[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
       CHALLENGES FACING THE NEW COMMISSIONER OF SOCIAL SECURITY
=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 2, 2002

                               __________

                           Serial No. 107-83

                               __________

         Printed for the use of the Committee on Ways and Means










                           U.S. GOVERNMENT PRINTING OFFICE
83-375                         WASHINGTON : 2003
____________________________________________________________________________
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                      COMMITTEE ON WAYS AND MEANS
                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa                     JOHN LEWIS, Georgia
SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington            MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia                 WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania           XAVIER BECERRA, California
WES WATKINS, Oklahoma                KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
                     Allison Giles, Chief of Staff
                  Janice Mays, Minority Chief Counsel
                                 ------                                

                    Subcommittee on Social Security
                    E. CLAY SHAW, Florida, Chairman

SAM JOHNSON, Texas                   ROBERT T. MATSUI, California
MAC COLLINS, Georgia                 LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona               BENJAMIN L. CARDIN, Maryland
KENNY C. HULSHOF, Missouri           EARL POMEROY, North Dakota
RON LEWIS, Kentucky                  XAVIER BECERRA, California
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin


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
Advisories announcing the hearing......................2, 4, 5, 6, 7, 8

                               WITNESSES

Social Security Administration, Hon. Jo Anne B. Barnhart, 
  Commissioner...................................................    11
U.S. General Accounting Office, Barbara D. Bovbjerg, Director, 
  Education, Workforce, and Income Security Issues, accompanied 
  by David L. McClure, Director, Information Technology 
  Management Issues..............................................    52
Social Security Administration, Office of the Inspector General, 
  Hon. James G. Huse, Jr., Inspector General.....................    69
Social Security Advisory Board, Hon. Hal Daub, Chairman..........    73

                                 ______

AARP, Marie Smith................................................    84
Consortium for Citizens with Disabilities, Marty Ford............    88
National Committee to Preserve Social Security and Medicare, Hon. 
  Barbara Kennelly...............................................    97

                       SUBMISSIONS FOR THE RECORD

Alexander, LaJuana, Northwestern Technical College, Rock Spring, 
  GA, statement..................................................   111
American Congress of Community Supports and Employment Services, 
  Steve H. Perdue, letter........................................   111
Association of Administrative Law Judges, Bronx, NY, Ronald G. 
  Bernoski, statement............................................   114
Association of Attorney-Advisors, Paducah, KY, Lisa Russell Hall, 
  letter.........................................................   124
Federal Bar Association, Social Security Section, Kathleen 
  McGraw, and Frederick R. Waitsman, letter......................   126
Hepatitis C Action Movement, Saratoga Springs, NY, David Marks, 
  statement......................................................   131
National Council of Social Security Management Associations Inc., 
  Hackensack, NJ, Anthony T. Pezza, statement....................   132
National Organization of Social Security Claimants' 
  Representatives, Midland Park, NJ, Nancy G. Shor, statement....   136
National Treasury Employees Union, James A. Hill, statement......   140














       CHALLENGES FACING THE NEW COMMISSIONER OF SOCIAL SECURITY

                              ----------                              


                         THURSDAY, MAY 2, 2002

                  House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Social Security,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:03 a.m., in 
room B-318 Rayburn House Office Building, Hon. E. Clay Shaw, 
Jr., (Chairman of the Subcommittee) presiding.
    [The advisory and the revised, revised #2, revised #3, 
revised #4, and revised #5 advisories announcing the hearing 
follow:]

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
December 6, 2001
No. SS-11

             Shaw and Herger Announce Joint Hearing on the

               Challenges Facing the New Commissioner of

                            Social Security

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security, and Congressman Wally Herger (R-CA), Chairman, 
Subcommittee on Human Resources, Committee on Ways and Means, today 
announced that the Subcommittees will hold a joint hearing on the 
challenges facing the new Commissioner of Social Security. The hearing 
will take place on Thursday, December 13, 2001, in the main Committee 
hearing room, 1100 Longworth House Office Building, beginning at 10:00 
a.m.

    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. However, 
any individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Subcommittees and 
for inclusion in the printed record of the hearing.

BACKGROUND:

    Jo Anne B. Barnhart was sworn in on November 14, 2001, as the 14th 
Commissioner of Social Security in a ceremony at the agency's 
headquarters in Baltimore. Her term will expire on January 19, 2007.

    The mission of the Social Security Administration (SSA) is ``to 
promote the economic security of the nation's people through 
compassionate and vigilant leadership in shaping and managing America's 
Social Security programs.'' Established to protect Americans against 
the loss of income due to retirement, death, or disability, for almost 
two-thirds of a century Social Security has been enormously successful, 
reducing poverty among the nation's elderly by 62 percent in the last 
30 years. Today, over 45 million Americans receive Social Security, 
including almost 4 million children and over 5 million workers with 
disabilities.

    The Supplemental Security Income (SSI) program is a means-tested 
Federal assistance program administered by SSA which falls within the 
jurisdiction of the Subcommittee on Human Resources. It provides a 
monthly benefit to people who have limited assets and income and who 
are blind, disabled, or aged 65 or older. In 2001, 6.6 million disabled 
and elderly Americans will receive over $30 billion in Federal payments 
through the program. The Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (P.L. 104-193) required the Commissioner of 
Social Security to report annually to Congress on the status of the SSI 
program. In addition, P.L. 104-193 and related legislation included a 
number of changes in SSI law to address problems of fraud and abuse and 
control program growth.

    In order to oversee and administer SSA's programs, SSA employs 
approximately 63,000 workers nationwide. Services are delivered through 
a decentralized nationwide network of regional offices, field offices, 
hearing offices, teleservice centers, processing and data operations 
centers, and State Disability Determination Services. This year, SSA's 
workloads include paying benefits to more than 50 million people every 
month, processing more than 6 million claims for benefits, issuing 16 
million new and replacement Social Security numbers, posting 273 
million earnings items to workers' earnings records, handling 59 
million phone calls, and issuing 136 million Social Security Statements 
to workers.

    The U.S. General Accounting Office, SSA's Office of Inspector 
General, and the bipartisan Social Security Advisory Board have each 
issued reports summarizing the primary management challenges facing the 
agency. These include: ensuring long-term solvency of the Social 
Security system, improving disability determination and return to work 
processes, further strengthening the integrity of the SSI program, 
providing timely and accurate service delivery as workloads rise and 
employee retirements increase due to the aging of the baby boom, 
maintaining a sound information technology infrastructure to support 
its operations, and addressing the misuse of the Social Security 
number.

    In announcing the hearing, Chairman Shaw stated: ``Social Security 
touches the lives of just about every American, providing essential 
income for workers and their families due to retirement, death, or 
disability. Social Security employees are among the best in Federal 
service. Yet the retirement of the baby boom generation will create 
unprecedented challenges for the agency. Chief among these is saving 
Social Security from bankruptcy. Second is the ability to deliver 
effective service and stewardship, as workloads rise 50 percent and 
more than half the agency's employees are eligible to retire in the 
coming decade. Equally important is fixing a broken disability 
determination and return to work process where workers with 
disabilities wait far too long to receive the benefits they deserve. 
Lastly, as we have seen in our numerous hearings on identity theft and 
from the tragic events of September 11th, safeguards to protect Social 
Security numbers must be enhanced.''

    Chairman Herger stated: ``SSI provides a lifeline to the neediest 
aged and disabled Americans. It is our responsibility to ensure 
benefits reach those who need them and to protect both the 
beneficiaries and taxpayers from fraudulent payments and wasteful 
practices that threaten program integrity and public support for these 
essential benefits.''

FOCUS OF THE HEARING:

    The Subcommittees will examine the new Commissioner's vision and 
action priorities for the agency. In addition, the Subcommittees are 
particularly interested in hearing specific action recommendations from 
the invited witnesses who are leading stakeholders in the successful 
resolution of these challenges.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610 by the close of business, Thursday, December 27, 2001. 
Those filing written statements who wish to have their statements 
distributed to the press and interested public at the hearing should 
deliver their 200 copies to the Subcommittee on Social Security in room 
B-316 Rayburn House Office Building, in an open and searchable package 
48 hours before the hearing. The U.S. Capitol Police will refuse 
unopened and unsearchable deliveries to all House Office buildings.

FORMATTING REQUIREMENTS:

    Each statement presented for printing to the Committee by a 
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 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.

    1.  Due  to  the  change  in  House  mail  policy,  all  statements 
 and  any accompanying exhibits for printing must be submitted 
electronically to [email protected], along with 
a fax copy to (202) 225-2610, in WordPerfect or MS Word format and MUST 
NOT exceed a total of 10 pages including attachments. Witnesses are 
advised that the Committee will rely on electronic submissions for 
printing the official hearing record.

    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.

    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.

    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.

    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 accommodation needs in general (including availability of 
Committee materials in alternative formats) may be directed to the 
Committee as noted above.

                                 

                * * * NOTICE--HEARING POSTPONEMENT * * *

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
December 7, 2001
No. SS-11-Revised

            Postponement of Joint Hearing on the Challenges

             Facing the New Commissioner of Social Security

                      Thursday, December 13, 2001

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security, and Congressman Wally Herger (R-CA), Chairman, 
Subcommittee on Human Resources, Committee on Ways and Means, today 
announced the Subcommittees' joint hearing on the challenges facing the 
new Commissioner of Social Security, previously scheduled for Thursday, 
December 13, 2001, at 10:00 a.m., in the main Committee hearing room, 
1100 Longworth House Office Building, has been postponed and will be 
rescheduled at a later date.

                                 

                * * * NOTICE--HEARING RESCHEDULED * * *

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 7, 2002
No. SS-11-Revised #2

                    Rescheduled Joint Hearing on the

                 Challenges Facing the New Commissioner

                      Thursday, February 14, 2002

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security, and Congressman Wally Herger (R-CA), Chairman, 
Subcommittee on Human Resources, Committee on Ways and Means, today 
announced the Subcommittees' joint hearing on the challenges facing the 
new Commissioner of Social Security, previously scheduled for Thursday, 
December 13, 2001, will now be held on Thursday, February 14, 2002, at 
10:00 a.m., in the main Committee hearing room, 1100 Longworth House 
Office Building.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
202/225-2610 by the close of business, Thursday, February 28, 2002. 
Those filing written statements who wish to have their statements 
distributed to the press and interested public at the hearing should 
deliver their 200 copies to the Social Security Subcommittee in room B-
316 Rayburn House Office Building, in an open and searchable package 48 
hours before the hearing. The U.S. Capitol Police will refuse unopened 
and unsearchable deliveries to all House Office Building.

    All other details for the hearing remain the same. (See 
Subcommittees' press release No. SS-11, dated December 6, 2001.)

FORMATTING REQUIREMENTS:

    Each statement presented for printing to the Committee by a 
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 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.

    1. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
``[email protected]'', along with a fax copy to 
202/225-2610, in Word Perfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.

    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.

    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.

    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.

    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.

    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 accommodation needs in general (including availability of 
Committee materials in alternative formats) may be directed to the 
Committee as noted above.

                                 

                * * * NOTICE--HEARING POSTPONEMENT * * *

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 13, 2002
No. SS-11-Revised #3

            Postponement of Joint Hearing on the Challenges

             Facing the New Commissioner of Social Security

                      Thursday, February 14, 2002

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security, and Congressman Wally Herger (R-CA), Chairman, 
Subcommittee on Human Resources, Committee on Ways and Means, today 
announced the Subcommittees' joint hearing on the challenges facing the 
new Commissioner of Social Security, previously scheduled for Thursday, 
February 14, 2002, at 10:00 a.m., in the main Committee hearing room, 
1100 Longworth House Office Building, has been postponed and will be 
rescheduled at a later date.

                                 

                * * * NOTICE--HEARING RESCHEDULED * * *

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
April 24, 2002
No. SS-11-Revised #4

  Shaw Announces Rescheduled Hearing on the Challenges Facing the New 
                              Commissioner

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee hearing on Challenges Facing the New Commissioner 
of Social Security previously scheduled for February 14, 2002, will now 
will take place on Thursday, May 2, 2002, at 9:30 a.m., in the main 
Committee hearing room, 1100 Longworth House Office Building. The 
hearing will end no later than 12:00 p.m.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business, Thursday, May 16, 2002. Those 
filing written statements who wish to have their statements distributed 
to the press and interested public at the hearing should deliver their 
200 copies to the Subcommittee on Social Security in room B-316 Rayburn 
House Office Building, in an open and searchable package 48 hours 
before the hearing. The U.S. Capitol Police will refuse sealed-packaged 
deliveries to all House Office Buildings.

    All other details for the hearing remain the same. (See 
Subcommittees' press releases No. SS-11, dated December 6, 2001, and 
No. SS-11-Revised #2, dated February 7, 2002.)

FORMATTING REQUIREMENTS:

    Each statement presented for printing to the Committee by a 
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 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.

    1. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.

    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.

    3. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.

    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 accommodation needs in general (including availability of 
Committee materials in alternative formats) may be directed to the 
Committee as noted above.

                                 

            * * * NOTICE--CHANGE IN TIME AND LOCATION * * *

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                    SUBCOMMITTEE ON SOCIAL SECURITY

                                                CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
April 30, 2002
No. SS-11-Revised #5

              Change in Time and Location for Subcommittee

                  Hearing on Challenges Facing the New

                    Commissioner of Social Security

    Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on 
Social Security of the Committee on Ways and Means, today announced 
that the Subcommittee hearing on Challenges Facing the New Commissioner 
of Social Security scheduled for Thursday, May 2, 2002, at 9:30 a.m., 
in the main Committee hearing room, 1100 Longworth House Office 
Building, will now be held at 9:00 a.m., in room B-318 Rayburn House 
Office Building. The hearing will end no later than 11:00 a.m. 

    All other details for the hearing remain the same. (See 
Subcommittees' advisories Nos. SS-11, dated December 6, 2001; SS-11-
Revised #2, dated February 7, 2002;

and SS-11-Revised #4, dated April 24, 2002.)

                                 

    Chairman SHAW. Good morning. Today our Committee will 
examine the challenges facing Commissioner of Social Security 
Jo Anne Barnhart. The Commission faces a monumental job of 
preparing the Social Security Administration (SSA) for the 
heavy responsibilities it faces in the coming decade, as the 
largest group ever of U.S. citizens turn from full-time workers 
into retirees. We will also hear from the public overseers of 
the Agency and from the representatives of those groups who 
receive the essential services Social Security provides.
    As we already know, the challenges facing the Social 
Security Administration are many, from long-term financing, to 
service delivery, to stewardship, to disability process 
improvements to the operating budget. Each one of these issues 
presents unique challenges and requires strong and decisive 
leadership. This leadership rests not only with the Agency's 
executives, but also with us here in the Congress and with the 
cooperation of stakeholders both within and outside Social 
Security.
    The Agency's future workload is daunting. It faces over a 
50-percent increase in retirement and disability work at the 
same time it is scheduled to lose half of its seasoned workers 
to retirement. Adequate resources for the Agency is one of my 
top priorities, but money without good management will not 
solve the overwhelming problems now beginning to break over the 
bow at Social Security.
    I was pleased to learn that the Commissioner is doing a 
top-down assessment of the Agency and its future needs. With 
this assessment in hand, I am sure we can work with the 
Commissioner, on a bipartisan basis, in both the House and the 
Senate, to give her the support she needs. Hopefully, we can 
get together on one thing, and that would be it.
    Certain issues of policy are also reaching a critical 
phase. Most important is securing Social Security's future for 
our children, our grandchildren, and generations to come. As 
Congress determines how best to strengthen this vital program, 
the importance of the Agency's assistance cannot be overstated. 
Also, drawing national attention is a disability claims process 
that simply does not work. In the delivery of services 
programwide, the need for better information and access through 
computer technology is one the public is quickly demanding from 
government.
    Finally, the events of September 11, have highlighted the 
security threat to the United States from stolen Social 
Security numbers. The Agency, the Inspector General, and this 
Subcommittee have been aware of the rising tide of identity 
theft and its precarious effect on its victims. Now, because of 
the shocking revelations that many of the terrorists and 
possibly many of the co-conspirators in the September bombing 
held falsified Social Security numbers, the need to protect the 
integrity of these numbers has become a matter of homeland 
security.
    Until we get this program under control, victims face 
financial ruin and our population lives in the shadow of 
another catastrophic event. We will act this year to further 
protect the privacy of Social Security numbers, and I will be 
calling on the Commissioner to help get this legislation 
passed.
    I look forward to hearing from the testimony of each of our 
witnesses today, as we work together to ready the Social 
Security Administration for its challenges in the 21st century.
    [The opening statement of Chairman Shaw follows:]
 Opening Statement of the Hon. E. Clay Shaw, Jr., a Representative in 
   Congress from the State of Florida, and Chairman, Subcommittee on 
                            Social Security
    Today, we have the opportunity to welcome the new Commissioner of 
Social Security, Jo Anne B. Barnhart. Mrs. Barnhart is our 14th 
Commissioner of Social Security and only the second Commissioner to be 
sworn in since the Social Security Administration became an independent 
agency in 1995. We appreciate having her appear before our Committee, 
and look forward to hearing her articulate her vision for the agency 
and outline her action priorities.
    As you know, the Social Security Administration (SSA) was 
established to provide an economic safety net against loss of income 
due to retirement, death or disability. For almost two-thirds of a 
century, SSA has successfully succeeded in reducing the poverty rate 
among the nation's elderly by 62 percent in 30 years.
    In addition to providing a retirement safety net, SSA administers 
two disability programs--Disability Insurance and Supplemental Security 
Income--which seeks to provide an economic safety net for workers who 
become disabled. The disability programs along with the Social Security 
trust fund face major solvency challenges as the baby boom generation 
begins to age and places demands on Social Security's services. 
Moreover, SSA's own workforce is facing retirement of approximately 
half of its employees due to retirement further complicating the 
predicted future demands on service delivery.
    The General Accounting Office (GAO), SSA's Office of Inspector 
General and the bipartisan Social Security Advisory Board have each 
issued reports summarizing their views on the primary management 
challenges facing the agency. Their primary concerns address the areas 
of solvency, disability determination and return to work processing and 
misuse of the Social Security number. Our Subcommittee has held many 
hearings examining these issues and their challenges, and we will 
continue to do so.
    Never before has a Commissioner of Social Security faced more 
challenges ranging from economic to workforce issues. We must waste no 
time in addressing these program concerns if we are to ensure their 
solvency and continuation for current and future generations.

                                 

    Chairman SHAW. Mr. Matsui?
    Mr. MATSUI. Thank you very much.
    Thank you very much, Mr. Chairman, for holding this 
hearing. I think this hearing, along with a few others, is 
probably one of the most important hearings that we, as Members 
of Congress, will have because obviously the results of what 
Commissioner Barnhart and her staff will be doing over the next 
few years will have a tremendous impact on each American, and 
so I appreciate your holding this hearing, and certainly I 
appreciate Commissioner Barnhart's appearance here today.
    I might just say that I worked with the Commissioner when 
she was in the Bush Administration, Bush 1 Administration, and 
I really enjoyed that relationship, and I look forward to your 
tenure as the Commissioner of Social Security. I appreciate the 
fact that you are here again today.
    I might, Mr. Chairman, if I may just take a moment to point 
out that Hal Daub, a colleague of ours, formerly on the 
Committee on Ways and Means, from Nebraska, will be testifying 
on the second panel today. I just want to welcome him here 
today. I think we came in together, if I am not mistaken. Maybe 
you came in 2 years later.
    Chairman SHAW. He came in 1980.
    Mr. MATSUI. Okay, 1980.
    Chairman SHAW. We also have Barbara Kennelly, another 
former Member of the Committee on Ways and Means.
    Mr. MATSUI. Representative Kennelly is here as well. She 
just came in, and she just got a new job with the National 
Committee to Preserve Social Security and Medicare, and we 
obviously look forward to working with her.
    Mr. Chairman, what you have said is absolutely correct, in 
terms of the issue of the fact that over the next few years 40 
million new Americans will go on the Social Security rolls. 
That will not only create more work for the system, but also 
probably create more disability claims as well and at a time 
when we have an increase in the volume of processing of claims, 
at the same time, in the 1980s, the budget constraints required 
us to reduce the workload in the Social Security 
Administration. So, now we have come to a point where we are 
going to have to make some critical decisions over the next few 
years. So, we look forward to finding out how we are going to 
be able to achieve that.
    I might also thank Commissioner Barnhart for her work on 
the service delivery assessment issue. I know that she has some 
preliminary numbers that she will give us today, and certainly 
we look forward to working with her on that issue.
    So thank you again, Mr. Chairman.
    Chairman SHAW. Thank you, Mr. Matsui.
    Ms. Barnhart, welcome back to this Committee. This is your 
second time before us. You, as all of the witnesses, proceed as 
you see fit. Your entire statement, without objection, and the 
statements of all of the witnesses will be placed in the 
record.

STATEMENT OF THE HON. JO ANNE B. BARNHART, COMMISSIONER, SOCIAL 
                    SECURITY ADMINISTRATION

    Ms. BARNHART. Thank you, Mr. Chairman, and Mr. Matsui. I 
really appreciate this opportunity to be here today. It is very 
important to talk about the challenges facing the Social 
Security Administration because, as you both indicated in your 
opening statements, they are many, and they are critically 
important.
    In my written testimony that I have submitted for the 
record, I go into some detail outlining what I consider to be 
the four basic and major challenges for the Agency.
    First of all, providing service, adequate and good service 
to the American people, particularly as baby boomers age and 
move into the retirement and disability population, improving 
program integrity through sound fiscal management and 
stewardship, insuring financial solvency and sustaining that 
solvency for future generations, and maintaining the quality of 
staff that SSA needs to meet those goals. As you mentioned, Mr. 
Chairman, we are expecting and projecting roughly one-half of 
our employees will retire over the next few years. I call these 
four challenges the four S's: service, stewardship, staffing, 
and solvency.
    I would like to use the remainder of my time this morning 
not to read that statement, however, but rather to talk about 
the disability program which, as you know, is perhaps the most 
challenging and the most pressing issue that the Agency faces. 
As Mr. Matsui indicated in his opening remarks, I have been 
working on a service delivery assessment and budget which I 
promised to Chairman Baucus during my confirmation and in 
conversations with each of you shortly after being confirmed by 
the Senate.
    I would like to take this opportunity to summarize the 
findings that I have----
    Chairman SHAW. Excuse me. Are these people with you?
    Ms. BARNHART. Yes, they are.
    [Laughter.]
    Ms. BARNHART. In the interest of time, I had given them a 
verbal cue so they would know when to come up so we wouldn't 
waste any of the Committee's time.
    I am going to summarize the findings to date, and time 
doesn't permit a complete technical explanation of this chart 
before you, but I wanted you to see it because it is going to 
provide the framework for the comments I want to make about the 
disability program today. We have provided to each of you, in 
blue binders, segmented copies on 8\1/2\ by 11 pieces of paper.
    [The charts follow:]


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                              ----------                              

      

  DISABILITY PROCESS TIME SUMMARY THROUGH THE APPEALS COUNCIL 
                FROM THE CLAIMANT'S PERSPECTIVE

                        Less than 1% (7 Days) |


                                Task Time


[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                            1,153 Days Total

    The Pie Chart above shows the three components of time 
reflected on the Disability Process Flowchart. The following 
assumptions are made:
         The claimant pursued the claim all the way 
        through the Appeals Council and was denied at each 
        step.
         No internal DDS reviews or ROQA reviews were 
        conducted.
         MER and CE were requested at the initial 
        claim, reconsideration, and hearing level.
         The hearing was not rescheduled.
         Process Time = Task Time + Delay Time + Queue 
        Time
         Task Time is based on average task (hands on) 
        times.
         Delay Time is time largely beyond SSA control 
        such as MER/CE time, 60-day appeal period, and so 
        forth.
         Queue Time is ``in-box'' time (more resources 
        would decrease queue time).
                                 

    Ms. BARNHART. Let me say, I did not intend to walk through 
this chart. We have already done so with members of your staffs 
earlier this week, but my staff would be happy to come up and 
brief you or your staff, as you would desire, in the future. A 
thorough briefing takes somewhere on the order of 2 hours, so 
we don't have time for that this morning.
    This chart shows what happens from the moment someone 
contacts Social Security. On that far left-hand side, they can 
contact us by calling the 800-number, calling the field office, 
or walking into a field office. The chart goes on to show what 
happens to what would be the average worst-case situation, and 
by that I mean someone who is denied at every stage of the 
system and goes all the way through the Federal court system, 
which is the gray at that far end.
    For Social Security's purposes, technically our 
responsibility and our process ends at that moment, the blue 
area there. The chart is color coded. The blue represents the 
field offices, this green the State Disability Determination 
Service (DDS) agencies. I am sitting in front of the Office of 
Hearings and Appeals (OHA). The yellow is the Appeals Council, 
and as I said, the gray is the court. We did that because it is 
important to understand the hand-off of the cases and the back-
and-forth that occurs because that accounts for some of the 
processing time delays that we experience.
    You will also notice, and again I am not going to go into 
the specifics, but there are actually little deltas, red 
triangles throughout this process. What they represent are the 
points in the process that we have identified where there are 
delays, where backlogs start to happen, bottlenecks occur, 
areas that we need to look at specifically to make 
improvements. The improvements that we are looking at and 
developing at this point fall into different categories. There 
are those that are under our immediate control, things that I 
have the authority to change, based on operating systems within 
the Agency.
    There are also internal policies we have that can be 
changed by the Social Security Administration and regulations, 
noncontroversial regulations, that can improve the processing 
and the program. Beyond that, we will eventually look into the 
longer term policy issues related to the program because I 
believe that one of the things that has come through clearly is 
that the issues that create such a very lengthy process and 
complicated process are a combination, in fact, of all of those 
factors.
    Now, along the bottom here, you see calendars, little 
calendars, and what those represent are the length of time that 
it takes to get to that point in the process. For the average 
case, in the year 2001--we used 2001 because that was the last 
year for which we had complete data by the time the person 
moves into the Office of Hearings and Appeals, they are on day 
291. By the time they get out of the Office of Hearings and 
Appeals, they are at day 653, and by the time they get through 
the Appeals Council they are at day 1,153.
    Now, again, I want to emphasize approximately 40 percent of 
the millions of people who apply for disability each year are 
decided favorably at the DDS level. There is what we call a 
waterfall. Of the 60 percent that are not approved at the point 
of entry, a percentage of those, 41 percent, go to the next 
level, and so on and so forth. I would be happy to provide a 
waterfall, I am sure your staff has it, but we would be happy 
to provide our most recent so-called waterfall chart for you 
for the record.
    [The chart follows:]

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
                                 
    The people that you hear about, the people that we hear 
about, that we read about, the sad, sad cases of individuals 
who have disabilities and who ultimately are determined 
favorable at the end of this process, right now they are 
waiting 1,153 days. I want to acknowledge, first of all, the 
employees of Social Security and the DDS do an outstanding job. 
They are dealing with huge numbers of people. They work very 
hard. They are a dedicated workforce and, in no way, am I 
suggesting anything other than that. I am simply saying that, 
unfortunately, I believe the cases that we hear about that 
demand our attention are the so-called outlier cases, the cases 
that do go all the way through to that level.
    With that said, they can put the chart down, but I think it 
provides a very important framework as we talk about this 
issue.
    Thank you very much, everyone.
    These are the folks, by the way, who put this chart 
together, by and large. It took a lot of work to do that. They 
work with people throughout the Agency at every level, and many 
of them are from our field, which is very, very important.
    This is what I call the toothpick chart. If you look at 
this chart, the entire circle represents the 1,153 days, which 
was again the time from the point of entry through the Appeals 
Council. I should mention, by the way, if the case goes on to 
court, it adds another 18 months to the process. So, we are 
talking 5 years if the case goes through the court system.
    Back to this chart. If you look at this chart the yellow 
area that is called Queue Time, 525 days, we have associated 
that amount of time in the process with backlogs. The way we 
calculate backlogs in the Agency is we determine how many cases 
we need to have in the so-called pipeline. Basing that on ideal 
service, processing cases at the DDS in 63 days, we need to 
have 400,000 cases in the pipeline. Processing cases at OHA in 
208 days, we need to have 300,000 cases in the pipeline.
    We then take what our pendings are, subtract that pipeline 
number from it, and get the backlog. The backlog now takes 525 
days in that process. So, in other words, there are cases that 
are waiting 525 days simply because of all of the cases in 
front of them.
    The delay time, the blue area, that is the area that we are 
looking at specifically for improvements. Of that 621 days, 
some of it we really do not have any control over, and I am not 
sure we would want to change anyway. For example, throughout 
this process, and included in that 1,153 days, are three 
different periods of 60 days where claimants have the ability 
to request the next step of appeal. There are also some other 
notification requirements: the number of days we have to 
provide when we schedule a hearing for them so they know the 
hearing is I think that is 20 days. After the hearing, we leave 
the record open for 22 days so that the claimant can submit 
even further evidence, medical evidence or information for the 
file.
    So, all of those due process days are included in that as 
well. That accounts for somewhere around 200 of the days in the 
621. I could provide this for the record. We, in fact, did 
explain to your staff when we briefed them earlier this week, a 
complete accounting of the 621 days.
    [The information follows:]

    The 621 days displayed as ``Delay Time'' on the chart assumes that 
the applicant is denied at each stage of SSA's adjudicative process, 
appeals at each of the three opportunities, and thus goes through SSA's 
entire administrative process. The times are estimated averages. 
Approximately one third of the delay time is attributable to legal 
requirements. This includes 180 days to allow for the statutorily set 
time for filing appeals (60 days each). Another 20 days is included for 
the legal notification requirement once a hearing is scheduled. Roughly 
another third of the delay time occurs in securing the information 
needed to make the disability determination. This includes over 180 
days spent securing medical evidence of record and consultative 
examination evidence at the initial, reconsideration and hearing levels 
and another 22 days after a hearing during which a claimant or 
representative may submit additional evidence. The remaining third of 
the delay time is comprised of 21 days between the initial call to SSA 
and an appointment to file an application, over 40 days mailing the 
file between offices, almost 60 days locating the file, and about 80 
days preparing the file for a hearing judge.

                                 
    Of those days, also, 40 days are lost due to mail time, a 
folder being mailed back and forth from the DDS to the field 
office or that field office to OHA or that hearing office and 
so forth. Approximately, 60 days are spent finding the folder. 
Actually, I think we calculated 56, but I am kind of rounding 
everything off. So, when you get the materials from us, you 
will see that actually the numbers vary a little bit. You can 
imagine, with millions of claims and hundreds of thousands of 
cases moving through this system on a regular basis, it becomes 
a real challenge when the folder is going back and forth 
between those different offices to locate the folder in a 
timely fashion. In fact, we have issues in the court system, 
where our attorneys are being held in contempt of court because 
we are unable to find the files within the time frame that the 
judge sets the case.
    So, those are things, quite frankly, we obviously can 
address. We are looking at things like should we be using some 
kind of expedited mail system, in the immediate term, as 
opposed to just the U.S. mail? Should we be using Express Mail, 
should we be using UPS, should we be using FedEx and what are 
the costs of those kinds of things?
    This chart, and the mapping out of this process has been an 
evolving effort with the entire Agency working together to 
provide the information. What it led to was a realization, on 
the part of myself and my senior staff, some of the Deputy 
Commissioners in the Agency, that we really must move toward an 
electronic disability process. We really must have an 
electronic file. We could eliminate the lost folder question 
because there would be an electronic copy of the file.
    We can virtually eliminate the mail issues because people 
would have access to the files through the system. Right there 
you would have 100 days that you could pick up of this 621. So, 
that is the kind of analysis that we are doing. I mention that 
simply as an example, not to go through all of the things that 
we are looking at, but just for exemplary purposes.
    It is a very complicated process. We are looking at it, as 
I say, from all levels, to take immediate action, mid-term 
action, what I call mid-term action, and what I call long-term 
action. When you look at this chart and you see that of the 
1,153 days, the actual hands-on time working the case is 7 days 
of the 1,153 days, I think it is a striking symbol of the fact 
that we need to change the entire dynamics of that circle. It 
needs to become a pie chart. That toothpick needs to certainly 
at least move out to a wedge of pie, and we need to change the 
configuration of the circle from the standpoint of the total 
number of days that we are looking at.
    I have included in my testimony some of the decisions that 
I have made to date in both the hearing process, as well as the 
initial claims process. We are in the process now of beginning 
to bargain with the union on impact and implementation of 
those. So, many of them have not gone into effect yet, but I 
would be happy to discuss those initiatives where I have made 
decisions already or to answer any questions that you might 
have.
    Again, I just want to thank you very much for giving me 
this opportunity to discuss the disability program and other 
challenges this Agency faces.
    [The prepared statement of Ms. Barnhart follows:]
    Statement of the Hon. Jo Anne B. Barnhart, Commissioner, Social 
                        Security Administration
    Chairman Shaw, Representative Matsui and Members of the 
Subcommittee:
    I am pleased to be here today in my second appearance before you as 
the Commissioner of Social Security to discuss the challenges facing 
the Social Security Administration (SSA). For all of the people who 
depend on Social Security and Supplemental Security Income (SSI), the 
work we do matters greatly. We must provide the kind of service that 
each and every claimant, beneficiary, and citizen needs and deserves.
    I also want to thank you for holding this hearing at this time, 
because it gives me the chance to discuss with you the wide range of 
important issues facing Social Security early in my tenure. I've been 
Commissioner just over five months now. When I think of the things I 
want the agency to accomplish during my watch, it seems like the time 
has flown by. I look forward to working with you and all the members of 
the Subcommittee, as well as the experienced and dedicated employees at 
SSA.
    Today, Social Security faces great challenges: Giving the American 
people the service they deserve, particularly as the number of 
beneficiaries increases each year with the aging of the baby boomers; 
improving program integrity through sound fiscal stewardship; ensuring 
the program's financial solvency for future generations; and 
maintaining the quality staff SSA needs to meet these goals. I think of 
these challenges as the four S's: service, stewardship, staffing and 
solvency.
Service

    The Social Security Administration's programs touch almost every 
person in the nation in one way or another--whether to get a social 
security number, contribute through payroll taxes, apply for retirement 
or survivors benefits, or apply for disability benefits. And, 
generally, the agency does a good job of providing the kind of service 
people need, but there are other areas where we must improve. The most 
glaring of these areas is the disability process.
    I know everyone is concerned about the length of time the 
disability process takes. Quite frankly, I think the length of time the 
disability claims process can take is unacceptable.
    Over the last five years, through my work as a member of the Social 
Security Advisory Board and now as Commissioner, I have had the 
opportunity to visit SSA field offices, hearing offices, and State 
Disability Determination Services (DDS). For the past 5 months I have 
spent a lot of time getting different perspectives on the disability 
process. I have talked to many people--employees and the public, 
individually, in small and large groups, to hear about the concerns 
they have with the disability process, at both the initial and appeals 
levels.
    In the weeks leading up to my confirmation, I was often asked what 
additional resources would be required to get control over the delays 
in the disability process, and address other areas of concern. I said 
that I could not answer that question until I could analyze our current 
processes, determine the optimal levels of service from the point of 
view of both applicants and taxpayers--future applicants, and what was 
necessary to get us there.
    At my confirmation hearing before the Senate Finance Committee, 
Chairman Baucus and I discussed my plan to develop a service delivery 
budget, and I promised him that I would report back.
    As I mentioned, it is clear that the disability process takes too 
long.
    Let me also say that I am not waiting to take steps to improve the 
disability process where we can take action now. I feel very strongly 
that we must move forward now and make decisions on what we can do 
immediately to improve disability processing while laying the 
groundwork for additional mid- and longer-term improvements.
    For instance, SSA's prototype process has been in place in 10 
States since 1999. In December, I issued a Federal Register notice that 
the prototype would continue for six more months. That gave us time to 
evaluate the prototype, to see what works and what does not. Now is the 
time to make decisions and put them into effect nationwide.
    For instance, the prototype confirmed the value of the single 
decisionmaker (SDM) feature. This feature allows the claims examiner to 
make the determination without a mandatory physician sign-off on many 
claims (except for determinations for children and those with mental 
impairments) and relies on the examiner to decide when to seek 
consultant physician advice on difficult and complex claims. It lets 
the DDS make more effective use of examiner and medical consultant 
resources and provide faster determinations for some claimants. I have 
decided to put the SDM into practice now, so that all States can take 
advantage of it, as we continue to develop longer-term improvements.
    I have also decided not to extend the formal claimant conference 
feature of the prototype. This end of the line conference between 
claimant and examiner added processing time (an estimated 15 to 20 
days) and was not as effective as we had hoped in helping claimants 
understand claims issues. Most prototype States found early and ongoing 
contact with the claimant to be more effective.
    There have also been concerns that the Hearings Process Improvement 
project (HPI) has created even more bottlenecks in the process than it 
was intended to fix. In addition, SSA's past inability to hire 
Administrative Law Judges (ALJs) to make decisions at the hearing level 
of the disability process has had a profoundly adverse effect on our 
ability to provide timely service. Before I signed on, former Acting 
Commissioner Larry Massanari started a group looking at the hearing 
process. Thanks to their careful analysis and that of my own staff, I 
have made some additional decisions on short- and near-term changes in 
this area. We are required to bargain with employee unions before we 
can implement some of these changes, and we certainly intend to meet 
that obligation in good faith. The decisions include:

         Including ALJs in early screening for on-the-record 
        decisions;
         Developing a short form for fully favorable 
        decisions;
         Allowing ALJs to issue decisions from the bench 
        immediately after a hearing;
         Creating a law clerk position;
         Expanding videoteleconference hearings;
         Deploying speech recognition technology;
         Ending the hearing office technician rotation 
        requirement; and
         Digitally recording hearings.

    More needs to be done and we are continuing to work in this area, 
but these are important first steps. I also have some good news to 
report with regard to hiring ALJs. In October we were able to bring on 
board 126 new ALJs from a list of candidates that had been (and 
continues to be) the subject of litigation. I want to thank the Social 
Security Subcommittee for your interest in hiring the new judges, and 
hope that we can continue to rely on your support.
    One thing that has become clear is the need to accelerate 
implementation of what we call e-DIB, an electronic disability 
determination folder. This should organize, store, transmit, and track 
claimant files and medical evidence electronically. I have formed a 
committee of the deputy commissioners of the 3 offices most closely 
involved with this. We have a plan in place to have this process up and 
running in another 20 months. This will go a long way to speeding up 
the process.
Staffing

    As you are aware, many of SSA's employees are retirement-eligible 
and many more will become eligible over the next few years. We need to 
explore ways both to retain employees who may be eligible for 
retirement and recruit employees as they first enter the workforce. I 
believe part of that effort must be to reinforce the idea that pursuing 
a career in the Federal Government is a noble and worthy cause. We can 
even look creatively at this challenge as an opportunity for employment 
of our own SSI and SSDI recipients.
    Over the years, SSA has earned a well-deserved reputation as an 
agency with a ``can-do'' attitude as it has taken on new 
responsibilities, developed new technologies, and worked hard to meet 
increasing workloads. With the support of talented and dedicated 
employees, I believe that we can make service improvements at this time 
within our available resources, and that we can improve the efficiency 
of our processes as we fulfill our legislatively mandated duties.
Stewardship and Program Integrity

    I mentioned earlier the importance of good stewardship, but I'd 
like to elaborate a little bit on this theme. Providing true service to 
the public includes an obligation to ensure sound financial management. 
The people of America, who fund the Social Security program through 
their payroll tax contributions, and SSI through their income tax 
payments expect and deserve well managed programs. There is also a 
strong economic incentive for doing so. In several areas, such as SSA's 
continuing disability reviews, ensuring that disability beneficiaries 
still meet eligibility criteria can reap significant savings.
    But good stewardship involves more than money. The tragic events of 
September 11, and reports that some of the terrorists had Social 
Security numbers and cards, which may have been fraudulently obtained, 
have brought home the need to strengthen safeguards in our enumeration 
process. In response to those events, SSA formed a high-level response 
team, which includes participation from our Office of the Inspector 
General (IG), and from the New York and San Francisco Regions. We have 
already begun implementing a number of process improvements to help 
ensure that we are strengthening our capability to prevent those with 
criminal intent from using Social Security numbers and cards to advance 
their operations.
    In all program integrity areas, not simply identity fraud and 
enumeration but also in our efforts to improve our stewardship of the 
SSI program, I am looking forward to working with SSA's Inspector 
General. As a matter of fact, I met with the Inspector General during 
my first days in office to begin a review of his recommendations. And 
Deputy Commissioner Jim Lockhart and I met with the Comptroller General 
recently to discuss the SSI program's high risk designation and develop 
a plan for removing the designation from the SSI program. I have asked 
Mr. Lockhart to take the lead on this important initiative.
    With regard to September 11, although it has been several months 
since the terrorist attacks, I want to take this opportunity to express 
my pride in the response of SSA's employees to the terrorist attacks. 
Particularly in New York, but also in northern Virginia and throughout 
the country, they worked tirelessly to help those who lost family 
members in spite of the chaos and highly charged emotions of those 
first few days. They will always have my gratitude and respect for 
their quick and compassionate action.
Solvency

    Whatever their individual circumstances, the vast majority of 
Americans will at some point in their lives be touched by Social 
Security. By providing survivor benefits to children and spouses, 
disability benefits, retirement benefits, and SSI benefits, SSA's 
programs reach almost every single home. And for the millions of 
Americans currently receiving benefits, be it a supplement to 
retirement or critically needed income support, and for those who will 
become eligible in the future, we must make sure that we can offer the 
same assurances in the future.
    During my tenure as a member of the Social Security Advisory Board, 
one of the issues on which we pressed for action is to ensure the long-
term solvency and sustainability of Social Security. The combined 
assets of the Old-Age and Survivors and Disability Insurance Trust 
Funds are estimated to reach cash flow deficit in 2017 and become 
exhausted in 2041 according to the latest report of the Social Security 
Trustees. I believe it is important to act as far in advance of that 
time as possible to make necessary changes to the program.
    I also believe that the impetus for constructive improvements must 
come from a bipartisan consensus. While I am not an economist, as 
Commissioner I will work to help reach that consensus. The final report 
of the President's Commission to Strengthen Social Security is the 
beginning of public discussion to work toward that goal.
Conclusion

    In conclusion, Mr. Chairman, I did not assume my duties as 
Commissioner of Social Security in order to manage the status quo. 
Through my work on the Social Security Advisory Board, I am convinced 
that we can and must do better. In doing so, I will work within the 
Administration, with the Congress, and with the dedicated and 
experienced employees of the Social Security Administration to find the 
best solutions.
    Again, thank you for inviting me to be here today. As you know, in 
order to meet the challenges I've described, and others, we will also 
need the help and advice of the Congress, and your continued support to 
obtain the needed funding for our operations. I look forward to working 
with you to make Social Security's programs--especially disability--
more responsive to claimants and beneficiaries and more accountable to 
the nation's taxpayers.

                               

    Chairman SHAW. Thank you for a very fine presentation. I 
must say a very unusual chart.
    [Laughter.]
    Chairman SHAW. I have got a couple of questions; one with 
regard to the retiring employees and how that would be impacted 
by the introduction of electronic filing and electronic 
handling of these entire matters. How much personnel time or 
how many employees would this be able to replace?
    Second, I want to inquire, too, as to what exactly are you 
doing to phase-out maybe early retirement of some of these 
employees so that you are not being impacted all at once with 
new hires?
    Ms. BARNHART. Well, first of all, if I may say, Mr. 
Chairman, in terms of electronic disability, I wasn't looking 
at it as a way to reduce employees. I was looking at it as a 
way to improve service and to allow our employees----
    Chairman SHAW. So you don't see it having any material 
effect on the----
    Ms. BARNHART. Well, I think there will absolutely be gains. 
That is something we actually have just started looking at, in 
terms of trying to do the cost-benefit analysis of it. There 
are different methodologies for looking at that. I was just 
talking about that earlier this week, in fact, a very timely 
question, in terms of the dollar savings to the program, as 
well as the so-called intangible cost-benefit to the program.
    What I would appreciate is having the opportunity, after we 
have completed that analysis, to provide that information to 
you, but I was looking at it more from a service perspective. 
Right now, what we have is we have employees who are more 
senior employees who, unfortunately, have to spend time looking 
for folders, and Xeroxing files and things like that, and that 
simply is not a good use of their time. I am really much more 
interested in having individuals doing more of the so-called 
grade-controlling portion of their position descriptions than 
engaging in lower level work.
    With relation to your question about retiring employees, it 
is correct that over the next 10 years we expect approximately 
3,500 people to retire each year. We have actually used early 
out and, in fact, are running early out right now in the 
Agency, with the exception of administrative law judges (ALJ). 
We use that to deal with that retirement peak. We have an 
Agency where the average age is 47. I must say it is the first 
time I have worked anywhere where I have been over the average 
age, and it is a daunting thing.
    Based on projections, we would have lost a huge number of 
our employees all in a couple of years had we not used early 
out. By using early out, what it has allowed us to do is to 
flatten the wave. So, in other words, we didn't have a huge 
number retiring all at once, and we had approximately a couple 
of thousand people take early out every year, which has allowed 
us now to back-fill those jobs and start training the people, 
so that by the time other people retire, we have more trained 
employees ready to take their place.
    I must emphasize the work that the Social Security 
employees do is very complicated work at many of the levels, 
and it takes, I am told, anywhere from 1\1/2\ to 2 years to 
become fully trained to be able to perform the responsibilities 
of a claims representative, for example, a position most people 
are familiar with.
    So, it is very, very important, this whole idea of bringing 
people in, on an ongoing basis, to train them and flattening 
that retirement wave so that we are not all of a sudden in a 
year or two losing a huge number of employees.
    So, we are monitoring it, but we intend to continue to use 
the early out process.
    Chairman SHAW. Are you preparing a budget to bring back to 
us to take a look at with regard to the electronics and 
operating technology at Social Security?
    Ms. BARNHART. In our budget submission, we included 
information about our Information Technology (IT) activities. 
To be perfectly honest, I wasn't working on a separate budget 
on IT. I do, however, have a team of three deputies that are 
working on electronic disability. One of the things I would 
like to take this opportunity to mention is, when I came into 
the Agency and asked about electronic disability, I was told we 
would have it in 7 years. I told them that that would not do 
because my term is only 5 years, and I would like to enjoy it 
for at least a year before I leave.
    So I asked, if resources were not an issue, if you did not 
have to worry about resources, how quickly could we have 
electronic disability? Our Deputy Commissioner for Systems came 
back to me and said we could have it in 22 months. That was 22 
months from March 1. Now, when he told me that, some of the 
other people on the staff said did you clarify it was March 1, 
2002, but we did.
    [Laughter.]
    Ms. BARNHART. Everyone is familiar with ``systems time,'' 
and particularly looking at some of the historical experience 
in the Agency.
    Anyway, now we are looking at in 20 months having an 
electronic disability capability to roll out across the Nation. 
We have estimated the cost of that is going to be somewhere 
around $155 million. I think I have already slated $7 million 
of this year's budget to begin the activities. What I have done 
is set up a triumvirate, I call it, of the Deputy Commissioner 
for Operations, for Systems, and for Disability and Income 
Security Programs, and I have them meeting on a regular basis, 
making decisions to move this process along because that is the 
only way we are going to stay on this 20-month time frame, and 
I am absolutely committed to doing it. I think it is so 
critically important to making progress in this program.
    In fact, I will tell you that most people are shocked when 
I talk to them about what I am doing in this job, and they find 
out we do not have an electronic disability process. The world 
is really pretty astounded by that.
    Chairman SHAW. Your employees, how technically trained are 
they to get them into these type of systems? I mean, if I were 
working for you, you would be in a world of trouble.
    [Laughter.]
    Ms. BARNHART. If I were doing the work, we would be in a 
world of trouble, let me tell you. I understand.
    Just last week, Mr. Chairman, I approved an additional $1.8 
million for the Office of Systems to use for technical 
training, specifically to keep our Systems employees up-to-
speed, from a technical perspective. The world changes weekly, 
in terms of the information technology world and systems, and 
so it is critically important that they stay up-to-speed, and 
we work to do that. We also have a number of contractors who 
are experts that help us support many of our systems activities 
as well.
    Chairman SHAW. I have one final question. You said the 
average age down there is 47 years, I believe you said. How 
does that compare to, one, other agencies or the private 
sector, where they are doing similar type of work as your 
employees do?
    Ms. BARNHART. I can't give you the exact figure, but I know 
I have been told repeatedly that we are an older workforce, 
relative to the private sector and relative to other government 
agencies. We definitely are an older workforce. There is no 
question about it. I would be happy to submit those comparisons 
to you, for the record. I just don't remember them.
    [The information follows:]

    The average age of SSA full-time permanent employees was 46.9 years 
as of September 30, 2001. This compares to a government-wide average of 
46.5 years. I'm unable to provide any comparable figure for any private 
sector organizations.

                                 

    Chairman SHAW. If you would, that be helpful to give us 
some idea of exactly how much trouble we are in. Mr. Matsui?
    Mr. MATSUI. Thank you, Mr. Chairman. Thank you for your 
testimony, Commissioner.
    I want to follow up on what Chairman Shaw was talking about 
in terms of the employment, the workforce. I guess, from what I 
understand, many of the employees will really start to retire 
at a rapid rate from about 2007 on; is that kind of the 
projection or am I mistaken about that number?
    Ms. BARNHART. Well, the projection was that we were going 
to have a huge retirement wave at that point. At this time, and 
I just had discussions with our Deputy for Human Resources 
about 3 weeks ago on this, it appears that we have, more or 
less, leveled the retirement wave. You are correct, it is going 
to become bigger over time, but my understanding is it averages 
out to about 3,500 people per year over the next 10 years. 
There may be some variation, but 35,000 people is a huge number 
of people to lose out of 65,000.
    Mr. MATSUI. I guess the challenge is, and if it is 
flattened out, it does help it a lot, but then the baby-boom 
population is due to begin its major retirement from about 
2008. So, again, it creates that kind of compaction right there 
around the late part of this decade, I guess.
    Ms. BARNHART. You are absolutely right. In fact, estimates 
are, I believe, that retirement claims will go up 20 percent 
and disability claims will go up 30 percent with the aging of 
the baby boomers, and so we are going to have the convergence 
of our most experienced people leaving the Agency over this 
band, this time band when the boomers start to retire, and this 
huge influx of new claimants, whether it is for retirement 
survivors or particularly disability. That is where we expect 
the fastest growth.
    Mr. MATSUI. Right. I guess that is, demographically, only 
because they shorted the workforce and the retirement, that is 
the part of the baby-boom population. It is something that 
really can't be helped.
    What I like, and I know in your service delivery assessment 
study, I guess you really get into that aspect of it, too, kind 
of the long-term aspects of this.
    Ms. BARNHART. Oh, yes.
    Mr. MATSUI. I guess that would be for another day we can 
discuss that, but I would like some thoughts on that as to how 
that is going to be addressed. I know you are working on that.
    Ms. BARNHART. Yes, sir, we are. In fact, this is just the 
first step in the service delivery budget. I started with 
disability because it is obviously the program that affects 
nearly 10 million people in this country, and more every year. 
It is the program we hear the most about, and quite frankly 
that I get the most letters and calls from members of this 
Committee and others throughout Capitol Hill. With good reason, 
because your constituents, in large numbers, are calling and 
writing to you with concerns about the process, and employee 
groups are concerned about the process.
    The employees themselves are concerned about the level of 
service. At every level we have concerns about it, but we are 
now starting to move into other areas of the Agency, and it is 
my full intention to look at every single activity of the 
Agency and, obviously, staffing is one of those.
    One of the challenges is going to be, quite frankly, to be 
able to try to map out, as we engage in system improvements, 
what effect is that going to have on being able to deal with 
these increased workloads. I mean, obviously, that is something 
the Office of Management and Budget (OMB) is looking at very 
closely on behalf of the President because of his management 
agenda, in terms of e-government, specifically. We are looking 
at some things now trying to understand what the effects will 
be.
    Mr. MATSUI. My understanding, also, is that because the 
workforce is aging, obviously, disability claims will begin to 
increase or probably increasing now because, as you get older, 
the probabilities of accidents or whatever it may be increase. 
Obviously, you are doing the disability issues now, and I think 
that is helpful for us, obviously, over the next 10 years as 
well, and so there is a match there, and I appreciate that.
    I would like to move over to the issue of the current flow 
chart and the disability issue. Due to no fault of your own and 
probably glitches in the system, we have, what, about a 500,000 
backlog now in terms of disability claims, Supplemental 
Security Income (SSI) or Social Security Disability Insurance 
(SSDI). Perhaps you can comment.
    Ms. BARNHART. I was going to say we have pending at the 
Office of Hearings and Appeals somewhere over 500,000 hearings. 
If we look at what we think we need to have in the system at 
any given point in time, it is somewhere around 250,000 that 
have to have work, but when you look at initial claims, Mr. 
Matsui, we have pending there somewhere on the order of 600,000 
claims, and we think we should have 400,000, so we have a 
backlog of 200,000. There are clearly backlogs. How you 
characterize each stage of the system is more or less 
technical, but, yes, there are definitely backlogs.
    Mr. MATSUI. I would imagine that you are not taking these 
backlog claims separately. I would imagine it is all being 
processed, everybody is dealing with current claims, backlog 
claims. Is that something that you are looking at? In terms of, 
and for you to get a fresh start, you almost need to get these 
behind you. On the other hand, if you do that, you are going to 
get behind on your current claims. What is your strategy there?
    Ms. BARNHART. I was hoping you would give me one because I 
have asked that question----
    [Laughter.]
    Ms. BARNHART. To almost everyone, literally, that 
question----
    Mr. MATSUI. This is easy for us to ask you, I want you to 
know.
    Ms. BARNHART. To almost everyone I have come in contact 
with and had this discussion about this program and this chart 
in the last 2 weeks.
    You are absolutely correct. Let me explain what one of the 
greatest challenges is with regard to making improvements in 
the system. With 525 days, approximately, being attributed to 
the backlog, any system changes that I make, from minor to 
important to significant changes, for a cohort of cases to move 
all the way through the system and for me to tell if they had 
an effect, I will no longer be Commissioner, based on that 
chart. That is what it means.
    Mr. MATSUI. Right.
    Ms. BARNHART. I said, for example, when Commissioner Apfel 
put the prototype into effect several years ago, the first 
cohort of prototype cases has still not moved through the 
system. So, if you want to have actual, hard data about the 
effects of those planned process improvements that are 
implemented during that test phase, we don't have them yet 
because we haven't gotten all of the cases through the system.
    So, that is one of the great frustrations for me, as my 
staff comes up with ideas and as we talk to people outside the 
Agency, and I have reached out to various groups and interest 
organizations, affected organizations throughout the country. 
As I consider putting things into effect, if I want to put them 
in and see how it is going in 6 months or a year, I won't have 
any information.
    So, that is one of the things that drives me to say we 
really need to separate out the backlog. The other thing is 
obviously these people have been waiting a very long time. If 
we look at the Appeals Council, for example, where the average 
time for a case to move through the Appeals Council is 447 days 
right now, actually, we have made a lot of progress in the 
Appeals Council Improvement Project, and we think we are going 
to have the pending there down to what would be the ideal 
pipeline of roughly 40,000 cases by the end of this year.
    The 447 days comes from the fact that some of these cases 
have literally been waiting 2 years to be considered. So, this 
whole issue of the backlog is a tremendously frustrating, 
complicated, and challenging one, and I am looking at how we 
can deal with that issue. Is it possible to pull out the 
backlog and look at it separately and still ensure due process 
requirements that we must meet?
    What I basically told the staff just yesterday is I don't 
want to end up with a situation we have all experienced at the 
grocery store. We have been waiting in line for 20 minutes, a 
new checker opens, and the people at the back of the line move 
over to that checker, and those who are toward the front of the 
line get frustrated because we should have been next. So, that 
is the challenge in looking at that, but it is very important.
    Mr. MATSUI. Are you, through your assessment, kind of 
working on how you can--I know my time is up--deal with that 
issue or is that something you just have to take on a case-by-
case basis?
    Ms. BARNHART. I have actually got my lawyers looking at 
that now to see what the legal requirements are because, 
obviously, we always want to meet the legal requirements. I 
have the policy folks looking at it, and I have the operations 
folks looking at the range of possibilities. It may end up 
there are none, other than to continue the way we are and just 
work them in order.
    I would certainly hope there are ways to improve, not only 
for those who are waiting in the backlog, but for all. These 
are all people. That is the other thing I must emphasize. When 
we talk about these numbers, these are people. These aren't 
just numbers. They are Americans, former workers, and disabled 
people in this country. We should not forget that human 
quality, the human element of all of this.
    Mr. MATSUI. Thank you.
    Chairman SHAW. It is also important to remember, as I am 
sure you do, that this is an earned benefit. By paying into 
Social Security, this is something that you have paid for. Just 
like if it were with an insurance company or anything else, 
these people have, the ones that have a legitimate claim are 
entitled to receive these benefits, and it is really terrible 
if they do have to wait.
    Mr. Collins?
    Mr. COLLINS. Thank you, Mr. Chairman.
    Thank you, Commissioner. Your chart was very impressive and 
very informative. I appreciate the fact that you have broken it 
down into four areas that you are working toward. The service 
and staff go hand-in-hand. You have to have the staff to be 
able to provide the service.
    In the area of the disability, I understand that you have 
been able to acquire more ALJs, but in order to help with this 
backlog and keep the system moving forward with additional 
claimants coming in, how many additional ALJs do you think you 
will need?
    Ms. BARNHART. If I may take just a moment to say we have 
approximately 1,100 on board at this time. I believe a full 
complement of ALJs in the Agency has been considered to be 
1,300. I haven't done a precise calculation at this time, the 
reason being we have the Azdell case that is pending, and as 
you know because we have discussed it, the Merit System 
Protection Board (MSPB) prevented us from hiring ALJs for over 
a year.
    We finally got an exception last August to hire 126 ALJs, 
which helped to some extent, but we were down to an all-time 
low of below 900 ALJs. That, obviously, added to the backlogs 
and the processing time, no question about it. Adding to the 
problem even more is the fact that we are the largest corps of 
ALJs in the government, and so everyone uses us as their 
recruiting ground. The ALJs come to Social Security, get 
established as ALJs, and the other agencies recruit from our 
ALJs because they are not allowed to hire outside either due to 
this pending personnel case with the MSPB. So the inability to 
hire ALJs certainly has a detrimental effect on the workload, 
but I would say, at this point, I would consider approximately 
1,300 a full complement.
    I haven't looked at that issue as closely. Since I can't 
hire them, it hasn't been an issue, quite frankly.
    Mr. COLLINS. As you move through the staffing in the 
Service, of course, you have to deal with the employees' union. 
I hope that the employees' union understand that all of this is 
to benefit the constituency that we all serve and work for.
    As you move toward the information technology, I see where 
you are shooting for 22 months to have that fully implemented 
and the costs being several million dollars, but has there been 
a comparison cost of money saved, as far as the snail mail 
versus the information technology?
    Ms. BARNHART. We are currently engaging in that right now, 
Mr. Collins. Again, I would be happy to provide the results of 
that cost-effectiveness analysis to the Committee when it is 
completed. I do think it is important, though, as we look at 
the methodologies, we are going to look at it from a pure cost 
savings point of view, but then also the so-called intangible.
    I forget, there is, as there is for everything, there is a 
jargon term for the methodology that one uses to capture the 
intangibles, but for us the intangible is service, which is I 
think a really important intangible in this program, in terms 
of being able to speed up the processing time. So, we will be 
looking at it from that perspective as well.
    Mr. COLLINS. We refer to that as public good. I do, anyway.
    [Laughter.]
    Mr. COLLINS. It is interesting that you were talking about 
when you first came they said 7 years for this implementation 
of the IT. I found it interesting that that compares to the 
length of time that they said it would take to rewrite a letter 
informing people that they have been denied or you could expect 
a check in the mail or such, on a temporary basis. That, too, 
was going to take 7 years, under the previous Administration. I 
am not throwing rocks at Ken or Bill Halter, but I think that 
again is the bog-down within the system, and oftentimes maybe 
the staff or the union not working as closely with management 
as they should to rewrite letters and such.
    I offered Mr. Halter at that time if he would rewrite a 
letter on that particular basis and send it to me, I would 
critique it for him and see if we couldn't get it down to a lot 
less than four pages. He did, and we did, and I never heard 
from him again. So, he must not have liked the south Georgia 
advice that I gave him.
    [Laughter.]
    Mr. COLLINS. You can say a whole lot in just a few words, 
if you so desire.
    We appreciate the fact that I think you are doing an 
excellent job, as you review and as you move forward with 
regulatory change. As we have discussed before, I am a strong 
promoter of regulatory change. Regulations are easier to change 
than if we, as Congress, put things down in policy as law. As 
you know, and as we all know, in order for us to change that 
type of policy, it takes an act of Congress. Then when you get 
into 435 experts on this end and 100 on the other end, that 
sometimes gets to be a total mess before it is over with.
    So I hope, Mr. Chairman, if you will give this Commissioner 
ample time to address all of the issues that she faces, the 
delays and as she so properly put forth and appropriately put 
forth, addressing the issue of integrity of numbers. That was 
part of your testimony, and we appreciate that very much.
    Ms. BARNHART. Thank you.
    Mr. COLLINS. I have something that I want to extend to you. 
It is something I know you don't use. I know that, and I feel 
that you are strong enough to do so, but I think your husband 
enjoys it as he mows the grass on Saturdays, and so I'll walk 
around and present it to you, and then I have to go on to a 
deputy whip meeting.
    Thank you, Mr. Chairman, and thank you very much for what 
you are doing. I am so well pleased to hear someone who has the 
will, the drive, and the fortitude to move forward with what 
needs to be done for the constituency of this country when it 
comes to the Social Security Administration and SSI.
    Thank you.
    Ms. BARNHART. Thank you very much, Mr. Collins. I 
appreciate your kind words.
    Chairman SHAW. While Mr. Collins is making his 
presentation, we will call on Mr. Hayworth.
    Mr. HAYWORTH. Mr. Chairman, I thank you, as the attention 
of the assembled multitude turns to my colleague from Georgia 
for this very special presentation.
    [Laughter.]
    Mr. HAYWORTH. I don't know if some of the public health 
folks care to weigh in. Commissioner, I would like to thank 
you, and I am sorry I don't come bearing gifts, but other than 
the----
    [Laughter.]
    Mr. HAYWORTH. I hope there is no restriction on that, by 
the way.
    Chairman SHAW. I can assure you, if Mr. Collins gave it to 
her, it is well under the gift limit.
    [Laughter.]
    Mr. HAYWORTH. Let me simply offer the price lists and the 
commodity of praise, Commissioner. Thank you for coming to 
Arizona and joining with me in issuing the first Tickets to 
Work to Members of our disability community. We appreciate the 
work done there. With that, we could have the same type of 
success, in short order, on what you have talked about today 
with the processing of disability cases. You noted your term in 
office, it is worth commenting that our Founders give each of 
us in this constitutional role but 2 years, renewable at the 
bar of public opinion on the first Tuesday following the first 
Monday in even-numbered years. I think there is something like 
that coming up in a few months. So, I appreciate the challenge 
that we confront there.
    Commissioner, with your indulgence, I would like to turn to 
another topic that really one of the tasks in government is to 
distinguish the urgent from the important, and in the wake of 
September 11, we really have to turn to border security.
    I just wanted to check with you and ask if the Agency is 
still processing the Social Security number applications of 
foreign nationals without verifying Immigration and 
Naturalization Service (INS) documentation? Is that continuing 
today?
    Ms. BARNHART. It is continuing at this moment, but I assure 
you we have several efforts underway. If I may take a moment to 
describe those.
    I have been working very closely with our Inspector General 
who is going to testify a little later today, on this issue, 
and he actually wrote to the Inspector General at the U.S. 
Department of Justice, emphasizing the importance of having the 
ability to do the enumeration and entry project and having 
access to INS data.
    We were basically scheduled for INS to assume the 
enumeration and entry responsibility. However, due to systems 
issues there, and of course as you read the papers and 
obviously the action you have taken in this body in recent 
days, that has been delayed until roughly October of this year.
    As of May 25 of this year, however, we are supposed to be 
able to get online access to what is called the NIIS system, 
which is the nonimmigrant database at INS. Let me explain what 
nonimmigrant means. It means individuals who have other than 
permanent resident alien status in this country; so people on 
limited visas, time-limited visas, those kinds of things, 
temporary authority to be in the country.
    That will be a huge, huge improvement for us because we 
will be able to check that database which is very up-to-date. 
There are not the delays there have been in the past with the 
Systematic Alien Verification for Entitlements (SAVE) system 
and some of the other INS data that have been provided. We are 
very, very encouraged at being able to do that, and that should 
be happening just later this month.
    Mr. HAYWORTH. That is reassuring, but I think what we saw 
this morning in the realm of disability claims with the chart 
that rivaled the intricacy of the Sistine Chapel and perhaps 
took almost as long to process or put together as the actual 
thing, it tends to typify, no matter the intent, what we 
studied about in political science as students, bureaucratic 
inertia, where things kind of get set in motion, but we just 
never quite get to task completion. So, I appreciate your 
intent to move toward closure and results because we still 
confront a very serious situation. I am glad to have your 
report, and we will continue to work with you and scrutinize 
that on behalf of the American people.
    One other question, Commissioner, does your Agency ask for 
a picture ID when an individual applies for a Social Security 
number?
    Ms. BARNHART. We do not ask for a picture ID.
    Mr. HAYWORTH. Why not?
    Ms. BARNHART. We oftentimes ask for a driver's license, if 
people have it, and they tend to have photographs on them. To 
be honest, I don't really know what the specific history of 
that is, other than the fact that photo IDs generally haven't 
been available, other than through a driver's license. I mean, 
if you are a student or something you might have a photo ID, 
but really the driver's license is the main way to obtain one.
    One of the other things that we are doing is I have 
convened an Enumeration Task Force. It has people from all 
across the Agency working on it, specifically as a result of 
the September 11 tragedy. One of the things they are looking at 
is this whole question of biometrics and what we ought to do to 
ensure that people are who they say they are. They have not 
made recommendations to me. We have had some preliminary 
discussions, but they are looking at all kinds of things, 
including requiring that people provide photo ID when they 
apply for a Social Security card.
    Mr. HAYWORTH. Well, I thank you, Commissioner, and again 
would simply point out that with the restrictions placed on 
travel, as we climb on jetliners, as many of us do, week in and 
week out, we must have picture ID. It seems to me it would be a 
simple step that transcends not only Social Security 
applications, but even for the right to exercise the franchise 
of voting. However, that is another topic for another hearing.
    Commissioner, thank you for your time and your indulgence. 
Mr. Chairman, I thank you for the time.
    Chairman SHAW. Mr. Lewis?
    Mr. LEWIS OF KENTUCKY. Thank you, Mr. Chairman. Good 
morning, Commissioner.
    Ms. BARNHART. Good morning.
    Mr. LEWIS OF KENTUCKY. I have found, and continue to find, 
that a lot of people in this country do not understand the 
Social Security program. In fact, I had a group of people, 
folks in my office yesterday that should have known, but I 
don't think they understood how the program operates and what 
it is all about.
    What is the Agency doing to educate, to instruct the public 
of what the program is all about, the benefits and so forth?
    Ms. BARNHART. Actually, there are several things that we 
do. One of the most important things we do every year is we 
send out a Social Security statement to all current workers. I 
have just completed making changes on that statement, and now 
it is being updated. It is going through a final check with the 
actuary just to make sure that all of the dates, and numbers, 
and information in it is absolutely correct because we were 
updating it based on the 2002 trustees report.
    That is one way, and that goes into an explanation of the 
status of Trust Funds, how you receive your benefits, how they 
are calculated. It lists what your earnings are. You are 
supposed to look at it so that you know that you play a role in 
determining your Social Security benefit, ultimately, based on 
how much you earn and making sure those earnings are reported 
correctly. It explains the tax rate for Social Security, the 
maximum salary that one pays Social Security on, those kinds of 
things. It is really a very informative document.
    We also have public affairs specialists (PAS) throughout 
the country. I don't have the exact number, but working under 
each regional communications director, and there are 10 of 
those, we probably have at least 100 PASs, I would guess, 
working around the country who attend community events, speak, 
as requested by various community organizations, and work to 
try to provide information, answer questions, and discuss any 
facet of Social Security people request.
    In addition to that, we have over 100 publications that we 
produce that describe various elements of the program that we 
make available to people. In fact, I spoke just recently to an 
organization, a women's group, on what women need to know about 
Social Security. I took copies of a really excellent 
publication we have that explained the effect of Social 
Security on women and the things they need to be concerned 
about specifically. I know that is of great interest to this 
Committee, from my prior appearance here.
    So, we have a number of things that we do. We also develop 
public service announcements (PSA), but of course unless you 
happen to be a late-night person like me, you may never see 
them because, obviously, SSA PSAs don't get prime time, given 
the cost of advertising these days, when you are asking people 
to run them for free, but we do all of those things.
    I actually have our Deputy for Communications working to 
come up with a public information campaign for us, looking at 
all of these elements to see if there are holes in things we 
need to be doing and then to augment that.
    Mr. LEWIS OF KENTUCKY. That is great. It seems to always be 
the situation, whether it is a townhall meeting or wherever I 
am and talking about Social Security, that a lot of people see 
Social Security as a retirement account, that their Social 
Security number is their account number, and that they are 
paying into a fund, and it is drawing interest, and they are 
going to get that money, plus their interest back when they 
retire.
    When I explained to them how the system actually works, 
they are pretty surprised. So just getting to the heart of what 
Social Security really is would, I think, help a lot of people 
understand that system.
    Ms. BARNHART. I agree. It is a very important program. It 
touches so many people in this country, more than any other 
program that we have in the government. So, I think it is very, 
very important that people understand it. I find people who 
have the same kind of confusion. I have had phone calls since I 
have been in this job, quite frankly, expressing that kind of 
confusion.
    Mr. LEWIS OF KENTUCKY. Thank you.
    Chairman SHAW. Mr. Pomeroy?
    Mr. POMEROY. Thank you, Mr. Chairman. I thank you for 
holding this hearing. Obviously, the situation of people 
needing to have case review and not having these kinds of 
delays is of great concern and hardship to them and an 
appropriate matter for this hearing. I appreciate it.
    Commissioner, the survey of the Advisory Board seemed to 
come up with the conclusion that these delays, the managers' 
evaluation of these delays are attributed to five factors, four 
of which relate to staffing limitations, reduction in the 
number of supervisory management staff, reduction or 
elimination of case reviews, decrease in staff training time, 
and staff shortcuts.
    The other reason given was the increasing complexity of the 
workload. Basically, you have got, in light of the limitations 
of resources for the Agency's administrative purposes, you have 
got people just straining to the limit and trying to do as best 
they can, but overwhelmed by workload. Is that the thrust of 
your conclusion about these delays?
    Ms. BARNHART. I think people are straining to the limit in 
the Agency. I absolutely agree with that. I think we have very 
hardworking people at the front lines and at headquarters, and 
I think the people at the frontlines are perhaps under greater 
stress because they are actually dealing with the public.
    They are the people who sit and talk to the claimants and 
the applicants, and I don't think there is any question they 
work very hard. I have visited a number of district offices 
myself, talked to the claims reps, the tele-service centers, 
talked to the service reps and find the same thing, our phone 
lines are always busy.
    We took over 59 million calls this year. We had expected 61 
million but it looks like 59 million. That actually is 
important. I should talk about that for just a moment because, 
for that reason, we are trying to do more through e-government. 
That, obviously, is one part of the President's management 
agenda, but the Agency has been working on it, and we are even 
more dedicated and committed to it under the President's 
initiative.
    We have actually seen less phone calls than we anticipated 
coming into our 800-number, and to deal with the 800-number 
phone calls, we have employees who perform what we call spike 
activities. I know this Committee is well familiar with that, 
people who normally perform other functions, but at certain 
peak days are pulled off of that to answer the telephones, 
which clearly adds to the pressure for those employees.
    What we believe is happening is the reason we are getting 
less phone calls is because more people are doing things 
through the Internet. They are actually going to the Internet 
for service, and that is very important. We are trying to 
figure out how to quantify that, quite frankly, to be able to 
tell did they go to the Internet, instead of making the phone 
call, and if they went to the Internet, did they get the 
service that they needed? That is not an easy thing to 
necessarily quantify, but we are looking at ways of doing that. 
The Office of Management and Budget is very interested, too, in 
us being able to quantify people doing business from an e-
government perspective.
    Going back to your original question and the thrust of it, 
yes, I think people are working very hard in the Agency.
    Mr. POMEROY. Your calls are running maybe 4 percent below 
projection or something.
    Ms. BARNHART. Something like that.
    Mr. POMEROY. It is nice, but it is certainly not the 
solution to what we are looking at in terms of people 
basically--what worries me is you have got career 
professionals, many of whom, a bunch of them reaching the end 
of their public service, soon to be retiring, at the very time 
you have got the demographics of the country changing in ways 
that, in all likelihood, will place more and more demand on the 
Agency in this way. I think we can look down the road and not 
very far in the very foreseeable compounding of this problem, 
in light of administrative capability and capacity.
    Ms. BARNHART. You are absolutely right. There are many 
factors that are contributing to it. When I mentioned the e-
government, you know, providing services that way, I just think 
that is something we obviously must do. There is a whole 
generation coming along behind us that is going to be able to, 
and prefer to do business over the Internet. That is not true, 
certainly, of my mother's generation, although my mother is 
getting there, but it is more true of ours. I wasn't 
suggesting----
    Mr. POMEROY. I am just about out of time, Commissioner. I 
agree with you. I think it is terrific, and one answer and a 
question that has many answers or a problem that has many 
answers.
    I do think we ought to continue to evaluate whether or not 
the funding for the Agency ought to come from the Social 
Security Trust Fund, as opposed to general fund revenues. Now, 
with the funding shortfall, you worry about taking those kinds 
of steps. On the other hand, it seems to me only very rational 
that you would have the administrative costs of the program 
coming from the Trust Fund itself, and over time that might 
lead toward a better ability to put in place the kinds of 
resources to competently manage the program.
    Do you have any thoughts on that?
    Ms. BARNHART. As you rightly point out, SSI has been 
limited by the administrative cap. Our Limitation on 
Administrative Expenses (LAE) account, our Limitation on 
Administrative Expenses is part of that overall governmental 
cap.
    One of the issues that I have talked about related to that 
cap specifically is the whole issue of program integrity. There 
are many areas where we could actually save program dollars if 
we spent Administration dollars, for example, engaging in 
certain kinds of activities, but we have to spend funds within 
the cap to save funds outside of the cap. I do think that, as a 
result, while we always want to accomplish a balance between 
good service, program integrity, and fiscal stewardship, 
obviously, when the Agency doesn't ``benefit'' from that return 
in a direct way, I think it does make those areas less 
attractive to move into and puts the pressure on for doing 
those in a different place.
    I just wanted to make one follow-up comment to your prior 
comment, that I stopped talking on my second-to-the-last answer 
because I didn't want to use up your time, but now that it is 
not technically your time----
    [Laughter.]
    Ms. BARNHART. I would like to add something, if I may, and 
that is your point about it is going to take many answers. One 
of the things that I have tried to emphasize to the constituent 
groups that I have spoken to, organizations and individuals, to 
the field staff I have spoken to, to the staff here, to the 
members here, and in the Senate that I have spoken to is this 
is sort of going to be death by a thousand cuts, for lack of a 
better term. There is no silver bullet. I cannot wave a magic 
wand, no one can. It is going to be a whole series of things, 
and therefore I am willing to look at very small things and 
very big things.
    Mr. POMEROY. Yes.
    Ms. BARNHART. I consider e-dib a very big thing, in terms 
of helping deal with staffing issues, taking some of the 
pressure off, having staff doing more of the work, the higher 
level work, as opposed to the lower level work, providing 
service. At the same time, if we need to look at different ways 
of getting Xeroxing done in the Agency, for example, I don't 
think it is a good use of a GS-11 or GS-12's time to have them 
standing and doing Xeroxing. It is not their fault. That is the 
way the system is right now.
    I think it is basically inexcusable, when it is taking us 
over a year, but based on the way the service is being provided 
right now and due to the backlogs, to get a hearing transcript 
typed so that the case can move forward. So, there are going to 
be all different kinds of things we are going to look at. So, I 
really appreciate you sharing that perspective because some 
things may seem very insignificant, compared to others, but I 
really believe it is going to be the combination of all of 
those things that are going to help us make a difference.
    Chairman SHAW. Mr. Brady?
    Mr. BRADY. Thank you, Commissioner, for your testimony 
today. I know you have a lot on your plate, but I really 
appreciate the focus you have given today on disability 
process, and more importantly just accelerating that program 
because people really ought not to have to wait that long to 
get a fair, you know, and timely hearing on their case.
    I think the Agency should be commended for the work it has 
done in trying to break the logjam in hiring new ALJs. The 126 
extra ones are a huge help. I understand we could hire another 
120 and still only be back to 1998 levels. So, it looks like we 
have a lot----
    Ms. BARNHART. If I may thank you for your personal 
involvement in that and assistance on that. I really, really 
appreciate that. It made a huge difference for us.
    Mr. BRADY. You are welcome. Again, the Agency did great 
work coordinating everything, and you need to let the 
Subcommittee know how we can help in that process. I think we 
work well together.
    In addition to hiring more judges to accelerate appeals, it 
seems like, at least in looking at the systems in our State and 
our area, that we need to have applications that include more 
complete information up front. That seems to be a key in making 
accurate decisions early in the process, better-trained State 
examiners that will make more accurate initial rulings.
    It seems, looking at the trend, we have fewer and fewer 
disability cases where you can have a medical expert simply say 
this person isn't physically able to work, and there are more 
and more cases where it is really a case of talking to an 
occupational expert who can say this person can work in this 
case in these types of jobs. That means more gray areas, more 
gray decisions and why I think a focus on training those 
examiners early on could be a big help, better communications 
with the claimants. They feel lost in the process in this 
length of time, it is one time to have it take forever in their 
minds, and in truth, it is nothing, they don't even know what 
is going on with their case.
    Finally, it just seems like over the 30 years, since the 
Federal disability law was written, we have had a number of 
contradictory and conflicting legal rulings that, at some point 
perhaps this Committee, Mr. Chairman, may need to take a hard 
look at rewriting the disability portion of Federal law and 
just try to clarify some of these issues.
    That being said, State-to-State the number of appeals times 
and their allowances, approvals, and disapprovals, seem to vary 
a great deal. In Texas, we seem to be slower making decisions 
and less accurate in doing that. Now we have gotten better in 
the last year because the Agency's focus, the public's focus, 
and congressional focus, which is really helpful, but still can 
you explain why the differences exist so dramatically, it seems 
like, from State-to-State on a Federal program that ought to 
have pretty consistent, both timing and rulings.
    Ms. BARNHART. You make an excellent point. As you know, 
this has been a longstanding challenge for the Agency. I 
remember when I went to work in the Senate in 1977, the very 
first U.S. General Accounting Office (GAO) report I ever read 
in my life had to do with the variation among State DDSs in 
making disability determinations. I think that report has been 
updated at least a couple of times.
    I have had this discussion as a Member of the Social 
Security Advisory Board, with the policy folks at Social 
Security, and since becoming Commissioner. I am told that we 
can actually sort out and account for some of the variation 
based on economic factors. For example, in some States, 
percentagewise, you may get more actual disability applications 
as a result of the economics in the State, and for that reason, 
obviously, if you have more people, you are having to deal with 
more claims per worker kind of thing, and so that affects the 
way that you make the determinations.
    I wish I had a complete answer for you. I don't. I am going 
to be thoroughly briefed by my policy staff on this analysis 
that they have done, that they say actually can account for a 
substantial part of the variation from State-to-State, and I 
would be more than happy to extend the offer to your staff, if 
you would like for us to come up and brief them on that as 
well----
    Mr. BRADY. Great.
    Ms. BARNHART. To provide you with the information that we 
have. As optimistic as the staff sounds, however, I am not sure 
it is going to explain it all away. I think, when you have more 
people applying in a State, relatively speaking, then odds are 
you are going to have more people that probably aren't 
necessarily eligible for it, for disability, for example, and 
that is one of the things that I think creates the variation, 
but we would be happy to pursue this discussion with you.
    Mr. BRADY. I just want to point out, I had recently made a 
request of your office to come down to Houston, Texas, to look 
at our problems firsthand, and my understanding is you 
immediately said, absolutely, we will work it out. So, I 
appreciate it. That type of responsiveness is really very 
helpful. Thanks.
    Ms. BARNHART. Thank you. I appreciate the invitation. I am 
looking forward to making that trip.
    Mr. BRADY. Thank you, Mr. Chairman.
    Chairman SHAW. Thank you. Mr. Doggett?
    Mr. DOGGETT. Thank you, Mr. Chairman.
    Commissioner, I regret a conflicting meeting prevented my 
hearing some of your earlier comments, and I am sure you 
discussed your efforts to address delay, but some of these 
delays really are troubling.
    I understand, for example, that it was determined that 
through a computer error of some type that there were a number 
of people, perhaps as many as 500,000 disability recipients who 
should have been disability recipients, but because of a 
computer error, they were denied their benefits. How long will 
it take you to resolve that problem?
    Ms. BARNHART. We are working on that plan right now. Let me 
tell you where we are on that, and you are absolutely correct. 
Our estimate right now is approximately 505,000 individuals 
affected by what we call the special disability workload. That 
is, for other people who may not be aware of it, a situation 
where individuals who were eligible for SSI may have been 
eligible actually for Title II disability, but it was not 
discovered at the point of entry at application. Others, over 
time, because they were working, even though in relatively low-
paying jobs, they were earning quarters of coverage, and they 
became eligible for Title II, and benefits did not occur.
    That is the issue. So, there are several categories of 
individuals that we are looking at comprising that 505,000. We 
are looking at how we ought to do that, how we ought to work 
that. To be honest, the Agency thought it was a much lower 
number of people last year. They were operating under the 
assumption it was somewhere around 130,000 or 200,000 people 
total, and it is only in recent weeks that we have discovered 
it is actually over half a million cases.
    So, the approach that was being pursued before may no 
longer be appropriate, quite frankly, given the increase in the 
number of cases. What we are looking at doing is having our 
most senior people, our highest level people in the staff level 
work those cases. They are very complicated cases. We did have 
a sample done of cases. People thought the cases might take 
around 4 hours apiece. It turns out, my understanding is, they 
take about 12.5 hours apiece to work.
    So, we have looked at doing the calculations on how many 
work years that will take, how long it could take, and to be 
perfectly candid, even if I started trying to shift as many 
people as I could today who could do that workload and still be 
able to maintain doing other work in the Agency, I think it 
would take a minimum of 3 years to get through that workload 
because it requires a level of expertise that all of the 
workers in the Agency simply don't have.
    Mr. DOGGETT. These are people that are probably disabled.
    Ms. BARNHART. They are.
    Mr. DOGGETT. A half a million?
    Ms. BARNHART. Yes.
    Mr. DOGGETT. They are going to have to wait, they may have 
waited now for months or years, but they will have to wait, 
some of them, as much as 3 years more to get their claim 
processed.
    Ms. BARNHART. That is my best estimate. We are working on 
it. Let me just say I realize how critically important this is 
because it is 500,000 cases.
    Mr. DOGGETT. Next week, perhaps as early as next week, we 
have a supplemental appropriations bill coming over here. I 
understand that it has been estimated that, since time is 
money, as well as delay for these folks, that the cost could be 
as much as $339 million additional to get these cases resolved. 
How much have you asked to be included in the appropriations 
bill to take care of this problem?
    Ms. BARNHART. We originally had some funds in our 2002 
budget that was supposed to be designated to special 
disability. I don't remember that precise amount, but we had 
some, but obviously that is when we thought it was a much lower 
number of cases.
    I haven't made a request yet, the reason being that even if 
I were to ask for, and receive, the $339 million tomorrow, I 
could not begin using it immediately because I don't have the 
people who can do that work at that level and take them out of 
other parts of the Agency, again. So, what I have the staff 
working on, and we just had a meeting on this, frankly, just a 
couple of days ago, is to chart this out for me year-by-year. 
In other words, we think it is basically the work value, the 
hours it would take to work those cases, that would equal $339 
million, with some money in for support, too, and equipment, 
and those kinds of things.
    I have asked the staff to plot out for me, based on the 
number of people that we think we have that can do this work 
that we could shift over to doing this work, and we are asking 
for volunteers, first. You know, we are not planning to do 
directed reassignments or anything like that. We are going to 
use a variety of plans. Some people will stay in their own 
office, other people might move to cadres. We have to bargain 
all of this with the union, and we will be doing that on impact 
and implementation, but I have asked them to provide for me 
what we could use on a year-by-year basis. I don't have that 
number yet, but believe me, we are working feverishly on trying 
to get there.
    Mr. DOGGETT. You expect some additional appropriations will 
be essential to allowing you to complete the job, even within 3 
years?
    Ms. BARNHART. I know that we don't have any funds in our 
budget for next year at all for special disability because we 
had anticipated that based on the number of cases we thought it 
was we would be finished with that workload, and we 
specifically wrote in our budget justification we did not 
include funds for special disability because we expected to be 
completed with it, and we won't be.
    Mr. DOGGETT. Thank you. Thank you, Mr. Chairman.
    Chairman SHAW. Ms. Barnhart, in going through the testimony 
and the questioning process, it became perhaps that at some 
particular point, when you are ready, and Mr. Matsui and I have 
briefly discussed this, that perhaps you might want to come in 
and have some type of a workshop just sitting around the table 
trying to figure out what we can do. After you get your ducks 
in a row down there and figure out exactly the direction that 
you want to go, come back and talk further with the Committee 
because we are very encouraged by what you are doing, but we 
know that you are, at some point, are going to need the 
cooperation of the Congress, and that is something that we 
would like to help out with.
    Ms. BARNHART. Thank you very much. I would really look 
forward to doing that. I would really appreciate that 
opportunity.
    Chairman SHAW. We are delighted that you are down there, 
and you are doing what you are doing, and keep it up, and we 
look forward to working with you over the next 5 years.
    Ms. BARNHART. Thank you. Again, I appreciate the 
opportunity today, and I just want to say, too, I really 
appreciate the Committee's ongoing support. You have done many 
things for this Agency over the years, and have ever since I 
have been there, and I really appreciate that.
    [Questions submitted by Chairman Shaw to Ms. Barnhart, and 
her responses follow:]
L1. What efforts have been made to ensure the integrity of the Social 
        Security number enumeration process since the September 11th 
        attacks?
    After the September 11th terrorist attacks, SSA chartered an 
executive level Enumeration Response Team (ERT) which has met regularly 
since September 11th to explore and track progress toward completion of 
a range of policy and procedural changes to further enhance the 
integrity of its enumeration processes. Initially, the ERT provided 
eight recommendations that could be accomplished quickly. Below is a 
list of the recommendations and the status of each.

    1. Provide refresher training on enumeration policy and procedures, 
with emphasis on enumerating non-citizens, for all involved staff.
    The SSA quickly provided refresher training to all field office 
employees and management on existing enumeration procedures, with 
emphasis on enumeration of non-citizens. We conducted the original 
training on December 19 and 20, 2001 and rebroadcast it on June 5 and 
14, 2002.
    2. Convene a joint task force between SSA, Immigration and 
Naturalization Service (INS), the Department of State (DoS) and Office 
of Refugee Resettlement (ORR) to resolve issues involving enumeration 
of non-citizens, including working out procedures for verifying INS 
documents before Social Security number (SSN) issuance.
    The SSA has been working with INS, the DoS and the ORR to establish 
a procedure for full collateral verification of all alien status 
documentation, including INS authorization to work. We are trying to 
devise a process that will minimize negative impact on many thousands 
of aliens who enter this country legally, with permission to work. In 
February 2002 we began verifying the documentation of all refugees. In 
May 2002 we gained access to INS's Non-Immigrant Information System to 
electronically verify the documents of non-immigrants. We began 
verifying documents with INS in July and will gradually phase-in full 
collateral verification of alien documentation by September 2002.
    3. Eliminate driver's licenses as a reason for issuing a non-work 
SSN. In March 2002 we eliminated driver's licenses from the definition 
of a valid nonwork reason to assign an SSN.
    4. Provide an alternative to giving out SSN printouts (for SSN 
verification) to number holders that contain personal information.
    In February 2002 we began providing an abbreviated SSN printout to 
persons who ask for SSN verification. The document provides the 
required verification, but contains far less information about the 
individual to whom the SSN is assigned than did the document we 
provided previously.
    5. Conduct a mandatory interview for all applicants for original 
SSNs over the age of 12. Verify the birth records of all applicants for 
original SSNs over the age of 1 and require evidence of identity for 
all children, regardless of age.
    In June 2002 we began verifying birth records for U.S.-born SSN 
applicants age 1 or older with the custodian of records. (Under former 
rules, we verified birth records for applicants age 18 and older.) We 
are drafting regulations to require a face-to-face interview for SSN 
applicants age 12 or older and eliminate the waiver of evidence of 
identity for SSN applicants under age 7.
    6. Determine the feasibility of photocopying (or scanning) all 
documentary evidence submitted with SS-5 applications. A pilot was 
started February 25, 2002 and completed March 22, 2002. Evaluation of 
the pilot results and recommendations are under way.
    7. Change the Modernized Enumeration System (MES) to provide an 
electronic audit trail for all processing modes. As of mid-December 
2001, new audit records for SSN applications were established.
    8. Implement online Social Security Number Verification System 
(SSNVS). In April 2002 a pilot of an online version of the existing 
Employer Verification System was started with nine participants. See 
the response to question 3 for more information.
L2. The American public is becoming increasingly aware of the 
        importance of keeping their SSN secure, including not routinely 
        providing it for frivolous reasons. In this vein, can you tell 
        us what SSA is doing to keep the SSN secure? For example, does 
        SSA place an individual's SSN on correspondence they send out? 
        If so, why? Are there any plans to modify this practice? If 
        not, then why?
    For many years, encouraging members of the public to protect their 
Social Security number has been a key message in the Agency's public 
information efforts. Information on how people should protect their 
number, as well as advice to victims of identity theft, is available in 
the Agency's publications, news releases and on its website 
www.ssa.gov.
    To minimize the occurrence of SSN misuse/identity theft, SSA 
maintains strict confidentiality of individual records, disclosing only 
where authorized by law; reconciles earnings when we learn that someone 
is working under another person's SSN; and contracts with third parties 
to verify SSNs for specific reasons.
    The annual Social Security Statement helps workers verify their 
earnings and alerts them to the possibility that someone else is 
working using their number. This is sent yearly to all working persons 
age 25 or older who are not yet receiving benefits, using address 
information provided to IRS by tax filers. (The statement shows only a 
truncated version of the recipient's SSN to safeguard the number should 
the address information no longer be current. The first page of the 
Statement also bears this reminder: Prevent identify theft--protect 
your Social Security number.)
    While many Federal, State and private organizations routinely use 
and display SSNs in their mailings, SSA recognizes that it has a 
special responsibility to protect the privacy of individuals with 
regard to information contained in the agency's records. Such open 
display increases the risk of someone using a person's name and SSN for 
fraudulent purposes.
    In correspondence, SSA does not show the addressee's SSN on the 
envelope and ensures that the number is not visible through the window 
of the envelope. The SSA does not include the full SSN on the annual 
cost of living adjustment notices that are mailed to Social Security 
beneficiaries who receive their monthly benefits by direct deposit; 
only the last four digits of the Social Security number are shown. The 
SSN is not displayed on checks so that it is visible through envelope 
windows.
L3. The SSA is undertaking a pilot program in which companies can 
        verify their employees' Social Security Numbers (SSN). Can you 
        describe this program?
    Employers already can validate their employees' names and SSNs 
against information in SSA's records, and SSA encourages them to do so. 
The Social Security Number Verification Service (SSNVS) will allow 
employers to validate SSNs via the Internet. The objective of the SSNVS 
project is to provide employers and payroll professionals with online 
real-time or next-business-day name and SSN verification services 
electronically, which will improve the accuracy of the annual wage 
report submission (Forms W-2 Annual Wage and Tax Statement).
    Under SSNVS, employers can verify up to 10 names and SSNs and get 
immediate results via interactive verification, or can verify large 
numbers of employees, by uploading files for batch processing with 
next-day response. Data that an employer supplies to SSA for 
verification will be annotated with a match/no match indicator and will 
be returned to the employer. The SSA will retain an audit record of all 
supplied data. In addition, the data collected will be used as part of 
the evaluation of the SSNVS process. None of the information provided 
by employers will be used for any other purpose.
    The SSA currently provides this SSN verification by telephone, 
paper and magnetic media. It is anticipated that the new Internet 
service will enable employers to verify name/number combinations more 
easily than the options that are currently available.
L4. What information is exchanged with the Immigration and 
        Naturalization Service regarding SSNs and applicants entering 
        the United States? Can you explain the process by which 
        information is exchanged?
    All applicants for original SSN cards must provide evidence of age, 
identity and citizenship or alien status. The SSA exchanges information 
with INS when verifying the information on the INS document presented 
as evidence of alien status. There are several circumstances under 
which these exchanges occur.
    The first step is the INS' Systematic Alien Verification for 
Entitlements (SAVE) online verification system to determine the status 
of a noncitizen who has applied for an SSN. All SSA offices have online 
access to certain INS information for immigrants and nonimmigrants. 
When the INS document presented shows an alien registration number (A 
number) or admission number from the INS Form I-94 (Arrival-Departure 
Record), the SSA employee queries SAVE, entering the appropriate 
number. The query response will determine whether the document is 
valid.
    When this electronic process does not yield results, SSA prepares a 
written request that is mailed to INS requesting verification. When INS 
returns the form to SSA, INS indicates the validity of the document and 
the alien's immigration status or work authority (e.g., ``the document 
appears valid and relates to a lawful permanent resident alien of the 
United States'').
L5. As you know, the earnings suspense file contains earnings that 
        could not be posted to an individual's account due to a 
        mismatch of the name and SSN. Can you tell us what happens when 
        an SSN has multiple earnings from different individuals posted 
        to it?
    An SSN that has multiple earnings from different individuals posted 
to it is considered a possible scrambled earnings record. We may become 
aware of scrambled earnings 1) while processing W-2s; 2) through 
follow-ups to the yearly Social Security Statement that we send to 
every wage earner 25 years or older showing the wage earner what is on 
SSA records; 3) in our day-to-day processing of SSN applications or 
claims for benefits; and 4) IRS inquiries concerning two or more 
individuals with the same surname who used the same SSN on their income 
tax returns.
    The earnings remain on the record until we investigate and take 
corrective action to remove the erroneous postings. We request 
appropriate identifying information to determine the number holder's 
true identity. To locate the individuals using the wrong SSN we use 
employer records, changes of addresses, Department of Motor Vehicles' 
records and state employment office records. If we determine to whom 
the earnings rightfully belong, we post them to the appropriate record. 
If we are unable to determine to whom the earnings belong, the earnings 
are then placed in the earnings suspense files.
L6. Can you provide what safeguards and internal controls SSA employs 
        when issuing SSNs?
    Maintaining the integrity of the enumeration process has always 
been a top priority for SSA. Historically, we have tried to anticipate 
potential susceptibility to fraud and have implemented early measures 
to eliminate opportunities for exploitation. Our measures include 
requiring proof of age, citizenship or alien status, and identity for 
an original Social Security card. We also require proof of identity and 
may require evidence of age, citizenship or alien status for duplicate 
or corrected Social Security cards. (See responses to questions 1 and 2 
for additional safeguards to protect the SSN and minimize the 
occurrence of SSN misuse/identity theft.) Our efforts to eliminate SSN 
misuse within SSA's business processes focus on preventing the 
assignment of valid SSNs to fictitious individuals as well as to those 
who do not legitimately meet the requirements for the SSNs.
    The SSA's efforts to eliminate its reliance on customer-presented 
paper documents and increase the detection of fraudulent documents in 
field offices include the Enumeration-at-Birth (EAB) process in which 
SSA assigns SSNs to nearly 4 million newborns annually, as part of each 
State's birth registration process. The process is quick, easy and 
convenient since parents can apply for the baby's SSN when filling out 
birth certificate information at the hospital.
    As of March 2001, when an application for an original SSN is 
received for a child under the age of 18, the system performs numerous 
checks. It verifies parent's name and SSN and does not allow a card to 
be issued if certain confidential age and death status checks indicate 
potential fraud. In December 2001 we have an improved electronic audit 
trail in which ``Suspect'' SSN application records are identified, and 
a description of evidence for all SSN applications is maintained.
    As of June 2002, before assigning a new Social Security number to 
an individual that is born in the U.S. who is 1 year or older, we 
contact the office that issued the birth certificate to make sure that 
the record provided is valid.
    In July 2002, we began implementing procedures to verify documents 
submitted by noncitizens requesting a SSN with the INS as explained in 
the response to question 4.
    We also guard against employee fraud. We allow only qualified field 
office employees to make input to the enumeration system and use a 
Comprehensive Integrity Review Process (CIRP) which detects, 
identifies, and thus, deters both potential employee and client fraud. 
Based on certain characteristics of the information input to the 
enumeration system, CIRP identifies potentially invalid applications. 
Applications identified by CIRP are referred to the OIG for 
investigation.
L7. The President has called for discussion about ways to strengthen 
        the Social Security system. In addition, the President's 
        Commission to Strengthen Social Security released its final 
        report recommending several options for reform. What is your 
        agency's role relative to the Social Security debate? Does the 
        agency plan to conduct comparative analyses of the effects of 
        various reform proposals on beneficiaries, the budget, and the 
        economy?
    The Social Security Administration intends to play an active role 
in the solvency debate. Solvency is one of four priority areas in the 
Agency's strategic plan and the lead on this issue has been assigned to 
Deputy Commissioner James Lockhart.
    In addition, the Office of the Chief Actuary has provided, and will 
continue to provide, independent actuarial assessments of comprehensive 
proposals to modernize Social Security. In addition to assessing 
effects on the financial status of the trust funds, the actuary's 
analysis of recent proposals, including the President's Commission 
models and your own proposal, have included estimates of the effects on 
unified budget balances, under the intermediate assumptions of the 
trustees.
L8. Several members of Congress have introduced legislation requiring 
        SSA to provide information in the Social Security Statement on 
        1) the date Social Security will first experience a cash flow 
        deficit 2) the date the trust funds are exhausted 3) the ratio 
        of taxes collected to benefits paid 4) rate of return 
        information 5) an explanation of the nature of the Trust Funds. 
        Since you have been Commissioner, have you made any changes to 
        the Social Security Statement to include additional information 
        or make these pieces of information more prominent? Do you 
        intend on making future improvements to the Social Security 
        Statement? Are there any of these pieces of information that 
        you think should not be included in the Social Security 
        Statement, and why?
    We have updated the important solvency dates based on the estimates 
in the 2002 Trustees Report and deleted some words that did not add 
factual information to the Statement. We plan to make some additional 
changes to the Social Security Statement in the near future. The 
Statement serves as a factual document that informs workers about how 
the Social Security program operates and how it is funded. First and 
foremost, it is a tool for Americans to use to plan their retirement. 
We always work to improve the quality of information we provide through 
the Social Security Statement and will keep the Subcommittee apprised 
of the changes made to the Statement in the future.
    Communicating complicated technical information in a way that is 
understandable to a diverse public can be difficult, but SSA has worked 
diligently to ensure that the message in our Social Security Statement 
is clear. We want to reiterate our commitment to ensure that the 
Statement remains a factual document that informs workers about how the 
program operates and how it is funded. This is important information 
that the public needs to have from its government.
L9. Last fiscal year, GAO reported your agency spent about $741 million 
        on information technology and systems. In recent reports 
        requested by me in my capacity as chairman, it has been noted 
        that while progress has been identified, GAO found weaknesses 
        in five key areas, and recommended actions to improve SSA 
        information technology management practices. As automation is 
        the key to your effective service delivery in the future, what 
        efforts are you making to address these recommendations?
    GAO made a number of recommendations for improvement in its report, 
``Information Technology Management: Social Security Administration 
Practices Can Be Improved.'' Below is a discussion of the 
recommendations and our efforts to address these recommendations.
    We were asked to develop and implement a process guide that 
establishes the policies, procedures and key criteria for conducting 
the information technology (IT) investment management process and 
guiding executive staff operations. The SSA has had a documented 
Information Technology (IT) Capital Planning and Investment Control 
(CPIC) process in place for years. As part of SSA's continuing effort 
to refine its IT CPIC process, the Agency is testing and evaluating 
promising changes to that process. These potential improvements include 
the use of the Information Technology Investment Portfolio System (I-
TIPS) investment management software and Expert Choice decision-support 
software as well as recommendations for other process improvements from 
higher monitoring authorities and consultants.
    GAO requested that we develop and maintain selection criteria that 
include explicit cost, benefit, schedule and risk criteria to 
facilitate the objective analysis, comparison, prioritization and 
selection of information technology investments. These selection 
criteria were defined and tested using Expert Choice decision-support 
software. The Agency continues to refine its selection process and will 
document a final model in its CPIC process guide.
    Another recommendation was that we analyze and prioritize all IT 
investments based on the predefined selection criteria and make 
selection decisions according to the established process. We are 
adopting an IT planning and portfolio selection process that includes 
predefined selection criteria. This new process includes the 
development of a documented prioritized IT plan (based on predefined 
selection criteria) for each senior executive's area of responsibility. 
These plans will be provided to the CIO-chaired Executive-level 
Information Technology Advisory Board (ITAB). That board will annually 
perform enterprise-wide IT planning and prioritization using the 
established evaluation criteria (qualitative and quantitative factors 
including strategic alignment, mission effectiveness, organization 
impact, risk and return on investment) to produce a single, integrated 
Agency IT project portfolio.
    It was recommended that we establish and annually review cost, 
benefit, schedule and risk life-cycle expectations for each selected 
investment. Our IT planning and budgeting process will establish this 
for each selected investment. The CIO-chaired, Executive-level ITAB 
will review these expectations on an annual or more frequent basis.
    GAO asked that we revise the information technology oversight 
process so that the executive staff oversees the comparison of actual 
cost, benefit, schedule and risk data with original estimates for all 
investments to determine whether they are proceeding as expected and, 
if not, to take corrective actions as appropriate. The CIO-chaired, 
Executive-level ITAB and senior Office of Systems managers will oversee 
these comparisons to determine whether they are proceeding as expected 
or require corrective action. The ITAB will review these projects on a 
quarterly basis. The Office of Systems will review major projects on a 
monthly basis.
    We were asked to regularly perform post-implementation reviews of 
information technology investments and develop lessons learned from the 
process. The agency is developing procedures to guide future post-
implementation reviews (PIR) that include criteria for designating 
projects for PIR.
    Another recommendation included developing, managing and regularly 
evaluating the performance of a comprehensive information technology 
investment portfolio containing detailed and summary information 
(including data on costs, benefits, schedules and risks) for all IT 
investments. In concert with the Agency's planning, budgeting, 
acquisition, systems development and assessment processes, ITAB will 
develop, manage and regularly evaluate the performance of the Agency's 
comprehensive information technology investment portfolio.
    Finally, we were asked to implement investment process benchmarking 
so that measurable improvements may be made to Agency information 
investment management processes based on those used by best in-class 
organizations. The Agency has investigated some of these issues in 
discussions with other agencies concerning their implementation of I-
TIPS and Expert Choice. This is an ongoing activity. In addition, the 
Agency has acquired the support of experts in areas such as CPIC best 
practices, electronic service value measurement, program management, 
project management and IT cost allocation strategies. Procedures for 
benchmarking will be included in the CPIC processing guide.
L10. What efforts are underway to recruit new employees? How are these 
        efforts progressing?
    The SSA is actively recruiting new employees around the nation. 
Recruiters regularly visit college campuses, participate in job fairs 
and disseminate job information in local communities. Recruiters are 
continually seeking out qualified applicants of diverse backgrounds 
with an interest in public service.
    To assist our recruiters in attracting applicants with an interest 
in serving the public, the Agency developed and implemented a new 
marketing plan in 2002. Using the theme ``Make a difference in people's 
lives and your own,'' new tabletop exhibits, posters, electronic 
images, CD-ROM ``business cards'' and professional signage were 
created. With these recruitment tools, SSA recruiters have a wide range 
of resources comparable to the best in the private and public sectors.
    As part of the Agency's marketing campaign, the Career 
Opportunities webpage on SSA's Internet site was redesigned. Through 
the SSA Internet site, the public has the opportunity to learn about 
SSA, its mission and the vast array of benefits the Agency offers. In 
addition, information is provided about career opportunities in the 
fields of public contact, information technology, legal, law 
enforcement and other occupations (actuary, economist, and so forth.). 
Information for students and college graduates is also highlighted. 
Most important, the website shows actual job vacancies and information 
for applying are provided.
    To further strengthen and coordinate our recruitment efforts around 
the nation, the first in a series of national recruitment strategy 
conferences was held by SSA in April 2002 in Philadelphia. The 
conference brought the Agency's recruitment officers together to 
discuss `best practices' and implementation of the new recruitment 
strategy and marketing campaign.
    The Agency's recruitment efforts are progressing very well. Over 
the last 4 fiscal years (FY 98-FY 01), we have hired 11,600 employees. 
With the retirement of SSA's ``baby boomers'' to continue through 2010, 
the Agency is expected to hire approximately 3,500 employees a year. We 
are well positioned to ensure that our recruitment efforts meet the 
projected hiring targets.
    In the months and years ahead, SSA will ensure that its recruitment 
strategies and marketing campaigns are effective and designed to 
attract a talented workforce committed to serving the public and 
fulfilling the Agency's mission.
L11. GAO recommended in their testimony that SSA prepare a detailed 
        plan for how service will be delivered in the future. Have you 
        completed such a plan?
    The SSA is committed to assessing the level of service that SSA 
should be providing Americans. GAO has asked us to ``spell out who will 
provide what types of services in the future, where these services will 
be made available and the steps and timetables for accomplishing needed 
changes.''
    We have formed a group to conduct a service delivery budget 
assessment, matching up resource needs against the level of service we 
would like to deliver. This is a fresh approach to how Social Security 
works. We are drilling down into our processes. We are getting the 
data, defining what we do now, how it works and what it costs.
    We are looking at enumeration, retirement claims, disability case 
processing, appeals and major post-entitlement workloads, including 
continuing disability reviews, SSI non-disability redeterminations, as 
well as other workloads.
    Upon completion of this assessment, SSA will be able to relate the 
desired level of service to current service levels, determine required 
action, including further automation and process improvement, to 
provide the appropriate level of service.
L12. President Bush is to be congratulated for making full 
        implementation of the Ticket to Work legislation a focus of his 
        New Freedom Initiative for People with Disabilities. Full and 
        effective implementation of TWWIIA is central to our efforts to 
        address the 70% unemployment rate among people with severe 
        disabilities. The issuance of the final regulations on December 
        28, 2001 and the implementation in several States are major 
        steps in reaching that goal. Can you give us indication of the 
        reaction to how the Ticket is working in those States in which 
        the program has been implemented?
    We are implementing the Ticket to Work program in three phases, for 
full implementation by January 2004. Over a 5-month period, we mailed 
tickets to eligible beneficiaries in the 13 States we selected for 
Phase One. In February 2002, we mailed tickets to 10 percent of 
eligible beneficiaries in those States, accompanied by an informational 
package explaining the Ticket to Work program.
    We did not mail any tickets in March, so that we could study the 
effects of the first mailing. We mailed 20 percent of tickets and 
informational packages to eligible beneficiaries in April, 30 percent 
in May and the remaining 40 percent were mailed in June. Beneficiaries 
who are eligible for a ticket in these States could also request the 
Program Manager, MAXIMUS, to mail their tickets before they would 
receive them based on the schedule described above. Almost 6,000 
beneficiaries have taken advantage of this ``ticket on demand'' 
feature.
    After consultation with officials in New York State, we decided not 
to mail any tickets to beneficiaries in their State during April 2002. 
After jointly considering with them the effect of the February mailing, 
we decided to mail tickets to another 10 percent of the eligible 
beneficiaries in New York in May and to again suspend the mailing in 
June. We are jointly considering with them how to release the remaining 
80 percent of the tickets to beneficiaries in New York State.
    Through June 14, 2002, we have approved 378 organizations to serve 
beneficiaries as Employment Networks (ENs) in the Phase One States, and 
there are another 66 applications awaiting approval. We have awarded 
contracts to ENs in each of the 13 States, ranging from 96 in New York 
State to 6 in Vermont. In addition, there are seven ENs that serve 
beneficiaries either nationally or in more than one State.
    MAXIMUS is continuing to market the Program to organizations who 
can serve beneficiaries in the Phase One States and is expanding their 
efforts to organizations in the 20 States and the District of Columbia 
that will be included in the implementation of Phase Two of the 
program. So far, the reaction of beneficiaries, as expressed via 
Maximus' toll-free number, has been overwhelmingly favorable.
    Through June 17, 2002, in the 13 States in Phase One\1\ out of 1.15 
million tickets mailed, 2,152 tickets have been assigned to State 
Vocational Rehabilitation agencies or Employment Networks.
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    \1\ Because of the newness of the program and the time frames 
involved in the provision of employment supports, job placement and job 
retention, the Ticket assignment numbers should be viewed as very early 
indicators of outcomes to be expected over the initial Ticket roll-out.
---------------------------------------------------------------------------
L13. An effective quality assurance system is necessary, and the agency 
        has talked about the need to revamp its quality review systems 
        since 1994. Is anything being done, and if so can you describe 
        what has been done?
    In April 2002, we formed the Quality Management Workgroup under the 
leadership of one of SSA's Senior Managers. The group was tasked with 
developing a proposal on what quality should look like for each of the 
Agency's business processes such as claims, post-entitlement actions, 
informing the public, enumeration, earnings and all support activities. 
The goal is to begin implementation by the end of FY 2002.
    In developing the proposal, the workgroup has been gathering 
information through interviews with executives, background research 
from oversight groups, briefings on initiatives in process and focus 
groups with managers and employee associations. While the workgroup is 
still formulating the proposal, the areas identified for quality 
improvement include new in-line reviews in the disability and SSI 
programs, training initiatives, policy improvement processes and 
systems/management information enhancements.
    Certain activities are already in process: plans for national 
automation training, new Program Service Center quality reviews, the 
acceleration of the electronic disability folder and process 
improvements that target SSI program issues. Working in conjunction 
with the responsible components, specific short, mid, and long-term 
activities in these areas will be identified, monitored and 
communicated throughout the Agency.
L14. Two of your agency's goals are to deliver customer-responsive 
        world-class service and to make sure program management the 
        best in the business, with zero tolerance for fraud and abuse. 
        In your view, are these two goals being effectively balanced?
    Yes, these two goals represent the core business of our Agency and 
we are effectively balancing them. World-class service also includes 
sound stewardship.
    Providing world-class service encompasses the full range of 
services that we provide the public in all our programs and through all 
modes of delivering that service--telephone, in-person, the Internet, 
automated self-service, mail and through third parties.
    Making sure program management is the best in the business, with 
zero tolerance for fraud and abuse, includes our responsibility to pay 
benefits accurately and be a good steward of the money entrusted to us. 
To do this we establish and maintain records of individual's earnings 
for use in determining entitlement to benefits; make accurate 
eligibility and entitlement decisions, prevent, detect and collect 
overpayments; deter, identify and combat fraud; and ensure efficient 
operations.
    To improve our service to the public and at the same time ensure 
that our program management is the best in the business, we have taken 
to significantly upgrade and refresh our systems infrastructure. 
Employee desktop computers are being replaced every 3 years. We are 
also upgrading our computer network, telecommunications and security 
infrastructure. Taken together, these enhancements not only allow us to 
better serve the public but also help us operate efficiently, make 
accurate decisions and detect fraud and abuse.
    Further, we developed a Service Vision, which is our guide to how 
we will manage our work and provide service a decade from now and an 
Internet service delivery mechanism. The SSA's website, Social Security 
Online, provides the American public with one-stop shopping for 
information and services regarding our programs. Our Market Measurement 
Program routinely collects information from the public which helps us 
decide where to best focus our limited resources and make improvements 
in areas that will have the greatest public impact.
    While doing all this we have initiated an aggressive antifraud 
program. This antifraud program 1) enhances our systems and operations 
to better detect fraud; 2) eliminates wasteful practices that erode 
public confidence in the Social Security program; and 3) vigorously 
prosecutes individuals or groups who damage the integrity of the 
programs.
    The SSA's National Anti-Fraud Committee, under the leadership of 
top SSA executives, continues to oversee the implementation and 
coordination of SSA's strategies to eliminate fraud. Regional Anti-
Fraud Committees coordinate antifraud strategies at each of our 
regional offices and identify new projects at the local level. Best 
practices are shared among the regional Committees and with the 
national committee.

                                 

    Chairman SHAW. Thank you. Thank you very much.
    The next panel, we have Barbara Bovbjerg, who is the 
Director of Education, Workforce and Income Security Issues, 
U.S. General Accounting Office, and she did a great job 
testifying before us down in Lakewood, Florida.
    David McClure is the Director of Information Technology 
Management Issues at the U.S. General Accounting Office.
    We also have the Honorable James Huse, the Inspector 
General of the Social Security Administration; the Honorable 
Hal Daub, particularly delighted to welcome him back to this 
Committee, a former Member of the Committee on Ways and Means, 
and now Chairman of the Social Security Advisory Board. This 
will be Hal's first time appearing before this Subcommittee.
    We have Marie Smith, who is the President-Elect of the 
Board of Directors of AARP, and all of us in the Congress are 
very sensitive to the words coming from the AARP, so we 
certainly look forward to your testimony.
    Marty Ford, who is the Co-Chair of the Social Security Task 
Force Consortium on Citizens with Disabilities, and also one of 
my favorites, the Honorable Barbara Kennelly, former Member of 
this Committee, former Ranking Member, I believe, of this 
Subcommittee, so we have to be careful what we ask her because 
she may know more about it than we do. She is now President of 
the National Committee to Preserve Social Security and 
Medicare.
    You and I have had conversations over the years, when you 
were with the Clinton Administration, and we certainly look 
forward to hearing from you. Ms. Bovbjerg?

    STATEMENT OF BARBARA D. BOVBJERG, DIRECTOR, EDUCATION, 
WORKFORCE, AND INCOME SECURITY ISSUES, U.S. GENERAL ACCOUNTING 
OFFICE, ACCOMPANIED BY DAVID L. MCCLURE, DIRECTOR, INFORMATION 
                  TECHNOLOGY MANAGEMENT ISSUES

    Ms. BOVBJERG. Thank you, Mr. Chairman.
    Mr. Chairman, Members of the Committee, thank you for 
inviting me back before you, this time to discuss management 
challenges at the Social Security Administration. I am pleased 
the Agency can look to the experienced leadership of 
Commissioner Barnhart and look forward to working with her, and 
with you, in facing these challenges.
    The SSA oversees programs that last year provided more than 
$450 billion in benefits to more than 50 million recipients. As 
the administrator of these programs, SSA has shown many 
strengths. The Agency is considered a leader in Federal service 
delivery, and it has a long tradition of strategic planning. In 
addition, it produces timely and accurate financial statements 
and is a leader among government agencies in accountability 
reporting.
    However, since 1995, when SSA became an independent Agency, 
GAO has called for sustained management attention to a 
relatively constant set of unresolved challenges. Although 
restoring solvency and sustainability to the Social Security 
programs themselves represents one of the major policy 
challenges facing our Nation, the challenges I will describe 
today are managerial in nature. My testimony is based on our 
previous and ongoing work, much of it performed for this 
Subcommittee.
    Let me begin with the challenge of disability determination 
and appeals, which we heard a lot about this morning. As the 
Commissioner noted, the Agency has been working for years to 
improve its disability claims process, yet ensuring the quality 
and timeliness of its disability decisions remains one of its 
greatest challenges.
    The SSA faces some difficult decisions about its next steps 
in this area and may need, in our view, to consider more 
fundamental changes to the process, rather than continuing to 
focus on changing its steps and procedures. At the same time, 
SSA should also seek to integrate return-to-work strategies 
into all phases of its disability determination process. While 
the Agency has taken some positive steps to return people with 
disabilities to work, a more comprehensive approach to the 
Agency's process and its underlying philosophy is needed.
    Management and oversight problems in the SSI Program also 
continue to challenge the Agency. We labeled this program high 
risk in 1997 because of its susceptibility to fraud, waste, 
abuse, and mismanagement. Since that time, SSI has taken a 
number of steps to improve the integrity of the program. 
However, some of these actions are still in the early stages 
and have yet to yield significant results. We believe more can, 
and should, be done, including simplifying program 
requirements, which are often error prone and a major source of 
overpayments.
    Future service delivery represents another challenge. Three 
factors pertain--as you noted, the expected increase in demand 
for services as the boomers retire, the imminent retirement of 
a large part of SSA's own workforce and changing customer 
expectations. These together have the potential to cripple 
SSA's service delivery system.
    Even though SSA has several human capital initiatives 
underway to help it prepare its workforce for the future, it 
lacks a detailed plan for service delivery by that workforce. 
Absent a detailed blueprint, the Agency cannot ensure that its 
human capital efforts will fully support its vision for future 
service delivery and that it is effectively marshaling its 
resources.
    Let me turn now to information technology, one of the 
greatest challenges for the Agency. The SSA is relying heavily 
on IT initiatives to cope with its growing workloads and plans 
increasingly to use web-based technologies to meet its service 
delivery goals and changing customer expectations. However, the 
Agency's past experience with IT initiatives has been mixed. As 
SSA transitions to electronic processes, it will be challenged 
to think more strategically about its IT investments and to 
ensure their effectiveness by linking them to service delivery 
goals and performance.
    Finally, let me speak to the challenge of protecting 
personal information. In light of the terrorist events of 
September 11, the Nation has a heightened awareness of the need 
to protect such information. The SSA will need to continue to 
take steps to ensure that only individuals who are eligible for 
Social Security numbers (SSN) receive them and to ensure that 
its information on deceased SSN holders is accurate and timely.
    However, once SSA has issued a number to an individual, the 
Agency realistically has little control over how these numbers 
are used by other government agencies and by private sector 
entities. We will continue to work with SSA, this Subcommittee, 
and the Inspector General to better protect SSN's as part of 
our ongoing evaluation of this issue.
    In conclusion, SSA has taken a number of steps to address 
its management challenges. However, the challenges remain, and 
the Agency is running out of time before expected workload 
increases overwhelm its operations. Although some of SSA's 
actions show promise, it is too early to tell how effective 
they will be and other actions SSA has taken have not produced 
the desired results. In almost all cases, the Agency has much 
more to do, and I welcome the energy and commitment that 
Commissioner Barnhart has shown in addressing these issues.
    That concludes my statement. Mr. McClure, who is here from 
our IT side of GAO, and I would be happy to answer any 
questions.
    [The prepared statement of Ms. Bovbjerg and Mr. McClure 
follow:]
 Statement of Barbara D. Bovbjerg, Director, Education, Workforce, and 
  Income Security Issues, and David L. McClure, Director, Information 
      Technology Management Issues, U.S. General Accounting Office
    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me here today to discuss the challenges 
facing the Social Security Administration (SSA). SSA oversees three 
major programs that in fiscal year 2001 provided more than $450 billion 
in benefits to more than 50 million recipients. One or more of the 
three programs--Old Age and Survivors Insurance (OASI), Disability 
Insurance (DI), and Supplemental Security Income (SSI)--touches the 
lives of almost every American family at one time or another.
    SSA has many strengths. The agency is considered to be a leader in 
federal service delivery, and it has a long tradition of strategic 
planning. In addition, SSA produces timely and accurate financial 
statements and is a leader among government agencies for its 
accountability reporting.
    However, since 1995, when SSA became an independent agency, we have 
called for effective leadership and sustained management attention to a 
relatively constant set of unresolved management challenges.\1\ These 
challenges include the need to redesign its disability claims process 
and heighten the focus on work for claimants, address management and 
oversight problems with its SSI program, meet its growing future 
service delivery demands, effectively implement its information 
technology initiatives, and strengthen its research and policy 
development capacity. Solutions to these challenges are difficult but 
necessary because they are linked to profound changes in our nation. 
The baby boom generation is nearing retirement age, people are living 
longer, technology and its applications are changing rapidly, and 
public expectations for faster and better service from government are 
growing. The implications of these changes create some management 
challenges and make others more difficult to overcome.
---------------------------------------------------------------------------
    \1\ See U.S. General Accounting Office, SSA's Management 
Challenges: Strong Leadership Needed to Turn Plans Into Timely, 
Meaningful Action, GAO/T-HEHS-98-113 (Washington, D.C.: Mar. 12, 1998); 
Social Security Administration: Information Technology Challenges 
Facing the Commissioner, GAO/T-AIMD-98-109 (Washington, D.C.: Mar. 12, 
1998); Social Security Administration: Significant Challenges Await New 
Commissioner, GAO/HEHS-97-53 (Washington, D.C.: Feb. 20, 1997); Social 
Security Administration: Effective Leadership Needed to Meet Daunting 
Challenges, GAO/HEHS-96-196 (Washington, D.C.: Sept. 12, 1996); and 
Social Security Administration: Leadership Challenges Accompany 
Transition to an Independent Agency, GAO/HEHS-95-59 (Washington, D.C.: 
Feb. 15, 1995).
---------------------------------------------------------------------------
    Today, I will discuss SSA's progress in meeting these and other 
challenges. The information I am providing is based on our previous and 
ongoing work, much of it performed for these subcommittees. (See 
Related GAO Products at the end of this statement.)
    In summary, SSA has taken a number of varied steps to address its 
management challenges; however, the challenges remain, and some are 
becoming ever more pressing. In certain instances, SSA's actions show 
promise, but it is too early to tell how effective they will be; in 
others, SSA's efforts have not produced the desired results. In almost 
all cases, the agency has much more to do and will likely need to take 
bolder action or make more fundamental changes to existing programs or 
procedures.

         SSA has been working for years to improve its 
        disability claims process; yet, ensuring the quality and 
        timeliness of its disability decisions remains one of the 
        agency's greatest challenges. The agency faces some difficult 
        decisions about its next steps in this area and may need to 
        consider more fundamental changes to the process. In addition, 
        although SSA has taken some positive steps to return people 
        with disabilities to work, a more fundamental change to the 
        agency's process and underlying philosophy is needed. Since 
        1996, we have called for SSA to integrate return-to-work 
        strategies into all phases of its disability determination 
        process to help disabled workers who can return to work to do 
        so.
         In 1997, we designated the SSI program as high risk 
        because of its susceptibility to fraud, waste, abuse, and 
        mismanagement. Since that time, SSA has taken or begun to take 
        a number of concrete and appropriate steps to improve the 
        integrity of the program. However, some of these actions are 
        still in the early stages and have yet to yield significant 
        results. We believe more can be done, including moving forward 
        on proposals to simplify program requirements, which are often 
        error prone and a major source of SSI overpayments.
         The combination of three factors--the expected 
        increase in demand for services as the baby boomers reach 
        retirement age, the imminent retirement of a large part of the 
        agencies workforce, and changing customer expectations--has the 
        potential to cripple SSA's future service delivery system. Even 
        though SSA has a number of human capital initiatives under way 
        to help it prepare for the future, it lacks a service delivery 
        plan that lays out a detailed blueprint for how service will be 
        delivered in the future. Without such a plan, the agency cannot 
        ensure that its human capital efforts fully will support its 
        vision for service delivery and that it is effectively 
        marshalling its scarce resources.
         SSA is relying heavily on information technology 
        initiatives to cope with its growing workloads, and it plans to 
        increasingly use Web-based technologies to meet its service 
        delivery goals. For fiscal year 2001, SSA estimated spending 
        about $741 million on information technology systems and 
        projects. Sound policies and procedures are fundamental to 
        effectively managing information technology initiatives, and in 
        a prior review, we found that SSA had not consistently 
        implemented some key policies and procedures to guide its major 
        information technology functions, including information 
        security. Doing so is imperative, given that the agency has 
        experienced mixed success in carrying out prior information 
        technology initiatives.
         Regarding the need to strengthen its ability to 
        conduct research and contribute to policy development, SSA is 
        well positioned to contribute vital information to policymakers 
        on the overarching problem of ensuring the long-term solvency 
        of the Social Security Trust Funds. The agency also has a 
        responsibility to review and identify other areas where policy 
        changes are needed, such as in its disability programs. SSA has 
        recently increased the level of staff and resources available 
        to support these activities; however, many of the agency's 
        efforts are in the early stages, and it is not yet clear how 
        the agency will use them and what their ultimate effect on SSA 
        program policy will be.
         Finally, in light of the terrorist events of 
        September 11th, the nation has a heightened awareness of the 
        need to protect sensitive information. SSA will need to 
        continue to take steps to ensure that only individuals who are 
        eligible for social security numbers (SSN) receive them and to 
        ensure that its information on deceased SSN holders is accurate 
        and timely. However, once SSA has issued an SSN to an 
        individual, the agency has little control over how SSNs are 
        used by other government agencies and the private sector. As we 
        complete our review of how federal, state, and local programs 
        and agencies use SSNs and how well they protect them, we look 
        forward to exploring with you additional options to better 
        protect SSNs.
Background
    SSA administers three major federal programs. OASI and DI, together 
commonly known as Social Security, provide benefits to retired and 
disabled workers and their dependents and survivors. In fiscal year 
2001, SSA provided OASI retirement benefits totaling more than $369 
billion to over 38 million individuals and DI benefits of more than $59 
billion to 6.8 million individuals. These benefits are paid from trust 
funds that are financed through payroll taxes paid by workers and their 
employers and by the self-employed. The third program, SSI, provides 
income for aged, blind, or disabled individuals with limited income and 
resources. In fiscal year 2001, 6.7 million individuals received almost 
$28 billion in SSI benefits.\2\ SSI payments are financed from general 
tax revenues.
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    \2\ Some DI and OASI benefit recipients have incomes low enough to 
qualify them for SSI, and they, therefore, receive benefits from both 
programs.
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    To administer these programs, SSA must perform certain essential 
tasks. It must issue SSNs to individuals, maintain earnings records for 
individual workers by collecting wage reports from employers, use these 
records and other information to determine the amount of benefits an 
applicant may receive, and process benefit claims for all three 
programs.
    To meet its customer service responsibilities, SSA operates a vast 
network of offices distributed throughout the country. These offices 
include approximately 1,300 field offices, which, among other things, 
take applications for benefits; 138 Offices of Hearings and Appeals; 
and 36 teleservice centers responsible for SSA's national 800 number 
operations.\3\ 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 SSA's toll-free number, or 
contacting SSA through the mail or the Internet. To conduct its work, 
SSA employs almost 62,000 staff. In addition, to make initial and 
ongoing disability determinations, SSA contracts with 54 state 
disability determination service (DDS) agencies under authority of the 
Social Security Act.\4\ Although 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.\5\ Overall, SSA relies extensively on 
information technology to support its large volumes of programmatic and 
administrative work.
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    \3\ Other SSA facilities include 10 regional offices, 7 processing 
centers, and 1 data operations center.
    \4\ These agencies exist in each state, the District of Columbia, 
Guam, Puerto Rico, and the Virgin Islands.
    \5\ The state DDS sites employ a total of more than 14,000 staff.
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    The process for obtaining SSA disability benefits under either DI 
or SSI is complex, and multiple organizations are involved in 
determining whether a claimant is eligible for benefits. As shown in 
figure 1, the current process consists of an initial decision and as 
many as three levels of administrative appeals if the claimant is 
dissatisfied with SSA's decision.
               Figure 1: SSA's Disability Claims Process




[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

      
    Each level of appeal involves multistep procedures for evidence 
collection, review, and decision making. Generally, a claimant applies 
for disability benefits at one of SSA's 1,300 field offices across the 
country. If the claimant meets certain nonmedical program eligibility 
criteria, the field office staff forward the claim to the DDS. DDS 
staff then obtain medical evidence about the claimant's impairment and 
determine whether the claimant is disabled. Claimants who are initially 
denied benefits can appeal by requesting the DDS to reconsider its 
initial denial. If the decision at the reconsideration level remains 
unfavorable, the claimant can request a hearing before a federal 
administrative law judge at an SSA hearings office and, if still 
dissatisfied, a review by SSA's appeals council. After exhausting these 
administrative remedies, the individual may file a complaint in federal 
district court.
    The agency's ability to continue providing Social Security benefits 
over the long term is strained by profound demographic changes. The 
baby boom generation is nearing retirement age. In addition, life 
expectancy has increased continually since the 1930s, and further 
increases are expected. This increase in life expectancy, combined with 
falling fertility rates, mean that fewer workers will be contributing 
to Social Security for each aged, disabled, dependent, or surviving 
beneficiary. Beginning in 2017, Social Security's expenditures are 
expected to exceed its tax income. By 2041, without corrective action, 
experts expect the combined OASI and DI trust funds to be depleted, 
leaving insufficient funds to pay the current level of benefits. Unless 
actions are taken to reform the social security system, the nation will 
face continuing difficulties in financing social security benefits in 
the long term. Over the past few years, a wide array of proposals has 
been put forth to restore Social Security's long-term solvency, and in 
December 2001, a commission appointed by the president presented three 
alternative proposals for reform.
    This solvency problem is part of a larger and significant fiscal 
and economic challenge facing our aging society. The expected growth in 
the Social Security program (OASI and DI), combined with even faster 
expected growth in Medicare and Medicaid, will become increasingly 
unsustainable over time, compounding an ongoing decline in budget 
flexibility. Absent changes in the structure of Social Security and 
Medicare, there would be virtually no room for any other budget 
priorities in future decades. Ultimately, restoring our long-term 
fiscal flexibility will involve reforming existing federal entitlement 
programs and promoting the saving and investment necessary for robust 
long-term economic growth.\6\
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    \6\ For more information, see U.S. General Accounting Office, 
Social Security: Issues in Evaluating Reform Proposals, GAO-02-288T 
(Washington, D.C.: Dec. 10, 2001).
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LAdditional Progress Is Needed to Improve SSA's Disability 
        Determination Process and to Return People to Work
    The disability determination process is time-consuming, complex, 
and expensive. Individuals who are initially denied benefits by SSA and 
appeal their claim experience lengthy waits for a final decision on 
their eligibility, and questions have been raised about the quality and 
consistency of certain disability decisions. Since 1994, SSA has 
introduced a wide range of initiatives intended to address long-
standing problems with its disability claims process. However, the 
agency's efforts, in general, have not achieved the intended result, 
and the problems persist. Because SSA's DI and SSI programs are 
expected to grow significantly over the next decade, improving the 
disability determination process remains one of SSA's most pressing and 
difficult challenges requiring immediate and sustained attention from 
the new commissioner. Additionally, in redesigning its disability 
decision-making process, SSA still needs to incorporate into its 
eligibility assessment process an evaluation of what is needed for an 
individual to return to work. We have recommended developing a 
comprehensive return-to-work strategy that focuses on identifying and 
enhancing the work capacities of applicants and beneficiaries.
Improvements to the Disability Determination Process Have Been Limited
    SSA's complex disability claims process has been plagued by a 
number of long-standing weaknesses that have resulted in lengthy 
waiting periods for claimants seeking disability benefits. For example, 
claimants who wish to appeal an initial denial of benefits frequently 
wait more than 1 year for a final decision. We have reported that these 
long waits result, in part, from complex and fragmented decision-making 
processes that are laden with many layers of reviews and multiple 
handoffs from one person to another. The cost of administering the DI 
and SSI programs reflects the demanding nature of the process. Although 
SSI and DI program benefits account for less than 20 percent of the 
total benefit payments made by SSA, they consume nearly 55 percent of 
annual administrative resources.
    In addition to its difficulties in processing claims, SSA has also 
had difficulty ensuring that decisions about a claimant's eligibility 
for disability benefits are accurate and consistent across all levels 
of the decision-making process. For example, our work shows that in 
fiscal year 2000, about 40 percent of applicants whose cases were 
denied at the initial level appealed this decision and about two-thirds 
were awarded benefits. This happens in part because decision makers at 
the initial level use a different approach to evaluate claims and make 
decisions than those at the appellate level. The inconsistency of 
decisions at these two levels has raised questions about the fairness, 
integrity, and cost of SSA's disability programs.
    In 1994, SSA laid out a plan to address these problems, yet that 
plan and three subsequent revisions in 1997, 1999, and 2001 have 
yielded only limited success. The agency's initial plan entailed a 
massive effort to redesign the way it made disability decisions. Among 
other things, SSA planned to develop a streamlined decision-making and 
appeal process, more consistent guidance and training for decision 
makers at all levels of the process, and an improved process for 
reviewing the quality of eligibility decisions. In our reviews of SSA's 
efforts after 2 years, 4 years, and again in 2001, we found that the 
agency had accomplished little.\7\ In some cases, the plans were too 
large and too complex to keep on track, and the results of many of the 
initiatives that were tested fell far short of expectations. Moreover, 
the agency was not able to garner consistent stakeholder support and 
cooperation for its proposed changes.
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    \7\ U.S. General Accounting Office, SSA Disability Redesign: Focus 
Needed on Initiatives Most Crucial to Reducing Costs and Time, GAO/
HEHS-97-20 (Washington, D.C.: Dec. 20, 1996); SSA Disability Redesign: 
Actions Needed to Enhance Future Progress, GAO/HEHS-99-25 (Washington, 
D.C.: Mar. 12, 1999); and Social Security Disability: Disappointing 
Results From SSA's Efforts to Improve the Disability Claims Process 
Warrant Immediate Attention, GAO-02-322 (Washington, D.C.: Feb. 27, 
2002).
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    Despite the overall disappointing progress, the agency did 
experience some successes. For example, it conducted a large training 
effort to improve the consistency of decisions, which agency officials 
believe resulted in 90,000 eligible individuals' receiving benefits 500 
days sooner than otherwise might have been the case over a 3-year 
period. In addition, the agency issued formal guidance in a number of 
areas intended to improve the consistency of decisions between the 
initial and appellate levels.
    Overall, however, significant problems persist and difficult 
decisions remain. For example, SSA is currently collecting final data 
on the results from an initiative known as the Prototype, which was 
implemented in 10 states in October 1999. Although interim data 
indicated that the Prototype resulted in more awards at the initial 
decision level without compromising accuracy, it also indicated that 
the number of appeals would increase. This, in turn, would result in 
both higher administrative and benefit costs and lengthen the wait for 
final decisions on claims. As a result, SSA decided that the Prototype 
would not continue in its current form. Recently, SSA announced its 
``short-term'' decision to revise some features of the Prototype to 
improve disability claims processing time while it continues to develop 
longer-term improvements. It remains to be seen whether these revisions 
will retain the positive results from the Prototype while also 
controlling administrative and benefit costs.
    Even more pressing in the near term is the management and workload 
crisis that SSA faces in its hearings offices. The agency's 1999 plan 
included an initiative to overhaul operations at its hearing offices to 
increase efficiency and significantly reduce processing times at that 
level; however, this nationwide effort not only has failed to achieve 
its goals but, in some cases, has made things worse. The initiative has 
suffered, in part, from problems associated with implementing large-
scale changes too quickly without resolving known problems. As a 
result, the average case-processing time slowed and backlogs of cases 
waiting to be processed approached crisis levels. We have recommended 
that the new commissioner act quickly to implement short-term 
strategies to reduce the backlog and develop a long-range strategy for 
a more permanent solution to the backlog and efficiency problems at the 
Office of Hearings and Appeals.\8\ According to SSA officials, they 
have recently made some decisions on short-term initiatives to reduce 
the backlogs and streamline the process, and they are preparing to 
negotiate with union officials regarding some of these planned changes.
---------------------------------------------------------------------------
    \8\ GAO-02-322.
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    Finally, SSA's 1994 plan to redesign the claims process called for 
the agency to revamp its existing quality assurance system. However, 
because of disagreement among stakeholders on how to accomplish this 
difficult objective, progress in this area has been limited. In March 
2001, a contractor issued a report assessing SSA's existing quality 
assurance practices and recommended a significant overhaul to encompass 
a more comprehensive view of quality management. We agreed with this 
assessment and recommended that SSA develop an action plan for 
implementing a more comprehensive and sophisticated quality assurance 
program.\9\ Since then, the commissioner has signaled the high priority 
she attaches to this effort by appointing to her staff a senior manager 
for quality who reports directly to her. The senior manager is 
responsible for developing a proposal to establish a quality-oriented 
approach to all SSA business processes. The manager is currently 
assembling a team to carry out this challenging undertaking.
---------------------------------------------------------------------------
    \9\ GAO-02-322.
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    The disappointing results of some of these initiatives can be 
linked, in part, to slow progress in achieving technological 
improvements. As originally envisioned, SSA's plan to redesign its 
disability determination process was heavily dependent upon these 
improvements. The agency spent a number of years designing and 
developing a new computer software application to automate the 
disability claims process. However, SSA decided to discontinue the 
initiative in July 1999, after about 7 years, citing software 
performance problems and delays in developing the software.\10\
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    \10\ U.S. General Accounting Office, Social Security 
Administration: Update on Year 2000 and Other Key Information 
Technology Initiatives, GAO/T-AIMD-99-259 (Washington, D.C.: July 29, 
1999).
---------------------------------------------------------------------------
    In August 2000, SSA issued a new management plan for the 
development of the agency's electronic disability system. SSA expects 
this effort to move the agency toward a totally paperless disability 
claims process. The strategy consists of several key components, 
including (1) an electronic claims intake process for the field 
offices, (2) enhanced state DDS claims processing systems, and (3) 
technology to support the Office of Hearing and Appeals' business 
processes. 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 piloting certain components of its electronic disability system 
in one state in May 2000 and has expanded this pilot test to one more 
state since then. According to agency officials, SSA has taken various 
steps to increase the functionality of the system; however, the agency 
still has a number of remaining issues to address. For example, SSA's 
system must comply with privacy and data protection standards required 
under the Health Information Portability and Accountability Act, and 
the agency will need to effectively integrate its existing legacy 
information systems with new technologies, including interactive Web-
based applications.
    SSA is optimistic that it will meet its scheduled date for 
achieving a paperless disability claims process--anticipated for the 
end of 2005--and has taken several actions to ensure that its efforts 
support the agency's mission. For example, to better ensure that its 
business processes drive its information technology strategy, SSA has 
transferred management of the electronic disability strategy from the 
Office of Systems to the Office of Disability and Income Security 
Programs. In addition, SSA hired a contractor to independently evaluate 
the electronic disability strategy and recommend options for ensuring 
that the effort addresses all of the business and technical issues 
required to meet the agency's mission. According to an agency official, 
SSA is currently implementing the contractor's recommendations. As SSA 
proceeds with this new system, however, it is imperative that the 
agency effectively identify, track, and manage the costs, benefits, 
schedule, and risks associated with the system's full development and 
implementation. Moreover, SSA must ensure that it has the right mix of 
skills and capabilities to support this initiative and that desired end 
results are achieved.
    Overall, SSA is at a crossroads in its efforts to redesign and 
improve its disability claims process. It has devoted significant time, 
energy, and resources to its redesign initiatives over the last 7 
years, yet progress has been limited and often disappointing. SSA is 
not the only government agency to experience difficulty in overhauling 
or reengineering its operations. According to reengineering experts, 
many federal, state, and local agencies have failed in similar efforts. 
Frequent leadership turnover, constraints on flexibility posed by laws 
and regulations, and the fact that government agencies often must serve 
multiple stakeholders with competing interests all constrain progress. 
Yet, it is vital that SSA address its claims process problems now, 
before the agency experiences another surge in workload as the baby 
boomers reach their disability-prone years. To date, the focus on 
changing the steps and procedures of the process or changing the duties 
of its decision makers has not been successful. Given this experience, 
it may be appropriate for the agency to undertake a new and 
comprehensive analysis of the fundamental issues impeding progress. 
Such an analysis might include reassessing the root causes contributing 
to its problems and would encompass concerns raised by the Social 
Security Advisory Board, such as the fragmentation and structural 
problems in the agency's overall disability service delivery system. 
The outcome of this analysis may, in some cases, require legislative 
changes.
LSSA Lacks a Comprehensive Strategy to Return People with Disabilities 
        to Work
    The number of working-age beneficiaries of the DI and SSI programs 
has increased by 61 percent over the past 10 years. We have reported 
that as the beneficiary population has grown, numerous technological 
and medical advances, combined with changes in society and the nature 
of work, have increased the potential for some people with disabilities 
to return to, or remain in, the labor force. Also, legislative changes 
have focused on returning disabled beneficiaries to work. The Americans 
with Disabilities Act of 1990 supports the premise that people with 
disabilities can work and have the right to work, and the Ticket to 
Work and Work Incentives Improvement Act of 1999 increased 
beneficiaries' access to vocational services. Indeed, many 
beneficiaries with disabilities indicate that they want to work, and 
many may be able work in today's labor market if they receive needed 
support. In 1996, we recommended that SSA place a greater priority on 
helping disabled beneficiaries work, and the agency has taken a number 
of actions to improve its return-to-work practices. But even with these 
actions, SSA has achieved poor results in this arena, where fewer than 
1 in 500 DI beneficiaries and few SSI beneficiaries leave the 
disability rolls to work.
    Even in light of the Ticket to Work Act, SSA will continue to face 
difficulties in returning beneficiaries to work, in part owing to 
weaknesses, both statutory and policy, in the design of the DI program. 
As we have reported in the past, these weaknesses include an either/or 
disability decision-making process that characterizes individuals as 
either unable to work or having the capacity to work. This either/or 
process produces a strong incentive for applicants to establish their 
inability to work to qualify for benefits.
    Moreover, return-to-work services are offered only after a lengthy 
determination process. Because applicants are either unemployed or only 
marginally connected to the labor force at the time of application and 
remain so during the eligibility determination process, it is likely 
that their skills, work habits, and motivation to work deteriorate 
during this wait. Thus, individuals who have successfully established 
their disability may have little reason or desire to attempt 
rehabilitation and work. Unlike some private sector disability insurers 
and foreign social insurance systems, SSA does not incorporate into its 
initial or continuing eligibility assessment process an evaluation of 
what is needed for an individual to return to work. Instead of 
receiving assistance to stay in the workforce or return to work--and 
thus to stay off the long-term disability rolls--an individual can 
obtain assistance through DI or SSI only by proving his or her 
inability to work. And even in its efforts to redesign the decision-
making process, SSA has yet to incorporate into these initiatives an 
evaluation of what an individual may need to return to work.
    Moreover, SSA has made limited strides in developing baseline data 
to measure progress in the return-to-work area. In June 2000, we 
reported that many of SSA's fiscal year 2001 performance measures were 
not sufficiently results oriented, making it difficult to track 
progress. SSA's fiscal year 2002 performance plan shows that SSA has 
begun to incorporate more outcome-oriented performance indicators that 
could support their efforts in this area. Two new indicators, in 
particular, could help SSA gauge progress: the percentage increase in 
the number of DI beneficiaries whose benefits are suspended or 
terminated owing to employment and the percentage increase in the 
number of disabled SSI beneficiaries no longer receiving cash benefits. 
However, SSA has not yet set specific performance targets for these 
measures.
    Nevertheless, SSA has recently stepped up its return-to-work 
efforts. For example, it has (1) established an Office of Employment 
Support Programs to promote employment of disabled beneficiaries; (2) 
recruited 184 public or private entities to provide vocational 
rehabilitation, employment, and other support services to beneficiaries 
under the Ticket to Work Program; (3) raised the limit on the amount a 
DI beneficiary can earn from work and still receive benefits to 
encourage people with disabilities to work; (4) funded 12 state 
partnership agreements that are intended to help the states develop 
services to increase beneficiary employment; and (5) completed a pilot 
study on the deployment of work incentive specialists to SSA field 
offices and is currently determining how to best implement the position 
nationally.
    While these efforts represent positive steps in trying to return 
people with disabilities to work, much remains to be done. As we have 
recommended previously, SSA still needs to move forward in developing a 
comprehensive return-to-work strategy that integrates, as appropriate, 
earlier intervention, including earlier and more effective 
identification of work capacities, and the expansion of such capacities 
by providing essential return-to-work assistance for applicants and 
beneficiaries. Adopting such a strategy is likely to require 
improvements to staff skill levels and areas of expertise, as well as 
changes to the disability determination process. It will also require 
fundamental changes to the underlying philosophy and direction of the 
DI and SSI programs, as well as legislative changes in some cases. 
Policymakers will need to carefully weigh the implications of such 
changes. Nevertheless, we remain concerned that the absence of such a 
strategy and accompanying performance plan goals may hinder SSA's 
efforts to make significant strides in the return-to-work area. An 
improved return-to-work strategy could benefit both the beneficiaries 
who want to work and the American taxpayer.
LLongstanding High-Risk SSI Issues Require Sustained Management and 
        Oversight
    The SSI program is the nation's largest cash assistance program for 
the poor. In fiscal year 2000, the program paid 6.6 million low-income 
aged, blind, and disabled recipients $31 billion in benefits. During 
that year, newly detected overpayments and outstanding SSI debt totaled 
more than $3.9 billion. In 1997, after several years of reporting on 
specific instances of abuse and mismanagement, increasing overpayments, 
and poor recovery of outstanding SSI debt, we designated SSI a high-
risk program. The SSI program poses a special challenge for SSA 
because, unlike OASI and DI, it is a means-tested program; thus, SSA 
must collect and verify information on income, resources, and recipient 
living arrangements to determine initial and continuing eligibility for 
the program. Our prior work, however, shows that SSA has often placed a 
greater priority on quickly processing and paying SSI claims with 
insufficient attention to verifying recipient self-reported 
information, controlling program expenditures, and pursuing overpayment 
recoveries once they occur.
    In response to our high-risk designation, SSA has made progress in 
coordination with Congress to improve the financial integrity and 
management of SSI, including developing a major SSI legislative 
proposal with numerous overpayment deterrence and recovery provisions. 
Many of these provisions were incorporated into the Foster Care 
Independence Act, which was signed into law in December 1999. The act 
directly addresses a number of our prior recommendations and provides 
SSA with additional tools to obtain applicant income and resource 
information from financial institutions; imposes a period of 
ineligibility for applicants who transfer assets to qualify for SSI 
benefits; and authorizes the use of credit bureaus, private collection 
agencies, interest levies, and other means to recover delinquent debt. 
SSA also obtained separate legislative authority in 1998 to recover 
overpayments from former SSI recipients currently receiving OASI or DI 
benefits. The agency was previously excluded from using this cross-
program recovery tool to recover SSI overpayments without first 
obtaining debtor consent. As a result of this new authority, SSA has 
recently begun the process of recovering overpayments from Social 
Security benefits of individuals no longer on the SSI rolls. The agency 
has also issued regulations on the use of credit bureaus and drafted 
regulations for wage garnishments. We have been told that the draft 
regulations are currently under review by the new commissioner and by 
the Office of Management and Budget.
    In addition to establishing the new legislative authorities, SSA 
has initiated a number of internal administrative actions to further 
strengthen SSI program integrity. These include using tax refund 
offsets for delinquent SSI debtors, an action that SSA said resulted in 
$61 million in additional overpayment recoveries last year. SSA also 
uses more frequent (monthly) automated matches to identify ineligible 
SSI recipients living in nursing homes and other institutions. As of 
January 2001, SSA's field offices were also provided on-line access to 
wage, new-hire, and unemployment insurance data maintained by the 
Office of Child Support Enforcement. These data are key to field 
staff's ability to more quickly verify employment and income 
information essential to determining SSI eligibility and benefit 
levels. SSA also increased the number of SSI financial redeterminations 
that it conducted, from about 1.8 million in fiscal year 1997 to about 
2.2 million in fiscal year 2000. These reviews focus on income and 
resource factors affecting eligibility and payment amounts. SSA 
estimates that by conducting more redeterminations and refining its 
methodology for targeting cases most likely to have payment errors, it 
prevented nearly $600 million in additional overpayments in fiscal year 
1999.
    SSA's Office of Inspector General (OIG) has also increased the 
level of resources and staff devoted to investigating SSI fraud and 
abuse; key among the OIG's efforts is the formation of Cooperative 
Disability Investigation teams in 13 field locations. These teams are 
designed to identify fraud and abuse before SSI benefits are approved 
and paid. Finally, in response to our prior recommendation, SSA has 
revised its field office work credit and measurement system to better 
reward staff for time spent thoroughly verifying applicant eligibility 
information and developing fraud referrals. If properly implemented, 
such measures should provide field staff with much-needed incentives 
for preventing fraud and abuse and controlling overpayments.
    SSA's current initiatives demonstrate a stronger management 
commitment to SSI integrity issues and have the potential to 
significantly improve program management; however, our work shows that 
SSA overpayments and outstanding debt owed to the program remain at 
high levels. A number of the agency's initiatives--especially those 
associated with the Foster Care Independence Act--are still in the 
early planning or implementation stages and have yet to yield results. 
In addition, at this stage, it is not clear how great an effect the 
impact of SSA's enhanced matching efforts, online access tools, and 
other internal initiatives has had on the agency's ability to recover 
and avoid overpayments. The same is true for the agency's efforts to 
improve the accuracy of SSI eligibility decisions.
    SSA also has not yet addressed a key program vulnerability--program 
complexity--that is associated with increased SSI overpayments. In 
prior work, we have reported that SSI living arrangement and in-kind 
support and maintenance policies used by SSA to calculate eligibility 
and benefit amounts were complex, prone to error, and a major source of 
overpayments. We also recommended that SSA develop options for 
simplifying the program. Last year, SSA's policy office issued a study 
that discussed various options for simplifying complex SSI policies. 
Although SSA is considering various options, it has not moved forward 
in recommending specific cost neutral proposals for change.
    We believe that sustained management attention is necessary to 
improve SSI program integrity. Thus, it is important that SSA move 
forward in fully implementing the overpayment deterrence and recovery 
tools currently available to it and seek out additional ways to improve 
program management. Accordingly, we have a review under way that is 
aimed at documenting the range of SSI activities currently in place; 
their effects on program management and operations; and additional 
legislative or administrative actions, or both, necessary to further 
improve SSA's ability to control and recover overpayments. A particular 
focus of this review will be to assess remaining weaknesses in SSA's 
initial and ongoing eligibility verification procedures, application of 
penalties for individuals who fail to report essential eligibility 
information, and overpayment recovery policies.
SSA Lacks a Plan to Help It Cope with Future Service Delivery 
        Challenges
    Among federal agencies, SSA has long been considered one of the 
leaders in service delivery. Indeed, for fiscal year 2001, SSA reported 
that 81 percent of its customers rated the agency's services as 
``excellent,'' ``very good,'' or ``good.'' SSA considers service 
delivery one of its top priorities, and its current performance plan 
includes specific goals and strategies to provide accurate, timely, and 
useful service to the public. However, the agency faces significant 
challenges that could hamper its ability to provide high-quality 
service over the next decade and beyond. Demand for services will grow 
rapidly as the baby boom generation ages and enters the disability-
prone years. By 2010, SSA expects worker applications for DI to 
increase by as much as 32 percent over 2000 levels. Determining 
eligibility for disability benefits is a complex process that spans a 
number of offices and can take over a year to complete. As we have 
observed earlier in this statement, SSA already has trouble managing 
its disability determination workload; adding additional cases without 
rectifying serious case processing issues will only make things worse. 
Furthermore, by 2010, SSA projects that applications for retirement 
benefits will also increase dramatically--by 31 percent over the 2000 
levels.
    SSA's ability to provide high-quality service delivery is also 
potentially weakened by challenges regarding its workforce. First, 
SSA's workforce is aging, and SSA is predicting a retirement wave that 
will peak in the years 2007 through 2010, when it expects about 2,500 
employees to retire each year. By 2010, SSA projects that about 37 
percent of its almost 62,000 employees will retire. The percentage is 
higher for employees in SSA's supervisory or managerial ranks. In 
particular, more than 70 percent of SSA's upper-level managers and 
executives (GS-14, GS-15, and SES level) are expected to retire by 
2010. Second, SSA will need to increase staff skills to deal with 
changing customer expectations and needs. SSA's staff will need to 
obtain and continually update the skills needed to use the most current 
technology available to serve the public in a more convenient, cost 
effective, and secure manner. At the same time, some aspects of SSA's 
customer service workload will likely become more time consuming and 
labor intensive, owing primarily to the growing proportion of SSA's 
non-English speaking customers and the rising number of disability 
cases involving mental impairments. Both situations result in more 
complex cases that require diverse staff skills.
    SSA has a number of workforce initiatives under way to help it 
prepare for the future. For example, as we recommended in 1993, and as 
required by law, SSA developed a workforce transition plan to lay out 
actions to help ensure that its workforce will be able to handle future 
service delivery challenges. In addition, recognizing that it will 
shortly be facing the prospect of increasing retirements, SSA conducted 
a study that predicts staff retirements and attrition each year, from 
1999 to 2020, by major job position and agency component. SSA also 
began to take steps to fill its expected leadership gap. We have long 
stressed the importance of succession planning and formal programs to 
develop and train managers at all levels of 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. SSA created three new leadership 
development programs to help prepare selected staff to assume mid- and 
top-level leadership positions at the agency. Overall, many of the 
efforts being made today are consistent with principles of human 
capital management, and good human capital management is fundamental to 
the Federal Government's ability to serve the American people. For this 
reason, we have designated strategic human capital management a high-
risk area across the Federal Government.\11\
---------------------------------------------------------------------------
    \11\ U.S. General Accounting Office, Major Management Challenges 
and Program Risks: A Governmentwide Perspective, GAO-01-241 
(Washington, D.C.: Jan. 2001).
---------------------------------------------------------------------------
    However, SSA is taking these human capital measures in the absence 
of a concrete service delivery plan to help guide its investments. We 
recommended as long ago as 1993 that SSA complete such a plan to ensure 
that its human capital and other key investments are put to the best 
use.\12\ In 1998, the agency took a first step by beginning a multiyear 
project to monitor and measure the needs, expectations, priorities, and 
satisfaction of customer groups, major stakeholders, and its workforce. 
In 2000, SSA completed a document that articulates how it envisions the 
agency functioning in the future.\13\ For example, SSA anticipates 
offering services in person, over the telephone, and via the Internet; 
its telephonic and electronic access services will be equipped with 
sophisticated voice recognition and language translation features, and 
work will be accomplished through a paperless process. In this service 
vision document, SSA also states that it will rely heavily on a 
workforce with diverse and updated skills to accomplish its mission. 
Although this new vision represents a positive step for the agency 
toward acknowledging and preparing for future service delivery 
challenges, it is too broad and general to be useful in making specific 
information technology and workforce decisions. We have stressed that 
this document should be followed by a more detailed service delivery 
plan that spells out who will provide what type of services in the 
future, where these services will be made available, and the steps and 
timetables for accomplishing needed changes. SSA officials told us that 
they are working on such a blueprint. Without this plan, SSA cannot 
ensure that its investments in its workforce and technology are 
consistent with and fully support its future approach to service 
delivery.
---------------------------------------------------------------------------
    \12\ U.S. General Accounting Office, Social Security: Sustained 
Effort Needed to Improve Management and Prepare for the Future, GAO/
HRD-94-22 (Washington, D.C.: Oct. 27, 1993). Also, see GAO/T-HEHS-98-
113 and GAO/HEHS-96-196.
    \13\ This document was originally called ``2010 Vision'' but 
subsequently was renamed ``SSA's Service Vision.''
---------------------------------------------------------------------------
LSSA's Future Success Is Linked to Effectively Managing Information 
        Technology Initiatives
    SSA also plans to rely heavily on information technology to cope 
with growing workloads and to enhance its processing capabilities. To 
this end, the agency has devoted considerable time and effort to 
identifying strategies to meet its goal of providing world-class 
service. For example, SSA has begun expanding its electronic service 
delivery capability--offering retirees the option of applying for 
benefits on-line as well as pursuing other on-line or Internet options 
to facilitate customer access to the agency's information and services. 
Yet, SSA's overall success in meeting its service delivery challenge 
will depend on how effectively it manages its information technology 
initiatives. As SSA transitions to electronic processes, it will be 
challenged to think strategically about its information technology 
investments and to effectively link these investments to the agency's 
service delivery goals and performance. Furthermore, its actions and 
decisions must effectively address dual modes of service delivery--its 
traditional services via telephone, face-to-face, and mail contacts 
that are supported primarily by its mainframe computer operations, as 
well as a more interactive, on-line, Web-based environment aimed at 
delivering more readily accessible services in response to increased 
customer demands.
    SSA has experienced mixed success in carrying out prior information 
technology initiatives. For example, the agency has made substantial 
progress in modernizing workstations and local area networks to support 
its work processes, and it has clearly defined its business needs and 
linked information technology projects to its strategic objectives. 
Moreover, our evaluation of its information technology policies, 
procedures, and practices in five key areas--investment management, 
enterprise architecture, software development and acquisition, human 
capital, and information security--found that SSA had many important 
information technology management policies and procedures in place.\14\ 
For instance, SSA had sound policies and procedures for software 
development that were consistent with best practices.
---------------------------------------------------------------------------
    \14\ U.S. General Accounting Office, Information Technology 
Management: Social Security Administration Practices Can Be Improved, 
GAO-01-961 (Washington, D.C.: August 21, 2001).
---------------------------------------------------------------------------
    However, SSA had not implemented its policies and procedures 
uniformly and had not established several key policies and procedures 
essential to ensuring that its information technology investments and 
human capital were effectively managed. We noted weaknesses in each of 
the five key areas and recommended actions to improve SSA's information 
technology management practices in each area. In total, our report 
included 20 specific recommendations for more effectively managing the 
agency's information technology. In responding to our report, SSA 
agreed with all of the recommendations.
    Let me illustrate some of the weaknesses that formed the basis for 
our recommendations. In making decisions on technology projects, SSA 
lacked key criteria and regular oversight for ensuring consistent 
investment management and decision-making practices. It also did not 
always consider costs, benefits, schedules, and risks when making 
project selections and as part of its ongoing management controls. 
Without such information, SSA cannot be assured that its investment 
proposals will provide the most cost-effective solutions and achieve 
measurable and specific program-related benefits (e.g., high-quality 
service delivered on time, within cost, and to the customer's 
satisfaction). Furthermore, given competing priorities and funding 
needs, SSA will need such information to make essential tradeoffs among 
its information technology investment proposals and set priorities that 
can maximize the potential for both short- and longer-term improvements 
to services provided to the public.
    As SSA pursues Internet and Web-based applications to better serve 
its customers, it must ensure that these efforts are aligned with the 
agency's information technology environment. A key element for 
achieving this transition is the successful implementation of SSA's 
enterprise architecture. An enterprise architecture serves as a 
blueprint for systematically and completely defining an organization's 
current (baseline) and desired (target) environment and is essential 
for evolving information systems, developing new systems, and inserting 
emerging technologies that optimize their mission value. It also 
provides a tool for assessing benefits, impacts, and capital investment 
measurements and supporting analyses of alternatives, risks, and trade-
offs. Nonetheless, we found that SSA had not completed key elements of 
its enterprise architecture, including (1) finalizing its enterprise 
architecture framework, (2) updating and organizing its architectures 
and architecture definitions under the framework, and (3) reflecting 
its future service delivery vision and e-business goals. In addition, 
it had not ensured that enterprise architecture change management and 
legacy system integration policies, procedures, and processes were 
effectively implemented across the agency.
    As SSA moves forward in implementing electronic services and other 
technologies, its architecture will be critical to defining, managing, 
and enforcing adherence to the framework required to support its 
current and future information processing needs. Moreover, without 
effective enterprise architecture change management and legacy system 
integration processes, SSA will lack assurance that (1) it can 
successfully manage and document changes to its architecture as 
business functions evolve and new technologies are acquired and (2) new 
software and hardware technologies will interoperate with existing 
systems in a cost-effective manner. In surveying 116 agencies across 
the Federal Government, we found the use of enterprise architectures to 
be a work in progress, with much left to be accomplished.\15\ We 
assessed SSA at a relatively low level of maturity in enterprise 
architecture management.
---------------------------------------------------------------------------
    \15\ U.S. General Accounting Office, Information Technology: 
Enterprise Architecture Use Across the Federal Government Can Be 
Improved, GAO-02-6 (Washington, D.C.: Feb. 19, 2002).
---------------------------------------------------------------------------
    SSA plans to rely extensively on software-intensive systems to help 
achieve processing efficiencies and improved customer service. Because 
SSA is an agency in which software development continues to be 
predominantly an in-house effort, in 1997, its Office of Systems 
established the Software Process Improvement program, in which new 
policies and procedures were created to enhance the quality of the 
agency's software development. However, our evaluation of these 
policies and procedures found that SSA was not consistently applying 
them to its software development projects. In particular, SSA had not 
applied sound management and technical practices in its development of 
the electronic disability system. This poses a significant risk given 
SSA's history of problems in developing and delivering the critical 
software needed to support its redesigned work processes.\16\ The use 
of sound, disciplined software development processes is critical to 
ensuring that SSA delivers quality software on schedule and within 
established cost estimates. Until SSA consistently and effectively 
implements its software development policies and procedures, it will 
lack assurance that it can meet its goal of developing a technological 
infrastructure to support its service delivery vision.
---------------------------------------------------------------------------
    \16\ GAO/T-AIMD-99-259.
---------------------------------------------------------------------------
    As SSA places increased emphasis on using information technology to 
support new ways of delivering service, it must ensure that it 
effectively manages its human capital to anticipate, plan for, and 
support its information technology requirements. However, SSA had not 
taken all of the necessary steps to ensure the adequacy of its future 
information technology workforce. For instance, we found that although 
SSA had begun evaluating its short- and longer-term information 
technology needs, these efforts were not complete. Specifically, SSA 
had not linked its information technology staff needs to the 
competencies it would require to meet mission goals. Doing so is 
necessary, however, to ensure that SSA's plans project workforce needs 
far enough in advance to allow adequate time for staff recruitment and 
hiring, skills refreshment and training, or outsourcing considerations. 
Furthermore, SSA lacked an inventory identifying the knowledge and 
skills of current information technology staff, which is essential for 
uncovering gaps between current staff and future requirements. Without 
such an inventory, SSA has no assurance that its plans for hiring, 
training, and professionally developing information technology staff 
will effectively target short- and long-term skills needed to sustain 
its current and future operations. These shortcomings in SSA's 
information technology human capital management could have serious 
ramifications as the agency moves toward making larger investments in 
new electronic service delivery options, such as Internet applications. 
Developing Internet applications represents a new era for SSA--one in 
which the agency must ensure that is has enough of the right people and 
skills to bring its electronic service delivery plan to fruition.
    As SSA proceeds with the development and implementation of Internet 
and Web-based initiatives, the need for a strong program to address 
threats to the security and integrity of its operations will grow. 
Without proper safeguards, these initiatives pose enormous risks that 
make it easier for individuals and groups with malicious intentions to 
intrude into inadequately protected systems and use such access to 
obtain sensitive information, commit fraud, disrupt operations, or 
launch attacks against other organizations' sites.
    SSA has made progress in addressing the information protection 
issues raised in prior years. Specifically, during fiscal year 2001, 
the agency

         conducted a risk assessment to identify critical 
        assets and vulnerabilities as part of the Critical 
        Infrastructure Protection project;
         issued a final security policy for the state 
        Disability Determination Service sites in accordance with the 
        information security requirements included in the National 
        Institute of Standards and Technology Special Publication 800-
        18;
         established and published technical security 
        configuration standards for operating systems and servers;
         completed updates for accreditation and certification 
        of key systems; and
         further strengthened physical access controls over 
        the National Computer Center.

    Nonetheless, weaknesses in SSA's information security program 
continue to threaten its ability to effectively mitigate the risk of 
unauthorized access to, and disclosure of, sensitive information. For 
example, although the agency has made improvements to its entity-wide 
security program and standards, control weaknesses continue to expose 
key elements of its distributed systems and networks to unauthorized 
access to sensitive data. The general areas where exposures occurred 
included implementation, enforcement, and ongoing monitoring of 
compliance with technical security configuration standards and rules 
governing the operation of firewalls; monitoring controls over security 
violations and periodic reviews of user access; and physical access 
controls at nonheadquarters locations. These exposures exist primarily 
because SSA has not completed implementation of its enterprise-wide 
security program.
    Until a complete security framework is implemented and maintained, 
SSA's ability to effectively mitigate the risk of unauthorized access 
to, and modification or disclosure of, sensitive SSA data will be 
impaired. Unauthorized access to sensitive data can result in the loss 
of data as well as trust fund assets, and compromised privacy of 
information associated with SSA's enumeration, earnings, benefit 
payment processes, and programs. The need for a strong security 
framework to address threats to the security and integrity of SSA 
operations will grow as the agency continues to implement Internet and 
Web-based applications to serve the American public.
LProgram Challenges Require SSA to Play an Active Role in Research, 
        Evaluation, and Policy Development
    In the past, we have reported that SSA has not undertaken the range 
of research, evaluation, and policy analysis necessary (1) to identify 
areas where legislative or other changes are needed to address program 
weaknesses and (2) to assist policymakers in exploring and developing 
options for change.
    The long-term solvency of the Social Security system is a critical 
issue facing the nation and SSA. As the debate on Social Security 
reform proceeds, policymakers and the general public need thoughtful, 
detailed, and timely analyses of the likely effect of different 
proposals on workers, beneficiaries, and the economy. SSA is well 
positioned to assess the programmatic impacts of economic and 
demographic trends and to identify areas where policy changes are 
needed to ensure that recipients' needs are met efficiently and cost 
effectively.
    At the same time, SSA needs to prepare for the implementation of 
whatever programmatic changes are eventually made. Many of the reform 
proposals currently under debate will likely affect not only SSA but 
other government agencies as well. As part of their debate, 
policymakers need to understand the administrative aspects of each 
proposal, including the amount of time and money necessary to implement 
the proposed changes. SSA has information that could be central to the 
implementation and administration of proposed Social Security reforms 
and should be providing this information in a timely and accurate 
manner.
    SSA also faces a wide range of pressing challenges with its 
disability programs, including how best to 1) ensure the quality and 
timeliness of its decisions, 2) integrate return-to-work strategies 
into all phases of its disability determination process, and 3) address 
program complexity problems that have contributed to vulnerability in 
the SSI program. To address these challenges, SSA will need to target 
its research and conduct analyses that will allow the agency to play a 
key role in proposing and analyzing major policy changes. However, in 
the past, we have noted SSA's reluctance to take the actions needed to 
fulfill its policy development and planning role in advance of major 
program crises, particularly when they require long-term solutions, 
legislative change, or both.
    In recent years, SSA has taken action to strengthen its research 
and policy development role in these and other areas. It has initiated 
several reorganizations of its policy component to strengthen its 
capacity. The agency has also significantly increased the level of 
staff and resources available to support research activities and has 
several analyses planned or under way to address key policy issues. 
Specific to the long-term solvency issue, SSA's Office of the Actuary 
has long provided key information on the financial outlook of Social 
Security and projections of the effects of different reform proposals 
on trust fund finances. In addition, SSA has expanded its ability to 
use modeling techniques to predict the effects of proposed program 
changes, and it has established a research consortium to conduct and 
advise on relevant research and policy activities. With respect to its 
disability programs, SSA has established a separate disability research 
institute and has submitted to the Congress its first major SSI 
legislative proposal aimed at improving program integrity. However, 
many of the agency's actions and studies are in the early stages, and 
it is not yet clear how the agency will use them and what their 
ultimate effect on SSA program policy will be.
The Need to Protect Personal Information Has Gained New Urgency
    The Social Security Administration is responsible for issuing SSNs 
to most Americans.\17\ The agency relies on the SSN to record wage 
data, maintain earnings records, and efficiently administer its benefit 
programs. In addition, the SSN is used by other government agencies as 
well as the private sector. This widespread use offers many benefits; 
however, combined with an increase in reports of identify theft, it has 
raised public concern over how this and other personal information is 
being used and protected. Moreover, the growth of the Internet, which 
can make personal information contained in electronic records more 
readily accessible to the general public, has heightened this concern. 
Finally, the terrorist attacks of September 11th and the indication 
that some of the terrorists fraudulently obtained SSNs have added new 
urgency to the need to assess how SSNs are used and protected.
---------------------------------------------------------------------------
    \17\ Since 1982, SSA has provided SSNs only to U.S. citizens, 
noncitizens authorized to work in the United States, and noncitizens 
with an approved nonwork reason for needing a number.
---------------------------------------------------------------------------
    We have recently testified on work we are completing at the request 
of Chairman Shaw and others to review the many uses of SSNs at all 
levels of government and to assess how these government entities 
safeguard the SSNs.\18\ We found that SSNs are widely used across 
multiple agencies and departments at all levels of government. They are 
used by agencies that deliver benefits and services to the public as a 
convenient and efficient means of managing records. More importantly, 
these agencies rely on SSNs when they share data with one another, for 
example, to make sure that only eligible individuals receive benefits 
and to collect outstanding debt individuals owe the government. 
Although these agencies are taking steps to safeguard the SSNs from 
improper disclosure, our work identified potential weaknesses in the 
security of information systems at all levels of government. In 
addition, SSNs are widely found in documents that are routinely made 
available to the public, that is, in public records. Although some 
government agencies and courts are trying innovative approaches to 
prevent the SSN from appearing on public records, not all agencies 
maintaining public records have adopted these approaches. Moreover, 
increasing numbers of departments are considering placing or planning 
to place documents that may contain SSNs on the Internet, which would 
make these numbers much more readily available to others, raising the 
risk of their misuse.
---------------------------------------------------------------------------
    \18\ U.S. General Accounting Office, SSNs Are Widely Used by 
Government and Could Be Better Protected, GAO-02-619T (Washington, 
D.C.: Apr. 29, 2002).
---------------------------------------------------------------------------
    We also found that SSNs are one of three personal identifiers most 
often sought by identity thieves and that SSNs are often used to 
generate additional false documents, which can be used to set up false 
identities. What is harder to determine is a clear answer on where 
identify thieves obtain the SSNs they misuse. Ultimately, in light of 
the recent terrorist events, the nation must grapple with the need to 
find the proper balance between the widespread and legitimate uses of 
personal information such as SSNs, by both government and the private 
sector, and the need to protect individual privacy.
    There are no easy answers to these questions, but SSA has an 
important role to play in protecting the integrity of the SSN. Given 
the widespread use of SSNs, the agency needs to take steps to ensure 
that it is taking all necessary precautions to prevent individuals who 
are not entitled to SSNs from obtaining them. Currently, the agency is 
reexamining its process of assigning SSNs to individuals. This may 
require the agency to find a new balance between two competing goals: 
the need to take time to verify documents submitted during the 
application process and the desire to serve the applicant as quickly as 
possible. In addition, the agency is studying ways to make sure it 
provides accurate and timely information to financial institutions on 
deceased SSN holders. However, once SSA has issued an SSN, it has 
little control over how the number is used by other government agencies 
and the private sector. In this light, we look forward to exploring 
additional options to better protect SSNs with you as we complete our 
ongoing work in this area.
Concluding Observations
    We have outlined a number of difficult challenges, most of them 
long-standing, that the SSA Commissioner faces. These are, in general, 
the same challenges we have been highlighting since SSA became an 
independent agency. In some cases, SSA has begun to take positive steps 
to address its challenges. Specifically, SSA's efforts to strengthen 
its research, evaluation, and policy development activities show 
promise. Likewise, SSA has made considerable progress in addressing 
weaknesses in the integrity of the SSI program. However, more can be 
done in these areas. As new pressures inevitably arise that will also 
demand attention from the commissioner and her team, it will be 
important for the commissioner to sustain and expand on the agency's 
actions to date.
    We are particularly concerned, however, about other challenges 
where SSA's efforts to date have fallen short and where the agency 
faces increasing pressures in the near future. The commissioner faces 
crucial decisions on how to proceed on several of these challenges. SSA 
has made disappointing progress on (1) its efforts to improve its 
disability claims process, (2) the need to better integrate return-to-
work strategies into all phases of the disability process, and (3) the 
need to better plan for future service delivery pressures and changes. 
These challenges will be exacerbated by growing workload pressures as 
the baby boom generation ages. After almost a year without a long-term 
leadership structure in place, the commissioner and a SSA team have an 
opportunity to take a fresh look at these longstanding challenges and 
the fundamental issues impeding faster progress in these areas. Again, 
focused and sustained attention to these challenges is vital, as the 
agency is running out of time to make needed changes before the 
expected increases in workload overwhelm its operations.
    Mr. Chairman, this concludes my statement. I would be pleased to 
respond to any questions that you or other member of the subcommittees 
may have.
Contacts and Acknowledgments
    For further information regarding this testimony, please contact 
Barbara D. Bovbjerg, Director, or Kay E. Brown, Assistant Director, 
Education, Workforce, and Income Security at (202) 512-7215. 
Individuals making key contributions to this testimony include Michael 
Alexander, Yvette Banks, Daniel Bertoni, Alicia Puente Cackley, Ellen 
Habenicht, Carol Langelier, Valerie Melvin, Angela Miles, Carol Dawn 
Petersen, and William Thompson.
Related GAO Products
Social Security Reform
    Social Security: Issues in Evaluating Reform Proposals. GAO-02-
288T. Washington, D.C.: December 10, 2001.
    Social Security: Program's Role in Helping Ensure Income Adequacy. 
GAO-02-62. Washington, D.C.: November 30, 2001.
    Social Security: Evaluating Reform Proposals. GAO/AIMD/HEHS-00-29. 
Washington, D.C.: November 4, 1999.
    SSA's Management Challenges: Strong Leadership Needed to Turn Plans 
Into Timely, Meaningful Action. GAO/T-HEHS-98-113. Washington, D.C.: 
March 12, 1998.
Social Security Disability Programs
    Social Security Disability: Disappointing Results From SSA's 
Efforts to Improve the Disability Claims Process Warrant Immediate 
Attention. GAO-02-322. Washington, D.C.: February 27, 2002.
    SSA Disability: SGA Levels Appear to Affect the Work Behavior of 
Relatively Few Beneficiaries, but More Data Needed. GAO-02-224. 
Washington, D.C.: January 16, 2002.
    SSA Disability: Other Programs May Provide Lessons for Improving 
Return-to-Work Efforts. GAO-01-153. Washington, D.C.: January 12, 2001.
    Social Security Disability: SSA Has Had Mixed Success in Efforts to 
Improve Caseload Management. GAO/T-HEHS-00-22. Washington, D.C.: 
October 21, 1999.
    SSA Disability Redesign: Actions Needed to Enhance Future Progress. 
GAO/HEHS/99-25. Washington, D.C.: March 12, 1999.
    SSA Disability: SSA Return-to-Work Strategies From Other Systems 
May Improve Federal Programs. GAO-HEHS-96-133. Washington, D.C.: July 
11, 1996.
Supplemental Security Income Program
    High Risk Series: An Update. GAO-01-273. Washington, D.C.: January 
2001.
    Supplemental Security Income: Additional Actions Needed to Reduce 
Program Vulnerability to Fraud and Abuse. GAO/HEHS-99-151. Washington, 
D.C.: September 15, 1999.
    Supplemental Security Income: Long-Standing Issues Require More 
Active Management and Program Oversight. GAO/T-HEHS-99-51. Washington, 
D.C.: February 3, 1999.
    Supplemental Security Income: Action Needed on Long-Standing 
Problems Affecting Program Integrity. GAO/HEHS-98-158. Washington, 
D.C.: September 14, 1998.
Service Delivery to the Public
    SSA Customer Service: Broad Service Delivery Plan Needed to Address 
Future Challenges. GAO/T-HEHS/AIMD-00-75. Washington, D.C.: February 
10, 2000.
Information Technology
    Information Security: Additional Actions Needed to Fully Implement 
Reform Legislation. GAO-02-470T. Washington, D.C.: March 6, 2002.
    Information Technology: Enterprise Architecture Use Across the 
Federal Government Can Be Improved. GAO-02-6. Washington, D.C.: 
February 19, 2002.
    Information Technology Management: Social Security Administration 
Practices Can Be Improved. GAO-01-961. Washington, D.C.: August 21, 
2001.
    Information Security: Serious and Widespread Weaknesses Persist at 
Federal Agencies. GAO/AIMD-00-295. Washington, D.C.: September 6, 2000.
    SSA Customer Service: Broad Service Delivery Plan Needed to Address 
Future Challenges. GAO/T-HEHS/AIMD-00-75. Washington, D.C.: February 
10, 2000.
    Social Security Administration: Update on Year 2000 and Other Key 
Information Technology Initiatives. GAO/T-AIMD-99-259. Washington, 
D.C.: July 29, 1999.
    Information Security: Serious Weaknesses Place Critical Federal 
Operations and Assets at Risk. GAO/AIMD-98-92. Washington, D.C.: 
September 23, 1998.
SSNs and Personal Information
    Social Security: Government and Commercial Use of the Social 
Security Number Is Widespread. GAO/HEHS-99-28. Washington, D.C.: 
February 16, 1999.

                                 

    Chairman SHAW. Do you have testimony, Mr. McClure?
    Mr. MCCLURE. No, sir.
    Chairman SHAW. Okay, fine. Mr. Huse?

 STATEMENT OF THE HON. JAMES G. HUSE, JR., INSPECTOR GENERAL, 
OFFICE OF THE INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION

    Mr. HUSE. Good morning, Mr. Chairman, Mr. Matsui. It is a 
pleasure to be here with Ms. Barnhart to discuss some of the 
challenges that face her as Commissioner of Social Security. 
Certainly no Commissioner has ever entered office facing 
greater challenges.
    The first wave of baby-boomers is on the cusp of 
retirement, increasing the Social Security Administration's 
workload, even as it decreases SSA's workforce and threatens 
the solvency of the Trust Fund. Demand for increased service 
delivery requires speed, while the need for fiscal 
responsibility and program stewardship requires care, and both 
demands must be met under a restrictive budget. Add to this the 
national spotlight brought on by discussions of solvency, 
personal retirement accounts and what Social Security will look 
like in the future, and the challenges threaten to become 
overwhelming.
    Then, on September 11, all of these challenges took a back 
seat to homeland security and the dawning realization that 
protection of the Social Security number is a key element not 
only in protect against fraud, but in protecting lives.
    Commissioner Barnhart's plate is full, and I pledge my 
support and the support of the entire Office of the Inspector 
General in helping her meet these many challenges in a 
cooperative effort.
    When the President's budget was released in February, it 
included the Office of Management and Budget's evaluation of 
SSA's progress in meeting the President's Management Agenda. 
The OMB noted that while SSA received one of the best 
evaluations in the Federal Government, there remains room for 
improvement in a number of areas. The challenges identified by 
OMB closely track the Top Ten Management Issues identified by 
my office in our most recent Semiannual Report to Congress. I 
would like to touch briefly on several of these specific 
challenges.
    The first issue to be identified both by my office and by 
OMB is payment accuracy. Working together with SSA, we have 
made great strides in reducing all benefit payments to 
prisoners and Supplemental Security Income payments to fugitive 
felons over the past several years, and those efforts continue. 
Erroneous payments, including those to deceased beneficiaries, 
students, and individuals receiving State Worker's Compensation 
benefits, continue to drain the Social Security Trust Fund, 
even as solvency becomes an overarching issue.
    A second closely related area in need of attention is the 
accuracy of the earnings reporting process. In fiscal year 
2001, SSA received about 274-million wage reports from 
approximately 6.5 million employers. One of the longstanding 
issues at SSA has been the large number of wage reports that 
are posted to the ``Suspense File'' because the records cannot 
be associated with a valid SSN.
    Third, the integrity of the Representative Payee process is 
a serious issue identified both by my office and by Congress. 
Representative Payees are appointed by SSA to manage the 
benefits of children and others incapable of managing their own 
funds. While most Representative Payees are honest, some are 
not. In some cases, benefits should not be paid at all; in 
others, the benefits never reach the actual beneficiary.
    Fourth, SSA has long struggled with redesigning the 
disability process, and I think that has been adequately 
brought out by the testimony you have heard so far this 
morning.
    Next, Commissioner Barnhart will need to confront issues of 
system security. Our own audit work, as well as audit work 
conducted by outside sources, has recognized SSA's efforts to 
provide for system security, but has also revealed systems 
security weaknesses that still threaten both the sensitive data 
SSA stores and the business operations of the Agency.
    Finally, the events of the past 8 months make it impossible 
to overstate the importance of protecting the integrity of the 
SSN. Because the SSN has become such a vital aspect of American 
life, the process by which SSA issues SSNs needs immediate 
attention. I have testified on this point several times in 
recent months, so I won't go any further into that.
    The SSA is justifiably proud of its record of outstanding 
service to the public, but to the extent that this commitment 
to service emphasizes speed over accuracy and quantity over 
quality, we are doing a disservice to the American people. I 
know that this Commissioner recognizes that true service 
delivery has two components--speed and accuracy. There is a 
balance to be struck between the two.
    I look forward to meeting the challenges ahead with 
Commissioner Barnhart, but clearly she has a formidable job 
leading SSA into the future. All of the recommendations we 
advance to address SSA's issues require the application, or 
redirection of precious Agency resources in this time of 
serious budget strictures. There are no easy answers. I believe 
that it is in resolving this dilemma, and making these critical 
choices, that Commissioner Barnhart faces her most difficult 
challenge.
    Thank you, and I would be pleased to answer any of your 
questions.
    [The prepared statement of Mr. Huse follows:]
Statement of the Hon. James G. Huse, Jr., Inspector General, Office of 
         the Inspector General, Social Security Administration
    Good morning. It is a pleasure to be here today with Ms. Barnhart 
to discuss some of the challenges that face her as Commissioner of 
Social Security. Certainly no Commissioner has ever entered office 
facing greater challenges:

         The first wave of baby boomers is on the cusp of 
        retirement, increasing the Social Security Administration's 
        (SSA) workload even as it decreases SSA's workforce and 
        threatens the solvency of the Trust Fund.
         Demand for increased service delivery requires speed, 
        while the need for fiscal responsibility and program 
        stewardship requires care, and both demands must be met under a 
        restrictive budget.
         Add to this the national spotlight brought on by 
        discussions of solvency, personal retirement accounts, and what 
        Social Security will look like in the future, and the 
        challenges threaten to become overwhelming.

    Then, on September 11th, all of these challenges took a back seat 
to homeland security and the dawning realization that protection of the 
Social Security number (SSN) is a key element not only in protecting 
against fraud, but in protecting lives. Commissioner Barnhart's plate 
is full, and I pledge my support and the support of the entire Office 
of the Inspector General, in helping her meet these many challenges in 
a cooperative effort.
    When the President's budget was released in February, it included 
the Office of Management and Budget's (OMB) evaluation of SSA's 
progress in meeting the President's Management Agenda. OMB noted that 
while SSA received one of the best evaluations in the Federal 
Government, there remains room for improvement in a number of areas. 
The challenges identified by OMB closely track the Top Ten Management 
Issues identified by my office in our most recent Semiannual Report to 
Congress. I would like to touch briefly on several of these specific 
challenges.
    The first issue to be identified both by my office and by OMB is 
payment accuracy. Working together with SSA, we have made great strides 
in reducing all benefit payments to prisoners and Supplemental Security 
Income payments to fugitive felons over the past several years, and 
those efforts continue. But erroneous payments, including those to 
deceased beneficiaries, students, and individuals receiving state 
workers' compensation benefits, continue to drain the Social Security 
Trust Fund even as solvency becomes an overarching issue. Because these 
overpayments continue to bedevil our benefit disbursement operations, 
we have made numerous recommendations, many of which SSA has already 
adopted, and we look forward to working with the new Commissioner to 
further strengthen our efforts to reduce erroneous payments.
    A second, closely related area in need of attention is the accuracy 
of the earnings reporting process. In FY 2001, SSA received about 274 
million wage reports from approximately 6.5 million employers. One of 
the long-standing issues at SSA has been the large number of wage 
records that are posted to the ``Suspense File'' because the records 
cannot be associated with a valid SSN. This file affects SSA's 
operations in that wages that cannot be associated with an employee's 
earnings record can affect the employee's future Social Security 
benefits, and also affects SSA's operating costs. SSA has made 
important strides in this area, but again, much remains to be done.
    Third, the integrity of the Representative Payee process is a 
serious issue identified both by my office and by Congress. 
Representative Payees are appointed by SSA to manage the benefits of 
children and others incapable of managing their own funds. While most 
Representative Payees are honest, some are not. In some cases, benefits 
should not be paid at all; in others, the benefits never reach the 
actual beneficiary. SSA has made some progress, but both legislative 
changes and adjustments to SSA's policies and practices must still be 
made to protect SSA's most helpless beneficiaries and protect against 
waste of Trust Fund monies.
    Fourth, SSA has long struggled with redesigning the disability 
process. The present system by which disability claims are considered 
and decided is so overloaded as to be virtually unworkable. On average, 
it takes SSA 106 days to make an initial determination on a claim. 
Worse still is the appeals process, which despite numerous failed 
attempts at improvement, is still so backlogged that a claimant who 
files a request for a hearing must then wait an average of 308 days for 
a notice of decision. These never-diminishing backlogs require a 
visionary approach to break through deeply imbedded bureaucratic 
processes to bring about true change.
    Next, Commissioner Barnhart will need to confront issues of systems 
security. Our own audit work, as well as audit work conducted by 
outside sources, has recognized SSA's efforts to provide for systems 
security, but has also revealed systems security weaknesses that still 
threaten both the sensitive data SSA stores and the business operations 
of the Agency. SSA needs to take steps to strengthen its information 
security framework and improve its overall critical information 
infrastructure. As we come to rely more and more on technology, and as 
the demand for service delivery makes online services more and more 
tempting, it is absolutely critical that SSA's systems be protected 
from cyber-fraud.
    Finally, the events of the past 8 months make it impossible to 
overstate the importance of protecting the integrity of the SSN. 
Because the SSN has become such a vital aspect of American life, the 
process by which SSA issues SSNs needs immediate attention. I have 
testified on this point several times in recent months, so I will not 
belabor the issue now, but the growing use of SSN violations to indict 
and convict individuals known or believed to be associated in some way 
with terrorism is a testament to the need to act, and act quickly to 
improve and protect the enumeration process.
    The enumeration process, as well as every issue I've mentioned 
today, presents us with a choice--a choice between increased service 
delivery, which means speed, and increased accuracy, which means 
security and stewardship. SSA is justifiably proud of its record of its 
outstanding service to the public, but to the extent that this 
commitment to service emphasizes speed over accuracy and quantity over 
quality, we are doing a disservice to the American people. I know that 
this Commissioner recognizes that true service delivery has two 
components--speed and accuracy. There is a balance to be struck between 
the two, and for all of the reasons I have discussed, we have reached a 
time where striking that balance properly is more important than ever.
    I look forward to meeting the challenges ahead with Commissioner 
Barnhart, but clearly she has a formidable job leading SSA into the 
future. All of the recommendations we advance to address SSA's issues 
require the application, or redirection of precious Agency resources in 
this time of serious budget strictures. There are no easy answers. I 
believe it is in resolving this dilemma, and making these critical 
choices, that Commissioner Barnhart faces her most difficult challenge. 
Thank you and I would be pleased to answer any of your questions.

                                 

    Chairman SHAW. Mr. Daub?

   STATEMENT OF THE HON. HAL DAUB, CHAIRMAN, SOCIAL SECURITY 
         ADVISORY BOARD, AND FORMER MEMBER OF CONGRESS

    Mr. DAUB. Mr. Chairman, Mr. Matsui, good friends, members 
of this Subcommittee, I appreciate the opportunity to speak to 
you this morning on behalf of the Social Security Advisory 
Board. We commend you for taking time to examine the condition 
of the Social Security Administration and to consider what 
changes are needed.
    My statement reflects the extensive work of the Board over 
the last 5 years. During that time, we have consulted with 
hundreds of employees in the Social Security Administration and 
State disability offices throughout the country. We have 
collected and analyzed data and held many public hearings.
    I am proud to say that I am associated with a group of 
people that is composed of two former Members of Congress, a 
former public Trustee, two former Commissioners, and two very 
distinguished Social Security and benefits scholars. So, we 
have a group of people that have been assembled that serve, 
without pay that are really interested in the subject matter 
that we are here to talk about today and very interested in 
helping the Subcommittee understand what changes can be made.
    As my statement emphasizes, the Social Security 
Administration's problems are serious, and the need to be 
addressed I think is clear to everyone. The Agency will have to 
make major changes in the way it conducts its business, and it 
will also need additional resources if major service shortfalls 
are to be averted.
    Commissioner Barnhart is a former member of our Board, 
where she made an outstanding contribution to our work. We know 
her well, and we know that she has the knowledge, experience, 
and personal qualities to lead the Agency through a period of 
rapid change. She will need the support of Congress, the 
President, and our Board. For our part, we intend to work with 
her and the Agency on the many changes that are urgently 
needed.
    To summarize, there are three primary areas where the 
Commissioner needs to focus her attention.
    The first is on improving the quality of the Social 
Security Administration's service to the public, where problems 
are large and growing. In our reports, we have documented 
critical service shortfalls in field offices and on the Social 
Security Administration's 800-number, as well as throughout the 
disability application and appeals process. Service levels in 
all of these areas are unacceptably low.
    A second, and related, area is improving the Agency's 
stewardship, ensuring that the public's funds are responsibly 
collected and expended. The Board issued a report on this 
subject in March, and each of you have a copy. Particularly 
after the events of September 11, the Social Security 
Administration's inability to ensure the integrity of the 
enumeration process is extremely disturbing. Employees in 
Social Security field offices are aware that many applicants 
for Social Security cards are presenting fraudulent documents. 
Validating documents with other sources, such as INS, either 
works poorly or does not work at all. Employees lack the time, 
training, and the tools they need to determine authenticity for 
themselves.
    The area of greatest difficulty is documents submitted by 
individuals who are foreign born, but there are problems with 
fraudulent U.S. documents as well. Far too many replacement 
cards are being issued, and many of them are unquestionably 
being used for illegal purposes. I want to underscore the high 
level of concern that many of the Social Security 
Administration's frontline workers feel about this problem.
    The third major area where improvement is needed is in the 
Agency's capacity to develop Social Security and SSI policy so 
that it can provide the comprehensive research and analysis 
that policymakers need to address complex issues like Social 
Security financing and disability. These problems will not be 
easy to address. They will require new ways of thinking, new 
practices, and changes in the culture of the Agency.
    Facing growing workloads, the Social Security 
Administration needs a plan that clarifies how it will meet 
service delivery needs in the future. It needs a budget that 
provides the resources that will carry out its objectives. We 
commend the Commissioner for moving forward to develop a more 
coherent work-based budget that will give the Congress the 
information it needs to make judgments about the funding levels 
that are required to serve the public appropriately.
    The Agency's current performance measures are seriously 
flawed. They emphasize process, rather than outcomes, speed, at 
the expense of quality, and skew performance in inappropriate 
ways. They are breeding cynicism in the field about the 
Agency's objectives and motives. The Social Security 
Administration needs more balanced measures of performance, a 
management information system that ensures quality performance, 
and better measures the type and quality of service that the 
public wants and needs.
    As we have emphasized in our reports, disability is at the 
heart of the Social Security Administration's many challenges. 
It accounts for two-thirds of the Agency's administrative 
budget, about $5 billion this fiscal year. Disability benefits 
will account for nearly $100 billion in spending this year or 
nearly 5 percent of our Federal budget.
    The current disability structure is seriously flawed, as we 
have seen today from a very clear indication of the 1,153 days 
that it takes, on average, to process claims. This structure, 
with its flaws, needs to be reformed, and this would be in the 
interests of both claimants and the taxpayers.
    Institutional problems also need to be addressed. Over the 
years, the Social Security Administration has developed a 
culture that discourages open discussion of problems. 
Communication between headquarters and operations in the field, 
I think, is poor and teamwork among various components, 
although improving, is demonstrably inadequate. Addressing 
these issues of Agency culture will require strong leadership.
    Finally, maintaining a skilled and experienced staff ranks 
near the top of the most difficult challenges for the Agency. 
The Social Security Administration needs to develop ways to 
attract and retain a skilled workforce, it needs to hire new 
employees before older ones leave so that there is time to 
train, mentor, and pass on to a new generation the Agency's 
very positive traditions. Weakness in human capital can 
undermine public support for and confidence in the ability of 
government to perform. Social Security's programs are too 
important to allow this to happen.
    In conclusion, Mr. Chairman, I hope that the Congress will 
continue to hold regular oversight hearings on issues that we 
are discussing here today. It is extremely valuable to the 
Social Security Administration to have thoughtful, balanced, 
and consistent oversight by the Congress. These hearings force 
the Agency, and all of us, to focus on the important problems 
that need attention. The public is well served when the 
critical issues are forthrightly addressed.
    I ask that the document I am holding in my hand, which we 
wrote and as a Board issued to you in December of this past 
year, entitled, ``Challenges Facing the New Commissioner of 
Social Security,'' be included in the record. The document lays 
out, in much greater detail, the matters that I have summarized 
for you this morning.
    [The information follows:]

       CHALLENGES FACING THE NEW COMMISSIONER OF SOCIAL SECURITY

    Over the last 4 years, the Social Security Advisory Board has laid 
out a set of issues and recommendations that are basic to the health of 
the Social Security Administration. This paper summarizes the major 
issues the Board has identified and the recommendations the Board has 
made to address them. Most of the issues we have raised in our reports 
have not yet been adequately addressed, and some have not been 
addressed at all.
    The Congress created the Board to provide an independent and 
objective source of information and advice to the President, the 
Congress, and the Commissioner. All of our reports have been issued by 
consensus and without dissent. I would make the point that the kind of 
in-depth analysis of SSA's problems that we have provided in our 
reports has never before been available to a new Commissioner. In that 
regard, I believe the Board has met the expectations of the Congress as 
to the role of the Board.
    The SSA's new Commissioner, Jo Anne Barnhart, is facing many 
difficult challenges. SSA has reached a critical time in its history. 
For nearly 20 years the agency has been asked to absorb large cuts in 
staffing while workloads have grown. Staff in the field have been cut 
by nearly 30 percent and the number of managers and supervisors in 
field offices and teleservice centers by nearly one-half.
    In response to severe human resource constraints, SSA has struggled 
to maintain quality of service. Improving systems and changing the way 
it conducts its business, while helpful, have not been adequate to make 
up for the loss of personnel. Service is poorer than in earlier years 
and is no longer measuring up to the agency's own historically high 
standards.
    The employees who work in SSA offices and in the State disability 
agencies have made extraordinary efforts to meet the agency's 
challenging workloads. Their rapid and professional response to the 
events on September 11 demonstrated once again their dedication to 
public service and their compassion for those who need their help. But 
every day there are thousands of individuals across the country who 
come to SSA for help in dealing with their own major life events--
retirement, disability, or death. Too often there are too few employees 
with too little time to respond appropriately to their needs.
    The extensive work the Board has done over the last four years has 
convinced us that SSA's employees are being asked to do too much with 
too little. As a consequence, the agency's capacity to carry out its 
mandated responsibilities is increasingly at risk. The situation will 
worsen rapidly as the population continues to age and baby boomers 
begin knocking at the door of the Social Security Administration 
seeking help in filing their claims for disability and retirement 
benefits.
    The time to remedy the shortfalls is now.
            THREE CRITICAL AREAS WHERE IMPROVEMENT IS NEEDED
    In its reports the Board has described the many aspects of the 
agency's work where we believe improvement is urgently needed. Three 
areas merit particular emphasis: service to the public, safeguarding 
the public's funds, and SSA's capacity to develop sound policy.
Service to the Public

    The problem of the quality of SSA's service to the public is the 
one that the public is most aware of, and which is most likely to come 
increasingly to the attention of the Congress.
    The most obvious gaps in SSA's service delivery system are in the 
agency's frontline--the 800 number and the 1300 local offices. For 
example:

        L  Many callers to SSA's 800 number are not getting the help 
        they need. The agency's longstanding goal of answering 95 
        percent of calls within 5 minutes is far below private sector 
        standards. Because of lack of resources, even this inadequate 
        95-percent goal has had to be reduced. The goal now is to 
        answer only 92 percent of calls within 5 minutes. In 2001, of 
        those who finally got through to the 800 number, 20 percent 
        gave up while waiting for an agent to handle the call or before 
        using the agency's lengthy automated message system.

    When the Board recently visited the agency's largest teleservice 
center in Auburn, Washington, employees there expressed serious concern 
about the quality of service they are able to provide. They told us 
they are hearing more complaints than ever about the difficulty callers 
to the 800 number are having in getting through to a real person who 
can answer their questions. They are frustrated that the pressures to 
keep calls short limit their ability to provide more help to those who 
do get through.
    Field offices, particularly those in urban areas, often are 
overcrowded and waiting times are too long. SSA estimates that there 
are about 85 million telephone calls to field offices each year. But 
field offices are not adequately staffed to answer this volume of calls 
in a timely way. When we talked to a group of field office managers in 
California earlier this year they stated that the situation in their 
offices was worse than it was in 1999, when the Board issued its first 
report assessing SSA's service to the public. At a hearing several 
months ago in Philadelphia, a witness from the Mayor's Commission on 
Services to the Aging described to the Board the inadequate assistance 
and tedious waits that visitors to a field office were experiencing, 
and recommended that SSA staff be given the tools and training they 
need to deliver good service.
    There is broad recognition that those who bear the brunt of field 
office and telephone service delivery deficiencies usually have the 
greatest need of assistance. These are primarily individuals who have 
mental or physical impairments, or who lack the education needed to 
navigate SSA's complex application and appeals system. A witness at the 
Board's public hearing in Seattle observed that ``SSA has failed to 
adopt a policy and procedures to effectively serve people with mental, 
developmental and cognitive disabilities.'' Other witnesses told the 
Board that SSA is not equipped to serve the growing numbers of 
claimants who do not speak English.
    Service delivery problems extend beyond the field office and the 
800 number. Every component of the disability application and appeals 
process lacks the highly trained and experienced staff needed to 
process cases both accurately and timely. In 2000, it took on average 4 
months for an SSI claim to go through the initial stage of the process. 
Those filing for reconsideration of the initial decision waited another 
2 months for a decision. An appeal to the administrative law judge 
level took nearly an additional year. Average processing time at the 
next level of appeal, the Appeals Council, was well over a year. 
Claimants who go through SSA's administrative appeals process may thus 
wait for two, three, or more years before getting a final 
determination. This is simply not adequate service.
    Finally, increasing public understanding of Social Security is 
another aspect of service to the public where improvement is needed. In 
earlier years the agency had a large cadre of employees in field 
offices around the country whose major function was to communicate with 
workers, employers, and beneficiaries in their communities. Because of 
downsizing, employees no longer have adequate time to do this kind of 
work. The agency has taken a number of steps to address this deficit, 
including sending out an annual Social Security Statement to all 
workers. But surveys show that the public's knowledge of Social 
Security remains relatively weak, and much more needs to be done.
Safeguarding the Public's Funds

    The second critical area where improvement is needed is in the 
safeguarding, or stewardship, of the public's funds--the work that 
needs to be done to ensure that taxpayer contributions are 
appropriately expended. Stewardship is integral to good service to the 
public. Taxpayers who support SSA's programs want and deserve to know 
that their tax dollars are being accurately dispensed. Beneficiaries 
want their payments to be accurate so that they do not have the 
inconvenience or hardship of dealing with either an overpayment or an 
underpayment.
    The Board's reports have cited a number of areas where more careful 
stewardship is warranted.
    SSI overpayments and underpayments provide one example. In fiscal 
year 2000, SSA processed 3.3 million SSI overpayments, more than twice 
as many as in 1990. Despite this large number of clearances, the number 
of SSI overpayments pending in field offices at the end of fiscal year 
2000 was two and a half times what it was at the end of 1990, 
increasing from 101,000 in 1990 to 260,000 in 2001. SSA's stewardship 
review shows that the amount of SSI overpayments in 2000 was $2 
billion. Underpayments were estimated to be more than $440 million.
    In our observation, many of the problems that are associated with 
inaccurate benefit payments stem from the fact that too often employees 
in the field lack the time they need to process their workloads with 
proper care. As one agency executive told us: ``Employees no longer 
have the time to cross the t's and dot the i's.''
    We have heard many examples of this. For instance, overworked 
employees in field offices have told us that they sometimes do not 
pursue certain lines of questioning, such as the details of an 
individual's living arrangements, because it takes too long to resolve 
the issues that may be raised. Agency employees have also told us that 
they are not processing reports of earnings or changes in living 
arrangements as promptly as they should because interviewing claimants 
who are sitting in overcrowded waiting rooms is--understandably--a 
higher priority.
    Agency employees report that they do not have time to investigate 
properly the quality and reliability of the representative payees whom 
they assign to manage payments on behalf of beneficiaries who are 
physically or mentally impaired. According to SSA data, between 1990 
and 2000 the number of work years devoted to representative payee 
activities decreased by a fifth, while the number of beneficiaries with 
representative payees increased by a third.
    We have heard similar concerns about the impact of inadequate 
resources from employees in State disability agencies, where examiners 
are pressed to meet processing times that make it difficult or 
impossible for them to gather all the evidence that is needed to make 
accurate and fully substantiated disability determinations. Too often 
decisions are pushed out the door prematurely in the drive to meet 
production goals.
    One area in which the agency has been greatly assisted by the 
Congress in carrying out its stewardship responsibilities is in the 
conduct of continuing disability reviews (CDRs). The special funding 
that the Congress provided has enabled the agency to expand greatly the 
number of CDRs that it has conducted. The SSA actuaries estimate that 
the present value of future benefits saved from CDR activity in fiscal 
year 2000 alone is $6 billion, at a cost of only $609 million, a pay-
off ratio of almost 10 to 1. Dedicated funding for CDRs in future years 
will be critical to the agency's ability to continue this important 
stewardship work.
    CDRs represent one example of how additional administrative dollars 
can be used to save program dollars. Conducting more frequent and 
careful SSI redeterminations and making more effective use of data 
exchanges are others. The competition across the government for 
discretionary administrative dollars has made it difficult for the 
agency to build the case for funds for these kinds of stewardship 
activities, but the case can and should be made.
    Like the Congress and SSA's Inspector General, the Board has become 
increasingly concerned about the growing fraudulent use of the Social 
Security number. We have been examining the unauthorized use of Social 
Security numbers, vulnerabilities in SSA's enumeration process, and the 
role that Social Security numbers play in identity-related crimes. One 
of our concerns is that the agency's heavy workload, combined with 
processing time goals, may be discouraging employees in the field from 
exercising the degree of care in the processing of applications that 
would otherwise be done.
SSA's Capacity to Develop Sound Policy

    The third major area where improvement is needed is in the agency's 
capacity to develop sound Social Security and SSI policy.
    In SSA, the responsibility for developing policy is divided. The 
Office of Policy is responsible for research and analysis regarding 
broad policy issues, while the Office of Disability and Income Security 
Programs is responsible for what the agency calls ``program policy,'' 
the development of regulations, rulings, and other agency instructions 
needed to give employees guidance on how to implement statutory 
requirements.
    Currently, there are serious weaknesses in both of these areas. 
With respect to broad policy issues, SSA needs greatly enhanced 
capacity to provide the comprehensive research and analysis that policy 
makers need to address complex issues regarding long-term financing of 
the Social Security program. Another area that deserves prompt study 
relates to helping individuals who are disabled find and retain 
employment.
    In the area of program policy, the needs of the disability program 
are particularly acute. Although the agency has tried in recent years 
to increase the level of its technical expertise by hiring additional 
staff, problems persist.
    For many years there have been too many sources of disability 
policy. Adjudicators in State agencies and in SSA's quality assurance 
system are bound by detailed instructions presented in SSA's Program 
Operations Manual System (the POMS). The POMS is supplemented by other 
administrative issuances from SSA. Administrative law judges and the 
Appeals Council, on the other hand, are bound only by the statute, 
along with regulations and rulings that have been published in the 
Federal Register. They also have their own operating instructions in a 
Hearings, Appeals, and Litigation Law Manual (HALLEX).
    In its 1994 plan for redesigning the disability process SSA made 
development of a single statement of policy a high priority. Because of 
limited resources, however, this effort has not been pursued with the 
vigor that was originally intended and that the Board believes is 
necessary.
    The development of sound disability policy requires greater medical 
and vocational expertise than the agency currently has. Physicians and 
others in the system have advised us that important medical listings 
have not been kept sufficiently up to date to reflect advances in 
medical diagnosis and treatment. Similarly, SSA's vocational guidelines 
do not take into account the changes that have occurred in the 
workplace.
    Also of great concern is the fact that the Department of Labor's 
Dictionary of Occupational Titles (DOT) is no longer being updated. 
This document, which describes the types of jobs that are available in 
the national economy, has long served as a primary tool for 
adjudicators in determining whether a claimant has the capacity to 
work. SSA currently has no replacement for the DOT, leaving a critical 
policy vacuum at a time when program rules require more and more 
decisions to be made on the basis of vocational factors.
       WHAT THE COMMISSIONER WILL HAVE TO DO TO BRING IMPROVEMENT
    SSA's problems will not be easy to address. We have emphasized the 
need for more adequate resources because the situation is urgent and 
without them substantial improvement in performance in the short term 
is unlikely. But additional resources will not be enough and in the 
longer term the major issues relate to the institutional aspects of the 
agency. The new Commissioner and her staff will have to make many major 
changes if the agency is to be able to handle its growing workloads. 
This will require a combination of approaches, including changes in the 
agency's strategies and practices, improvements in technology, and 
changes in organizational arrangements. The culture of the agency also 
has to be changed. The Board has urged the agency to undertake a number 
of major initiatives.
Develop a Plan and a Budget That Implements the Plan

    First, to guide the agency's course into the future, SSA should 
develop a plan that describes how it expects to meet its workload 
needs, both in the short term and the long term. As indicated above, 
the plan should address the changes that need to be made in the areas 
of human resources, technology, work processes, and institutional 
arrangements.
    Among the most urgent issues that need to be resolved are how the 
agency will meet the needs of the growing numbers of disability 
claimants, how it will handle its telephone service, and how it will 
handle the workload related to the implementation of the new Ticket to 
Work program.
    Looking to the future, we know that the way the agency delivers 
service will inevitably change. There will be changes in the law and in 
beneficiary characteristics, and there will be advances in technology. 
All of these changing factors argue for the establishment of a 
permanent planning process that will enable the agency to adapt to new 
circumstances and needs.
    Equally important, SSA should have a budget that reflects the 
agency's objectives and provides the resources that will be needed to 
meet these objectives. Commissioner Jo Anne Barnhart has made a 
commitment to develop a budget along the lines that the Board has 
recommended. This is a challenging undertaking in that it will require 
the agency to adopt a new way of thinking about how its budget should 
be constructed. The Commissioner is to be commended for moving forward 
promptly in this critically important effort.
Strengthen the Policy Infrastructure

    Second, strengthening SSA's capacity to analyze and develop policy 
should be one of the highest priorities of the Commissioner and the 
agency. In some respects the agency has made significant strides since 
the Congress enacted legislation in 1994 making SSA independent of the 
Department of Health and Human Services. In 1997 SSA created a new 
Office of Policy with a Deputy Commissioner who reports directly to the 
Commissioner. New staff have been hired, boosting the agency's ability 
to conduct policy research and evaluation.
    But given the importance of the policy issues facing Social 
Security, much more needs to be done. There is a large need for deeper 
analysis of the many issues related to Social Security financing that 
has yet to be met. The capacity of the Office of Policy to identify 
issues, develop options, and provide information and analysis to the 
Congress and the administration on this subject should be dramatically 
enhanced. Similarly, there is a need for more research and analysis 
regarding the application of SSA's definition of disability and how it 
affects work. More comprehensive research on ways to improve incentives 
for rehabilitation and employment early in a period of disability is 
also needed.
    In the area of disability program policy, SSA needs to strengthen 
its capacity to issue the thoughtfully crafted regulations and rulings 
that adjudicators need to guide their decisionmaking. Developing sound 
disability program policy requires individuals who have extremely high 
levels of technical and analytical skills. The Board has urged the 
agency to create a permanent policy unit that combines the knowledge 
and experience of employees who have worked in all parts of the system, 
including the Office of Disability, the State disability agencies, and 
the Office of Hearings and Appeals. If individuals with experience in 
these offices participate in writing the agency's policy, it is more 
likely to take into account the important differences in the 
perspectives and needs of adjudicators in both State agencies and 
hearing offices.
    A single presentation of policy that will be followed by all of the 
agency's adjudicators is critical to the objective of ensuring 
consistent and fair decisions for all claimants, and the agency should 
proceed with this effort as quickly as possible.
    The Board has expressed its deep concern about the agency's 
longstanding inability to explain why disability decisional outcomes 
show such a high degree of variance over time, between levels of 
adjudication, and among different regions of the country. The agency 
should institute a quality management system that will provide the 
ongoing and comprehensive information that is needed to understand why 
these large variances exist. Policy makers need far better information 
than is now available in order to develop and implement the kinds of 
changes in policies and procedures that are needed to improve accuracy 
and consistency in decisionmaking. Administrators also need this 
information in order to detect problems promptly and correct them 
appropriately.
Improve Service Delivery Practices and Strategies

    Third, it is a truism within the agency that what the leadership 
chooses to measure is what the agency will do. If the agency 
establishes a performance measure for a particular work process, such 
as the number of days it should take to issue a Social Security number, 
managers and employees in the field will do whatever is necessary to 
meet the agency's goal.
    Many within the agency think that the way SSA currently measures 
its service performance is seriously flawed. They believe there is too 
much emphasis on process rather than outcomes, that speed is emphasized 
at the expense of quality, and performance is skewed in inappropriate 
ways. The thoughtful comments that we have heard from employees in the 
field give credence to these criticisms. The current measures appear to 
be breeding cynicism about the agency's objectives and motives, an 
outcome that is clearly counterproductive.
    The agency must reassess the way it measures performance, giving 
close attention to how its measures are affecting the overall quality 
of service that is being provided to the public. It should seek the 
advice of the most successful public and private entities and solicit 
the views of SSA and State agency employees in the field who have a 
frontline view of the strengths and weaknesses of the current 
performance measurement system.
    The public needs to have a stronger voice in setting the agency's 
priorities. Last year the agency accepted the Board's proposal for 
joint sponsorship of a forum on how to measure and use customer service 
information. This forum brought together experts from the private 
sector and academia to advise the agency on ways it can improve its 
measurement and use of customer service information so as to improve 
the quality of service that it is providing. The agency should build on 
the beginning steps that it has already taken to build a customer 
information system that will be instrumental in agency decisionmaking.
    One area in which better information is needed regarding the views 
of the public is the nature and quality of the agency's telephone 
service. SSA needs a strategy for meeting the growing demand for 
telephone service. Basic questions need to be answered. For example, 
are SSA's current 800 number standards adequate to address the public's 
needs and expectations? Would extending the hours of service provided 
by the 800 number result in significantly higher public satisfaction 
with its service? Should SSA's field offices assist in taking 800 
number calls?
    The volume of telephone calls made to SSA is enormous. In 2001, 
about 85 million calls were placed to the 800 number and a similar 
number went to field offices. As noted earlier, getting through to 
someone who can answer a question is often difficult whichever approach 
is tried. A witness at a hearing the Board held recently in Seattle 
described the field offices in that area as ``virtually impenetrable'' 
by phone. SSA will have to put into place improved technologies and, 
most likely, increased staffing as well if it is to meet the growing 
demand.
    The agency's steadily increasing workload will also require the 
development and implementation of major systems improvements. There is 
a particularly urgent need for rapid systems improvements throughout 
the disability determination system. Today, the claims that are filed 
in the field offices and continue through the State agencies and the 
hearings and appeals process are all stored on paper and the volume of 
documents is huge. Although the technology is now available to 
transform this cumbersome system into a paperless system that will 
speed up the flow of claims and avoid lost files, the development and 
implementation of the software and the hardware needed to support the 
system have been proceeding very slowly. This should be made one of the 
agency's highest systems priorities.
    SSA has been working intensively to transfer as much of its work as 
possible to the Internet and is anticipating that a significant portion 
of its future workload can be handled in this way. But SSA's programs 
are complex and many of the public's interactions with the agency 
require personal attention. SSA will have to define carefully the 
functions that are suitable for handling by Internet. It will also have 
to address issues relating to privacy and program integrity.
    Another new and potentially very useful tool is videoconferencing. 
SSA has begun to use videoconferencing on a pilot basis to conduct 
administrative law judge hearings and is finding that it can save 
significant travel time and expense on the part of both judges and 
claimants. As the technology improves and becomes cheaper and more 
accessible, videoconferencing has substantial promise for improving 
service to the public in other ways--for example, by conducting 
interviews with disability claimants in distant locations and providing 
translation services in field offices that lack the particular 
expertise a claimant may need. SSA should continue to evaluate the use 
of videoconferencing with special emphasis on the added value in 
serving the public and the quality of outcomes.
Consider Ways to Improve Accountability

    Over the last 20 years the number of functional components in the 
agency has proliferated, leading to a dispersion of responsibility and 
an erosion of accountability. Many of the components have overlapping 
lines of authority, requiring a great deal of coordination. Disability 
is of particular concern. Under the current administrative structure, 
nearly every component of the agency has a role. Each has its own 
mission and interests, and no one other than the Commissioner has the 
authority to bring them together. With so many individuals and offices 
involved, decisionmaking is slow and creativity is stifled. One of the 
Commissioner's most difficult challenges will be to establish clearer 
lines of responsibility and accountability so that she will receive the 
high quality of information and analysis that she needs to lead the 
agency.
    Over the longer term, the Commissioner will have to look at the 
organizational issue in an even more fundamental way. Critical 
questions need to be confronted regarding SSA's basic service delivery 
structures. How much and what type of work should be conducted in face-
to-face settings? By telephone? By Internet? By outside third parties? 
In making these choices, what are the tradeoffs in cost, in quality of 
service to the public, and in program integrity?
Change the Disability Adjudication Process

    Since the Disability Insurance program was enacted in 1956, the 
Federal-State administrative structure that was established at that 
time has had to accommodate a dramatic and unforeseen increase in 
program size and complexity. Today, the disability determination 
structure is in need of major change.
    In the report issued by the Board earlier this year, Charting the 
Future of Social Security's Disability Programs: The Need for 
Fundamental Change, the Board discussed the problems in the current 
arrangements and why we think change is needed. We recommended ways to 
strengthen the Federal-State relationship and reform the hearing 
process. We urged careful study of how the Appeals Council can be made 
to function more effectively, and we recommended that the Congress and 
the Social Security Administration study whether a Social Security 
Court or a Social Security Appeals Court should replace existing 
arrangements for judicial review.
    Comprehensive hearings by the Congress on the disability programs 
can be an important first step in the discussion that needs to take 
place on this subject. The Commissioner and SSA must determine the 
kinds of changes they believe need to be made, but they will need the 
help of a broad public discussion that the Congress can lead to assist 
in their analysis and to build support.
Address Long-Standing Institutional Problems

    In the September 1999 report on improving service to the public, 
the Board identified three underlying institutional problems that only 
the leadership of the agency can effectively address:

         An agency culture that discourages open discussion 
        and timely resolution of problems;
         Weaknesses in communication between SSA's 
        headquarters and operations in the field; and
         Inadequate teamwork among various components with 
        parallel responsibilities.

    As we noted in our report, SSA's resistance to open discussion has 
existed for many years, and may have grown out of the agency's historic 
``can do'' approach. But this resistance to openness is particularly 
inappropriate today, given the scope and magnitude of the agency's 
problems.
    A related problem is a feeling of misunderstanding between SSA's 
managers in headquarters and employees in the field, including in State 
disability agencies. Many employees in the field have expressed concern 
that management in headquarters appears unaware of the problems they 
are having in serving the public and uninterested in hearing their 
suggestions for how these problems might be resolved.
    Over the years the problems related to agency culture and lack of 
good communication have been exacerbated by an absence of close 
teamwork among various parts of the agency whose missions overlap. 
Disability is the area where the need for better teamwork is most 
apparent. Administrative arrangements are fragmented, and the working 
relationships among various parts of the disability system have 
historically been weak.
    These interrelated problems are likely to be highly resistant to 
change. Since the Board's 1999 service to the public report was issued, 
the agency's leadership has begun to address them, emphasizing the need 
for a ``one agency'' culture. But it will require a convincing and 
consistent message from the new Commissioner and others who work with 
her to bring about real and lasting change.
Attract and Retain Highly Qualified Staff to Build for the Future

    Over the present decade, SSA expects to lose more than half of its 
most valuable asset--its experienced and dedicated staff. By 2010 over 
28,000 of the agency's 64,000 employees will retire and another 10,000 
will leave for other reasons.
    Maintaining a strong staff to carry out the many complex 
responsibilities of the agency will require careful planning, and ranks 
near the top of the most difficult challenges the Commissioner must 
address. Although the events of September 11 and the aftermath 
reportedly have increased the appeal to young people of working in the 
Federal Government, it is unlikely that there will be a dramatic 
difference over the long run in the numbers who will turn to Federal 
service as their first employment option. SSA needs to do everything it 
can to attract and retain a skilled workforce. The agency is aware of 
this need and has been in the forefront of government agencies in 
planning how this should be done.
    But there are forces beyond the agency's control and it will need 
help. The Administration and the Congress must provide the funds that 
are necessary to hire new employees before older ones leave so that 
there is time to train, mentor, and pass on to a new generation the 
agency's positive traditions. If the agency needs more flexibility than 
is available under present rules to adjust pay scales to attract and 
keep the quality of employees that it needs, it should be given it.
    Much more attention needs to be given to providing employees in SSA 
and in the State disability agencies with high quality, ongoing 
training. The need is particularly urgent for those who are involved in 
adjudicating disability claims. At the present time training for these 
employees is highly fragmented and varies greatly from one part of the 
disability structure to another. SSA should have an ongoing training 
program where the thousands of individuals in State disability 
agencies, hearing offices, and quality assurance offices can receive 
in-depth training on how to apply the agency's disability policy rules. 
An institutionalized training program, perhaps conducted under the 
auspices of a prestigious medical institution, would be extremely 
helpful in addressing the serious problem of inconsistency in 
decisionmaking and would help to assure higher quality disability 
determinations throughout the system.
    The reality is that weaknesses in human capital can undermine 
public support for and confidence in the ability of government to 
perform. Social Security's programs are too important to allow this to 
happen.
Conclusion

    Some of the most important challenges that Commissioner Barnhart 
and the agency are facing are highlighted here. Addressing them will 
require making difficult decisions and setting new directions. The 
Commissioner is in a unique position to lead the process of change, 
having been a Member of the Board and having participated in our study 
of SSA's administrative and policy issues over the last four and a half 
years. Her colleagues on the Board stand ready to work with her and to 
assist in any way we can.
    One thing is very clear. Disability is at the heart of SSA's many 
challenges. It accounts for two-thirds of the agency's budget and 
dominates the work of the agency at all levels. Disability benefits 
will account for nearly $100 billion in spending this year, or nearly 5 
percent of the Federal budget. Disability will have to be the primary 
focus of the Commissioner's attention and that of her top management 
staff for many years to come.
    Finally, the Congress should hold regular oversight hearings on the 
many important issues facing the Commissioner and the Social Security 
Administration. It is extremely valuable to SSA and other agencies of 
government to have thoughtful, balanced, and consistent oversight by 
the Congress. These hearings force the agency and all of us to focus on 
important issues that need attention. The public is well served when 
critical issues are forthrightly addressed.

                                 

    Mr. DAUB. I will be happy to answer questions that you 
have, and I assure you of our continued commitment from the 
Board to help you in the conduct of your work.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Daub follows:]
  Statement of the Hon. Hal Daub, Chairman, Social Security Advisory 
                  Board, and former Member of Congress
    Mr. Chairman, Mr. Matsui, and Members of the Subcommittee, I 
appreciate the opportunity to speak to you this morning on behalf of 
the Social Security Advisory Board. We commend you for taking time to 
examine the condition of the Social Security Administration and to 
consider the changes that are needed.
    My statement reflects the extensive work that the Board has done 
over the last five years. During that time we have consulted with 
hundreds of employees in SSA and State disability offices throughout 
the country. We have collected and analyzed data, and held public 
hearings.
    As my statement emphasizes, SSA's problems are serious and need to 
be addressed as promptly as possible. The agency will have to make 
major changes in the way it conducts its business and it will also need 
additional resources if major service shortfalls are to be averted.
    Commissioner Barnhart is a former member of the Board, where she 
made an outstanding contribution to our work. We know her well, and we 
know that she has the knowledge, experience, and personal qualities to 
lead the agency through a period of rapid change. She will need the 
support of the Congress, the President, and the Board. For our part, we 
intend to work with her and the agency on the changes that are urgently 
needed.
    To summarize there are three primary areas where the Commissioner 
needs to focus her attention.
    The first is on improving the quality of SSA's service to the 
public, where problems are large and growing. In our reports we have 
documented critical service shortfalls in field offices and on SSA's 
800 number, as well as throughout the disability application and 
appeals process. Service levels in all of these areas are unacceptably 
low.
    A second and related area is improving the agency's stewardship--
ensuring that the public's funds are responsibly collected and 
expended. The Board issued a report on this subject in March. Each of 
you was sent a copy.
    Particularly after the events of September 11, SSA's inability to 
ensure the integrity of the enumeration process is extremely 
disturbing. Employees in the field are aware that many applicants for 
Social Security cards are presenting fraudulent documents. Processes 
for validating documents with other sources, such as the INS, either 
work poorly or do not exist at all. Employees lack the time, training, 
and tools they need to determine authenticity for themselves. The area 
of greatest difficulty is documents submitted by individuals who are 
foreign born, but there are problems with fraudulent U.S. documents as 
well. Far too many replacement cards are being issued and many of them 
are unquestionably being used for illegal purposes. I want to 
underscore the high level of concern that many of SSA's frontline 
workers feel about this problem.
    The third major area where improvement is needed is in the agency's 
capacity to develop Social Security and SSI policy so that it can 
provide the comprehensive research and analysis that policy makers need 
to address complex issues like Social Security financing and 
disability.
    These problems will not be easy to address. They will require new 
ways of thinking, new practices, and changing the culture of the 
agency.
    Facing growing workloads, SSA needs a plan that clarifies how it 
will meet service delivery needs in the future. It needs a budget that 
provides the resources that will carry out its objectives. We commend 
the Commissioner for moving forward to develop a more coherent, work-
based budget that will give the Congress the information it needs to 
make judgments about the funding levels that are required to serve the 
public appropriately.
    The agency's current performance measures are seriously flawed. 
They emphasize process rather than outcomes, speed at the expense of 
quality, and skew performance in inappropriate ways. They are breeding 
cynicism in the field about the agency's objectives and motives. SSA 
needs more balanced measures of performance, a management information 
system that ensures quality performance, and better measures of the 
type and quality of service that the public wants and needs.
    As we have emphasized in our reports, disability is at the heart of 
SSA's many challenges. It accounts for two-thirds of the agency's 
administrative budget --about $5 billion this fiscal year. Disability 
benefits will account for nearly $100 billion in spending this year, or 
nearly five percent of the Federal budget. The current disability 
structure is seriously flawed and needs to be reformed in the interests 
of both claimants and taxpayers.
    Institutional problems also need to be addressed. Over the years, 
SSA has developed a culture that discourages open discussion of 
problems. Communication between headquarters and operations in the 
field is poor, and teamwork among various components, although 
improving, is demonstrably inadequate. Addressing these issues of 
agency culture will require strong leadership.
    Finally, maintaining a skilled and experienced staff ranks near the 
top of the most difficult challenges for the agency. SSA needs to do 
everything it can to attract and retain a skilled workforce. It needs 
to hire new employees before older ones leave so that there is time to 
train, mentor, and pass on to a new generation the agency's positive 
traditions. Weaknesses in human capital can undermine public support 
for--and confidence in--the ability of government to perform. Social 
Security's programs are too important to allow this to happen.
    In conclusion, Mr. Chairman, I hope that the Congress will continue 
to hold regular oversight hearings on the issues we are discussing here 
today. It is extremely valuable to SSA to have thoughtful, balanced, 
and consistent oversight by the Congress. These hearings force the 
agency and all of us to focus on the important problems that need 
attention. The public is well served when critical issues are 
forthrightly addressed.
    I ask that a document entitled ``Challenges Facing the New 
Commissioner of Social Security'', December 2001 be issued in the 
record. This document lays out in much greater detail matters that I 
have summarized.
    I will be happy to answer any questions that you may have, and I 
assure you of the continued commitment of the Board to be of help to 
you as you conduct your work.

                                 

    Chairman SHAW. Thank you. Ms. Smith?

        STATEMENT OF MARIE SMITH, PRESIDENT-ELECT, AARP

    Ms. SMITH. Thank you, Mr. Chairman, Mr. Matsui.
    My name is Marie Smith, and I am the new President-Elect of 
AARP. We appreciate the opportunity to present our views on the 
challenges facing the new Commissioner of Social Security. I 
was particularly interested to hear the new Commissioner's 
remarks and happy that she has been able to drill through to 
some of the major problems because I am a former Social 
Security Manager and spent 25 years with that Agency, and I 
know the value of the Agency.
    It administers both the Social Security program and 
Supplementary Security Income, SSI Programs, which are crucial 
to the economic well-being of millions of Americans of all 
ages. It is important that the Agency maintains complete and 
adequate records, responds quickly and courteously to 
information requests, and safeguards the program's financial 
integrity. If SSA falls short, then public confidence in the 
Agency, and in the Social Security program itself, will be 
undermined.
    The AARP members still report problems reaching the 800-
number, particularly during peak hours. They feel frustrated at 
not being able to speak with knowledgeable and sympathetic 
staff. Since the 800-number is the primary point of access, the 
Agency needs to do a better job training staff and providing 
them with accurate and complete information. Access to local 
offices must remain an option for those who prefer to do 
business in person or are uncomfortable using the telephone.
    Service delivery problems are particularly evident in the 
disability program, which we have been discussing today. The 
backlog of applications and appeals places many applicants in 
economic jeopardy because they have few resources to sustain 
themselves until benefits begin. The Agency has a fiduciary 
responsibility to safeguard the trust funds, yet it should 
provide benefits in a timely manner to those who are eligible.
    The SSA must address its current service delivery problems 
and anticipate future service delivery needs brought on by the 
retirement of the boomers. The SSA must be prepared to deliver 
service in a way that satisfies all groups of boomers. Despite 
the increased familiarity with technology that will 
differentiate many boomers from past beneficiaries, some 
segments of the boomer population will require personalized 
service. The Agency will face the challenge of the boomer 
retirement at a time when many of its own senior-level managers 
will be retiring as well, as we have heard.
    The SSA devotes considerable resources to the SSI Program, 
but has been criticized for providing benefits to some who are 
not eligible and for erecting barriers for those who could 
qualify. The SSA's overall service delivery problems are 
exacerbated by inadequate funding. While the Agency's 
administrative expenses are paid with Social Security Trust 
Funds, Congress continues to include these costs within the 
annual discretionary spending limits it sets for non-Social 
Security programs.
    The AARP will continue its strong support for removing 
SSA's administrative costs from these spending limits. This 
change can help ensure that the Agency will have the resources 
to provide the American people with the quality service they 
deserve.
    The SSA touches Americans from the time of birth, and the 
issuance of a Social Security number, through entrance and 
departure from the workforce and into retirement. Many people 
will have limited contact, while others will interact with the 
Agency often. Even if only a small percentage of people 
experience problems with SSA, it will represent a sizable 
number of people.
    Regardless of the amount of contact, the Agency should 
strive to provide the highest quality of service and ensure 
that no matter who you are, you will be treated courteously, 
receive accurate and timely information, and have your problem 
resolved expeditiously. Thank you.
    [The prepared statement of Ms. Smith follows:]
            Statement of Marie Smith, President-Elect, AARP
    AARP appreciates the opportunity to present its views regarding the 
challenges facing the new Commissioner of Social Security. The Social 
Security Administration (SSA) has provided quality service throughout 
most of its history, but as it enters into the 21st century it will 
face new problems that need to be addressed in a timely manner. At her 
confirmation hearing before the Senate Finance Committee, Commissioner 
Barnhart identified some of the key issues awaiting her: ensuring the 
program's long-term solvency for future generations; providing quality 
service to the public at the same time as the number of beneficiaries 
rises because of the aging of the Boomers; and improving program 
integrity through solid fiscal stewardship. These areas were identified 
at the 1998 confirmation hearing for the prior Commissioner. The agency 
has made some improvements, but more can and needs to be done. SSA 
would be better able to improve service if its administrative costs, 
funded with trust fund dollars, were removed from congressionally-
mandated spending caps that apply mostly to programs funded from the 
non-Social Security budget.
    SSA administers the Old Age, Survivor and Disability Insurance and 
the Supplemental Security Income (SSI) programs, which provide monthly 
income support to more than 45 million Americans of all ages. The 
agency also maintains wage records for over 150 million workers and 
provides annual statements of worker earnings and estimated benefits, 
as well as issuing new Social Security cards. It is important that the 
agency respond quickly and courteously to information requests, 
communicate clearly to the public it serves, maintain complete and 
adequate records, and safeguard the programs from fraud and abuse. If 
SSA falls short, public confidence in Social Security could be 
undermined.
I. SERVICE DELIVERY
A. Staffing

    SSA has always prided itself on its service to the public. For much 
of the agency's history, those who sought assistance and information 
found employees who took the time and had the interest and expertise to 
help them. Today, SSA employees remain dedicated, but in some offices 
staff shortages or inadequate resources may hinder the performance of 
even the most well-intentioned individual and could have a significant 
impact on long-term delivery.
    SSA underwent an over twenty-percent staff reduction from 1985 to 
1990, which was largely accomplished through attrition. While SSA was 
undergoing this downsizing, federal legislation added to SSA's 
responsibilities by requiring the widespread distribution of Social 
Security benefit and earning statements and changing the status of some 
individuals receiving Social Security and SSI benefits. This further 
strained the agency's already limited resources and hampered its 
ability to maintain consistent and quality service.
    By 2015 the first wave of Boomers will be in their 60s, and SSA's 
retirement and survivor beneficiary population will reach about 50 
million. As the agency prepares for the influx of retiring Boomers, it 
will have proportionately fewer resources but greater responsibilities. 
The situation could worsen because many senior-level managers will be 
retiring. The Boomers' familiarity with technology and the internet and 
their service delivery expectations differ from current beneficiaries. 
Despite the increased familiarity with technology that will 
differentiate these beneficiaries from previous ones, some Boomers will 
continue to require more personalized service. SSA must be prepared to 
deliver service in a way that satisfies the various clients it serves.
B. The 800 Number and Accurate Information

    Claimants continue to experience difficulty accessing SSA by phone 
and obtaining accurate information from the agency. SSA set up the 800 
number to improve service. While a toll-free number is convenient for 
simple matters, it does not necessarily work for complex ones. And, if 
the caller is unable to speak to an SSA employee and gets repeated busy 
signals, even the simplest matter is not being handled.
    Although the public reports overall satisfaction with SSA's 
customer service, we continue to hear about 800 number access and 
service problems. SSA sometimes reassigns staff to handle calls during 
peak hours, but that means other duties are being neglected. AARP 
believes the 800 number should be used for basic transactions, and 800 
number staff should receive sufficient training and/or information to 
answer basic questions on the phone.
    Even an easily accessible 800 number poses hardships for SSA's most 
vulnerable claimants--many of whom lack the physical ability, language 
skills, or mental acuity to use the telephone for certain types of 
information. Those who are unaccustomed to doing business by phone may 
find it upsetting to use the telephone to complete a transaction that 
will have a significant impact on their lives. Local office visits must 
continue to accommodate individual needs and preferences as well as to 
deal with complicated matters.
C. The Disability Program

    SSA has been unable to keep up with the dramatic increase in its 
disability caseload. In particular, the agency has a significant 
backlog of initial applications and those appealing a denial must wait 
a long period of time before their case is heard. The agency has taken 
steps to speed up initial disability application processing time and 
reduce backlogged appeals. If the complaints we receive are an 
indicator, the problem persists. SSA should resolve these problems 
since those with disabilities are less likely to be able to work or 
have the resources to sustain themselves until they begin receiving the 
benefits to which they are entitled.
    It is critical that those who are eligible for benefits receive 
them in a timely and efficient manner. At the same time, the agency is 
the guardian of the trust funds and must consistently and accurately 
evaluate initial and ongoing eligibility for those who have a 
disability. In particular, SSA has not conducted the required 
continuing disability reviews for disabled beneficiaries because of 
competing demands and limited resources. Consequently, some 
beneficiaries continue to receive Social Security disability benefits 
although they no longer are qualified. Not only do the trust funds lose 
money, but also individuals who have been overpaid may have 
considerable difficulty repaying the program.
II. SUPPLEMENTAL SECURITY INCOME
    The SSI program, that serves 5 million people of all ages, is the 
largest cash assistance program for low-income individuals. Since 
recipients must prove their income and assets fall below certain 
thresholds, SSA must devote considerable resources and staff time to 
verifying eligibility on an initial and ongoing basis. SSA's 
administration of the program has been criticized in two areas: 
providing SSI to some who are not eligible and failing to provide 
benefits to those who legitimately qualify but do not know about the 
program and/or how to properly file an application to get benefits.
    SSA must continue its efforts to recoup SSI overpayments and reduce 
fraud and abuse. The SSI program has been put on the General Accounting 
Office's (GAO) list of high-risk programs. The GAO faulted SSA for 
failing to adequately verify recipients' initial and continuing 
eligibility, to effectively recover SSI overpayments, to aggressively 
combat fraud and abuse, and to proactively develop SSI policies or an 
overall program management plan.
    While the SSI program must be carefully monitored to prevent 
ineligible individuals from defrauding the government, the agency 
should not erect barriers for those who could qualify for benefits. 
Receipt of SSI is critical to the economic well being of very 
vulnerable individuals and is a gateway to other public benefits. AARP 
has undertaken many projects to educate potentially eligible 
individuals about the availability of SSI and assist them in applying 
for benefits. These are highly intensive, one-to-one activities 
undertaken by dedicated volunteers. Some AARP projects were in 
collaboration with SSA and many others required interaction with agency 
personnel. While these programs help many individuals to learn about 
and potentially qualify for SSI, they are not a substitute for an 
effective SSA-sponsored outreach program.
    A sizeable number of individuals do not qualify for SSI on initial 
application. Our volunteers report that agency explanations of a denial 
are confusing and did not clearly describe the appeals process. 
Fortunately, our volunteers are familiar with these procedures and 
could assist in the appeal. Thus, many more people ultimately received 
benefits because they had assistance. AARP believes that SSA should do 
a better job of recognizing the differing backgrounds and cultures that 
it serves and make additional efforts to meet their needs.
III. SSA's ADMINISTRATIVE EXPENSES
    SSA's administrative expenses are paid with trust fund dollars but 
are included in congressionally determined, annual, discretionary 
spending caps. As a result, the agency does not always receive 
sufficient funding to address its service delivery needs. AARP supports 
removing the administrative expenses from the congressional spending 
caps as a way of ensuring that current and future service needs are 
fully funded. In any event, any savings from constraining SSA's 
expenses accrue to the trust funds and are not directly available to 
finance the operations of other agencies
IV. HELPING SECURE LONG-TERM SOLVENCY
    Although the Social Security Administration itself will not 
determine how to restore long-term solvency to the Social Security 
program, the agency will play a significant role in the process. Social 
Security Administration actuaries and research staff provide the 
technical expertise to evaluate solvency proposals and their impact on 
workers, beneficiaries and the economy. This is a less visible role 
than the one the agency plays in educating the public about the program 
and its financing.
    Polls show the American public is not aware of the many options 
that could help restore long-term solvency, and does not understand the 
trade-offs among them. Over the last few years, the Social Security 
Administration has undertaken an extensive public education campaign 
about the options. We hope the agency will continue to engage Americans 
of all ages in the national dialogue about the value and future of 
Social Security as well as the importance of having other savings for 
retirement. This information can help forge the consensus that can lead 
to a bipartisan solution to strengthen Social Security and enhance 
overall retirement security.
VI. CONCLUSION
    The Social Security Administration touches the lives of all 
Americans from the issuance of a Social Security number at birth 
through entrance and departure from the workforce. Many people will 
have limited contact with the agency, while others will have greater 
interaction. Regardless of the level of contact by each person, the 
agency should strive to provide the highest quality of service and 
ensure that no matter who you are, you will be treated courteously, 
receive accurate and timely information, and have your problem resolved 
expeditiously.

                                 

    Chairman SHAW. Thank you, Ms. Smith. Ms. Ford?

 STATEMENT OF MARTY FORD, CO-CHAIR, SOCIAL SECURITY TASK FORCE 
 AND WORK INCENTIVES IMPLEMENTATION TASK FORCE, CONSORTIUM FOR 
                   CITIZENS WITH DISABILITIES

    Ms. FORD. Chairman Shaw, Representative Matsui, and Members 
of the Subcommittee, thank you for this opportunity to testify 
on the challenges facing Commissioner Barnhart.
    From the perspective of people with disabilities and as we 
have heard a lot this morning, there are obviously numerous 
challenges, and we look forward to working with the 
Commissioner and with this Subcommittee in meeting them.
    In our experience with SSA, we have learned that there is 
great value in working together to address concerns before they 
reach crisis proportions. We hope to continue this approach 
under Commissioner Barnhart's leadership. We may not always 
agree, but we can certainly avoid unintended consequences with 
open dialogue early on.
    I will discuss several of the challenges identified in our 
more complete written testimony.
    Social Security Trust Fund solvency is an overarching 
issue. The disability community has raised numerous concerns 
about the potential impact of Social Security reform proposals 
on people with disabilities who receive benefits throughout the 
Old-Age Survivors and Disability Insurance programs. The SSA 
will need to play a major role in the evaluation of reform 
proposals for their impact on people with disabilities. We have 
urged that Congress request a beneficiary impact statement from 
SSA on every major proposal under serious consideration.
    There are several work-related issues that require 
attention. The chronic problem of overpayments to beneficiaries 
in both the Title II and Title XVI disability programs is a 
major barrier to beneficiaries' ability to use the work 
incentives. If not addressed, beneficiaries will continue to be 
fearful of attempting to work. To address this, SSA must 
establish a reliable, efficient, beneficiary-friendly method of 
collecting and recording, in a timely manner, information 
regarding a worker's earnings when they are reported. In 
addition, SSA must adjust benefits in a timely manner. We have 
also recommended that Congress require SSA to forgive 
overpayments if the beneficiary is not notified within a 
reasonable period of time.
    We most definitely appreciate the inclusion in H.R. 4070 of 
the requirement that SSA provide a receipt to the beneficiary 
whenever a change in earnings or work status is reported. This 
could go a long way in helping to resolve some of the problems 
with earnings reports.
    Consumers have also raised numerous issues about the final 
regulations regarding the Ticket to Work program. The SSA has 
stated in those final regulations that it will monitor and 
evaluate many of the potential pitfalls that had been 
identified by advocates. We urge Commissioner Barnhart to 
ensure that the Agency lives up to these promises and takes 
action where policies are creating barriers to increased 
independence and self-sufficiency. We pledge to work with the 
Commissioner in identifying those areas that continue to prove 
problematic and in recommending changes. In fact, some of those 
discussions have already begun.
    In the meantime, there are several important related issues 
that also need attention. They include the adequacy of 
incentives study and the earnings offset demonstration built 
into the Ticket to Work law. These are critical parts of the 
law and should be implemented as soon as possible.
    Also, several issues have surfaced regarding the treatment 
of disabled adult children under the Ticket legislation, and we 
urge the Commissioner to work with us in identifying and 
clarifying those issues and to resolve them through 
regulations.
    Now, I want to turn to some process issues. As we have 
heard over and over today, the backlog of cases waiting for ALJ 
and Appeals Council decisions is unacceptably long. We support 
efforts to reduce unnecessary delays and make the process more 
efficient, so long as they do not affect the fairness of the 
process. Numerous proposals have come forward that, in fact, do 
not reflect consumer concerns. We believe that the right to a 
full and fair hearing before an Administrative Law Judge should 
be preserved. The record must be kept open for new evidence. 
The Appeals Council should continue to review cases, and 
judicial review of cases should remain in the Federal court 
system. We urge Commissioner Barnhart to take these consumer 
concerns into account in efforts to reduce the backlog.
    We support the provisions in H.R. 4070 to strengthen SSA's 
ability to address abuses by representative payees, and we urge 
SSA to pay particular attention to government agencies who 
serve as representative payees and to ensure that government 
agencies are not chosen over family or friends who are 
available, willing, and capable to serve as payees.
    We also appreciate and support your inclusion in H.R. 4070 
of the program to establish a voluntary attorneys' fee payment 
system in SSI.
    We also have serious concerns about SSA's workload. That 
has been mentioned several times. We strongly support removing 
SSA's limitation on administrative expenses from any domestic 
discretionary spending caps.
    I thank you for this opportunity to testify and look 
forward to working with the Subcommittee and the Commissioner 
on these issues.
    [The prepared statement of Ms. Ford follows:]
Statement of Marty Ford, Co-Chair, Social Security Task Force and Work 
  Incentives Implementation Task Force, Consortium for Citizens with 
                              Disabilities
    Chairman Shaw, Representative Matsui, and Members of the 
Subcommittee, thank you for this opportunity to testify regarding the 
challenges facing the new Commissioner of the Social Security 
Administration.
    I am Director of Legal Advocacy for The Arc of the United States. I 
am testifying here today in my role as co-chair of the Social Security 
Task Force and the Work Incentives Implementation Task Force of the 
Consortium for Citizens with Disabilities. CCD is a working coalition 
of national consumer, advocacy, provider, and professional 
organizations working together with and on behalf of the 54 million 
children and adults with disabilities and their families living in the 
United States. The CCD Social Security and Work Incentives 
Implementation Task Forces focus on disability policy issues in the 
Title XVI Supplemental Security Income program and the Title II 
disability programs.
    CCD welcomes the opportunity to testify here today and appreciates 
your holding a hearing at the beginning of Jo Anne Barnhart's service 
as Commissioner. From the perspective of people with disabilities, 
there are numerous issues that we believe pose challenges for 
Commissioner Barnhart and her staff. We look forward to working with 
the Commissioner and the Subcommittee in meeting these challenges.
    In our experience with the Social Security Administration, we have 
learned that there is great value in working together to address 
problems and concerns before they reach crisis proportions. We want to 
continue this approach with SSA under Commissioner Barnhart's 
leadership. We expect that there will be times when we are in 
disagreement over an issue; however, working with input from consumer 
advocates, SSA would be in a better position to devise solutions which 
work to the greatest extent possible to meet the needs of people with 
disabilities.
Social Security Trust Fund Solvency
    The disability community has raised numerous concerns about the 
potential impact of Social Security reform proposals on people with 
disabilities. In January 2001, the General Accounting Office issued a 
report which reinforces our concerns about the negative impacts many of 
the reform proposals would have on people with disabilities, Social 
Security Reform: Potential Effects on SSA's Disability Programs and 
Beneficiaries, GAO-01-35 (Jan. 2001).
    In December 2001, the President's Commission to Strengthen Social 
Security published its final report. The Commission chose not to hear 
formal testimony from people with disabilities. However, the CCD Task 
Forces met with about half of the members of the Commission to discuss 
the interests of people with disabilities. We are disappointed that the 
report failed to deal with many of the important issues that we raised. 
Furthermore, the Commission acknowledged that applying their 
recommended retirement program changes to the Social Security 
Disability Insurance program could result in reduced benefits for 
people with disabilities. The Commission recommended that the President 
and Congress further study how to address the DI program issues. At the 
same time, the report failed to address the issues for dependents and 
survivors with disabilities whose benefits come from the retirement and 
survivors programs, rather than the DI program, and whose benefits too 
would suffer cuts under the Commission's proposals. In fact, in all of 
the proposals, the benefit reductions would impact people with 
disabilities regardless of which Trust Fund pays the benefits.
    The Commission's decision to leave people with disabilities out of 
the public hearings was based on the members' belief that the 
Commission's charge did not include the disability programs. At the 
meeting with the Commissioners, we emphasized that people with 
disabilities benefit from all parts of Title II, not just the 
Disability Insurance program. Categories and sources of benefits 
include:

         disabled workers, and their families, receive 
        benefits based on the workers' work histories, from the DI 
        program;
         retirees with disabilities receive benefits based on 
        their own work histories from the retirement program;
         disabled adult children who are dependents of 
        disabled workers and retirees receive benefits from the DI and 
        retirement programs, respectively;
         disabled adult children who are survivors of deceased 
        workers/retirees receive benefits from the survivors program; 
        and
         disabled widow(er)s receive benefits from the 
        survivors program.

    Beneficiaries with disabilities depend on Social Security for a 
significant proportion of their income. The more limited capacity of 
beneficiaries with disabilities to work and to save for the future and 
the reality of their higher rates of poverty must be taken into 
consideration in any efforts to change the Title II programs.
    The nature of the OASDI programs as insurance against poverty is 
essential to the protection of people with disabilities. The programs 
are unique in providing benefits to multiple beneficiaries and across 
multiple generations under coverage earned by a single wage earner's 
contributions. Proposals that partially or fully eliminate the current 
sharing of risk and replace it with the risks of private investment 
will be harmful to people with disabilities who must rely on the OASDI 
programs for life's essentials. Diversion of Social Security revenues 
to private investment accounts would shift the risks from the Federal 
Government back to the individual. This could have a devastating impact 
on people with disabilities and their families as they try to plan for 
the future. The basic safety nets of retirement, survivors, and 
disability insurance would be substantially limited and individuals, 
including those with limited decision-making capacity, would be at the 
mercy of fluctuations in the financial markets.
    For these and other reasons, the CCD Task Forces have urged that 
Congress request a beneficiary impact statement from SSA on every major 
proposal, or component of a proposal, under serious consideration. SSA 
will need to play a major role in the evaluation of reform proposals 
for their impact on people with disabilities.
Earnings Reports
    The chronic problem of overpayments to beneficiaries in both Title 
II and Title XVI is a major barrier to beneficiaries' ability to take 
advantage of the work incentives programs, including the new incentives 
of the Ticket to Work and Work Incentives Improvement Act (TWWIIA). If 
not addressed, beneficiaries will continue to be fearful of working.
    As the system now operates, chronic overpayments to beneficiaries 
result from significant delays in, and sometimes complete failure of, 
SSA personnel recording earnings reports for working beneficiaries. We 
believe that part of the problem may be that SSA workers do not get any 
credit for this work in their work evaluations. In addition, there is 
not a well-defined process for beneficiaries to use in reporting 
earnings. Beneficiaries often tell us that they are very conscientious 
in reporting their earnings, but the overpayments still occur over 
significant periods of time. When that happens, beneficiaries are not 
equipped to know whether the benefit amount they are receiving is 
correct or whether SSA has made an error or failed to record earnings. 
Over time, overpayments build and it is not unusual for beneficiaries 
to be told to pay back tens of thousands of dollars. Beneficiaries are 
so fearful of overpayments and the inadequate notices from SSA that go 
with them that the Ticket program and other work incentives could fail.
    We urge SSA to establish a reliable, efficient, beneficiary-
friendly method of collecting and recording, in a timely manner, 
information regarding a worker's earnings. In addition, SSA must adjust 
benefits in a timely manner. CCD has further recommended that Congress 
require SSA to forgive overpayments if the beneficiary is not notified 
within a reasonable period of time. We appreciate the inclusion in the 
Social Security Program Protection Act of 2002, H.R. 4070, of a 
requirement that SSA provide a receipt to the beneficiary whenever a 
change in earnings or work status is reported. This could go a long way 
in helping to resolve some of the problems with earnings reports.
Work Incentives
            1. Ticket to Work Program
    As you know, the CCD Task Forces supported the Ticket to Work and 
Work Incentives Improvement Act on behalf of people with disabilities 
who wanted to work but were prevented from doing so by the barriers 
that existed in the Title II and SSI programs and Medicare and 
Medicaid. We believe that the purpose of the bill was to ensure that 
people with severe disabilities would not permanently lose needed 
supports if they attempted to work and to expand their opportunities to 
make those attempts.
    However, after the proposed regulations were published last year, 
we testified that certain significant changes must be made to the 
proposed regulations if the purposes of the program are to be 
fulfilled. We urged that speedy implementation not come at the expense 
of ensuring that the program works for the intended purpose. While we 
were pleased to see that President Bush included the implementation of 
the new work incentives in his New Freedom Initiative early last year, 
we were still concerned that speedy implementation of problematic 
regulations could create new barriers rather than eliminate barriers to 
work. Our concerns included, among others, the limitation on one ticket 
per period of disability; the measures for timely progress on a work 
plan; and the structure of the outcome and milestone payment systems.
    SSA must seriously consider the issues raised by advocates if the 
program is expected to accomplish its purpose. Although SSA responded 
somewhat to a few of the concerns expressed over the proposed rules, 
the agency left in place many policies that advocates felt could be 
problematic for successful implementation of the Ticket to Work 
Program. SSA has chosen to maintain eligibility criteria for the ticket 
that will deny entrance to the program to many beneficiaries who are 
legitimately entitled to its opportunities. In addition, it appears 
that an attempt to work must ultimately be successful or the individual 
will not be able to receive another ticket to try again at some point 
in the future. While we are pleased that SSA increased the number and 
the amount of milestone payments, the current payment systems--in 
particular, the milestone payment system--are still considered 
inadequate and threaten the success of the Ticket to Work program. 
Adequate payment systems will help ensure the program works as this 
Committee intended.
    Leaving in place a dispute resolution process that favors 
employment networks over beneficiaries, SSA insists that beneficiaries 
will still have access to protection and advocacy services--even as the 
agency has severely restricted the services that the Protection and 
Advocacy Systems (P&As) are allowed to offer. SSA appears not to 
understand the structure, authority, and role that Protection and 
Advocacy systems should play in providing independent legal advocacy 
services within the new Protection and Advocacy for Beneficiaries of 
Social Security (PABSS). SSA has restricted the scope of both the types 
of cases and the remedies available to resolve issues and has 
prohibited P&As from working on appeals involving overpayments, 
continuing disability reviews, plans for achieving self-support, 
subsidies, and impairment related work expenses. While the P&As are 
allowed to offer assistance or advice in filling out necessary 
paperwork, for example, to request a reconsideration or a waiver of an 
overpayment, they are not allowed to provide representation in those 
matters. This raises a number of issues, one of which is an ethical 
dilemma for the attorneys. They are permitted to provide some advice 
and counseling regarding certain problems, but at some point must 
refuse to provide representation to the client as the issue progresses. 
We want to thank the Subcommittee for addressing some of these concerns 
through language included in H.R. 4070.
    We want to thank Commissioner Barnhart for resolving the recent 
dispute regarding funding of the P&A systems by restoring the funding 
allocation to the full amount. This is critical in ensuring that 
individuals will be able to navigate their way through the system.
    In the final rule, SSA asserts that it will ``monitor'' and 
``evaluate'' many of the potential pitfalls identified by advocates. We 
urge Commissioner Barnhart to ensure that the agency lives up to these 
promises and takes action where it is determined that the policies are 
denying beneficiaries the possibility of increased independence and 
self-sufficiency. We pledge to work with the Commissioner in 
identifying those areas that continue to prove problematic and in 
recommending changes to make the system work for individuals who want 
to become more independent.
            2. Studies
    We believe that SSA must design an Adequacy of Incentives study (as 
required by TWWIIA) that includes the best information in the field 
about employment for people with significant disabilities. The AOI 
report is critical for: people with a need for ongoing supports and 
services; people with a need for high-cost accommodation; people who 
earn a sub-minimum wage; and people who work and receive partial cash 
benefits. Advocates urge SSA to ensure that this is a strong and 
effective study that will lead to alternative payments for people with 
significant disabilities. SSA must move quickly on this so that any 
deficiencies in incentives may be addressed by the time the Ticket 
program is fully implemented.
    In addition, we believe that the earnings offset ($1 benefit offset 
for $2 earned) demonstration is a critical part of the law, 
particularly for those whose earnings will remain low, and that it 
should be implemented as soon as possible. Again, the demonstration 
must be designed to reflect realities for people with severe 
disabilities in their attempts to work and to maintain an income over 
the course of their lives. We have had numerous discussions with SSA 
staff regarding these issues. In addition, the Work Incentives Advisory 
Panel convened an expert panel to address some of the issues involved. 
Based on the discussions at that meeting, many advocates are very 
concerned about the possibility of a mandatory assignment of 
beneficiaries to a demonstration program that may deprive them of 
benefits to which they are entitled (for instance, a mandatory 
demonstration where the earnings offset begins below the SGA level). 
Furthermore, there are concerns about the possibility of beneficiaries 
in the demonstration being rejected by employment networks because of 
the longer time that it will take for ENs to be reimbursed. We urge SSA 
to consider these concerns in refining its plans for the demonstration 
and to move quickly towards its implementation.
            3. Disabled Adult Child Issues
    There are several issues which have surfaced regarding the 
treatment of disabled adult children under the Ticket to Work and Work 
Incentives Improvement Act. It is important that these issues get 
resolved if the work incentives are to operate as intended by TWWIIA. 
First, we are concerned that people with disabilities who are disabled 
adult children (DAC) in the Title II program should be able to move on 
and off the program to the same extent that other people with 
disabilities are able to under TWWIIA. Since the rules regarding DAC 
eligibility have some unique requirements, it is important that the 
regulations clearly outline the impact of work on disabled adult 
children who use a ticket.
    There is also a concern about how work supports are treated for a 
disabled adult child, depending on whether the beneficiary receives 
such supports from his/her employer or whether the supports are 
provided by a third party, such as a supported employment provider. SSA 
has made some efforts to address this issue through the Program 
Operations Manual System (POMS), however, it appears that the issue has 
not been fully resolved. If disabled adult children are to be 
encouraged to use the new work incentive provisions, there must be a 
cohesive, understandable policy, embodied in regulations, upon which 
disabled adult children and their advisors may rely in making 
employment decisions. We urge the Commissioner to work with us in 
identifying and clarifying these issues and to resolve them through 
regulations.
Disability Backlog/Hearings and Appeals
    The backlog of cases waiting for ALJ and Appeals Council decisions 
is unacceptably long. People with severe disabilities who by definition 
have limited earnings from work are often forced to wait years for a 
final decision from the time of application through the final Appeals 
Council decision. This is damaging not only to the individual with a 
disability and his/her family, but also to the public perception of and 
integrity of the program.
    Bringing the waiting times down in these two areas must be a high 
priority. We urge commitment of resources and personnel to resolve the 
exorbitant waiting times and make the process work better for people 
with disabilities. First, SSA must be provided with the resources to 
fully meet its administrative responsibilities. As noted later in this 
testimony, this requires that SSA's Limitation on Administrative 
Expenses budget authority be removed from the domestic discretionary 
spending category.
    We strongly support efforts to reduce unnecessary delays for 
claimants and to make the process more efficient, so long as they do 
not affect the fairness of the process to determine a claimant's 
entitlement to benefits.
    1. The right to a full and fair hearing before an Administrative 
Law Judge. The key aspect of the adjudication process for a claimant is 
the right to a full and fair hearing by an Administrative Law Judge 
(ALJ), who is an independent decision-maker, providing impartial fact-
finding and adjudication. The ALJ asks questions of and takes testimony 
from the claimant, may develop evidence when necessary, and applies the 
law and agency policy to the facts of the case. Claimants have the 
right to present new evidence in person to the ALJ and to receive a 
decision from the ALJ that is based on all available evidence. This 
should be preserved.
    2. Keeping the record open for new evidence. Many recent proposals 
to change the disability determination process recommend that the 
record be closed to new evidence either after the DDS decision or, at 
least, after the ALJ level. In the past, both Congress and SSA have 
recognized that such proposals are neither beneficial to claimants nor 
administratively efficient for the agency.
    We strongly support the submission of evidence as early as 
possible. The benefit is obvious: the earlier a claim is adequately 
developed, the sooner it can be approved and the sooner payment can 
begin. However, there are a number of reasons why closing the record is 
not beneficial to claimants including: (1) possible worsening of the 
medical condition which forms the basis of the claim; (2) the fact that 
the ability to submit evidence is not always in the claimant's or 
representative's control, e.g., providers delay sending evidence; and 
(3) the need to keep the process informal. Early submission of evidence 
also is necessary under current law which limits the ability to submit 
evidence and have it considered at the Appeals Council (must be ``new 
and material'' and relate to pre-ALJ decision period) and federal court 
(record closed; remand possible if evidence ``new and material'' and 
``good cause'' for failure to submit earlier).
    Filing a new application is not a viable option because it does not 
improve the process and may in fact severely jeopardize, if not 
permanently foreclose, eligibility for benefits. A claimant should not 
be required to file a new application merely to have new evidence 
considered where it is relevant to the prior claim. If such a rule were 
established, SSA would need to handle more applications, unnecessarily 
clogging the front end of the process.
    3. Representing the agency at the ALJ level. We do not support 
efforts to have SSA represented at the ALJ hearing because past 
experience shows that it does not result in better decision-making and 
reducing delays, but instead injects a level of adversity, formality 
and technicality in a system meant to be informal and nonadversarial. 
In the 1980's, SSA tested, and abandoned, a pilot project to have the 
agency represented. It was terminated following Congressional criticism 
and a judicial finding that it was unconstitutional and violated the 
Social Security Act. In the end, the pilot did not enhance the 
integrity of the administrative process.
    4. Retain review by the Appeals Council. We oppose the elimination 
of a claimant's right to request review by the Appeals Council. The 
Appeals Council currently provides relief to nearly one-fourth of the 
claimants who request review of ALJ denials, either through outright 
reversal or remand back to the ALJ. Review by the Appeals Council, when 
it is able to operate properly and in a timely manner, provides 
claimants, and SSA, with effective review of ALJ decisions. Given the 
low percentage of appeals to federal court, it appears that claimants 
largely accept decisions by the Appeals Council as the final 
adjudication of their claims. As a result, the Appeals Council acts as 
the initial screen for ALJ denials, a position for which the district 
courts are not equipped, given their other responsibilities.
    5. Access to judicial review in the federal court system. We 
believe that both individual claimants and the system as a whole 
benefit from the federal courts deciding Social Security cases. Over 
the years, the federal courts have played a critical role in protecting 
the rights of claimants. The system is well-served by regular, and not 
specialized, federal judges who hear a wide variety of federal cases 
and have a broad background against which to measure the reasonableness 
of SSA's practices.
    We urge Commissioner Barnhart to take these concerns into account 
in efforts to reduce the backlog in disability cases.
SSI Childhood Disability / Examination of Disability Determination 
        Process
    Over the last few years, SSA has engaged in a deliberate process to 
study how it assesses children with disabilities for purposes of the 
SSI program. These efforts have resulted in important clarifications 
and streamlining of the process, embodied in final regulations 
published in September 2000 which became effective in January 2001. SSA 
continues to evaluate its procedures regarding such things as the kind 
of evidence necessary to assess disability, including appropriate 
tests, and the kind of consultative examinations which will yield the 
most useful evidence. Knowledge gained through this evaluation, 
conducted in partnership with disability assessment experts through the 
Association of University Centers on Disabilities, can help inform 
SSA's future policy decisions regarding the childhood SSI program. We 
urge that this work continue. In addition, we urge that SSA consider 
adopting a similar approach to evaluate the way in which adults are 
assessed for purposes of eligibility in the disability programs.
Improvements for Surviving Spouses with Disabilities
    We support the provisions in the Social Security Benefit 
Enhancements for Women Act of 2002 (H.R. 4069) to repeal the seven year 
restriction on eligibility for widow's and widower's insurance benefits 
based on disability. We believe that this provision and others intended 
to better protect widows and widowers are important improvements
Supplemental Security Income Improvements
1. SSI Modernization Act of 2001
    The CCD Task Forces believe it is time to make important 
improvements in the SSI program and we support passage of the SSI 
Modernization Act of 2001, H.R. 739. This bill is an important and much 
needed step in increasing the ability of people with disabilities and 
the elderly to improve the quality of their lives. Many people with 
disabilities must rely on the Supplemental Security Income program for 
basic income support and the access it provides to critical medical 
services through Medicaid. Despite severe, lifelong disability 
requiring on-going support, many beneficiaries attempt to improve the 
quality of their lives through earnings. Others receive some income 
from their past employment efforts. Increasing the value of the small 
amounts of earned and unearned income to be disregarded by SSI will 
assist beneficiaries in improving their overall situation and will also 
reduce the administrative burden of dealing with small adjustments in 
payments. In addition, removing barriers to education will provide 
beneficiaries opportunities for further growth and potential for future 
work.
    The SSI Modernization Act addresses several important areas 
designed to encourage work, savings, and education. These include: an 
increase in the general income exclusion; increase in the earned income 
exclusion; increase in the resource limits; and an increase in the 
irregular or infrequent income disregard. Each of these exclusions, 
limits, or disregards would be indexed for inflation so that the buying 
power of beneficiaries' income is protected. The bill would also ensure 
that children who are still in school, including those receiving 
special education services, would be allowed to finish their education 
prior to their assessment as adults for the SSI program. Finally, the 
bill would exclude the entire amount of educational grants from income 
and, for 9 months, from resources.
    We believe that these modest, but important, improvements to the 
SSI program will assist beneficiaries while encouraging work, savings, 
and educational efforts. We believe that these improvements could also 
help people better meet their ongoing obligations, providing vital 
resources to fall back on for housing repairs and the like. We urge 
that SSA and Members of the Subcommittee support these improvements.
2. Medicaid Retention
    There is another issue also needing attention regarding retention 
of Medicaid when SSI benefits are lost upon entitlement to early 
retirement benefits. The Social Security Act requires SSI recipients to 
apply for any and all other benefits to which they may be entitled. 
Included in this group are a small number of recipients who are not 
eligible for Social Security Disability Insurance benefits because they 
were not currently insured at the onset of their disability but who are 
fully insured for retirement benefits, either on their own account or 
on the account of a spouse or ex-spouse. These SSI beneficiaries are 
required to apply for retirement benefits at age 60 or 62. Some of them 
have earnings records that result in a high enough monthly retirement 
benefit that renders them financially ineligible for SSI. The loss of 
eligibility for SSI for these recipients also results in a loss of 
eligibility for Medicaid, which is only partially averted where some 
states provide coverage for the elderly and people with disabilities 
with an income up to 100% of the federal poverty level. Because the 
beneficiaries are under 65 years of age, they are not entitled to 
Medicare benefits and often do not have the financial ability to pay 
for private health insurance. This result is particularly devastating 
to these former SSI recipients who are still disabled and are 
experiencing further deterioration in their health as a result of their 
increasing age.
    The Act allows widows and widowers who lose SSI benefits upon 
entitlement to early retirement benefits to retain Medicaid coverage. 
42 U.S.C. Sec. 1383c(d). This protection should be extended to all SSI 
recipients who lose Medicaid upon entitlement to early retirement 
benefits. The number of individuals who would benefit from this 
extension is relatively small but the protection it would provide them 
is enormous. We urge the Commissioner and Members of the Subcommittee 
to support closing this gap through which they fall.
3. Expanding SSI Eligibility for Noncitizens
    The 1996 welfare law severely restricted the SSI eligibility of 
noncitizens lawfully residing in the United States. While legislative 
changes in 1997 and 1998 helped some individuals who entered before 
August 22, 1996, eligibility remains extremely limited for individuals 
who entered on or after that date. TANF reauthorization provides an 
opportunity for the Subcommittee on Human Resources to consider 
restoring equal access to SSI benefits, such as eligibility for 
lawfully residing immigrants with disabilities, with appropriate 
safeguards. We urge Commissioner Barnhart and Members of the 
Subcommittee to support these efforts.
Attorneys Fees in SSI
    In previous testimony (May 2001), the CCD Social Security Task 
Force urged the Subcommittee to support a statutory change, similar to 
the provision in Title II, that would allow SSI claimants to 
voluntarily enter into agreements with attorneys for SSA to withhold 
and provide direct payment of attorneys fees from their past due SSI 
benefits. We support such a provision because it will help ensure that 
claimants have adequate representation to appeal their cases. The 
reasons behind the withholding and direct payment of attorneys' fees in 
Title II cases apply with equal force to SSI cases.
    We appreciate and support your inclusion, in H.R. 4070, of 
provisions to establish a similar mechanism in SSI. We also thank the 
Commissioner for increasing the maximum fee cap in Title II cases, an 
adjustment which had not occurred since 1990.
Representative Payee Improvements
    Approximately 6 million Social Security and Supplemental Security 
Income beneficiaries have representative payees, often family members 
or friends, who receive the benefits on behalf of the beneficiaries and 
have a responsibility to manage the benefits on behalf of these 
beneficiaries.
    As favorably reported by the Subcommittee last week, H.R. 4070 
includes provisions strengthening SSA's ability to address abuses by 
representative payees. The provisions would: require non-governmental 
fee-for-services organizational representative payees to be bonded and 
licensed under state or local law; provide that when an organization 
has been found to have misused an individual's benefits, the 
organization would not qualify for the fee; allow SSA to re-issue 
benefits to beneficiaries whose funds had been misused; allow SSA to 
treat misused benefits as ``overpayments'' to the representative payee, 
thereby triggering SSA's authority to recover the money through tax 
refund offsets, referral to collection agencies, notifying credit 
bureaus, and offset of any future federal benefits/payments; and 
require monitoring of representative payees, including monitoring of 
organizations over a certain size and government agencies serving as 
representative payees.
    We support these provisions, including establishing the definition 
of ``misuse'' in the statute, rather than leaving it solely to 
administration policy. We believe that such provisions should be 
enacted. In addition, we believe that SSA should address the 
accountability of state or federal agencies who serve as representative 
payees and ensure that governmental agencies or institutions are not 
selected as representative payees where family or friends are 
available, willing, and capable to serve as payee.
Limitation on Administrative Expenses
    SSA workloads are projected to begin increasing rapidly within the 
next decade as the baby boom generation begins to reach its peak 
disability years just prior to reaching early retirement age beginning 
in 2008. In addition, the SSA workforce is also aging and will begin to 
lose significant numbers of staff, including senior and leadership 
staff. About 3,000 employees are expected to retire per year from 2007 
through 2009. SSA is also taking on new or more complex 
responsibilities such as providing increased rehabilitation and 
employment services for people with disabilities, completing and 
maintaining an appropriate schedule of continuing disability reviews 
and other eligibility reviews, and new approaches to prevent fraud and 
abuse. In FY 1985, SSA's staffing levels were 80,844 FTEs and 83,406 
workyears. The President's budget requests for FY 2003 include 63,464 
FTEs and 64,730 workyears, for a reduction of 17,380 FTEs and 18,676 
workyears over the last 18 years.
    The CCD Social Security Task Force has voiced concern for some time 
over the continued long-term downsizing of the SSA workforce. We 
believe that failure to conduct appropriate and timely CDRs and other 
eligibility reviews could lead to decreased trust in the integrity of 
the Social Security and SSI programs. In addition, the new efforts to 
assist people with disabilities to go to work, through the Ticket to 
Work and Work Incentives Improvement Act of 1999, require new and 
expanded approaches for SSA interaction with beneficiaries. Adequate 
staffing levels are critical for these and other efforts to be 
successful, especially given the coming disability and retirement years 
of baby boomers.
    For these reasons, we strongly support removing the Social Security 
Administration's Limitation on Administrative Expenses (LAE) budget 
authority from any domestic discretionary spending caps. Even if the 
LAE were removed from the domestic discretionary caps, SSA's LAE would 
still be subject to the annual appropriations process and Congressional 
oversight. Currently, SSA's administrative expenses total less than 2% 
of benefit payments paid annually. Congress would still maintain its 
role in ensuring continued administrative efficiency.
    Most importantly, removal of the LAE from the domestic 
discretionary spending caps would remove it from competition with other 
health, education, and human needs programs for limited funds. It would 
allow for growth that is necessary to meet the needs of the coming 
baby-boomer retirement years (including the retirement of SSA and state 
DDS personnel); continue the efforts to improve the processing time for 
initial applications and appeals; continue the efforts to ensure 
integrity in the program through CDRs and other redeterminations; and 
allow for replacement of staff in a timely manner to allow for adequate 
training and mentoring.
                               __________
    Thank you for this opportunity to testify on the challenges facing 
the Commissioner of Social Security. We look forward to working with 
the Subcommittee and Commissioner Barnhart in addressing these 
challenges affecting people with disabilities.

                                 

    Chairman SHAW. Thank you, Ms. Ford. Ms. Kennelly?

  STATEMENT OF THE HON. BARBARA KENNELLY, PRESIDENT AND CHIEF 
   EXECUTIVE OFFICER, NATIONAL COMMITTEE TO PRESERVE SOCIAL 
      SECURITY AND MEDICARE, AND FORMER MEMBER OF CONGRESS

    Ms. KENNELLY. Good morning, Chairman Shaw and Congressman 
Matsui.
    I am Barbara Kennelly, and I am the new President of the 
National Committee to Preserve Social Security and Medicare. We 
have millions of members and supporters across this country. We 
are a grassroots advocacy group, and we are an educational 
organization.
    Mr. Chairman, Congressman Brady, also, and of course 
Ranking Member Matsui, thank you for your leadership on Social 
Security issues. I really appreciate the opportunity to testify 
this morning.
    I have just begun a new job, as the other new President I 
think has, too, and I had planned to come and ask you to see me 
individually because I really value your expertise. However, 
getting this invitation to appear before a Committee that I 
served on for 16 years, I just could not turn it down.
    I am pleased to be here, also, with Social Security 
Commissioner Jo Anne Barnhart. I have known her in her other 
life, as she has known me, and I wish her success at the helm 
of the Social Security Administration. I anticipate working 
with the Commissioner, as I anticipate working with this very 
important Subcommittee.
    As a former Ranking Member of this Subcommittee, and more 
recently counselor to Commissioner Apfel, and Associate 
Commissioner of Retirement Policy, some of the staff here that 
I have worked with, I have a strong sense of challenge facing 
and understanding what is facing Commissioner Barnhart.
    Chairman Shaw, I know that under your leadership the 
Subcommittee has had a very full agenda, and we share your 
concern about the misuse of personal data held by Social 
Security, and we applaud your efforts to highlight the 
continuing response of SSA to those who were directly affected 
by the events of September 11.
    The SSA remains one of the most effective agencies in the 
Federal Government. Each year, SSA efficiently tracks the 
lifetime wages of almost every American worker and then sees 
that 46 million of these Americans get their benefits. In the 
short-term, Commissioner Barnhart faces the challenge of 
ensuring that the Agency continues the success. In the longer 
term, the Commissioner faces a demographic, technological, and 
management policies that face the Agency. May I speak to a few 
of these pending SSA retirements?
    We know that by 2009, half of the workforce of Social 
Security will be eligible for retirement. Even more 
importantly, the senior management at the end of this decade, 
practically half of the senior management, will also be 
eligible for retirement, and of course this means a great 
change in the leadership of the Agency.
    I also want to speak about streamlining access to benefits. 
The burden on SSA is lightened when the public accesses 
benefits and information electronically, through e-mail, the 
Internet, and direct deposit for beneficiaries. These new 
technologies can also add convenience. However, we have to be 
very careful that those people who are seeking help from Social 
Security know that they also can speak to somebody personally 
if, in fact, it is necessary. For a variety of reasons, direct 
human contact is important, particularly when so many of these 
people are elderly, bereaved or disabled.
    Having said that, we have to be very careful about how we 
move into the electronic age, and knowing that the Committee 
should not have goals so high that they can't be reached, let 
me please join with the Commissioner in her commitment to 
processing disability claims. I will never forget the first day 
I went to one of the offices where the claims are processed, 
never forget seeing the overloaded file cabinets, never forget 
seeing the files from floor to ceiling, bins full of files.
    I can't tell you the number of calls I got from the 
administration, from old friends, who were so delighted that 
the new Commissioner had decided to make the disability claim 
operation one of her priorities. I really feel, unless it is a 
priority, nothing can really happen to improve it. More 
importantly, I don't think, if we didn't have the technology 
changes we have, that we could ever address the situation. So, 
I salute the Commissioner, and I know I could hear from all you 
had to say this morning and what the Congressmen said, that you 
are willing to back her completely because we all know this is 
a very serious problem.
    Privacy. It is because Social Security has been such a 
successful universal program that the number has become 
overused for identity purposes. We applaud the Agency for its 
tremendous support of the investigative efforts, following the 
recent attacks on our Nation. Balancing national security 
interests, however, with personal privacy will be a big 
challenge for SSA, and you will have to determine what the role 
is in the new implementation of the USA Patriot Act, which is a 
whole other subject.
    Inequities in the current system. We applaud the efforts of 
this Subcommittee to address existing inequities in the present 
Social Security benefit structure. Thank you, Mr. Chairman, for 
your leadership in repealing the earning limit for seniors over 
65. That was absolutely wonderful. Talked about for years, but 
you and your Committee did it, and I thank you, and the people 
across this country thank you.
    Another major challenge will be to address the real 
disadvantages women face under our current system, and this is 
one of the reasons that I took the present job that I am 
holding. Women remain our society's primary family care-givers 
and spend more time of their working years outside the 
workforce. When they are working outside the home, they still 
earn less than men, on average, even for a similar job. For 
similar reasons, women generally do not have the same access to 
pensions. One sensible reform would be to leave out the benefit 
calculations any years where an individual had zero earnings 
due to family care-giving responsibility. A higher benefit for 
surviving spouses should also be enacted, and we are all 
pleased to see some promise in this improvement in the area 
because of your introduction with Mr. Matsui of H.R. 4069.
    Social Security solvency. The greatest challenge facing 
Social Security is the need to ensure the long-term solvency 
for future generations. As you have this hearing today talking 
about the day-in/day-out work of the Social Security Agency and 
how you, as a Committee, can back that work of the Agency, we 
have to know that the National Committee understands that 
really the major emphasis has to be, for all of us, the whole 
solvency question.
    We are going to have debates over this, but these are for 
another day, and we will have honest disagreements. The fact of 
the matter is, I think we have been given another opportunity. 
When I was in the Congress, we had the Commission that came in 
with a report and had three answers, and now we have a new 
Commission that comes in with three answers. So, we have 
another opportunity to debate the whole question of solvency. 
There are, as I said, disagreements. However, what we can all 
agree on is that we do it sooner rather than later. We 
remember, we were on the Committee when we had the 1983 
reforms, and we remember some of the drastic things that had to 
happen, the first time to attack Social Security, the first 
time the young people who are collecting Social Security and 
then went to college, after 18, it was shut off, and that was 
no longer there. Of course, we know we had the raising of the 
age from 65 to 67.
    I also trust our new Commissioner will work to ensure that 
Americans of all ages become better educated about the value of 
Social Security in their lives. Too many people believe that 
myth that it won't be there when I get older. The fact of the 
matter is that the actuaries have come in and said we can be 
fiscally sound to 2041 now. So, I hope we can all come together 
to understand how we can make sure that people know any 
developed country in this world has to have a core retirement 
program.
    So thank you, Chairman Shaw and Members of the 
Subcommittee, for having this hearing. I feel like I have come 
home. I look forward to being again active in Social Security.
    Thank you very much.
    [The prepared statement of Ms. Kennelly follows:]
 Statement of the Hon. Barbara Kennelly, President and Chief Executive 
 Officer, National Committee to Preserve Social Security and Medicare, 
                     and former Member of Congress
    Good morning Chairman Shaw, ranking Member Matsui and distinguished 
members of the Subcommittee. I am Barbara Kennelly, President and Chief 
Executive Officer of the National Committee to Preserve Social Security 
and Medicare. With millions of members and supporters across America, 
the National Committee is a grassroots advocacy and education 
organization devoted to the retirement security of all citizens--from 
the ``twenty-something'' generation and baby boomers to the nation's 34 
million seniors.
    Mr. Chairman, Ranking Member Matsui, thank you for your leadership 
on Social Security issues. I appreciate the opportunity to testify 
today. This is a fitting debut in my new position, and an ideal way to 
begin my tenure at the helm of the National Committee. I look forward 
to working closely with both of you and all of the Members of the 
Committee. Hopefully you will allow me to visit with each of you. Your 
expertise is invaluable to me.
    I am also pleased to be here with Social Security Commissioner, Jo 
Anne Barnhart. I wish her success in leading the Social Security 
Administration (SSA) upon which millions of people rely for their 
earned benefits, and that most others look to as a financial safety net 
that will be there when they need it. We anticipate working with the 
Commissioner and with this important Subcommittee to ensure that Social 
Security continues to meet the needs of working Americans and their 
families.
    As a former Ranking Member of this Subcommittee, and more recently 
Counselor to Commissioner Apfel and Associate Commissioner on 
Retirement Policy at SSA, I have a strong sense of the challenges 
facing Commissioner Barnhart. Those challenges include the following:

         Pending retirements at SSA;
         Streamlining and modernizing access to benefits and 
        information;
         Eliminating unnecessary delays in the disability 
        claims process; and
         Ensuring the long-range solvency of the Old Age, 
        Survivors and Disability Insurance programs.

    Chairman Shaw, I know that under your leadership, the Subcommittee 
has had a full agenda. We share your recent concern about the misuse of 
personal data held by Social Security, the misuse of benefits by 
representative payees, and we applaud your efforts to highlight the 
continued response of SSA to those directly affected by the tragedies 
of September 11.
    SSA has many strengths. It is one of the most effective agencies in 
the Federal Government. Each year, SSA efficiently tracks the lifetime 
wages of nearly every American worker. Each month, the agency sends out 
benefits for over 46 million Americans with clockwork efficiency. All 
this, including the claims processing, is done with administrative 
costs of less than 1 percent. SSA provides service to the American 
people with a level of success that rivals the performance of the best 
companies in the private sector.
    Americans not receiving a check still benefit from the program's 
disability and survivor insurance provisions. Each year, 135 million 
working Americans rely on Social Security for disability insurance. In 
fact more than 30 percent of Americans receiving a monthly check from 
SSA are non-retirees. Each month, about 4 million children and 5 
million disabled workers receive benefits.
    In the short term, Commissioner Barnhart faces the challenge of 
ensuring that the agency continues to efficiently provide benefits that 
keep millions of people out of poverty. In the longer term, the 
Commissioner faces the demographic, technological and management 
challenges I mentioned earlier. I would like to discuss those 
challenges in greater detail.
Pending SSA Retirements
    One major reason for the success of SSA is its skilled and 
dedicated workforce. By 2009, over half the agency's 63,000 employees 
will be eligible for retirement. SSA may also lose most of its senior 
management to retirement by the end of this decade, just as the 
agency's workload is expected to dramatically increase. Initiatives are 
underway to prepare for this, but the agency needs additional resources 
to remain ahead of the curve and ensure seamless public service.
Streamlining Access to Benefits
    The burden on SSA is lightened when the public accesses benefits 
and information electronically, through e-mail, the Internet, and 
direct deposit for beneficiaries. These new technologies and new ways 
of reaching beneficiaries provide cost savings to the agency and 
convenience for those who are served. We need to improve on the fact 
that only 3.5 percent of retirement claims are handled over the 
Internet. However, I urge the Administration not to set an overly 
ambitious goal. Many seniors are adept at using the web, but for many, 
there is a reluctance to embrace the new technology. The goal of 
raising the level of Internet or automated telephone service delivery 
to 67 percent by 2005 should be reviewed.
    For a variety of reasons, conventional means of accessing benefits, 
assistance and information should always be an option for those who 
choose it. Beneficiaries should be able to speak or write to an agency 
representative in person about a problem if they need to do so. This 
kind of access puts a human face on the agency and enhances public 
confidence in the program. Hence, it is imperative that resources 
continue to be directed toward this type of personal service, including 
maintenance of existing local and regional offices.
Eliminating Unnecessary Delays
    The excessive lag time in processing disability claims, 
particularly appeals from a denial of a disability claim, is clearly an 
issue that demands attention. The process of evaluating a claim is 
inherently complex and the current system is antiquated. We can all 
agree that lag time in handling these claims is an issue that needs our 
attention now before it becomes more acute. This is one area where I 
believe that new technologies will be of great help. Mr. Chairman, we 
salute you and your staff who have devoted considerable time and effort 
to address this problem. We are pleased to see that these efforts to 
improve in this area are a high priority for the Administration as 
well.
Privacy
    Thank you also for your efforts to ensure the integrity of 
beneficiary information and to prevent the misuse of the Social 
Security number. It is because Social Security has been such a 
successful universal program that the number has become overused for 
identity purposes. Use of Social Security cards must be limited to the 
accounting and records purposes of the Treasury Department and 
activities that are related to the mission of SSA. We salute the agency 
for its tremendous support of the investigative efforts following the 
recent attacks on our nation. Balancing privacy with broader public 
needs remains a big challenge as SSA considers its important role in 
the implementation of the USA PATRIOT Act.
Inequities in the Current System
    We applaud the efforts of this Subcommittee to address existing 
inequities in the present Social Security benefits structure. Thank you 
Mr. Chairman for your leadership in repealing the earnings limit for 
seniors over age 65. We also appreciate your efforts in advancing the 
debate on the Government Pension Offset. The reform of the Government 
Pension Offset would address a long-standing unfairness.
    In addition to the Government Pension Offset, there is a second 
issue that is particularly sensitive to women: the Windfall Elimination 
Provision. As you know, Congress created a modified formula for 
determining monthly Social Security benefits to eliminate any windfall 
to individuals who worked in jobs that were not covered by Social 
Security, but receive benefits that were computed as if they were long-
term, low-wage workers. We believe that the Windfall Elimination 
Provision should be modified.
    It is my hope that we can move to address the real disadvantages 
women face under our current Social Security system. Women remain our 
society's primary family caregivers, and they still earn less than men 
on average, even for similar work. Also, for the same reasons, women 
generally do not have the same access to pensions or other types of 
retirement income. One sensible reform would be to leave out of the 
benefit calculation any years during which an individual had zero 
earnings due to family caregiving responsibilities. An increase in the 
benefit for surviving spouses should also be considered as well as a 
restoration of the minimum benefit. We are pleased to see promise for 
improvement in some specific women's benefit issues through the 
introduction of your legislation, H.R. 4069, the Women's Benefits 
Improvement Act.
Social Security Solvency
    I hope that we all can agree that the greatest challenge facing the 
new Commissioner is her role in the effort to ensure the long-term 
solvency of the retirement and disability trust funds for future 
generations.
    Assuming no changes, Social Security will be fiscally strong for 
the next 39 years. Beyond 2041, however, tough choices will need to be 
made to close the projected 29 percent solvency gap. Every generation 
must be guaranteed full benefits. The National Committee does not 
support efforts to partially privatize Social Security. We oppose the 
transformation of Social Security from an insurance program that offers 
everyone a defined benefit to an investment vehicle based on a defined 
contribution that favors those with higher incomes and uninterrupted 
work histories. We share the Administration's desire to create new 
opportunities for younger workers to save and invest. But we believe 
that personal savings and investment must be in addition to the current 
baseline benefit provided by Social Security.
    There are honest disagreements over how best to ensure the future 
solvency of the Social Security program, but I can safely say there is 
at least one point on which we can all agree: the sooner decisions are 
made, the easier they will be to implement and the less painful they 
will be for all stakeholders. We also believe that the debate over how 
improve the solvency of the Social Security program should include the 
broadest possible range of alternatives. The Commissioner of Social 
Security must be an integral part of this debate as well.
Public Education
    I trust that our new Commissioner will work to ensure that 
Americans of all ages become better educated about the value of Social 
Security in their lives. Too many younger Americans are encouraged to 
question whether Social Security be there for them when they retire, 
without understanding that it is there for them now, as insurance 
should they or their parents die or become severely disabled. Social 
Security not only lifts more than half of our nation's retirees above 
the poverty line, it provides protection and financial relief to 
Americans of all ages against the ``hazards and vicissitudes of life.'' 
I feel confident that Commissioner Barnhart's agenda will include an 
educational endeavor to help current and future beneficiaries 
understand the value of the Social Security program in our daily lives.
    Thank you Mr. Chairman for holding this hearing and extending this 
opportunity to speak. I also want to thank you for your strong 
leadership on this Subcommittee and your sustained work to improve the 
performance of the agency. On behalf of the millions of members and 
supporters of the National Committee to Preserve Social Security and 
Medicare we look forward to working with you, your colleagues, and 
Commissioner Barnhart as you move forward in the 107th Congress to 
accomplish your mission.

                                 

    Chairman SHAW. I might add you look very comfortable in 
this room.
    [Laughter.]
    Chairman SHAW. Mr. Matsui?
    Mr. MATSUI. Thank you very much, Mr. Chairman. Thank you 
for yielding to me.
    I want to, first of all, thank all of you for your 
testimony, and I want to thank Mr. Shaw for having this hearing 
today. I am going to have to leave, so I will not be able to 
ask questions and stay for the balance of it, but I thank all 
of you very much.
    Thank you, Mr. Shaw.
    Chairman SHAW. Yes, sir. Mr. Brady?
    Mr. BRADY. Thank you, Mr. Chairman.
    First, I want to thank the panel not just for being here 
today, but reading through the testimony ahead of time, it is 
clear that you identified not only problems that we need to 
work on, challenges, but solutions as well, and that is really 
very helpful for this Committee and the staff as we try to move 
forward on this.
    I really had wanted to inquire of our two former Members of 
Congress and our President-Elect for AARP, Ms. Smith, and our 
Co-Chair, Marty Ford. It seems to me that we have got a number 
of challenges before us. Some of them are emerging challenges 
that are a part of a process improving Social Security the way 
it works today, the other are longstanding problems, the 
solvency of Social Security, how to preserve it once and for 
all.
    My question to you is, in a Congress so evenly divided in 
both chambers or evenly balanced, however you look at it, how 
important is it or maybe the reverse is true, what are the 
chances of Congress successfully improving and reforming 
preserving Social Security? How likely is that to happen if 
both parties won't work together to do it? It seems to me that 
it is not just election-year politics any more, it is 24/7 
politics that seems to be the biggest single obstacle for us 
really working together to reform Social Security.
    It seems to me there are some good ideas out there on how 
we can really address this in a good, thoughtful debate, but 
they get no air. They get no oxygen. There is no chance for 
real scrutiny and debate, and my people back home, they want to 
talk about these options. They want to hear about them, they 
want to think about them, and they want to give it back to us.
    So, my question to you is what are the chances of us 
succeeding in improving and preserving Social Security without 
us working together to do it? I would open it up to the floor.
    Ms. KENNELLY. I will begin. First of all, we know that no 
major legislation can ever get really passed if there isn't 
some kind of bipartisan coming together. I think everyone here 
understands calendars, and there is probably nothing obviously 
going to happen, other than a lot of talk, between now and 
Election Day. Having said that, we also continue to understand 
calendars, and I think there is an understanding that in a 
Presidential election year, it might not happen. So, you have 
that window of opportunity after your next election to truly 
address this issue.
    All of us who have been so familiar with Social Security 
are very familiar with the list of incremental changes that can 
be taken to try to put out the years when the Social Security 
needs additional funding. We are very familiar with them. So, I 
wouldn't have taken this job, Congressman, if I despaired. I 
really think in that year after the election, of this coming 
election, that there is an opportunity, with all of the 
information and the interest, that we can address or you can 
address this thing and work together. As I said, I remember 
1983 when it did happen.
    Mr. BRADY. Thank you.
    Ms. SMITH. I would like to respond.
    I remain optimistic because I think that, at the end of to 
day, no matter what party you belong to, you will remember that 
we are dealing with people. We are dealing with human lives. We 
are dealing with our frail elderly, our disabled. I know, I 
have total confidence that, when all else fails, we are going 
to come to that point and say we are going to take an action. 
We will be strong.
    As has been mentioned already, we know all of the possible 
solutions to this. It is just a matter of grabbing a hold to 
one or two, however you want to handle it, but it is the 
people, and they are going to badger us. They are going to 
badger AARP. They are going to badger their representatives, 
and you know how it is like a bull dog----
    Mr. BRADY. Yes, we know that.
    [Laughter.]
    Ms. SMITH. We will come to you and all of the agencies that 
represent the different groups because the voices are getting 
louder, and louder and louder.
    Mr. BRADY. Thank you.
    Mr. DAUB. I think you asked the $64-million question. I am 
not so sure it would be any less difficult if the partisan 
division were skewed, given the nature of this issue. So, I 
have three suggestions for you and for the Committee.
    First of all, I think that Members of Congress themselves, 
and I say this having been one, need to address the issue by 
understanding Social Security better than many do, and 
therefore be less inclined to emotionally respond to a 
constituent or to a media source when they discuss terms like 
lockbox or the meaning of the trust fund or that there is 
really no money there, it is just a bunch of paper and IOUs, 
and so forth, and so forth. That is an indication of being 
misinformed, and that, in turn, I think creates a 
misunderstanding in the public. I think that creates some of 
the gridlock then that ultimately afflicts the congressional 
ability to legislate.
    Mr. BRADY. So, we are part of the problem.
    Mr. DAUB. I think that Members of Congress who often get 
asked in their townhall meetings about Social Security need to 
work harder at understanding the system of the Certificate of 
Indebtedness and that the document that represents the earnings 
record really can be found in a safe, in a vault in the Bureau 
of Public Debt in the hills of West Virginia, that it does 
exist, there is an accounting system and that it is dependable. 
So, I think that is the first recommendation.
    The second one is that any effort that Congress makes, 
particularly because of the even division between parties, 
needs to be comprehensive. This is a very complex set of 
issues, and they are all interrelated. The four Trust Funds 
relate to Old-Age Survivors and Disability, part A Medicare, 
and part B Medicare. part B Medicare is financed by general 
fund revenues, plus a premium. Medicaid is a Federal-State, 60-
40 match, and SSI, is fully funded by general revenue of the 
U.S. Department of the Treasury. They all interrelate. These 
programs represent a huge amount of outlay, in terms of the 
totality of the Federal budget, so there should be a 
comprehensive solution, rather than a picking away at it.
    The third and last one, is stewardship. This is a 67-year-
old program. Some people a long time ago summoned the courage 
to make sure it worked well for many decades ahead. We need 
now, as is said, sooner, rather than later, to summon the 
courage, in a bipartisan way, to act comprehensively rather 
than let the problems get worse.
    Mr. BRADY. Mr. Chairman, do you think I could get 1 minute 
for Ms. Ford to respond real quick?
    Chairman SHAW. Yes, please be brief. We were instructed to 
conclude this hearing by 11:00 by the Chairman, but perhaps he 
won't know.
    [Laughter.]
    Ms. FORD. My response will be brief.
    I just want to say that, in the history of disability law 
and policy, we have never had any real progress on any issue, 
unless it has been bipartisan. So, we definitely have hope that 
we will get there in a bipartisan way. We think it is the only 
way to approach it.
    Chairman SHAW. I have been asked, both by friends and foe 
alike, about why I haven't pushed the agenda forward, and the 
problem is that we have not, as of this date, put together the 
bipartisan spirit that is going to be necessary to solve this 
problem. I am particularly pleased to see Barbara where she is, 
and Hal where he is, as Members of Congress, understanding the 
politics of the situation.
    I would also like to say that, as Mr. Daub said, I would 
venture to say over half the Members of Congress do not 
understand how the Social Security system works. I would have 
to say that I have learned a lot, since I have been Chairman of 
this Subcommittee, that I would like to share with the other 
Members of Congress because it is very important and vital that 
we do understand it.
    Any thought or any discussion regarding privatization of a 
Federal obligation is pure nonsense. Social Security is a 
Federal retirement program, and it is going to stay a Federal 
retirement program run by the Federal Government. We need to 
add onto it, but we do not, in any way, and I will not stand by 
and allow the integrity of the basic system to be, in any way, 
interfered with. It needs help. We need to add to it, but we 
need to keep the basic system totally in place, as the ultimate 
safeguard for tomorrow's retirees, as well as today's retirees.
    I look forward to that private meeting that you are talking 
about, Barbara. I would like very much to discuss this with 
you.
    Ms. KENNELLY. Thank you, Congressman.
    Chairman SHAW. You mentioned, in your comments, that the 
young people are, more or less, saying in despair it is not 
going to be there for them. They ought to be madder than hell 
about it, and they ought to be on our doorsteps demanding, the 
young people in this country, demanding that we do something 
about it because they will be members of AARP. The AARP not 
only represents today's seniors, but they also have a 
conscience for tomorrow's seniors.
    You are coming here, Ms. Smith, from Hawaii----
    Ms. SMITH. That is right.
    Chairman SHAW. Is certainly great evidence of your concern 
for this. I know that AARP does not want to take sides in a 
debate. However, I would hope that you would add your voice to 
those that demand Congress do its job and get this done.
    Ms. SMITH. We plan to do that.
    Chairman SHAW. Unfortunately, I am afraid that we are not 
going to be able to get the bipartisanship that is necessary 
until after the next election. I would be delighted if I could 
get that, but it just doesn't seem to be in the cards for 
between now and November.
    As Chairman of this Subcommittee, I may very well, if we 
haven't moved the ball, I may very well call back and ask the 
Members of the Subcommittee to come back in November and start 
the dialog that is necessary. We cannot afford to wait. There 
is a very narrow window of opportunity. Once we get over into 
2004, it is going to be chaos in trying to get something done. 
So, we have got to do it either the end of this year or the 
very beginning of next year, and that is my intention for this 
Subcommittee, as I feel this is vitally important.
    We do not have a cash problem until 2017. However, the 
longer you wait, the more difficult it is going to be to find 
the solution and hold the benefits exactly where they are, 
which is my intention, and that is the intention I think of 
most of the Members of Congress.
    We do not need to adjust the cost of living. We do not need 
to, in any way, affect the age of retirement at this particular 
time. That is something that this Congress should not, and will 
not, have to face, and neither will the next Congress, if I 
have my way about it, but it is time I think for us to sit down 
and really work for it.
    The purpose of this hearing was to be able to streamline 
and to offer better service to the people we all work for, and 
I think this is something I am very encouraged by your presence 
and each of your testimony. It was very clear and succinct, and 
I appreciate your taking the time to be here.
    Chairman SHAW. Thank you very much. This hearing is 
concluded.
    [Questions submitted by Chairman Shaw to the panel, and 
their responses follow:]
                                     Social Security Administration
                                    Office of the Inspector General
                                          Baltimore, Maryland 21235
                                                      June 24, 2002
The Honorable E. Clay Shaw, Jr., Chairman,
Subcommittee on Social Security
Committee on Ways and Means
House of Representatives
Washington, D.C. 20515

    Dear Mr. Shaw:
    Thank you for the opportunity to testify before the Subcommittee on 
Social Security regarding challenges facing the Commissioner of Social 
Security. Please find enclosed our responses to the following questions 
posed in your May 28, 2002 letter.
    The Agency has taken several steps to improve the Social Security 
numbering process and provide for secure claims over the Internet. We 
will continue to monitor the Agency's efforts in both of these 
projects.
    If you have any questions about our response, please call me or 
your staff may contact H. Douglas Cunningham, Special Assistant, at 
(202) 358-6319.

    1. Are you satisfied with the progress the Agency is making 
relative to improving the Social Security numbering process? What 
progress is being made with other agencies, particularly the 
Immigration and Naturalization Service (INS), in addressing the 
documentation for immigrants entering our country?

    We are encouraged by the steps the Agency is taking to improve its 
enumeration process, and we believe Commissioner Barnhart is committed 
to strengthening related policies and procedures.
    For example, the Social Security Administration (SSA) has 
implemented verification of birth records before enumeration for all 
applicants age 1 and over for original Social Security numbers (SSNs). 
Also, SSA lowered the age tolerance from 18 to 12 for mandatory 
interview procedures. Further, in July 2002, the Agency plans to begin 
verifying all noncitizen evidentiary documents before issuing SSNs, 
with full implementation by the end of the year.
    We are also encouraged by the progress SSA is making with other 
agencies in addressing the documentation for immigrants. SSA continues 
to work with INS and the Department of State (DoS) to resolve issues 
involving enumeration. SSA has taken steps to expand document 
verification by providing its field offices (FO) manual access to DoS' 
Refugee Data Center and is working to provide its FOs online access to 
INS' Non-Immigrant Information System (NIIS). SSA is working with INS 
and DoS to implement the initial phase of the Enumeration at Entry 
program, which would reduce the probability of SSA improperly assigning 
SSNs to immigrants.
    The Agency has formed several enumeration-related workgroups and 
continues to explore other areas to improve the integrity of the SSN. 
We will continue to monitor the Agency's efforts to ensure it meets all 
established milestones and that no significant delays occur.

    2. There is potential for fraud when the Agency is dealing with 
``faceless'' persons across the Internet. As pressures to deliver 
service through the Internet grow, how is SSA protecting the process 
from fraud? How can the Agency be sure when a person on the Internet 
claims to be an eligible individual and applies for benefits, that they 
are dealing with the right person and won't send benefits to the wrong 
person?

    We agree with your assessment that the Internet will be the 
foundation of the Agency's future information technology initiatives. 
The United States is the world's leading Internet nation, with over 110 
million users. By some estimates, worldwide Internet traffic is 
doubling every 100 days. The baby-boomer generation is more 
technologically aware than any previous generation. It is estimated 
that three-quarters of Americans under the age of 60 use the Internet 
at work or at home. We are only beginning to see the extent of changes 
that it will bring.
    Advances in technology, public expectations, Congress' mandate in 
the government Paperwork Elimination Act \1\ (GPEA) and the President's 
Management Council, all require that SSA move expeditiously to adopt 
electronic processes. By 2005, SSA expects to make 60 percent of its 
customer-initiated services available electronically through automated 
phone services or the Internet. Presently, the Agency allows customers 
to key in portions of their title II retirement and disability claims 
electronically. However, once the claimants complete their keying, they 
are required to print out, sign and mail to SSA their application with 
necessary proofs. Some of the internal controls regarding this process 
are as follows,
---------------------------------------------------------------------------
    \1\ P.L. 105-277, sections 1701-1710

         SSA requires that these Internet applicants elect 
        direct deposit. This allows the Agency to ``share the burden'' 
        with the financial institutions and the Department of the 
        Treasury. The name on the incoming electronic funds transfer 
        payment must match the name on the financial institution's 
        account. Most banks require some form of picture identification 
        to open an account. This provides additional assurances about 
---------------------------------------------------------------------------
        the applicant's identity.

         SSA checks the SSN against its Numident file. If the 
        name or date of birth on the incoming Internet claim does not 
        match the Numident, SSA investigates the matter.

         SSA still requires a birth certificate, military 
        service papers, wage report (W2), marriage certification, etc.

         A substantial number of the Internet applications do 
        still involve contact with an SSA employee. In addition, if SSA 
        has any concerns about the validity of the application, they 
        are supposed to make personal contact with the applicant.

         SSA has an automated Earnings Enforcement Operation 
        (EEO) which identifies incorrect benefit payment situations 
        under the Retirement and Survivors Insurance (RSI) programs 
        that result from a beneficiary's earnings. If SSA is paying 
        benefits to a non-disabled beneficiary and wages are posted to 
        that record, SSA will determine if an overpayment or 
        underpayment exists and make the necessary adjustments to the 
        record. Additionally, SSA has a Continuing Disability Review 
        Enforcement Operation (CDREO) which is designed to identify 
        disabled beneficiaries that have potentially substantial 
        earnings after disability onset. SSA investigates these cases 
        to determine whether cash benefits and/or disability 
        entitlement should end.
          If there is any indication of fraud, SSA will refer the 
        matter to the OIG.

    Furthermore, when SSA converts or adopts new procedures to perform 
specific business processes electronically, it conducts a risk 
assessment, as prescribed in the Office of Management and Budget's 
(OMB) Procedures and Guidance for Implementation of the GPEA. In 
planning and selecting appropriate procedures and electronic signature 
technologies, SSA policy calls for it to consider factors associated 
with traditional paper-based processes, such as originator 
authentication, message integrity, non-repudiation, and 
confidentiality. SSA procedures also call for the consultation of 
outside privacy experts to opine on the Agency's ability to maintain 
the privacy of its beneficiaries' data.
    We have asked SSA to consider one additional safeguard concerning 
the verification of claimants. Because the application of benefits/
taking of claims and the verification of a claimant are at the heart of 
the Social Security system, we have asked SSA officials to consider 
requiring claimants to prove their identity in person before payment of 
benefits begins. Because we believe this safeguard, like others, should 
be assessed based on its merits, we have asked SSA to consider this 
aspect of identification as part of its overall risk assessment of the 
claims taking process.
    As SSA and other agencies proceed toward adopting electronic 
transmission and storage of information, the importance of legal 
considerations also increases dramatically. As a result, the Department 
of Justice (DoJ) has issued a guide \2\ for Federal agencies to assist 
them with the legal considerations in designing and implementing 
electronic processes into their systems. We strongly believe and have 
recommended to SSA officials that the Agency follow, to the extent 
practicable, DoJ's Guide. The Guide explains the legal issues the 
Agency is likely to face in designing electronic-based processes, 
examines four overarching legal issues that should be considered with 
respect to converting any given type of system or operation, and 
discusses general and specific steps agencies should consider in 
converting to electronic processes.
---------------------------------------------------------------------------
    \2\ Legal Considerations in Designing And Implementing Electronic 
Processes, A Guide For Federal Agencies, United States Department of 
Justice, November 2000.
---------------------------------------------------------------------------
    There are always risks, however, in conducting electronic commerce, 
despite the Agency's efforts to identify and mitigate them. SSA will 
have to keep privacy and security concerns at the forefront of its 
planning efforts by continuing to work closely with privacy experts and 
consultants. SSA will have to use a variety of tools to protect the 
public's information, such as data matching, personal identification 
number/password, public/private key tools, encryption, firewalls, 
digital signatures and biometrics. Secure access to SSA's facilities 
and its multiplatform environment, as well as secure electronic access 
to SSA's records, will be a top priority to ensure it complies with the 
Presidential Decision Directives 63 \3\, which deals with critical 
infrastructure protection, and 67 \4\, which is concerned with 
continuity of government operations.
---------------------------------------------------------------------------
    \3\ Issued May 22, 1998
    \4\ Issued October 21, 1998
---------------------------------------------------------------------------
    GPEA seeks to preclude agencies from systematically treating 
electronic documents and signatures less favorably than their paper 
counterparts, so citizens can interact with the government 
electronically (S.Rep. 105-335). GPEA states that electronic records 
and their related electronic signatures are not to be denied legal 
effect, validity, or enforceability merely because they are in 
electronic form. SSA has taken a proactive position regarding the 
future use of electronic signatures and is evaluating the use of 
digital signature, under a limited proof of concept basis, in areas 
other than benefit claims.

         The Office of the Inspector General (OIG) has also 
        taken a proactive position with respect to the Agency's use of 
        electronic commerce and electronic signature in the following 
        manner

         Provided training on Internet and Web Security to the 
        OIG's System's team and key SSA officials and their staffs.

         Directed OIG personnel to sit on numerous Committees 
        at SSA that initiate and approve electronic commerce system 
        development projects and implement policies and procedures that 
        use electronic commerce.

         Advised SSA officials and their staffs on security 
        requirements impacting electronic commerce.

         Asked my legal staff to be available to consult with 
        SSA on matters of electronic commerce and signature 
        requirements.

         Directed our financial statement audit contractor to 
        conduct an audit of the internal controls of SSA's Web-based 
        systems over the last 2 Fiscal Years.

         Conducted on-going audits involving systems security 
        that will include a review of SSA's system development life-
        cycle management practices of its Web-based systems.

          Sincerely,
                                                 James G. Huse, Jr.
                                                  Inspector General

                                 

                                                               AARP
                                               Washington, DC 20049
                                                      June 24, 2002
E. Clay Shaw, Jr., Chairman
House of Representatives
Ways and Means Committee
Subcommittee on Social Security
Rayburn House Office Building B-317
Washington, DC 20515

    Dear Chairman Shaw:
    I was pleased to testify on behalf of AARP at the May 2, 2002 
Subcommittee hearing on the challenges facing the Social Security 
Commissioner. I also appreciate the opportunity, in response to your 
May 28th follow-up letter, to provide you with additional information 
regarding our members' views on the Social Security Administration's 
(SSA) 800 number service and public awareness about the Social Security 
program. Since AARP Membership begins at 50 and many of our members are 
in their nineties, there are age-based differences among our members in 
both areas. When necessary, I will differentiate among them.

    1. You discuss AARP's concerns for telephone service. Can you tell 
us more about what your members are experiencing, how important this 
service is to them and any suggestions for change you may have?

    AARP's younger members are accustomed to securing information via 
the telephone and generally find SSA's 800 service useful--unless they 
experience delays. Some older members are less familiar with accessing 
information over the phone and have difficulty navigating through the 
system. As well, some people are hearing impaired or have physical or 
mental difficulties that prevent them from using the 800 number. Some 
AARP members, particularly those over age 65, have commented on the 
need for greater courtesy (e.g., that some 800 number staff are rude or 
curt).
    A well functioning 800 number requires that SSA receive sufficient 
funding. Inadequate resources lead to staff shortages and incomplete 
training for those who answer the phone. AARP urges that SSA's 
administrative expenses be removed from any congressionally 
established, discretionary spending cap. The agency's administrative 
costs are paid with Social Security trust fund dollars, not the general 
revenues that finance other programs, and therefore should not be 
subject to the spending cap.

    2. In order for us to reach bipartisan agreement on how best to 
strengthen Social Security, the views of our constituents are so 
important. Their knowledge about the challenges Social Security faces 
and the options for change is extremely important to advance the 
debate. Based on your experiences with your members, where are the 
information gaps? How do you see SSA addressing those information gaps, 
and what recommendations would you have for ways SSA could better 
educate the public?

    In general, AARP members are better informed than the rest of the 
public about how Social Security works. This could reflect coverage of 
Social Security issues in our publications and AARP's public education 
efforts throughout the country. Knowledge about Social Security among 
AARP members (and the public) is directly related to age, with younger 
members having less knowledge. Our younger members, especially those 
who work, may have less interest in and/or time to learn the 
fundamentals about Social Security and less experience with the 
program.
    Regardless of age, the biggest information gap involves the current 
financial status of the program and the Social Security trust funds. A 
minority of our members understand Social Security's financing, but 
most members are unaware of Social Security's true financial health 
(e.g., that Social Security has sufficient assets to pay full benefits 
until 2041 and over seventy percent for decades thereafter).
    Many older members confuse Social Security and Supplemental 
Security Income (SSI) benefits. They mistakenly believe that some who 
did not contribute for themselves (and their dependents) are receiving 
Social Security benefits. We have long worked to explain the 
eligibility differences between the two programs and their distinct 
revenue sources, but the information gap persists.
    Working AARP members underestimate the program's value for 
themselves and their dependents and are largely unaware of Social 
Security's survivor and disability benefits. While SSA's annual 
statement provides workers with useful information about retirement, 
survivor and disability benefits, not all workers read the material.
    Without sufficient resources, SSA has had to curtail some of its 
public outreach programs. SSA's website has helpful information for 
Internet users, but many individuals do not have access to the 
worldwide web and others do not know about the site and what it 
provides. Moreover, an Internet site is not a substitute for face to 
face contact with an SSA representative.
    As part of its outreach effort, SSA has been emphasizing the 
importance of supplementing Social Security with additional savings. 
This is an important message that hopefully will encourage today's 
worker to put aside some or more money for their retirement.
    Just as SSA's 800 number service would be improved with additional 
resources, the agency could upgrade its public education efforts with 
additional funding. A better-informed public would not only know more 
about the program itself but could help in forgoing a bipartisan 
consensus to strengthen Social Security for future generations.
    I hope my response is helpful. If you need additional information, 
please feel free to contact me, or Evelyn Morton of the Federal Affairs 
staff at (202) 434-3760.
            Sincerely,
                                                        Marie Smith
                                                    President-elect

                                 

                          Consortium for Citizens with Disabilities
                                               Washington, DC 20006
                                                      June 24, 2002
The Honorable E. Clay Shaw, Chairman
Subcommittee on Social Security
U.S. House of Representatives
Washington, DC 20515

    Dear Chairman Shaw:
    This is in response to your letter of May 28 requesting additional 
information regarding challenges facing the Commissioner of Social 
Security. Specifically, you asked:

    1. You raise a number of concerns about implementation of the 
Ticket to Work program in your testimony. Some to these have been 
addressed in recent legislation moving through the Committee. This 
Subcommittee will continue its close oversight of this important 
program and will want to work with you to identify improvements needed 
in the law. What cooperation have you received from SSA under the 
Commissioner's new leadership? Have you met with the new Commissioner? 
Have you shared your concerns? Has she been responsive?

    2. In order for us to reach bipartisan agreement on how best to 
strengthen Social Security, the views of our constituents are so 
important. Their knowledge about the challenges Social Security faces 
and the options for change is extremely important to advance the 
debate. Based on your experiences with your members, where are the 
information gaps? How do you see SSA addressing those information gaps, 
and what recommendations would you have for ways SSA could better 
educate the public?

    The CCD Task Forces on Social Security and Work Incentives 
Implementation applaud your work in introducing H.R. 4070, the Social 
Security Program Protection Act of 2002 and addressing some of the 
Ticket to Work issues in the bill. We also appreciate your intention to 
have the Subcommittee continue its close oversight of this important 
program and the CCD Task Forces will want to work with you to identify 
improvements needed in the law. We met with Martin Gerry, Deputy 
Commissioner for Disability and Income Security Programs, in February. 
He and others in SSA have been available to hear our concerns and 
respond to inquiries about numerous issues. It is too soon to know 
whether the concerns that we have raised will find their way into 
decision- and policy-making in SSA. We also have a meeting scheduled 
with Commissioner Barnhart for mid-July.
    Regarding Social Security reform, the general public sees the 
debate as a retirement program debate and most are unfamiliar with the 
other benefits paid by Social Security, including the disability and 
survivors' programs. SSA should engage in public information outreach 
activities to ensure that the general public, particularly those paying 
FICA taxes, have a clear understanding of all Social Security programs, 
and the basics of the insurance coverage they provide.
    Much is understood about retirement benefits. However, few people 
seem to realize the scope of the additional coverage provided by the 
Social Security programs: survivors' coverage, including coverage of 
disabled adult children and disabled and elderly surviving spouses; 
dependents' coverage, including coverage of disabled adult children; 
and disabled workers' coverage, including coverage for their 
dependents. SSA could produce explanations of this coverage, along with 
examples, that could be disseminated through its available media 
resources. The personal earnings and benefits estimate statement 
(PEBES) made many people aware of the value of the benefits of Social 
Security system. Simple documents that primarily focus on the non-
retirement benefits of the program could similarly go a long way in 
creating a broader understanding of the coverage provided.
    In addition to basic information about the programs and their 
benefits, SSA should play a lead role in helping all stakeholders and 
policymakers to understand the implications of the various proposals 
for change. Unless there is a broader understanding of the programs and 
the potential changes, the debate will continue to create confusion. 
Acceptance of a final reform product will require that people 
understand what exists and what may be changing. Without such public 
understanding, there is great potential for public outcry over 
unexpected and unwanted results. Therefore, I believe that a sincere 
attempt to educate the general public must be combined with clear 
statements about the impact of various proposals on beneficiaries. 
These beneficiary impact statements should be based on agreed-upon use 
of consistent baseline and economic assumptions. While the stakes are 
so high for people with disabilities, few people understand the issues; 
therefore, it is incumbent upon policymakers to ensure that this 
information is widely available.
    Thank you for this opportunity to provide comment on these issues. 
I would be happy to respond to any further questions.
            Sincerely,
                                                         Marty Ford
                                                           Co-Chair
                                     CCD Social Security Task Force

                                 

    [Whereupon, at 11:10 a.m., the hearing was adjourned.]
    [Submissions for the record follow:]
Statement of LaJuana Alexander, Director of Counseling and Assessment, 
          Northwestern Technical College, Rock Spring, Georgia
    To the Subcommittee on Social Security:
    It is my understanding that this is the committee to whom I should 
address my concerns.
    Teachers and educational employees in 14 states who are covered by 
alternative state retirement plans (no SS withheld) are currently being 
adversely affected by a Social Security regulation which will penalize 
up to 60% of our SS benefits that were earned in other states or in 
other professions outside these education employee benefit plans. 
Organizations such as our Department of Technical and Adult Education 
actively recruit outstanding professionals in business and industry to 
teach in their areas of expertise. I doubt there are any who understand 
that they are going to pay a financial price for their cooperation. If 
they were, they would not be anxious to enter these educational fields.
    I personally worked in various educational and non-profit 
foundation organizations for most of my adult life which had supposedly 
earned for me a small SS pension. After my husband left me, I realized 
I had to get busy and secure my old age benefits, so I went back to 
school for my master's and eventually entered the career counseling 
field at a technical college. I will be 10 year-vested next year which 
will also coincide with my 65th birthday. When I attended a retirement 
seminar, I was shocked to discover that I would not draw my full SS 
benefits (on which I was depending) because of my small 10 year pension 
at DTAE. It sounded as though my penalty would be about the same as 
those who had worked longer and had larger pensions. NO ONE TOLD US 
when we took these positions that this was going to happen.
    It makes no sense to allow those 65 and older to draw their SS 
benefits and continue to work without penalty, while those of us who 
legitimately earned social security benefits in other professions are 
going to be penalized.
    A recent article in the newspaper mentioned two bills--HR2638 and 
the Senate version SB1523--as fixes for this inequity. I would 
appreciate anything this committee can do to get those bills passed 
without delay. We may not be a great number of people, but this policy 
is hurting us just the same and many are going to suffer unnecessarily 
unless it is changed.
    Thank you.

                               

    American Congress of Community Supports and Employment Services
                                               Washington, DC 20006
                                                  February 14, 2002
House Committee on Ways and Means
The Honorable E. Clay Shaw, Jr., Chairman
Subcommittee on Social Security
B-316 Rayburn House Office Building
Washington, DC 20515-6353

House Committee on Ways and Means
The Honorable Wally Herger, Chairman
Subcommittee on Human Resources
B-317 Rayburn House Office Building
Washington, DC 20515-6351

    Chairman Shaw and Chairman Herger:
    Thank you for giving me the opportunity to submit my written 
statement on the challenges facing the Social Security Administration 
(SSA) and new Commissioner. As chairmen of your respective 
subcommittees, I am sure that you can appreciate that the lives of 
individuals with disabilities are greatly impacted by the programs 
administered by SSA.
    I am submitting my statement on behalf of the American Congress of 
Community Support and Employment Services (ACCSES). ACCSES is a 
national, nonprofit organization of providers of vocational 
rehabilitation and community supports committed to maximizing 
employment opportunities and independent living for individuals with 
mental and/or physical disabilities.
    I will focus my statement on the ongoing implementation of the 
Ticket to Work and Self-Sufficiency Program (hereafter referred to as 
the Ticket program), which is part of the historic Ticket to Work and 
Work Incentives Improvement Act (TWWIIA) of 1999. Considering that many 
individuals with disabilities want to work, but do not for fear of 
losing their Social Security Disability Insurance (SSDI) and 
Supplemental Security Income (SSI), the Ticket program presents a clear 
opportunity for success. The success of the Ticket program will 
undoubtedly be measured in many ways, such as the number of 
beneficiaries discontinuing their Federal disability benefits, 
community rehabilitation programs (CRPs) providing quality services, 
and the potential savings to the Social Security Trust Fund.
    The Ticket program embodies the desire that individuals with 
disabilities have in wanting to forego disability benefits and become 
self-sufficient. Since currently less than one half of one percent of 
SSDI beneficiaries and approximately one percent of SSI beneficiaries 
ever realize the dream of becoming self-sufficient, it is crucial that 
the legislative intent of the TWWIIA is maintained during the 
implementation process. Removing disincentives to work and barriers to 
access quality health care are the cornerstones of this landmark piece 
of legislation. Anything short of SSA achieving these goals will result 
in lost confidence in the system by both beneficiaries and community 
providers alike.
    Despite congressional intent, in publishing its final regulations 
on the Ticket program SSA has created new and distinct barriers to 
employment for SSDI and SSI beneficiaries. ACCSES feels that the 
exclusion of beneficiaries who have impairments that are expected to 
improve and for whom SAA has not yet conducted at least one continuing 
disability review (CDR) is troublesome. The ``medical improvement 
expected'' (MIE) designation is ambiguous. Reliable evaluations are 
hard to obtain and subject to interpretation by disability 
determination officials. SSA's decision is clearly based more on 
administrative convenience than sound public policy since many 
beneficiaries remain on the rolls well after their first CDR. All 
beneficiaries deserve an equal opportunity to participate in the Ticket 
program and access the services being offered by community providers 
that will enable them to gain self-supporting employment.
    In fact, SSA acknowledges the weakness of its standard in its own 
response to comments under Section 411.125. In its response, SSA 
stated, ``. . . we plan to conduct an evaluation of the methodology for 
the classification system to assess possible ways to improve the system 
for use in identifying those beneficiaries for whom near-term medical 
improvement should preclude the immediate receipt of a Ticket.''
    In maintaining the MIE exclusion in the final regulations, SSA 
stated that using ``the medical improvement diary system is the most 
practical and efficient means available to identify those beneficiaries 
with impairments that are expected to improve within a relatively short 
period of time so as to permit the individual to engage in SGA 
.'' The diary system, however, will not 
assist beneficiaries who have been improperly classified as MIE but 
continue to need ongoing rehabilitative support services (i.e. there 
were 2200 individuals with diagnosed schizophrenia in 1994--a medical 
condition that often involves relapses). Clearly these individuals need 
more than a diary to benefit from the resources available under the 
Ticket program. Instead of being fearful that some beneficiaries with 
near-term medical improvements might use such resources to obtain 
employment and engage in SGA, SSA should focus their attention on 
granting beneficiaries maximum access to them.
    Changing the final regulations to reflect the intent of the 
legislation is also consistent with the purpose of the Rehabilitation 
Act of 1973, as amended. Both the Ticket-to-Work program and the 
Rehabilitation Act of 1973, as amended, aim to offer the needed 
resources and opportunities for individuals with disabilities who want 
to enter or reenter the workforce. More importantly though, both stress 
the importance of informed consumer choice and self-determination in 
accessing rehabilitative and support services. By denying beneficiaries 
designated as MIE, SSA is essentially denying beneficiaries from 
exercising their right to choose the best and most appropriate options 
available in ending their dependency on cash benefits.
    Along the same lines as the MIE exclusion, SSA has created an 
additional disincentive with its timely progress standards toward self-
supporting employment. Though ACCSES recognizes that these standards 
only apply to CDR protection (and not participation in the Ticket 
program), beneficiaries will be wary of participating if they fear a 
negative CDR determination will end their cash benefits prior to 
obtaining self-supporting employment. Basically, there is no incentive 
for beneficiaries to participate in the Ticket program without an 
unambiguous CDR protection.
    The standards in the final regulations are clearly too rigid and do 
not take into consideration the different abilities of beneficiaries 
who have different disabilities. In other words, a ``one-size-fits-
all'' approach to the timely progress standards assumes that 
beneficiaries with physical and mental disabilities require the same 
rehabilitative services and supports. This approach may be easier to 
administer and monitor, but it will make it harder for beneficiaries 
with severe, persistent, and complex disabilities to enter or re-enter 
the workforce. Individuals with psychiatric, developmental, physical, 
and/or multiple disabilities require different services and supports 
and, therefore increased flexibility not only recognizes individual 
differences, but also accommodates them, thus assuring an increased 
opportunity for success.
    The timely progress standards should be directly related to how 
beneficiaries are accomplishing their employment goals as outlined in 
their approved Individual Work Plans (IWPs). Connecting the timely 
progress standards to the IWPs puts the beneficiaries in control of 
their own progress--thus, ensuring a greater probability of success. 
This approach, if adopted by SSA, would, again, be consistent with the 
emphasis placed on informed consumer choice and self-determination by 
the Ticket program and the Rehabilitation Act of 1973, as amended. As 
long as beneficiaries are actively engaged in working toward their 
employment goal, and the community providers are furnishing services 
(employment, vocational rehabilitation, or other support services as 
outlined in Subpart E in the final regulation) then their level of 
success should not be adversely measured using ``administrative'' 
standards.
    It appears that SSA has sided, again, with administrative 
convenience in establishing its standards for CDR protection instead of 
the congressional intent to remove barriers and disincentives. In 
responding to comment, SSA stated, ``. . . if we allowed the individual 
and the EN or State VR agency to define timely progress, it would not 
be possible to develop a consistent and standardized method to 
determine timely progress for program administration and integrity 
purposes.'' Considering that the IWP is basically the contract between 
beneficiaries and community providers--with clearly required and 
defined components already approved by SSA Program Managers--SSA has 
the documentation needed to maintain the program administration and 
integrity it references.
    The final regulations already show a willingness by SSA to 
recognize unforeseen events, which may cause beneficiaries to suspend 
their work efforts. By granting an unassigned or inactive ticket status 
during the initial 24-month period, SSA is allowing beneficiaries to 
temporarily suspend their employment plan. Also, the months in which 
their tickets are inactive do not count toward the time limitations for 
making timely progress toward self-supporting employment. Clearly, if 
beneficiaries are working toward achieving their employment goals 
outlined in their IWPs, then it stands to reason that they are meeting 
the timely progress standards. SSA should not penalize beneficiaries 
with inflexible standards.
    SSA has also modified its standards in the final regulations to 
allow for ``banking'' of work during the initial 24-month period to 
meet work requirements of the first 12-month progress review period if 
the work was at the requisite level. If SSA is willing to accommodate 
beneficiaries and their unique needs by allowing the banking of work, 
then SSA should also be willing to modify their standards to maximize 
beneficiaries' self-determination.
    Finally, the success of putting beneficiaries back to work will, in 
large part, depend on the availability of employment services, 
vocational rehabilitative services, and other support services in the 
community. Most community providers fully recognize that the program 
does not come without risks and therefore will be looking for 
incentives to make their participation justifiable as an Employment 
Network (EN). ACCSES is concerned that by only allowing community 
providers to change their desired payment system every 18 months, the 
final regulations will hinder the recruitment of ENs. Community 
providers will be looking for flexibility to help ease their 
apprehension over the risks associated with their participation.
    Granted, community providers are not obligated to accept tickets 
that they feel are beyond their service expertise. However, since the 
Ticket program is outcome-based in nature, community providers will 
have to wait an extended period of time before seeing a return on their 
investment (i.e. furnishing services to beneficiaries). And though 
community providers can elect to choose the milestone-outcome payment 
system--which begins making payments sooner once milestones are 
achieved--the total net worth of the payments is less than the outcome 
payment system. By making what amounts to a simple infrastructure 
change, SSA will go a long way in appeasing provider apprehension.
    In addition, many potential community providers are not-for-profit 
organizations that lack the resources to deliver services without some 
cost reimbursement prior to job placement. Few of these organizations 
can afford to wait for a year or longer before recovering at least some 
of their costs. The current payment system will prevent the majority of 
community providers from participating in the program and will result 
in a lack of choice for beneficiaries and in a service delivery system 
with insufficient capacity. Furthermore, by shifting all of the risk to 
community providers, it is reasonable to expect that beneficiaries with 
higher abilities will be targeted for services with the most in need 
viewed as to great a risk.
    On a related issue, SSA decided not to narrow the gap in net 
payment amounts between the outcome and milestone-outcome payment 
systems. Currently, under the milestone-outcome payment system in the 
final regulations, SSA will only pay 85 percent of the total payments 
under the outcome payment system. The concept is in keeping with 
congressional intent and the statutory language, but the size of the 
gap is questionable.
    The milestone-outcome payment system was added to the statute 
because community providers expressed their reluctance to participate 
in the Ticket program with the proposed outcome-only based payment 
system. The addition of the milestone-outcome payments aimed to entice 
community providers to enroll as ENs and offer service to 
beneficiaries. By only paying 85 percent, SSA essentially created a 
roadblock for community providers who are considering accepting the 
risk associated with the program. Though community providers will 
receive some up-front monies, the total amount not materialized (15 
percent) is a high price to pay.
    Considering that to date SSA has had difficulties in recruiting 
community providers to enroll as ENs, the concerns expressed over the 
payment systems should be taken under advisement.
    In closing, ACCSES appreciates the opportunity to submit its 
written statement to the House Ways and Means Subcommittees on Social 
Security and Human Resources. ACCSES urges the new Commissioner of SSA 
to incorporate these important changes as the ongoing implementation of 
the Ticket program moves forward. Thank you in advance for your 
consideration and attention to this issue. Should you desire additional 
information, please feel free to contact me at 231-922-4886, or Brandon 
Macsata in our Washington, DC office at 202-466-3355. I am
            Sincerely,
                                                    Steve H. Perdue
                                                          President
                               
      Statement of Ronald G. Bernoski, President, Association of 
               Administrative Law Judges, Bronx, New York
    Mr. Chairman and Members of the Subcommittees:
I. INTRODUCTION
     Thank you for the opportunity to testify before you today. My name 
is Ronald G. Bernoski. I am an Administrative Law Judge (``ALJ'') who 
has been hearing Social Security disability cases at the Office of 
Hearings and Appeals (``OHA'') of the Social Security Administration 
(``SSA'') in Milwaukee, Wisconsin, for over 20 years.
    This statement is presented in my capacity as the President of the 
Association of Administrative Law Judges (``AALJ''), which represents 
the ALJs employed in the SSA OHA and the Department of Health and Human 
Services (``DHHS''). One of the stated purposes of the AALJ is to 
promote and preserve full due process hearings in compliance with the 
Administrative Procedure Act for those individuals who seek 
adjudication of program entitlement disputes within the SSA.
    I will address the challenges facing the new Commissioner of SSA in 
improving the disability determination appellate process at the ALJ 
hearing and Appeals Council administrative review levels. First, I will 
list the challenges at each of the appellate levels and then I will 
offer short and long term solutions that may be implemented to resolve 
these challenges. This discussion presumes familiarity with the 
structure of the SSA OHA and the initiatives by the SSA management to 
change or improve the functioning of OHA, including the Process 
Unification Training (``PUT''), the Hearing Process Improvement Plan 
(``HPI''), and the Appeals Council Improvement Plan (``ACPI'').
II. CHALLENGES FOR THE NEW SSA COMMISSIONER
    A. Challenges at the ALJ Hearing Level: In brief, the 
Commissioner's challenges at this level is to have a large and growing 
volume of cases heard and decided by SSA's ALJs in a timely and high 
quality manner that preserves the claimant's due process rights under 
the Social Security Act and Administrative Procedure Act (``APA''). 
Several specific challenges that now confront the new Commissioner are 
as follows:

    1. The Need to Reduce the Number of Cases that Require an ALJ 
Hearing and Thus Get the Claimants a Correct Final Administrative 
Result Sooner: The burgeoning caseload at the ALJ hearing level has 
been growing unabated in recent years. Prior to HPI, the SSA OHA heard 
and decided over 500,000 cases annually, and surpassed 600,000 in one 
recent year. SSA is projecting that the annual case load will climb to 
about 726,000 by 2005. This has strained the current structure of OHA 
to timely handle the volume with quality because nothing effective has 
been done to either reduce the number of cases that require an ALJ 
hearing or change the structure of OHA to better address the huge 
caseload:

        L  (a) OHA's structure and process for hearing cases has not 
        changed significantly to adjust to the large scale of the 
        operation since the APA went into effect in 1947. There is no 
        mechanism for settling cases without a hearing, other than 
        granting a claim on the record, because SSA has no 
        representative to assert its interests at the hearing level. 
        Cases endlessly are remanded back to the ALJ level for 
        rehearing because the record remains open without limits, new 
        issues may be raised at all levels of appeal, and the quality 
        of the Appeals Council review is poor.

        L  (b) The reversal rate of the DDS decisionmakers' 
        determinations by the ALJs remains high. In order to reduce the 
        number of ALJ reversals of DDS determinations, in 1996, the SSA 
        conducted the PUT training to have the DDS decisionmakers use 
        the same rules to decide cases as the ALJs. This did not result 
        in fewer cases requiring a hearing.

        LThere are several steps that SSA can take that do not require 
        legislation to reduce the number of ALJ hearings.

    2. Challenges from the ALJ Level HPI Reorganization of OHA: There 
is a consensus that HPI, which SSA implemented in 2000, has both 
exacerbated the case disposition time problems that it was intended to 
solve and created new problems that have caused work flow bottlenecks, 
reduced the quality of decision drafts by some decision writers, and 
increased the case backlog. The several HPI challenges are as follows:

        L  (a) One purpose of HPI was to reduce the amount of 
        processing time it takes to obtain the evidence for the record 
        by doing it more completely before the ALJ hearing, so that 
        fewer cases would need post-hearing development. The practice 
        of HPI did not result in a reduction of cases that require 
        post-hearing development.

        L  (b) HPI also was expected to reduce overall case processing 
        time, ostensibly by reducing the need for post-hearing 
        development. Instead, case processing time steadily has 
        lengthened under HPI beyond what was considered to be 
        unacceptable at the time that HPI was implemented. The creation 
        of teams to handle cases was intended to decrease the number of 
        people who have to work on each case and increase individual 
        responsibility for the quality of work within the group, which 
        were expected to reduce case processing time and increase work 
        quality. Instead, HPI process has resulted in an increase of 
        the ``hand offs'' of the files and the sense of individual 
        responsibility for work quality has vanished. The cases are 
        assigned to judges later in the process and the responsibility 
        for early pre-hearing case development has been transferred to 
        the staff.

        L  (c) The quality of decision drafts has declined because, as 
        part of the HPI plan, SSA has promoted to Paralegal Specialist 
        positions as ALJ decision writers clerical staff members, many 
        who do not have the skills to perform the job adequately. HPI 
        created promotion opportunities for the clerical staff, which 
        boosted the morale of those receiving the promotions. However, 
        the implementation of HPI resulted in the promotion of clerical 
        staff to approximately 350 writer positions without the need to 
        show that they have the skills to do the job. This promotion 
        process resulted in positions being filled by clerical staff, 
        some of whom who have not been successful in performing the 
        job.

        L  (d) A huge backlog of case files that need to be prepared 
        for hearing has accumulated as a result of the SSA promoting 
        about 350 clerks to writer positions and about 300 clerks to 
        case technician positions as part of the HPI plan without 
        replacing the vacated clerical positions. (The process of 
        organizing and marking exhibits to prepare a case for hearing 
        is called ``pulling,'' which is a clerical task.) As a result, 
        the backlog of unpulled cases has ballooned from about 34,000 
        to 216,000 since HPI has been implemented. The shortfall in 
        ``pulled'' cases has resulted in an insufficient number of 
        cases being scheduled for ALJs to hear in many offices and adds 
        to the case processing time.

        L  (e) The lack of acceptance of the failure of HPI by the SSA 
        administrators is a challenge that the new Commissioner 
        confronts. At a hearing before the House Subcommittee on Social 
        Security in June 2001, Mr. Stanford Ross, Chair of the SSAB, 
        testified that the HPI did not improve the hearing process and 
        in some circumstances it had made the situation worse. Without 
        acknowledgment of the failure of HPI, new strategies will not 
        be considered seriously and implemented by SSA administrators.

    3. The Challenge of Preserving Due Process While Achieving Greater 
Efficiency:

    I have a strong concern with recent information that I have seen 
relating to proposals to transfer the SSA administrative law judge 
hearing to the DDS, non-ALJ hearing officers within OHA, and/or non-ALJ 
personnel within the District Offices. Any plan to deny Social Security 
claimants the right to a full due process hearing under the 
Administrative Procedure Act (``APA'') before an administrative law 
judge will result in a denial of basic constitutional rights to the 
American people. The preservation of APA due process for the claimants, 
including the hearing and decision of their claims by ALJs who are 
appointed pursuant to the APA, is essential as the new Commissioner 
devises ways to more efficiently address the agency's large and growing 
caseload.
    The APA was adopted by Congress in 1946 to ensure that the American 
people were provided hearings that are not prejudiced by undue agency 
influence. The securing of fair and competent hearing adjudicators was 
viewed as the heart of the Administrative Procedure Act.
    The APA was enacted primarily to achieve reasonable uniformity and 
fairness of the administrative process in the Federal Government for 
members of the American public with claims pending before Federal 
agencies. The APA sets forth a due process administrative procedure for 
the hearing and decision by administrative law judges of cases brought 
before the Federal agencies to which the APA applies. The APA provides 
the minimum standards for federal administrative due process in the 
Executive Branch, and delineates procedures for adjudicative 
administrative proceedings, namely individual case decisions about 
rights or liabilities as an agency's judicial function. This includes 
uniform standards for the conduct of adjudicatory proceedings, 
including the merit appointment of administrative law judges. U.S. 
Justice Dept., Attorney General's Manual on the Administrative 
Procedure Act 9 (1947) (the ``Manual''). The APA, Pub. L. No. 79-404, 
60 Stat. 237 (1946), as amended, is codified at 5 U.S.C. Sec. Sec. 551-
559, 701-706, 1305, 3105, 3344, 4301(2)(E), 5335(a)(B), 5372, and 7521.
    By APA mandate, the administrative law judge is an independent, 
impartial adjudicator in the administrative process and there is a 
separation of the adjudicative and prosecutorial functions of an 
agency. The administrative law judge is the only impartial, independent 
adjudicator available to the claimant in the administrative process, 
and the only person who stands between the claimant and the whim of 
agency bias and policy. If SSA returns to using subordinated employees 
who would be an instrument and mouthpiece for the SSA, we will have 
returned to the days when the agency was both prosecutor and judge.
    There is a close relationship between the APA and the Social 
Security Act. In the case of Richardson v. Perales, 420 U.S. 389 
(1971), the U.S. Supreme Court stated that the APA was modeled upon the 
Social Security Act.
    It is clear that Congress intended the APA to apply to hearings 
conducted under the Social Security Act. The Attorney General's Manual 
on the Administrative Procedure Act, which is recognized by the U.S. 
Supreme Court to be part of the legislative history of the APA, states 
that ``the residual definition of `adjudication' in section 2(d) was 
intended to include . . . [t]he determination of . . . claims under 
Title II (Old Age and Survivor's Insurance) of the Social Security Act. 
. . .'' Manual at 14-15 (emphasis added), citing, Senate Judiciary 
Committee Hearings on the APA (1941) at 657, 1298, 1451 and S. Rep. No. 
752 at 39; 92 Cong. Rec. 5648. (The other programs did not then exist.)
    In the case of Butz v. Economou, 438 U.S. 478, 513-514 (1978), the 
U.S. Supreme Court defined the role of a Federal Administrative Law 
Judge as follows:

        L  There can be little doubt that the role of the modern 
        hearing examiner or administrative law judge within this 
        framework is ``functionally comparable'' to that of a judge. 
        His powers are often, if not generally, comparable to those of 
        a trial judge. He may issue subpoenas, rule on proffers of 
        evidence, regulate the course of the hearing, and make or 
        recommend decisions . . . . More importantly, the process of 
        agency adjudications is currently structured so as to assure 
        that the hearing examiner exercises his independent judgment on 
        the evidence before him, free from pressures by the parties or 
        other officials within the agency. Prior to the Administrative 
        Procedure Act, there was considerable concern that persons 
        hearing administrative cases at the trial level could not 
        exercise independent judgment because they were required to 
        perform prosecutorial and investigative functions as well as 
        their judicial work . . . and because they were often 
        subordinate to executive officials within the agency . . . . 
        Since the securing of fair and competent hearing personnel was 
        viewed as ``the heart of formal administrative adjudication,'' 
        . . . the Administrative Procedure Act contains a number of 
        provisions designed to guarantee the independence of hearing 
        examiners. They may not perform duties inconsistent with their 
        duties as hearing examiners . . . . When conducting a hearing 
        under the APA, a hearing examiner is not responsible to or 
        subject to the supervision or direction of employees or agents 
        engaged in the performance of investigative or prosecution 
        functions for the agency . . . . Nor may a hearing examiner 
        consult any person or party, including other agency officials, 
        concerning a fact at issue in the hearing, unless on notice and 
        opportunity for all parties to participate . . . . Hearing 
        examiners must be assigned to cases in rotation so far as 
        practicable . . . . They may be removed only for good cause 
        established and determined by the Civil Service Commission 
        after a hearing on the record . . . . Their pay is also 
        controlled by the Civil Service Commission.

    The Congress has reviewed the function of the administrative law 
judge in the Social Security Administration. In 1983, a Senate 
Subcommittee on Oversight of Government Management of the Committee on 
Governmental Affairs conducted a hearing that inquired into the role of 
the administrative law judge in the Title II Social Security Disability 
Insurance Program. S. PRT. 98-111. The Committee issued its findings on 
September 16, 1983, which provided in part as follows:

        L  The APA mandates that the ALJ be an independent impartial 
        adjudicator in the administrative process and in so doing 
        separates the adjudicative and prosecutorial functions of an 
        agency. The ALJ is the only impartial, independent adjudicator 
        available to the claimant in the administrative process, and 
        the only person who stands between the claimant and the whim of 
        agency bias and policy. If the ALJ is subordinated to the role 
        of a mere employee, and instrument and mouthpiece for the SSA, 
        then we will have returned to the days when the agency was both 
        prosecutor and judge.

    The decisionmaking independence provided by the APA is not for the 
benefit of the judge, but instead is provided for the protection of the 
American people. The protections are intended to ensure that the 
American people receive a full and fair due process hearing with a 
decision based on the evidence in the hearing record. This is a right 
protected by the Constitution. ``The APA creates a comprehensive 
bulwark to protect ALJs from agency interference. The independence 
granted to ALJs is designed to maintain public confidence in the 
essential fairness of the process through which Social Security 
benefits are allocated by ensuring impartial decisionmaking.'' Nash v. 
Califano, 613 F.2d 10, 20 (2nd Cir. 1980). Despite these protections, 
the Social Security Administration has a history of attempting to 
assert undue influence on the decisionmaking of its administrative law 
judges. This abuse occurred in the 1980's after the agency had 
implemented the Bellmon Review Program. The Senate Subcommittee on 
Oversight of Government Management (referred to above) issued findings 
on September 16, 1983, on this improper agency conduct that provided in 
part as follows:

        L  The principal findings of the subcommittee is that the SSA 
        is pressuring its ALJs to reduce the rate at which they allow 
        disabled persons to participate in or continue to participate 
        in the Social Security Disability Program.

    The Bellmon Review Program also was challenged in the courts in 
Association of Administrative Law Judges v. Heckler, 594 F.Supp. 1132 
(1984). In that case, a Federal district court judge found in part as 
follows:

        L  In sum, the Court concludes, that defendant's unremitting 
        focus on allowance rates in the individual ALJ portion of the 
        Bellmon Review Program created an untenable atmosphere of 
        tension and unfairness which violated the spirit of the APA, if 
        no specific provision thereof. Defendants' insensitivity to 
        that degree of decisional independence the APA affords to 
        administrative law judges and the injudicious use of phrases 
        such as ``targeting'', goals and ``behavior modification'' 
        could have tended to corrupt the ability of administrative law 
        judges to exercise that independence in the vital cases that 
        they decide.

    The efforts of the administrative law judges of the Social Security 
Administration to protect the Social Security hearing process and the 
rights of Social Security claimants was recognized in an award 
presented to the judges of the agency by the President of the American 
Bar Association in August 1986. The award acknowledged the efforts of 
the Social Security administrative law judges in protecting the 
integrity of the hearing system. The award specifically stated:

        L  That the American Bar Association hereby commends the Social 
        Security Administrative Law Judge Corps for its outstanding 
        efforts during the period from 1982-1984 to protect the 
        integrity of administrative adjudication within their agency, 
        to preserve the public confidence in the fairness of 
        governmental institutions and uphold the rule of law.

    On January 9, 2001 Commissioner Kenneth S. Apfel affirmed the 
relationship between the Administrative Procedure Act and the Social 
Security Act for Social Security hearings. He stated as follows:

        L  The Social Security Administration (SSA) has a long 
        tradition, since the beginning of the Social Security programs 
        during the 1930s, of providing the full measure of due process 
        for people who apply for or who receive Social Security 
        benefits. An individual who is dissatisfied with the 
        determination that SSA has made with respect to his or her 
        claim for benefits has a right to request a hearing before an 
        Administrative Law Judge, an independent decisionmaker who 
        makes a de novo decision with respect to the individual's claim 
        for benefits. As the Supreme Court has recognized, SSA's 
        procedures for handling claims in which a hearing has been 
        requested served as a model for the Administrative Procedure 
        Act (APA). Congress passed the APA in 1946 in part to establish 
        uniform standards for certain adjudicatory proceedings in 
        Federal agencies, in order to ensure that individuals receive a 
        fair hearing on their claims before an independent 
        decisionmaker. SSA always has supported the APA and is proud 
        that the SSA hearing process has become the model under which 
        all Federal agencies that hold hearings subject to the APA 
        operate. SSA's hearing process provides the protections set 
        forth in the APA, and SSA's Administrative Law Judges are 
        appointed in compliance with the provisions of the APA.

    In a recent study prepared for the Social Security Advisory Board 
by Professors Paul Verkuil and Jeffrey Lubbers, entitled Alternative 
Approaches to Judicial Review of Social Security Disability Cases, the 
authors recommended the establishment of an Article I court for Social 
Security cases. The report favorably refers to the over 1000 
administrative law judges in the Social Security Administration as an 
objective source of decisionmaking that can be effectively integrated 
into an article I court review structure. This recommendation seeks to 
improve and strengthen the Social Security disability process, not to 
diminish the system as would result from abandoning the administrative 
law judge hearing. In fact, articles recently have been published that 
recommend that the Veterans disability appeals system be improved by 
modeling it after the Social Security administrative law judge hearing 
process. James T. O'Reilly, Burying Caesar: Replacement of the Veterans 
Appeals Process Is Needed to Provide Fairness to Claimants, 53 Admin. 
L. R. 223 (2001); William F. Fox, Jr., A Proposal to Reform the VA 
Claims Adjudication Bureaucracy: One Law Professor's View, FBA Veterans 
Law Sec., Tommy: A Lawyer's Guide to Veterans Affairs, 1 (Issue 3, 
2001).
    Any retreat from this long and proud tradition of the Social 
Security Administration with regard to the manner in which it conducts 
hearings will have a substantial adverse effect on Social Security 
claimants and will deny them basic constitutional rights. American 
citizens will have less rights than they had prior to the enactment of 
the APA.
    We urge Congress to protect the constitutional rights of the 
American people and to continue to provide the Social Security 
claimants the full range of due process rights for a Social Security 
hearing under both the APA and the Social Security Act.

    B. Challenges at the Appeals Council Level: Several specific 
challenges that now confront the new Commissioner are as follows:

        L  1. Long Case Processing Time: The long case processing time 
        at the Appeals Council often is measured in years, rather than 
        months.

        L  2. Poor Decision Quality: The chronically poor quality of 
        the Appeals Council decisions has declined further in recent 
        years. The decisions rarely have legal citations of authority 
        or rationales for the positions taken, and often are factually 
        inaccurate regarding what the record shows. The informality of 
        the decisions does not give the impression of the careful 
        deliberation to which the claimants are entitled.

        L  3. Excessive Number of Lost Hearing Record Tapes and Files: 
        The chronic loss of hearing record tapes and files by the 
        Appeals Council requires a lengthy rehearing process for the 
        claimants. Anecdotal evidence suggests that thousands of 
        hearing tapes and files have been lost. This reportedly is 
        caused by three problems: (a) the repeated crashing of the 
        Appeals Council's antiquated computer case tracking system and 
        loss of case names from the database that are not recoverable, 
        (b) a large backlog of cases that have not been entered into 
        the case tracking system, and (c) separating hearing tapes from 
        the hearing file to save storage space

        L  4. Achieving Acceptance of the Failure of the Appeals 
        Council Level ACPI Reorganization of OHA: Acceptance by SSA 
        administrators of the failure of the ACPI that was implemented 
        in 2000 to correct these three chronic challenges of the 
        Appeals Council operation also is a challenge that the new 
        Commissioner confronts. Without acceptance of the failure of 
        ACPI, new strategies will not be considered seriously and 
        implemented by SSA administrators.
LIII. PROPOSED ACTIONS TO MEET THE CHALLENGES FOR THE NEW SSA 
        COMMISSIONER
A. Overview of Needed Reforms for the SSA Hearing Process
    1. Reorganize the Hearing Office Process: Because of the failure of 
HPI, SSA should reorganize the hearing office process. The 
reorganization should correct the defects in HPI. We propose that the 
recommendations of the Commissioner's HPI Steering Committee be used as 
a guide for the reorganization. The reorganization should consist of 
both short term and long term changes. The short term changes should be 
structured in a manner that permits easy transition to the long term 
reforms. The objective should be to immediately return to the 
efficiency and level of case production that existed in the hearing 
offices immediately before the introduction of HPI (over 500,000 cases 
a year). The long term reform should then build on that base. There is 
no single change that will accomplish this objective. It instead must 
be accomplished by a series of coordinated changes in several different 
areas. The changes will allow the agency to improve the service 
provided to the American public.
    We recommend that the short term changes should include the 
following elements:

        L  (a) The process must be simple, and administrative law 
        judges should be assigned to cases from master docket according 
        to law.

        L  (b) Each administrative law judge should have adequate and 
        properly trained support staff. The support staff should 
        include a clerical worker, paralegal and attorney/writer.

        L  (c) The support staff should be assigned to perform the work 
        product of a particular administrative law judge according to 
        the instructions and guidance of the judge.

        L  (d) The administrative law judge should have control of all 
        case development.

        L  (e) The administrative law judge should have the 
        responsibility to determine when a case decision is legally 
        sufficient and the judge should have the authority to return 
        the decision for rewrite to achieve the same.

        L  (f) Case files of each administrative law judge should be 
        maintained separately.

        L  (g) The assigned support staff of each administrative law 
        judge should be under the supervision of the hearing office 
        management staff for personnel actions.

        L  (h) Staff members should be accountable for their work 
        product. Case work should be assigned on an individual basis to 
        support staff to provide for accountability and enhance the 
        employees' sense of ownership.

    We recommend that the long term changes should include the 
following elements:

        L  (a) Close the hearing record after the administrative law 
        judge hearing.

        L  (b) Assignment of Social Security Administration 
        representatives to represent the agency at administrative 
        hearings. Such representatives would be responsible to defend 
        the position of the agency at the hearing, recommend favorable 
        cases, exercise settlement authority, and assist unrepresented 
        claimants.

        L  (c) Create a case manager and law clerk position for the 
        support staff of each administrative law judge   (as 
        recommended by the Commissioner's HPI Steering Committee).

        L  (d) Allow administrative law judges to issue bench decisions 
        and short form decisions.

        L  (e) Adopt regulations for issue exhaustion as suggested by 
        the United States Supreme Court in the case of Sims v. Apfel, 
        530 U.S. 103 (2000).

        L  (f) Reform the Appeals Council to issue decisions in some 
        cases, limit the scope of appeal for claimants who have 
        received the requested relief from the administrative law judge 
        and support the administrative law judge in ``no-show'' 
        dismissals.

        L  (g) Implement a sustainable agency policy on the issue of 
        pain and the treating physician rule and defend the same if 
        challenged.

        L  (h) Require the DDS to follow disability law and 
        regulations.

        L  (i) Improve the use of technology in the hearing process 
        (i.e. voice to print software, improved equipment for recording 
        hearings, etc.).

        L  (j) Adopt rules of procedure for the hearing process.

        L  (k) Reorganize the Office of Hearings and Appeals.
LB. Strategies to Reduce the Number of Cases Heard at the ALJ Hearing 
        Level That May Be Effected in the Short Term by Regulation 
        Changes and Preserve Due Process
    1. Require DDS Decisionmakers to follow the Law and Regulations: 
SSA should issue regulations that require DDS decisionmakers to 
adjudicate cases pursuant to the law and regulations. This can be 
implemented on a short term basis that would immediately serve to 
reduce the number of cases appealed to the ALJs.

    2. Close Record After Administrative Law Judge Hearing: The 
amendment of SSA's regulations to close the record at the end of the 
ALJ hearing would reduce the number of cases that ALJs must hear upon 
remand from the Appeals Council and courts based upon new evidence. New 
evidence is one of the most common reasons for remand of cases. This 
adds to the ALJ case load and greatly delays a final administrative 
decision for the claimants. This change will place the responsibility 
upon the claimants' representatives for producing all relevant and 
material evidence at the hearing.
    By SSA regulation, the hearing record in the Social Security 
disability system is not closed at any stage in the appeals process. 
This system precludes administrative finality and allows the claimant 
to introduce new evidence at each step of the process, including the 
Appeals Council level. 20 C.F.R. Sec. Sec. 404.900(b), 404.976(b). This 
is true even when the evidence was in existence and available during 
the prior stage of the appeal. The reason the SSA keeps the record open 
at the administrative levels is that the Social Security Act authorizes 
the courts to remand a case to SSA when a claimant shows that there is 
material new evidence and there is good cause for not including it in 
the record earlier. 42 U.S.C. Sec. 405(g).
    In a recent report, the Social Security Advisory Board (``SSAB'') 
stated that ``Congress and SSA should review again the issue of whether 
the record should be fully closed after the ALJ decision.'' Charting 
the Future of Social Security's Disability Programs: The Need for 
Fundamental Change, January 2001, p. 20. This change will bring 
administrative finality to the Social Security disability case and will 
encourage all known relevant and material evidence to be produced at 
the hearing.
    New documentary medical evidence of disability based upon treatment 
that occurred before the date on which the ALJ hearing closed should be 
admitted into evidence by the Appeals Council only upon a showing that 
the new evidence is material and that there is good cause for the 
failure to incorporate such evidence into the record in a prior 
proceeding. This standard is in keeping with the standard that the 
Social Security Act allows for the courts. Unrepresented claimants 
should be excepted from the requirement to show good cause.

    3. The SSA Should Have a Representative At the ALJ Hearings: After 
conducting a pilot program to work out the details in practice, the SSA 
should amend its regulations to provide for a government representative 
at the ALJ hearing. This change would permit SSA to complete the 
documentary record faster, enter into settlements without the need for 
a hearing in some cases, and present the government's position on each 
case. SSA representation will allow the SSA to present its evidence, 
present the type of expert witnesses it deems necessary, and advance 
its legal theories in the case. The government representative also 
should provide assistance and advice to claimants in unrepresented 
cases.
    In order to meet the requirements of due process, the APA provides 
that ``[a] party is entitled to appear in person or by or with counsel 
or other duly qualified representative in an agency proceeding.'' 5 
U.S.C. Sec. 555(b). Therefore, the SSA, as a party, has the right to 
appear on its own behalf at the proceedings before the OHA. However, 
the Social Security Administration is not represented at the disability 
hearing before an administrative law judge. SSA regulations long have 
stated that it ``conducts the administrative review process in an 
informal, nonadversary manner,'' 20 C.F.R. Sec. 404.900(b), so SSA thus 
has waived its right to appear at the ALJ hearings. The present system 
worked well when most claimants in Social Security cases were not 
represented at the hearing. However, there has been a dramatic rise in 
the number of claimants who are represented at the hearing. Presently, 
well over 80% of the claimants are represented at the hearing. The 
Social Security Advisory Board has noted that ``[t]he percentage . . . 
of claimants represented by attorneys at ALJ hearings has nearly 
doubled [between] 1997 [and 2000].'' SSAB, Disability Decision Making: 
Data and Materials, Chart 56--Attorney and Non-attorney Representatives 
at ALJ Hearings Fiscal Years 1997-2000, p. 73 (January 2001).
    In its recent report, the SSAB recommended that the SSA have 
representation at the Social Security disability hearing: ``We think 
that having an individual present at the hearing to defend the agency's 
position would help to clarify the issues and introduce greater 
consistency and accountability into the adjudicative system.'' Charting 
the Future of Social Security's Disability Programs: The need for 
Fundamental Change, January 2001, p. 19.
    The SSA had a pilot program for its representation at the hearing 
in 1982. This pilot program was discontinued after an unfavorable court 
decision on the project. Salling v. Bowen, 641 F. Supp. 1046 (W.D.Va. 
1986). The past pilot program on the government representative project 
was not an adequate test of this system. The SSA should implement a new 
test program for agency representation at the hearing. This pilot 
project should be implemented in coordination with the claimants' bar, 
SSA employee organizations, our Association, and other interested 
groups. The pilot program should address the issues raised by the court 
in Salling. The objective is to establish a hearing process that 
provides a full and fair hearing for all parties who have an interest 
in the case.
    In addition, in the current non-adversarial setting, the SSA ALJ 
has the legal responsibility to ``wear three hats'' in each case. The 
ALJ legally is bound to ensure that all of the claimant's relevant and 
material evidence is made part of the record and the claimant's 
interests are protected, to protect the interests of the government in 
the hearing, and to make a fair decision which is based on the evidence 
in the record. Additionally, the judge must take care to not become 
overly protective of the interests of the government for fear that the 
case will be reversed on appeal on a claim of bias against the 
claimant. The inherent conflict in all of these roles is patent and 
would be resolved by having the government represented at the hearing.

    4. If the SSA Provides for a Government Representative at the 
Hearing, Require Issue Exhaustion at the Appeals Council Level for 
Represented Claimants: As the Supreme Court stated in Sims v. Apfel, 
530 U.S. 103, 120 S.Ct. 2080, 147 L. Ed. 2d 80 (2000), there is no 
statute or regulation that requires that a claimant must list the 
specific issues to be considered on appeal on the request for review by 
the Appeals Council of an ALJ's decision, in order to preserve those 
issues for judicial review. Although agencies often issue ``regulations 
to require issue exhaustion in administrative appeals,'' which are 
enforced by the courts by not considering unexhausted issues, ``. . . 
SSA regulations do not require issue exhaustion.'' Id. at 2084. The 
Supreme Court refused to impose a judicially inferred issue exhaustion 
requirement in order to preserve judicial review of the issues upon a 
claimant for Title II and Title XVI Social Security Act benefits 
because the issues in SSA hearings are not developed in an adversarial 
administrative proceeding and the ``[Appeals] Council, not the 
claimant, has primary responsibility for identifying and developing the 
issues.'' Id. at 2086. However, the Court, deferring to the agency, 
noted that ``. . . we think it likely that the Commissioner could adopt 
a regulation that did require issue exhaustion.'' Id at 2084. The 
Supreme Court thus explicitly invited SSA to draft new regulations.
    Unrepresented claimants should be excepted from the requirement to 
show good cause. Expecting unrepresented claimants to bear the burden 
of preserving specific legal issues for judicial review does not 
comport with a sense of fair play and keeping the claims process 
claimant-friendly.
    Issue exhaustion would bring finality to the administrative process 
and it is consistent with the general principles of administrative law 
and the procedure of other agencies in the Federal Government.
LC. Strategies to Reduce Case Processing Time and Increase Quality of 
        Service at OHA While Preserving Due Process
    1. Administratively Reform the HPI Process: SSA should change the 
HPI process by assigning cases to ALJs at an earlier point in the 
process, such as when the cases are entered into the computerized 
master docket. This would return the control of pre-hearing case 
development to the ALJs, leave the ALJ in control of the hearing, and 
support the ALJ's responsibility for determining when a draft decision 
is legally sufficient. SSA also should return individual accountability 
for work product to the employees by assigning staff employees to work 
with each ALJ, which should consist of a clerical person, paralegal, 
and staff attorney. This will enhance morale through a sense of 
ownership by employees working on particular cases for an individual 
judge. These changes are needed to permit the ALJs to provide full and 
fair hearings for the American public in an efficient and timely 
manner. SSA may effect these changes administratively on a short term 
basis.

    2. Redefine Paralegal Specialist Job To Include Clerical Duties: 
SSA OHA may redefine the GS-0950 Paralegal Specialist ALJ decision 
writer job across a broad band of General Schedule levels to permit the 
assignment of appropriate clerical duties to the people promoted to 
this position who have not performed the ALJ decision writing function 
well. The clerical work could include the case pulling and other 
clerical work that has been accumulating. This permits the necessary 
clerical work of the agency to get done while permitting the promoted 
staff to stay at their new grade levels and experience satisfaction 
from a job well done.

    3. Enhance the Appeals Council Case Tracking System: SSA should 
install a modern computerized case tracking system to prevent loss of 
files by the Appeals Council.

    4. Reorganize the Office of Hearings and Appeals

    (a) Proposed Legislation to Reform the Office of the Chief Judge:

    Current Status:

        L  The adjudication of administrative claims by the SSA is 
        currently done by administrative law judges who are part of the 
        Office of Hearings and Appeals. The function for both 
        administrative law judge hearings and the appellate process for 
        the review of administrative law judge decisions by the Appeals 
        Council are located in the Office of Hearings and Appeals. The 
        Office of Hearings and Appeals is under the dual leadership of 
        a Chief Administrative Law Judge and an Associate Commissioner. 
        The Position Description of the Chief Administrative Law Judge 
        places the Chief Judge in charge of the hearings function and 
        hearings field operation of the agency. The Associate 
        Commissioner is placed in charge of the Appeals council and 
        major policy making responsibilities of the Office of Hearings 
        and Appeals. The Chief Judge reports to the Associate 
        Commissioner who reports to the Deputy Commissioner for 
        Disability & Income Security Programs.

    Problems with Current System:

        L  In the current organization of SSA the Office of Hearings 
        and Appeals is buried in the bureaucracy and is far removed 
        from the Commissioner. This structure prevents the Commissioner 
        from having effective oversight of the agency hearing process. 
        The administrative law judge adjudication function should not 
        be treated as a staff responsibility in the agency. The 
        administrative law judge adjudication function is a major 
        program of the agency with every individual in this nation 
        being a potential claimant within the system. The SSA 
        administrative law judge hearing system protects a 
        constitutional right of our citizens and provides a 
        constitutionally protected due process hearing to the American 
        public. This vital process should have direct oversight from 
        the Commissioner and the Chief Judge should have direct 
        interaction with the Commissioner. Another major defect in the 
        Office of Hearings and Appeals is created by the dual 
        leadership responsibilities of the Chief Judge and the 
        Associate Commissioner. Frequently these two leaders are 
        competing for power to control the administrative and/or policy 
        decisions for this component of SSA which has deprived OHA of 
        strong effective leadership. The lack of effective leadership 
        and direction of the Office of Hearings and Appeals has 
        resulted in an organization that has been deteriorating. During 
        the past 10 plus years several reforms have been imposed on the 
        SSA hearing process. Each attempt has resulted in failure. 
        Subsequent to a recent change in the hearing office process 
        that was implemented in January 2000 (HPI), the number of case 
        depositions have dropped while the case processing time and the 
        case backlog have increased. The result has been poorer service 
        for the American public. Within the past several years, the 
        Associate Commissioner attempted to reorganize the 
        responsibilities of the Chief Judge and divest the Chief Judge 
        of most of the powers of that office leaving the Chief Judge 
        with some minor duties relating to judicial education and staff 
        support for the Associate Commissioner. This scheme was 
        thwarted by the efforts of interested individuals and 
        organizations together with the oversight action of the 
        Congress.

        L  The problem has now returned with the present Associate 
        Commissioner of the Office of Hearings and Appeals. He has 
        striped most of the power from the Office of the Chief Judge. 
        He treats the Chief Judge as a staff person instead of a vital 
        policy maker who is in charge of the field operations for the 
        hearings function of the agency as provided for in the Chief 
        Judge's position description. This action of the Associate 
        Commissioner has led to a crisis within the Office of Hearings 
        and Appeals with the last Acting Chief Judge leaving the 
        position after having served for only a few weeks in office. 
        The Chief Judge position for the agency is now vacant. This 
        position has not been filled since the last Chief Judge left 
        over a year ago.

    Proposed Reform:

        L  This system requires basic reform which places an 
        established Chief Judge in charge of the agency hearing process 
        with reporting responsibility directly to the Commissioner. We 
        propose legislation that separates the agency hearings function 
        from the Appeals Council and places the hearing component under 
        the control of a Chief Judge who reports directly to the 
        Commissioner.

    The following improvements in service to the American public will 
result from the proposed legislation:

        L  a. The Commissioner will have direct oversight of the 
        hearing component of the agency which is necessary to 
        effectively administer this important program which provides 
        constitutional due process hearings for the American public.

        L  b. Improved leadership and efficiency in the hearings 
        component will permit the SSA to provide better service for the 
        American public by increasing case dispositions, reducing 
        processing times and reducing case backlogs.

        L  c. The change will improve the SSA hearing process and will 
        continue to ensure that the American public receives a fair 
        constitutional due process hearing.

        L  d. The proposed legislation creates an Office of 
        Administrative Law Judges in the Social Security 
        Administration.

        L  e. The Office of Administrative Law Judges headed by the 
        Chief Judge who reports directly to the Commissioner. The Chief 
        Judge is appointed by the Commissioner for a term of 6 years.

        L  f. The administrative law judge hearing component of SSA is 
        regarded as an organization that is responsible for 
        administering a major agency program which reports directly to 
        the Commissioner. It will be no longer organized as a staff 
        function within the agency.

        L  g. The Office of Administrative Law Judges will have one 
        individual, the Chief Judge, responsible for administrative 
        operations and policy making. This will result in effective 
        leadership of the administrative law judge function.

        L  h. The Associate Commissioner of the Office of Hearings and 
        Appeals will continue to head the Appeals Council.

        L  i. This change is endorsed by the Social Security Advisory 
        Board (``SSAB''). The SSAB recently prepared a report on the 
        Social Security disability system that states that ``[m]any 
        believe that the Office of Hearings and Appeals is buried too 
        low in the agency and should be elevated so that the head of 
        the office would report directly to the agency leadership. 
        Others believe that there should be independent status for an 
        administrative law judge organization'' Charting the Future of 
        Social Security's Disability Programs: The need for Fundamental 
        Change, January 2001, p. 19.

        L  j. The change is a reorganization within the agency and will 
        not result in any additional costs to the agency.

    (b) In the Alternative, Reorganize OHA to Have the Chief ALJ Report 
Directly to the Commissioner and Replace the Appeals Council with a 
Right of Appeal to Appellate Panels Staffed by ALJs that Would Be 
Administered by the Chief ALJ: This proposal is identical to AALJ's 
proposal for an independent adjudication agency that would provide a 
hearing before an ALJ with a right of appeal from the individual ALJ's 
decision to an appellate panel staffed by ALJs, which is explained in 
suggestion 6(b) below, except that the Chief ALJ would report to the 
Commissioner rather than be the head of an independent agency. Such a 
reorganization may be effected by the SSA without legislation.

    (c) As an Alternative to Reorganizing OHA, Create A New Independent 
Agency within SSA to Issue the Final Administrative Decisions of Social 
Security Act Claims, Including Medicare Claims: AALJ recommends the 
creation of a new ALJ-administered independent adjudication agency for 
Social Security Act claims that would provide a hearing before an ALJ 
with a right of appeal from the individual ALJ's decision to an 
appellate panel staffed by ALJs. The panels would consist of three ALJs 
who would review the cases locally. A Chief ALJ would administer the 
agency. The Social Security Act hearing process should be reformed by 
the transfer of the authority to make final administrative 
adjudications of Social Security Act claims, which currently are made 
at the ALJ and SSA Appeals Council levels, from the Social Security 
Administration to a new independent adjudication agency. This agency 
may be called the United States Office of Hearings and Appeals 
(``USOHA''). This agency is to be located within the SSA.
    This proposal would provide the claimants with timely, high 
quality, impartial and fair decisions of their claims pursuant to the 
Social Security Act and Administrative Procedure Act (``APA'') by 
adjudicators who are in an agency independent of, but within, the SSA. 
The USOHA would have the exclusive jurisdiction to make the final 
administrative decisions of Social Security Act Title II and XVI 
claims. The USOHA would have permissive jurisdiction over other classes 
of cases, including Medicare cases under Social Security Act Title 
XVIII.
    On December 4, 2001, the House passed the Medicare Regulatory and 
Contracting Reform Act of 2001, H.R. 3391, section 401 of which 
authorizes the transfer of the ALJ function from SSA to the Department 
of Health and Human Services by October 1, 2003, to hear and decide 
Medicare cases pursuant to Title XVIII of the Social Security Act. 
AALJ's proposal advocates placing all of the ALJs hearing Social 
Security Act cases into one independent agency, including Medicare 
cases.
    The ALJ appellate panels would be akin to the Bankruptcy Court 
appellate panels and is one of the key features that makes the ALJ 
self-administration model superior to the current SSA Appeals Council 
model, which is a small body that cannot timely and effectively handle 
a heavy caseload. Based upon the Bankruptcy Court experience, the 
appellate panel model (1) is an appellate system that can handle a 
large caseload, (2) results in a shorter disposition time because the 
large pool of about 1,000 ALJs throughout the United States permits the 
timely determination of appeals that cannot take place with a small 
body such as the Appeals Council or a Commission or Board, (3) results 
in higher quality decisions because of expertise, (4) results in 
substantially fewer appeals to the courts and a substantially lower 
reversal rate by the courts because of the confidence in the high 
quality of the decisions, which reflects a higher degree of decision 
accuracy, (5) results in a substantially reduced federal court 
caseload, and (6) affords the claimants access to a local 
administrative appellate process.
    This proposal requires legislation that would amend the Social 
Security Act.
    A detailed version of the features of the proposed new agency and 
the rationales for such a new agency is presented in the AALJ's 
Statement that is published in the Report for the June 28, 2001, First 
Hearing in the Series on Social Security Disability Programs' 
Challenges and Opportunities, House Subcommittee on Social Security, 
No. 107-35, 107th Cong., 1st Sess., pp. 80-93. A very detailed version 
of the features of the proposed new agency and the rationales for such 
a new agency is presented in the AALJ's ``Report and Recommendations 
for the Transfer of the Authority to Make Final Administrative 
Adjudications of the Social Security Act Claims from the Social 
Security Administration to a New Independent Regulatory Agency,'' which 
is available on the AALJ website, www.aalj.org.

    (d) As an Alternative to Reorganizing OHA, Create A New Independent 
Agency outside SSA to Issue the Final Administrative Decisions of 
Social Security Act Claims, Including Medicare Claims: Another 
alternative is to create a separate adjudication agency to hear Social 
Security Act claims, including Medicare claims. This agency would have 
the same organization structure as is described in section 4(c) 
immediately above, but it would be a separate agency outside the SSA.
            Submitted respectfully,
                                                 Ronald G. Bernoski
                                                          President

                               

                                   Association of Attorney-Advisors
                                            Paducah, Kentucky 42003
To: The Subcommittee on Social Security
   Of the Committee on Ways and Means

Subject: Submission of Comments related to Hearing on May 2, 2002

    I am the President of the Association of Attorney-Advisors, an 
organization comprised of attorneys throughout OHA, and includes in its 
membership both GS-12 Attorney-Advisors and GS-13 Senior Attorney-
Advisors, as well as some attorneys who are members of management and 
some Administrative Law Judges. We have been reading with great 
interest the submissions of some of our fellow professionals who are 
concerned with the future direction of OHA. This paper is not designed 
to exhaust all of issues currently facing OHA, but to comment on some 
of the proposals which have been presented.
    1. DDS receipt of hearing functions. It has been proposed that the 
hearing functions be removed from OHA, thereby dissolving the 
organization, and be added to the responsibilities of the state 
agencies. The Association of Attorney-Advisors is very much against 
that plan. It is the DDS position that disability determinations are 
solely a medical evaluation. The DDS believes that the ultimate 
arbitrator of disability should be the state agency physicians who 
review the medical records. This is contrary to existing law and 
regulation. The Social Security Act, related Regulations, Rulings and 
case law set forth the legal framework for analyzing the medical 
evidence of record. The ultimate decision regarding disability is 
reserved for the Commissioner, rather than any physician including a 
treating physician, much less a non-examining medical source. The law 
recognizes the need to evaluate multiple pieces of evidence from 
multiple sources and assign weight to each. Intangible aspects of a 
case, such as the credibility of a claimant's complaints of pain, 
require more analysis than a review of objective tests alone can give. 
(see 20 CFR 404.1512, 20 CFR 416.912, 20 CFR 404.1527. 20 CFR 416.927, 
Social Security Ruling 96-2p, Social Security Ruling 96-5p and Social 
Security Ruling 96-6p.
    Several years ago, the Agency underwent Process Unification 
Training (PUT) to help bring the state agencies into line with the 
legal requirements for determining disability. No substantive change 
has occurred in the state processing of claims. Little effort is made 
to properly evaluate a claimant's credibility. Further, in many cases, 
development is not near completion when files are turned over to OHA. 
The state agencies have not shown the capacity for managing the legal 
requirements of our joint business. Turning the hearing process over to 
the state agency would dramatically change the claimant's due process 
rights and would eliminate his ability to receive a proper legal 
determination regarding whether entitlement to benefits.
    The Association is also concerned with the timelines promised in 
proposal. One of the challenging aspects of disability determinations 
is ensuring reasonable development of the record has occurred. Many 
medical sources take longer to respond to requests for records than the 
proposed time frames would allow. One reason for the disparity among 
cases denied at the DDS level but paid at the OHA level is the 
additional development that OHA accomplishes. The ``fair hearing'' 
proposed by the DDS is fair only if adequate development has occurred. 
A ``fair hearing'' is fair only, if after being apprised of his rights, 
a claimant has sufficient time to obtain representation and opportunity 
to ensure the record is as complete as possible.
    2. Elimination of reconsideration reviews. One of the programs 
which has been tested is the elimination of the reconsideration level 
of review at the state agency level. We recommend this be considered 
for a nationwide test. As a general rule, the reconsideration level of 
evaluation does not add value to the process. Little new development is 
performed at that step. If the funds that were used to carry out the 
reconsideration process were used for better development at the initial 
level of consideration or to increase fees paid to medical consultants, 
the claimant would be much better served.
    3. Consideration of a Government Representative Program. The 
government representation program would have many advantages. 
Administrative Law Judges would be relieved of the burden of case 
development and could assume a more traditional judicial role. They 
could focus on hearing and deciding cases, rather than performing the 
ongoing reviews required in current efforts to schedule cases. 
Attorneys assuming the duties of government representative would have 
the opportunity to more fully utilize their skills as advocates. Many 
of the OHA attorneys have backgrounds as former prosecutors and civil 
litigators who are more than capable of evaluating a case, ordering 
development, negotiating settlements, and making presentations during 
the hearing. The job of the Administrative Law Judge would be made much 
easier by having issues defined and ready for evaluation at the 
hearing, thus expediting the process for the claimant. For those 
attorneys who do not want these additional duties, there will still be 
a need for competent attorneys to engage solely in decision writing for 
the Administrative Law Judges. It makes sense for the Agency to fully 
utilize the experience and skill of its staff. The Association of 
Attorney-Advisors feels this program has a long-term promise.
    4. The ``old'' Senior Attorney Program. The only program which has 
thus far demonstrated the ability to speed up the processing of 
favorable decisions is the prior Senior Attorney Program. The Agency is 
well aware of the success of the program in cutting down the backlog of 
cases and reducing average case processing times. Serious consideration 
should be given to returning signature authority to the Senior 
Attorneys.
    5. Two other recommendations for immediate relief. There were 
numerous problems with HPI, which have been addressed in depth in other 
documents. At the heart of the failure was the lack of trust the Agency 
had in its management and employees. Local management had minimal imput 
in the implementation in HPI. Forcing a ``one size fits all'' approach 
will not bring about further improvement. Prior to bringing about any 
change, the Agency needs to collectively take a deep breath and look at 
the progress of individual offices. Some offices are fully staffed in 
judges, others are woefully short. Some offices need more managers to 
handle the workload, others may need to decrease the management team. 
Some offices are overstaffed in writers, others need more. Almost every 
office needs some degree of supplemental support staff. We need to 
avoid any approach where manning edicts are made across the board 
ranging from full-time receptionists to additional case technicians. 
Local management should be given a voice to individual office manning 
concerns.
    A) Support Staff--Funding needs to be made available to be able to 
hire adequate support staff to manage all the administrative functions 
associated with hearing cases. Local management needs to ensure there 
staff is doing its best to work up cases, however, in some offices 
workload far exceeds the available staff. It is inexcusable that a 
claimant would have to wait months just to have a case technician work 
up his case.
    B) Administrative Law Judge support--In some offices, the staffing 
of Administrative Law Judge slots is significantly less than needed to 
adequately hear cases. While many offices report the need for more 
Administrative Law Judges, hiring could be delayed indefinitely due to 
the litigation with OPM in regards to the Azdell case. Pending 
resolution of Azdell, some measure must be taken to get additional 
cases heard. The time has come for serious consideration of some form 
of magistrate's program, where claimants could opt to have their cases 
heard by an attorney magistrate in lieu of a judge. Unlike the 
Adjudication Officer program, the attorney magistrate would need to be 
empowered to hold full hearings and issue unfavorable as well as 
favorable decisions. Although increasing the number of Administrative 
Law Judges would be preferred, until that is possible, the position of 
magistrate would enable additional cases to be heard and give 
claimant's final resolution in the disability process.
    Thank you for your attention. This is intended to be a general 
overview of our position. We welcome the opportunity to discuss any 
plans in further detail. We hope that a process can be worked out to 
enable OHA to better serve the needs of the claimants and the general 
public.
                                                  Lisa Russell Hall
                                                          President

                               

                   Federal Bar Association, Social Security Section
                                                Washington DC 20037
                                                       May 16, 2002
The Honorable Clay Shaw, Jr.
Chairman
Subcommittee on Social Security
U.S. House of Representatives
B-316 Rayburn House Office Building
Washington, D.C. 20015

Re: Challenges Facing the New Commissioner of Social Security

    Dear Chairman Shaw:
    Thank you for holding the hearing on May 2, 2002 on the challenges 
facing the new Commissioner of Social Security. Those challenges are of 
considerable interest to the membership of the Social Security Section 
of the Federal Bar Association (FBA), and we request that this 
correspondence be entered into the hearing record. The comments 
presented herein are exclusively those of the Social Security Section 
of the FBA and do not represent the official views of the Social 
Security Administration, in whose employment we serve as Administrative 
Law Judges.
    As you know, the Federal Bar Association is the foremost 
professional association for attorneys engaged in the practice of law 
before federal administrative agencies and the federal courts. Fifteen 
thousand members of the legal profession belong to the Federal Bar 
Association. They are affiliated with over 100 FBA chapters across the 
nation. There are also over a dozen sections organized by substantive 
areas of practice such as the Social Security Section, of which I am 
the Chair.
    Unlike other organizations associated with Social Security 
disability practice that tend to represent the narrow interests of one 
specific group, the Federal Bar Association's Social Security Section 
encompasses all attorneys involved in Social Security disability 
adjudication. Our members include:

         Attorney Representatives of claimants

         Administrative Law Judges (ALJs)

         Administrative Judges at the Appeals Council

         Staff Attorneys at the Office of Hearings and Appeals

         Attorneys at the Social Security Administration's 
        Office of General Counsel

         U.S. Attorneys

         U.S. Magistrate Judges, District Court Judges and 
        Circuit Court Judges

    The primary interest of the FBA's Social Security Section is in the 
effectiveness of the adjudicatory processes associated with hearings in 
the Office of Hearings and Appeals (OHA), the appeal process at the 
Appeals Council, and judicial review in the federal courts. It is the 
Section's collective view that the Social Security disability program 
is under considerable strain. Current delays in the processing of 
claims are unacceptable and the quality of decisions at all levels is 
less than ideal. The Commissioner is faced with a daunting task. It is 
with that in mind that we offer the following comments.
1. Fully Implement Process Unification at All Levels of Adjudication
    Process unification is essential to an efficient, timely and 
accurate disability adjudication system that ensures disabled claimants 
will be paid as early in the process as possible.
    In the mid-1990's the Social Security Administration (SSA) 
acknowledged the inconsistency created by the Disability Determination 
Services (DDS) applying one set of rules for determining eligibility 
through the Program Operations Manual (POMS), and its Administrative 
Law Judges, Appeals Council, and the federal courts applying another 
through statute, regulations, rulings and case law. Consequently, in 
1996 SSA initiated Process Unification Training for all DDSs, ALJs, and 
the Appeals Council. The training was based on a set of rulings--the 
``Process Unification Rulings''--that were designed to guide all 
adjudicators at every level. It was anticipated that the DDSs would no 
longer rely exclusively on POMs, and that they would begin to write an 
analysis of their decision-making. This rationalized determination, in 
turn, would be granted some deference by reviewing ALJs and Appeals 
Council.
    This plan for a unified process never came about, however. 
Unfortunately, the DDSs did not follow through and continued to apply 
the narrow standards of POMs, giving mere lip service to claimants' 
subjective complaints. Today they continue to fail to provide any 
meaningful analysis of their decisions, leaving unclear what 
standard(s) they are applying to their review of disability claims.
    We submit that SSA had it right the first time when it recognized 
the need for process unification. Fairness requires that all 
adjudicators assess a disability claim using the same legal standards 
and requirements.
    A fundamental premise of the SSA process unification effort was 
that disability benefits should be awarded to claimants as soon as 
their disability has been determined under the law. The burden of long 
delays to claimants before the statute, regulations, rulings, and case 
law are applied is unacceptable and does not serve the interests of 
justice. Quite simply, it can wreak havoc in the lives of claimants.
    The Commissioner recently announced that in an effort to deal with 
the backlog and delays at OHA, ALJs would begin to review raw, unpulled 
files as they arrived from DDS. The purpose of the review is twofold: 
to allow those claims that can be allowed on the record without a 
hearing, and to undertake immediate development of cases requiring 
additional development.
    On its face, this initiative attests to the failure of process 
unification. If such an initiative can be productive and result in a 
significant number of dispositions or significant additional 
development, then the cases were either: (1) not decided correctly 
under the law at the DDS; or (2) not adequately developed at the DDS.
L2. Preservation of the Due Process Hearing Before an Administrative 
        Law Judge
    It is our understanding that various proposals are being made that 
would eliminate a hearing before an Administrative Law Judge. The FBA 
strongly opposes any such effort for the following reasons.
    In 1983, a Senate Subcommittee on Oversight of Government 
Management of the Committee on Governmental Affairs conducted a hearing 
that inquired into the role of the ALJ in disability hearings. The 
report provided in part:

        L  The principal finding of the Subcommittee is that the SSA is 
        pressuring its ALJs to reduce the rate at which they allow 
        disabled persons to participate in the Social Security 
        Disability Program . . . . [The Subcommittee found that the SSA 
        was limiting the decisional independence of ALJs through its 
        Rulings, its non-acquiescence to federal court decisions, and 
        its increasing of case quotas that reduced the time an ALJ 
        could spend on each case to develop additional evidence that 
        may support an allowance decision, among other things.] The APA 
        mandates that the ALJ be an independent, impartial adjudicator 
        in the administrative process and in so doing separates the 
        adjudicative and prosecutorial functions of an agency. The ALJ 
        is the only impartial, independent adjudicator available to the 
        claimant in the administrative process, and the only person who 
        stands between the claimant and the whim of agency bias and 
        policy. If the ALJ is subordinated to the role of a mere 
        employee, an instrument and mouthpiece for the SSA, then we 
        will have returned to the days when the agency was both 
        prosecutor and judge.

Sen. Rep. No. 98-111 (September 16, 1983).
    The Administrative Procedure Act requires that independent 
administrative law judges be selected on a merit basis and insulated 
from agency bias and pressure in performing the adjudicative function. 
See Butz v. Economu, 458 U.S. 478, 513 (1978). Regretfully, as noted in 
the Senate Report, SSA has in the past attempted to subvert the 
statutory independence of its administrative law judges. It has sought 
overtly and at other times more subtly to influence the decisions of 
its ALJs to achieve some predetermined acceptable allowance rate or 
altogether cease payment of benefits to a particular class of disabled 
beneficiaries. In one well-publicized episode in 1982, SSA attempted to 
terminate benefits to thousands of Americans with mental disabilities, 
triggering the reversal in many cases of that policy decision by SSA 
ALJs who applied the law and restored the benefits. The American Bar 
Association in fact honored the SSA ALJ corps for their outstanding 
efforts during the period from 1982-84 to protect the administrative 
adjudication within their agency, to preserve the public confidence in 
the fairness of governmental institutions and to uphold the rule of 
law.
    A due process hearing conducted by an ALJ is a protection against 
potential agency bias and policy that may at times run contrary to the 
law as mandated by Congress. Disability claimants should not be 
deprived of this step in the disability process. That being said, there 
remains the critical issue of unacceptably long delays at OHA. The 
causes of these delays are many, but most obvious is the abject failure 
of the Hearing Process Improvement (HPI) initiative. Prior to HPI, in 
FY 1998, ALJs issued 618,578 decisions. In FY 2001, with full 
implementation of HPI, that figure plummeted to 465,228.
    The defects in HPI, both in design and implementation, are legion 
and need not be enumerated here. Suffice it to say, a fundamental 
problem was the de-legalization of the adjudicative process, which 
included the removal of judges from the case development function. Over 
350 employees, primarily from the clerical ranks, were promoted to the 
position of ``paralegal''. Their promotion left OHA bereft of employees 
trained in ``pulling cases'' in preparation for adjudication by 
administrative law judges. This created fewer cases ready for judges to 
hear and decide. The employees who have been promoted to the 
``paralegal'' position, in almost all cases, have had no legal training 
whatsoever and in their promotion were not even required to demonstrate 
an ability to write; yet, they are tasked with writing draft decisions 
for the judges--decisions that are subject to judicial review in U.S. 
District Court. Attorneys could have filled the positions encumbered by 
these ``paralegals'' as the two positions are at the same grade level. 
Instead, SSA made the conscious choice to fill these slots with 
clerical workers rather than trained lawyers. It goes without saying 
that under this new arrangement the review time required for judges to 
edit and revise their decisions has increased exponentially further 
delaying disposition of claimants' cases.
    OHA performs an adjudicative function and its procedures and 
support systems need to be designed and implemented to facilitate that 
function. Clearly, with proper and adequate support, ALJs are capable 
of expediently adjudicating the cases before them while providing 
claimants with due process. In addition, OHA should be under the 
direction of a Chief Administrative Law Judge who is provided 
appropriate administrative assistance in carrying out the adjudicative 
function. The administrative and support system should not be dictating 
to the judges how the adjudicative function should be accomplished.
L3. Extension of Fee Withholding to Supplemental Security Income (SSI) 
        Cases
    Attorneys who practice Social Security disability law 
overwhelmingly endorse the extension of withholding attorney fees in 
SSI cases, due to the high risk of nonpayment for services rendered. 
This is reflected in SSA's FY 2000 statistics at the OHA level, which 
show that 74.9% of Title II claimants were represented while only 45.9% 
of title XVI claimants were represented. Many attorneys simply decline 
to handle SSI cases, and this appears to be a growing trend. Those who 
do accept such cases tend to do so out of a sense of obligation and 
often in the spirit of pro bono work. SSI claimants should not have to 
rely upon the collective good conscience of a few attorneys for 
representation.
    While Administrative Law Judges are charged with protecting the 
interests of pro se claimants and do their best to meet that 
obligation, it is done in the context of a very heavy caseload. ALJs 
carry hundreds of cases on their dockets. The reality is that a 
represented claimant, by virtue of the time, attention and expertise 
that a representative can provide, has a better chance of prevailing in 
his appeal. This is recognized by the Consortium for Citizens with 
Disabilities (CCD), as reflected in Marty Ford's testimony at the May, 
2001 hearing of your Subcommittee. While resources such as legal 
services and pro bono attorney work are invaluable, they are limited in 
their availability. As the CCD pointed out, the potential denial of 
benefits for SSI claimants, due to lack of experienced legal 
representation, far outweighs the burden of having reasonable attorney 
fees withheld from their back benefits.
    It is our understanding that SSA now supports this provision and we 
applaud that decision. We believe attorney fee withholding in SSI cases 
will benefit SSA by increasing attorney representation which will, in 
turn, serve to screen cases, educate claimants regarding the 
eligibility criteria, aid in the production of evidence, and further 
the goal of insuring that the proper decision is made as soon as 
possible.
L4. Establishment of a Comprehensive Quality Assurance Program 
        Throughout the Disability Program
    The General Accounting office has repeatedly reported that SSA 
needs to implement a comprehensive and meaningful quality assurance 
system. SSA announced a plan to revamp its existing quality assurance 
system in 1994. Yet, in 2001 SSA acknowledged that its quality 
assurance system needed to more effectively promote uniform and 
consistent disability decisions across all geographic and adjudicative 
levels. GAO has made specific recommendations as to the content of such 
a plan.
    The Commissioner has appointed a Regional Commissioner to lead an 
effort to establish a quality assurance program. We commend this action 
and encourage the development of a comprehensive quality assurance 
program that establishes quality standards at all levels of the claims 
process. The disability program is a nationwide program and it is not 
acceptable to have allowance rates at the DDS level on Title II 
disability claims in FY 2000 ranging from a low of 31% in one state to 
a high of 65% in another state.
    A quality assurance plan should, for example, set the standard for 
the collection of evidence at all levels of review, including DDS. Much 
of the delay in the life of a disability claim is due to the time 
needed to collect relevant evidence. For example, if a claimant alleges 
disability due to severe injuries in an automobile accident and DDS 
only obtains the primary care physician records of general care and 
fails to obtain the records of the trauma surgeon and hospital, it will 
not have the relevant evidence needed to make an accurate 
determination. While a denial based on the primary care physician 
records may be technically correct, given the record as developed, that 
record is wholly inadequate. The claimant is then forced to appeal the 
denial until someone develops the complete and relevant record. If the 
correct record were obtained at the DDS level, the accuracy of the DDS 
decision could be realistically measured. It is a meaningless statistic 
to say the DDS made the right decision, when it was rendered on an 
inadequate record.
    Similarly, delays at the ALJ level occur while the relevant 
evidence is obtained and the file is assembled. One of SSA's redesign 
initiatives, the Adjudication Officer (AO), sought to accomplish the 
generation of evidence and file assembly at the DDS level. The AO 
developed the record and granted eligible claims, forwarding the 
ineligible claims to an ALJ for further review. In those cases that 
were denied, the AO prepared a summary of the evidence, and certified 
that the record was complete. The case was then heard by an ALJ 
generally within 60 to 90 days of its receipt and little or no further 
development of the record was required. Concerns were raised about the 
AO project because a higher percentage of claims was being paid at the 
DDS level, and administrative costs for assembling a complete record 
and providing a summary were high. The project, however, resulted in 
correct decisions earlier in the process and savings of administrative 
costs and time at OHA.
    A Quality Assurance Program should measure the adequacy of the 
file, the quality of the analysis, and the correctness of decisions at 
all levels. It should also undertake to measure the accuracy of both 
allowances and denials of claims. At the DDS level, quality review work 
currently performed by SSA's Disability Quality Branch focuses on 
allowances of claims rather than denials. This creates systemic 
pressure on the DDS examiner to avoid erroneous allowances, but not 
necessarily erroneous denials. Since an erroneous denial is much less 
likely to be scrutinized by quality control, a denial represents a far 
more attractive and safer decision option for the DDS examiner. At the 
ALJ level, the opposite is true. To be effective, without subtly 
influencing the outcome of decision-making, a quality assurance program 
should be neutral and refrain from pushing the process toward allowing 
or disallowing claims. The QA program must measure the accuracy of both 
allowances and denials.
L5. Electronic Folders (E-DIB) Must be Adequately Funded, Closely 
        Monitored, and Not Viewed as the Complete Answer to Disability 
        Adjudication Problems
    The Commissioner has announced that the entire record at all levels 
will be contained in an electronic folder (E-DIB) by January, 2004. The 
E-DIB initiative has the potential to provide significant improvement 
in the speed of claims adjudication. However, given SSA's track record 
in the conceptualization and implementation of HPI and other redesign 
initiatives, we strongly encourage the application of significant care 
and attention to the testing and introduction of E-DIB.
    Very few details concerning the plan have been announced, and there 
are innumerable questions relating to the implementation of this 
initiative. We urge extensive testing at the pilot stage and vigilant 
monitoring of its rollout. Given the shortage of personnel within DDS 
and OHA to handle the current caseload, careful attention also should 
be devoted to staffing plans for those who will maintain the systems 
and scan the documents included in the electronic folder. Attention 
should also be devoted to whether E-DIB coverage will extend to claims 
pending at the time of conversion or whether this will include only 
claims filed after January, 2004. The Social Security Administration 
needs to work with the representative community to insure the 
confidentiality of the claimant's record, while also assuring safety 
and security of the internet system itself. Access to the claimant's 
record by those on the other side of the digital divide, who lack 
compatible equipment, also should be considered.
L6. Elimination of Reconsideration and Reorganization of the Appeals 
        Council
    The FBA seriously questions whether the current processes of DDS 
level reconsideration and Appeals Council review are serving their 
intended purposes. Thoughtful scrutiny should be devoted to whether the 
time spent on these two review processes contributes to the effective 
adjudication of disability claims and the interests of justice.
    A claimant who is initially denied benefits may request DDS 
reconsideration of the denial decision. Reconsideration is widely--and 
correctly--viewed as little more than a rubber stamp of the initial 
denial. During FY 2001, of an average 100 claims processed by DDS, 40 
were approved at the initial level and 4 at the reconsideration level. 
Time spent at the reconsideration level was 69 days. Given the few 
requests for reconsideration that ultimately are successful, concerns 
can be deservedly raised whether reconsideration represents a 
meaningful step in the disability process.
    Similar attention should be devoted to the role and effectiveness 
of Appeals Council review. Upon receipt of an adverse claims decision 
by an ALJ, a claimant may appeal to the Appeals Council, which then 
undertakes a review on the record. While the Appeals Council serves a 
valuable purpose in screening out many cases that should not reach 
federal court due to deficiencies in the ALJ decisions, the Appeals 
Council is overwhelmed by its staggering workload. It has taken steps 
to shorten its appeal time, and according to the General Accounting 
Office, reduced the amount of time to process an appeal from 458 days 
in FY 1999 to 447 days in FY 1999. This is still an unduly long period 
of time.
    The substantive legal correctness of the decisions of the Appeals 
Council has also been frequently challenged. In a mounting number of 
cases appealed to U.S. District Court after denial of review by the 
Appeals Council, the Office of General Counsel and U.S. Attorneys have 
asked the Appeals Council to agree to a ``voluntary remand.'' These 
requests are prompted by concerns over the ability to defend the 
underlying ALJ decision--the decision that had already been affirmed by 
the Appeals Council. The frequency of such ``voluntary remands'' 
indicates that in its rush to process appeals, the Appeals Council is 
not getting it right the first time. The record the Appeals Council 
agrees to take back in a voluntary remand is usually identical to the 
record it initially reviewed. If the ALJ decision is indefensible, it 
should have been caught by the Appeals Council before the case 
proceeded to federal court. That after all is the role of the Appeals 
Council in the request for review process.
    Therefore, we believe that the Commissioner should review and study 
the role and responsibility of the Appeals Council, with special 
attention devoted to: the usefulness and necessity for the request for 
review function; the merits of redesign of the Appeals Council mission 
to focus on quality review; and the establishment of a time-limit for 
the processing of requests for review, permitting cases not reached 
within the allowable time to go directly to court.
    In closing, we thank the Subcommittee for taking favorable action 
on fee withholding for SSI cases and for holding this important hearing 
on the challenges facing the new Commissioner. The Social Security 
Section of the Federal Bar Association looks forward to working with 
you on this and future issues relating to Social Security disability 
case adjudication. Please contact Bruce Moyer, our government relations 
counsel (301-270-8115) if you have any questions. Thank you for your 
consideration.
            Sincerely,
                                                    Kathleen McGraw
                                                              Chair

                                              Frederick R. Waitsman
                                       Chair, Legislative Committee

                               

   Statement of David Marks, West Coast Director, Hepatitis C Action 
                  Movement, Saratoga Springs, New York
    On behalf of the Hepatitis C Action Movement, I would like to 
express my concerns with the Social Security Administration's current 
standing on awarding disability benefits on Hepatitis C related claims.
    Because there was no effective method for detecting the Hepatitis C 
Virus until 1992, the severity of this epidemic is still greatly under-
estimated and the U.S. Government has yet to provide adequate relief to 
those who are suffering from this virus. We are hopeful that 
Commissioner Barnhart will lead the Social Security Administration into 
the 21st Century and the visions of this new administration will 
include relief for the growing number of people who are only now being 
diagnosed with a virus contracted a quarter century ago.
    When the HIV epidemic struck America in the 1980s, the Social 
Security Administration realized the burden having a potentially fatal 
virus has on the body and updated the disability impairment listings to 
include HIV. However, since the SSA does not yet recognize Hepatitis C, 
a person suffering from HCV is not judged by the same standards. The 
policy of not awarding disability benefits for HCV victims until they 
are in end stage liver failure is the equivalent of waiting until a 
person with HIV is dying of end stage pneumonia before approving their 
disability claim. The number of people infected with HCV out numbers 
those with HIV nearly 5 to 1 and the number of deaths from HCV will 
triple in the next 5 years, out numbering that of AIDS. Just as the SSA 
was quick to adapt the system to include the needs of a new generation 
when faced with the HIV epidemic, the current administration must once 
again adapt to include the needs of those with HCV.
    The current position adopted by the Social Security Administration 
is to review all Hepatitis C related disability claims based on the 
guidelines set forth under Section 5.05 of the List of Impairments 
titled ``Chronic Liver Disease.'' However, the guidelines under this 
heading were not written with the Hepatitis C infection in mind and do 
not consider the myriad of disabling symptoms which accompany the 
Hepatitis C infection. These guidelines do not adequately reflect the 
current needs of the five million known American's who are inflicted 
with this insidious virus.
    HCV has many disabling effects in addition to chronic liver 
failure, which are not currently recognized by the SSA. The Hepatitis C 
virus lives in the body for 10-20 years before showing any outward 
symptoms, so the infected go undiagnosed for decades. However, during 
these years, the liver becomes an unwilling host for the virus and the 
liver deteriorates. Once obvious symptoms begin to appear, the damage 
is irreversible and quite debilitating. Yet, the end stage liver 
failure required by the SSA to qualify for disability claims may not 
occur for several years after the virus begins to actively destroy the 
liver and kidneys.
    The liver is the body's largest internal organ and provides many 
critical functions needed to sustain a healthy lifestyle and when the 
HCV attacks the liver, performing everyday tasks becomes difficult. 
However, the Hepatitis C virus affects more than just the liver. 
Symptoms a person with HCV may suffer before qualifying for Social 
Security disability include: Extreme debilitating fatigue, memory loss, 
confusion, nausea, painful swollen muscles and joints, depression, 
anxiety, numb and tingling limbs, enlarged spleen, inflammation or 
bleeding in the stomach and esophagus and heptocellular carcinoma.
    The result of the current SSA review policy leaves people too sick 
to work and not sick enough to receive assistance. Currently, there are 
people infected with HCV on the liver transplant list that still do not 
meet the strict criteria under the current SSA guidelines. Because most 
health insurance policies are contingent upon their employment, when 
their job is lost, so are their health benefits. The current cost of 
treatment for Hepatitis C is $32,000 a year as there are no generic 
options available. The unfortunate result is the choice between 
spending their life savings on medicine or life itself.
    Even when the HCV patient is able to continue their health 
insurance, the side effects of the treatment are often more severe than 
the infection itself. The side effects of the Interferon combination 
therapy are similar to chemotherapy and include nausea, fever, 
insomnia, swollen and painful muscles and joints, depression, 
confusion, thyroid disease and flu-like symptoms, just to name the most 
common. Working a full time job while undergoing the 12 to 36 month 
regiment is nearly impossible.
    This epidemic can not continue to be ignored any longer. It is time 
that the Social Security Administration realizes the devastating 
effects of their policy and updates their current policy to include the 
5 million Americans infected with HCV. We are hopeful the Social 
Security Administration under the new vision of Commissioner Barnhart, 
will take on the new challenges facing today and will be granted the 
proper resources to be able to meet their responsibilities to the 5 
million Americans infected with HCV.
            Respectfully,
                                                        David Marks
                                                West Coast Director

                               

 Statement of Anthony T. Pezza, President, National Council of Social 
     Security Management Associations Inc., Hackensack, New Jersey
    Chairman Shaw and Members of the Subcommittee, my name is Anthony 
T. Pezza and I am submitting this statement for the record on behalf of 
the National Council of Social Security Management Associations 
(NCSSMA).
    As you know, Mr. Chairman, the NCSSMA is a membership organization 
of more than 3000 Social Security managers and supervisors who work in 
SSA's 1400 field offices and teleservice centers throughout the nation. 
It is most often our members who work with your staffs when problems 
and issues arise with Social Security recipients in your Congressional 
Districts. Since our organization was founded thirty-two years ago, the 
NCSSMA has been a strong advocate of locally delivered services 
nationwide to meet the variety of needs of beneficiaries, claimants and 
the general public. We, like you, consider our top priority to be a 
strong and stable Social Security Administration that delivers quality 
services to our clients and your constituents.
    The new Commissioner of Social Security faces a myriad of 
challenges as she assumes her new responsibilities. This is a critical 
time for the Social Security Administration and the programs it 
administers. Demographic, economic, technological and cultural forces 
are combining to stress and test an agency that has, since its 
inception during the Great Depression, been a paragon of service to the 
American public. Now SSA will be tested as never before and it will be 
the new Commissioner who will have to lead the agency in meeting the 
challenges ahead.
    In discussing the challenges facing the Commissioner, we will do so 
from the perspective of SSA's front-line managers and supervisors. We 
experience first hand the impact of SSA's programs and processes on the 
lives of our citizens and consequently are in a prime position to 
identify and assess the challenges ahead.
    SSA is, in a manner of speaking, a growth industry. With the aging 
of the 76 million strong ``Baby Boomers'' will come a burgeoning in the 
agency's workloads. Between now and the year 2010, SSA's actuaries 
project that the number of retirement and survivor beneficiaries will 
increase by 16 percent, the number of disability beneficiaries by a 
staggering 50 percent and the number of SSI recipients by almost 15 
percent. At the same time, SSA estimates that 28,000 of its employees 
will be eligible to retire and another 10,000 will leave for other 
reasons. This amounts to more than half the current workforce and could 
result in a significant loss of experienced people and a drain of 
institutional knowledge. Additionally, it has been estimated that if 
SSA attempts to process its projected workload in the year 2010 using 
the methods it currently employs there will be a 20,000 shortfall in 
workyears.
    With this as background we see the following as among the major 
challenges facing the new Commissioner:
Resources and Service Levels

    One of the first issues and challenges facing the Commissioner is 
the question of whether SSA has the resources appropriate to the levels 
of service it must deliver to the American public. The Social Security 
Advisory Board in its September, 1999 report entitled: ``How The Social 
Security Administration Can Improve Its Service To The Public'' 
summarized this issue by saying, ``. . . the agency has a serious 
administrative deficit at present in that the level of service that is 
being provided is less than is required to meet the needs of the 
public.'' Over the two years since that was written, the situation has 
not improved. Agency resources have not kept pace with the growth in 
workloads. SSA simply does not have enough staff to deliver the level 
of service currently expected of the agency.
    This leads inexorably, to the issue of how SSA's administrative 
costs are funded. SSA's administrative costs like its program costs are 
funded by the Social Security Trust Funds through an account entitled 
the ``Limitation on Administrative Expenses'' (LAE). As pointed out by 
the Social Security Advisory Board in its February, 2001 report 
entitled, ``Agenda For Social Security: Challenges For The New Congress 
And The New Administration'': ``Both workers and employers contribute 
to the self-financed Social Security System, and are entitled to 
receive service that is of high quality.'' We agree with the Board that 
SSA's administrative spending should be set at a level that fits the 
needs of Social Security's contributors and beneficiaries. Under no 
circumstances should SSA be required to compete for funding with 
health, education and other human services functions.
    Citizens contributing over their working lives to the Social 
Security Trust Funds are paying not only for their benefits, but also 
for the service necessary to process their claims, answer their 
questions, send them their payments and the myriad other functions 
performed by SSA to administer the Social Security programs. Each 
citizen has a right to expect the best service possible.
    We urge that SSA's budget requests be considered separate from 
others in the HHS/Labor appropriations process. Because the LAE is 
funded by the Social Security Trust Funds its budget should be 
considered outside of the discretionary budget allocation, although we 
recognize the importance of continued Congressional oversight of this 
account.
Current Service

    The issue of funding SSA's administrative costs notwithstanding, 
the service SSA is providing today is, in our judgement, the most 
important challenge facing the Commissioner. SSA needs to provide the 
best service possible to those who seek service now, no matter how they 
choose to seek that service. The Staffing Survey released by the 
National Council of Social Security Management Associations early last 
year, as well as recent reports issued by the Social Security Advisory 
Board have raised troubling questions about whether adequate resources 
are being allocated to the direct service being provided by SSA's 
network of field offices and teleservice centers. As a direct result of 
its survey, the NCSSMA called for an increase in frontline staffing in 
SSA's network of field offices. It asked that SSA's budget establish a 
base of 33,500 full-time equivalents (FTEs) in SSA's field offices, an 
increase of approximately 5000 FTEs over current staffing levels.
    Short of obtaining more resources, the Commissioner will be faced 
with the challenge of apportioning current scarce resources among SSA's 
various components. In our judgement, this should be done with a view 
toward allocating direct service components first. There is nothing 
more important than the service SSA provides our citizens today.
Disability

    SSA's disability programs have been under severe stress for a 
number of years. As reported by the Social Security Advisory Board in 
its January 2001 report entitled, ``Charting the Future of Social 
Security's Disability Programs: The Need for Fundamental Change'', 
SSA's actuaries project that between now and 2010 the number of Title 
II disability beneficiaries will increase by 50% and the number of SSI 
disability recipients by 15%. This tremendous increase in disability 
claims workloads will further strain a system that is already at the 
breaking point. Disability claims workloads are rising around the 
country. It was reported a few months ago that 134,000 disability cases 
were waiting to be assigned to Disability Examiners in various 
Disability Determination Services. This is just the ``tip of the 
iceberg''. SSA has been attempting to deal with its problems in the 
disability area for many years, but when all is said and done, from the 
claimant's perspective, little has changed. The root causes of the 
disability dilemma were accurately described by the Social Security 
Advisory Board when it reported: ``. . . the structural problems of the 
agency's disability determinations and appeals process . . . are at the 
heart of many of the agency's service delivery problems.''
    While we believe that it is appropriate and desirable for the 
Commissioner to develop a proposal to revamp our national disability 
program, we also believe that given the burgeoning workload (which is 
unrelenting) and the political realities (which will be difficult and 
time-consuming to deal with), it would not be prudent to count on a new 
national disability program in time to avoid a service delivery 
meltdown in the current program.
    The challenge for the Commissioner will be to move quickly to 
improve performance under the current system. The experience and data 
obtained from the many pilots and studies over recent years should be 
used to make necessary adjustments in the current process pending a 
more expansive solution.
Workforce Transition

    The impending ``Retirement Wave'' presents the Commissioner with 
the immediate and critical challenge of replacing experienced personnel 
with new hires who must be trained and mentored while workloads and 
service demands are increasing. More than half of SSA's current 
workforce could leave by the year 2010. Many of the people leaving will 
be those with years of priceless experience in administering the most 
complex laws and regulations on the federal books. It is tempting to 
think that technological aids can be developed to guide employees 
through the complexities to the right answer or course of action in any 
particular case or situation. It is also tempting to think that a 
combination of technological aids and new training protocols will make 
our new employees more productive more quickly. But consider this, it 
literally takes years for a Claims Representative (SSA's chief 
technical/direct service operative) to become a fully competent 
journeyman. It takes about the same length of time to develop a 
journeyman Disability Examiner. The luxury of time to deal with the 
workforce transition issue diminishes daily.
    We urge the Commissioner to seek from the Administration and the 
Congress the authority and funding to do advance hiring, in significant 
numbers, of ``replacement'' personnel so that workforce transition can 
take place in a measured and effective manner. SSA needs to be in a 
position to take advantage of the opportunity of having the new 
workforce trained and mentored by the experienced people who will be 
retiring in increasing numbers over the next few years.
Organizational Framework

    The Social Security Advisory Board has recommended that SSA 
consider organizational changes in order to create a more service-
oriented organization. We believe that this is a challenge facing the 
Commissioner. Increased pressure and demand for SSA's essential public 
services have exacerbated the need for change. SSA's organizational 
structure must be revamped to put its operational mission first.
    SSA needs an organizational structure that pares support functions 
to realistic levels. While support functions performed at the central 
office, regional and area levels are often essential, they should not 
be staffed at the expense of direct public service.
    In addition, SSA needs to ensure that a larger percentage of its 
key executives, especially those with operational responsibilities, 
bring with them the knowledge and experience that comes from having 
spent significant time working in SSA's direct service facilities.
Manager/Supervisor Ratios

    More than ample evidence exists to suggest that SSA went too far in 
the delayering of its managers and supervisors. According to former 
Acting Commissioner Massanari, as a result of the delayering effort 
initiated by the now defunct NPR, SSA has suffered a net loss of 1423 
supervisory positions since 1993. The vast majority of these losses 
came in SSA's front-line field offices and teleservice centers. The 
impact of these losses in terms of diminished public service cannot be 
overstated.
    In its September, 1999 report entitled ``How the Social Security 
Administration Can Improve Its Service to the Public'' the Social 
Security Advisory Board wrote: ``As implemented by SSA, the reduction 
in the number of managers and supervisors is particularly 
problematic.'' SSA achieved the management-staff ratio recommended by 
the NPR, but in the view of the Board, this achievement came at a 
``high price.'' More recently, the National Council of Social Security 
Management Associations Staffing Survey released in March, 2001 
revealed quality, training and service delivery problems attributed in 
large measure to the decline in the number of management and 
supervisory positions in SSA's field offices. As a pertinent aside, OMB 
Director Mitch Daniels has defined direct service positions as 
``positions that interact with citizens.'' By that definition, every 
management and supervisory position in every field office and 
teleservice center is a direct service position. They all interact with 
citizens on a daily basis and consequently, by the definition applied 
by the current OMB Director, each manager and supervisor lost to 
delayering was a loss in direct service to the American public.
    The need to address these cutbacks so as to achieve and maintain 
adequate levels of quality, training and public service will be another 
challenge facing the Commissioner.
Organizational Culture

    The Social Security Advisory Board in both its September, 1999 
report and in its February, 2001 report made reference to the need for 
the agency's leadership to address what they termed ``long standing 
institutional problems.'' In both reports the Board states that ``. . . 
SSA has a strong institutional resistance to open discussion of the 
agency's problems. Although this attitude has apparently persisted for 
many years and may be related to the agency's historic ``can do'' 
approach, it is particularly inappropriate and troubling today, given 
the scope and magnitude of the agency's problems.''
    Related to this problem is a belief among field office and 
teleservice center management that their offices are being 
micromanaged. There appears to be a strong emphasis on top down 
management. There is a proliferation of numeric goals that are 
increasingly remotely monitored. A negative consequence of this 
approach is that onsite mangers are restricted in their use of 
judgement and initiative and are constrained in their use of resources 
to obtain optimum public service given local circumstances.
    The challenge for the Commissioner is to be sensitive to these 
issues and to the perceptions arising therefrom.
Public Awareness

    For a long time there has been recognition of the fact that there 
is a critical need to strengthen public understanding of Social 
Security programs. The agency has set a strategic objective of 
increasing public awareness of Social Security programs in five 
critical areas: (1) Basic program facts, (2) Financial value to 
individuals, (3) Economic and social impact of programs, (4) How 
programs are financed today, (5) Financing issues and options. The goal 
is to have 9 out of 10 Americans knowledgeable in these areas by 2005. 
This is a desirable goal and represents a significant challenge for the 
Commissioner.
    If this challenge is to be met, it is essential that SSA 
reinvigorate the role and capacity of our local community based field 
offices in the area of public information.
Technology

    SSA's Service Vision details a very impressive array of 
technological enhancements that are intended to enable the agency to 
deal with increased workloads and public demand within assumed 
budgetary constraints. These enhancements are desirable and arguably 
essential to the future viability of SSA's service. But technology is 
only effective if used and used correctly by employees. The challenge 
for the Commissioner is to make that happen.
    The Commissioner needs to examine how technology is utilized in 
SSA. Does the agency have the skilled programmers required to develop 
needed software timely and efficiently? Does the agency have in place 
the skilled resources necessary to ensure the effective maintenance and 
updating of its computer systems? And, importantly from the viewpoint 
of field management, does that agency effectively provide for systems 
support in field offices and teleservice centers?
    Regarding this last question, we feel there is a definite need to 
take a fresh look at systems support at the field office and 
teleservice center level. Line employees need to receive ongoing, hands 
on training in the effective use of available software. Managers and 
supervisors should not have the prime responsibility for handling 
hardware maintenance and problems. The challenge here for the 
Commissioner is to develop a comprehensive, effective and uniform 
approach, which may extend to the development of new positions to 
fulfill these needs.
Special Title II Disability Workload

    SSA is currently faced with a huge and essentially unanticipated 
workload in the form of literally hundreds of thousands of cases that 
have come to be termed Special Title II Disability cases. These involve 
situations wherein there was a failure to properly identify SSI 
recipients who, after becoming entitled to SSI payments, subsequently 
became potentially eligible for Title II benefits. At that point an 
application for Title II benefits should have been solicited and 
processed. Having now identified these cases, SSA is now obligated to 
secure and process applications. This will involve a very significant 
and unanticipated expenditure of SSA's frontline field office 
resources. This is a very difficult challenge for the Commissioner 
because it will take a significant number of SSA's best and brightest 
frontline Technical Experts to handle this workload. These people will 
not be available to help handle the normal and expected workload, which 
continues to grow. This is also not a situation that can be resolved 
with additional money alone. The Commissioner needs the option and 
authority to hire additional frontline field office Claims 
Representatives to help ease the additional burden that will result 
from using the afore mentioned ``experts'' on this unanticipated 
workload. Without this option and authority, service to the public, in 
terms of current service, will undoubtedly suffer.

Summary

    As indicated at the beginning of my statement, the challenges 
discussed are from the perspective of SSA's frontline managers and 
supervisors. They are by no means comprehensive, but they are, in our 
judgement, directly related to the level and quality of service SSA 
provides to our citizens on a daily basis. The NCSSMA is anxious to 
work with and help SSA's new Commissioner as she tackles the difficult 
challenges ahead.
    We have every hope and confidence that she will be successful and 
that SSA will continue to be among the premier organizations in 
government.
    Again Mr. Chairman, I thank you for this opportunity to address the 
Subcommittee. I would welcome any questions that you or your colleagues 
may have.

                               
 Statement of Nancy G. Shor, Executive Director, National Organization 
of Social Security Claimants' Representatives, Midland Park, New Jersey
    This statement is submitted on behalf of the National Organization 
of Social Security Claimants' Representatives (NOSSCR). NOSSCR's 
current membership is approximately 3,450 attorneys and others from 
across the country who represent claimants for Social Security and 
Supplemental Security Income (SSI) benefits. Collectively, we have many 
years of experience in representing claimants at every level of the 
administrative and judicial process. NOSSCR is committed to providing 
the highest quality representation and advocacy on behalf of persons 
who are seeking Social Security and SSI benefits.
    During my more than twenty-year tenure as the NOSSCR Executive 
Director, SSA Commissioners and other officials at the Social Security 
Administration have been willing to meet with us and other advocacy 
groups to discuss issues important to our membership and to claimants. 
This has proven to be an effective way of addressing our concerns 
before they become serious problems requiring other types of 
intervention and we look forward to continuing this dialogue with the 
new Commissioner and her management staff. I am very encouraged by 
Commissioner Barnhart's recent decision to adjust the maximum amount 
payable to representatives in the fee agreement process, which was a 
topic at the Subcommittee on Social Security's hearing in May 2001. I 
want to thank her for taking this action since, despite the statutory 
authority to do so, no other Commissioner since the legislation's 
inception in 1990 had adjusted the amount for inflation.
    On November 1, 2001, the Subcommittee on Social Security held a 
hearing on SSA's response to the September 11 terrorist attacks. The 
testimony presented at the hearing reaffirmed the important and vital 
role that the Social Security Administration plays in the lives of 
people in this country. The challenges faced by the Commissioner are 
not insurmountable. This Statement for the Record will discuss NOSSCR's 
major concerns, focusing on the disability programs.
SOCIAL SECURITY SOLVENCY AND REFORM
    As the debate on Social Security solvency and reform proposals 
progress, the impact on people with disabilities must be considered. 
More than one-third of all Social Security benefit payments are made to 
nearly 17 million people who are not retirees. People with disabilities 
are paid benefits not only from the disability program but also from 
many other Social Security programs. We support efforts to require a 
beneficiary impact statement from SSA on every major proposal under 
consideration.
    In addition, the agency has a role to play in educating the public 
about the Social Security program. Because the debate on reform focuses 
on the retirement program, many people are unfamiliar with the other 
benefits paid by Social Security, including the disability and 
survivors' programs. SSA should engage in public information outreach 
activities to ensure that people have a clear understanding of all 
Social Security programs.
LPROVIDING SSA WITH ADEQUATE RESOURCES TO MEET CURRENT AND FUTURE NEEDS
    NOSSCR is concerned about SSA's readiness to deal with the 
impending increase in its workload as the ``baby boom'' generation 
approaches the peak age for onset of disability and, subsequently, 
retirement. At Subcommittee on Social Security hearings in 2000, 
testimony painted a bleak picture regarding SSA's ability to deal with 
the increased work, at the same time that its own workforce will reach 
peak retirement numbers. To exacerbate this problem, SSA's budget 
continues to be cut from levels that would allow it to adequately 
address current and future service delivery needs.
    Most cases handled by NOSSCR members are at the ALJ hearing and 
Appeals Council levels, where current processing times are unacceptably 
high. Thus, while their medical and financial situations are 
deteriorating, claimants are forced to wait for many months, if not 
years, before receiving a decision.
    To improve delays, better develop cases and implement technological 
advances, SSA requires adequate staffing and resources. NOSSCR strongly 
agrees with the Social Security Advisory Board's unanimous and 
bipartisan recommendation that SSA's administrative budget, like its 
program budget, be removed from the discretionary domestic spending 
caps. Legislation such as H.R. 5447, a bipartisan bill introduced in 
2000 by Chairman Shaw and Representative Cardin, would have 
accomplished this by allowing Congress to approve funding for SSA to 
address current service delivery needs and planning for the future.
THE DISABILITY DETERMINATION PROCESS
    The vast majority of cases handled by NOSSCR members are claims for 
Social Security and SSI disability benefits. NOSSCR strongly supports 
efforts to reduce unnecessary delays for claimants and to make the 
process more efficient, so long changes do not affect the fairness of 
the process to determine a claimant's entitlement to benefits.
1. Improve full development of the record earlier in the process
    Developing the record so that relevant evidence from all sources 
can be considered is fundamental to full and fair adjudication of 
claims. Unfortunately, very often the files that denied claimants bring 
to our members show that little development was done at the initial and 
reconsideration levels. Claimants are denied not because the evidence 
establishes that the person is not disabled, but because the limited 
evidence gathered cannot establish that the person is disabled.
    The key to a successful disability determination process is having 
an adequate documentation base and properly evaluating the 
documentation that is obtained. Unless claims are better developed at 
earlier levels, other procedural changes will not improve the 
disability determination process.
    NOSSCR supports full development of the record at the beginning of 
the claim so that the correct decision can be made at the earliest 
point possible. Claimants should be encouraged to submit evidence as 
early as possible. The benefit is obvious: the earlier a claim is 
adequately developed, the sooner it can be approved and the sooner 
payment can begin. However, the fact that early submission of evidence 
does not occur more frequently is usually due to reasons beyond the 
claimant's control. Recommendations to improve the development process 
include:

         SSA should do a better job explaining to the 
        claimant, at the beginning of the process, what evidence is 
        important and necessary.
         DDSs need to obtain necessary and relevant evidence. 
        Representatives often are able to obtain more detailed medical 
        information because they use letters and forms that ask 
        questions relevant to the disability determination process. DDS 
        forms usually ask for general medical information (diagnoses, 
        findings, etc.) without tailoring questions to the Social 
        Security disability standard. The same effort should be made 
        with nonphysician sources (therapists, social workers) who see 
        the claimant more frequently than the treating doctor and have 
        a more thorough knowledge of the limitations caused by the 
        claimant's impairments.
         Improve provider response rates to requests for 
        records, including more appropriate reimbursement rates for 
        medical records and reports.
         Provide better explanations to medical providers, in 
        particular treating sources, about the disability standard and 
        ask for evidence relevant to the standard.
L2. Streamline the process without impairing a claiman;ts right to a 
        full and fair hearing
    Current processing times at the ALJ and Appeals Council levels are 
unacceptably high. We agree with the Commissioner that reducing the 
backlog and processing time must be a high priority. We urge commitment 
of resources and personnel necessary to reduce delays and make the 
process work better for the public.
    Recently, a number of proposals to change the disability 
determination process have been put forward. However, these proposals 
contain some recommendations that we believe would undermine a 
claimant's right to a fair adjudication process. Key features of a full 
and fair process include the following:

         Retain the right to a de novo hearing before an 
        Administrative Law Judge.

    A claimant's right to a hearing before an Administrative Law Judge 
(ALJ) is central to the fairness of the adjudication process. This is 
the right to a full and fair administrative hearing by an independent 
decisionmaker who provides impartial fact-finding and adjudication, 
free from any agency coercion or influence. The ALJ asks questions of 
and takes testimony from the claimant, may develop evidence when 
necessary, and considers and weighs the evidence, all in accordance 
with relevant law and agency policy. For claimants, a fundamental 
principle of this right is the opportunity to present new evidence in 
person to the ALJ, and to receive a decision from the ALJ that is based 
on all available evidence.

         Keep the record open for new evidence.

    Many recent proposals to change the disability determination 
process recommend that the record be closed to new evidence either 
after the DDS or, at least, after the ALJ level. In the past, both 
Congress and SSA have recognized that such proposals are neither 
beneficial to claimants nor administratively efficient for the agency.
    Under current law, an ALJ hears a disability claim de novo. Thus, 
new evidence can be submitted and will be considered by the ALJ in 
reaching a decision. However, the ability to submit new evidence and 
have it considered becomes more limited at later levels of appeal. At 
the Appeals Council level, new evidence will be considered by only if 
it relates to the period before the ALJ decision and is ``new and 
material.'' 1 At the federal district court level, the 
record is closed and the court will not consider new evidence. However, 
the court may remand the case to allow SSA to consider new evidence but 
only if (1) it is ``new and material'' and (2) there is ``good cause'' 
for the failure to submit it in the prior administrative 
proceedings.2
---------------------------------------------------------------------------
    \1\ 20 C.F.R. Sec. Sec. 404.970(b) and 416.1470(b).
    \2\ 42 U.S.C. Sec. 405(g).
---------------------------------------------------------------------------
    As noted earlier, NOSSCR strongly supports the submission of 
evidence as early as possible. Full development of the record at the 
beginning of the claim means that the correct decision can be made at 
the earliest point possible. The benefit is obvious: the earlier a 
claim is adequately developed, the sooner it can be approved and the 
sooner payment can begin.
    There are a number of legitimate reasons why claimants are unable 
to submit evidence earlier in the process and, as a result, why closing 
the record is not beneficial to claimants. Such reasons include: (1) 
worsening of the medical condition which forms the basis of the claim; 
(2) the fact that the ability to submit evidence is not always in the 
claimant's or representative's control, e.g., providers delay sending 
evidence; and (3) the need to keep the process informal.
    Filing a new application is not a viable option because it does not 
improve the process and may in fact severely jeopardize, if not 
permanently foreclose, eligibility for benefits. A claimant should not 
be required to file a new application merely to have new evidence 
considered where it is relevant to the prior claim. If such a rule were 
established, SSA would need to handle more applications, unnecessarily 
clogging the front end of the process. Further, there would be more 
administrative costs for SSA since the cost of handling a new 
application is higher than reviewing new evidence in the context of a 
pending claim.

         SSA should not be represented at the ALJ level.

    We do not support proposals to have SSA represented at the ALJ 
hearing. In the 1980's, SSA tested, and abandoned, a pilot project to 
have the agency represented, the Government Representation Project 
(GRP). First proposed by SSA in 1980, the plan encountered a hostile 
reception at public hearings and from Members of Congress and was 
withdrawn. The plan was revived in 1982 with no public hearings and was 
instituted as a one-year ``experiment'' at five hearing sites. The one-
year experiment was terminated more than four years later following 
congressional criticism and judicial intervention.3
---------------------------------------------------------------------------
    \3\ In Sallings v. Bowen, 641 F. Supp. 1046 (W.D.Va. 1986), the 
federal district court held that the Project was unconstitutional and 
violated the Social Security Act. In July 1986, it issued an injunction 
prohibiting SSA from holding further proceedings under the Project.
---------------------------------------------------------------------------
    Based on the stated goals of the experiment, i.e., assisting in 
better decisionmaking and reducing delays, it was an utter failure. The 
GRP caused extensive delays in a system that was overburdened, even 
then, and injected an inappropriate level of adversity, formality and 
technicality into a system meant to be informal and nonadversarial. In 
the end, the GRP experiment did nothing to enhance the integrity of the 
administrative process.

         Retain review by the Appeals Council.

    NOSSCR opposes the elimination of a claimant's right to request 
review by the Appeals Council, which SSA is still testing in the ten 
``prototype'' states. The Appeals Council currently provides relief to 
nearly one-fourth of the claimants who request review of ALJ denials, 
either through outright reversal or remand back to the ALJ. The Appeals 
Council, when it is able to operate properly and in a timely manner, 
provides claimants with effective review of ALJ decisions and acts as a 
screen between the ALJ and federal court levels. Elimination of Appeals 
Council review could have a serious negative impact on the federal 
courts. We agree with the Judicial Conference of the United States' 
1994 statement opposing this plan when first proposed as ``likely to be 
inefficient and counter-productive.''

         Retain access to judicial review in the federal court 
        system.

    NOSSCR supports the current system of judicial review. Proposals to 
create either a Social Security Court to replace the federal district 
courts or a Social Security Court of Appeals to provide appeal of all 
Social Security cases from district courts have been considered, and 
rejected, by Congress and SSA over the past twenty years.
    We believe that both individual claimants and the system as a whole 
benefit from the federal courts deciding Social Security cases. Over 
the years, the federal courts have played a critical role in protecting 
the rights of claimants. The system is well-served by regular, and not 
specialized, federal judges who hear a wide variety of federal cases 
and have a broad background against which to measure the reasonableness 
of SSA's practices.
    Creation of either a single Social Security Court or Social 
Security Court of Appeals would limit the access of poor disabled and 
elderly persons to judicial review. Under the current system, the 
courts are more geographically accessible to all individuals and give 
them an equal opportunity to be heard by judges of high caliber.
    Rather than creating different policies, the courts, and in 
particular the circuit courts, have contributed to national uniformity, 
e.g., termination of disability benefits, denial of benefits to persons 
with mental impairments, rules for the weight to give medical evidence, 
evaluation of pain. The courts have played an important role in 
determining the final direction of important national standards, 
providing a more thorough and thoughtful consideration of the issues 
than if a single court had passed on each. As a result, both Congress 
and SSA have been able to rely upon the court precedent to produce a 
reasoned final product.
    Finally, the financial and administrative costs of creating these 
new courts must be weighed against their questionable effectiveness to 
achieve the stated objectives. The courts, if created, would involve 
new expenditures. Should limited resources be committed to that purpose 
instead of increasing resources at SSA? Further, from an administrative 
perspective, should the focus be on the end of the appeals process 
rather than on the front end?
3. Technological improvements
    The Commissioner has announced an initiative to expand the use of 
video teleconference ALJ hearings. This allows ALJs to conduct hearings 
without being at the same geographical site as the claimant and 
representative and has the potential to reduce processing times and 
increase productivity. NOSSCR members have participated in pilots 
conducted by SSA and have reported a mixed experience, depending on the 
travel benefit for claimants, the quality of the equipment used, and 
the hearing room set-up.
    In 2001, SSA published proposed rules on video teleconference 
hearings before ALJs. 66 Fed. Reg. 1059 (Jan. 5, 2001). In general, we 
support the proposed rules and the use of video teleconference hearings 
so long as the right to a full and fair hearing is adequately protected 
and the quality of video teleconference hearings is assured.
RETURN TO WORK EFFORTS
    NOSSCR supports efforts that encourage disabled beneficiaries to 
return to work. Successful implementation of the Ticket to Work and 
Work Incentives Improvement Act of 1999 is an ongoing process. As a 
member of the Consortium for Citizens with Disabilities, we endorse the 
written statement and testimony on this issue presented by Marty Ford.
ANTIFRAUD ACTIVITIES
    Recently passed legislation requires SSA to take steps to prevent 
fraud in the Social Security and SSI programs. The integrity of the 
Social Security and SSI disability programs must be protected and cases 
of true fraud should be uncovered. However, we are increasingly 
concerned about reports that cases involving very questionable 
allegations of fraud are being referred for investigation and possible 
criminal prosecution. While we support efforts that maintain the 
integrity of the programs, such activities must protect the due process 
and privacy rights of individuals since they may lead to serious 
sanctions. To avoid harming vulnerable individuals with disabilities, 
guidelines and criteria must be sufficiently detailed to ensure that 
only legitimate and appropriate cases are identified.
    In December 2000, NOSSCR and other advocates met with officials 
from SSA and the Office of Inspector General to raise our concerns and 
to suggest ways to improve the process. We hope to continue the 
dialogue in this area.
NOTICES
    Over the past decade, the Subcommittee on Social Security has 
addressed the serious problems caused by the poor quality of key SSA 
notices provided to beneficiaries. Despite efforts to improve notices, 
many of the same problems raised at a 1994 hearing continue to exist, 
based on testimony at a September 2000 hearing. As noted by the GAO at 
that hearing, notices continue to be written in complex and archaic 
language that even experienced advocates, not to mention claimants and 
beneficiaries, find difficult to decipher. They are written at reading 
levels beyond the ability of the average person. Moreover, the notices 
fail to adequately explain the basis for the action taken by SSA. As a 
result, the poor quality of SSA's notices leads to erroneous and 
unnecessary loss of benefits and relinquishment of important rights, 
such as the right to appeal.
    The poor quality of notices also affects SSA. Notices that 
claimants and beneficiaries do not understand cause more work for 
already overburdened SSA workers including: more telephone calls or in-
person visits for explanation of the agency's action; more appeals 
filed; and more new applications filed.
CONCLUSIONS
    We commend the Subcommittee for holding this hearing to look at the 
challenges facing the new Commissioner of Social Security. NOSSCR is 
committed to working with Commissioner Barnhart to improve the Social 
Security and SSI programs which are so vital to millions of people in 
this country.

                               
 Statement of James A. Hill, President, Chapter 224, National Treasury 
                            Employees Union
    Chairman Shaw and Members of the Subcommittee:
    My name is James A. Hill. I have been employed by the Office of 
Hearings and Appeals (OHA) of the Social Security Administration (SSA) 
for more than 19 years as an Attorney-Advisor. I am also the President 
of National Treasury Employees Union (NTEU) Chapter 224 that represents 
Attorney-Advisors and other staff members in approximately 110 Hearing 
Offices and OHA Regional Offices across the United States. I wish to 
thank the Subcommittee for inviting me to testify regarding the 
challenges and opportunities facing Social Security disability programs 
today.
    The crisis in disability adjudication at the hearing level of the 
mid-1990's has returned. Case backlogs and average processing time have 
increased at an alarming rate severely diminishing the quality of 
service provided to the American public. The current situation is even 
more disturbing because the anticipated workload will significantly 
increase with the aging of the ``baby boomers''. SSA must immediately 
address the current backlog problem and devise a system that will 
adequately serve the needs of the future.
    NTEU makes the following recommendations for action necessary to 
ensure that the Office of Hearings and Appeals delivers the quality of 
service demanded by the American people currently and in the future:

        L  1. All qualified OHA Attorney Advisers should be converted 
        to Senior Attorney decision makers and given the authority to 
        issue fully favorable on-the-record decisions. These Senior 
        Attorney decision makers would review all cases coming into the 
        hearing office.

        L  2. SSA should establish a workgroup to examine the 
        implementation of additional attorney decision makers in the 
        OHA hearing offices to work in conjunction with the ALJs in 
        processing the ever-growing workload that faces SSA.

        L  3. SSA should establish a workgroup to examine the issue of 
        introducing an Agency representation into the adjudication 
        process.

    Since the mid-1990's SSA's disability program has been in crisis. 
In the mid-1990s the disability backlog rose to over 550,000 cases and 
processing time climbed to nearly 400 days at the hearing office level. 
In 1995 SSA introduced the Senior Attorney Program that was 
instrumental in reducing the disability backlog to approximately 
311,000 cases by September 1999 and reducing processing time to 
approximately 270 days at the end of fiscal year 2000. Since the 
termination of the Senior Attorney Program the disability case backlog 
has risen to approximately 460,000 and SSA projects by the end of FY 
2002 the backlog will rise to 546,000 cases.
    Additionally, since the mid-1990s SSA has been concerned that its 
disability program would be unable to meet the needs of the future, 
particularly in view of the inevitable increase in disability 
applications caused by the aging of the ``baby boomers''. That concern 
was, and remains, well-founded, because it is clear that both the 
system prior to 1995 and the current system are unable to meet the 
needs of today's workloads to say nothing of the projected workloads of 
the future. In order to address this problem the Social Security 
Administration established the Disability Process Redesign Program 
(DPR) in 1995. Despite the expenditure of millions of dollars, test 
after test revealed failure in initiative after initiative. SSA 
recently announced the demise of the Disability Claims Manager and 
Prototype programs. They join the Adjudication Officer and Redesigned 
Disability Systems Programs as failed major initiatives. Additionally, 
DPR failed to produce an acceptable quality assurance program.
    The failure of DPR did not discourage SSA from resurrecting many of 
its basic concepts under the guise of the Hearings Process Improvement 
Plan (HPI). One lesson learned from DPR was that testing often 
disclosed problems. SSA took no chance that testing would reveal 
problems with the HPI concept and implemented the program without 
testing. Everyone concedes that like DPR, HPI has failed.
    While both programs have failed, the failure of DPR had little 
direct effect on claimants. The failure of HPI has severely damaged the 
quality of service delivered to the public. During the time DPR was 
failing, the disability backlog at OHA fell from approximately 570,000 
cases in 1995 to approximately 311,000 cases in September 1999, but 
since the inception of HPI, the backlog at the hearings level has risen 
to more than 460,000 cases. This change of circumstances can be 
attributed to the fact that during the unsuccessful DPR effort, OHA's 
Senior Attorneys were issuing over 220,000 fully favorable decisions, 
while the elimination of the Senior Attorney Program and the decisions 
it produced was one of the ``improvements'' of HPI.
    Under HPI, the Senior Attorney Program was replaced by a triage 
system in which Attorney Advisers would screen profiled cases (the same 
profiles used by the Senior Attorney Program) and recommend cases to 
ALJs that could be paid on the record. This still requires a 
significant commitment of ALJ resources. However, this process has 
resulted in a considerable decline in on-the-record decisions emanating 
from this profiled workload leading to fewer overall dispositions. The 
rate of ALJ dispositions has not increased, in fact it has declined, 
leading to a substantial decrease in total dispositions. Workload 
growth is not the problem. In spite of the small increase in receipts 
(5.7%), the case backlog has increased by nearly 40%. At the hearings 
office level we have returned to the crisis situation of 1995, but the 
expected flood of `baby boomers' is seven years closer. The service 
delivery problems have both long-term and short-term ramifications, and 
the time to address them is rapidly shrinking.
    We are in the midst of an emerging disaster precipitated by the 
demise of the Senior Attorney decision maker and fueled by HPI. The 
situation continues to deteriorate. Any hope of significant improvement 
without bold and decisive action is unreasonable. OHA has traditionally 
maintained a roster of 1000-1100 ALJs. Hiring substantial numbers of 
additional ALJs to meet future needs is fiscally irresponsible. SSA 
recently hired approximately 130 new Administrative Law Judges 
(returning to the norm) but readily admits that this addition will not 
solve today's problems.
    The loss of efficiency caused by HPI, the elimination of the Senior 
Attorney Program, the precipitous decline in the number of on-the-
record decisions, the staggering increase in ``unpulled'' cases, the 
expected increase in disability receipts, and the imposition of a new 
and increased Medicare workload spell disaster. The Social Security 
Administration must act quickly to deal with the current disability 
backlog. It must also realistically assess its future workloads and 
devise processes sufficient to meet the decision-making needs of the 
future.
SSA Must Re-introduce of the Senior Attorney Program

    The fundamental problem at OHA is that the number of decision 
makers is insufficient to meet the workload. There is widespread 
agreement that it is unreasonable to expect an Administrative Law Judge 
to produce more than 500 dispositions in a year if an acceptable level 
of quality is to be maintained. If ALJs are the only decision-makers, 
and unless the Agency is prepared to accept a much greater number of 
ALJs than currently are employed, the simple arithmetic mandates an 
ever increasing backlog and skyrocketing processing times. The solution 
is more decision makers.
    In 1995 the Social Security Administration faced a disability 
caseload backlog and processing time crisis very similar to that 
existing today. In order to reduce the backlog and decrease processing 
time, SSA instituted the Short Term Disability Program. The primary 
element of that program, designed to reduce both the backlog and 
processing time, was the Senior Attorney Program.
    That program began in 1995 and continued until the advent of the 
HPI Program. The authority to make and issue fully favorable decisions 
on the evidence of record was delegated to the Agency's experienced 
Attorney Advisors. The Senior Attorney decisions combined with ALJ 
decisions resulted in a substantially higher level of total 
dispositions than would have occurred if ALJs had been the sole 
decision-makers. In addition to performing the ``Senior Attorney 
work'', the Senior Attorneys also continued to draft ALJ decisions. 
This arrangement utilized the knowledge, skills, and abilities of these 
attorneys to issue fully favorable decisions to those claimants whose 
case did not require a hearing, and to continue to draft the more 
difficult ALJ decisions. This afforded, on an individual hearing office 
basis, the flexibility to direct decision making and decision writing 
resources as necessary to achieve maximum productivity.
    Senior Attorneys issued approximately 220,000 decisions during the 
course of the Program. The average processing time for Senior Attorney 
decisions was approximately 105 days. During its pendency the OHA 
backlog fell from over 550,000 to as low as 311,000 at the end of FY 
1999. The correlation is obvious. During the same time period there was 
also an increase in ALJ productivity demonstrating that dual decision 
makers was a viable concept. It is readily apparent that processing a 
large number of cases in such an expeditious manner materially reduced 
the average processing time for all disability cases at the hearings 
level in OHA.
    While the Senior Attorney Program resulted in a substantial 
increase in on-the-record decisions, there was not a corresponding 
increase in the OHA payment rate. In fact the overall payment rate at 
OHA declined during the course of the Senior Attorney Program. The 
absence of a significant increase in ALJ on-the-record decisions as the 
number of Senior Attorney on-the-record decisions declined (because of 
the downsizing and eventual elimination of the Program) is difficult to 
explain, particularly in view of the recent significant increase in the 
ALJ payment rate.


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   As the Senior Attorney Program was marginalized, OHA dispositions 
                               declined.

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    Finally, the size of the backlog reflects the success and demise of 
the Senior Attorney Program.
    In July 1998 the Senior Attorney Program was significantly 
downsized with approximately one-half of the senior attorneys returned 
to the GS-12 attorney adviser position. The remaining Senior Attorneys 
spent 100 percent of their time doing ``Senior Attorney work''. This 
lack of flexibility doomed this arrangement to a very short lifetime. 
In fact it lasted only four months before the remaining Senior 
Attorneys were also assigned ALJ decisions drafting duties. 
Unfortunately, the number of Senior Attorneys was not increased which 
led to a significant decline in the Program's productivity. This 
decrease in productivity led to the rise in unpulled cases and the 
beginning of the increase in the backlog and average processing time.
    The Senior Attorney Program benefited more than just those 
claimants who received their disability payments far earlier than would 
otherwise have been the case. Because Senior Attorneys adjudicated the 
fully favorable on the record cases, staff and ALJ time was not spent 
needlessly on cases that could be paid without a hearing. They could 
more timely attend to the other cases, thereby reducing processing time 
for those cases as well. Another benefit, less appreciated at the time, 
was that cases paid by a Senior Attorney were not pulled (prepared for 
hearing). Had the Senior Attorney Program had not been downsized and 
then eliminated, I believe that there would currently be 90,000 fewer 
cases waiting to be pulled.
    The processing of Senior Attorney cases involved a very limited 
amount of hearing office staff time. This resulted in the expenditure 
of far fewer work years devoted to processing Senior Attorney cases 
than would have been the case had ALJ adjudication been required. This 
resulted in a significant reduction of administrative costs for those 
cases that did not require ALJ adjudication. The former Chief 
Administrative Law Judge stated that OHA may receive as many as 100,000 
cases a year that with minimum development could be paid without a 
hearing before an Administrative Law Judge. The savings in 
administrative costs arising from the reinstitution of the Senior 
Attorney Program would be substantial.
    During the pendency of the Senior Attorney Program, the payment 
rate at the hearings level significantly declined. Since its demise, 
the payment rate has returned to near record levels. The Senior 
Attorney Program was at least in part responsible for this decrease in 
the payment rate, a key factor in determining program costs.
    One of the criticisms of the Senior Attorney Program involved 
decisional accuracy. Of course that is also one of the chief complaints 
regarding ALJ decisions. The Appeals Council review of Senior Attorney 
and ALJ on-the-record decisions found no difference in quality. I am 
convinced that the formulation and implementation of an effective 
quality assurance program at the hearing level should be of the highest 
priority. Quite simply, the time for such a program has come.
    Of course the success of the Senior Attorney Program ultimately 
rests on the competence of the highly trained legal professionals who 
can serve as adjudicators. These individuals are experienced OHA 
Attorney Advisors who have many years experience dealing with the 
intricacies of the legal-medical aspects of the Social Security 
disability program. They are attorneys well versed in the law, and they 
are experienced disability practitioners with a wealth of adjudicatory 
experience in the Social Security disability system.
    The immediate conversion of OHA Attorney Advisers to Senior 
Attorney decision makers as described above will result in an immediate 
and substantial improvement in OHA service to the public with minimal 
disruption of current OHA structure and operations and at minimal 
additional cost. Based upon the Agency's experience with the original 
Senior Attorney Program, and with the full cooperation of hearing 
office management (lacking during the original Senior Attorney 
Program), this measure could produce as many as 75,000-100,000 
decisions a year without diminishing ALJ productivity. Based upon 
previous experience, the average processing time for these cases would 
be approximately 100 days. Additionally, the minimal staff and complete 
lack of ALJ time spent on these cases frees the staff and ALJs to spend 
more time on processing those cases requiring a hearing.
    The original Senior Attorney Program was a resounding success. It 
materially improved the quality of service provided to the public, 
especially for those individuals who were disabled and entitled to 
receive their disability decision and benefits on a timely basis. In 
addition, it resulted in administrative and program cost savings. 
Senior Attorney decision makers have proven by their performance that 
pre-ALJ decision making in the OHA hearing office significantly 
improves the quality of service provided to the public.
    SSA has long been concerned that the disability adjudication system 
will be unable to meet the expected increase of applicants for 
disability benefits caused by the aging of the ``baby boomers''. Based 
upon the performance of the disability system, that concern is 
justified. However, the basic problem that affects adjudication at OHA 
today, the lack of a sufficient number of decision makers, will remain 
unless OHA either greatly expands its ALJ Corps and support staff, 
creates a magistrate position, develops additional decision-making 
positions with the authority to grant and deny disability benefits, 
and/or fundamentally alters the adjudication process.
    However, the number of dispositions is not the only chronic problem 
faced by the adjudication system at the hearings level in OHA. The 
maintenance of quality assurance has been a long-standing problem at 
OHA. Managerial oversight of the quality of ALJ decisions unavoidably 
impacts on the decisional independence guaranteed by the Administrative 
Procedures Act. As a consequence, very few effective quality assurance 
activities have occurred at the hearings level.
    NTEU believes that it is time for the Social Security 
Administration to seriously consider fundamentally altering the nature 
of ALJ hearings by introducing an Agency representative, the Social 
Security Counsel, who will be responsible for presenting the Agency's 
case to the Administrative Law Judge. The Counsel would be responsible 
for developing the record and presenting it at the hearing. This would 
relieve the ALJ of the primary responsibility for developing the 
record.
    It is the responsibility of the Counsel to present the adjudicator 
with a balanced and complete record upon which a fair and just decision 
can be based. It is not the Social Security Counsel's responsibility to 
obtain a denial in as many cases as possible. The Counsel is also 
responsible for facilitating the adjudicatory process to ensure that 
those entitled to benefits receive them as soon as practicable. The 
Counsel, in concert with the claimant's representative, will resolve 
issues and propose settlement agreements that would be presented to the 
adjudicator for approval.
    The role of the adjudicator would be reduced to oversight of the 
pre-hearing process, conducting hearings, and preparation of written 
decisions based on evidence presented at hearing. The Administrative 
Law Judge would be relieved of the responsibility of representing the 
agency and the represented claimant, and would act as a trier of fact. 
The change to a system that allows ALJs to decide cases based on the 
merits of the arguments presented by both sides, the facts of the case, 
the credibility of the claimant and the rules, regulations and law 
could greatly increase ALJ satisfaction with the process. The ALJ will 
still be supported in the decision writing and effectuation process. If 
case preparation by the Counsel's staff replaces much of the case 
preparation currently performed by the ALJ's staff, the net impact on 
administrative cost could be quite small.
    NTEU is not alone in advocating the consideration of a process in 
which an Agency representative plays a vital role. Both the Lewin 
Group, Inc. and the Social Security Advisory Board have advanced 
similar recommendations.
    In its report dated January 2001, Charting the Future of the Social 
Security's Disability Programs: The Need for Fundamental Change, the 
Social Security Advisory Board also noted that Administrative Law 
Judges have been required to balance three roles. They are obligated to 
protect the interests of both the claimant and the government, and to 
serve as an objective adjudicator. The Board further noted that 
approximately 80 percent of disability insurance claimants are now 
represented by an attorney. The Board also noted that because of the 
massive increase in the disability appellate workload, SSA has 
periodically made efforts to increase ALJ productivity which many in 
OHA believe has impacted adversely on the quality of decision-making. 
To correct a variety of current problems, the Social Security Advisory 
Board recommended that the agency be represented at hearings. The Board 
stated that having a representative present at the hearing to defend 
the Agency's position would help clarify the issues and introduce 
greater consistency and accountability into the adjudicatory system. 
The Board also indicated that consideration be given to allowing the 
Agency to file an appeal of ALJ decisions.
    The extent of the quality assurance problems in the current system 
is underlined in the report of The Lewin Group, Inc, which stated that 
the adjudication process at OHA is almost unique. The Lewin Group 
reported, ``We have not encountered good examples of non-adversarial 
processes.'' The Lewin Group suggested that one way to improve the non-
adversial system is to make it more adversarial. It suggested that the 
mechanism for such a change would be to introduce a representative from 
the Social Security Administration into the adjudication process. This 
would relieve the Administrative Law Judge of the responsibility of 
representing the agency, and if the claimant were represented by 
outside counsel, the responsibility for representing the claimant. The 
Lewin Group stated that the political issues could be greatly mitigated 
by appropriate definition of the representative's job and appropriate 
training of the representatives. They stated that the representative's 
job is not to obtain a denial in as many cases as possible, and in 
fact, the representative could be given the authority to allow cases 
that meet the medical eligibility criteria, perhaps subject to the 
approval of the ALJ.
    The Lewin Group also felt that administrative savings are generated 
by elimination of a separate quality assurance process that would not 
be required in an adversarial system, because of the normal appellate 
process. They concluded that if the system also reduced the allowance 
rate, as they expected, program savings would be generated.
    In conclusion, NTEU makes the following recommendations of action 
necessary to ensure that the Office of Hearings and Appeals delivers 
the quality of service demanded by the American people currently and in 
the future:

           1. All qualified OHA Attorney Advisers should be converted 
        to Senior Attorney decision makers and given the authority to 
        issue fully favorable on-the-record decisions. These Senior 
        Attorney decision makers would review all cases coming into the 
        hearing office.

           2. SSA should establish a workgroup to examine the 
        implementation of additional attorney decision makers in the 
        OHA hearing offices to work in conjunction with the ALJs in 
        processing the ever-growing workload that faces SSA.

           3. SSA should establish a workgroup to examine the issue of 
        introducing an Agency representation into the adjudication 
        process.

                                
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