contend
is an extension of the public's support for what Social
Security does rather than how efficiently they do their work.
Anyone waiting literally years for their appeal for disability
benefits to be resolved knows what I mean. How does Social
Security stack up against companies that provide similar
services, such as a private disability insurer? Do their
customers ever experience the long waits that some Social
Security disability applicants do? If not, what are those
companies doing to provide better service? At what cost? Is
Social Security studying any of them in hopes of improving the
service they provide?
In 1995, Dalbar, Inc., a Boston-based financial services
company, completed a comparison of SSA's 800 number service to
the service provided by private sector firms. At that time, it
rated SSA's service as number one in the country. But one-time
measurements are not good enough. Experts in the private sector
have told the Board that SSA's standard for telephone service
is now far below the standard used in the private sector.
Customer service expectations are rising, and the public will
inevitably find the agency's service wanting if it lags far
behind, whether this be in telephone service or otherwise.
The Board believes that SSA needs to follow the lead of the
best private and public entities and make major improvements in
the way it measures and uses customer service information. At
this time, the agency has only limited information on client
needs and expectations and on client satisfaction with its
service. This is especially the case with respect to particular
client segments. For example, SSA does not measure discrete
client segments such as SSI disabled children or SSI disabled
adults. Nor does it measure client satisfaction with particular
types of agency actions, such as the hearing process. As the
private sector has learned, this type of information is vitally
important if the agency is to understand and address its
service delivery problems.
In addition, in the past the way the agency has set its
quality goals and the way it has measured performance have been
largely developed internally. SSA needs to expand its efforts
to learn how these important functions are being carried out by
the most successful organizations in the private and public
sectors. The agency will be taking a step in the right
direction this summer when it joins with the Board in
sponsoring a joint effort to bring to the agency outside,
private sector expertise and advice on how to improve its
client measurement procedures.
Although the agency is conducting several major disability-
related research endeavors, such as the Disability Evaluation
Study and studies of alternative ways of measuring disability,
we are unaware of any special agency studies relating to how
private disability insurers are providing service.
3. You indicate that Social Security's work is complex and
becoming more so, especially in disability, program integrity,
return to work, and health-related areas. Can these
complexities be addressed through changes in regulations or in
law? Is SSA conducting a review of their regulations and the
law with an eye towards reducing complexities?
Much of the difficulty of administering SSA's programs is
the result of their inherently complex nature. SSI is a means
tested program, and requires a continuing review of income,
resources, living arrangements, and other changing factors. The
statutory definition of disability appears relatively simple on
its face, but to implement it requires careful development of
medical history and use of personal judgment. Disability
decision-makers need extensive and ongoing training to carry
out their job.
SSA recently began taking a closer look at the SSI program
in an effort to identify areas where simplification might be
possible. We believe that some improvements can be made by
changing agency regulations. Even relatively small changes
could make a significant difference to workers in the field. We
have recommended that as a first step the agency should consult
with employees in the field to identify rules and procedures
that are requiring disproportionately large amounts of staff
time to administer but have little impact on benefit
determinations and do not require legislative change.
Over the longer term, the agency should examine areas of
greater complexity that involve more substantive change, such
as the rules that apply with respect to living arrangements and
in-kind support and maintenance. There are 186 pages of
instructions that field office employees are required to follow
on this subject alone. Although changes in policy areas like
this may be controversial because of their possible impact on
individuals and program costs, we believe the agency should
take the leadership in identifying the issues that are involved
and proposing changes in regulations or law where it believes
they are warranted.
With respect to disability, the agency proposed a major
redesign of the determination process in 1994. It has
subsequently stepped back from many of the changes that it
proposed at that time, although some are being further tested
in 10 prototype States with a view to nationwide implementation
within the next couple of years. Based on our studies, we doubt
that the changes that are being proposed will result in
simplification of the process, although for some claimants the
elimination of the reconsideration step of appeal and changes
that are being made in the hearing process may speed up
decisions. One area where the process could be simplified and
enhanced from the perspective of employees is in systems
improvements. As we pointed out in our September 1999 report on
service delivery, we are concerned about the extraordinarily
slow pace of developing a systems strategy that will serve all
parts of the disability determination process. Some of the
agency's most serious service delivery problems now occur in
the disability programs. We have urged the agency to give high
priority to developing a system that would support all parts of
the disability process. We have noted that implementation of a
well designed system holds promise for speeding up the flow of
cases through the claims and appeals process, improving the
quality of the information that is available to decision
makers, and providing a more uniform basis for decision making.
In addition, innovations such as electronic retrieval of
medical information could ease the burden on both claimants and
disability workers and these should be incorporated into the
process to the extent possible.
4. The Advisory Board recommends that Social Security's
efforts to improve computer hardware and software should be
strengthened and accelerated. What specific hardware and
software problems did you observe? How does Social Security's
systems improvement performance compare with technology
enhancements being implemented in the private sector?
Systems are primary enablers of SSA's efforts to improve
its processes. However, many of SSA's systems enhancements and
improvements have not been delivered on schedule and sometimes
they do not perform according to the agency's expectations.
Moreover, SSA has not been able to demonstrate that promised
dollar savings have been realized, even when the process has
resulted in better service or work products.
One of the primary reasons for the implementation delays at
SSA is the procurement process. The private sector does not
have to comply with federal procurement guidelines and can
introduce new technology more quickly and efficiently. In
addition, the private sector has greater flexibility than
government agencies in using innovative approaches to attract
and retain qualified technical expertise. Nonetheless, we
believe SSA should make better use of the flexibility that now
exists in the law to speed up its delivery of systems
innovations to workers in the field.
In our visits to field offices around the country, we heard
many concerns about systems technology from SSA employees. We
heard that there is a shortage of computers available to field
offices. Customers are served more slowly as a result. We also
heard that much of the software used by field offices is not as
user friendly as it should be, especially for many new
employees who think they need more training in its use than
they have been getting. In addition, we heard complaints that
many of the systems at use in the field are older systems that
break down regularly, causing delays in workload processing.
SSA has been lagging well behind the private sector in its
introduction and use of technology. This is an area where
considerably greater investment is needed.
5. You testified that SSA must become much more adept at
integrating new technologies into its processes. How can SSA
accomplish this most efficiently and effectively? Does SSA have
the needed expertise in-house? Are they working with outside
experts? Should SSA consider outsourcing some of these
functions?
We do not believe that SSA has all of the technical
expertise that it needs in house at the present time. The
private sector has more flexible pay and benefit structures
that enable it to be more innovative than government agencies
in attracting and retaining skilled employees. In addition, SSA
has perhaps not been as aggressive as it could be in using the
hiring authorities that it currently has.
Many who work in the field believe that SSA should have far
greater capacity than it has now to keep up with the agency's
systems needs. They also believe there is a need for additional
staff in the field who are qualified to do systems work. One of
the greatest challenges the agency will face is ensuring that
it will have adequate staff with the technical expertise that
will be required to met its future needs in the area of
information technology.
SSA is facing a situation where the salaries it is able to
offer are so much lower than those being offered in the private
sector that it is losing its ability to compete. Other
government agencies share this problem, but SSA's needs are
greater than those in many other agencies because of the
complexity and vastness of its operations.
Although the salary issue is important today, there are
even greater grounds for concern when the impending retirement
wave begins to hit the agency. SSA needs to begin to hire
replacements right away if experienced personnel are to be in
place when they are needed.
SSA needs to consider whether it should have greater pay
flexibility so that it can be more competitive with the private
sector in hiring systems specialists. Even with greater
flexibility it is likely that the agency's salary scales will
remain below those offered in the private sector. Given that
fact, the Board has urged the agency to examine whether there
are areas in which the private sector may be able to perform
tasks that are becoming increasingly difficult for the agency
to do. Additional contracting for some of these tasks may be
necessary.
6. In your testimony you indicated that the response of
Social Security and State disability employees to the
recommendations in your report was overwhelmingly supportive.
Have you heard about any disagreement with your findings or
recommendations?
We have been pleased with the positive response that the
Board has received to its report from all parts of the agency.
Groups that represent managers and other employees in the field
have been particularly supportive of our findings and
recommendations. In addition, the Commissioner has announced a
number of initiatives that respond to our recommendations.
Although there may be some within the agency who take issue
with one or more of our findings or recommendations, no one has
presented reservations to us. We would be pleased to have a
dialogue with anyone who would present other views.
7. One criterion for judging service delivery is the
accuracy of payments and the ability to recover overpayments.
You say that the amount of outstanding debt in the form of
overpayments due to SSA has increased from $4.1 billion in 1994
to $6.5 billion in 1999, a 57 percent increase. Why has this
happened and is SSA doing anything about it?
The Board believes that one of the principal reasons for
the increase in outstanding debt at SSA is insufficient
staffing in the field. Downsizing in the field, combined with
the rapidly growing, more complex workloads that we have
documented, have meant that employees no longer have as much
time as they need to work on collections of overpayments. In
addition, staffing shortages have also resulted in fewer
quality reviews. In an environment where employees do not have
the time to work as carefully as they should--and there is
insufficient attention to training and to quality measures--
more inaccurate payments will occur. The Board has been told
that the agency is making more mistakes because there are now
too few managers and supervisors in the field to ensure an
adequate level of quality control.
In addition, there are large delays in processing
postentitlement actions resulting from the agency's focus on
the 800 number. SSA has been diverting program service center
staff from their own critical work to answer the telephone.
This has caused more overpayments to be made because
beneficiary records are not being kept current. For example, if
a beneficiary reports a change in living arrangements and the
SSA program service center is delayed in processing that
change, inaccurate SSI payments will result until the change is
made.
SSA has been taking some important steps to improve program
integrity. It is doing more cross checking of data with other
agencies. It is planning to use other debt collection
authorities, including Federal salary offset, charging
interest, expanding the Treasury offset program, and credit
bureau reporting. It has also supported an increase in the size
of its Inspector General staff. We believe the most important
need of the agency, however, is sufficient staff in the field
to do the careful work that is needed to prevent overpayments
from occurring in the first place.
8. Your testimony indicates that Social Security should
follow the examples of the best private and public entities as
it improves service delivery practices and strategies. Can you
provide some specific examples to illustrate what you mean by
this? Does SSA have a process in place to regularly compare
itself with other public and private high-performing agencies?
SSA has begun applying the Baldrige Criteria for
Performance Excellence to its operations. The Baldrige Criteria
include making regular comparisons with other organizations as
a way of measuring performance. It is our view that SSA should
be doing much more than it has been doing in the way of
benchmarking its performance against the best performers in the
public and private sectors and it should be doing this on a
systematic basis. SSA's performance goals, such as trying to
answer 95 percent of its 800 number calls within 5 minutes,
need to be regularly reviewed and updated. SSA will have to
keep up with private sector standards if it is to satisfy the
public's demands for high quality service.
9. You point to several major service delivery problems
that need immediate attention, including problems with
telephone service, waiting times in field offices, and large
backlogs of actions after people start receiving benefits (such
as adjusting benefits for changes in earnings or living
arrangements). What in your view are the most pressing problems
and their effects on customers? Did you provide any specific
recommendations to SSA as to how to address these problems?
In our report we urge SSA to identify in its service
delivery plan those problems that need to be addressed
immediately. We stated that based on our study, we believe that
improving telephone service is foremost among them and we make
specific recommendations for how this should be done. We urge
the agency to improve its measures of the public's needs and
expectations for telephone service so that it will have a more
valid basis for setting its goals for service delivery and for
determining how various components of the agency will be used
in delivering service. Among other changes, we recommend that
the agency develop more balanced measures of the telephone
service that it is providing--for example, measures that
emphasize the percent of calls that are served as well as the
percent that achieve access. We urge greater attention to
improving the telephone service that is being provided by local
field offices. We also urge the agency to improve its telephone
service through technological improvements and to strengthen
its training programs for those who answer the telephone.
Another area needing prompt attention is the administration
of the disability programs. We have recommended five priority
measures to address the problems: development and
implementation of an ongoing joint training program for all
adjudicators; development of a single presentation of
disability policy that is binding on all decision makers,
including the updating of medical listings and vocational
standards; development and implementation of a quality
assurance system to unify the application of policy throughout
the disability determination system; improvement in the quality
of medical evidence that is used in determining disability
claims; and development and implementation of a computer system
that will provide adequate support to all elements of the
disability claims process. SSA has begun work on all of these
recommendations, but progress has been too slow.
We also recommend that the agency pay close attention to
service in its field offices, where there are serious problems
of crowded waiting rooms and long waiting times. We believe
that in the short term the agency should try to alleviate these
service dislocations by shifting either employees or workloads
wherever possible. But we believe that hiring and training
additional field office staff will also be necessary.
We will continue to monitor SSA's progress in addressing
these issues and will work with the agency to resolve them.
10. Social Security has an aging workforce and will soon
face a wave of retirements. Do you think SSA is taking
appropriate actions to prepare for the retirement of its own
employees?
SSA has been studying its retirement wave and is planning a
program of allowing employees to opt for early retirement with
the expectation that this will enable it to hire and train
younger and more technology-oriented employees to replace them,
thereby smoothing out the transition. Going beyond this, the
agency needs to take a realistic look at its future staffing
needs. It is our understanding that as the agency looks toward
the future, it is doing so under the constraining assumption
that staffing for the agency is fixed and will not increase.
In contrast, the Board believes that the agency needs to
develop a comprehensive workforce plan as provided for in the
1994 legislation that established SSA as an independent agency.
This plan should provide a bottom-up analysis of the workload
needs of the agency. The agency's budget should be based on
this plan. The agency also urgently needs a new and more
accurate work measurement system in order to properly assess
its workforce needs. SSA's work measurement system has a
pervasive influence on how the agency conducts its business.
The field employees who spoke to the Board about the current
system universally described it as inaccurate and unfair.
Our next panel will be the United States General Accounting
Office. We have Cynthia Fagnoni. I have a way of butchering
names, so I hope the witnesses will correct me. She is the
director of Education, Work force and Income Security Issues at
Health, Education, and Human Services Division, and she is
accompanied by Joel Willemssen who is a director in Civil
Agencies Information Systems and the Accounting Information
Management Division.
Welcome. We look forward to your testimony, and welcome
back to this Subcommittee.
STATEMENT OF CYNTHIA M. FAGNONI, DIRECTOR, EDUCATION,
WORKFORCE, AND INCOME SECURITY ISSUES, HEALTH, EDUCATION, AND
HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING OFFICE;
ACCOMPANIED BY JOEL C. WILLEMSSEN, DIRECTOR, CIVIL AGENCIES
INFORMATION SYSTEMS, ACCOUNTING AND INFORMATION MANAGEMENT
DIVISION, U.S GENERAL ACCOUNTING OFFICE
Ms. Fagnoni. Thank you, Mr. Chairman and Members of the
Subcommittee. I am pleased to be here today to discuss the
Social Security Administration's service to the public.
SSA faces a number of future challenges that can affect its
ability to provide high quality service to the public. Today, I
will discuss these challenges and the agency's strategy to meet
them. This information is based both on our published as well
as ongoing work.
As you have heard, the challenges SSA faces are
significant, and demand for services is expected to grow
significantly. Applications for the DI program alone are
projected to increase by 46 percent by the year 2010. Moreover,
the expectations and needs of SSA customers are changing. Some
are expecting faster, more convenient services or more
automated services. Others, such as the high proportion of
disabled beneficiaries with mental impairments, may require
more time and additional staff skills to serve them
successfully.
SSA's ability to cope with these changes will be further
challenged because of the number of SSA employees expected to
retire. Agency retirements are likely to peak at the same time
the agency experiences the large increases in workload. To meet
these challenges, SSA will need to marshal two of its key
resources, its technology and its work force.
We recommended as long ago as 1993 that SSA prepare a
service delivery plan to guide its investment in these two key
areas. This plan would provide a detailed road map of who in
the future will be providing what service, where and how, and
SSA is beginning to take some steps in this direction.
Recently, the agency began to work on what it calls a service
vision for the year 2010. As we understand it, though, this
vision will provide a high level summary of future service
options rather than the detailed road map needed to make
information technology and work force decisions.
In the meantime, SSA is proceeding with specific
information technology and work force initiatives to deal with
its future challenges. To prepare for the expected workload
increases, SSA plans to rely in large part on efficiencies
gained through using information technology. However, to date,
SSA has had mixed success and has not yet been able to show
specific benefits from some of its most significant
investments. For example, since 1996, SSA has installed more
than 75,000 new workstations and related equipment as part of
its intelligent workstation local area network. The initiative
is to provide the infrastructure to support redesigned,
speedier work processes and make information more available.
However, the benefits of this investment are unclear. SSA
has not yet assessed the initiative's contribution to improved
productivity and service delivery. Further, SSA spent most of
the last decade trying to develop a system to automate its
entire disability claims process. However, after 7 years and
more than $71 million, the agency discontinued the effort and
began testing a new, less ambitious strategy. The new strategy
currently focuses on automating the disability intake process
using an electronic folder to speed the movement of disability
cases from the field office to a disability determination
service.
To its credit, SSA is applying some of the lessons it
learned from the prior unsuccessful effort. It is taking a more
incremental development approach and is regularly monitoring
the status of the project at high level meetings. However, the
initiative is still in the early stages and its cost and
benefits have not yet been defined.
SSA is also pursuing other technologies that could help
enhance service delivery. It is experimenting with different
ways to provide service over the Internet using imaging and
document scanning to reduce time spent moving and tracking
paper documents and is trying video conferencing of disability
hearings to cut processing time.
Turning now to SSA's work force initiatives, the agency has
taken steps to prepare for retirements in its own work force
and for changing customer needs and expectations. Many of its
initiatives, however, are still in their early stages. Just
this week SSA completed a 5-year work force transition plan.
While a step in the right direction, this plan is long overdue.
We recommended such a plan in 1993, and as you know, the
agency's independence law requires one. The new plan spells out
a number of actions the agency will take to prepare the work
force for the future; however, much work remains. For example,
SSA has made progress in identifying the skills that its
leaders and staff need today, but it still needs to identify
the skills its future work force will need. SSA has also
completed a study that helps predict when agency staff are
likely to retire and is beginning to work on ways to make
hiring simpler and faster. Because the agency expects to lose
large portions of its senior executives and other managers, it
has also initiated a number of leadership development programs
to prepare its future leaders.
In conclusion, even if SSA is able to successfully carry
out all of its planned information technology and work force
initiatives, it is not clear that the agency is adequately
prepared for the future. It will be important for the agency to
clarify its gains from information technology and complete a
service delivery plan to guide its investments and better
position itself to cope with future challenges. Without a
detailed service delivery plan, SSA runs the risk that it will
not have the right people with the right skills and in the
right jobs and locations to face its future challenges.
This concludes my oral statement. We would be happy to
answer any questions you or the members may have.
[The prepared statement follows:]
Statement of Cynthia M. Fagnoni, Director, Education, Workforce, and
Income Security Issues, Health, Education, and Human Services Division,
U.S. General Accounting Office
Messrs. Chairmen and Members of the Subcommittees:
We are pleased to be here today to discuss the Social
Security Administration's (SSA) efforts to prepare to meet its
future service delivery challenges. As you know, SSA is one of
only a few federal government agencies with which most American
families will have regular contact. In fiscal year 1999, SSA
provided benefits of over $400 billion to more than 48 million
individuals through its retirement and disability programs, and
the agency maintained records on the earnings of the vast
majority of U.S. workers. Because of SSA's broad reach, the
quality of its customer service can affect the public's view of
government overall, and SSA has committed itself to providing
world-class service to the American public.
While SSA has generally been viewed as one of the better-
run federal agencies and has been recognized for its service to
the public, the agency faces a number of challenges that could
adversely affect its ability to provide world-class service in
the future. Today, we are here to discuss (1) the extent and
seriousness of these challenges, (2) SSA's strategy to meet
them, and, more specifically, (3) the status of the agency's
efforts to use information technology to cope with the
challenges, (4) the agency's efforts to prepare its workforce
for the future, and (5) the implications of SSA's plans and
efforts for its readiness to meet future challenges. The
information we are providing is based on both published and
ongoing work (see the list of related GAO products at the end
of this statement).
In summary, we found that SSA will be challenged to
maintain a high level of service to the public in the next
decade and beyond. Demand for services is expected to grow
significantly, with applications for one of SSA's already-
burdened disability programs projected to increase by 54
percent by 2010. Moreover, the expectations and needs of SSA's
customers are changing. Some are expecting faster, more
convenient service, while others, such as non-English speakers
and the large population of beneficiaries with mental
impairments, may require additional assistance from staff with
more diverse skills. At the same time, SSA's ability to cope
with these changes will be challenged, since the number of SSA
employees retiring is expected to peak at the same time that
large increases will occur in applications for benefits,
according to SSA's Actuary's estimates.
While we have recommended since 1993 that SSA prepare a
service delivery plan, SSA is only now beginning to develop a
broad vision for customer service for 2010. This broad vision,
as well as a more detailed plan spelling out who in the future
will be providing what service and where, is needed to help the
agency focus its efforts to meet its future challenges. In the
meantime, to cope with pending workload increases, the agency
is relying in large part on technology to achieve increased
efficiencies. However, SSA has had mixed success in
implementing information technology initiatives, and the
benefits from its technology investments have largely been
unclear. On the other hand, SSA's efforts to prepare for the
increasing number of retirements from its own workforce and
changing customer needs and expectations have shown more
promise, although many initiatives are still in their early
stages and much work remains. SSA will need to fully assess the
skills its workforce will need to serve its future customers,
particularly its growing population of disabled beneficiaries
and the high proportion of those with mental impairments. SSA
will also need to ensure continuity in leadership through
ongoing succession planning efforts. Finally, without a vision
for future service followed by a more detailed service delivery
plan, SSA cannot be sure that its investments in technology and
human capital--that is, its workforce--are consistent with and
fully support its future approach to service delivery. It will
be important for the agency to complete this plan to guide its
investments and better position itself to cope with its future
challenges.
Background
SSA administers three major federal programs. The Old Age
and Survivors Insurance (OASI) and Disability Insurance (DI)
programs, together commonly known as Social Security, provide
benefits to retired and disabled workers and their dependents
and survivors. In fiscal year 1999, SSA provided OASI
retirement benefits totaling more than $332 billion to 38
million individuals and DI benefits of more than $50 billion to
6.5 million individuals. The third program, Supplemental
Security Income (SSI), provides income for aged, blind, or
disabled individuals with limited income and resources. In
fiscal year 1999, 6.6 million individuals received more than
$28 billion in SSI benefits.\1\ SSA needs to keep up with
changes in the circumstances of those currently receiving
benefits--from address changes to changes in health or work
status. In addition, SSA maintains records of the yearly
earnings of over 140 million U.S. workers and provides them
with annual estimates of their future benefits.
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\1\ Some DI benefit recipients have incomes low enough to qualify
them for SSI as well and receive benefits from both programs.
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To meet its customer service responsibilities, SSA operates
a vast network of offices distributed throughout the country.
These offices include 1,343 field offices, which, among other
things, handle application in-take; 132 Offices of Hearings and
Appeals (OHA); and 36 teleservice centers responsible for SSA's
national 800 number operations.\2\ The agency's policy is to
provide customers with a choice in how they conduct business
with SSA. Options include visiting or calling a field office,
calling the 800 number, or contacting SSA through the mail. To
conduct its work, SSA employed 63,000 staff in 1999: 13,000 at
its headquarters offices and 50,000 in the field offices and at
other facilities. In addition, to make initial and ongoing
disability determinations, SSA contracts with 54 state
disability determination service (DDS) agencies.\3\ While
federally funded and guided by SSA in their decision-making,
these agencies hire their own staff and retain a degree of
independence in how they manage their offices and conduct
disability determinations.\4\
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\2\ Other SSA facilities include 10 regional offices, 7 processing
centers, and 1 data operations center.
\3\ These agencies exist in each state, the District of Columbia,
Guam, Puerto Rico, and the Virgin Islands.
\4\ The state DDS sites employ a total of more than 14,000 staff.
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SSA relies extensively on computer technology to support
its large volumes of programmatic and administrative work.
Since the 1980s, SSA has taken numerous steps to modernize its
computer systems in an effort to better serve its increasing
beneficiary population and improve its productivity. A key
aspect of the modernization effort has been the agency's
transition from a centralized mainframe-based computer
processing environment to a more highly distributed processing
environment. SSA has also taken other steps to improve its
service delivery capability, such as enhancing its electronic
payment services and implementing direct access customer
service on the Internet.
SSA Faces Significant Customer Service Challenges Over the Next 10
Years
Over at least the next 10 years, SSA will face a number of
changing conditions that could tax its effort to provide world-
class service. Demand for services will grow as the baby boom
population ages. This growth will place additional strain on
the disability claims process, which is already troubled. In
addition, the agency will have to adapt to changing customer
service expectations. For example, some customers may expect
faster, more convenient service through the use of technology.
As the agency is trying to cope with these changes, increasing
numbers of its own experienced staff will be retiring.
Customer Demand for Services Is Likely to Grow and Change
SSA expects customer demand for its services to grow and
change significantly over the next 10 years. The aging U.S.
population means many more people will be applying for
disability and retirement benefits with SSA, and determining
initial eligibility--and in the case of DI and SSI, continuing
eligibility--are costly and time-consuming activities. Figure 1
shows the estimated growth in the number of people applying for
benefits. By 2010, applications for OASI, DI, and SSI benefits
are predicted to have increased by 20, 54, and more than 10
percent, respectively, over 1999 levels. Moreover, applications
are expected to continue to grow even more dramatically for a
number of years after 2010 as the baby boom generation reaches
retirement age. More applications imply growth in other work
areas for SSA as well, such as updating and maintaining records
for those awarded benefits.
[GRAPHIC] [TIFF OMITTED] T5267.006
Note: SSA's Office of the Chief Actuary does not have
estimates of applications for OASI and DI beyond 2010. Also,
these estimates reflect some double-counting of those
individuals who apply for both DI and SSI--a group that is
expected to grow from about 480,000 in fiscal year 1999 to
640,000 in fiscal year 2010.
Source: Data provided by SSA's Office of the Chief Actuary.
Increased customer demand for services has serious
implications for SSA's workforce. For example, if SSA did not
change the number of staff currently handling initial
applications for benefits, worker productivity would need to
increase by 27 percent--whether through technology
enhancements, process improvements, or other changes--to manage
increases in applications predicted by SSA's Office of the
Chief Actuary.\5\ Table 1 shows the increased level of
productivity that would be needed to manage predicted levels of
applications in 2010.
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\5\ The estimated increase in productivity might be conservative,
since SSA predicts a slightly higher proportion of DI applications,
which are more complex and resource-intensive than retirement
applications.
Table 1:--Productivity Needed to Manage Estimated 2010 Workloads
----------------------------------------------------------------------------------------------------------------
Initial
Initial Work-years applications
Fiscal year applications required processed per
Processed work-year
----------------------------------------------------------------------------------------------------------------
1999 (actual).......................................... 6,177,723 16,714 370
2010 (predicted)....................................... 7,855,800 16,714 470
----------------------------------------------------------------------------------------------------------------
Note: SSA's accountability report used slightly different data in calculating fiscal year 1999 applications than
did SSA's Office of the Chief Actuary; the difference amounted to about 66,000 cases.
Source: Fiscal year 1999 data are from SSA's Accountability Report for Fiscal Year 1999. Fiscal year 2010 data
were calculated from Office of the Chief Actuary data.
Increases in disability applications are particularly
worrisome for SSA because of its complex process for
determining whether an applicant is disabled. The process spans
a number of offices and can take a long time. First, an
applicant contacts a field office to file a claim for benefits.
This information is forwarded to one of the state DDS offices
to determine whether the individual is disabled. To make this
determination, DDS staff must often collect a number of
documents, including medical records and other evidence. The
decision itself requires difficult judgments. If the applicant
is dissatisfied with the original decision, the process
provides for several opportunities for appeal: a
reconsideration of the decision at the DDS, a hearing before an
administrative law judge at an OHA, and a review by SSA's
Appeals Council. Finally, after exhausting all these remedies,
the applicant may file a claim in federal court.
Even as SSA expects increases in the number of disability
applications, the agency is experiencing difficulty managing
its current workload effectively. In 1999, over 500,000 people
initially denied disability benefits appealed the decision, and
it took an average of 316 days to reach a final decision for
these cases. Reducing the lengthy period that the disability
claims process takes at both the initial and hearings levels
has become one of SSA's priorities for improving customer
service. SSA has been attempting for a number of years to
streamline, or redesign, the disability claims process and has
counted on these efforts to help absorb some workload growth.
However, as we testified before you in October 1999, SSA's past
progress has been slow and disappointing.\6\ The agency is now
conducting a test of some proposed changes and has also begun a
new initiative to speed decisions at the hearings level. It
will be challenging, but necessary, for the agency to achieve
significant improvements in processing times in order to handle
the impending workload increases. Otherwise, the predicted
growth in applications could further erode customer service in
this area.
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\6\ Social Security Disability: SSA Has Had Mixed Success in
Efforts to Improve Caseload Management (GAO/T-HEHS-00-22, Oct. 21,
1999).
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In addition to the expected increase in customer demand for
SSA services, the demands that customers place on SSA are
changing, presenting SSA with a dual challenge. Changing
customer expectations are pushing the need for faster, more
convenient service from SSA, such as by phone or computer. For
example, the volume of calls handled by SSA's national 800
number's automated menu grew by over 1.6 million (13 percent)
between 1997 and 1999. More dramatically, during a recent 6-
month period, requests for individual estimates of future
Social Security benefits via the Internet increased by 45
percent. At the same time, some aspects of SSA's customer
service workload have become more time-consuming and labor-
intensive. For example, SSA is hiring more staff with bilingual
skills and spending more time serving an increasing number of
non-English or limited-English speaking customers. In addition,
since 1986, the proportion of disabled beneficiaries with
mental impairments has increased--by 18 percent for SSI and by
over 30 percent for DI--and these beneficiaries can be
challenging and even more time-consuming to serve successfully.
Moreover, SSA's efforts to help disabled beneficiaries join or
rejoin the workforce could require some additional time and new
skills.\7\
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\7\ The Ticket to Work and Work Incentives Improvement Act of 1999
directs SSA's Commissioner to provide disability beneficiaries with a
ticket, or voucher, they may use to obtain vocational rehabilitation
services, employment services, and other support services from an
employment network of their choice.
Retirements of SSA Staff Will Affect Agency's Ability to Meet
---------------------------------------------------------------------------
Challenges
SSA's ability to meet growing and changing customer demands
will be strained by increasing retirements expected within its
own workforce over the next decade. SSA's retirement wave is
predicted to begin in 2001 and peak in 2009. As shown in table
2, more than half of SSA's 63,000 employees will be eligible to
retire by 2009.\8\ The percentage is higher for employees that
compose SSA's supervisor or manager ranks. In particular, 83 to
86 percent of SSA's upper-level managers and executives (GS-14,
GS-15, and SES level) will be eligible to retire by 2010.
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\8\ SSA officials predict an average of 18 percent to retire each
year.
Table 2:--SSA Employees Eligible to Retire Between 1999 and 2009
----------------------------------------------------------------------------------------------------------------
Number of
Number of employees Percentage
Grade level employees eligible to eligible to
retire retire
----------------------------------------------------------------------------------------------------------------
GS-1 to 11...................................................... 47,983 23,848 50
GS-12........................................................... 8,617 5,518 64
GS-13........................................................... 4,395 3,245 74
GS-14........................................................... 1,568 1,298 83
GS-15........................................................... 479 414 86
SES............................................................. 117 98 84
Total........................................................... 63,159 34,421 54
----------------------------------------------------------------------------------------------------------------
Source: SSA, Office of Human Resources.
Retirement eligibility figures, while useful, do not show
the actual challenge an agency will face in replacing its
staff. To get a better idea of the challenges it will face, SSA
has developed estimates of how many staff it will lose each
year to retirement and other factors. Figure 2 shows SSA's
predicted workforce losses over the next 20 years. As the
figure shows, peak losses occur in fiscal years 2009 and 2010.
This peak generally coincides with the time period for which
SSA's Office of the Chief Actuary predicts large increases in
applications for benefits. In addition, the largest number of
retirements will most likely occur in job positions that
provide direct service to the public; for example, over 7,500
of the agency's approximately 16,500 claims representatives--
those who accept and process claims for benefits--are expected
to retire by 2010. Retirements can especially affect SSA's
small offices around the country, where the loss of just a few
experienced staff or managers can seriously undermine customer
service and effective operations.\9\
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\9\ Of SSA's approximately 1,300 field offices, about 200 have only
1 to 10 employees, and more than half of all the field offices have 20
or fewer staff, according to the Social Security Advisory Board.
[GRAPHIC] [TIFF OMITTED] T5267.007
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Source: SSA, Office of Human Resources.
Service Delivery Plan is Needed to Focus Efforts to Address
Future Challenges
To meet the challenges we just outlined, SSA will need to
marshal its key resources: its technology and its workforce. To
help ensure that these vital resources are put to the best use,
SSA needs to complete a service delivery plan, which we have
recommended as long ago as in 1993.\10\ Such a plan should
spell out for the future who will be providing what type of
services and where these services will be made available. It
should take into account changing customer needs and
expectations; the views of interest groups and oversight
bodies; and other future challenges, such as growing workloads.
We have also criticized SSA in the past for developing plans
out of sequence, that is, for developing an information
technology plan without having first developed a service
delivery plan. Ideally, the agency should base its decisions on
and investments in both information technology and its
workforce on a detailed service delivery plan. We view SSA's
workforce, or its human capital, as an asset whose value can be
enhanced through investment, such as training and staff
development. As the value of its people increases, so does the
performance capacity of the organization. However, to help
ensure their effectiveness, SSA's human capital strategies and
practices should be aligned with the agency's vision for the
future, including its plans for serving its customers and its
strategic goals and objectives.
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\10\ Social Security: Sustained Effort Needed to Improve Management
and Prepare for the Future (GAO/HRD-94-22, Oct. 27, 1993). Also, see
SSA's Management Challenges: Strong Leadership Needed to Turn Plans
Into Timely Meaningful Action (GAO/T-HEHS-98-113, Mar. 12, 1998) and
Social Security Administration: Effective Leadership Needed to Meet
Daunting Challenges (GAO/HEHS-96-196, Sept. 12, 1996).
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SSA has begun taking some long overdue steps to better plan
for its future service delivery; however, much work remains. In
1998, SSA established its Market Measurement Program to improve
and consolidate its approach to assessing customer
expectations. When this program is fully developed, SSA will
monitor and measure the needs, expectations, priorities, and
satisfaction of customer groups, major stakeholders, and its
workforce. However, collecting complete data on the needs,
expectations, and satisfaction of these various groups is a
multiyear project, and as of January 2000, SSA was about midway
through its initial wave of data collection, analysis, and
reporting. SSA has a separate initiative under way to assess
future customer needs and expectations.
In addition, the agency has recently begun to develop a
service vision for 2010. This vision, according to SSA
officials, will be based on future customer and stakeholder
needs and expectations and will provide a high-level summary of
the principles on which SSA plans to base its service provision
and the various delivery options available. The agency plans to
incorporate this vision into its strategic plan, which will be
updated this year. However, to be useful for making information
technology and human capital decisions, this vision should be
followed by a more detailed service delivery plan. According to
SSA officials, the agency does not have plans to go beyond this
vision statement to issue a more detailed plan at this time.
Without a well-developed plan, SSA cannot be assured that its
investments in human capital and technology, as well as any
related decisions regarding the use of its many field offices
and other facilities, will fully support its vision of service
delivery. Nor can the agency be comfortable that it has taken
the necessary steps to meet its future challenges.
SSA's ability to develop a detailed service delivery plan
is hampered by weaknesses in the agency's complex systems for
measuring workloads, productivity, and quality. These
weaknesses make it difficult both to monitor current customer
service performance and to use the data to develop and support
planned changes. For example, SSA has the capability to monitor
and measure only service provided at the national and regional
level, not by its various offices located around the
country.\11\ As a result, line managers and planners do not
know the efficiency or quality of service provided by
individual offices, or even the level of service provided by
phone as opposed to face-to-face, and therefore cannot plan for
improvements accordingly. SSA recognizes that its workload and
quality data have limitations. The agency is in the early
stages of piloting alternative workload measurement systems and
also just recently let a contract to review its quality
assurance systems.
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\11\ SSA uses sampling to assess the level and quality of service
provided. Due to budgetary restrictions, SSA does not collect
sufficient data to assess service below the national or regional level.
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In the absence of a service delivery plan, SSA has a number
of information technology and workforce initiatives under way
to try to prepare for its future challenges. The following
sections provide specific information on agency progress on
these initiatives.
SSA is Pursuing Various Information Technology Initiatives, but
Impact on Service Delivery Cannot yet be Determined
To cope with its growing workloads, SSA plans to rely
extensively on information technology to help it achieve
processing efficiencies and improved customer service. To this
end, the agency has devoted considerable time and effort to
identifying strategies to meet its goal of providing world-
class service. SSA has pursued a number of initiatives over the
past decade aimed at establishing the technological
infrastructure needed to enhance its claims-processing
capabilities and the overall administration of its programs. As
we testified last summer,\12\ however, SSA has experienced
mixed success in carrying out its information technology
initiatives and it has not yet been able to demonstrate
specific benefits resulting from some of its most significant
investments. Because many of SSA's information technology
initiatives are still in various stages of development,
evidence of how they will improve the agency's processing
capabilities and service to the public remains to be seen.
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\12\ Social Security Administration: Update on Year 2000 and Other
Key Information Technology Initiatives (GAO/T-AIMD-99-259, July 29,
1999).
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According to a 1999 independent audit of SSA's systems
environment, the agency must also contend with the challenge of
further strengthening controls over the information contained
in its computers.\13\ The vulnerabilities identified could lead
to unauthorized access to, and modification or disclosure of
sensitive SSA information. In turn, this could result in the
loss of data and resources, and compromised privacy of
information associated with SSA's key business processes.
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\13\ Social Security Accountability Report for Fiscal Year 1999.
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SSA's Computer Modernization Benefits Are Not Yet Known
One of SSA's most significant initiatives is its computer
modernization effort known as the Intelligent Workstation/Local
Area Network (IWS/LAN). SSA considers this initiative to be the
linchpin for both its customer service program and its entire
business approach. It is expected to provide the automation
infrastructure to support redesigned work processes and
improved availability and timeliness of information throughout
SSA and state DDSs.\14\ SSA began acquiring the IWS/LAN
equipment in December 1996. As of January 30, 2000, the agency
reported that it had installed more than 75,600 intelligent
workstations and about 1,900 local area networks in most of the
approximately 2,000 SSA and state DDS sites included in the
initiative.
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\14\ Under the IWS/LAN initiative, SSA planned to replace
approximately 40,000 ``dumb'' terminals and other computer equipment
used at SSA and state DDS sites with an infrastructure consisting of
networks of intelligent workstations connected to each other and to
SSA's mainframe computers.
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Despite its progress, however, the benefits of SSA's
investment in IWS/LAN remain uncertain because the agency has
not yet assessed the initiative's actual contribution to
improving productivity and service delivery. While SSA should
be able to claim some work improvements from various desktop
management tools that are integral to IWS/LAN, such as on-line
guides and directories, standardized notices, and electronic
mail, it has not completed the evaluations needed to fully
assess the efficiencies achieved through implementing IWS/LAN
and its impact on providing higher quality and more effective
service.
During our testimony before the Social Security
Subcommittee last July,\15\ we expressed concern that SSA
lacked target goals and a defined process for measuring IWS/LAN
performance--two ingredients essential for determining whether
this investment will yield expected improvements in service to
the public. We noted, in particular, that SSA had not conducted
postimplementation evaluations to determine actual project
costs, benefits, risks, and returns, as required by the
Clinger-Cohen Act of 1996 and Office of Management and Budget
guidelines. During a meeting held in December 1999 to address
our concerns, SSA's chief information officer acknowledged the
need to measure IWS/LAN's performance, stating that the agency
had begun formulating plans and studies to evaluate the
investment in and actual benefits resulting from the
initiative. On February 8, SSA told us that it is now
conducting studies to assess the benefits of IWS/LAN.
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\15\ GAO/T-AIMD-99-259, July 29, 1999.
SSA Has Initiated a New Technology Strategy to Support Its
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Disability Claims Process
As part of its efforts to reengineer the disability claims
process, SSA intended to achieve many of its benefits from
programmatic software that was to operate on IWS/LAN. To
accomplish this, SSA spent most of the last decade designing
and developing the Reengineered Disability System to serve as
part of the enabling platform for its modernized disability
claims process. Specifically, this system was to automate SSA's
disability claims process--from the initial claims-taking in
the field office to the gathering and evaluation of medical
evidence in the state DDSs, to payment execution in the field
office or processing center, and include the handling of
appeals in hearing offices. However, after approximately 7
years and more than $71 million reportedly spent on the
initiative, SSA discontinued the effort due to software
development and performance problems.
SSA is now pursuing a new technology strategy to address
the needs of its disability claims process. This new strategy
is expected to incorporate several key components, including:
(1) an electronic disability intake process, (2) enhanced state
DDS claims processing systems, and (3) a technology approach to
support new business processes within OHA. The components are
to be linked to one another through the use of an electronic
folder that is being designed to transmit data from one
processing location to another, and to serve as a data
repository, storing documents that are keyed in, scanned, or
faxed. SSA began testing the electronic disability intake
component and electronic folder in July 1999, with the overall
objective of automating the disability interview process in the
field office, storing data collected through the interview in
an electronic disability folder, then passing key data elements
to a DDS system.\16\ SSA believes that automating the field
offices' disability intake process will expedite the movement
of the disability case to the DDS, and will provide for earlier
adjudication and claimant notification.
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\16\ Of the 54 state DDSs, 46 currently use one of three standard
systems to process disability claims. SSA is currently working with 6
DDSs to procure standard systems and the remaining 2 DDSs use their own
systems.
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To date, SSA has tested the electronic folder concept on
two versions of the electronic disability software. Based on
the test results, it now plans to test the software and
electronic disability folder in a limited production
environment in May 2000 at its Delaware field offices and the
Delaware state DDS. However, according to SSA's preliminary
plans for the effort, the agency does not expect to be able to
identify anticipated benefits or return on investment from the
electronic disability intake component until fiscal year 2001,
after the project has undergone additional testing at other
sites.
One of the keys to SSA's success in developing the
electronic disability intake process is avoiding the kinds of
development and performance problems that caused the
Reengineered Disability System to be discontinued. As part of
its evaluation of that development effort, SSA identified a
number of lessons learned that it is now applying in its
development of the electronic disability intake component. For
example, SSA is taking an incremental approach to developing
the electronic disability software application, and is using
proofs-of-concept to evaluate design options before pursuing
full development. SSA also is managing the development by (1)
requiring a contract between software developers, customers,
and end users to ensure that all parties agree to the scope of
the project; (2) performing risk assessments and developing
risk mitigation and project management plans; and (3) regularly
monitoring the status of the project during weekly management
meetings chaired by the Deputy Commissioner for Systems.
Beyond the electronic disability intake process, SSA has
agreed to have several state DDSs participate in pilot projects
to determine the technology required to support a fully
electronic (that is, totally paperless) disability process, and
help assess costs and benefits of the electronic folder. For
example, the California DDS has been selected to explore
whether a public key infrastructure \17\ can be used to test
digital signatures and encryption for medical consultative
examination reports. One challenge associated with this is
that, by regulation, some medical evidence used to make
disability determinations must contain an original signature.
In New York, the DDS has been approved to test the management
and operational feasibility of an electronic disability folder
as it moves through all stages of SSA's processes. Further, a
pilot being undertaken by the Wisconsin DDS will use the
electronic folder concept to measure the impact of an
electronic claim on the DDS' internal operations. The results
of this pilot are expected to provide SSA with information
needed to interface a fully paperless DDS case processing
system with an electronic folder, and allow the agency to study
the ergonomic effects of paperless processing upon DDS case
adjudicators.
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\17\ A public key infrastructure is a system that uses a matching
pair of encryption and decryption keys, along with digital
certificates, to achieve secure Internet services.
Various Initiatives Are Being Implemented to Support OHA, but
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Long-Term Efforts Have Not Been Defined
SSA also considers information technology crucial for
improving the capabilities of OHA. Therefore, in August 1999,
the Commissioner of Social Security launched a hearings process
improvement initiative to create a more customer-focused and
efficient hearings process. The initiative, combined with
related activities such as the expanded use of
videoconferencing, aims to further reduce processing times and
yield higher quality decisions without additional resource
expenditures. OHA implemented the first phase of this
initiative in January.\18\
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\18\ Under phase I, 37 hearing offices were selected to apply the
new hearings processes in conjunction with 10 states that will
prototype modifications to the disability process.
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While the hearings process improvement plan relies mostly
on innovative management and reengineered processes to achieve
dramatic improvements in the process, it also emphasizes the
use of various technologies and automation to help support the
workload management needs of the hearing offices. For example,
SSA is exploring the use of videoconferencing as a means to
potentially reduce OHA's hearings processing times, travel time
and travel-related expenses, and to increase time available for
in-office case-related work. Currently, in order to provide
customers with face-to-face hearings and to correct imbalances
in workloads among various hearing offices, administrative law
judges can spend a large percentage of time (for example, about
2 weeks out of every month) traveling to remote sites. However,
the use of videoconferencing equipment to conduct hearings has
the potential to reduce travel and processing times, while
increasing productivity.
In February 1996, OHA began piloting the use of
videoconferencing equipment at two sites--West Des Moines,
Iowa, and Huntington, West Virginia. SSA estimates that, to
date, a total of about 3,000 hearings have been held via
videoconferencing at the two pilot sites. According to SSA, an
evaluation of the initial pilot results cited a reduction in
processing time of 38 days in one of the pilot offices. OHA has
been granted permission to expand the use of videoconferencing
to nine additional sites. Once the equipment has been installed
at these sites and the users become comfortable with the
technology, OHA plans to collect data to quantify the benefits
of expanding the use of videoconferencing at additional sites.
SSA is also evaluating whether speech recognition software
can be used by OHA's administrative law judges and other staff
involved in writing decisions to dictate their casework
directly into a computer. SSA initiated this effort in December
1999 and is currently testing the dictation performance of
speech recognition software on computers of various processing
speeds. This technology is still being evaluated; therefore,
the agency has not determined the costs and benefits associated
with the initiative, or whether it will actually be
implemented.
In collaboration with the Office of the Deputy Commissioner
for Systems, OHA has also identified four automation efforts to
support the goals of the hearing process improvement
initiative. These projects, as shown in table 3, primarily
involve the use of automated tools to aid in scheduling
hearings and to monitor and track case progress throughout the
hearing process.
Table 3:--OHA Automation Initiatives to Support HPI Goals
----------------------------------------------------------------------------------------------------------------
Anticipated effect on
Initiative Objective workload Status
----------------------------------------------------------------------------------------------------------------
Hearings Process Improvement (HPI) To make software Allow users to track Modifications completed
software modifications. modifications to the incoming HPI work, in January 2000;
Hearing Office work assigned to system currently being
Tracking System that processing groups, and used by the 37 hearing
will support HPI. the date a case is offices participating
certified and generate in phase I.
two new case tracking
reports.
Consolidated Hearing Office Tracking To replace the existing Enable OHA to provide System currently being
System. Hearing Office timely reporting designed and a
Tracking System with a nationwide and locally prototype scheduled to
new application and reduce the be implemented at
compatible with IWS/ duplicate data entry OHA's headquarters in
LAN and to consolidate currently required to Falls Church, Va., by
the over 140 separate track cases during the September 2000.
databases into a various levels of OHA
single database. appeals.
Hearing Office Scheduling System..... To provide automation Reduce the manual Pilot testing began at
support in the aspects of the hearing OHA headquarters in
scheduling of hearings scheduling process. Falls Church, Va.,
that will record and during January 2000
share current and will be deployed
information on at hearing offices in
resource availability Johnstown, Pa., in
within the hearing February 2000 and
office and Morgantown, W.V., in
electronically notify March 2000.
the administrative law
judge that a hearing
has been scheduled.
Document Generation System........... To provide users with a Provide the means for System implemented in
system that generates generating and November 1999.
decision notices and subsequently editing
routine correspondence. decisions and
supporting
correspondence, with
an automated interface
to the Hearing Office
Tracking System.
----------------------------------------------------------------------------------------------------------------
Source: SSA.
It is too early to know whether these four automation
projects will successfully support the goals of the hearings
process improvement initiative. To date, only two of the four
have been developed and integrated into the phase I process
modification now under way, and the ability of these systems to
adequately support the modified
hearing processes has not yet been determined. Further,
according to the acting director of OHA's Office of Management,
these efforts do not represent all of the information
technology that will be required to help OHA increase its
productivity and provide better service to its customers. SSA
is currently in the process of preparing a statement of work
for the development of an information technology strategy to
support OHA's business processes. Until this strategy is
defined, SSA will not be in a position to identify all of the
technologies that will be required to meet OHA's needs. SSA
expects to finalize OHA's information technology strategy by
late 2000.
SSA Is Exploring Other Technologies to Enhance Service Delivery
As noted, SSA's beneficiaries of the future are likely to
demand services that require new and different technological
options to meet their needs. As a result, SSA's success in
providing world-class service will depend on how effectively it
can apply such technologies to enhance its processing
capabilities. Moreover, recently enacted legislation and other
initiatives have reenforced the urgency for agencies such as
SSA to pursue new and innovative technologies to carry out
their work. For example, the Government Paperwork Elimination
Act states that federal agencies should consider electronic
alternatives to paper submissions, and the President's December
1999 electronic government initiative directs the heads of
various federal agencies to make a broad range of benefits and
services available through private and secure electronic use of
the Internet. In addition, the National Partnership for
Reinventing Government is urging federal agencies to offer more
online transactions through its Access America initiatives.
To its credit, SSA has long recognized the potential value
in exploring alternative technologies to enhance its service
delivery. Since at least 1997, SSA has included an electronic
service delivery strategy in its planning documents to support
the agency's strategic direction in dealing with self-service
communication technology and access delivery alternatives.
Moreover, it has explored a number of technology options,
ranging from Internet/electronic commerce applications to
document imaging and scanning. SSA is currently in various
stages of designing, developing, and implementing these
technologies. In doing so, however, it faces the continual
challenge of ensuring that the technologies are implemented in
a manner that is cost-effective and that does not compromise
the security and privacy of beneficiaries' personal
information. In addition, a technological challenge that SSA
must address before some of its interactive Internet or
electronic commerce initiatives are implemented is upgrading
its network infrastructure, including IWS/LAN, to provide the
capabilities to support the new applications.
Internet service is a major project under SSA's electronic
service delivery initiative. SSA is pursuing the use of
Internet applications to increase the number of electronic
transactions available to the public and to help absorb
workload increases expected as aging baby boomers become
eligible for benefits. Over the past 3 years, SSA has explored
various options for deploying Internet applications on its web
site without violating privacy issues. As a result, it now uses
Internet applications to assist customers in conducting
business with the agency. For example, customers can download
or access the ten most frequently requested SSA forms, such as
an application for a Social Security card, and they can use on-
line applications to determine the location of a Social
Security office and to request statements of benefits.
SSA has now developed an Internet services tactical plan,
which includes a framework for identifying and approving future
electronic service delivery efforts. However, it has not
finalized a strategy that identifies and prioritizes the
applications that will be deployed. Further, because it has not
developed a service delivery plan, SSA does not yet know what
efforts will be required to meet its future service delivery
needs. Moreover, according to the framework, before SSA
launches its future efforts, it needs to determine (1) what
electronic services make sense to its customers, (2) how the
new line of service delivery will affect the agency's workload,
(3) whether the agency has the available resources (staff and
technology) to implement these actions, and (4) whether the
technology needed to authenticate the electronic customer is
available. Furthermore, sound, disciplined processes such as
business case analyses; cost/benefit analyses; and
requirements, technology, and risk assessments must drive these
decisions. Some of these processes are already being applied to
various projects under the direction of SSA's Software Process
Improvement Program, which is responsible for serving as a
focal point to the agency's Office of the Deputy Commissioner
for Systems. The objective of the Software Process Improvement
Program is to create an environment that encourages continuous
improvement in software development activities that will result
in the ability to develop high-quality software products and to
deliver those products to the customer as promised.\19\
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\19\ Social Security Administration: Software Development Process
Improvements Started But Work Remains (GAO/AIMD-98-39, Jan. 28, 1998).
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In addition to its electronic service delivery initiatives,
SSA intends to support its future workload demands with
projects that rely on technologies such as imaging and
scanning. One such initiative, which has been ongoing since
September 1993, is SSA's Paperless Processing Center project to
begin to turn SSA into a paperless agency and position its
resources and processes to meet emerging workloads. Based on
its initial analysis of the paperless processing concept, SSA
estimated that 95 percent of a clerk's workday and 10 percent
of a manager's workday are occupied with paper-related
activities, such as locating a folder and the associated case
material. Accordingly, the project's objective is to implement
document imaging and paperless technologies to improve SSA's
intensive paper folder processing in program service centers
and the Office of Central Operations. Paperless processing will
be used to eliminate SSA's reliance on paper records by
building and storing comprehensive electronic client records.
The new technology is expected to increase productivity and
quality, which in turn should reduce backlogs and improve
public service.
SSA has thus far spent about $35 million to implement and
maintain the necessary hardware and software to pilot paperless
processing at three program service center sites. According to
the project manager, about $69 million \20\ in total will be
required to complete the paperless processing effort at all six
program service centers and the Office of Central Operations by
2001. SSA projects savings attributable to the paperless
processing initiative of about $161 million, or about 5,600
work years, once fully implemented. However, the agency
considered this to be a conservative estimate, given that
additional savings may be realized from being able to redirect
program service center staff to other activities such as
assisting the telephone service staff in responding to 800-
number telephone calls.
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\20\ This figure does not include additional costs that may be
incurred to replace hardware acquired for the initial pilot sites.
SSA'S Efforts to Prepare its Workforce for Future Challenges
---------------------------------------------------------------------------
are in Early Stages, and Much Work Remains
SSA has a number of initiatives under way to help prepare
its workforce for the remaining two key challenges: the
impending retirement of many of its experienced staff and the
projected changes in customer needs and expectations, such as
the increased reliance on technology as a means of service
delivery. Many of these steps are consistent with principles of
human capital management laid out in our self-assessment
checklist \21\ and common to organizations recognized as
leaders in human capital management.\22\ (App. I outlines the
selected principles of human capital management that are most
relevant to SSA's future challenges.) Many of SSA's human
capital initiatives, while steps in the right direction, are in
the early stages. Moreover, without a more detailed future
service delivery plan linked to the agency's goals and
objectives, SSA runs the risk that it will not have the right
people, with the right skills, in the right jobs and locations
to face its future challenges.
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\21\ Human Capital: A Self-Assessment Checklist for Agency Leaders
(GAO/GGD-99-179, Sept. 1999).
\22\ Human Capital: Key Principles From Nine Private Sector
Organizations (GAO/GGD-00-28. Jan. 31, 2000).
SSA Is Making Progress in Workforce Planning Initiatives, but
---------------------------------------------------------------------------
Some Lack Future Focus
Principles of human capital management suggest that
workforce planning be explicitly linked to an agency's
strategic and program plans and that it meaningfully involve
the agency's human resource professionals. To address SSA's
impending staff retirements and to help meet its strategic
objective ``to create a workforce to serve SSA's diverse
customers in the 21st century,'' SSA is developing a 5-year
workforce transition plan. The draft plan strives to project
what SSA expects to happen in the future, what the effects will
be on SSA's workforce needs, and what actions SSA should take
to respond to those needs.\23\ The plan was developed with
direct involvement of key human resource professionals
throughout the agency. While a step in the right direction,
such a plan is long overdue. The Social Security Independence
and Program Improvements Act of 1994, which made SSA an
independent agency, required that the agency's appropriations
requests for staffing and personnel be based on a comprehensive
workforce plan. Even earlier, we reported that the absence of a
human resource plan contributed to low morale and problems in
such areas as management development and training, agencywide
succession planning, and employee/management communication.\24\
Then in our 1993 report, we recommended that SSA develop a
long-term human resources plan to prepare for future workforce
changes.\25\
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\23\ SSA's draft workforce transition plan includes over 20 action
items, with milestones for each to (1) improve the workforce projection
and planning process, (2) recruit new employees with the necessary
competencies, (3) fully develop and utilize employees, and (4) provide
a work environment and culture that support employees.
\24\ Social Security Administration: Stable Leadership and Better
Management Needed to Improve Effectiveness (GAO/HRD-87-39, Mar. 18,
1987) and Social Security: Status and Evaluation of Agency Management
Improvement Initiatives (GAO/HRD-89-42, July 24, 1989).
\25\ GAO/HRD-94-22, Oct. 27, 1993.
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To link workforce planning to an agency's strategic vision,
human capital principles call for identifying current and
future human capital needs. Recognizing that it will shortly be
facing the prospect of increasing retirements, SSA conducted a
study that predicts staff retirement and attrition by year,
from 1999 to 2020, as well as by major job position and agency
component. In making these predictions, SSA went beyond
identifying the dates that its employees first become eligible
to retire by also factoring in 10 years of historical
retirement data to make more realistic projections. SSA also
conducted focus groups with recent retirees and current
employees eligible for retirement to identify factors that
might affect their decisions to retire once eligible. SSA
expects the focus group and retirement study will help its
managers in their workforce planning, and the agency intends to
update the retirement data on an ongoing basis. However,
aspects of the retirement study might not provide sufficient
detail to be useful for some line managers. For example, the
study lumps all supervisors from the GS-7 to SES levels into
one supervisory category, whereas planners and managers might
have a better idea of how to prepare for the imminent
retirement of upper-level managers if the supervisory data were
broken out into further detail. SSA officials told us they plan
to break out these data in their next update. Even with this
additional information, the agency will still need to develop a
concrete plan to clarify what staff, where, and with what
skills will be needed to replace the retirees.
To ensure that staff are well-prepared to do their jobs,
agencies need to compare the competencies--that is, the
knowledge, skills, and abilities--employees need, both now and
in the future, with the knowledge, skills, and abilities they
possess. As part of its draft workforce transition plan, SSA
has already identified core competencies that its leaders and
employees need to possess today, and the agency is taking steps
to evaluate and update the competency levels of its existing
staff.\26\ The agency has developed automated self-assessment
tools that supervisors and nonsupervisors can use to evaluate
whether they need improvement in any of the core competencies
identified by SSA. When the individual completes the
assessment, the tool identifies areas where the individual
needs additional training and provides a list of courses
related to that competency area. The self-assessment tool is
currently being piloted at a number of SSA offices. Through
these steps, SSA is making some progress in identifying and
developing core competencies, but its efforts to date reflect
today's workforce needs rather than tomorrow's. SSA recognizes
the need to identify competencies that reflect its future
workforce needs so that it can more effectively recruit and
train staff to handle more complex customer needs and new
technology tools. Once these future competencies are
identified, SSA will need to develop new training programs,
including ones to help current and new staff adapt to new
technologies.
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\26\ Core competencies identified by SSA are attributes needed by
all its employees, including qualities such as organizational
awareness, basic program knowledge, ability to apply computer skills on
the job, and customer service orientation.
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To ensure continuity of leadership, human capital
principles call for identifying leadership traits that support
an agency's mission and goals, and building and sustaining a
pool of leaders through recruitment, hiring, development,
retention, and succession planning. We have long stressed the
importance of succession planning and formal programs to
develop and train managers at all levels at SSA. As early as
1993, we recommended that SSA make succession planning a
permanent aspect of its human resource planning and evaluate
the adequacy of its investments in management training and
development.\27\ SSA has recently created three 2-year national
development programs to help prepare selected staff to assume
mid-and top-level leadership positions at the agency.\28\ Each
of these programs accommodates between 35 and 40 staff. Because
of the large number of expected management retirements, SSA
hopes to regularly repeat these national programs over the next
10 years. It will be important for the agency to do so. In
addition to these formal development programs, SSA is also
taking steps to provide leadership training for all its current
supervisors, managers, and executives.\29\ Also, SSA regional
and headquarters offices are providing additional leadership
development opportunities to their staff.
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\27\ See GAO/HRD-94-22, Oct. 27, 1993; GAO/HEHS-96-196, Sept. 12,
1996; GAO/T-HEHS-98-113, Mar. 12, 1998; and Social Security
Administration: Significant Challenges Await New Commissioner (GAO/
HEHS-97-53, Feb. 20, 1997).
\28\ Specifically, SSA established the Career Development Program
in July 1998 to prepare staff for senior executive positions and the
Advanced Leadership Program in April 1999 to prepare staff for upper-
level management positions. SSA expects to begin the Leadership
Development Program, to prepare staff for mid-level management
positions, in March 2000.
\29\ As a basis for its training, SSA is using 30 leadership
competencies, or characteristic and measurable patterns of behavior,
skills, and knowledge, that engender superior performance in a specific
job.
SSA Recognizes Need to Improve Hiring and Investments in Human
---------------------------------------------------------------------------
Capital
Human capital principles call for recruitment and hiring
strategies that target short-and long-term needs and gaps
identified through workforce planning. SSA's draft workforce
transition plan emphasizes that, in the future, the agency will
need to recruit and hire more effectively in order to compete
with other employers in an increasingly tight labor market. To
improve the recruitment process, SSA is seeking ways to
simplify its hiring process and use special recruiting tools
and approaches for hard-to-fill jobs. For example, SSA is
seeking to establish procedures for providing a salary advance
for job candidates who possess skills that are in high demand
and is developing criteria for incentive awards for current
employees who refer candidates who are hired for such jobs.
However, according to SSA officials, the agency's freedom to
take some actions may be limited by governmentwide hiring and
recruitment policies and procedures, such as the Office of
Personnel Management test requirements for certain SSA
positions and governmentwide salary limitations on candidates
who have needed critical skills. SSA recognizes it will need to
work with the Office of Personnel Management to simplify these
aspects of its hiring process. Regardless, competition in the
labor market for staff with certain critical skills, such as
those with the ability to help design and implement new
technology and information systems, is already stiff, and SSA
will have difficulty recruiting the talent that is critical to
meeting future challenges.
Maintaining positive working conditions is another key to
human capital management. The draft workforce transition plan
contains a number of action items to provide a work environment
that supports employees. These items include opening or
expanding child care facilities and fitness centers and making
improvements to SSA facilities from a environmental health or
security standpoint where necessary. For certain action items,
such as expanding telecommuting, it will be difficult for SSA
to be receptive to employee preferences for telecommuting
because employees' responsibilities for customer service often
require an on-site presence.
Another essential human capital principle involves
investing in training and development to build and sustain
critical staff competencies, such as customer service skills.
This would include appropriate investments in education,
training, and other developmental opportunities to help
employees build the competencies needed to achieve the agency's
strategic mission and goals. To meet the challenge of SSA's
significant training needs, particularly with respect to the
large number of anticipated new staff, SSA has been making a
major investment in Interactive Video Teletraining (IVT). SSA
currently provides IVT at 78 percent of its sites around the
country and is considering expanding IVT to all sites. In the
past, staff generally received classroom training, often away
from their home units--an approach SSA recognizes will be
costly to sustain given the large numbers of new staff it
expects to hire. In contrast, SSA's new IVT training modules
are transmitted live to staff in their home units, thus
avoiding travel and per diem costs. However, to be effective
for new hires, IVT sessions are to be supplemented with on-the-
job training by a mentor at the work site. Providing for
mentors will be challenging for SSA given the large number of
experienced staff expected to retire and the growing customer
service demands being placed on remaining staff. SSA officials
told us that having the ability to bring new staff on board
before the experienced staff retire would facilitate the
mentoring process. SSA plans to evaluate the relative
effectiveness of IVT, which is important, because IVT is new to
SSA.
Even though individual elements of SSA's workforce
transition plan are consistent with principles of human capital
management, to date the agency is undertaking these initiatives
in isolation from a comprehensive vision and plan for future
service delivery. It is vital that SSA's workforce efforts be
well integrated with any future service delivery plans. If they
are not, actions taken now could prove counterproductive. For
example, SSA is now considering the expansion of its IVT
equipment and facilities to all SSA offices. SSA officials told
us that while IVT equipment is not very expensive, renting or
otherwise securing appropriate facilities to support IVT
training can be. However, such investments may ultimately prove
unnecessary if SSA's service delivery plan calls for
adjustments in the number of field offices, other facilities,
or the types of services offered at these facilities.
Similarly, SSA's current policy to replace each staff person
who retires might result in the deployment of staff in
locations or positions inconsistent with the agency's future
vision.
State Disability Offices Face Similar Workforce Challenges
While SSA has taken many steps toward preparing its own
workforce for future retirements and other challenges, its
workforce planning efforts do not extend to the large number of
state workers who are responsible for making disability
determinations. Because state workers are not SSA employees,
SSA's draft workforce transition plan has not taken into
account DDS retirement and other workforce trends. However, the
state agencies will likely be undergoing many of the same
stresses being experienced by SSA, including the retirement of
large numbers of skilled staff and stiff competition in the
labor market for qualified staff. As noted earlier, these DDS
employees are responsible for making initial and ongoing
disability determinations, which requires considerable
expertise and knowledge of complex regulations and policies. It
will be important for the DDS offices to adequately prepare for
these workforce changes and for SSA to share its plans and
other useful approaches with DDS managers. According to SSA
officials, DDS staff have participated in SSA's training
programs, and SSA plans to invite them to use the self-
assessment tool for evaluating their core competencies.
Implications of SSA'S Current Plans and Efforts for its Future
Readiness
If SSA is to meet its future customer service obligations,
it is important for the agency to allocate funds for the human
capital and information technology initiatives that are vital
to helping it face its impending challenges. For example, SSA
will need to continue and possibly expand its leadership
development programs to fill the gaps left by retiring managers
and executives. Also, SSA will need to continue exploring and
investing in various technologies to manage its increasing
workload and to improve service delivery. As with any
initiative, continued funding should depend on progress or
demonstrated success under a program of vigilant oversight.
Even if SSA is able to carry out all of its planned
initiatives, however, it is not clear that the agency is
adequately prepared for the future. SSA is relying heavily on
its information technology to meet the demands of its growing
workload. However, until the agency has identified the benefits
from its various information technology investments, it will
not know whether it will need to take other steps, such as
adding staff or contracting out some of its services, in order
to cope with its future challenges.
Given the serious challenges facing the agency, you asked
us to address the possible implications of removing SSA's
administrative expenses from the caps that are used to limit
discretionary spending in the federal budget overall. If this
were done, SSA would no longer have to compete directly with
other federal agencies for funding of its administrative
expenses, which could potentially result in increased
administrative funding. However, most of SSA's administrative
budget is financed from the OASI and DI Trust Funds.\30\ An
increase in SSA's administrative budget, unless paid for
through a separate appropriation of general funds, would not
provide any new source of funding but would instead draw
additional resources from the Social Security Trust Funds. This
would reduce the Trust Fund surpluses and somewhat exacerbate
the Social Security program's long-term financing problems. In
addition to the effect on the Trust Funds, there are technical
implications of removing SSA's administrative expenses from the
discretionary spending caps. (We provide additional information
on this issue in app. II.)
---------------------------------------------------------------------------
\30\ The OASI and DI Trust Funds are funded by Social Security
taxes paid by workers and their employers. SSI administrative costs are
paid through general funds.
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Because of the uncertainty over whether SSA's current plans
are adequate, it will be important for SSA and the Congress to
closely monitor the agency's performance. Also, before future
financing needs can be determined, SSA will need to complete a
number of important planning activities. To help ensure that
SSA makes optimal use of its resources and places itself in the
best position to cope with its future service delivery
challenges, the agency will need to complete its 2010 service
vision and use it to develop an overarching service delivery
plan. This plan would then provide the framework to guide SSA's
future information technology and workforce decisions and
investments. In addition, the agency will need to
complete assessing the benefits (that is, work-
year savings, productivity increases, and improved service
delivery) expected from its information technology initiatives
and then closely monitor whether these benefits are being
realized;
monitor service delivery measures for degradation
in quality, satisfaction, and timeliness and to look for early
warnings of work backlogs; and;
more aggressively pursue all possible options to
better position itself for the future, such as developing cost-
saving electronic service delivery options or altering the
agency's network of facilities to more closely align it with
projected customer needs and demographics.
This concludes my formal statement. I will be happy to
answer any questions that you or other Members of the
Subcommittees may have.
GAO Contacts and Acknowledgments
For future contacts regarding this testimony, please call
Cynthia M. Fagnoni at (202) 512-7215 or Joel Willemssen (202)
512-6253. Kay Brown, Valerie Melvin, Christine Bonham, Michele
Grgich, Yvette Banks, Robert Tomcho, and Gregory Micco also
made key contributions to this testimony.
Appendix I
Selected Human Capital Principles Key to Meeting Future
Challenges Faced by SSA
In reviewing SSA's efforts to prepare its workforce for the
future, we applied the following human capital principles.\31\
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\31\ An effective performance culture to enable and motivate
performance is another key human capital principle; however, SSA's
efforts in this area were beyond the scope of our review.
---------------------------------------------------------------------------
Treat human capital management as fundamental to strategic
business management. Integrate human capital considerations
when identifying the mission, strategic goals, and core values
of the organization as well as when designing and implementing
operational policies and practices. Establish measures that
provide meaningful data on the full range of human capital
policies and practices and how these practices promote mission
accomplishment.
Implement an explicit workforce planning strategy. Link
workforce planning to the agency's strategic and program
planning efforts to identify its current and future human
capital needs, including the size of the workforce; its
deployment across the organization; and the knowledge, skills,
and abilities needed for the agency to pursue its strategic
mission and goals. Include information on attrition rates,
retirement rates, and projected eligibility by pay level and
ratios of managers to employees. Identify roles and core
competencies needed to support the agency's strategic mission
and goals, and develop an inventory of current and future
skills needs and gaps.
Integrate employee input into the design and implementation
of human capital policies and practices. Incorporate the first-
hand knowledge and insights of employees and employee groups to
develop responsive human capital policies and practices.
Empower employees by making them stakeholders in the
development of solutions and new methods of promoting and
achieving high performance of organizational missions and
goals.
Hire, develop, and sustain leaders according to leadership
characteristics identified as essential to achieving specific
missions and goals. Define the kind of leaders the agency wants
(that is, their roles, responsibilities, attributes, and
competencies) and the broad performance expectations it has for
them in light of the agency's shared vision. Ensure continuity
through succession planning; investments in development
programs; selection criteria linked to the agency's shared
vision, competencies, and broad expectations; and information
on attrition rates, retirement eligibility, and retirement
rates of executives.
Hire, develop, and retain employees according to
competencies. Develop a recruiting and hiring strategy that is
targeted to fill short-and long-term human capital needs and,
specifically, gaps identified through the agency's workforce
planning efforts. Make appropriate investments in education,
training, and other developmental opportunities to help
employees build the competencies needed to achieve the agency's
shared vision, and encourage continuous learning and
improvement.
Deploy the agency's workforce in a way that is appropriate
to mission accomplishment. Ensure that workforce deployment--
both geographically and organizationally--supports
organizational goals and strategies and is keyed to efficient,
effective, and economic operations.
Measure the effectiveness of human capital policies and
practices. Evaluate and make fact-based decisions on whether
human capital policies and practices support high performance
of mission and goals.
Implement an information technology plan. Ensure that
employees are making the best use of information technology to
perform their work and to gather and share knowledge. Emphasize
the alignment of the agency's information technology programs
with its mission, goals, and strategies. Obtain employee
feedback to ensure they have the opportunity, incentives,
support, and training to make the appropriate use of technology
to do their work and to acquire and share knowledge.
Take the necessary steps to help employees effectively,
economically, and efficiently pursue their work. Establish
appropriately tailored organizational structures, job
processes, workplace facilities, tools, work arrangements, and
other resources and opportunities.
These human capital principles represent a subset of
principles from two recent GAO reports that are relevant to our
review of SSA's efforts to address its future challenges. The
first report \32\ is a checklist of human capital issues we
developed for agencies to use to self-assess and improve their
human capital management. The values found in the checklist
were derived from various sources, including 32 leading
organizations in the private sector and governments at the
state and local levels and abroad; the Malcolm Baldridge
National Quality Award Program and the President's Quality
Award Program; relevant parts of title 5 U.S.C., ``Government
Organization and Employees,'' and 5 C.F.R., ``Administrative
Personnel"; and the Government Performance and Results
Act, along with agency guidance contained in OMB Circular No.
A-11. The second report \33\ identifies common principles
underlying the human capital strategies and practices of nine
private sector organizations recognized as innovative or
effective in strategically managing their human capital:
Federal Express Corp.; IBM Corp.; Marriott International, Inc.;
Merck & Co., Inc.; Motorola, Inc.; Sears, Roebuck and Company;
Southwest Airlines Co.; Weyerhouse Co.; and Xerox Corp.,
Document Solutions Group.
\32\ GAO/GGD-00-28, Jan. 31, 2000.
\33\ GAO/GGD-99-179, Sept. 1999.
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Appendix II
Technical Implications of Removing SSA'S Administrative
Expenses From the Discretionary Spending Caps
Currently, SSA's administrative expenses are controlled by
an obligation limitation contained in the agency's
appropriation act and are considered to be subject to the
discretionary caps set forth in the Deficit Control Act
(DCA).\34\ This means SSA's administrative expenses must
compete for funding with most of the other discretionary
programs in the budget.\35\
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\34\ The Deficit Control Act is the Balanced Budget and Emergency
Deficit Control Act of 1985, as amended by the Budget Enforcement Act
of 1990, the Omnibus Budget Reconciliation Act of 1993, and the Budget
Enforcement Act of 1997. The Deficit Control Act, as amended,
established statutory limits on federal government spending for fiscal
years 1991 through 2002 by creating, among other controls, annual
dollar limits (spending caps) on discretionary spending funded through
the regular appropriations process.
\35\ For fiscal years 2001 and 2002, SSA's administrative funding
does not compete with highway and mass transit spending, each of which
has its own cap.
---------------------------------------------------------------------------
We contacted OMB regarding the implications of removing
SSA's administrative expenses from the discretionary spending
caps. According to OMB, under the DCA, if this funding was
moved out from under the discretionary caps by redefining it as
``mandatory''--that is, not subject to appropriation act
control--this would be a ``change in concepts and
definitions.'' The DCA requires adjustments to the caps for
such changes in concepts, but the timing of the adjustment
would depend on how the change was made. Further, OMB indicated
that if the change was the result of technical discussions and
agreement among the scorekeepers \36\ and was not related to
making room for additional spending by other agencies under the
existing discretionary caps, OMB would lower those caps by the
baseline amount of SSA's administrative funding. If the change
was made by direction in legislation, the administrative
funding would not be scored as discretionary and more room
would be available under the caps for 1 year. However, OMB
would most likely reflect the change by lowering the caps in
subsequent years, thus putting more pressure on the following
year. As a result, in OMB's view, shifting SSA's administrative
expenses to mandatory spending would create, at the most,
additional room under the caps for 1 year for funding other
programs.
---------------------------------------------------------------------------
\36\ The scorekeepers are the House and Senate Budget Committees,
the Congressional Budget Office, and OMB.
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Administrative expenses are typically viewed as
controllable and thus fit into the discretionary category of
spending. Questions might be raised about considering them
mandatory. If SSA's administrative expenses are not controlled
by obligation limitations in an appropriation act, the locus of
control would shift to SSA's authorizing committees, and some
mechanism would be required to limit the amount of Social
Security trust funds that could be spent on administrative
expenses.
It is important to note that the shift in the locus of
control would not provide any new source of financing, because
administrative funds come out of the trust funds that pay
Social Security benefits. Therefore, any increase in the
administrative budget would reduce the trust funds unless a
general fund appropriation was made. However, such an
appropriation would be discretionary and would have to compete
with other programs for the limited funding under the
discretionary caps.
Related GAO Products
Human Capital: Key Principles From Nine Private Sector
Organizations (GAO/GGD-00-28. Jan. 31, 2000).
Social Security Disability: SSA Has Had Mixed Success in
Efforts to Improve Caseload Management (GAO/T-HEHS-00-22, Oct.
21, 1999).
Human Capital: A Self-Assessment Checklist for Agency
Leaders, Discussion Draft (GAO/GGD-99-179, Sept. 1999).
Social Security Administration: Update on Year 2000 and
Other Key Information Technology Initiatives (GAO/T-AIMD-99-
259, July 29, 1999).
SSA Disability Redesign: Actions Needed to Enhance Future
Progress (GAO/HEHS-99-25, Mar. 12, 1999).
Social Security Administration: Technical Performance
Challenges Threaten Progress of Modernization (GAO/AIMD-98-39,
June 19, 1998).
SSA'S Management Challenges: Strong Leadership Needed to
Turn Plans Into Timely, Meaningful Action (GAO/T-HEHS-98-113,
Mar. 12, 1998).
Social Security Administration: Software Development
Process Improvements Started, but Work Remains (GAO/AIMD-98-39,
Jan. 28, 1998).
Social Security Administration: Significant Challenges
Await New Commissioner (GAO/HEHS-97-53, Feb. 20, 1997).
Social Security Administration: Effective Leadership Needed
to Meet Daunting Challenges (GAO/HEHS-96-196, Sept. 12, 1996).
Social Security Administration: Risks Associated With
Information Technology Investment Continue (GAO/AIMD-94-143,
Sept. 19, 1994).
Social Security: Sustained Effort Needed to Improve
Management and Prepare for the Future (GAO/HRD-94-22, Oct. 21,
1993).
Social Security: Status and Evaluation of Agency Management
Improvement Initiatives GAO/HRD-89-42, July 24, 1989).
Social Security Administration: Stable Leadership and
Better Management Needed to Improve Effectiveness (GAO/HRD-87-
39, Mar. 18, 1987).
Chairman Shaw. Thank you. In the report that you have
submitted to the Congress, and we talked about it several times
with the previous panel with regard to the aging work force,
this is one of the more frightening things about what is going
on. Could you further elaborate on what you found there and
what you might suggest as where to go?
Ms. Fagnoni. Well, as we pointed out, SSA did do a study--
--
Chairman Shaw. I am talking about the aging work force
within the agency, not country as a whole. Excuse me.
Ms. Fagnoni. SSA did do an assessment to try to get a
handle on what that retirement wave might look like and at what
pace people might leave the agency due to retirement. In part
they used historical information that, of course, shows not
everybody who is eligible for retirement, retires. But they do
have some estimates of how many people will retire, are
expected to retire, and, as we show, it will peak about the
same time that its workloads are expected to be increasing.
That poses significant challenges, and as the members of the
Board said, it is important for SSA not only to be positioned
now to replenish the staff who are leaving, but to make sure
they know what skills and abilities they need for these new
staff coming in to meet the challenges with the new kinds of
clients that they are going to be serving.
If you think about the fact that many of the people who
will be retiring over the next 10 years were hired 30 years
ago, the skill mix that is needed for this century is likely to
be very different from what was needed 30 years ago when these
people came into the agency. Just to cite one example, there is
a significantly higher percentage of individuals on the
disability rolls who have mental impairments, and that poses
particular challenges both in terms of how to serve these
individuals but also the judgments and training that are needed
to assess whether or not people are, in fact, mentally impaired
and how severe the impairment is.
So while SSA officials have taken some important steps to
get a handle on how many people might be leaving over the next
decade, they have not gone as far at this point to determine
what the skill mix might be that they need in the future and
how that might differ from what they have on board.
Chairman Shaw. How does all of this relate to the increased
productivity due to technology? I see that also in your
testimony you refer to the computers and the aging of these
particular computers. The replacement that we make today we
assume will probably be somewhat obsolete at the time the baby
boomers hit the system. Is there any plan in place for an
orderly replacement of the technology as it's upgraded? We are
starting from way behind at that particular point according to
how I understand your testimony.
Ms. Fagnoni. I will turn to Mr. Willemssen who is our
expert on technology.
Mr. Willemssen. The agency has just undergone a major
modernization with its field offices on the workstations and
local area networks, and they are planning a major replacement
project for that effort to start I believe in Fiscal Year 2003,
and one of the areas that we are most anxious to see is SSA is
now committed to demonstrating what kind of benefits have
accrued from that initial investment so they can use that
information to better target their technology modernization
upgrade that will be starting down the line.
Chairman Shaw. Mr. English.
Mr. English. Thank you, Mr. Chairman, and thank you, Ms.
Fagnoni, and welcome back.
Ms. Fagnoni. Thank you.
Mr. English. A couple of points you raised that I am
particularly interested in: First of all, you have expressed
concern over weaknesses in the agency's complex systems for
measuring workload, productivity, and quality. How much does
SSA know about who receives services and the quality of those
services rendered in the field offices? What is the agency
doing to address any weaknesses in this regard, and are they
taking the right steps in your view?
Ms. Fagnoni. Actually, that is a weakness that has been, I
think, frustrating to those of us who are trying to get a good
handle on SSA's service delivery structure and how well
positioned the agency is, and the reason I say that is because
while SSA has methods for on a national level knowing how
satisfied people are with service, what SSA is not able to do
is go field office by field office and understand how satisfied
people are with the service at that particular office.
Particularly they do not have good measures of the numbers of
people who walk into those offices each day and how that may
ebb and flow at different points in time.
They do not have a good handle on the numbers of people who
call the field office and why they are calling. They do not
know why people are walking in on a routine basis. Routinely,
they do not know this and how many might walk out or hang up
without being served. They have better information on people
who come in to file for claims because that information gets
recorded on their systems, so they have a very incomplete
picture of how their field offices are performing, and I think
that makes it difficult for them when they try to do their
service delivery plan to really know which are the offices that
are especially overcrowded, and are there offices that may be
undercrowded. Maybe the clientele base that once was there is
not there or is choosing alternative ways to be served, and I
think that is the piece of this that SSA has less information
on.
In fact, one of the reasons you will hear so much about
their 800 number performance is because they have a lot of data
on their 800 number performance and that level of data are not
available for the field offices--for specific field offices.
Mr. English. In your testimony you indicated that Social
Security, while it is making progress in its work force
planning initiatives, is lacking a future focus. Can you be a
little more specific about what SSA has done in this area and
what do you see are the strengths and weaknesses of their
approach?
Ms. Fagnoni. Well, as I mentioned a little earlier, they do
have a handle on who might retire, and of course that is a
piece of knowing what the work force ought to be. They also, as
we recommended, reinstituted leadership programs at the
executive and managerial level that they had suspended for some
time in the mid-nineties. So they do have a better--they are
better positioned for succession planning at the executive and
managerial level.
They have a sense of who is going to retire. They are in
the process of documenting what skills they have on board. They
are collecting that information at a sort of general competency
level and are in the process of determining on a more job-
specific basis what skills they have on hand. What they have
not yet done, although my understanding is they know they need
to do this, is to get a handle on what skill mix they will need
for the future and how that compares with what they have now
and what they will need for their hiring, for their recruiting
and retention plans.
Mr. English. You indicate that the SSA has established
something called a market measurement program to improve and
consolidate its approach to assessing customer expectations.
Can you describe this program, and why do you feel more needs
to be done in this area?
Ms. Fagnoni. The market measurement program is something
that was put in place a couple of years ago in part because
while SSA had a lot of different initiatives underway in
different parts of the agency to obtain feedback both from
customers and in some cases from employees, it was not well
coordinated. One of the goals of this particular effort was to
get a better handle on what data were being collected in terms
of feedback, how that could be better coordinated and
organized, what else they needed to obtain.
So SSA has done that. They actually did that with the help
of an outside consultant. They have also instituted some
additional surveys such as re-contact surveys where they are
now asking people who call or go to the fields offices how they
felt about that service provided. That is something they were
not doing in the same way in the past, and at this point they
are partway through gathering and analyzing the data that they
have obtained. So they will get some better information on--and
more coordinated information on--customer as well as employee
feedback.
And another very important thing that they are doing for
the first time is segmenting people's responses by the type of
customer, and the reason that is important is because I believe
they may very well find that somebody who is applying for
retirement benefits may very well have different views and
different preferences for service than someone who is filing
for disability benefits or somebody with mental impairments who
is seeking assistance once they have obtained disability
benefits. I think that information can be important for SSA in
understanding and determining how to serve people in the
future.
Mr. English. Thank you, and thank you, Mr. Chairman.
Chairman Shaw. Thank you, Mr. English. And thank you, Ms.
Fagnoni, for joining us. We always look forward to your
appearances before this Subcommittee.
Ms. Fagnoni. Thank you.
[The following questions submitted by Chairman Shaw, and
Hon. David M. Walker's responses are as follows:]
February 28, 2000
The Honorable David M. Walker
Comptroller General of the United States
U.S. General Accounting Office
441 G Street, N.W.
Washington, DC 20548
Dear Mr. Walker:
As a follow up to the joint subcommittee hearing held on February
10 regarding the current and future service delivery challenges that
Social Security is facing, I would appreciate your answering the
following questions for the record:
1. In your testimony (page 1) you state ``While we have recommended
since 1993 that SSA prepare a service delivery plan, SSA is only now
beginning to develop a broad vision for customer service for 2010.''
Why the 7-year delay?
You indicate that according to SSA officials, the agency does not
have plans to go beyond this vision and issue a more detailed plan. How
is a ``vision'' different from a ``plan''? What does the absence of a
detailed plan mean for customer service?
2. Would you elaborate on the consequences of developing plans out
of sequence, specifically SSA's continued pursuit of workforce and
information technology planning without a service delivery plan in
place? Is SSA expending scarce resources today to develop service
delivery systems that may prove to have limited usefulness by the time
they are in place? Or hiring employees with the wrong skills to work in
locations where they may not be needed in the future?
3. A recent Washington Post article discussed how productivity
gains especially in manufacturing are helping the economy produce more
and better goods and services while lifting wages and still keeping
inflation at bay. Presumably this is occurring because businesses are
figuring out how to capitalize on the digital revolution.
In contrast, your testimony points out that, despite SSA's
efforts to modernize computer capacity since the 1980s (page 3) and
their ``relying in large part on technology to achieve increased
efficiencies'' (page 1), ``the benefits from (SSA's) technology
investments have largely been unclear.'' Further, SSA ``has not yet
been able to demonstrate specific benefits resulting from some of its
most significant investments'' (page 10).
How is it possible that after more than 10 years we do not
know whether these investments in SSA have increased worker
productivity there? While I note that SSA recently told you they are
``now conducting studies,'' when do you think we will have that
information? What is it likely to show? After how much money has been
spent on computerization (which SSA calls IWS/LAN)?
Not having this information seems especially exasperating
in light of the gains we see elsewhere in the economy, and given your
point (page 4) that SSA needs to increase worker productivity by 27
percent between now and 2010 to keep up with expected increases in
demand.
4. You have made the point that Social Security's customers and
their needs will change over time. Please tell us more about the
special challenges that Social Security will face because of this.
5. About half of all households have online access now. Today, on
the internet, you can buy a car. You can find a job. You can access
stocks and savings, and pay all your bills. You can apply for a home
loan worth hundreds of thousands of dollars in just seconds--without
ever sitting down and seeing anyone face to face. You can pay your
taxes, and in fact the government is encouraging people to do so. You
can even buy and print out stamps without leaving your desk. Yet you
can't apply for Social Security benefits online. Why? Does Social
Security see online applications for benefits as one way they will
provide services in the future? If so, starting when?
Since it's pretty obvious that online applications for benefits are
both inevitable and may conserve scarce worker resources, are you
comfortable with how Social Security is going about developing this
process from the standpoint of openness, timeliness, and ensuring
maximum privacy and data protection?
6. Please talk to us about how online applications for benefits
might allow Social Security to provide better, more convenient
services, and perhaps at lower cost to taxpayers. Rather than only
1,300 field offices, wouldn't people have literally millions of new
ways to access benefits, including from the convenience of their home?
Might SSA staff have more flexible work conditions, including working
from home handling electronic applications? And couldn't field offices
concentrate on tough cases that require face-to-face service, such as
disability cases and SSI cases, and maybe do more outreach into the
community? Does SSA foresee such benefits?
7. You describe a new technology strategy that the agency is using
to address the needs of its disability claims process. Can you provide
a brief overview of the components of this strategy and your assessment
of the appropriateness of this strategy and the effectiveness of the
tests of this strategy so far?
8.Your testimony includes a discussion of the various technology
initiatives being implemented to support the Office of Hearings and
Appeals, yet you indicate that long-term efforts have not yet been
defined. Does this mean SSA hasn't identified all of the technologies
needed to meet the needs of its hearing offices?
I appreciate your taking the time to answer these questions for the
record. If you have any questions concerning this request, please feel
free to contact Kim Hildred, Staff Director, Subcommittee on Social
Security at (202) 225-9263.
Sincerely,
E. Clay Shaw, Jr.
Chairman
cc: The Honorable Nancy Johnson
Chairman, Subcommittee on Human Resources
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Chairman Shaw. Thank you very much.
The final panel today is made up of James Burke, a futurist
with Coates & Jarratt; Dr. Henry Hertz, the director of the
Baldrige National Quality Program in Gaithersburg, Maryland;
and Hon. Maurice McTigue, Q.S.O., distinguished visiting
scholar at George Mason University in Virginia and a former
cabinet minister and member of Parliament from New Zealand.
Thank you, gentlemen, for being with us. As before, we have
your full testimony. It will be made a part of the record, and
you may summarize as you see fit.
STATEMENT OF JAMES E. BURKE, FUTURIST, COATES AND JARRATT, INC.
Mr. Burke. Thank you, sir. Thank you, Mr. Chairman, for
inviting me today.
As a futurist, one of the things that I do is scan and
study the world as it might unfold, look at conditions and
events, and it is less to predict, as a matter of fact, it is
not to predict, but to just create some insights and
projections and a framework for understanding customer service
and access needs in 10 or 15 years.
Today, we will look at values and trends for the boomer
generation and the rest of the working population and future
trends, diversity, and advanced technologies. I would suggest
you not look at this as expectations for a point solution but
rather to look at the next few years as a ramp up to a
transition period that will bring with it great changes and
great opportunities--boomer retirements and an increasingly
diverse population.
I would invite you to come with me to the year 2010 to a
pleasant suburb where there is a typical boomer couple, John
and Susan. They have typical values and typical attitudes. They
are confident. They are well educated, but they are generally
skeptical towards the government, and they have a belief that
public officials do not really care about their problems. They
have no patience for bureaucracy, unresponsive systems, and
they demand that institutions be effective in protecting public
safety and security.
They see themselves as unique with unique needs, and they
want customized solutions and fast resolution to their
problems. They tend to be generally comfortable with advanced,
user-friendly, technology, and they have no real privacy or
security concerns, but they are a bit uncertain about their
finances and how much it will take to maintain their particular
lifestyle after retirement. They expect to live longer than
their parents, and they look at retirement as a time to relax
but also to stay engaged, perhaps even work a little bit after
retirement.
They are in their entertainment center on this snowy
afternoon, and they tell their entertainment center to shift
from the TV show that they are watching to their intelligence
agents. John has a virtual electronic agent called Horace. It
is dressed in flower child clothing of the sixties, while
Lydia, who is Susan's virtual electronic agent, is dressed as a
17th century pirate. They tell their agents to visit their
Social Security account, their investment accounts, and return
to them with their options for retiring at 5, 6, and 7 years.
Horace vanishes, and Lydia chuckles and asks Susan if she
wants some money from another person's account. Susan says no,
but realizes that since the electronic attacks that took place
in 2002, electronic security has been very tight and such cyber
antics are virtually impossible. Within minutes the two virtual
agents return to the boomer couple and present them with a
rundown of their options and opportunities, including the tax
and insurance implications of their retirement options. They
now have a much better idea of the future, and both vow to
return to the questions later this week.
Meanwhile, at the same time across town at the Celestial
Dollars Cyber Cafe, three young people have gathered to
socialize. They talk of a friend facing a long-term disability
and wonder how to get information for her. Two of the three,
Shankar Shastri and Ernesto Marquez, are recent immigrants, one
familiar with advanced technology and the other less so. Hua
Peng, the third person, is a long-term resident and recently
moved to the local area because of his skills. He acts much
like his contemporaries, sort of like today's athletic free
agents, going to companies that provide the best benefits and
offer the best deal. His new company hires both part-time and
full-time employees and does a lot of outsourcing work.
He has on his wearable computer that allows him to stay
connected to his coworkers in the United States as well as
around the world, and like his two friends, usually works at
home or occasionally at a satellite office facility. His
company also offered him an extensive training program, and he
knows that life-long learning is a key to his success as well
as those of the people in his generation and the older
generations.
The table that they are sitting at has a built-in
electronic package that lets them access the Internet, cyber
music, and a variety of government agencies including the
Social Security Administration, the Postal Service, and even
Fannie Mae. They could have checked out such a device from
their local library and even accessed one at the local health
clinic, child care center, convenience store, gym, or the
community center.
They chose the Social Security Administration icon, a
picture on the menu, and they see another menu with easily
understood pictures that walk the three through a variety of
information options. Shankar's English is a bit rough, and he
selected an icon for a language option and is soon speaking in
his native tongue to a realistic figure that is outfitted in
his native culture's dress. They got the information in minutes
and planned to get one of the local volunteer agencies that
work with the Social Security Agency to stop by their friend's
home to get more details using a variety of advanced technology
and video conferencing capabilities.
These stories hold several implications for the
administration. There is a skeptical, but demanding boomer
generation out there. There is a diverse population with much
different needs than exist today, and it is growing quickly.
Flexible jobs and part-time jobs will be existent with
extensive outsourcing at a variety of different companies. The
work will be distributed--any time and any place. Skills will
count more than seniority.
There will be a highly mobile work force, and the benefits
will travel with the workers as opposed to losing some benefits
as they transfer. There will be gradual retirements and people
will stay in the work force longer. There will be different
language, culture and service expectations along with special
groups that will still need specialized personal service.
Finally, there will be a need for tailored outreach, life-
long learning, and work force management strategies that
recognize the differences among the workers. The technologies
that support these stories are well within reach in the next
decade. By 2010, we expect to see small, rugged wireless
devices with lots of carrying capacity: data, voice, and video,
anywhere, anytime. They will have real-time language
translation. They have intelligent agents who are also know as
``Knowbots'' that will be two dimensional and three dimensional
that will interface.
There will be State and Federal agency coalitions, for
example, Health and Human Services, the Social Security
Administration, and Postal Service, Fannie Mae that will come
together in concert to offer these advanced technology options
to their clients.
Some observations: The customers today and in the future
will want quality and quickness, and knowledgeable and friendly
service, whether that is in a machine or a person. They will
want attentive follow-up. Some activities and clients, however,
will need more personalized service that will be offered
through coalition activities, local community representatives
or even volunteer organizations. At some point, the Social
Security Administration will face the need to shift from a
system that provides personal access services to one that
predominantly relies on the electronic access.
I would suggest you might want to think of the Social
Security Administration much like this sphere. It is
multicolored. It is very diverse, and as the Social Security
Administration goes into the future, this sphere is going to
expand. There will be a variety of different needs. It will be
a much larger population. The key to SSA success is bringing
that sphere back down and touching them with electronic
advances, yet maintaining the individuality of the clients.
Thank you for the opportunity to speak to you.
[The prepared statement follows:]
Statement of James E. Burke, Futurist, Coates and Jarratt, Inc.
Chairman Shaw and Chairman Johnson and Members of the
Subcommittees, thank you for the invitation to speak to you on
the future service delivery and access challenges facing the
Social Security Administration in the 21st Century. I am a
futurist, which means that I am engaged in scanning and
studying the world as it might unfold in the future, looking at
conditions, events and trends--social, technical, economic,
environmental, and political--not to predict as much as to use
insights and projections to create a framework for
understanding customer service and access needs in 10-15 years.
Today, I will briefly look at a major category of users of
that service, the boomer generation and also at trends in the
rest of the working population, considering: values, desires
for customized service delivery, work trends, diversity of work
force and advanced technologies that might contribute to
solutions. I would suggest that in looking out at the range of
solutions you probably do not want to create expectations for a
single, point solution, but rather understand that the next few
years will be a ramp up to the transition that will come with
the boomer retirements and an increasingly diverse population.
Boomer Values
Boomers are now about 30% of the US population and about
40% of the adults. The so-called boomer retirement bulge starts
about 2008 and carries with it quite a few paradoxes. While
they are the richest and most educated generation in American
history, about 70% consider themselves middle class. They
generally are a self-confident group, based on their education
and experience, but also tend to be confused over retirement
financial needs. Their seeming biggest shortfall is their
tendency to underestimate the money required for particular
desired lifestyles.
The boomers also have a declining respect for authority and
are rather skeptical of status quo, including trust in banks
and financial institutions, but they want to have systems and
institutions to fix problems, even if they don't like
particular institutions. They believe that institutional
inertia or disinterest that threatens public safety is
especially irresponsible. They harbor a great desire for
authenticity, and don't believe that public officials are
concerned about their problems. Boomers tend to hold a general
mistrust of people--\2/3\'s believe they need to be careful
about trusting other people--but they also believe that most
people would try to be fair and helpful. They do tend to share
their wealth, but are somewhat selfish about giving up personal
time and have no sympathy for bureaucratic procedures that
cause delays.
They are generally willing to take personal risks, although
they also tend to be less risk-taking with financial areas. If
they fail, however, they expect and want some sort of
institutional rescue and will not hesitate to resort to
litigation.
They tend to hold a different view of retirement than
previous generations. They expect to live longer and want to
stay active and engaged, especially since they believe they
have a lot to offer. Many expect to and a large number will
consider working after retirement--for financial reasons, but
also to contribute. They tend to be healthy and less frail than
previous generations, but the boomers' biggest concern is
potential for poor or declining health, followed by lack of
money.
They have and will continue to have little patience with
unresponsive or bulky social service systems that do not meet
their needs and they also see themselves as unique with unique
needs. For that reason, they have a desire for customized
solutions and want fast resolution--whether it is to provide
expected services or to resolve perceived problems.
The boomer generation generally is comfortable with
advanced information technology, because many see themselves as
part of the generation that introduced computers. However, few
see themselves as highly proficient with computer and advanced
information technology and demand that programs and systems be
user friendly. As such they have a low tolerance for complexity
in operating computer systems. Like most people, boomers want
privacy and security--although privacy concerns are weakening
as advanced information technology becomes more ubiquitous and
reassuring.
Diversity
The US will continue to see growth in immigration and a
much more diverse population in the coming years. Over the next
two decades minorities in U.S. will grow from about 30% of US
population to nearly 40% and by 2010, 30% of population over 65
are projected to be members of minorities. A recent Hudson
Institute study indicated that 35% of people that entered the
work force in 1997 were immigrants. This growing group of
minorities will be younger. In 2010 the average age of non-
minorities will be about 41, while that of minorities about 27-
34.
This diversity will bring great vitality to the American
scene, but it also will bring a different set of access
challenges, the most obvious of which is the potential for
language and cultural barriers that have to be overcome to
connect with and provide services. Maintaining connections to
ensure that all these diverse groups are educated about their
rights and responsibilities will be embedded in the language
challenge, but also involve a need for different ways to reach
out to different communities. While some minorities will be
comfortable with advanced technology, indeed a greater portion
of the immigrant population is coming to the use with
sophisticated technical expertise, immigrants from less
developed countries will require more care in they way they are
approached with advanced technologies. Like the boomers, many
of the newly arriving minorities, as well as some that reside
in the US today, have declining levels of trust towards
government institutions, especially those coming with cultural
values that did not include cooperative working relationships
with government agencies. This means that the groups have a
diversity of expectations regarding services from government
agencies, again calling for tailored education programs.
Another area of diversity involves generational attitudes,
specifically those of the generation that follows on the heels
of the boomers, the so-called Gen-Xers. The Gen-Xers are about
16% of population, and tend to be more self reliant and
entrepreneurial than boomers, but also are very skeptical of
corporate motives and loyalty. The Gen-Xers want flexibility,
creativity and control over their work environment and in their
interactions with authority.
Finally, there are some groups that cut across all
minorities and generations. These are those who, for what ever
reasons, tend to be very ill informed about their rights to
available services. Some are ill informed because they are
unable to function very well in any organized societal setting,
because of education, mental capacity or mental conditions.
This means that a certain percentage of people who are eligible
for social services will not apply and it will call for special
efforts by agencies to find and touch these groups.
Work Trends
Along with the changing nature of the working population,
the work place itself also is changing. By 2015, 90%+ of all
U.S. jobs will be in service, with only 7-8% in manufacturing
and 2-3% in agriculture. Jobs will be flexible, contingent and
often part-time, with outsourcing a growing part of business.
We anticipate that work increasingly will be distributed--being
performed anytime, any place. Satellite work centers--in homes
or in temporary rental office complexes--will become more
popular, not only to ease commuting, but because fewer jobs
will call for an on-site presence.
Electronic commerce will facilitate this trend--i.e., by
2003 we expect $1.3 Trillion in on-line transactions--and this
also will ease the challenge for those who want to take
advantage of the Internet to provide information and services.
One indicator example: 40% of new car buyers in 1999 used the
Internet to facilitate a new car purchase versus 25% in 1998.
US workers will face new challenges themselves. Global
competition, not only regional or local competition, for jobs
will become more commonplace. But there are bright spots for
future US workers. Given current trends, unemployment will be
low over next 20 years, making a tight labor market, especially
in the Northeast and Mid-west. The South and West will have
more workers and a greater share of immigrants. The most
qualified workers will become more like athletic free agents
and a greater part of work force will be mobile, moving where
their skills are most needed and bid for at the highest rates.
Skills, therefore, will count more than seniority, but older
workers will stay in work force longer. This naturally calls
for lifelong learning--personal and organizational and high
technology training will be increasingly important to retain
and motivate the best workers. Understanding high technology
will continue to be critical and jobs requiring a college
degree are expected to grow by 25% in next decade--increasing
the need for analytical and math skills.
Access Trends
Picture, if you will, an average boomer couple in the year
2010. John and Susan are in the last years of successful
business careers and are a couple years away from retirement.
They have paid attention to their retirement needs, but want to
do a bit more research on their options, part of which is
checking the status of their social security and investment
accounts. It's a Saturday afternoon and they have tickets to
the local symphony and plan to spend some time on their
retirement questions on Sunday afternoon, when the weather is
predicted to turn cold, blustery and snowy. John interrupts the
sports event he is watching to mute the entertainment center
and calls out in a conversational tone, ``Norman, I need some
help.'' A figure appears on the screen, dressed in 1960's
flower child clothing, recalling a favorite historical period
of John's. Norman is John's intelligent agent, a knowbot that
John created a couple of years earlier. ``What may I do,
John?'' Norman inquires politely. ``Norman, Susan and I want to
do some retirement planning tomorrow afternoon, so I want you
to check out my social security account status and pull
together the current status of our investment accounts. Have
three planning scenarios ready for us to discuss, the high, low
and medium options we discussed last week. Check with Susan's
intelligent agent, Lydia, and ask her to get Susan's account
information also. Please have this ready by 1PM tomorrow. Thank
you, Norman.'' Norman nods, saying, ``OK, man,'' and the screen
fades back to the half-time show. The next day, over juice and
low-fat muffins, Norman and Lydia appear right on time, asking
for permission to go 3-D. With John and Susan's approval,
Norman and Lydia take advantage of the entertainment center's
hologram feature and appear as a 3-D team. Norman's bells and
tie-dyed shirt clash a bit with Lydia's 17th century clothing,
but the differences fade as each gives John and Susan a run
down on the status of their accounts and the different ways
they could take advantage of their social security benefits.
Meanwhile, in another part of town, the wintry weather
doesn't slow a hardy young group as they joke over cups of
steaming coffee in the Celestial Dollars Cyber Cafe, a popular
neighborhood-gathering place. Three young people, Hua Peng,
Ernesto Marquez and Shankar Shastri, are part of the local
vibrant community and frequently meet at the cafe to socialize.
Today, one of the things they all have on their minds is Social
Security. A friend in the neighborhood had a run of bad health
and is facing a long-term disability. They had heard that the
Social Security Administration might be able to help. Because
of this they all wondered how their own benefits might look in
30 or 40 years. To get their answers they used a small device,
conveniently inserted on every table in the cafe so that it was
flush with the surface, showing a screen with several icons for
Fannie Mae, the IRS, the Postal Service, and, in addition to
several other state and federal agencies, one for the Social
Security Administration. A simple touch and a menu of choices
came up. Shankar, who had recently immigrated to the United
States, wanted to test the system and, when the screen asked
for a language preference, mentioned his local dialect. The
screen language immediately transitioned to his language, with
an icon for speech. When he pressed that, a figure, dressed in
the clothing of his culture appeared. This virtual person and
Shankar conversed and the virtual person answered all his
questions and made some suggestions for follow-up activities.
Hua and Ernesto accessed their own versions of the virtual
persons and were quite impressed with the responsiveness and
detail with which their questions were answered, including ways
for their friend to get disability assistance.
Advanced Information Technology
The technologies that will allow these stories to come true
are well within reach in the next decade. The Internet will
continue to be an important force across cultures because of
its ability to operate without borders and controls. The
devices exploiting the networks by 2010 increasingly will be
wireless, with lots of bandwidth or carrying capacity, allowing
data, voice and video to be transmitted anywhere, anytime.
Devices will be voice actuated, with cultural barriers less
important as real-time language translation becomes
commercially available.
Miniaturization will allow wearable offices, with workers
able to be continually linked to information networks, their
work places and their own products. To ease the burden from
this continual connectivity, we expect a growing emphasis on
intelligent agents--knowbots--tailored for the user and
increasingly taking on personal search and decision
responsibilities. These will be closely tied to virtual reality
and 3-Dimensional holograms that will be used more and more in
business and even social roles, e.g., interactive, networked
game playing.
These advances, of course, will not be limited to the
business and personal worlds of the future workers. Small size,
low cost and rugged, wireless designs will allow access devices
to be integrated with cell phones or to be placed almost
anywhere--tables in the cyber cafes mentioned above, portable
wireless devices that can be checked out in libraries for use
at home, or kiosks in convenience stores, malls, post offices,
libraries, community centers, health clinics, apartment
lobbies, child care centers, etc., allowing a wide variety of
access points for different members of the community. Touch or
voice actuated will ease use, dissolving some of the digital
divide problems--transparency and user friendliness will be key
attributes. Personalized intelligent agents that interact with
customers in their own language, even cultural styles, will
help overcome barriers that are sure to arise with the
diversity expected in the coming years.
These devices could also offer a menu of ways for different
state and federal agencies to reach out to the community and
share information and services. Consumers would accept agency
coalitions, e.g., Health and Human Services, SSA, USPS, if they
were comfortable with privacy and security and competence
levels were equivalent across all services. We would expect
that some activities, e.g., verification of service needs, and
some categories of clients, e.g., mentally challenged, will
need more personalized service, but that could be offered
through coalition activities or through local community
representatives or even volunteer organizations. The keys to
service will be constant, regardless of the technologies--
customers will continue to want quality and quickness,
knowledgeable and friendly service (machine or person), value
and attentive follow-up, if needed. At some point, the SSA,
like many federal and state agencies, will face the need to
shift from a system that combines personal and electronic
services, to one that predominantly relies on electronic
access.
In summary, we see the future bringing to the Social
Security Administration a number of service challenges, but
also a wealth of technical opportunities and solutions that
could offer personalized solutions to a growing customer base.
Again, I thank you for the opportunity to speak with you
about this important aspect of our society.
Chairman Shaw. I was listening eagerly to see if you were
going to say that we would have solved the problem of Social
Security, but I will leave that for another day. I guess you
need a crystal ball for that, and I doubt that you use that in
your profession.
Dr. Hertz.
STATEMENT OF HARRY S. HERTZ, DIRECTOR, NATIONAL QUALITY
PROGRAM, NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY,
TECHNOLOGY ADMINISTRATION, AND U.S. DEPARTMENT OF COMMERCE
Mr. Hertz. Thank you, Mr. Chairman.
From the start of the Baldrige program in 1987, our
definition of quality and performance excellence has focused
both on the customer and on operational performance. We view
performance excellence as delivering ever improving value to
customers, resulting in marketplace success while at the same
time improving overall organizational effectiveness and
capabilities.
Let me begin by addressing service quality. Service quality
is inherently more challenging than product quality. Production
and consumption are frequently combined. While we have had
manufacturing winners of the Baldrige award every year since
its beginning, it was not until the third year that we had a
service winner, Federal Express Corp. They learned that a
process orientation could be applied to service delivery, that
a 12-component performance index developed by FedEx could track
quality performance and serve as a predictor of customer
satisfaction, and that empowered customer contact employees
with data to make decisions could improve their own end company
performance.
Service quality is dependant on human factors, behavior and
personality of the customer contact person and the customer's
perception of their interaction. As opposed to manufactured
goods, the product cannot be inventoried and it cannot be
tested fully in advance of delivery. Every customer interaction
is a moment of truth.
The environment in which the service is delivered,
surrounding, wait time, demeanor of the deliverer, and the
competence of the deliverer are extremely important. That is
why we see the great emphasis placed by all Baldrige winners on
employee training. The service category winners of the Baldrige
award as a group average over 80 hours of training per year for
each employee.
Service quality is only one component of overall
organizational performance quality. The Baldrige criteria
provide a framework for guiding and assessing overall
organizational performance. Criteria are based on the following
11 core values and concepts: visionary leadership, customer
driven, organizational and personal learning, valuing employees
and partners, agility, focus on the future, managing for
innovation, management by fact, public responsibility and
citizenship, focus on results and creating value, and a systems
perspective.
All these core values and concepts are relevant to today's
hearing, but let me comment just on one, on personal learning.
Xerox Business Services, a 1997 Baldrige recipient in the
service category, has 14,000 employees with more than 80
percent at 4,300 client sites worldwide. Through a focus on
learning and empowerment, XBS trains and then empowers its
employees. XBS learning programs focus on individual learning
styles, for people learners, information learners and action
learners. On-site customer interactions lead to learning that
is electronically communicated for organizational sharing and
for new service development.
Data Commercial Credit, a 1996 service category winner,
uses ``People finding a better way'' as their motto for their
organization's three-part focus on customer satisfaction,
quality, and knowledgeable people. All education is followed by
a course evaluation, a personal improvement plan, 90-day
follow-up, and correlation analysis to measure effectiveness
and improved customer focus. Suggestions and innovation, part
of Data's style, led to a more than tripling of profit after
tax per person from 1992 to 1996.
The Baldrige criteria for performance excellence translates
the core values and concepts into a performance guide using
seven Baldrige criteria categories: Leadership, strategic
planning, customer and market focus, information and analysis,
human resource focus, process management, and business results.
Performance tracking is extremely important. A shortcoming of
many early total quality management efforts was a lack of focus
on results and a lack of focus on strategic organization
priorities. Obviously, chief executive officers must focus on
organizational results.
As part of the 10th anniversary of the Baldrige program, we
conducted a survey and forum of chief executives to understand
the other key challenges, aside from focusing on results, that
they face entering the 21st century. Two subjects received
considerable discussion. By a 3 to 1 margin, chief executive
officers believed timely strategy deployment was more
challenging than strategy development, and the chief executive
officers strongly believed that the Internet and electronic
commerce will be the most important and challenging new vehicle
for conducting business at all levels.
To meet tomorrow's challenges, we will need high
performance organization, organizations characterized by
flexibility, innovation, knowledge and skill sharing, alignment
with organizational objectives, customer focus, and rapid
response to changing needs and requirements of the marketplace.
Thank you, Mr. Chairman. I would be pleased to answer any
questions.
[The prepared statement follows:]
Statement of Harry S. Hertz, Director, National Quality Program,
National Institute of Standards and Technology, Technology
Administration, and U.S. Department of Commerce
Thank you Mr. Chairman and Members of the Subcommittees for
the invitation to testify.
On August 20, 1987, President Ronald Reagan signed Public
Law 100-107, the Malcolm Baldrige National Quality Improvement
Act of 1987. The purpose of the act was to provide a national
program to recognize U.S. companies and other organizations
that ``practice effective quality management and as a result
make significant improvements in the quality of their goods and
services'' and to disseminate information about their
successful strategies. The program has been managed by the
National Institute of Standards and Technology, an agency of
the Commerce Department's Technology Administration, in close
cooperation with the private sector.
From the start, our definition of quality and performance
excellence has focused both on the customer and on operational
performance. We view performance excellence as delivering ever-
improving value to customers resulting in marketplace success,
while at the same time improving overall organizational
effectiveness and capabilities.
``The Baldrige public/private partnership has accomplished
more than any other program in revitalizing the American
economy,'' said Barry Rogstad, president of the American
Business Conference and past chairman of the Baldrige Award's
board of overseers.
Since 1998, when the first Baldrige Awards were presented
to three companies, the Baldrige National Quality Program has
grown in stature and impact. Today, the Baldrige program, the
Award's criteria for performance excellence, and the Baldrige
award-winning organizations are imitated and admired worldwide.
Following are some of the program's 10-year highlights:
Called the ``single most influential document in
the modern history of American business,'' almost 2 million
copies of the Baldrige Criteria for Performance Excellence have
been distributed. This number does not include the copies
available in books and from state and local award programs or
downloaded from the Award's World Wide Web site.
For the past five years, a hypothetical stock
index, made up of publicly-traded U.S. companies that have
received the Baldrige Award, has outperformed the Standard &
Poor's 500 by more than 2.5 to 1.
State and local quality programs--many modeled
after the Baldrige program--have grown from fewer than 10 in
1991 to over 40 in 1999.
Internationally, 45 quality programs are in
operation. Most are modeled after the Baldrige Award, including
one established in Japan in 1996.
Today, I would like to share with you some of the lessons
we have learned from the first decade of the Baldrige Program,
particularly as they relate to service quality. Those lessons
are realized in the evolving set of core values and concepts
that form the foundation for our year 2000 Criteria for
Performance Excellence. I will briefly discuss these core
values and some of the resulting criteria. Finally, I will
present some of the key performance challenges I believe we
face. I will give some specific business examples to emphasize
key points.
Service Quality
Service quality is inherently more challenging than product
quality. In service delivery, production and consumption are
frequently combined. While we have had manufacturing winners of
the Baldrige Award every year since its beginning, it wasn't
until the third year that we had a service winner, Federal
Express Corporation. They learned that a process orientation
could be applied to service delivery, that a 12-component
performance index developed by FEDEX could track quality
performance and serve as a predictor of customer satisfaction,
and that empowered customer contact employees with data to make
decisions can improve their own and company performance.
Service quality is greatly dependent on human factors: the
behavior and personality of the customer contact person, and
the customer's perception of their interaction. As opposed to
manufactured goods, the ``product'' cannot be inventoried, and
it cannot be tested fully in advance of delivery. Every
customer interaction is a ``moment of truth'' and suffers from
all the complexities associated with such interactions. The
environment in which the service is delivered (e.g.,
surroundings, wait time, demeanor of the deliverer) and the
competence of the deliverer are extremely important. That is
why we see the great emphasis placed by all Baldrige winners on
employee training. The service category winners as a group
average over 80 hours of training per year for each employee.
Finally, and maybe most significantly in a service
business, conformance to specifications often does not suffice.
It is the personal concern or added touch that supplements
accurate service that defines quality. For example, at Ritz
Carlton hotels (a 1992 and 1999 service category winner),
employee empowerment is the key to customer satisfaction. All
employees are empowered ``to move heaven and earth to satisfy a
guest.'' Each employee can spend up to $2000 without approval
to obtain that satisfaction.
If an error is made, not only is recovery important, but
speed of recovery and how the customer is compensated for the
error are equally important. At Granite Rock, a 1992 small
business winner that quarries and delivers stones and concrete,
their ``short pay'' system encourages customers not to pay for
any service that doesn't meet the customer's expectations. This
policy is stated in writing on every delivery form.
Baldrige Core Values and Criteria
Service quality is only one component of overall
organizational performance quality. The Baldrige Criteria for
Performance Excellence provide a framework for guiding and
assessing overall organizational performance. The Baldrige
Criteria are based on eleven core values and concepts. These
core values and concepts typify the characteristics of high
performing organizations of all types. These core values, like
the Baldrige Criteria, evolve to continue to define leading
edge high performance practices. The core values and concepts
are:
Visionary Leadership
Customer Driven
Organizational and Personal Learning
Valuing Employees and Partners
Agility
Focus on the Future
Managing for Innovation
Management by Fact
Public Responsibility and Citizenship
Focus on Results and Creating Value
Systems Perspective
All these core values and concepts are relevant to the
subject of today's hearing, but let me comment on four:
Organizational and Personal Learning
Achieving the highest levels of performance requires a
well-executed approach to organizational and personal learning.
Organizational and personal learning is a goal of visionary
leaders. The term organizational learning refers to continuous
improvement of existing approaches and processes and adaptation
to change, leading to new goals and/or approaches. Learning
needs to be embedded in the way an organization operates. By
embedded I mean that learning: (1) is a regular part of daily
work; (2) is practiced at personal, work unit, and
organizational levels; (3) results in solving problems at their
source; (4) is focused on sharing knowledge throughout the
organization; and (5) is driven by opportunities to affect
significant change and do better. Sources for learning include
employee ideas, research and development, customer input, best
practice sharing, and benchmarking.
Employee success depends increasingly on having
opportunities for personal learning and practicing new skills.
Organizations invest in employee personal learning through
education, training, and opportunities for continuing growth.
Opportunities might include job rotation and increased pay for
demonstrated knowledge and skills. On-the-job training offers a
cost-effective way to train and to better link training to
organizational needs. Education and training programs may
benefit from advanced technologies, such as computer-based
learning and satellite broadcasts.
Personal learning can result in: (1) more satisfied and
versatile employees; (2) greater opportunity for organizational
cross-functional learning; and (3) an improved environment for
innovation.
Dana Commercial Credit, a 1996 service category winner,
uses ``people finding a better way'' as their motto. Their
organization's three-part focus is on customer satisfaction,
quality, and knowledgeable people. All education is followed by
a course evaluation, a personal improvement plan, 90-day follow
up, and correlation analysis to measure effectiveness in
improved customer focus. Suggestions and innovation, part of
Dana Style, led to a more than tripling of profit after tax per
person from 1992 to 1996.
Valuing Employees and Partners
An organization's success depends increasingly on the
knowledge, skills, innovative creativity, and motivation of its
employees and partners.
Valuing employees means committing to their satisfaction,
development, and well-being. Increasingly, this involves more
flexible, high performance work practices tailored to employees
with diverse workplace and home life needs. Major challenges in
the area of valuing employees include: (1) demonstrating
leaders' commitment to employees; (2) providing recognition
opportunities that go beyond the normal compensation system;
(3) providing opportunities for development and growth within
an organization; (4) sharing the organization's knowledge so
employees can better serve customers and contribute to
achieving strategic objectives; and (5) creating an environment
that encourages risk taking.
Organizations need to build internal and external
partnerships to better accomplish overall goals.
Internal partnerships might include labor-management
cooperation, such as agreements with unions. Partnerships with
employees might entail employee development, cross-training, or
new work organizations, such as high performance work teams.
Internal partnerships also might involve creating network
relationships among work units to improve flexibility,
responsiveness, and knowledge sharing.
External partnerships might be with customers, suppliers,
and education organizations. Strategic partnerships or
alliances are increasingly important kinds of external
partnerships. Also, partnerships might permit the blending of
an organization's core competencies or leadership capabilities
with the complementary strengths and capabilities of partners,
thereby enhancing overall capability, including speed and
flexibility.
Successful internal and external partnerships develop
longer-term objectives, thereby creating a basis for mutual
investments and respect. Partners should address the key
requirements for success, means of regular communication,
approaches to evaluating progress, and means for adapting to
changing conditions. In some cases, joint education and
training could offer a cost-effective method of developing
employees.
Boeing Airlift and Tanker (A&T) Programs, a 1998 Baldrige
Award recipient, designs, develops, and produces the C-17
Globemaster III airlifter for the U.S. Air Force. In the early
1990's, the Department of Defense threatened to cancel all C-17
orders due to quality problems. Based on a unique partnership
with its union, A&T's exemplary quality performance by 1996 led
to A&T receiving the government's largest ever multi-year
contract for additional C-17's. The union partnership involves
employee gainsharing and ownership of work teams.
Managing for Innovation
Innovation is making meaningful change to improve an
organization's products, services, and processes and create new
value for the organization's stakeholders. Innovation should
focus on leading the organization to new dimensions of
performance. Innovation is no longer strictly the purview of
research and development departments. Innovation is important
for key product and service processes and for support
processes. Organizations should be structured in such a way
that innovation becomes part of the culture and daily work.
3M Dental Products Division, a 1997 manufacturing category
recipient, starts its innovation process with insights into
changing customer requirements. Introduced in 1979, the
innovation process itself has been refined 37 times since then.
Now customer feedback is received at least three times during
each development cycle. In 1996 more than 40% of 3M Dental's
total sales stemmed from new products.
Systems Perspective
The Baldrige Criteria provide a systems perspective for
managing an organization and achieving performance excellence.
The core values and the seven Baldrige Criteria categories form
the building blocks of the system. However, successful
management of the overall enterprise requires synthesis and
alignment. Synthesis means looking at the organization as a
whole and focusing on what is important to the whole
enterprise. Alignment means concentrating on key organizational
linkages among the requirements for organizational success.
Alignment means that the senior leaders are focused on
strategic directions and on customers. It means that senior
leaders monitor, respond to, and build on the organization's
business results. Alignment means linking the organization's
key strategies with its key processes and aligning its
resources to improve overall performance and satisfy customers.
Thus, a systems perspective means managing the whole
enterprise, as well as its components, to achieve performance
improvement.
Solectron, a 1991 and 1997 manufacturing category
recipient, realized that to grow its business it had to surpass
the quality of original equipment manufacturers' internal
production. A key goal became quality and process capability.
Key performance indicators and regular review of those
indicators were established (daily on the floor, weekly by
division, monthly by the CEO), improvement strategies were
implemented, and training programs were developed. All
employees benefit from success through Solectron's variable
compensation plan.
Criteria for Performance Excellence
The Baldrige Criteria for Performance Excellence translate
the core values and concepts into an assessment vehicle for
determining organizational strengths and opportunities for
improvement. The seven Baldrige Criteria categories for this
assessment are: Leadership, Strategic Planning, Customer and
Market Focus, Information and Analysis, Human Resource Focus,
Process Management, and Business Results.
As with the core values and concepts, all of the Criteria
are relevant to the subject of today's hearing, but let me
summarize very briefly the first two Criteria categories
because they are critical to organizational communication and
future success. These two areas challenge all large
organizations (and many small ones).
The Leadership Category examines how an organization's
senior leaders set, communicate, and deploy values and
performance expectations, as well as a focus on creating and
balancing value for customers and other stakeholders. Also
examined is how senior leaders focus on empowerment,
innovation, learning, organizational directions, and
responsibilities to the public and key communities.
Xerox Business Services, a 1997 Baldrige recipient in the
service category, has 14,000 employees, with more than 80% at
4300 client sites worldwide. Through a focus on learning and
empowerment, XBS trains and then empowers its employees to make
decisions as if they were running their own small business. XBS
learning programs focus on individual learning styles for
people learners, information learners, and action learners.
The Strategic Planning Category examines an organization's
strategy development process, including how the organization
develops strategic objectives and action plans, and key human
resource plans based on its strategic objectives and action
plans. Also examined are how plans are communicated and
deployed to achieve organizational alignment and how
performance to plans is tracked.
AT&T Consumer Communications Services, a 1994 service
category Award recipient, uses a HR planning council to achieve
alignment of its business plans and HR plans. Council members
include management and occupational associates. Council members
are responsible for communicating HR plans to their
organizations, who then develop organizational work plans and
individual competency plans.
The Importance of Results
Performance tracking is extremely important. A shortcoming
of many early total quality management (TQM) efforts was a
total focus on process without an equal focus on whether
process improvements were yielding results or whether the
improvement focus was even on organizational (senior leader's)
priorities. Furthermore, when results were measured,
organizations generally measured what was available and easy,
and not what was important.
Based on lessons learned by the Baldrige program over the
last decade, we have developed a set of ``results
imperatives''--what to measure and how to use the measurements.
Results should be tied to key business and
customer requirements.
Results should be tied to key product/service and
support processes.
Results should gauge progress on key strategic
objectives and their associated action plans.
Results need to track ``levels and trends.''
Tracking the level of performance means knowing where
one stands relative to goals and to examples of high
performance (obtained through benchmarking).
Tracking trends ensures that the progress made and the
rate of progress are acceptable.
Results must be linked to and produce the measures
senior leaders use for their organizational analysis and
decision-making.
Results must be actionable and action generating!
In other words, the results an organization should and must
measure are those that lead to action on the part of that
organization. This action occurs at all levels--individual,
work unit, division, and senior leader--and the key results and
actions are linked.
At Merrill Lynch Credit Corporation, a 1997 service
category winner, client satisfaction is a long-term focus.
Hence, client satisfaction survey measures are tracked at all
levels of the organization. In addition, key indicators of
client satisfaction are tracked down to the individual partner
(employee) level where customers have told MLCC that timeliness
of loan approval and in-process status information are key.
What CEO's Say
Obviously CEO's must focus on overall organizational
results. As part of the tenth anniversary of the Baldrige
program, the private sector Foundation for the Malcolm Baldrige
National Quality Award conducted a survey of U.S. private and
public sector chief executives to understand the other key
challenges they face entering the 21st century. At a July 1998
CEO forum two subjects that received considerable discussion
bear comment here:
By a three-to-one (72% vs 26%) margin, CEO's
believed timely strategy deployment was more challenging then
strategy development.
The CEO's strongly believed that the internet and
electronic commerce will be the most important and challenging
new vehicle for conducting business at all levels. While they
were unwilling to speculate on the specifics of these
challenges, they felt they had to be leaders in this new
business technology.
Seven Challenges
As the Baldrige program looks to the future, I see seven
key challenges for all organizations. Organizations must:
Go beyond today's performance management and
quality systems. They will not deliver future results.
Measure, analyze, and execute for alignment.
Evaluate and improve with a purpose. Focus on the
important.
Focus on their value chain and changing value
equation. Balance the needs of all stakeholders--all those who
create value for the organization and for whom the organization
hopes to create value.
Build flexible strategies: only change is a given.
Anticipate the needs and desires of a diverse
workforce and a diverse customer base.
Manage knowledge, stimulate innovation, support
people, learn and grow as an organization.
To meet these challenges we will need high performing
organizations--organizations characterized by flexibility,
innovation, knowledge and skill sharing, alignment with
organizational objectives, customer focus, and rapid response
to changing business needs and requirements of the marketplace.
Thank you, Mr. Chairman, and I would be pleased to answer
any questions that you may have.
[An attachment is being retained in the Committee files.]
Chairman Shaw. Thank you.
Mr. McTigue.
STATEMENT OF HON. MAURICE P. MCTIGUE, Q.S.O., DISTINGUISHED
VISITING SCHOLAR, MERCATUS CENTER, GEORGE MASON UNIVERSITY,
ARLINGTON, VIRGINIA; AND FORMER CABINET MINISTER, AND FORMER
MEMBER OF PARLIAMENT, NEW ZEALAND
Mr. McTigue. Thank you, Mr. Chairman. It is rather strange
for me to be sitting on this side of the table. I have had more
experience as a parliamentarian of sitting on your side of the
table, sir. With your side comes the responsibility of making
the decisions and I am pleased to be relieved of that.
Mr. Chairman, the request to address the meeting today was
couched in terms of you really want to look forward, and I
congratulate you on the vision of looking forward to what might
be required of governmental organizations in the future. I
think that what you are dealing with, and what governments
around the world are dealing with, is the quandary that the
demands of the citizenry have dramatically changed. No longer
as a consumer either of government services or private sector
services will I accept a standardized response. I want
everything to be customized so that I am treated as an
individual.
This is an incredible challenge for governmental
organizations and cuts right across the tradition of hierarchal
structures command and control approach from senior management.
This new environment really says that in the future the
interface between the customer and the organization is going to
be the critical learning experience for that organization.
These organizations are going to have to deal much more with
the causal factors of problems rather than treating the
consequences. The learning experience that is required to be
able to deal with causal factors is quite different from the
tradition of bureaucracy.
In the presentations that you listened to a few moments ago
were some critical observations. One of those was that much
institutional knowledge in the SSA is likely to be lost with
the current cohort of retirees. That is not a situation
applicable just to the Social Security Administration. Many
organizations are facing the same problems. Some in the private
sector are solving those problems today, particularly the
consulting industry. This industry considers each case history
and records what have been successful outcomes so that the
knowledge is captured and is available to everybody else in the
organization to learn from.
It would be my recommendation that these knowledge building
capabilities are what government should be seeking from its
organizations of the future. For government, it is much easier
to visualize this in terms of the needed capabilities of the
organization rather than basing decisions on a consideration of
its inputs.
When looking at the capabilities of the organization, you
have to project forward to the year 2005 and say what
capabilities would we expect of this organization at that time.
Some of the capabilities I would emphasize would be customer
access from remote locations, access by telephone or
electronically. That as a customer when I made first contact, I
would trigger something like an electronic portal where one
approach would activate all organizations to address all of my
problems in a variety of customized ways. Instead of having to
go to two, three, or four organizations, my business or
personal problems would be referred to those who are most
capable of delivering to me successful solutions.
The Social Security Administration needs to have a very
tight focus on what are the needs, needs not wants, of
customers. In meeting those needs, the focus must be on
actually starting to solve people's problems. You are looking
for solutions that might help to diminish the dependency of
this person. Can solutions be found that will allow this person
to live a more independent life?
There is no way that this is achievable using only face-to-
face techniques. To be successful this will require the
creation of an organization that has the following capability
and characteristics. It would require strong leadership, with a
clear vision of what was to be achieved. The senior management
team would now see itself as the facilitator of what happens at
the interface between its customers and the organization. It
would be able to respond to the needs of individual customers
with customized solutions. It would have the capability to call
in resources from other organizations to solve those problems.
It would be able to communicate with its customers in a variety
of different mediums, and it would be able to do that on a
continuing basis.
When you look at people's requirements for medical care,
their problems are not single issue problems. They are
continuing. Can they come back until their problem is resolved?
It is certainly possible to build organizations like that
today. It does require a massive change in the culture of both
the leadership and of those who have oversight of those
organizations. It does require real thrust in the future to
judge organizations on their capability and what it will
achieve rather than scrutinizing what inputs they consuming.
Mr. Chairman, I am honored to have been asked to bring my
presentation to you today, and I am very happy to answer
questions.
[The prepared statement follows:]
Statement of the Hon. Maurice P. McTigue, Q.S.O., Distinguished
Visiting Scholar, Mercatus Center, George Mason University, Arlington,
Virginia; and former Cabinet Minister, and former Member of Parliament,
New Zealand
Mr. Chairmen, I am honored to have been invited to give
testimony before your committees on examining the Social
Security Administration's capacity to address the needs of an
aging population in the 21st century.
Mr. Chairmen, it would be inappropriate for me to comment
on the merit of policies that drive the activities of the
agencies of the United States Government as a visitor to your
country. However, having served as an elected member of the
Parliament of New Zealand for nine years and as a member of
Cabinet during a period of unprecedented reform, my experience
may be of value to you in your deliberations. In particular, in
my role as Associate Minister of Finance and Chairman of the
Cabinet's Expenditure Control Committee, I have first-hand
experience of the change process and, hopefully, some of the
wisdom of hindsight.
In addition to the above background, we at George Mason
University's Mercatus Center have over the last two and a half
years been conducting a study of the progress of Federal
Government Agencies in moving toward accountability for
results, as required by the Government Performance and Results
Act.
Congress's intent in passing this law was to place a
concentrated focus on the value to citizens of government
programs and services. This has brought about in Congress and
in federal agencies a heightened awareness of the need to
address issues of customer satisfaction. This changed focus
should not be interpreted as a criticism of past performance;
instead, it is yet another indicator of societal changes based
on the technology revolution. The old world of the last century
was dominated by industrialization, which required massive
standardization. The new world made possible by the technology
revolution is insisting on customization. In my view, that
demand for customized services applies to government services
just as it does to our consumer society.
It is from the above rationale that you have wisely decided
to conduct this hearing. To satisfy the demands for
customization, the bureaucracies of government must reverse
many of the traditions of the past. No longer can they be top-
down, command and control organizations. They need to
facilitate decision-making at the customer level and not
attempt to control process decisions from a senior management
level. What this means is that the civil service tradition of
hierarchical organizations will have to be replaced by
creative, innovative organizations that can react
instantaneously to customer needs. The magnitude of cultural
change and the time required for this shift in emphasis should
not be underestimated.
To be successful, these new organizations will need to
develop a sharp focus on customer needs. That focus must start
from a clear articulation of the goal they are ultimately
trying to achieve. For example: Does the Social Security
Administration view its role in life as moving supplementary
income to people in need, or does it view its role as helping
resolve its customers' dependency problems and using its
resources creatively to either minimize or eliminate those
dependencies? The societal consequences from this decision are
enormous. The impact on SSA as an organization is also
enormous-particularly if it is to become involved in solving
people's problems.
Such a decision would go well beyond the SSA alone, as
other government resources almost certainly would need to be
brought in to solve the problem. Yet, in the 21st century, it
is inevitable that government's focus in dealing with the
public will move to seeking solutions to causal factors rather
than dealing only with consequences of societal problems.
Contemplating such issues brings into sharp focus the
incredible degree of individualization and customization
necessary to achieve these social outcomes. The concept of even
considering this degree of individualization is only made
possible by advances in technology.
Today, with the ability to build electronic portal entry to
government, the capability to deliver the above concepts is a
reality. The idea that customers could access all of the
services they need from one electronic entry point is exciting,
but will require a very considerable commitment of capital and
resources and a different style of organization. The technical
requirements and their resource implications are best addressed
by others more skilled in this area than me.
The characteristics of the organization of the future are
something I would like to address.
The characteristics of the organization of the future--in
my view--will include the following:
strong leadership with a clear vision of what is
to be achieved;
a senior management team that recognizes that its
role is to facilitate what happens at the staff/customer
interface;
an ability to respond to the individual needs of
customers;
a sharp focus on solving customer problems;
the capability to call upon resources of other
Government organizations, where necessary, to facilitate
solutions;
a recognition that it must meet customer needs to
make contact by a variety of different mediums and in many
locations;
an ability to continuously measure progress
towards goals and to utilize this knowledge to influence
decision-making;
an ability to instantly disperse--to all
appropriate levels--knowledge of best practice as experienced
at the customer interface;
a capability to communicate on a continuous basis
to all appropriate audiences information that will facilitate
knowledge of the organization's capabilities and performance;
a dream team that constantly looks at what is not
possible now but might be in the future;
The above characteristics are matters that I will address
in more depth in my verbal testimony. Our study of change in
the public sector does give some insight into current
capabilities and what is achievable.
Mr. Chairmen, once again I thank you for the opportunity to
present testimony to these subcommittees on these far-reaching
issues. I extend my congratulations to you, Sirs, and to the
other members of the Committees on your visionary role in
placing these forward-looking ideas under the spotlight at this
time. In my view, great good could come from this timely
consideration.
Testimony prepared by:
Maurice P. McTigue
Distinguished Visiting Scholar
Mercatus Center
George Mason University
Chairman Shaw. Thank you, Mr. McTigue, and I thank this
entire panel. I could not help but think while I was sitting
here that we seem to be putting our head in the sand on this
whole matter of Social Security both administratively as well
as the benefit structure that we presently have, the investment
structure, and the whole fiscal structure of what we have. We
seem to be going more of the way of Europe and rather than the
way of New Zealand, which I understand has already made some
changes in looking to the aging population.
Mr. Burke, the Social Security Administration is facing a
wave of retirements. We have spent quite a bit of time on this
today. Given the trends and challenges, what will Social
Security have to consider now when they hire their new people
for the future?
Mr. Burke. The work force that will be available will be in
some ways like the boomer generation in terms of their
skepticism of organizations. The organizations have to present
to them an environment that supports them, an environment that
recognizes that younger generations desire for a more balanced
lifestyle, that when they work, they work hard, and when they
play, they play hard.
The generations that are following the boomers are not lazy
generations. They are very hardworking. They have a desire to
be as entrepreneurial as possible which will complicate
government agencies in hiring practices. They want to
understand why they have to do things. They have very little
patience for bureaucracy, much like the boomers, and also they
have a great desire for learning on the job or outside the job,
and they have the desire to improve their posture.
Additionally, they have great sensitivity toward social
justice, justice in the workplace and justice outside the
workplace, and one of the things Social Security Administration
has is a reputation for justice which they can use to their
advantage.
The type of folks that probably would be drawn to the
Social Security Administration would be people that are
familiar with the advanced technology which is becoming more
and more common, people that have a multicultural viewpoint,
and people that understand and are familiar with and
comfortable with diversity.
Chairman Shaw. Could you briefly touch upon what Mr. Ross
was talking about, and that is the cultural difference? Were
you here for his testimony?
Mr. Burke. Yes, sir, I was. The cultural differences in
terms of?
Chairman Shaw. Of the retiring work force as to the post-
baby boom.
Mr. Burke. One of the interesting things is that in many
ways the work force that's out there, is retiring at an earlier
age, and part of that is because of, as one of the witnesses
mentioned, that the leadership in some organizations do not
tend to support these workers, and it makes it difficult and
workers want to get out from under that.
Some of the cultural differences with respect toward
retirement is that the generation that is retiring now, to a
lesser degree then the boomers, want to retire and relax. The
boomers will stay engaged, but less so in a work force. The
generations that are following, and it is hard really to
project this out, but there is a likelihood that they will have
greater mobility and greater engagement and will retire
probably not at the same points but, will stay engaged in the
work force longer, especially since they will be growing up,
entering, and living in a work force with lifestyle and work
style that takes advantage of mobile skills.
Chairman Shaw. Thank you.
Mr. Hertz, as you know, the Social Security Administration
is a 63,000-employee organization. Now assume that you are
appointed Commissioner. We will make it Commissioner-for-life
so you do not have to consider about the political whiplash
that you might otherwise get in that position. What are the
three things that you would change about the program, and what
do you see are items that should be preserved?
Mr. Hertz. I guess I feel less comfortable talking about
three things I would change, since my knowledge of the program
comes from reading the Social Security Advisory Board report,
but let me tell you about what I would preserve from what I
have read in that report and what I would do when I first
became Commissioner, maybe the first three things I would do.
The thing I would try to preserve based on my reading is
the can-do attitude and the commitment, which was evident
throughout the report, of the field staff to satisfying the
needs of the Social Security recipients who come in to talk to
them or contact them. I think in terms of what I would do, the
first thing I would do is I would try to understand the
management system and the communications system within the
Social Security Administration, and I would try to listen and
learn from as many learning posts as I could. I would talk to
employees. I would talk to management. I would talk to
customers, and I would try to gather an understanding of the
needs and desires of both the employees, how well
communications flows through the agency, and also what the
needs are of the customers who are being served.
The second thing I would do, based on my background in
Baldrige, is I would take the Baldrige criteria book. There is
a section in it called the business overview, and I would work
with my management team to try to write that business overview
for the Social Security Administration. That overview asks you
about the culture of the organization, about your customers and
their requirements, about your partnering relationships, about
your competitive situation, and about your directions, your
future directions, and I would see how well we could answer
those simple questions, and from those gaps, I would begin to
develop my agenda.
The last thing I would do of the first three is I would
look at what measurement system the Social Security
Administration has in place, what measurement system to measure
performance at all levels, customer performance, how we satisfy
the customer, operational performance, human resource
performance, and budgetary performance, and then look at where
we have gaps in that measurement system.
Chairman Shaw. Mr. McTigue, could you elaborate a little
bit upon the difference in the system that you are familiar
with in New Zealand and what you have learned of the system
that we have here, both from the administrative and from the
investment standpoint?
Mr. McTigue. In general, there is little difference between
the organizations that deliver these services in both of our
countries, except ours is more extensive in scope and deals
with more of the problems of individuals than does your Social
Security Administration. Our Department of Social Welfare tends
to be the focal point for all the problems people have when
crises develop in their lives.
The major change has been that the focus of the mission of
the organization has moved very much to addressing the issue of
dependency and developing policies that will help to move
people out of dependency as much as possible. As a result of
making that change, all of the policies, programs and processes
had to be much more flexible. Case workers have to be empowered
to make decisions about how they might apply that particular
program to different individuals and what additional resources
they may call to those individuals needs.
The focus of the organization then becomes very much a
focus on solving people's problems rather than administering a
service, and measurement factors have to reflect recognition of
what success is being achieved at solving people's problems.
Chairman Shaw. How about the structure of the financing of
the benefits?
Mr. McTigue. Quite different to yours. Retirement income in
New Zealand is not a payroll tax. It is taken out of general
revenue. So nobody actually makes a contribution to retirement
income. It is currently paid at 67 percent of the average wage,
and it is paid to everybody as of right so there does not have
to have been an earning history, and there is no income
testing. Three times in the recent past we have income tested
retirement income, and three times we have canceled income
testing, mainly because of the political pressures.
When dealing with the problems of Social Security, there
are really only two choices. Either put in more money or change
entitlement. Our choice has been to change entitlement, and
each time the battle has been lost politically. Having been
part of that decision, I still think it is the right decision
even though I have seen the policy reversed three times. I do
not think that experience is helpful to you, sir.
With regard to the rest of the program----
Chairman Shaw. I would say that is the political culture
that is very similar.
Mr. McTigue. I do not disagree.
With regard to the other programs, they are funded from
general tax revenue and they encompass virtually the whole
spectrum of support that you see here. The major change has
really been in refocusing the organization so that it looks
from the top down at its customer group and seeks to solve
problems.
One of the major issues today is the staffing skills for
providing that service. Currently neither the private sector
nor the governing sector have recognized that skill sets remain
current for only about 4 years, and nobody is re-skilling
people at the rate of 25 percent of their work force per annum.
You cannot mend this gap by recruitment. To rectify the skill
gap, organizations must continually work at skilling their own
work force. Reductions in discretionary funding has
dramatically reduced skill development activity in government
to the point where many governments are facing a crisis in
skills.
Chairman Shaw. Well, your retirement system is a totally
unfunded system?
Mr. McTigue. Correct. I do not recommend you do it.
Chairman Shaw. No. We have got enough problems without
that.
Mr. McTigue. Yes.
Chairman Shaw. And you have even got an aging population as
we do.
Mr. McTigue. Yes, indeed.
Chairman Shaw. And you have people having less kids as we
do, I would assume.
Mr. McTigue. Yes, exactly the same problems. They are
identical however, the peak periods shift by a year or two.
Chairman Shaw. Is there a movement to bring reform to New
Zealand as we are trying to do here? Some countries have been
successful. I think Australia has done something. I am not sure
exactly what it was. I was of the impression that New Zealand
has, but evidently I was wrong about that.
Mr. McTigue. Oh, we have done it, sir. Just each time we
have done it, we have undone it again, and that is the problem.
The difficult thing politically to deal with is that it is very
hard to get society to focus on an event that is 15, 20, or 30
years in the future. Young people do not believe retirement
income is going to be there to support them when they get to
retirement age, people in the middle cohorts are not prepared
to accept that this problem must be solved now.
So different age groups give political reactions that are
very different. There are some places around the world that
have found solutions, but because our scheme is an entirely
unfunded program, those solutions were not open to us.
Chairman Shaw. Well, we have a trust fund that we can claim
and the President has claimed that it is quite solvent, and it
is for the time being because of the FICA taxes. For at least
another 12 or 13 years we will exceed the demand for benefits.
But following that time, it does not make any difference
whether we have treasury bills in the fund or not. When the
time comes to cash those treasury bills in, it will be the same
as you. We will be going to the taxpayer to get those moneys.
We do have a dedicated FICA tax which puts us in a little
better position than just coming out of the general fund, but
it can be sort of a bottomless pit if the Parliament does not
exercise a great deal of restraint, and it sounds like you have
kind of turned restraint on and off intermittently. So maybe we
ought to sit down with you fellows and try to figure out what
to do since we are looking for someone to sit down with on this
Subcommittee to try to come up with some solutions.
Sam?
Mr. Johnson. Thank you.
Let me carry on with that just a minute, if I may. What is
your total tax on the people of New Zealand versus their total
income in percentage?
Mr. McTigue. Yes. Can I just give you a little bit of
background so that we are comparing like with like?
Mr. Johnson. OK.
Mr. McTigue. OK. We have two rates of income tax. The
bottom rate of income tax for everybody who is below middle
income is 19 cents on the dollar. The top rate of income tax
for everybody who is above middle income is 33 cents on the
dollar. From that general revenue we fully fund all education,
both in public and private schools. We fully fund all
retirement income, and we fully fund all health care which is
universally accessible to everybody. So it is not quite
comparing like with like.
Mr. Johnson. Do you have a sales tax as well?
Mr. McTigue. Yes, we do.
Mr. Johnson. So what would the total tax burden on average
be? Around 40, 50 percent? Is it the same as ours?
Mr. McTigue. It would be--it is estimated to be somewhere
around the 37 percent.
Mr. Johnson. Around 40, OK.
Chairman Shaw. But they get health care.
Mr. Johnson. Yes, and you have health care.
Mr. McTigue. Yes.
Mr. Johnson. OK. Well, thank you very much.
I would like to refer to Dr. Hertz now, if I may. You
suggested that heightened demands like Social Security are
going to be replaced by creative, innovative organizations that
can react instantaneously. I want to ask you several questions.
One, what would a Federal agency need to do to achieve such a
change, how long would it take, and can you tell us in general
terms what you think the cost of that might be? And it sounded
like from your answer to Mr. Shaw that you were talking about
privatization because I do not know of a Federal Government
agency that can respond like you were talking about.
Mr. Hertz. Well, there are a number of Federal agencies
that are using the Baldrige criteria, so I believe--
Mr. Johnson. Properly?
Mr. Hertz. I'm sorry?
Mr. Johnson. Properly?
Mr. Hertz. Properly.
Mr. Johnson. OK. Name me one.
Mr. Hertz. Name you one? National Security Agency is one
that is using it. There are parts of the Department of Defense.
Mr. Johnson. Well, NSA does not deal with people directly.
I'm talking about one that deals with the public.
Mr. Hertz. Deals with people in the public? Social Security
has made some inroads, but it is not fully using it, obviously.
Mr. Johnson. OK. Well, see if you can tell me what it takes
for them to achieve a change and how long you think it might
take and what you think the cost might be.
Mr. Hertz. I have to speak, obviously, from my experience
from the private sector because that is who I work with, but
there are organizations that are equally large in the private
sector. What they tell us is that it basically requires
cultural change in an organization and the time period for
establishing something like that is typically 5 to 6 years.
Mr. Johnson. Does that mean you change the whole employee
population or what?
Mr. Hertz. You do not change the employee population
necessarily. You change the philosophy and hope that the
employees will come along with the changed philosophy, and what
companies have found is that many do, and those who do not
generally choose to leave on their own if they cannot adapt to
a new culture, and it is really a change in the way one
manages.
So it is not a cost that is a cost of making the change. It
is a change in the way one does business, and it is done over
time, and the cost in the end--and there is one of the famous
quality people, Phil Crosby, who talks about quality being
free. In the end, it should actually bring you benefits because
of the greater efficiencies that you bring to the organization.
Mr. Johnson. So what you are essentially saying is you
change the managers and hope the employees go along with them?
Is that true?
Mr. Hertz. You would start by changing the culture at the
top.
Mr. Johnson. And if we went to a program that just talked
about personal savings accounts, for example, a percentage,
would that require changes in the Social Security
Administration itself?
Mr. Hertz. Well, I think any change in how you administer
the retirement will require a change in the philosophy or
change in the focus, and the biggest issue that we see in
service organizations is knowledgeable, empowered employees,
empowering them and giving them information they need to act.
Obviously, you make any change in the program and you need to
change the knowledge base and you need to have informed
employees so that they can carry out the mission.
Mr. Johnson. Yes, well they have been saying, I think, that
you cannot get through to them on the telephone, and I presume
you looked at that. Did you have any discussion on that system?
Mr. Hertz. Well, I read the concern, again the report of
the Social Security Advisory Board, and I have talked a lot
with service companies about telephone standards, and we have
learned two things, one that forefront companies look at the
standard right now, if you will, as being responsive in three
rings, but if you talk to companies that have won the Baldrige
award, what they tell us what is much more important than
focusing on answering in three rings is having employees who
are the contact employees, knowledgeable, informed and with
data and information at their fingertips so that issues are
resolved on first contact on the first phone call. That is much
more important to somebody on the other end of the phone line
than whether or not it is 3 rings or 5 rings or 10 rings. If
they can then walk away with the answer and the right answer to
their issue, they are satisfied.
Mr. Johnson. Thank you, sir. Thank you, Mr. Chairman.
Chairman Shaw. Thank you, Sam, and I want to thank this
panel for being a part of what I think will end up giving
everyone a wake-up call as to problems. We not only have
problems of funding. We also have tremendous problems with
personnel. We have problems of antiquated equipment, and it
almost looks like we are just taking a piece of dynamite,
lighting the fuse and handing it to the next generation and
saying, ``You take care of it, it is your problem.''
This is something that our Subcommittee, the Social
Security Subcommittee, will have to exercise an extraordinary
amount of oversight on and really be sure that we have in place
plans to go forward and also be sure that we are properly
funding the changes that are necessary and that have to be
made. We have had a good working relationship with the
Commissioner, and I certainly would expect that to continue.
This problem did not just arise on his watch. It is a
continuing problem, but it is one that we must address.
These retirement figures are startling. The figures as to
people coming into the system are startling. The antiquated
machinery and computers that are being used is startling. We
have got to get this thing resolved, and we have got to be sure
that we have a plan in place to do that so that we are ready
for retirement of the baby boomers.
Thank you very much, and we stand adjourned.
[The following questions were submitted by Chairman Shaw to
Mr. Burke, Dr. Hertz, and Mr. Mctigue.]
February 28, 2000
Mr. James Burke
Coates and Jarratt
4455 Connecticut Avenue, N.W., Suite A500
Washington, DC 20008
Dear Mr. Burke:
As a follow up to the joint subcommittee hearing held on February
10 regarding the current and future service delivery challenges that
Social Security is facing, I would appreciate your answering the
following questions for the record:
1. In your testimony you indicate that Social Security's future
customers will want customized, fast service that is unique to them.
Can you give us some specific examples of what that will mean? What
will this desire for personalized service mean for more complicated
programs like disability benefits? How about for SSI applicants who
tend to have less education and may not be as experienced with
computers? Can technology be adapted to help them, too?
2. You indicate that along with the changing nature of the working
population, the workplace itself will also be changing. We are already
seeing evidence of this with increasing work out of the home, more
temporary positions, and so on. Based on such trends, would you expect
that Social Security would need to offer more points of access for its
customers, albeit at less traditional settings such as via their home
computer or through mobile offices or kiosks in malls, the post office,
or large workplaces? How would you expect such trends--delivering
services closer to where the public lives and works rather than only
through ``traditional'' Social Security offices--will affect customer
perceptions of Social Security? The morale of Social Security workers?
Social Security's bottom line in terms of administrative costs?
In your testimony you provide two examples of Baby Boomers
interacting with Social Security from their home and a local cafe, as
well as a description of their interacting with Social Security with
small wireless devices integrated with cell phones. In it you talk
about a ``personalized intelligent agent.'' Can you explain what that
means? When might we see such technology come into use? How long will
it take for the public to become comfortable with such new modes of
interaction? Will the costs of such technology serve as a barrier for
some families, diminishing their access to the best, most efficient
service? If so, what are some ways to mitigate that?
I appreciate your taking the time to answer these questions for the
record. If you have any questions concerning this request, please feel
free to contact Kim Hildred, Staff Director, Subcommittee on Social
Security at (202) 225-9263.
Sincerely,
E. Clay Shaw, Jr.
Chairman
cc: The Honorable Nancy Johnson
Chairman, Subcommittee on Human Resources
[No information had been received at the time of printing.]
February 28, 2000
Mr. Harry Hertz, Ph.D.
Director, Malcolm Baldrige National Quality Program
National Institute of Standards and Technology
Administration Building, Room A635
Gaithersburg, MD 20899
Dear Dr. Hertz:
As a follow up to the joint subcommittee hearing held on February
10 regarding the current and future service delivery challenges that
Social Security is facing, I would appreciate your answering the
following questions for the record:
1. Both the Advisory Board and GAO have recommended that Social
Security should follow the example of the most successful public and
private sector organizations and become more oriented toward meeting
the needs and expectations of its customers. Could you provide us
examples companies who have has done this? What steps did they take to
improve their company/agency performance?
2. I note the statement in your testimony (page 8) that
``performance tracking is extremely important.'' Can an organization
achieve high-performance goals without knowing, for example, how its
investments in technology are impacting worker productivity? Can such
an organization effectively plan for future service delivery needs
without tracking worker performance?
I assume that performance tracking is also a necessary component in
rewarding great employees and encouraging others to do better. How do
high performance companies recognize their employees for outstanding
service?
3. Can you comment on the common perception that private sector
companies and organizations do a better job providing customer service
than government agencies? Is that necessarily the case? Can you give
any examples that dispel that assumption?
I appreciate your taking the time to answer these questions for the
record. If you have any questions concerning this request, please feel
free to contact Kim Hildred, Staff Director, Subcommittee on Social
Security at (202) 225-9263.
Sincerely,
E. Clay Shaw, Jr.
Chairman
cc: The Honorable Nancy Johnson
Chairman, Subcommittee on Human Resources
[No information had been received at the time of printing.]
February 28, 2000
The Honorable Maurice P. McTigue
Q.S.O., Distinguished Visiting Scholar
Mercatus Center, George Mason University
3401 North Fairfax Drive, Suite 450
Arlington, VA 22201
Dear Mr. McTigue:
As a follow up to the joint subcommittee hearing held on February
10 regarding the current and future service delivery challenges that
Social Security is facing, I would appreciate your answering the
following questions for the record:
1. Are you aware of any public sector organization that is facing
service delivery issues similar to Social Security? Do you have any
suggestions of private and public sector organizations that Social
Security should compare themselves with on service delivery issues,
especially the problem areas noted by the Advisory Board?
2. As we move into the 21st century, you suggest that, with
heightened demands for customization, current hierarchical programs
like Social Security will be replaced by creative, innovative
organizations that can react instantaneously to customer needs. Relying
on your experience both with the Government Performance and Results Act
and other efforts to achieve change in government programs, what would
a federal agency need to do to achieve such change? How long would that
take? At what cost in terms of administrative costs especially?
3.You indicate that a sharp focus on customer needs starts with a
clear articulation of the ultimate goal of the organization. You
mention that SSA must decide whether its goal is to move income to
people in need or to help resolve people's dependency needs. Obviously,
this is a decision that SSA cannot make alone. Based on your
experiences in New Zealand, how does a country and its government go
about deciding what is the proper role of agencies such as SSA? If the
decision is made to deal with the larger issues such as dependency, how
can the various government agencies be included to work together to
accomplish such a goal?
4. Regarding your point that all government agencies have to decide
what their goal in life is--to simply dispense checks or to help
alleviate the reasons why someone is seeking government assistance, it
seems in Social Security's case it is both. The Old-Age and Survivors
Insurance program provides cash to families in which a worker has
retired or died. Yet in the case of disability insurance, lots of
people want to work and overcome their disabilities and may be able to
do so with the right kind of assistance. The recently-passed Ticket to
Work bill is based on this premise.
Do you have any concern about one agency serving both
functions?
Is there a reason to foresee Social Security's disability
programs becoming more closely aligned in the future with the
government's other health, unemployment, and training programs?
Does the model of welfare reform apply--where government
programs are converted from providing checks to those who meet certain
criteria of need into programs that seek to address the reasons why
someone is needy in the first place?
5. You describe one of the characteristics of high-quality
organizations in the future as the ability to instantly disperse, to
all appropriate levels, knowledge of best practices at the customer
interface. For us non-management gurus, what does that mean, especially
from the perspective of a Social Security beneficiary? How about from
the vantage of a Social Security employee?
6. ``A dream team that constantly looks at what is not possible now
but might in the future'' is a characteristic of a future organization
you mention in your testimony. Who would make up such a group? What
would be their objective? Do any government agencies in the U.S. have
such a group at work?
7. As you know, Social Security is an agency that operates based on
voluminous laws and regulations. Based on your experience, what is the
best way to ensure that Social Security is flexible enough to respond
to the challenges and customer service demands of tomorrow? Can this be
done while retaining all of today's laws and regulations? Can such deep
change be implemented gradually, or will Social Security need to
completely rethink how they go about providing services? Given some of
what we know about the culture of SSA and the highly political nature
of what Social Security does, does such change have to come from within
the agency? Is that likely? Will SSA have any choice but to change?
I appreciate your taking the time to answer these questions for the
record. If you have any questions concerning this request, please feel
free to contact Kim Hildred, Staff Director, Subcommittee on Social
Security at (202) 225-9263.
Sincerely,
E. Clay Shaw, Jr.
Chairman
cc: The Honorable Nancy Johnson
Chairman, Subcommittee on Human Resources
[No information had been received at the time of printing.]
[Whereupon, at 1:50 p.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of Terri Spurgeon, President, National Association of
Disability Examiners, Zachary, Louisiana
Chairman Shaw, Chairwoman Johnson and members of the
Subcommittees, on behalf of the members of the National
Association of Disability Examiners (NADE), thank you for this
opportunity to comment on current and future service delivery
challenges that the Social Security Administration is facing in
the 21st Century.
NADE is a professional association with a diverse
membership and a strong commitment to the viability of the
Social Security and Supplemental Security Income disability
programs. Although the majority of our members are disability
examiners, quality assurance and public relations personnel,
hearing officers, physicians, administrators and support staff
employed in the state Disability Determination Service (DDS)
agencies, our membership also includes Social Security claims
representatives, physicians, psychologists, attorneys,
advocates, representatives from private insurance companies,
and other professionals not in the DDSs who work with, and are
interested in, the evaluation of disability claims. Many of our
members have been, or are currently, involved in testing the
process changes envisioned in SSA's Disability Redesign
initiative. It is the diversity of our membership, as well as
our experience working directly with the Social Security and
SSI disability programs, which provides us with a unique
perspective and understanding of those programs and the public
they serve. We understand the importance of the Social Security
Administration's service to the public and the issues which
must be addressed in order to maintain and improve that
service.
Those of us who have worked with the Social Security and
Supplemental Security Income programs for even a short time
have seen enormous increases in the complexity of the issues
involved in administering these programs. We do not expect that
to change. In fact, many of the Disability Redesign
initiatives, while simplifying the process for the claimant,
have increased the responsibilities of the adjudicator and the
complexity of the decision making process. The redefined role
of the disability adjudicator now encompasses responsibilities
and tasks previously performed by the medical consultant and
have significantly increased the scope of their duties.
Legislative initiatives, court decisions and an aging, and
increasingly diverse, population will further increase the
complexities of these programs. It is imperative that Congress
act now to ensure that resources are available to meet the
challenges ahead.
The Social Security Advisory Board, in their September 1999
Report noted, ``The responsibilities of the Social Security
Administration in serving the public are numerous and
complex.'' These responsibilities include:
Issuing Social Security numbers
Maintaining wage records
Determining eligibility for OASDI benefits
Determining eligibility for SSI
Keeping up with changes in beneficiary
circumstances (postentitlement changes)
Delivery of related beneficiary service
Providing public information
Developing program policy
Resolving disputes
Despite the continued increase in the number and complexity
of the programs administered by SSA, the Advisory Board's
September 1999 report documents the dramatic decline in SSA
staff. The impact of this ``downsizing'' on service delivery
cannot be overemphasized. Continued budget reductions will only
serve to further erode public service and public confidence in
the Social Security program.
Robert J Myers, former Chief Actuary and Deputy
Commissioner of Social Security, in his March 5, 1992 testimony
before the Subcommittee on Social Security stated:
``Unfortunately, in recent years, the various services provided
by the Social Security Administration have deteriorated
somewhat. This, in my opinion, has been due to inadequate funds
being made available for administrative expenses--and not to
the lack of zeal or ability on the part of the administrators.
. . . . Proper administration of an insurance system--whether
social insurance or private insurance--requires that
administrative expenses should be neither too low nor too high.
In the latter case, the funds available for benefits would be
eroded. In the former case, inadequate service would be
provided. In fact, in some instances weak administration could
mean improperly excessive benefit payments due to fraud and
abuse.''
The need for appropriate--and adequate--funding for
administrative expenses described in Mr. Myers' 1992 testimony
remains true today and provides a framework for the proper
administration of Social Security's insurance programs.
The programs administered by the Social Security
Administration touch the lives of every American. It is
irresponsible to have an Agency this important be underfunded
and understaffed. We echo the Advisory Board's belief that,
``It is entirely appropriate that spending for administration
be set at a level that fits the needs of Social Security's
taxpayers and beneficiaries rather than at an arbitrary level
that fits within the government's overall discretionary
spending cap.''
The State DDSs have historically met the challenges posed
by limited resources and increased program demands. But there
is a cost to that achievement and a limit to how long it can be
sustained. NADE has consistently expressed the need for
adequate resources, including funding, staffing, training and
clear and timely operating instructions. While we recognize
that funds for government programs are limited we believe that
if spending for administrative costs is not sufficient to
ensure accurate decisions and maintain program integrity, to
obtain quality medical evidence to document disability claims
and to combat fraud and abuse, then program costs will
increase. It is far better to invest in an adequate and well
trained staff that will ensure that those who deserve benefit
payments receive them, and receive them in a timely manner, and
that those who do not deserve benefit payments do not get them.
It is far better to invest in the quality of service delivery
and to see that quality of service reflected in how SSA is able
to meet the expectations of its constituents, than to
acknowledge that quality public service comes at too high a
cost, and contribute to further erosion of the public's
confidence in the service they receive from their government.
We concur with the recommendation in the September 1999
Advisory Board report that improvements in the disability
process should remain a priority of the agency and we strongly
support the five priority measures described in their August
1998 report:
Development and implementation of an ongoing joint
training program for all adjudicators;
Development of a single presentation of disability
policy that is binding on all decision makers, including the
updating of medical listings and vocational standards;
Development and implementation of a quality
assurance system to unify the application of policy throughout
the disability determination system;
Improvement in the quality of medical evidence
that is used in determining disability claims; and
Development and implementation of a computer
system that will provide adequate support to all elements of
the disability claims process.
All of these require adequate resources, including funding
and staffing.
Ongoing, joint training is needed, both to address the
increased complexity of the issues involved in the development
and adjudication of claims, and to improve the quality of the
decision. NADE has consistently stressed, both to Congress and
to the Social Security Administration, the need for ongoing
training. In our October 1999 testimony prepared for these
Subcommittees we stated:
The Telecenters and Field Offices are the first point of
contact for most disability applicants. While disability is a
relatively small part of their workload the quality of the
completed application at this level can have a significant
impact on the efficiency with which the claim is processed at
the DDS level. It is important, then, that these components
work together to provide quality service to all applicants. To
do this requires ongoing communication and an emphasis on
teamwork. Unfortunately, communication between the Field
Offices and the DDSs was severely curtailed with the workforce
reductions in the 1980s. Efforts to increase communication
between all components have recently been initiated and these
efforts must be maintained. This, again, will require adequate
staffing levels and coordinated training initiatives. SSA must
invest in the training of its personnel to insure that those
who take the applications for disability benefits, as well as
those who adjudicate the claims, have the necessary skills and
knowledge to do so. . . . .Ongoing training is important; joint
training is essential.''
It is also essential that the initiatives to increase
communication between components be continued. Again, this
cannot happen without adequate resources.
In 1999 Congress passed the Ticket to Work and Work
Incentives Improvement Act. This legislation assures that more
Americans with disabilities will have an opportunity to
participate in the workforce and lessen their dependence on
public benefits. NADE supported this legislation and we applaud
this Congressional initiative. However, while the actual impact
of this legislation on Field Office and DDS staff and resources
remains unknown, it is clear that additional resources,
including staffing and training, will be needed. Other
congressional initiatives, as well as Circuit Court and Supreme
Court decisions, have had a significant impact on our
workloads. As the complexity of the programs we administer
increases so does the need for ongoing training. Unfortunately,
staff reductions and budget cuts reduce SSA's ability to
conduct training at the very time that more is needed.
In addition to ongoing, joint training, NADE has long
stressed the need for a single presentation of disability
policy that is binding on all decision makers. This must be an
agency priority if the Social Security Administration is to
insure consistency in the decision making process and restore
public confidence in the program. However, this cannot be
accomplished without a strong, consistent and inclusive quality
assurance system.
SSA's quality review process has a significant ability to
shape disability policy through subtle messages imparted by
tighter or looser reviews, by the kinds of decisions that are
selected for review or even by increasing or decreasing the
size of the review sample. A strong, consistent and inclusive
quality assurance system, with the review process applied in a
similar manner to decisions made by the DDSs and by OHA, can be
a major factor in assuring that program policy is implemented
in a manner that is consistent, fair and nationally uniform.
A single presentation of disability policy and a strong,
consistent and inclusive quality review process will promote
uniformity in the decision making process. Quality decisions,
however, require quality (complete, detailed and descriptive)
medical evidence. Changes in the physician/patient relationship
and in the way medical records are maintained and stored have
impacted on our ability to obtain the medical evidence which is
the backbone of any disability decision. To address these
issues, and to improve the quality of the medical evidence
received, we must increase our outreach to the medical
community and provide appropriate reimbursement for the
information received. However, as the DDSs face severe budget
cuts they are being asked to reduce expenditures for medical
evidence. Quality decisions rely on quality medical evidence.
If administrative funding is not available to obtain that
evidence, program costs will undoubtedly increase.
NADE recognizes the value of technology and computer
support and urges continued development in this area. However,
we would echo the Advisory Board's statement that the
Disability Insurance and SSI workloads ``. . . .are highly
labor intensive and do not lend themselves readily to
significant savings though systems improvements.'' Computers
cannot replace people in these areas.
In an effort to improve efficiency and increase public
service, in1994 the Social Security Administration issued its
plan to redesign the disability claims process. This new
process (prototype) is now being tested in 10 states. NADE
supports the testing of this prototype although we continue to
have reservations about some aspects of the new process. We
have voiced these reservations to both Congress and the Social
Security Administration. We are not convinced that the new
process will improve efficiency, provide better service to our
customers or increase public satisfaction. We hope that the
prototype will produce sufficient data to clearly establish
which aspects of this new process will work and which ones will
not. We urge extreme caution, however, before full national
implementation of this process, which eliminates the
reconsideration level of appeal, until the necessary and well
tested changes have been made at the OHA level of appeal that
will produce some degree of assurance that OHA is equipped to
handle the increase in the number of appeals. NADE believes
that if SSA were to adopt the single presentation of policy,
ongoing joint training and changes in the quality assurance
process, the quality of service provided to its customers will
be greatly enhanced and provide support for the new disability
claims process.
Finally, we believe that any action taken by Congress to
improve the Social Security Administration's service to the
public should include the elimination of the five month waiting
period for Title II applicants. Currently Title II disability
beneficiaries must wait five full calendar months from the
onset of their disability before they can begin receiving cash
benefits. Title XVI (SSI) beneficiaries, on the other hand, can
begin receiving benefits immediately. This fosters a perception
that the Title II program is unfair to the disabled worker who
has actually paid into the system. This is particularly evident
in cases involving claimants with terminal illnesses. Many of
these claims are closed by the DDSs as ``no decision'' cases
due to the fact that the claimant died during the waiting
period. NADE's Position Paper on this subject has been
previously shared with the Social Security Administration and
with members of this Subcommittee. We have been encouraged by
recent actions by the Congress and by SSA to address many
issues that deal with the public's confidence in the disability
program and the public's perception of ``fairness'' between the
two disability programs. NADE strongly urges Congress and SSA
to work together to produce legislation that will eliminate, or
significantly reduce, the waiting period. We offer the
expertise of our membership to assist in this effort.
Again, thank you for allowing NADE this opportunity to
comment.
Statement of Michael A. Steinberg, Esquire, Michael Steinberg &
Associates, Tampa, Florida
Mr. Chairman and Members of the House Ways and Means
Committee, Subcommittee on Social Security:
How do you know if you are a baby boomer? If you remember
drinking ``fizzies,'' you might be a baby boomer. If you
remember eating Pillsbury ``space food sticks,'' you might be a
baby boomer. If ``AIDS'' caused you to lose weight because it
was a diet chocolate candy, you might be a baby boomer. If,
when someone mentions Ron Howard, you think of ``Opie,'' you
might be a baby boomer. If your favorite pro wrestler is Chief
Wahoo MacDaniel. If you remember having to actually get up and
turn the dial on your television set. If your favorite brand of
sneakers was P.F. Flyers. If, when you think of famous Chinese
chefs, the first one that comes to mind is Hop Sing. If, when
you hear the name ``Buffy,'' you think of Jody instead of the
vampire slayer. If you have ever used a slide rule. If you know
what word follows ``My Mother the------------------------.'' If
you're ever worn a Tonomatic belt. If someone asks if you
remember Goldie Hawn's first T.V. series and your answer is
``You bet your sweet bippie.'' If you remember when the names
of cereal started off with the word ``sugar,'' i.e, Sugar Pops,
Sugar Smacks, Sugar Frosted Flakes, and, the initials AMC make
you think of the Gremlin and Pacer, rather than a movie
theater, you just might be a baby boomer.
Today's hearing was announced on February 3, 2000. This
would give an interested member of the public only six days
including the weekend to prepare a written statement and
deliver 200 copies to the Subcommittee office if they wanted to
distribute their statement to the general public at this
hearing. Thanks to the internet and the Subcommittee's website,
an interested member of the public can check on a daily basis
to see whether hearings are scheduled, prepare a statement, and
have the same delivered in time for this hearing. This would
have been almost impossible for the general public only a few
years ago.
Today's discussion involves the preparedness of the Social
Security Administration to deal with the impending influx of
Social Security recipients in the near future. There are two
main hurdles the Social Security Administration faces in
administering the retirement and disability programs, to-wit:
(1) the dissemination of information to the public; and (2)
internal communication within the Administration.
The administration of the Social Security program involves
implementation of the Social Security Act, regulations,
programs operation manual, Hallex, Social Security rulings,
etc. These are very complicated rules and regulations on par
with the Internal Revenue Code. One of the primary complaints I
have heard from my clients is that they have been given
incomplete or incorrect information by the Social Security
Administration. This has resulted in devastating consequences
to their financial well-being, as well as to their health. The
Social Security Administration's toll-free 800 number is
universally considered subpar by most Social Security claimant
representatives. Communication with the Appeals Council of the
Social Security Administration is almost nil.
A possible solution to dealing with the expected, but
unknown, increase in claims is through the utilization of the
private sector to assist in preparing and/or processing claims.
A comparison could be made to the way the Internal Revenue
Service deals with taxpayers. Imagine the chaos which would
occur if the Internal Revenue Service attempted to handle all
IRS matters internally; where private professionals were not
permitted to charge a fee for assisting a taxpayer with filing
a tax return without first filing a fee petition to the IRS for
approval of the fee requested.
Taxpayers use a variety of experts to assist them with
planning and filing tax forms. For simple matters, a bookkeeper
or non-CPA accountant would suffice. For more complicated
returns, the taxpayer might desire to use a CPA. In the event
of a disputed claim, a tax attorney might be preferable.
While it is commendable for the government to want to
protect Social Security claimants and recipients from paying
unduly high fees, the goal to provide quality service is
defeated if access to quality service is not available, because
it is not financially feasible for experts in the private
sector to assist claimants.
Currently, there is a mechanism for approving attorney fees
in disputed disability claims, but a claimant should not have
to wait until he has a problem, before retaining an expert. The
adage, ``An ounce of prevention is worth a pound of cure'' (.44
kilograms for those who insist on using metric), is appropriate
in this arena. If experts were allowed to charge a fee without
first seeking approval from the Administration, a large number
of experts would make their services available to claimants.
Of course, the Social Security Administration could still
provide services at no charge. The cost of services by the
private sector would be governed by the principle of supply and
demand.
Historically, Social Security claimants and recipients have
been dissatisfied with the quality of service provided by the
Social Security Administration. There is no reason to believe
that this would improve in the future unless tremendous changes
take place which necessarily would involve enormous amounts of
money.
I would propose an amendment to the Social Security Act,
removing the requirement that a person desiring to charge a fee
for assisting a claimant or recipient, must first file a fee
petition, which must be approved before he can charge a fee. It
might be prudent to require an examination and licensing to
insure the provider is competent to provide this service.
A second recommendation would be to make Social Security
records more accessible to the claimant or recipient (and his
authorized representative) as well as to make those records
more accessible internally . This writer is not unmindful of
the privacy problems inherent in disseminating information via
the internet, but these problems are no more insurmountable
than those with trading stock, banking, buying software, or
purchasing airline tickets.
In order to keep up with the expected volume of claims, the
Social Security Administration must begin storing medical
records and other paper electronically. Entire claims files
must be instantly accessible. The days when paper files are
mailed to six or seven locations during a claims proceeding,
finally to be stored at a huge megacenter, are numbered.
My final suggestion is to encourage universities and
colleges to teach Social Security representation just as they
would teach tax and accounting. In-house training by Social
Security is not enough to insure quality service and
representation either in the private sector or within the
Social Security Administration.
I foresee the day when a Social Security claimant can go to
a neighborhood Social Security claims representative, pay a
nominal fee, and have his claim for benefits filed
electronically; when a recipient can ask his representative for
assistance in planning his retirement and determine his best
options with respect to continuing employment and medical care;
and where a claim for disability benefits will not take several
years.
With no disrespect to the members of the Social Security
Advisory Board or Government Accounting Office, how many of
them have actually represented claimants or served at a Social
Security branch office and processed claims. In order for these
hearings to have any substance, Congress must hear from persons
actually involved in the system, i.e. claimants, administrative
law judges, attorneys, claims representatives, and disability
determiners, and not just the administrative heads of these
groups who are out of touch with the reality of the system.
As an expert on Social Security law and policy, and having
personally represented thousands of Social Security claimants
and recipients during my eighteen years practicing law, I would
be happy to share my knowledge and experience at any future
hearings.
Respectfully submitted,
Michael Steinberg, Esquire
Michael Steinberg & Associates
1000 N. Ashley Drive, Ste. 801
Tampa, FL 33602
(813) 221-1300
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