[Senate Hearing 112-]
[From the U.S. Government Publishing Office]


 
  DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2012 

                              ----------                              


                        WEDNESDAY, MARCH 9, 2011

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:35 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Tom Harkin (chairman) presiding.
    Present: Senators Harkin, Reed, Mikulski, and Shelby.

                     SOCIAL SECURITY ADMINISTRATION

STATEMENT OF MICHAEL J. ASTRUE, COMMISSIONER


                opening statement of senator tom harkin


    Senator Harkin. The Subcommittee on Labor, Health and Human 
Services, and Education, and Related Agencies will now come to 
order.
    Our topic today is administrative funding for the Social 
Security Administration. Normally, this time of the year, we'd 
be talking about the President's budget request for the 
upcoming year. However, since this is not a normal year, we're 
also here to discuss funding for the rest of fiscal year 2011.
    Today's hearing is very timely. Three weeks ago, the House 
passed a spending bill for the rest of this year that cuts $102 
billion from the President's request. The Senate majority has 
offered an alternative that meets the House halfway, cuts $51 
billion.
    I believe the Senate plan represents a reasonable approach. 
But, that's just my own opinion, my own views on this, to 
reduce the deficit while protecting programs that help meet the 
basic needs of the most vulnerable Americans: seniors, 
children, those living in poverty, people with disabilities.
    And we're here to discuss one of the most important 
programs. And that's Social Security. Created in 1935, Social 
Security is the centerpiece of America's social safety net, 
providing insurance against poverty from old age, the loss of a 
spouse, or a debilitating disability. Today, 58 million 
Americans receive Social Security benefits. Eight million will 
file, this year. Social Security field offices will receive 45 
million visitors. And Social Security's 1-800-number will take 
67 million calls this year.
    Because of the economic downturn and the aging population, 
in the last few years the number of Americans turning to Social 
Security and filing for retirement and disability benefits has 
increased significantly. You know, as the economy goes down and 
unemployment goes up, and it's harder and harder for people at 
or near the age of 62, they can't find work; they take early 
retirement because they just can't find jobs. So, the number of 
people applying has gone up. Also, people who may have had a 
minor disability--they've tried to overcome it and work, but 
now they're out of work and they simply can't find a job--they 
file for disability. So, that's why we've got a huge increase 
in an economic downturn.
    While the backlogs still persist, the administrative 
funding, so far, has largely kept pace with this increased 
demand. This, for one thing, has allowed Social Security to 
significantly step up its program integrity activities. Social 
Security Administration periodically conducts reviews to 
determine if beneficiaries are still eligible under the--both 
the income and disability guidelines.
    Since 2007, the Social Security Administration has 
increased the number of continuing disability reviews by over 
50 percent, and redeterminations of nonmedical eligibility, by 
over 140 percent. Combined, these activities save taxpayers--
save taxpayers--an average of about $8 in future Social 
Security, Medicare, and Medicaid benefits for every $1 spent in 
administrative funding. So, we spend $1, we save $8.
    Today, however, adequate funding for the Social Security 
Administration to properly administer these programs is at 
risk. The House continuing resolution H.R. 1 would cut 
administrative funding for SSA by $125 million below last 
year's level--fiscal year 2010 level--even though, as I pointed 
out, their workloads on disability claims, hearings, retirement 
claims, are staying at record high levels.
    Under the House plan, the SSA, the Social Security 
Administration, would have to cut its staff by 3,500 by the end 
of the year, and may ultimately have to resort to furloughs. As 
a result, millions of Americans filing disability claims this 
year will have to wait much longer for benefits. Everyone will 
have to wait. You probably won't get online, and you probably 
won't get your phone call answered right away--and the program 
integrity efforts, the one I just mentioned, about making sure 
that we save money by making sure that people that are on 
disability or filing claims are still eligible--so, delaying 
these isn't just bad for the economy, but it's devastating for 
the individuals, on both sides.
    The Senate majority plan would provide, on net, $600 
million more for the Social Security Administration's 
administrative expenses. This is less than the President's 
request, but it will keep the offices open and allow the agency 
to meet its most basic service commitments to the American 
public and prevent its backlog of work from growing any bigger 
than it is today.
    So, that's what this hearing is about. We need to know what 
the impact will be on the Social Security Administration, on 
their ability to respond to the huge workload, and the effect 
it will have on recipients and people who rely upon their 
disability or their supplemental security income (SSI) or their 
old-age survivors' benefits. So, that's why we're having this 
hearing today. We need to know what this means.
    So, I look forward to hearing the testimony from our 
distinguished panels on this matter. But, first, I yield to 
Senator Shelby for any opening remarks.


                 statement of senator richard c. shelby


    Senator Shelby. Thank you, Mr. Chairman.
    Thank you for calling this hearing to examine the fiscal 
year 2012 Social Security Administration's budget request. I 
look forward, as you do, to hearing the panels' testimony and 
their views on this critical program.
    The greatest obstacle to our Nation's fiscal stability is 
ignoring our increasing entitlement obligations. Simply put, 
there is no way to control our debt without getting serious 
about entitlement reform. And, while we can argue about how to 
reform Social Security, we cannot argue about whether it should 
be reformed. It's a question of when.
    In 2010, for the first time in the history of the Social 
Security Program, the system paid out more in benefits than it 
received in payroll taxes. This is a critical threshold that 
was not expected to be reached until at least 2016. Social 
Security is now at the tipping point, the first step of a long, 
slow march to insolvency if we don't do something about it.
    According to the Social Security Board of Trustees, the 
Social Security Trust Fund surplus will be completely exhausted 
by 2040. At that juncture, Social Security will have to rely 
solely on revenue from the payroll tax, which will not be 
sufficient to pay all the promised benefits.
    There are currently 50 million Social Security 
beneficiaries, and their numbers are increasing faster than the 
number of taxpayers. The number of workers per retiree has 
fallen from 42 to 1 in 1940 to about 3 to 1 today. Social 
Security is unbalanced because contributions are insufficient 
to provide the promised benefits. In a sense, it's a classic 
Ponzi scheme, with new contributions used to pay off earlier 
investors.
    I think we must also recognize that the Social Security 
Disability Insurance (SSDI) Program contributes more than its 
share to Social Security's looming insolvency. During the 
economic recession, the unemployment rates soared, as did 
applications to the SSDI program. The number of individuals 
receiving SSDI benefits has jumped more than 10 percent in the 
last two recessionary years. The increase will accelerate the 
exhaustion of the SSDI reserves by 2018, and was recently 
described by the Congressional Budget Office (CBO) as ``not 
financially sustainable.''
    And, while the SSDI program faces the same fundamental 
issue as the retirement program--that is, there are fewer 
workers to pay for an ever-increasing population receiving 
benefits--its questionable structure adds complexity. What was 
supposed to be a narrowly tailored program to help individuals 
who could no longer work grew into a gigantic budgetary burden 
that looks more like an unemployment program, to some people.
    What makes the problems worse is that, unlike the Federal 
Unemployment Program, there is no time limit for how long an 
individual can receive SSDI. But, more significantly, among 
those receiving SSDI benefits, the incentive to return to work 
is very low. In fact, revealing one's ability to go back to the 
workforce could result in permanent loss of SSDI benefits. The 
strong work disincentives under the SSDI results in workers 
never seeking gainful employment, at the risk of losing future 
benefits. Clearly, Congress must face the potential fiscal 
collapse of the Social Security system in the future.
    However, today's hearing focuses on the near-term issues 
facing the program and the only aspects of the $817 billion 
fiscal year 2012 budget the Appropriations Committee has 
control over, $12.5 billion that funds administration costs and 
the Office of the Inspector General.
    The fiscal year 2012 budget requests an additional $1 
billion over the fiscal year 2010 budget to reduce the daunting 
744,130 disability claims and 722,872 hearings case backlog. On 
top of the significant backlog, the processing time for 
disability claims is 112 days, and the wait time for a Social 
Security appeal hearing is 371 days.
    Interestingly, two-thirds of those who appeal a Social 
Security decision win their case on appeal. And, while I 
understand the disability process is complex, it's also highly 
subjective. With an appeal-over rate so high, why are so many 
people winning on appeal. Instead, shouldn't they win at the 
beginning?
    As the Social Security Administration continues to tackle 
the backlogs in their caseload, I think it's important that 
funding to pursue continuing disability reviews remains strong. 
SSDI benefits are not, and should not be, benefits for life. 
Only those who continue to qualify for benefits should receive 
them.
    We need, I believe, to ensure that fraud and abuse of the 
system are rooted out. Those who take advantage of the system 
ruin it for those who are genuinely in need. In a program where 
there are no fines and virtually no prosecution for those who 
attempt to fraudulently collect benefits, we need to examine 
ways to stop fraudulent applicants.
    The administration of Social Security, while only a small 
percentage of the entire system, is a vital component to the 
success and the fiscal stability of the overall program. This, 
however, does not mean that it can operate without stringent 
oversight from this subcommittee. We need to ensure that that 
money is being spent wisely and in the best interest of the 
U.S. taxpayer.
    Mr. Chairman, I look forward to working with you on this 
panel, and look forward to the hearing.
    Senator Harkin. Thank you very much, Senator Shelby.
    I'd like to just ask my colleagues if they have some short 
remarks they'd like to make.
    Senator Mikulski.


                statement of senator barbara a. mikulski


    Senator Mikulski. Thank you very much, Mr. Chairman. My 
remarks will be brief.
    I joined the Labor-HHS Subcommittee at the start of this 
Congress, and I'm delighted to be here. As both the chair and 
the ranking on the Commerce, Justice, Science Subcommittee, 
Senator Shelby and I are used to talking to rocket scientists, 
Federal Bureau of Investigation agents, and those in the 
Commerce Department who advance the trade for the United 
States. But, whether you're a rocket scientist or whether 
you're a janitor, Social Security is your program. This is the 
one program that the entire United States Government effects. 
So, whether you were a Nobel Prize winner, whether you are the 
cop protecting the lab where they work, or whether you're the 
person who cleans up that lab when everybody goes home, Social 
Security is your program.
    I'm very proud of the fact that Social Security is 
headquartered in my State. Thousands of people work there every 
day to make sure that this benefit is a guaranteed benefit, not 
a guaranteed gamble for those who want to privatize it, but 
they guarantee also that the checks will be delivered on time, 
to the right person, with the right actuarial assignment or 
payment given to it. I'm very proud of them.
    And, quite frankly, Mr. Chairman, I'm deeply troubled about 
where we are on the cuts to Social Security, the contemptuous 
attack on Social Security as a benefit, and then the even overt 
hostile attack on Social Security employees. They're on the 
front line every day--some in harm's way, when a disgruntled 
person shows up off their meds--but, they're there every day, 
every way, serving the people of the United States of America, 
and we have to make sure they have the right pay, the right 
resources, and the right respect.
    Senator Harkin. Thank you, Senator Mikulski.
    Senator Reed.
    Senator Reed. No, thank you.


             introduction of commissioner michael j. astrue


    Senator Harkin. Well, thank you all very much.
    We'll start with our first panel.
    Michael J. Astrue serves as a Commissioner of the United 
States Social Security Administration. He was sworn in on 
February 12, 2007. Prior to joining Social Security, the 
Commissioner served as counsel to the Social Security 
Commission, general counsel and Department of Health and Human 
Services, and as an associate counsel to the President, in both 
the Reagan and George Bush, Sr., administrations. He's a 
graduate of Yale University and Harvard Law School.
    Mr. Astrue, welcome to the subcommittee. Your testimony 
will be made a part of the record in its entirety. And, if you 
could sum it up in several minutes or so, we'd be most 
appreciative.
    Commissioner Astrue. Great.
    Senator Harkin. Thank you.


                 summary statement of michael j. astrue


    Commissioner Astrue. Chairman Harkin, Ranking Member 
Shelby, and members of the subcommittee, thank you for this 
opportunity to discuss the important work of the Social 
Security Administration.
    For a number of years, going back to the 1990s, we did not 
receive full funding, and service deteriorated. When I became 
commissioner in 2007, I promised improvements. And Congress has 
supported those improvements. With necessary investments, 
greater productivity, and new initiatives, we have reversed the 
trend of declining service and increasing backlogs.
    Our top priority remains eliminating the hearings backlog. 
And we've made significant progress 4 years in a row. We have 
decided over one-half a million of the oldest, most complex 
cases, some as old as 1,400 days. We have cut the waiting time 
for a hearing decision, from nearly 18 months in August 2008 to 
exactly 1 year in February 2011.
    We have made the most progress in some of our most 
backlogged offices. For example, our Atlanta downtown office 
had an average waiting time of 1,020 days in August 2007. We 
have slashed that time by 70 percent. The average waiting there 
is now 297 days.
    Without your continued support, however, we will not meet 
our commitment to eliminate this backlog by 2013. Our staff and 
our State disability determination services (DDS) partners kept 
our pending level of claims well below our fiscal year 2010 
projected level, while achieving the highest level of accuracy 
in over a decade, even as they faced furloughs and a huge 
influx of claims, due in part to the economic downturn.
    In fiscal year 2010, callers to our national 800 number had 
the shortest waiting time and lowest busy rates since we began 
tracking these measures, nearly a decade ago. We reduced the 
average waiting time in our field offices. We have increased 
our important program integrity work, which is improving 
payment accuracy in the Supplemental Security Income Program.
    Every $1 we spend on continuing disability reviews yields 
$10 in lifetime program savings. Every $1 spent on SSI 
redeterminations yields more than $7. To do this complex work, 
we need an adequate number of well-trained employees.
    Since 2007, our dedicated employees have averaged nearly a 
4-percent annual increase in productivity, which is fueled by 
hard work, better business processes, and smart investments in 
information technology. Few, if any, organizations can boast 
productivity gains of this magnitude.
    The fiscal year 2012 President's budget request of $12.5 
billion is what we need to reduce our remaining backlogs and to 
increase our deficit-reducing program integrity work. But, 
achieving that performance depends on receiving the President's 
budget request in fiscal year 2011.
    Because of the uncertainty of our budget and the length of 
the continuing resolution, I've already had to make choices 
that will begin to erode service. I cut back on hiring, last 
July, and have continued to scale back on hiring and other 
areas. We now expect a net loss of 3,500 Federal and State 
employees this fiscal year. Most of these employees work in 
offices across the Nation, and they will not leave those 
offices uniformly. Some offices are already understaffed. Our 
employees continue to serve the public as best they can, but 
they are disappointed about the prospect of watching what we 
have worked so hard to achieve potentially slip away.
    I regret that we may not be able to keep our commitments to 
the American people because we do not have the necessary 
support to move forward. Millions of people we serve cannot 
afford to wait. People with disabilities lose their homes, 
medical coverage, and dignity. That outcome does not serve 
Americans or the economy well.
    In addition to other cuts we've made, we are discontinuing 
service at over 300 remote sites and are considering field 
office consolidations. We will not open eight needed hearing 
offices, and we will not be able to staff the new Jackson, 
Tennessee, Teleservice Center this year and maybe not next year 
or in future years. We're suspending printing and mailing of 
annual earnings statements, which will save about $70 million 
annually.
    If you look at what we have accomplished in just 4 years, 
you'll see that we are a good investment. With adequate and 
timely resources and the superb efforts of our employees, we 
deliver on our promises. Nevertheless, we cannot eliminate our 
disability backlogs, provide accurate and responsible service, 
and meet our stewardship duties, unless Congress provides us 
with the resources to do the job. Suddenly reduced funding 
halfway through the fiscal year could eliminate most of the 
progress that we have made.
    I'm happy to answer any questions that you may have.


                           prepared statement


    Senator Harkin. Mr. Astrue, thank you very much for a very 
concise statement. I know you have a longer statement, which I 
went over the other evening, and it will be made a part of the 
record, as I said, in its entirety.
    I thank you for----
    Commissioner Astrue. Thank you, Mr. Chairman.
    Senator Harkin [continuing]. Summing it up.
    [The statement follows:]
                Prepared Statement of Michael J. Astrue
    Chairman Harkin, Ranking Member Shelby, and Members of the 
Subcommittee: Thank you for the opportunity to discuss the President's 
fiscal year 2012 budget request for the Social Security Administration.
    For over 75 years, Social Security has touched the lives of 
virtually every American, whether it is after the loss of a loved one, 
at the onset of disability, or during the transition from work to 
retirement. Our programs provide a safety net for the public and 
contribute to the increased financial security for the elderly and 
disabled. Each month, we pay more than $60 billion in benefits to 
almost 60 million beneficiaries. These benefits not only provide a 
lifeline to our beneficiaries and their families, but also are vital to 
the Nation's economy.
    Americans request a staggering amount of service from our agency. 
We respond to their needs through a network of 1,500 offices that 
provide service to local communities across the country. Nearly all of 
our employees work in these local offices where they do a wide range of 
work including issuing Social Security cards, handling applications for 
benefits, maintaining workers' earnings records and the accuracy of our 
benefit records, deciding appeals, answering our 800 number, and 
assisting with Medicare.
    In fiscal year 2010 we:
  --Completed 4.7 million retirement and survivors claims;
  --Completed 3.2 million initial disability claims;
  --Served 45.4 million field office visitors;
  --Completed over 67 million transactions over the telephone;
  --Verified over 1 billion Social Security numbers;
  --Issued 17.2 million new and replacement Social Security cards;
  --Conducted 325,000 full medical continuing disability reviews (CDRs) 
        and 312,000 work CDRs;
  --Completed 2.5 million Supplemental Security Income (SSI) non-
        disability redeterminations;
  --Paid $1.4 billion in attorney fees;
  --Completed 738,000 hearings;
  --Defended 12,000 new Federal court cases;
  --Facilitated over 1,500 data exchanges with Federal, State, local 
        and foreign government entities as well as some private sector 
        companies;
  --Oversaw approximately 5.6 million representative payees;
  --Completed 240 million earnings items for crediting to workers' 
        earnings records; and
  --Mailed out 152 million Social Security statements.
    We have a long-standing and well-deserved reputation as a ``can-
do'' agency. Despite years of underfunding, our hard-working and 
dedicated employees have done their utmost to maintain the level of 
service that the American people expect and deserve. We have been 
innovative and proactive in adopting strategies to allow us to meet the 
challenges we face. To the extent resources allowed, we have hired and 
trained staff to handle our increased workloads, and we have used 
technology to complement our traditional work processes and make them 
more efficient.
    In retrospect, our remarkable successes planted the seeds for many 
of our current challenges. Congress, confident that those successes 
coupled with our ``can do'' attitude meant that we could always find 
ways to adapt, appropriated less than the President requested each year 
from 1992-2007. At the same time, requests for our core services rose 
as the population grew and baby boomers aged, passing through their 
most disability-prone years before retiring. Even with this new and 
unavoidable demand, we managed to maintain our high service levels for 
some time.
    Inevitably, though, we could no longer hold out. Unprecedented 
workloads combined with declining budgets damaged our service delivery. 
We could not keep up even with a long string of employee productivity 
increases. Throughout most of the past decade, the amount of program 
integrity work our employees could keep up with while handling other 
priority work dropped dramatically, even though we know that program 
integrity work saves the taxpayer about $10 for each dollar spent. The 
time claimants waited for disability hearings rose to an average of 
800-900 days in many cities, and some claimants waited as long as 1,400 
days. Waiting times for in-person and telephone service increased, as 
did the public's and Congress's frustration with us.
                         recent accomplishments
    In the last 3 years, we have demonstrated the nexus between 
adequate funding and our ability to deliver--the Congress increased our 
funding, and we made real and measurable progress. We reversed many 
negative trends, most notably with the hearings backlog, and 
significantly improved service and stewardship efforts. We made these 
improvements even though we have had to absorb huge unexpected 
increases in workloads due to the worst economic downturn since the 
Great Depression.
    When I became Commissioner, the Congress made it clear that I had 
to reduce the amount of time it takes a claimant to receive a hearing 
decision. I recognized their concerns and committed to eliminating the 
hearings backlog. Although we have many pressing workloads, we have 
never wavered from this top priority, demonstrating what it means to be 
a results-driven organization.
    With your help, we attacked the backlog and made incredible 
progress in the last 4 years. We have cut the national average time 
claimants wait for a hearing decision by one-third, from an all-time 
high of nearly 18 months in August 2008 to exactly 1 year in February 
2011. We have made the most progress in offices that had the largest 
backlogs. For example, the Atlanta offices had some of the longest wait 
times in the country. In the summer of 2007, the Atlanta Downtown 
office had an average waiting time of 1,020 days, and the Atlanta North 
office averaged about 900 days. By January 2011, we reduced the wait in 
the Atlanta Downtown office to 297 days, a 70 percent reduction, and to 
307 days in the Atlanta North office, a two-thirds reduction.
    During this time, we focused on the most urgent part of the 
backlog--the oldest, most complex cases. In 2007, we had claimants who 
waited for a hearing decision for as long as a staggering 1,400 days. 
Since 2007, we have decided over a half million of the oldest cases. By 
the end of fiscal year 2010, we had virtually no cases pending for more 
than 825 days. This year we are focusing on the cases that are 775 days 
or older, and through January 2011, we have decided over 60 percent of 
these cases.
    We expect that once we eliminate the backlog, we will be able to 
decide hearings in an average of 270 days. In 2007, 50 percent of the 
pending hearing requests were older than 270 days. Today, about 30 
percent of our cases are over 270 days, and that percentage continues 
to drop.
    Another indicator of our progress is the number of our 
administrative law judges (ALJ) who are on pace to meet our 
productivity expectation to decide between 500-700 cases each year. 
When we established the expectation in late 2007, only 47 percent of 
the ALJs were achieving it. By the end of fiscal year 2010, 74 percent 
of the ALJs met the expectation.
    We have made considerable progress, despite the significant 
increase in disability claims. More disability applications result in 
more appeals. Last year, we received nearly 100,000 more hearing 
requests than we received in fiscal year 2009. This trend of increasing 
claims has continued. In our highest month for hearing requests last 
year, we received approximately 73,800 requests. This year, that number 
rose to a record monthly high of about 82,000.
    In fiscal year 2010, we handled more than 3,161,000 initial 
disability claims--a record number that is 300,000 more than the year 
before. Even with this huge increase in determinations, we could not 
keep up with the number of disability claims we received. The number of 
pending initial disability cases rose to over 842,000. We have begun 
working this number down, and as of February 2011, we have reduced the 
pending claims to 774,000.
    The State disability determination services (DDS), the State 
agencies that make initial disability decisions for us, are not 
sacrificing quality to gain productivity. The DDSs have steadily 
increased the accuracy of their decisions since fiscal year 2007. In 
fiscal year 2010, the DDSs achieved an accuracy rate of 98.1 percent, 
the highest level in over a decade.
    These accomplishments are particularly remarkable considering the 
unjustifiable--because we fully fund this work--furloughs of disability 
determination services employees in many States.
    To help States with mounting disability claims, we created Extended 
Service Teams (EST) modeled after our successful National Hearing 
Centers. The ESTs are located in State DDSs that have a history of good 
quality and high productivity. These centralized DDS teams are helping 
us reduce the initial claims backlog as we electronically shift claims 
to them from the hardest hit DDSs. We have also expanded our Federal 
capacity to decide disability claims. We currently have 12 Federal 
units that assist those DDSs most adversely affected by the increase in 
initial claims.
    Identifying and paying eligible claimants early in the disability 
process clearly benefits those with severe disabilities and helps our 
backlog reduction efforts. In fiscal year 2010, we used our fast-track 
initiatives, Compassionate Allowances and Quick Disability 
Determinations, to issue favorable disability determinations to over 
100,000 disability claimants within 20 days of filing. We implemented 
these initiatives while maintaining a very high accuracy rate.
    In fiscal year 2011, we implemented a new regulation to allow 
disability examiners to make fully favorable determinations for 
claimants with the most severe disabilities without consulting a 
medical professional. This change allows us to decide claims even 
faster.
    Last year, more than 45 million people, a record number, visited 
our field offices across the Nation. Despite the increased number of 
visitors, we reduced wait times in our field offices more than 10 
percent from fiscal year 2009.
    We completed more than 67 million transactions over the telephone--
another record number. Callers to our national 800-teleservice centers 
had the shortest wait time and lowest busy signal rates since we began 
measuring these services over a decade ago. In the last 2 years, we cut 
our busy rate by more than half, from 10 percent in fiscal year 2008 to 
4.6 percent in fiscal year 2010. We also reduced the time spent waiting 
for an agent by over 37 percent, from 326 seconds in fiscal year 2008 
to 203 seconds in fiscal year 2010.
    Our online applications have been indispensible in helping us keep 
up with the enormous growth in retirement claims. For that reason, we 
made it easier to file disability claims online. In January 2010, we 
released a streamlined disability report, which we use to collect 
information about a claimant's disability. This user-friendly report 
allows a claimant to complete an application more quickly and improves 
the quality of the information we receive.
    We continue to expand and improve our online offerings. In March 
2010, we introduced an online Medicare-only application. In July 2010, 
we introduced our Life Expectancy calculator, which helps people decide 
when to start collecting retirement benefits. In December 2010, we 
launched a Spanish version of the Retirement Estimator--the first non-
English interactive online application in the Federal Government. We 
have the three best electronic services in the Federal Government, as 
measured by the University of Michigan public satisfaction survey. Our 
Spanish-language retirement estimator is on track to become the fourth. 
These easy-to-use online tools encouraged 37 percent of retirees and 27 
percent of disability claimants to file online in fiscal year 2010.
    We have increased our program integrity work, which saves taxpayers 
dollars. In fiscal year 2010, we completed over 700,000 more SSI 
nondisability redeterminations than in fiscal year 2009. Completing 
more of this important stewardship work, helps us increase the payment 
accuracy in the SSI program.
    Our employees deserve the credit for these successes. From fiscal 
year 2007 to fiscal year 2010, their productivity increased by an 
astounding average of nearly 4 percent per year. I am privileged to 
lead a workforce dedicated to the highest standards of public service. 
Despite the pressures that increased workloads bring, our employees 
understand how important our mission is, voting us one of the top ten 
best places to work in the Federal Government for the third consecutive 
year.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    We are proud of the hard-earned progress we have made over the past 
3 years. However, demographics, rising workloads, and heightened fiscal 
austerity will threaten our recent achievements and make further 
progress at this level unlikely.
                   effects of continuing resolutions
    We understand the economic reality that is driving budget 
decisions. I have looked for and found ways to cut back. We have 
trimmed non-essential travel, training, and even systems enhancements. 
By far the largest part of our budget funds payroll. Eighty percent of 
our employees work in local offices across the Nation. I have even cut 
this critical area--the people we all depend on to get the work done--
by freezing hiring and offering early out.
    Beyond payroll costs, most of our remaining costs are mandatory 
expenses to maintain our operations. For example, we must pay rent and 
maintenance on the 1,500 facilities we occupy; we must pay postage on 
more than 390 million notices we send annually; we must pay for medical 
and vocational evidence and expertise; and we must pay for armed guards 
in our offices to protect our employees and the public. Unfortunately, 
these guards are particularly vital now given the increase in threats 
against our employees.
    A theoretically level-funded continuing resolution does not 
consider that our costs do not remain flat--we have to absorb mandatory 
cost increases with last year's funding level. In addition, the $350 
million Recovery Act funding we used in fiscal year 2010 to handle 
claims was not included in our continuing resolution level. Between 
having to cover mandatory cost increases and not having Recovery Act 
funding, we are operating at a significant loss over last year.
    In this modern era, we are completely dependent on information 
technology. Not only do we need stable and robust systems to handle our 
day-to-day work, technology makes us more efficient. Unfortunately, 
under a continuing resolution, our information technology (IT) funds 
are severely constrained. Many of our investments in technology to 
improve our productivity have been curtailed. If the continuing 
resolution reduces our funding further, or the funding reduction 
continues into future years, our ability to continue keeping our 
technology environment operating smoothly will be threatened.
    Our technology to this point has enabled us to implement work 
processes that are less costly, more accurate, and require fewer 
employees to accomplish the same amount of work. Without our current 
investments, we would not have been able to keep pace with the recent 
increases in claims. We would not have realized the increases in 
productivity that have enabled us to serve the public as we have. IT 
investments are critical if we are to continue to improve productivity 
and achieve our performance targets. We must maintain and invest in 
technology.
    Because of the uncertainty of our budget and the length of the 
continuing resolution, I have had to make choices that will begin to 
erode service. Our employees continue to churn out work, but they are 
disappointed and are becoming demoralized about the prospect of 
watching what they have worked so hard to achieve slip away. I regret 
that we may not be able to keep our commitments to the American people 
because we do not have the necessary funding to continue moving 
forward.
    Our employees come face-to-face with the public every day, and they 
are acutely aware of how the public will suffer. As I mentioned 
earlier, there is a direct nexus between our funding and our service 
level. We want to prepare you for what a deep cut would mean. Our 
backlogs will skyrocket, and people will wait considerably longer to 
receive decisions. As our backlogs grow, it will become more difficult, 
expensive, and time-consuming for us to eliminate them. Waiting times 
in field offices and on our 800-number will increase dramatically. Deep 
cuts will cause billions of dollars of payment errors that will take 
years to address, hardly a wise use of taxpayers' dollars. Even if we 
have specific funding for program integrity work, we need the people to 
do that work plus all of their other fundamental responsibilities.
    A full-year continuing resolution will require us to put on the 
brakes, reversing the tremendous progress we have made in the last few 
years. Common sense dictates that we need enough skilled employees to 
handle mounting workloads. A continued hiring freeze means we will lose 
about 2,500 Federal employees and 1,000 DDS State employees this year. 
Our field employees will not leave the agency uniformly. Attrition is 
random, leaving some offices seriously understaffed.
    While we regret the resulting loss in service, we have tried to 
prepare for the continuing resolution. In July, we instituted a full 
hiring freeze for all headquarters and regional office staff, and then 
we further restricted hiring to allow only those components critical to 
the backlog reduction effort to replace staffing losses. Under a 
continuing resolution, we will continue--and likely expand--the hiring 
freeze. We will reduce or eliminate, overtime, which our front line 
employees depend on to keep up with their work.
    We have decided not to open eight needed hearing offices, and we 
will not have staff to open our new Jackson, Tennessee Teleservice 
Center this year, and perhaps not even next year. We are discontinuing 
service in over 300 remote service sites throughout the United States. 
Most of these sites are ``contact stations'' housed in locations like 
libraries, senior centers, or other facilities where a Social Security 
employee travels, typically once or twice a month, to take applications 
for Social Security cards or benefits, as well as answer questions. We 
have also begun looking at field office consolidation where that 
decision makes fiscal sense.
    Each year we send Social Security Statements to non-beneficiaries 
who are over age 25. These annual Statements cost us approximately $70 
million each year to print and mail. In order to conserve funds, we 
will suspend the current contract and stop sending out these 
Statements. Individuals contemplating retirement can get real-time 
information about the amount of their benefits on our highly regarded 
Retirement Estimator, available on-line at www.socialsecurity.gov. 
Field offices may also provide Statement data. After we negotiate a new 
contract, we will send Statements only to people age 60 and over and 
people under age 60 upon request. We also are working on making the 
Statements available online.
              ongoing funding--fiscal years 2011 and 2012
    The President's fiscal year 2012 budget request includes $12.522 
billion for our fiscal year 2012 LAE account. This level of funding 
will allow us to maintain staffing in our front-line components, fund 
ongoing activities, and cover our inflationary increases. It will allow 
us to reduce our hearings and initial disability claims backlogs and to 
continue to reverse the decline in our program integrity work. Our 
fiscal year 2012 request is a very modest increase from our fiscal year 
2011 request; the increase of $143 million is primarily to fund 
additional program integrity efforts.
    However, this level of funding will be sufficient to meet these 
goals only if we receive the full amount that the President requested 
for fiscal year 2011. While full funding of the President's budget 
request will allow us to build on the tremendous progress we achieved 
over the past few years, it will not allow us to keep up with some of 
the important, statutorily mandated, and less visible work we do, such 
as representative payee accountings and benefit recomputations.
    Even with full funding, we will not have sufficient resources to do 
all that you and America expects us to do. Accordingly, we will use our 
fiscal year 2011 and 2012 funding to focus on our three priorities.
  --Continuing to reduce the disability backlogs;
  --Improving service to the public; and
  --Saving taxpayer dollars.
    We will continue to operate very efficiently, holding 
administrative costs in fiscal year 2012 to just 1.6 percent of benefit 
payments.
              continuing to reduce the disability backlogs
    Hearings Backlog.--Eliminating the hearings backlog continues to be 
our number one priority, and we have made real and measurable progress 
in reducing both the number of pending hearings and the amount of time 
a claimant must wait for a hearing decision.
    In fiscal year 2012, with full funding of both the fiscal year 2011 
and 2012 President's budget requests, we will continue our progress 
toward our goal of eliminating the hearings backlog in 2013. Resources 
permitting, we plan to hire an additional 130 ALJs in late fiscal year 
2011--particularly if hearing requests remain so high--to ensure that 
we can meet our commitment to eliminate the hearings backlog by the end 
of fiscal year 2013. We expect to complete a record number of 
hearings--over 800,000 in fiscal years 2011 and 2012, which is more 
than double the number we handled 10 years ago.
    We continue to focus on eliminating our oldest cases. In fiscal 
year 2011, we are targeting the 106,715 cases that will be 775 days or 
older by the end of the year. In fiscal year 2012, we will lower our 
threshold to 725 days.
    While we have made significant progress, people still wait too 
long. That wait has very real implications--many people with 
disabilities lose their homes, medical coverage, and dignity while 
waiting for a decision on a hearing. We want to maintain our momentum 
and eventually restore an appropriate level of service. Without the 
President's budget, it is highly likely that we will miss our goal of 
eliminating our hearings backlog in 2013. If that happens, gains that 
we have achieved in prior years will vanish.

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    Initial Claims Backlog.--We remain committed to returning our 
initial disability claims pending to its pre-recession level by 2014. 
However, in order to meet this commitment, we will need sustained, 
adequate funding.
    Another significant obstacle to tackling this backlog is the 
decisions by a number of States to furlough federally paid State 
employees who make our disability determinations. To address that 
problem, in July 2010, we submitted a legislative proposal to Congress 
that would prohibit States, without our prior authorization, from 
reducing the number of State personnel who make disability 
determinations for Social Security. I look forward to working with you 
on this important issue.
    If we receive full funding, we estimate we will complete 3,409,000 
disability claims in fiscal year 2011, and 3,268,000 in fiscal year 
2012. We have several initiatives planned and underway to help us 
achieve our goal.
    We are dedicated to fast-tracking disability claims that obviously 
meet our disability standards and to providing decisions within 20 days 
of filing. With the effective use of screening tools, expanded 
technology, and electronic services, we have increased our ability to 
identify and quickly complete cases that we are likely to approve. We 
continue to refine our methods for identifying these cases so we can 
increase the number of fast-tracked claims while maintaining accuracy. 
We plan to increase the number of fast-tracked claims to 5.5 percent of 
all new claims filed in fiscal year 2012.

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                    improving service to the public
    The availability of online services is vital to good and efficient 
public service. Increasingly, the public expects to have the option to 
conduct business over the Internet at their convenience and at their 
own pace. Even though our employees continue to review online benefit 
applications and contact applicants to resolve questions or 
discrepancies, these online services reduce the average time our 
employees spend completing claims, giving them additional time to 
address more complex issues.
    We plan to continue to expand and improve our online services. We 
plan to implement a new, even more secure authentication process to 
provide a safe environment for people who are interested in conducting 
additional business with us online. This protocol will be the gateway 
to allow the public to access their personal information online. We are 
also working on an initiative that may provide access to a variety of 
personalized online services, such as verifying earnings history, 
receiving notices, and requesting certain routine actions.
    Investing in online services is critical for providing better and 
more efficient service to the public. We will only be able to meet our 
budget commitments if we continue to see growth in our online 
applications. In fiscal year 2011, we plan to implement a shorter 
online application for cases in which a claimant alleges a 
Compassionate Allowance condition. In fiscal year 2012, we expect that 
50 percent of all retirement applications and 38 percent of all 
disability applications will be filed online.
    Because calling our 800-number continues to be the option the 
public chooses most frequently to access our services, we are committed 
to improving our telephone service. In fiscal year 2010, we awarded a 
contract to replace our 800-number telecommunications infrastructure. 
The new system will include state-of-the-art features such as providing 
immediate telephone assistance to people who visit our website. It will 
also allow us to redesign our call flow to eliminate lengthy navigation 
menus that are frustrating to the public. We plan to implement these 
and other enhancements in fiscal year 2011 and fiscal year 2012.
    We also recognize the importance of improving our field office 
service. Despite a record number of visitors, we reduced wait times in 
our field offices for those without an appointment from 23.3 minutes in 
fiscal year 2009 to 20.7 minutes in fiscal year 2010. We will continue 
improving our field office service in fiscal year 2011 with Social 
Security Television (SSTV). SSTV broadcasts to our reception areas 
information about our programs and services, such as what documents 
visitors need to apply for benefits or to request a Social Security 
card. It saves the public and our staff time.
    We are improving field office telephone service by continuing to 
replace obsolete telephone systems in all of our field offices. Nearly 
70 percent of our field offices have the new system, and we are on 
schedule to complete the rollout in 2012, although abrupt budget cuts 
may slow that rollout. The new system reduces operating costs and 
replaces increasingly unreliable outdated telephone systems. It also 
will allow us to improve both service and efficiency. For example, with 
the new system, we will be able to implement a Dynamic Forward-On-Busy 
feature, which will offer field office callers who would otherwise get 
a busy signal the option of being transferred to our 800-number during 
non-peak times.
    Video service can provide an efficient and innovative way to 
provide Social Security services to the public. For example, we 
negotiated an agreement with the Walter Reed Army Medical Center to 
install onsite video service delivery equipment that connects 
hospitalized military service members with Social Security claims 
representatives to apply for disability benefits. Video service allows 
our offices to link together to provide help to busy or understaffed 
offices. With adequate funding, we can continue to expand our use of 
video services to reach our customers in remote sites such as American 
Indian Tribal centers, local community centers, senior centers, 
hospitals, and homeless shelters, and end the inefficiency of traveling 
to remote sites on a regular basis.
                        saving taxpayer dollars
    We continue to find better ways to conduct our business. We are 
committed to minimizing improper payments and protecting program 
dollars from waste, fraud, and abuse. We pay over $60 billion in 
benefits each month and have a duty to protect taxpayer dollars. We 
invested $758 million toward our program integrity efforts in fiscal 
year 2010, and our budgets propose to invest even more in fiscal years 
2011 and 2012.
    We have many stewardship activities that are critical to helping us 
prevent and detect improper payments. These include our program 
integrity reviews, our initiatives to reduce improper payments, and our 
joint Cooperative Disability Investigations effort with our OIG.
    We have two types of program integrity reviews for which we receive 
special funding: CDRs, which are periodic reevaluations to determine if 
beneficiaries are still disabled, and SSI redeterminations, which are 
periodic reviews of non-medical factors of SSI eligibility, such as 
income and resources. We estimate that every dollar spent on CDRs 
yields at least $10 in lifetime program savings. Every dollar spent on 
SSI redeterminations yields more than $7 in program savings over 10 
years, including savings accruing to Medicaid.
    For many years, we had to cut back on these reviews due to 
inadequate funding. However, with your support, we have been able to 
increase the number of program integrity reviews we complete, saving 
billions of program dollars. In fiscal year 2012, we plan to conduct 
592,000 full medical CDRs, up from the 360,000 we plan to conduct this 
fiscal year. We also plan to conduct 2.6 million redeterminations, up 
from an estimated 2.4 million in fiscal year 2011.
    The fiscal year 2012 President's budget includes a legislative 
proposal to require employers to report wages quarterly. Increasing the 
frequency of wage reporting would improve program integrity for a range 
of programs by generating more timely information for retrospective 
checking and quality control.

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    We have several initiatives underway to reduce improper payments. 
In fiscal year 2009, over 99 percent of all OASDI payments were free of 
payment error. Our SSI payment accuracy is improving, but it is still 
not acceptable. In fiscal year 2009, 91.6 percent of all SSI payments 
were free of overpayments, while 98.4 percent of all SSI payments were 
free of underpayments.
    To help improve our SSI accuracy rate, we have developed several 
program initiatives that are both cost-effective and prevent or 
minimize improper payments. These include:
  --Access to Financial Institutions (AFI).--In 2004, we began piloting 
        AFI, which runs data matches with financial institutions that 
        allow us to quickly and easily identify assets of SSI 
        applicants and recipients that exceed the statutory limits. In 
        November 2007, we expanded AFI to California. Currently, 25 
        States use AFI, and we expect to complete our rollout by the 
        end of fiscal year 2011. Once we have fully implemented AFI, we 
        project roughly $900 million in lifetime program savings for 
        each year that we use the fully implemented process. We are 
        working with other agencies to see if they would benefit from 
        this initiative.
  --Telephone Wage Reporting.--Wages earned by SSI recipients can 
        affect their payment amounts. We do not always receive reports 
        of income timely; in fact, this is a major cause of SSI 
        improper payments. Using our SSI Telephone Wage Reporting 
        System (SSITWR), recipients can call a dedicated toll-free 
        number to report their wages via a voice recognition system. In 
        fiscal year 2010, we received over 331,000 calls to our SSITWR. 
        These reports generally require no additional evidence, which 
        saves time in our field offices. Wages reported using this 
        method are 92.2 percent accurate, compared to the 75.5 percent 
        dollar accuracy of wages reported through traditional means. 
        Based on the positive results of electronic reporting in the 
        SSI program, we are planning to expand telephone wage reporting 
        to Social Security disability beneficiaries.
    With adequate funding, we plan to continue to modernize our 
information technology infrastructure. If our systems are down, we 
cannot function. We must continue to provide service that is more 
efficient, continually refresh our technology before it becomes 
obsolete, and ensure that we can continue to protect our data from 
security threats.
    We will expand our use of Health Information Technology (HIT). This 
promising technology has reduced the amount of time it takes for us to 
obtain medical records, which in turn decreases the time it takes to 
complete a disability claim. In fiscal year 2010, we funded 
technological support for a number of healthcare providers to send us 
medical records electronically.
         disability work incentives simplification pilot (wisp)
    The fiscal year 2010 President's budget request proposes a 5-year 
reauthorization of our section 234 demonstration authority for the DI 
program, which would allow us to test program innovations. One such 
innovation is the WISP program, which would provide beneficiaries with 
a simple set of work rules and would no longer terminate benefits based 
solely on earnings. Many DI beneficiaries want to return to work but 
they do not attempt to because they are worried about losing monthly 
benefits and health insurance if their work attempt fails. 
Additionally, the current work incentive rules are complex and can 
sometimes result in large overpayments.
    WISP is intended to address these concerns by replacing complex 
rules with a clear, simple, unified process that is both easier to 
understand and easier to administer. Work would no longer be a reason 
for terminating DI benefits. We would continue to pay cash benefits for 
any month in which earnings were below our established threshold, but 
would suspend benefits for any month in which earnings were above the 
threshold. A beneficiary would maintain an attachment to DI and 
Medicare as long as the disabling impairment continues.
    Testing WISP under rigorous evaluation protocols would allow us to 
analyze the effects of these changes on the behavior of beneficiaries 
and potential applicants across the country.
                               conclusion
    I am proud that we have significantly improved the service we 
deliver to the American people. Without the additional funding Congress 
provided to us since fiscal year 2008, Americans would wait 
significantly longer to receive decisions on their claims, speak to a 
representative in our field offices or on the phone, and have their 
cases heard by an ALJ.
    While we hope that the worst of the economic downturn is behind us, 
unemployment is predicted to remain high. Since high unemployment rates 
usually result in more benefit applications, we expect the number of 
new claims, particularly for disability, will continue to remain high. 
These additional claims will ultimately result in more hearing 
requests.
    We have made great progress for the American public, but it will be 
jeopardized without full funding of the President's fiscal year 2011 
and 2012 budget requests of $12.379 billion and $12.522 billion, 
respectively. The American people are still struggling through the 
economic crisis. We cannot allow our services to deteriorate. A 
reduction in our funding at this time would reverse the progress we 
have made over the last few years. Millions of deserving Americans 
count on us, and we need your continued support to provide the service 
they expect and deserve.

               ADMINISTRATIVE FUNDING FOR SOCIAL SECURITY

    Senator Harkin. So, we'll begin a round of 5-minute 
questions.
    First, I just want to reiterate, for everyone here, we're 
here today to discuss administrative funding for Social 
Security. Issues concerning the solvency of the program are not 
in the purview of this subcommittee. I will be limiting my 
questions to the very important topic at hand that will impact 
millions of Americans this year, and I ask my fellow 
subcommittee members to do the same. Debates on solvency and 
what needs to be done to ``fix'' Social Security stuff, 
that's--as I said, that's not in the purview of this 
subcommittee. What's in the purview is the funding for the 
administration of the program, and how that program operates 
with that funding.

                       ANNUAL EARNINGS STATEMENTS

    So, Commissioner Astrue, just a couple things. One, you 
said you're suspending printing and mailing of the annual 
earning statements. Is this the statement that people get every 
year that says, ``Here's how much you have put in and here's 
what you can expect to get''----
    Commissioner Astrue. Yes.
    Senator Harkin [continuing].``When you retire''?
    Commissioner Astrue. Yes, it is, Mr. Chairman.
    Senator Harkin. One of the things that, when Social 
Security started doing this--I don't know how long ago Social 
Security started doing this, but----
    Commissioner Astrue. We started doing this, on a pilot 
basis, when I was with the agency the last time. So, it would 
be more or less around 1987----
    Senator Harkin. Somewhere in there.
    Commissioner Astrue. Mr. Chairman.
    Senator Harkin. Since then, what's happened--correct me if 
I'm wrong--is that people get these statements and they then 
have a better idea if they need to save more or put more in 
some other retirement account or something, because they'll 
know what their Social Security is going to be. And now they're 
not going to have that information?
    Commissioner Astrue. Well, they will substantially have 
that information in a different form, Mr. Chairman. So, one of 
the things that we have done on my watch is that almost all 
Americans can go online now and get an estimate of their 
retirement earnings. And it's very accurate. What they used to 
do with the old printed statement is take their 35 years, type 
those into an online program that was not very accurate, and 
try to get the same information. So, for the vast majority of 
Americans, they can now get what they're really looking for, 
much more accurately.
    What we were planning on talking to the Congress about in 
the next 6 months, we think that we are close to being able 
provide the earning statement information online. We do not 
know for sure yet. It's primarily a question of authentication, 
and we're still working on that. So, we are in the process of 
canceling the contract, which is very expensive. We think, in 
the next 6 months, we'll be able to make a decision whether 
we're going to be able to provide that information safely and 
efficiently online, or whether we have to revert to the old way 
of doing things. But, in the meantime, it seemed like it made 
sense; given the tradeoffs of all the things that we're 
supposed to do that we can't do efficiently, that this is one 
of the things that it made sense to take a pause in doing.

                           PROGRAM INTEGRITY

    Senator Harkin. I understand. Very good.
    About program integrity: As you say, the continuing 
disability reviews save about $10 for every $1 spent. 
Redeterminations save about $7 for every $1 spent. What are the 
long-term budget implications of cutting administrative funding 
for these today, if we do cut them?
    Commissioner Astrue. Well, I think the key part of the 
issue, Mr. Chairman, is that even if we continue the same level 
of program integrity work--and with all the stresses of the 
agency, you'll note my commitment to program integrity work, 
because that had dropped steadily with the administrative 
funding cuts in the beginning of the decade. And they've gone 
up, year by year, on my watch, although we're not back to where 
we really should be in order to protect the trust funds 
appropriately.
    But, the issue really is, we are going to make a lot more 
mistakes that cost the trust fund money if we're not handling 
the cases upfront correctly. And what's going to happen if we 
have sudden and severe cuts is, the level of error will 
increase dramatically, and we'll need more staff, and it will 
take a lot of time, and it will not be a complete recovery 
effort, to try to fix that after the fact. As with most things 
in life, it's better to do it correctly upfront than try to fix 
the problems after the fact.

                        DISABILITY WAITING TIMES

    Senator Harkin. Last--I've only got a few seconds left; 
I'll ask my last question. And that has to do with the amount 
of time that you have reduced. On your watch, you've reduced 
the----
    Commissioner Astrue. Yes.
    Senator Harkin [continuing]. The waiting time considerably. 
I congratulate you on that. That's great leadership. And so, 
I've said this to some people, but ``Well, okay, then the time 
will go back up again, for people to get their disability 
claims.'' And, quite frankly, some people have said, ``Well, 
you know, so what? So, they have to wait another half a year or 
year. So what?'' Well, what's the response on that?
    Commissioner Astrue. Well, you know, my response is, I've 
been through this, personally. Very unexpectedly in 1985, I had 
to file for disability for my father. And I think that a lot of 
people who say things like that just don't appreciate what it's 
like to be in that position and how important--even with the 5-
month waiting period for benefits and the 24-month waiting 
period for medical benefits--how important it is for the 
family, for financial planning, to know what's going to be 
available when. And I think anyone who's been through the 
process can't possibly say, ``Well, another year, another 2 
years, is just fine.''
    Senator Harkin. Thank you very much, Commissioner.
    Senator Shelby.

                      RECOVERY ACT FUNDING FOR SSA

    Senator Shelby. Thank you, Mr. Chairman.
    I'm a little baffled by the assumptions made by the Social 
Security Administration, in your testimony, with regard to 
fiscal year 2011 and 2012 budgets. You state, and I'll quote, 
``The $350 million Recovery Act funding we used in fiscal year 
2010 to handle claims was not included in our continuing 
resolution level. Between having to recover mandatory cost 
increases and not having Recovery Act funding, we're operating 
at a significant loss over last year.''
    It's my understanding that the Social Security 
Administration received $500 million in the stimulus bill to 
address workload processing. These were onetime funds that 
should not, I believe, be considered in addition to the 
administration's baseline. The 2012 budget request is 9.4 
percent higher than 2010. This significant request for 
additional resources comes, of course, in an austere economic 
environment, where we should not be looking at how to throw 
money at a problem, but to work smarter.
    Instead of spending onetime stimulus funding on personnel, 
I believe the Social Security Administration should have been 
looking at ways to streamline the claims process. Maybe you 
have. The Social Security Administration's use of one-time 
funds to build new personnel into its baseline, I think is a 
dangerous mismanagement of Federal funds. Using one-time 
Recovery Act money, your agency hired 2,405 employees--more 
employees--to lower the disability backlog. Your own numbers 
show initial disability receipts and hearing receipts will 
start to decline in 2012.
    Why did you choose a long-term costly hiring strategy for a 
short-term problem?
    Commissioner Astrue. Well, Mr.----
    Senator Shelby. At least that's the way it looks to me.
    Commissioner Astrue. Mr. Shelby, in large part, because 
that's what the Congress told us to do. We expressed concern to 
the committees, at the time, that operating funds were being 
put into the Recovery Act instead of into the baseline, that 
there might be confusion in subsequent years. But, the 
committees of Congress that we talked to were quite clear that 
they knew that the only way to reduce the backlog in the short-
term was to address some of the staffing issues, and said it 
would be adjusted--we were assured it would be adjusted in the 
future years. So, we did----
    Senator Shelby. Now, what does that mean, ``adjusted''? You 
include it in----
    Commissioner Astrue. That, in future authorizations and 
appropriations, there would be a recognition that these were 
not one-time capital expenditures. These people are different 
from a building. So, I agree with you----
    Senator Shelby. Who told you that?
    Commissioner Astrue. My understanding is that was Members 
of the Congress and members of committee staff. I mean----
    Senator Shelby. I never heard that.
    Commissioner Astrue [continuing]. There was no controversy 
at the time that we were going out and doing that hiring. In 
fact, I got quite a bit of criticism, from some individual 
Members, that we were not moving fast enough on some of the 
hiring. But, the civil service process, you know, is a long and 
difficult one. So, we did, in my view, exactly what the 
Congress told us to do.
    Senator Shelby. Well, a lot of people all over America, 
realize that this stimulus package, this money was--once it ran 
out, it was gone. I think you should have considered that. 
Obviously, you didn't.
    How will you manage the additional costs, in the future, 
when your payroll costs already topped $7 billion, over two-
thirds of your budget?
    Commissioner Astrue. Well, most of our----
    Senator Shelby. How could you save money? Have you thought 
about how could you save?
    Commissioner Astrue. Oh, I get up every day----
    Senator Shelby. Sure.
    Commissioner Astrue [continuing]. And think about how to 
save money and how to make the process more efficient. But, 
what I think is important for the subcommittee to understand is 
that, unlike many other agencies that have discretion in terms 
of what kinds of grants they give or prioritization on 
enforcement, we have very little that is discretionary. Almost 
everything we are doing involves an entitlement to the American 
people, where we don't have choice whether we do it or not.
    And, at the end of the day, while we have done the best we 
can to improve efficiency with information technology and 
things like that, people have to do that work. And the people 
are very important to that. And, as it is, we're losing people 
at a disturbing rate. We're losing 3,500 people this year. 
We're expecting, under a continuing resolution, if it extends 
to next year, another 4,100 people. So, we're reducing people 
at an extremely fast rate.

                 REVERSAL RATE FOR DISABILITY DECISIONS

    Senator Shelby. I want to touch on some other stuff.
    We've been told that, after being rejected by the Social 
Security Administration for a disability claimant person, two-
thirds of the claimants win their appeal. With such a high 
overturn rate, why are claimants not approved on initial 
review, if the work was done? And, if so, it would save a lot 
of money, it seems to me.
    Commissioner Astrue. Yeah. I think that's an arithmetic 
confusion, Mr. Shelby, because the numerator and the 
denominator are not the same. So, you have to realize that, in 
addition to the people--probably last year, if I remember 
correctly, over 1 million people who were approved at the 
initial level, and there were about 1.2 million people who 
received an adverse decision and did not appeal to the next 
level. And so, it's a relatively small number of the closer 
cases, as a general matter, that go up on appeal. So, the 
overall number of denials going from the initial decision to an 
appeal is actually very small.
    Senator Shelby. And how many--number-wise, what--how many 
cases are denied, then appealed nationwide, roughly, per year?
    Commissioner Astrue. How many are----
    Senator Shelby. Yeah.
    Commissioner Astrue. The allowance rate is down, I think, 
not even a statistically significant amount. But, it's my 
recollection, and we will provide for the record page 103 of 
our fiscal year 2012 justification of estimates for 
Appropriations Committees, which shows the flow of disability 
cases from the initial level all the way to Federal court 
appeals.
    Senator Shelby. Okay.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

     Figure 1. Fiscal Year 2010 Workload Data: Disability Appeals.

    Commissioner Astrue. It's about 62 percent at hearing.
    Senator Shelby. And how many cases are there?
    Commissioner Astrue. It's about 800,000 hearings a year.
    Senator Shelby. Eight-hundred thousand--that's a lot of 
cases over the next few years.
    Commissioner Astrue. It is a lot of cases, Mr. Shelby.
    Senator Shelby. Eight-hundred thousand cases.
    Commissioner Astrue. And I would say, you are correct about 
the importance of doing things promptly and upfront. So, one of 
the things that we've done, in the last couple of years, is 
because we have an electronic system, we can now pull out the 
cases that should be the easy and automatic cases, and allow 
them upfront. And that's part of how we've increased our 
accuracy, which had been flat at the first level at about 94 
percent. Even with all the influx of cases, we're up to about a 
98-percent accuracy rate now.

   COST-BENEFIT ANALYSIS OF HEARING VERSUS APPROVING A CASE INITIALLY

    Senator Shelby. I know I'm under a time constraint, but if 
you'd just----
    Commissioner Astrue. I'm sorry.
    Senator Shelby [continuing]. Say it for the record. Has the 
Social Security Administration performed a cost-benefit 
analysis to examine the cost of hearing a case versus approving 
a case initially? That is, an appeal. What--the--if someone's 
got merit in their initial claim, wouldn't it make sense to do 
the work to ascertain that, rather than have 800,000 cases on 
appeal?
    Commissioner Astrue. Well, we're certainly trying to do 
that. And, as I said----
    Senator Shelby. Assume it's got merit, you know? And if the 
appeal process throws back two-thirds of the cases, there's 
something wrong.
    Commissioner Astrue. Well, as I said, I think if we were 
approving a much lower percentage, then we'd be getting the 
complaint from the Congress that the odds are stacked against 
the claimants. So, it is a process that has been very carefully 
prescribed by the Congress, that we try to follow as closely as 
we can. And you have to realize that each decision, if I 
remember correctly, at the hearings and appeals level, in terms 
of net present value, is about a quarter million dollar 
decision. So, these are important decisions.
    And I don't think it's the right answer, from a trust fund 
point of view, to simply give that money away at the front end 
of the process. There are some cases that are very close, where 
reasonable people can disagree. It's very hard to tell with 
back pain, it's very hard to tell with depression. There are 
also cases up on appeal that initially are turned down, 
appropriately, because they're diseases that get progressively 
worse. And, by the time they get to the appeal, where we look 
at it fresh--it's not like a legal appeal, where you----
    Senator Shelby. Well, I've known cases where people who 
have filed for disability claims and have been denied. And, of 
course, to say they're not really that sick or they're not that 
disabled, and then they die before the appeal process. You know 
'em, too.
    Commissioner Astrue. Yes, that's----
    Senator Shelby. So, I think----
    Commissioner Astrue [continuing]. That does happen.
    Senator Shelby [continuing]. What we've got to do is 
determine the merits of cases.
    Commissioner Astrue. Absolutely. I agree with you, Mr. 
Shelby.
    Senator Shelby. Thank you.

            FUNDING NEED TO RUN AN EFFICIENT, EFFECTIVE SSA

    Senator Harkin. Thank you, Senator Shelby.
    Senator Mikulski.
    Senator Mikulski. Thank you, Mr. Chairman.
    Mr. Administrator, I have two questions: one on what you 
need to run an efficient, effective Social Security 
Administration; and then the other, additional info on the 
impact of the continuing resolution.
    I believe that demography is destiny. In other words, the 
population profile of the United States is predictable. We have 
a Census Department that tells us who it is. And what they tell 
us is, the Baby Boomer generation is here. If there are 
Boomers, there are demands on the application to Social 
Security. You have no control over it. Congress doesn't have 
any control over it. No political party or subgroup within a 
party has it. Tell me, from the standpoint of someone who's 
devoted his career to public service, what is it that you think 
you need to have for fiscal year 2012. What is the number of 
employees you need to have, and what is it that you need to 
have in the Federal budget to meet the sheer predictable 
population demands, let alone economic downturns or an 
unexpected event?
    Commissioner Astrue. Sure. That's a very fine question.
    As you know, Senator Mikulski, by statute my request to the 
President is disclosed to the Congress, and so that you know, 
the President's request for 2011 and 2012 was very close to my 
request. And we've laid out in the President's budget why we 
need----
    Senator Mikulski. But, for the record, what amount is it, 
and what will that buy?
    Commissioner Astrue. Well, what the President's level 
would--which is approximately $12.5 billion--would allow us to 
do is to meet the ongoing service needs of the country and 
continue on track to reduce the existing backlogs, not only at 
the hearing level, but at the front level, because we've gotten 
about two-thirds of 1 million more disability cases than we 
originally projected a few years ago. And we have to process 
that work.

                    EFFECTS OF CONTINUING RESOLUTION

    Under the continuing resolution, staff numbers are 
declining very rapidly. We are barely above the funding level 
where we need to furlough. And, at that point, we start to see 
degradation of service. We've been trying to hold the line as 
best we can. But, if we go much further with these kinds of 
dramatic staff reductions, the numbers that have been improving 
so well for the last 4 years----
    Senator Mikulski. Let me get----
    Commissioner Astrue [continuing]. Rapidly----
    Senator Mikulski [continuing]. To the point.
    First of all, I'm deeply troubled by the 3,500 employees 
that will be lost this year. That's 3,500 nationwide----
    Commissioner Astrue. Yes.
    Senator Mikulski [continuing]. Not in the headquarters, 
the----
    Commissioner Astrue. Yes, that's right.
    Senator Mikulski [continuing]. The mother ship in 
Baltimore----
    Commissioner Astrue. Yes, that's right.
    Senator Mikulski [continuing]. Is that correct?
    Commissioner Astrue. That is correct.
    Senator Mikulski. So, that's nationwide, and that's in the 
field offices, et cetera.
    Commissioner Astrue. Yes. And about 80 percent of the 
people, more or less, are in the field.
    Senator Mikulski. Now, is it because people now know that 
there's both a freeze, an impending furlough, and the serious 
threats of reductions in promised retirement benefits that have 
been proposed in some deficit reduction plans, such as going to 
a high five instead of a high three? Are people also getting 
ready, at the Social Security Administration, to retire at a 
more increasing rate? So, in addition to that which you need to 
replace employees who leave through natural attrition, they're 
going to start to bail out?
    Commissioner Astrue. Well, I think all those things are 
factors, and significant ones. I think if you look at it from a 
broad perspective--because we went 14 straight years with 
appropriations under the President's request, we did not do 
very much hiring for a long time. We had been an agency, at one 
point, of as many as 82,000 people. And we dropped, briefly--in 
the beginning of my watch, when we were on a continuing 
resolution for 15 months, if I remember correctly, to under 
60,000. So, we're up a little bit over that now, but we have an 
older workforce; we have a lot of people retiring, as a normal 
course of business. I think some of the things that have 
happened with civil service are accelerating that.
    But, I have to be candid with you, too; we also just gave 
everyone, without exception, the ability, earlier in the year, 
for early out, because we looked at the potential budget 
situation and, to Mr. Shelby's point, that the Congress is 
telling us that we can't afford those people. So----
    Senator Mikulski. Good. Now, let me jump in. We could be 
headed to a shutdown.
    Commissioner Astrue. Yes.

                POSSIBLE EFFECTS OF GOVERNMENT SHUTDOWN

    Senator Mikulski. Because, I know that, in my subcommittee, 
in Commerce/Justice, I can't cut any more. And Senator Harkin 
must also be facing the same stress. So, we're heading to a 
showdown.
    Now, much has been said about the impact on Social 
Security. If there is a shutdown, will Social Security checks 
go out?
    Commissioner Astrue. So, this answer----
    Senator Mikulski. And will field offices----
    Commissioner Astrue. Sure.
    Senator Mikulski [continuing]. Stay open, or will they be 
closed?
    Commissioner Astrue. Sure. This answer gets a little bit 
complicated, depending on whether the Congress fails to pass a 
budget at all or takes deep cuts in our budget. So, it's a 
somewhat different answer.
    But, if the answer is addressed to a shutdown, where 
Congress does not pass a budget, then I think that the White 
House has made what will happen clear. Mr. Carney correctly 
laid out that, for most existing beneficiaries, checks will go 
out and they will not see an interruption of service. If you've 
had a change of address, if you're a new applicant, then we 
cannot pretend that we will be able to get a timely and 
accurate payment out.
    Senator Mikulski. And what about the field offices? Are 
they open or closed?
    Commissioner Astrue. Under a shutdown scenario in the 
Government, we have some latitude to keep some essential 
services open, but we will be open only on a very partial 
basis, for certain types of work, under a Government-wide 
shutdown.
    Senator Mikulski. I think this is a very severe crisis.
    Commissioner Astrue. I agree----
    Senator Mikulski. And I----
    Commissioner Astrue.--with you, Senator.
    Senator Mikulski. And, sir, I appreciate your factual and 
candid response. And it's our job to resolve the crisis. Thanks 
for being so candid.
    Commissioner Astrue. Thank you, Senator Mikulski.
    Senator Harkin. Thank you, Senator Mikulski.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Thank you, Commissioner, for your testimony and for your 
very professional service.
    Commissioner Astrue. Thank you.

                      SSA ADMINISTRATIVE OVERHEAD

    Senator Reed. Just as background, sort of contrast, how 
would you evaluate your overhead, including all of your 
personnel and your systems, versus a comparable insurance 
entity in the country?
    Commissioner Astrue. I think that we stand up against, not 
only any Federal agency, but pretty much any large financial 
organization in the country. If I remember correctly--if I'm 
making a mistake, we'll correct it for the record--about 1.6 
percent, I believe, of our budget is for administrative costs. 
And it's been going down steadily, as a percentage of cost, for 
a number of years. So, this is, in my book--and I've been a CEO 
of publicly traded corporations, which relatively few agency 
heads have--an extraordinarily efficient organization. And I 
don't think there's a lot of fat left in this organization.
    Senator Reed. In fact, I think is--and I'm alluding to what 
was suggested by Senator Mikulski--we're reaching the point 
where, if we deny effective resources to the Department, this 
level of efficiency will be compromised----
    Commissioner Astrue. Yes.
    Senator Reed [continuing]. That, at some point, you just 
can't, you know, continue to maintain this level.
    Commissioner Astrue. Exactly, Senator Reed--we've run this 
experiment recently. So, we ran down the administrative budget 
for most of this decade. And very predictable things happened: 
backlogs grew, and program integrity work plummeted, at a long-
term cost to the trust fund. It is only with great difficulty 
that we've been able to move the agency back in a positive 
direction and increase the program integrity work and bring the 
backlogs down.
    And what I would say to all of you now is, it's your 
choice. We've done everything that we know how to do. And 
whether we go backward or whether we go forward depends on what 
you decide to choose for funding for the agency.

                   ADEQUATE RESOURCES NEEDED FOR SSA

    Senator Reed. Well, I think it's ironic--I'll use that 
term--that you--we have one of the most effective programs in 
the history of this country, one of the most efficiently run 
programs in the history of this country--in fact, as you 
suggest, from your experience as a CEO of a private-sector 
country--company--much more effective than most of the vaunted 
public companies. And yet, we're at the point of disrupting it 
significantly, in terms of how it operates, if we don't provide 
adequate resources to you.
    So, I think it's clear that, you know, this is one of those 
cases--and they're not that frequent in any endeavor, 
particularly Government--where we have to reinforce success, 
not undercut it. And so, I would hope that we would reject some 
of the proposals--particularly the House proposal, it would 
have significant cuts, as I understand them--and support you at 
a time--and again, to Senator Mikulski's point--where, 
demographically, your burden is not going to get lighter, it's 
going to get heavier because of the people like me--not yet, 
but very soon.
    And I want you to be around for my 4-year-old daughter. So, 
you--we--I've got a vested interest.
    Commissioner Astrue. Well, my term runs pretty soon. So, I 
know----
    Senator Reed. I know it will.
    Commissioner Astrue [continuing]. I won't be there 
personally, but the wonderful people behind me will be there.

                 SERVICE CUTS DUE TO A LACK OF FUNDING

    Senator Reed. All right. Well, if that's a promise.
    Let me just now go down, sort of, the level--and again, 
suggested by Senator Mikulski--these cuts will come, not from 
the D.C., Washington, Baltimore, metro area. Most of them are 
from the local offices. We had the experience, in 2002, where 
adjudication officers in three of my communities in Rhode 
Island were consolidated. You know, again, you said, ``When you 
cut the budget every year, you start cutting into the--you 
know, the efficient operation.'' They were sent up to 
Massachusetts. I would assume that if the budget pressure 
continues to grow as is, you'll be making those same types of 
decisions.
    Commissioner Astrue. Exactly right. We are actually moving 
more work geographically around the country to take advantage 
of wherever places are less busy. So, we've done more of that 
than in the past. And, if we go into a crisis, then there'll be 
more work moving from one State to another as we try to manage 
things as best we can.
    Senator Reed. So, you'll have two situations going on: 
reductions in force----
    Commissioner Astrue. Right.
    Senator Reed [continuing]. Consolidations of offices. What 
that leaves, though, is big--potentially, big service gaps. I 
mean----
    Commissioner Astrue. Yes.
    Senator Reed [continuing]. It is a difference between a 
senior citizen in my State getting on a bus or getting--taking 
their car and driving 10 or 15 or 20 minutes to a local office 
and the difference of going to Boston, literally----
    Commissioner Astrue. Yes.
    Senator Reed [continuing]. And with all of the--that 
entails.
    Commissioner Astrue. Yes. You know, you've said it more 
articulately than I could, Senator, but the only thing I would 
add is, it's already happening. We're already starting to move 
backward because of the staff reductions.
    Senator Reed. Let me just--a final point is that we 
sometimes focus on the Social Security system as one that deals 
with seniors. But, you have families and children that we have 
to worry about. In fact, one of the startling statistics that 
I've seen recently is that, for the first time, the Great 
Depression, 25 percent of children in this country are living 
in poverty.
    Commissioner Astrue. Right. And----
    Senator Reed. That's a very, very shocking and, indeed, 
shameful statistic----
    Commissioner Astrue. And, in fact----
    Senator Reed [continuing]. Given this the----
    Commissioner Astrue [continuing]. If you look at----
    Senator Reed [continuing]. Wealthiest country.
    Commissioner Astrue [continuing]. Where the administrative 
effort is spent, we would be even more efficient if we were 
just a retirement organization; but we're not. We will take in 
about 3.3 million disability claims this year, and that's where 
the vast majority of the administrative effort goes. We're the 
largest repository of medical records in the world. Sometimes 
we have over 1,000 pages of medical records we need to review. 
And a lot of these are very difficult, close calls.
    That is, in fact, where a lot of the administrative time is 
spent, because the retirement process is pretty automatic. We 
try to make it even more automatic. We've gone from 10 percent 
to 40 percent of the people filing online, because we've 
improved--we've made it a much more user-friendly process. And 
we're trying to find the efficiencies wherever we can. But, the 
lion's share of the administrative effort is on the disability 
side. And there are just some limits on how much of that you 
can automate. And we'll have to make a lot of those decisions.
    Senator Reed. And--but, that has a huge impact on the 
quality of life of families and children in this country----
    Commissioner Astrue. Absolutely.
    Senator Reed [continuing]. Particularly as we see these 
growing statistics of childhood poverty. And your agency does 
make a difference; but if you don't have the resources, you 
can't.
    Commissioner Astrue. That's right.
    Senator Reed. Thank you.
    Senator Harkin. Commissioner, thank you very much for your 
great stewardship of a wonderful--or a wonderful part of our 
American society. Thank you for your stewardship of it. We have 
our work cut out for us, in terms of making sure that you can 
do your job well and make sure that people who rely upon Social 
Security--as Senator Reed just reminded us, not just elderly, a 
lot of kids out there, too, and people with disabilities, 
survivors--make sure that they can get timely help.

                     ADDITIONAL COMMITTEE QUESTIONS

    Commissioner Astrue. Thank you very much, Mr. Chairman.
    Thank you to everyone on the subcommittee. I appreciate 
this opportunity.
    Senator Harkin. Thanks, Commissioner.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
            Questions Submitted by Senator Richard C. Shelby
    Question. You are permitted to transfer unobligated regular 
appropriations authority that is considered ``not needed'' to your 
information technology (IT) fund. Since fiscal year 2001 you have 
transferred $1.3 billion out of the operational Limitation on 
Administrative Expenses account into the IT Fund. This is at a time of 
record backlogs and wait times. Why were these Limitation on 
Administrative Expenses funds considered ``not needed?'' Wouldn't this 
funding have been better spent on integrity work, such as, disability 
and Supplemental Security Income reviews?
    Answer. Our ability to transfer unobligated administrative funds to 
our Information Technology Systems (ITS) account is a funding mechanism 
that Congress specifically authorized and that the Office of Management 
and Budget (OMB) manages closely. Congress included language in our 
fiscal year 2001 appropriation that allowed us to carry forward 
unobligated Limitation on Administrative Expenses (LAE) funds to invest 
in ITS costs. Congress has continued to provide this authority in every 
succeeding appropriations act since fiscal year 2001.
    We must justify to OMB any transfer of unobligated balances to the 
ITS account, and OMB must give us formal approval before we can 
transfer and spend any funds. Moreover, available ITS transfer funding 
factors into our annual budget request. During the budget process, we 
work with OMB to determine how much of our IT needs will be covered 
with funding we can transfer into the ITS account, thereby decreasing 
the amount of new funding we need to request in any given fiscal year.
    We have a long history of sound financial management practices that 
avoid Anti-Deficiency Act violations. At the beginning of each fiscal 
year, we put in place spending plans to use the full budget. We develop 
performance targets (i.e., numbers of completed claims, hearings, 
continuing disability review, redeterminations, etc.), estimate related 
costs, and negotiate these estimates with OMB. We allocate these annual 
resources as soon as we have an appropriation from Congress and 
approved apportionments from OMB. We continually monitor our resources 
and reallocate them to our highest priorities as the year progresses. 
We typically lapse only about 1 percent of our LAE funding each year. 
We do not lapse annual funding in order to transfer it to our ITS 
account. Nevertheless, with the complexity of our budget, two-thirds of 
which is payroll costs, a small amount of lapsed resources is 
unavoidable and often necessary to avoid an Anti-Deficiency Act 
violation. With nearly 80,000 Federal and State employees, even a small 
shift in salary or benefit costs can create a change of millions of 
dollars in our administrative budget. We also must be able to address 
unanticipated requirements, such as court decisions.
    When we receive a budget each year, we determine the level of staff 
we can fund and support in future fiscal years. Your suggestion that we 
could have better used annual administrative resources to complete more 
program integrity work would have required us to hire additional staff. 
Uncertainty about future funding makes it difficult to predict how many 
employees we can support in future years, and prolonged continuing 
resolutions can delay the hiring process. We cannot make long-term 
commitments to hire employees when future budgets may not support 
retaining them, potentially forcing us to implement furloughs or other 
drastic cost saving measures.
    ITS transfer authority has allowed us to make technology 
improvements that help our employees work more efficiently. Our IT 
investments have helped us achieve average annual employee productivity 
increases of about 4 percent each of the last 5 years. Most of our 
annual ITS funding is necessary for ongoing operational costs such as 
our 800 number service and our online services. It also helps us 
maintain sufficient capacity to store ever-increasing amounts of data. 
Prior year resources have helped us fund essential IT projects such as 
making our disability process fully electronic, developing robust and 
user-friendly online services, and opening our second data center. 
Without these IT investments, we would not have kept pace with the 
recent increases in claims. If we did not have the ITS transfer 
authority but still invested the same amount of resources in IT 
enhancements to improve employee productivity, we would have completed 
nearly 1 million fewer disability claims or nearly 500,000 fewer 
hearings since fiscal year 2001.
    Question. Today, what is the total level of funding in the so-
called ``IT Fund,'' or the carryover funding from previous fiscal years 
for information technology and telecommunication activities? Of this 
amount, what level of funding did the Social Security Administration's 
fiscal year 2011 budget request state would be used in fiscal year 
2011? Is it correct that this would still leave a substantial amount of 
reserve funding in the IT Fund that would not be spent in this fiscal 
year? What level of funding specifically would remain in the IT Fund?
    Answer. The fiscal year 2011 column of the fiscal year 2012 
President's budget assumed that $480.4 million would be available in 
fiscal year 2011 to transfer to the no-year ITS account. Of that total, 
our fiscal year 2012 budget assumed that we would use $280 million in 
fiscal year 2011 and the remaining $200.4 million in fiscal year 2012 
for IT costs. Prior to March 2011, we had transferred $680.4 million 
from previous fiscal year unobligated balances to the no-year ITS 
account, which was the amount available in prior year accounts that was 
not needed for potential upward adjustments to prior year obligations. 
On March 18, 2011, the Additional Continuing Appropriations Amendments, 
2011 (Public Law 112-6, the sixth CR for fiscal year 2011) rescinded 
$200 million of the available $680.4 million. The Department of Defense 
and Full-Year Continuing Appropriations Act, 2011 (Public Law 112-10, 
enacted on April 15, 2011) rescinded an additional $75 million.
    Due to the rescissions in fiscal year 2011, we carried over only 
$32.5 million from fiscal year 2011 into the no-year ITS account in 
fiscal year 2012. In fiscal year 2012, we transferred $129.6 million 
from previous fiscal year unobligated balances to the ITS no-year 
account. In total, we have $162.1 million available in the fiscal year 
2012 no-year ITS account. This amount is less than the $200.4 million 
that we assumed would be available in the fiscal year 2012 no-year ITS 
account.
    Question. According to the Congressional Research Service, only 3 
percent of beneficiaries ever come off Social Security Disability 
Insurance (SSDI) rolls. In your testimony, you discussed the pilot Work 
Incentives Simplification Program (WISP) that would allow beneficiaries 
to return to work and continue to receive SSDI benefits for any month 
in which earnings were below the established threshold. I believe it is 
critical to the future of SSDI that beneficiaries who are able to work 
do. However, I remain concerned that other programs put in place by the 
Social Security Administration to incentivize work, such as the Ticket 
to Work program, have been failures. How do you implement this program 
to ensure those who are able to work in some capacity will do so?
    Answer. Congress established the Ticket to Work (Ticket) program in 
1999 to expand the universe of service providers to help beneficiaries 
obtain the services and supports they need to find and maintain 
employment. In 2008, we made regulatory changes to the Ticket program, 
which have significantly increased beneficiary and employment network 
(EN) participation. Since the change, the number of active ENs 
increased by nearly 50 percent and the number of beneficiaries that ENs 
placed in a job increased by 319 percent from a little over 4,000 
beneficiaries to over 16,895 beneficiaries.
    The most important distinction between the Ticket program and the 
Work Incentives Simplification Pilot (WISP) is that under the Ticket 
program, we must still apply our complex and often confusing work 
incentive rules. The Social Security Act (Act) includes a number of 
incentives to encourage disability beneficiaries to return to work. In 
the Social Security Disability (SSDI) program, the incentives include 
the trial work period (TWP) and the extended period of eligibility 
(EPE). In addition, there are special rules about impairment-related 
work expenses, expedited reinstatement, and medical insurance. Although 
we train our field office personnel to explain the work incentives and 
we publish information to help people understand the provisions, the 
work incentive provisions are complex and difficult to administer and 
understand. The work incentive rules are different for SSDI than they 
are for Supplemental Security Income (SSI) which make the rules even 
more complex if a person is entitled to both types of benefits. The 
goal of WISP, which we would first pilot, is to simplify SSDI work 
rules to encourage beneficiaries to return to work and reduce our 
administrative costs. WISP would eliminate complex rules on the TWP and 
the EPE. It would also eliminate performing substantial gainful 
activity as a reason to terminate SSDI benefits. If a beneficiary's 
earnings fell below a certain threshold, we could reinstate monthly 
benefit payments as long as the person remained disabled. WISP would 
allow us to replace the complex work continuing disability review 
process with a streamlined work review process, which would reduce 
improper payments. Finally, our WISP proposal would better align the 
SSDI program with the SSI program.
    Congress has held hearings to highlight the importance of program 
integrity and improved service. Program simplification is an answer to 
Congress' questions about how to improve in these areas.
    Question. There are no disincentives from fraudulently applying for 
Social Security Disability Insurance. Claimants are not fined and 
virtually no one is prosecuted for a false claim. How do we implement 
specific, targeted fixes to this program when there is no deterrent 
mechanism?
    Answer. One of our most successful efforts against disability fraud 
is the Cooperative Disability Investigations (CDI) program, which links 
our Office of Inspector General (OIG) and local law enforcement with 
Federal and State workers who handle our disability cases. These units 
are highly successful at detecting fraud before we make a disability 
decision and identifying overpayments. There are currently 25 CDI units 
nationwide.
    Since its inception in fiscal year 1998, CDI efforts nationwide 
have resulted in nearly $3.1 billion in projected savings: $1.9 billion 
to our disability programs and $1.2 billion to other programs, such as 
Medicare and Medicaid. Due to the success of the CDI program and our 
increased efforts to prevent improper payments, we plan to open 
additional units as resources permit.
    The Federal Government or States may prosecute an individual for 
fraudulently receiving SSDI benefits. The determination as to whether 
to proceed criminally rests with the appropriate prosecutor, either 
Federal or State. The Department of Justice may also pursue a claim 
under the False Claims Act. If a U.S. Attorney's Office declines to 
prosecute the case, our OIG may pursue an action for civil monetary 
penalties. If the OIG declines the case, we may pursue administrative 
penalties.
    We train our field employees to alert OIG to any cases of suspected 
fraud. We made nearly 19,000 such fraud referrals related to our 
disability programs in fiscal year 2011, from which the OIG opened 
about 4,600 cases. During this period, our OIG initiated 314 civil 
monetary penalty cases, successfully resolving 67 with $2,798,172 in 
penalties and assessments imposed.
    Additionally, we have nine attorneys assigned to a United States 
Attorney's Office as Special Assistants. These attorneys prosecute 
possible fraud cases referred by OIG that would not otherwise be 
prosecuted in Federal court. From fiscal years 2003 through 2011, our 
attorneys secured over $43.7 million in restitution orders and 814 
convictions or guilty pleas.
    Question. It is my understanding that the Social Security 
Administration has implemented two fast-track initiatives, known as 
Compassionate Allowances and Quick Disability Determinations, to 
improve processing of claims for those with severe disabilities. Please 
provide specific data on the decrease in time to approve claims under 
these programs compared to past claim processing times.
    Answer. The State disability determination services (DDS) render 
disability determinations for initial claims. In fiscal year 2011, the 
average time from the date the DDS received the claim until the DDS 
made a disability determination was approximately 80 days for all 
approved claims, 10 days for approved fast-track claims and 88 days for 
approved non-fast-track claims.
    Question. I am told that Continuing Disability Reviews yield more 
than $10 in lifetime program savings for every $1 spent and 
Supplemental Security Income redeterminations yield over $7 in lifetime 
program savings for every $1 spent. I find it alarming that an Office 
of the Inspector General Report recently found from 2005 to 2010 it is 
estimated that the Social Security Administration paid between $1.3 
billion and $1.6 billion in disability benefits that could have been 
avoided with full medical Continuing Disability Reviews. In recent 
years, Congress has provided specific funding for program integrity 
initiatives. What additional steps would you recommend be taken to 
support program integrity efforts that could lead to increased savings?
    Answer. For many years, the agency was forced to cut back on 
program integrity reviews due to inadequate funding. The same people 
who handle initial disability decisions and reconsiderations also 
complete medical continuing disability reviews. We must balance the 
amount of program integrity work we undertake with our work on incoming 
claims. Because of funding cuts, we hit the low point for these reviews 
in fiscal year 2007. In fiscal years 2008 through 2010, with additional 
funding, we increased our program integrity work, saving billions of 
program dollars. However, in fiscal year 2011, we were under a full-
year continuing resolution, which prevented us from further increasing 
our program integrity work. We use complex algorithms to select the 
most cost-effective cases to review with our limited resources. 
Adequate funding is critical to our ability to increase this cost-
effective work, but it is also important to understand that the same 
people who handle our program integrity work also handle other work, 
such as initial applications for benefits. Without sufficient and 
sustained funding, other work suffers as we increase program integrity 
work.
    Question. Please provide detailed information on the number of 
cases each year that are appealed to Federal district courts after 
being rejected by Administrative Law Judges at the Social Security 
Administration. Of this number, how many claimants win their appeals at 
Federal district courts? With regard to cases that are remanded to the 
Social Security Administration, how many of these cases are ultimately 
decided in favor of a claimant? Please describe possible factors that 
may play a role in claimants' success on appeal. What recommendations 
would you make to improve the process on the front end so that cases 
that win on appeal are approved in the beginning?
    Answer. In fiscal year 2010, claimants filed 13,158 complaints in 
Federal district courts concerning Social Security program (disability 
and non-disability) litigation matters. In fiscal year 2011, this 
number increased to 15,644, as we issued more decisions.
    In 2010, Federal district courts reversed the agency's decision in 
447 cases (or 3.7 percent of the 12,182 district court dispositions 
that year). In 2011, this number decreased to 380 cases (or 2.86 
percent of the 13,304 district court dispositions that year). District 
courts remanded 5,718 cases (46.9 percent) to the agency in 2010 and 
6,137 cases (46.12 percent) in 2011.
    In 2010, we issued dispositions in 6,028 cases that courts had 
previously remanded. We issued fully or partially favorable decisions 
in 4,048 of these cases (67.15 percent). In 2011, we issued 
dispositions in 6,285 cases that courts had previously remanded. We 
issued fully or partially favorable decisions in 4,176 of those cases 
(66.44 percent).
    The three most common causes of remand in our disability cases, 
which represent the vast majority of our program litigation, are: (1) 
insufficient reasons provided for rejecting a medical source or 
treating source opinion; (2) failure to consider or properly evaluate a 
particular impairment at step two of the sequential evaluation process; 
and (3) failure to accommodate limitations from all impairments in the 
residual functional capacity.
    With regard to recommendations on how to improve our decisionmaking 
so that we approve claims as early as possible. We hold nationwide 
training for our Administrative Law Judges at which attorneys from our 
Office of the General Counsel participate to discuss how to best 
evaluate medical evidence and draft decisions. In addition, we have 
initiatives to improve the quality of the information in a disability 
case file. For example, we have an Electronic Claims Analysis Tool, a 
web-based tool that automatically prompts an examiner with case-
relevant regulations and instructions and requires the examiner to 
enter the necessary documentation before he or she can close a case.
                       NONDEPARTMENTAL WITNESSES

    Senator Harkin. Now we'll turn to our second panel.
    Senator Mikulski. Mr. Chairman, I regret, I've to get to 
another hearing. But, this was a terrific hearing, and you've 
got a great panel, here.
    Senator Harkin. We've got a----
    Senator Mikulski. I think we're----
    Senator Harkin [continuing]. Great panel, yeah.
    Senator Mikulski. Yeah. And what we're seeing in this is, 
under every rock is another rock.
    Senator Harkin. Right, exactly.
    Senator Mikulski. And we're now heading to the hard place.
    Senator Harkin. This is the----
    Senator Mikulski. We don't want a hard landing.
    Senator Harkin. These are the hard places. Thank you very 
much, Senator Mikulski.
    W. Lee Hammond is the president of the AARP and has been a 
member of its board of directors since 2002. He is a retired 
teacher, who served in the--Wicomico?
    Mr. Hammond. Wicomico.
    Senator Harkin [continuing]. Wicomico County schools for 30 
years. He currently serves on the U.S. Attorney's Healthcare 
Fraud Task Force and is a member of the Maryland Commission on 
Aging.
    Marty Ford is the acting director of the Arc of the United 
States and the United Cerebral Palsy Disability Policy 
Collaboration. She was previously the chair of the Consortium 
for Citizens with Disabilities and has continued to work with 
the consortium as a co-chair of the Task Force on Social 
Security and Long-term Services and Supports; received her law 
degree from the George Washington University National Law 
Center and her B.A. from the University of Virginia.
    Mr. Joe Dirango was--Dirago or----
    Mr. Dirago. Dirago.
    Senator Harkin. Dirago.
    Mr. Dirago--sorry about that--was elected the president of 
the National Council on Social Security Management Associations 
in November 2009. He previously served on the New York Region 
Management Society, for 13 years, and as chair of the National 
Council's Labor Relations Committee for 2 years. Mr. Dirago has 
worked for Social Security for 30 years. A graduate of State 
University of New York at New Paulz with a bachelor of science 
degree in economics.
    And, before we start with this panel, I'm also told that 
Nancy Shor, who is the executive director of the National 
Organization of Social Security Claimants' Representatives, is 
also with us here today. She's done great work on behalf of 
persons with disabilities. I have spoken and met with NOSSCR in 
the past, so I just wanted to take a moment to recognize both 
NOSSCR and Nancy Shor. I don't--I can't see where--right there 
in front of me.
    Nancy, thank you very much. And thank you for the great 
work that your organization does on behalf people, especially, 
with disabilities.
    Now, we'll start with our panel. All your statements will 
be made a part of the record in their entirety. I ask you to 
sum up, if you can, in 5 minutes or so.
    And we'll start Mr. Hammond and work across.
STATEMENT OF W. LEE HAMMOND, PRESIDENT, AMERICAN 
            ASSOCIATION OF RETIRED PERSONS (AARP)
    Mr. Hammond. Chairman Harkin, Ranking Member Shelby, and 
members of the subcommittee, good morning to all of you.
    And, Mr. Chairman, Wicomico presents a challenge wherever I 
go. So.
    Senator Harkin. Okay, thank you.
    Mr. Hammond. As the largest nonprofit, nonpartisan 
organization representing the interests of Americans age 50 and 
older, their families, AARP would like to thank the chairman 
and ranking member for holding this hearing and giving us the 
opportunity to voice our concerns about the ability of the 
Social Security Administration to adequately serve current 
recipients while responding to the needs of the new Boomer 
retirees and other program beneficiaries.
    AARP recognizes the budget deficit provides many 
challenges, and our members believe that it's important to work 
together across party lines to find responsible budget 
solutions that consider the health and financial well-being of 
all Americans.
    We also believe the Federal budget reflects the priorities 
of this Nation and her people. First and foremost, we must 
always consider the impact each proposed budgetary cut will 
have on people. We're not just talking about numbers and 
statistics. We're talking about our families, our loved ones, 
friends, and neighbors: real people.
    The Social Security Administration interacts with millions 
of Americans when they retire and seek the benefits that 
they've earned over a lifetime of work; with those who, through 
sickness or injury, become disabled and cannot longer support 
themselves or their families; with orphans of the 9/11 
terrorist attack; with families of soldiers killed in Iraq and 
Afghanistan; and with countless widows, widowers, and surviving 
dependents, who must continue on after the loss of a loved one: 
real people.
    Now, I'd like to address AARP's major concerns regarding 
the funding of the Social Security Administration. SSA was made 
an independent agency in 1995 to provide the program with 
consistent direction and professional management and to help 
insulate it against decisions not based on Social Security-
related issues. However, becoming an independent agency has 
also placed added administrative burdens on the Social Security 
Administration, and we're very concern with the impact these 
additional responsibilities are having on the timely delivery 
of services to Social Security beneficiaries.
    The Social Security Administration performs this additional 
work as it meets the challenges of Boomers reaching the 
retirement age at a rate of 1 every 8 seconds by the end of 
this decade. Nearly 80 million new beneficiaries will be added 
to the Social Security rolls. It's not difficult to understand 
the enormity of the administrative task the agency is facing.
    With the increases in funding Congress has provided over 
the last 3 years, and significant increases in employee 
productivity, SSA has been able to make some progress in 
customer service. However, the longer-than-foreseen economic 
downturn has resulted in a record level of claims for the 
retirement and disability benefits. In fiscal year 2010, SSA 
received nearly 3.25 million initial disability claims, the 
highest in its 75-year history. Yet, at a time when additional 
funding is needed to handle the increased workload, the agency 
is dealing with the possibility of a Government shutdown as 
well as cutbacks resulting from enactment of spending levels 
below the current fiscal year. The House passed long-term 
continuing resolution H.R. 1, with a result in the aggregate 
funding loss of over $1 billion for the Social Security 
Administration. That proposal is unacceptable.
    As if service reductions were not enough, even the status 
quo would prevent program integrity efforts from realizing 
their potential. Congress has consistently provided for 
separate additional funds for SSA to conduct continuing 
disability reviews and SSI eligibility redeterminations. We 
believe that not enabling the agency to pursue these 
activities, simply because of an artificial barrier like the 
discretionary spending caps, would be downright foolish.
    Mr. Chairman, AARP strongly urges the subcommittee, and the 
Senate as a whole, to reject the deep cuts to SSA funding that 
are included in the House-passed resolution. Today, the bottom 
line is nothing--is that nothing short of the $11.5 billion, 
with no rescission of IT funds for fiscal year 2011, will 
ensure the ability of the SSA to adapt to the many critical 
challenges that confront them for the balance of this year. 
Social Security Administration customers, whether older, 
younger, or somewhere in between, are real people. They have 
the right to expect better service than they're receiving 
today. We sincerely hope that Congress and the President will 
not let them down, by providing the funding necessary to enable 
SSA to serve them promptly and properly.
    On behalf of the millions of AARP members, and of all 
Americans who are served by SSA, thank you for the opportunity 
to address the subcommittee.
    Senator Harkin. Mr. Hammond, thank you very much.
    [The statement follows:]
                  Prepared Statement of W. Lee Hammond
    Chairman Harkin, Ranking Member Shelby, and members of the Labor, 
Health and Human Services, and Education, and Related Agencies 
Subcommittee, good morning.
    As the largest nonprofit, nonpartisan organization representing the 
interests of Americans age 50 and older and their families, American 
Association of Retired Persons (AARP) would like to thank to Chairman 
Harkin, and Ranking Member Shelby for holding this hearing. AARP 
appreciates this opportunity to appear before the subcommittee to voice 
our concerns about the ability of the Social Security Administration 
(SSA) to adequately serve current recipients while responding to the 
needs of new Boomer retirees and other program beneficiaries. I am here 
today to speak to AARP's priorities with respect to funding for the SSA 
for fiscal year 2011 and beyond.
    While SSA funding is of great importance, we have equal concern for 
many other vital healthcare services and economic security programs. 
For example, AARP is concerned about sufficient funding for the 
Qualified Individual-1 program which helps more than 156,000 seniors 
nationwide afford to pay their Medicare premiums that would otherwise 
be unaffordable or cause great financial hardship; programs authorized 
under the Older Americans Act which provide needed assistance, 
including nutrition programs which free hundreds of thousands of our 
seniors from hunger, as well as job training and other services; and, 
the Low Income Home Energy Assistance that help millions of households 
with seniors avoid making that horrible choice between heating and 
eating, or paying for all the medicine they need to live healthy lives 
in homes, not institutions.
    As you complete action on the fiscal year 2011 budget and begin 
work on the fiscal year 2012 budget, we ask that you note the framework 
we have set forth for our appropriations and budget advocacy:
  --AARP recognizes that the Federal budget deficit provides many 
        challenges, and AARP members believe it is important to work 
        together across partisan lines to find responsible budget 
        solutions that consider the health and financial well-being of 
        all Americans.
  --We believe the budget reflects the priorities of this Nation and 
        any budgetary cuts will impact people, not just programs.
  --AARP supports budget proposals that will help make healthcare more 
        accessible and affordable for all Americans, including 
        implementation of the Affordable Care Act.
    The SSA touches the lives of nearly every American, and was once 
known as the standard for Government agency service by which all others 
were measured. Over time, however, the agency's mission has been 
diluted by additional responsibilities not related to its core mission 
while the agency itself has faced a loss of staff and a budget that is 
woefully inadequate, especially given the increasing number of 
beneficiaries.
    The SSA was made an independent agency in 1995 to provide the 
program with consistent direction and professional management and help 
insulate it against decisions not based on SSA-related issues. However, 
in the ensuing years, the agency has been tasked with numerous other 
responsibilities that fall outside its core mission of managing the old 
age and survivors insurance, disability insurance, and Supplemental 
Security Income (SSI) programs. SSA now plays a key role in assessing 
the correct premium levels for parts B and D of Medicare. In addition, 
SSA processes applications for the Low Income Subsidy of Medicare part 
D and conducts outreach to those who may potentially qualify for the 
extra help.
    In recent years, the agency has also become an important element in 
the Nation's homeland security efforts as it conducts millions of 
Social Security Number (SSN) verifications for employment purposes and 
other immigration-related activities. In light of the added 
administrative burden these activities have placed on the agency, and 
the impact that burden has on the timely delivery of services to 
beneficiaries, AARP has grave concerns about proposals that would 
further expand these activities or mandate new ones.
    This extra work given to SSA by Congress comes at a time when the 
Nation is confronting a significant, long-anticipated demographic 
challenge, the coming of retirement age of the Baby Boom generation, 
which will add nearly 80 million new beneficiaries to the SSA rolls--
nearly 13 million in the next 10 years alone, and upwards of 16,000 per 
working day. At the end of this decade, these Boomers will reach 
traditional retirement age at the rate of 1 every 8 seconds. It is not 
difficult, then, to understand the enormity of the task the agency 
faces in foreseeable work alone.
    For the most part, Congress has understood these challenges and has 
responded with added resources for SSA to handle this spike in demand. 
With the increases in funding Congress has provided over the last 3 
years and significant increases in employee productivity, SSA has been 
able to make some progress in customer service. However, the 
unforeseeably long-lasting economic downturn has caused even more 
Americans to turn to the SSA. Claims for retirement and disability 
benefits have risen to record levels.
    In fiscal year 2010, SSA received nearly 3,225,000 initial 
disability claims, the highest in its 75-year history. SSA ended fiscal 
year 2010 with initial disability claims pending at an all-time high of 
more than 842,000 cases. This year, SSA expects a record number of 
visitors to its field offices above the 45.4 million customers that 
requested assistance from the field offices in fiscal year 2010. These 
field offices are also responsible for processing an additional 1.2 
million SSI redeterminations in fiscal year 2011 as compared to fiscal 
year 2008, an increase of 100 percent. Furthermore, answer rates on 
telephone calls coming into the field offices remain at an unacceptably 
low level nationally as the rates of calls answered are less than 65 
percent.
    SSA field offices also processed more than 18 million requests for 
new and replacement SSA cards; field offices served thousands of people 
each day needing to report changes of address, changes in direct 
deposit information, and other issues that could affect their benefit 
payments. Field offices also play a significant role in helping people 
with their Medicare benefits and often work with State and local 
agencies regarding Medicaid and SNAP (formerly known as food stamps).
    Eliminating the hearings backlog continues to be SSA's highest 
priority, and one that AARP strongly supports. SSA ended fiscal year 
2010 with just more than 700,000 pending hearings nationwide--the 
lowest level in 5 years. At its peak, it took an average of 18 months 
for a hearing decision. As of January 2011, it took just more than a 
year.
    At a time when it would additional funding is needed to handle the 
incoming and pending workload, the agency is unfortunately dealing with 
the possibility of a Government shutdown, as well as cutbacks resulting 
from the enactment of spending levels below the current fiscal year.
    The House passed long-term continuing resolution, H.R. 1, would 
result in an aggregate funding loss of $1.093 billion for the SSA. That 
proposal is clearly unacceptable.
    SSA is already operating under a partial hiring freeze because of 
the current continuing resolution, which is likely to result in nearly 
3,500 lost jobs for 2011. These additional cuts could lead to SSA 
offices closing their doors, stopping all claims processing, and not 
answering the phones for about a month--1 month out of the seven 
remaining in 2011. In addition to office closures, many locations are 
already seriously understaffed due to employee attrition. Employees who 
retire or otherwise leave the agency are not replaced because the 
resources are just not available. In fiscal year 2009 staffing reached 
its lowest level since 1972, before SSI was established; yet SSA today 
has twice the number of beneficiaries it had in 1972.
    If the SSA shuts down for a month, it would be devastating to both 
the public and to SSA employees. Extended to the national level, it 
would mean that about 182,000 visitors would not be seen, about 33,000 
claims would not be taken, and almost 10,000 redeterminations would not 
be completed. Even 1 furlough day could be devastating to someone in a 
dire need situation desperate for a critical or immediate payment, or 
for a beneficiary needing verification information to qualify for food 
stamps, to obtain housing, or to get Medicaid. Another 70,000 fewer 
people will get a disability appeals hearing this year, which means 
workers waiting to present an appeal to a judge, who already wait more 
than a year, will wait longer. And, SSA would complete 32,000 fewer 
continuing disability reviews, which means wasting millions of dollars 
on improper payments now.
    As if service degradations were not enough, even the status quo 
would prevent program integrity efforts from realizing their potential. 
Congress has consistently provided for separate, additional funds for 
SSA to conduct Continuing Disability Reviews (CDR) and SSI eligibility 
redeterminations. When fully utilized, CDR's result in savings of more 
than $10 in program costs for every $1 in administrative funding used 
to conduct the reviews. SSI redeterminations help save $7 for every $1 
spent. Not enabling the agency to pursue these activities simply 
because of an artificial barrier like the discretionary spending caps 
would be very un-penny wise and grossly pound foolish.
    Mr. Chairman, AARP strongly urges the subcommittee and the Senate 
as a whole to reject the deep cuts to SSA funding that are included in 
the House-passed legislation. Today, the bottom line is that nothing 
short of $11.679 billion, with no rescission of IT funds for fiscal 
year 2011 will ensure the ability of the SSA to adapt to the many 
critical challenges that confront them for the balance of this year. 
Additional resources will also be required to fulfill its obligations 
in the next fiscal year and beyond. The SSA customers, whether they are 
older, younger or anywhere in between, have the right to expect better 
service than are receiving today--we sincerely hope that the Congress 
and the President will not let them down and provide the funding 
necessary to enable its workforce to serve them promptly and properly.
    On behalf of the millions of AARP members and all Americans who are 
served by SSA, I thank you for the opportunity to address the 
subcommittee.

    Senator Harkin. And now we'll turn to Ms. Ford.
    Ms. Ford.
STATEMENT OF MARTY FORD, CO-CHAIR, CONSORTIUM FOR 
            CITIZENS WITH DISABILITIES TASK FORCE ON 
            SOCIAL SECURITY; ACTING DIRECTOR, THE ARC 
            AND UCP DISABILITY POLICY COLLABORATION
ACCOMPANIED BY NANCY G. SHOR, EXECUTIVE DIRECTOR, NATIONAL ORGANIZATION 
            OF SOCIAL SECURITY CLAIMANTS' REPRESENTATIVES

    Ms. Ford. Chairman Harkin, Ranking Member Shelby, thank you 
for this opportunity to testify on behalf of the consumer 
advocacy provider and professional organizations working on 
behalf of children and adults with disabilities, and their 
families, in the United States.
    This hearing is extremely important to people with 
disabilities who may need the programs administered by SSA: the 
Supplemental Security Income Program and the disability 
programs in Title II, including the Disability Insurance 
Program and Medicare. These are crucial income-support programs 
serving disabled workers and their families, and children and 
adults with disabilities, who have limited incomes and 
resources.
    We believe that it is critical to continue to ensure that 
SSA provides adequate services to people applying for SSI 
entitled to disability benefits. We have worked for many years 
with the Congress and the administration to ensure that SSA has 
the funding necessary to reduce the huge backlogs in disability 
decisions. Just as the agency was bringing down the backlog, 
the recession began to have a substantial impact in building a 
new backlog in initial claims. Once again, we are facing the 
prospect of significantly increasing waiting times for 
disability decisions.
    Behind the numbers are individuals with disabilities whose 
lives are unraveling while waiting for decisions. Families are 
torn apart, their homes are lost, claimants' medical conditions 
deteriorate, their once-stable financial security crumbles, and 
some individuals die. Over the past few years, we have 
described extraordinary and unnecessary hardships that people 
with disabilities have endured as they wait for decisions on 
their claims.
    In my written testimony, we have included a very small 
sample of what is happening across the country to claimants who 
are forced to wait many months for their decisions.
    A woman in Oregon has received an eviction notice. Her 
husband's paycheck has already been garnished to pay for her 
medical bills. She has been waiting for a hearing, and then for 
the decision, since August.
    A young man in Texas has applied for SSI in February 2010, 
more than 1 year ago, due to a combination of intellectual and 
mental disabilities. He has just received a notice of denial at 
the reconsideration stage, and now will have to wait for a 
hearing, and then for a hearing decision.
    A man in North Carolina, with a combination of impairments, 
who needs a pacemaker, has been waiting for a hearing on his 
SSI claim since September. His representative estimates, based 
on the claims in that State, that he will have to wait til mid- 
to late-summer 2011 for his hearing.
    Your own constituent services staff are likely well aware 
of similar situations in your States. It is important to note 
that these are situations that are current when the processing 
times are improving, at least at the hearing level, as 
described by the Commissioner earlier.
    We are extremely concerned about what might happen if SSA's 
budget is further reduced to the level included in H.R. 1. 
Under the current continuing resolution, the Social Security 
Administration is already operating at a very bare-bones level. 
The cuts at the level in H.R. 1 will severely punish people who 
most rely on Social Security and SSI. The delivery of services 
should be strengthened, not weakened, during economic crisis.
    The Senate bill, the continuing resolution for the rest of 
2011, in total would provide $600 million more than H.R. 1 for 
SSA's operation. While this is not entirely what SSA requires 
to continue to meet the needs of the public and to address its 
IT needs for fiscal 2011, the Senate amount is certainly better 
than the House-passed bill. And we urge its adoption at a 
minimum of that amount of $11.8 billion.

                           PREPARED STATEMENT

    Finally, regarding fiscal year 2012, we believe that the 
President's budget proposal for SSA for 2012, of $12.5 billion, 
is the minimum needed to continue to reduce the backlogs and to 
increase the deficit-reducing/program-integrity work.
    The speed and quality of the disability process must 
continue to improve and should not be allowed to regress into 
the longer waiting periods of the recent past. These challenges 
can only be addressed if Congress and the administration work 
together to ensure that Social Security continues to be the 
safety net it was designed to provide for people with 
disabilities and their families, as well as retirees and 
survivors.
    Thank you for this opportunity to testify, and I'm happy to 
answer any questions.
    Senator Harkin. Thank you, Ms. Ford.
    [The statement follows:]
                    Prepared Statement of Marty Ford
    Chairman Harkin, Ranking Member Shelby, members of the 
subcommittee, thank you for this opportunity to testify at today's 
hearing on the fiscal year 2012 budget request for the Social Security 
Administration (SSA) and the impact of possible cuts to the fiscal year 
2011 budget.
    I am Marty Ford, Acting Director of the Disability Policy 
Collaboration of The Arc and United Cerebral Palsy. I am here in my 
capacity as a Co-Chair of the Consortium for Citizens with Disabilities 
(CCD) Social Security Task Force. 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 Task Force (hereinafter ``CCD'') 
focuses on disability policy issues in the title II disability programs 
and the Title XVI Supplemental Security Income (SSI) program.
    The focus of this hearing is extremely important to people with 
disabilities. The SSA administers the Disability Insurance (SSDI) and 
other title II disability benefits and Supplemental Security Income 
(SSI), significant crucial income support programs for people with 
disabilities. SSDI provides benefits to disabled workers and their 
families and SSI provides financial support to aged, blind, and 
disabled adults and children who have limited income and resources.
    We believe that it is critical to continue to ensure that SSA 
provides adequate services to people applying for SSI and title II 
disability benefits.
           impact of h.r. 1 on remainder of fiscal year 2011
    The House-passed H.R. 1, Full-Year Continuing Appropriations Act, 
2011, reduces the SSA's administrative spending level to $11.3 billion, 
a decrease from the fiscal year 2010 spending levels of $11.4 billion 
and leaving an already cash-strapped agency with fewer resources with 
which to process claims for people with disabilities and seniors.
    Under H.R. 1, the SSA would receive $430 million less than if it 
operated the rest of fiscal year 2011 under the current Continuing 
Resolution (CR), which is already $1.7 billion less than the 
President's proposed fiscal year 2011 budget. If SSA is forced to 
furlough employees to address the full $430 million shortfall from the 
current CR spending level, it will result in nearly a month of 
furloughs, having devastating effects on service to the American 
public. In 1 month of furloughs, SSA would complete 400,000 fewer 
retirement, survivor, and Medicare claims; 290,000 fewer initial 
disability claims (with processing time increasing by a month); 70,000 
fewer hearings; and 32,000 fewer continuing disability reviews. In 
addition, H.R. 1 severely cuts funds for vital information technology 
(IT) improvements and funds to build the critical new National Computer 
Center, which must be built to protect SSA electronic information and 
infrastructure.
    Under the current CR, the SSA is already operating at a very bare 
bones level. The proposed cuts in H.R. 1 will punish people who must 
rely on SSA and Medicare. We need to remember that there are real 
people behind these numbers. The delivery of services must be 
strengthened, not weakened, during economic crisis.
                impact of senate amendment 149 to h.r. 1
    Senate Amendment 149, the full-year fiscal year 2011 continuing 
resolution offered by Senator Inouye on March 4, would provide $500 
million more for SSA's administrative expenses than would H.R. 1 for 
the remainder of fiscal year 2011. In addition, it rescinds $100 
million less from the special reserve fund for IT expenses. In total, 
the Senate bill provides $600 million more than H.R. 1 for SSA's 
operation. While this is not entirely what SSA requires to continue to 
meet the needs of the public and to address its IT needs for fiscal 
year 2011, the Senate amount is certainly better than the House-passed 
bill. We urge the adoption, at a minimum, of the amount included in 
Senate Amendment 149, totaling $11,821,500,000.
        impact on claimants for social security and ssi benefits
    Behind the numbers are individuals with disabilities whose lives 
unravel while waiting for decisions--families are torn apart; homes are 
lost; medical conditions deteriorate; once-stable financial security 
crumbles; and many individuals die. Over the past few years, we have 
described the extraordinary and unnecessary hardships endured by people 
with severe disabilities as they wait for decisions on their claims. 
The following stories are only a sampling of what is happening across 
the country to claimants who are forced to wait months and years for 
decisions on their appeals. Your own constituent services staff are 
likely well aware of similar situations in your State. It is important 
to note that these situations are current, when the processing times 
are improving, at least at the hearing level. We are extremely 
concerned about what will happen if SSA's budget is further reduced to 
the level proposed in H.R. 1.
  --Ms. C, a 46-year-old woman with fibromyalgia and depression lives 
        in Omaha, Nebraska. She filed her request for hearing on August 
        2, 2010. Her utilities were shut off on December 30, 2010, and 
        she received an eviction notice on January 4, 2011. Although 
        her husband works, his checks are being garnished for her 
        medical bills. She cannot afford her medications and does not 
        qualify for Medicaid because her husband works. Her 
        representative requested critical case status (for expedited 
        processing) on December 30, 2010. Her hearing was held on 
        February 18, 2011, but she has not yet received a decision. The 
        delay in scheduling a hearing and receiving a decision has been 
        extremely difficult for her and her family. (From a 
        representative in Omaha, Nebraska)
  --A 19-year-old young man lives with his foster mother in Plano, 
        Texas; she is his sole source of support. He has a full-scale 
        IQ of 65 and all of his schooling has been in special education 
        classes. He also has some mental health diagnoses and has been 
        in several inpatient psychiatric facilities. He was born 
        prematurely with a positive drug screening and put into foster 
        care at 13 months of age. He has chronic encephalopathy with 
        psychomotor delays. He applied for SSI disability benefits in 
        February 2010 and, more than 1 year later, he received his 
        reconsideration denial in February 2011. Now he will have to 
        wait for a hearing and hearing decision.
  --Mr. E is a 52-year-old man who formerly worked as a security guard. 
        Because he has no income, he lives in a homeless shelter in 
        eastern North Carolina. He is constantly in and out of the 
        hospital. He has bipolar disorder and is an insulin-dependent 
        diabetic with associated neuropathy, which causes burning pain 
        in his feet and legs. He has a history of two heart attacks for 
        which he has had stents. He needs a pacemaker for his heart but 
        cannot get one until he is determined Medicaid eligible. He 
        cannot get Medicaid until he is found eligible for SSI. He 
        asked for a hearing on his SSI claim in September 2010, but he 
        will probably wait until mid to late summer 2011 to get a 
        hearing--if he lives that long. (From a representative in 
        Raleigh, North Carolina)
  --A homeless woman in Manchester, New Hampshire requested her hearing 
        in January 2010. After her representative submitted a ``dire 
        need'' request for expedited processing, her hearing was held 1 
        year later (January 6, 2011). She has had no access to medical 
        care for her severe mental impairments (bipolar disorder, 
        paranoia, and anxiety). She has not yet received a decision.
  --The same New Hampshire representative assisted a man who received a 
        partially favorable decision from an Administrative Law Judge 
        after a 15-month wait. He now has to wait an additional 90 days 
        while his case lingers at the Decision Review Board for 
        possible review. His home is being foreclosed on while he waits 
        for the board to act on his partially favorable decision.
    ssa's limitation on administrative expenses for fiscal year 2012
    We believe the President's budget proposal for the SSA for fiscal 
year 2012 of $12.522 billion is the minimum needed to continue to 
reduce key backlogs and increase deficit-reducing program integrity 
work. With your support, SSA could continue to build on the progress 
achieved thus far, progress that is vital to millions of people who 
depend on their services, including people with disabilities. This 
funding level will allow SSA to continue working down disability 
backlogs, to implement efficiencies in programs, and to increase 
program integrity work.
    The budget will provide for the continuance of crucial income 
support programs. In fiscal year 2012, SSA expects to provide SSDI 
benefits to almost 11 million disabled workers and their family members 
and provide SSI benefits to more than 8.3 million beneficiaries.
    It is imperative that the SSA continue to reduce its disability 
hearings backlog and initial disability claims backlog. This budget 
request will allow SSA to reduce hearings and initial disability claims 
backlogs and simplify the work incentives in the Disability Insurance 
program. With the continued support of Congress, SSA is on track to 
meet its commitment to the American public to eliminate the backlog by 
fiscal year 2013. However, to reach this goal, it will need to 
adjudicate more than 800,000 cases in fiscal years 2011 and 2012, which 
is more than double what was handled 10 years ago. Yet, progress 
continues to be challenged with the current skyrocketing number of 
hearing receipts due to the increased number of people who are applying 
for benefits.
    We are pleased that SSA has implemented many productivity 
improvements which help provide fast and accurate service to the public 
at a lower cost, but the administration needs adequate funding to 
continue this. Congress and the administration must work together to 
ensure that millions of Americans do not experience significant waiting 
times for decisions on their claims. To do this, SSA needs full funding 
of the President's budget for fiscal year 2012.
    The President's proposed fiscal year 2012 budget will aid in 
processing mounting disability claims by creating programs such as 
Extended Service Teams for more efficiency, and expanding Federal 
capacity to decide claims and to assist Disability Determination 
Services in handling claims, improving online services, fast-tracking 
cases that obviously meet SSA's disability standards, paying medical 
consultants per case as opposed to per hour to increase productivity, 
and developing a disability case processing system.
    The President's budget request proposes a 5-year reauthorization of 
section 234 demonstration authority for the Disability Insurance 
Program, which would allow SSA to test program innovations. Using this 
authority, SSA has proposed a new Disability Work Incentives 
Simplification Pilot to provide beneficiaries with a simple set of work 
rules that would no longer terminate benefits solely based on earnings. 
As a result, beneficiaries would have more flexibility to try working, 
without fear of losing their benefits. After years of making similar 
recommendations to improve work incentives, we look forward to working 
with SSA on the details of this proposal.
    The budget request also proposes an extension through 2013 of SSI 
eligibility for 9 years for refugees, asylees, and certain other 
humanitarian immigrants.
    We also support SSA's plans to explore potential improvements to 
programs, such as the Disability Research Consortium to address the 
shortage of disability policy research and collaboration and to enhance 
efforts to expand disability research within and across disability 
programs. We would also like to work with SSA on the SSI Children's 
Pilot--Promoting Readiness of Minors in SSI (PROMISE)--to improve 
outcomes for children and families in the SSI program.
    We are also concerned that Amendment 195 to H.R. 1 would make it 
more difficult for people whose disability claims have been denied to 
take their claims to Federal district court since no funds would be 
available for payment of fees or expenses under the Equal Access to 
Justice Act. We believe that this could make legal representation 
unavailable to claimants who need to pursue their claims in Federal 
court. We urge the subcommittee to oppose inclusion of such language in 
the fiscal year 2011 and 2012 spending packages.
                               conclusion
    For the remainder of fiscal year 2011, H.R. 1 would have a 
devastating impact on administration of the SSA programs and we urge 
the subcommittee to reject such drastic cuts. The harmful impact on the 
American people, particularly people with disabilities waiting for 
decisions on their claims for disability benefits, would be too great. 
Instead, we urge the adoption of at least the amount included in Senate 
Amendment 149 to H.R. 1.
    The President's budget proposal for fiscal year 2012 is the minimum 
needed to continue driving down disability backlogs, improve services 
to people with disabilities, increase efficiency, and keep pace with 
the rising demands of the American public. The speed and quality of the 
administration's disability process must continue to improve and should 
not be allowed to regress into the longer waiting periods of the recent 
past. These challenges can only be addressed if Congress and the 
administration work together to ensure that Social Security continues 
to be the safety net it was designed to provide for people with 
disabilities and their families, as well as retirees and survivors of 
workers and retirees.
    Thank you for this opportunity to testify. I would be happy to 
answer questions or provide you with additional information.
    This testimony is submitted on behalf of the undersigned 
organizations:
  --American Association of People with Disabilities
  --American Foundation for the Blind
  --Association of University Centers on Disabilities
  --Bazelon Center for Mental Health Law
  --Children and Adults with Attention-Deficit/Hyperactivity Disorder
  --Community Action National Network
  --Corporation for Supportive Housing
  --Council of State Administrators of Vocational Rehabilitation
  --Disability Rights Education and Defense Fund
  --Easter Seals
  --Epilepsy Foundation
  --Health and Disability Advocates
  --Lutheran Services of America--Disability Network
  --National Alliance on Mental Illness
  --National Association of Councils on Developmental Disabilities
  --National Association of Disability Representatives
  --National Council for Community Behavioral Healthcare
  --National Council on Independent Living
  --National Disability Rights Network
  --National Multiple Sclerosis Society
  --National Organization of Social Security Claimants' Representatives
  --National Spinal Cord Injury Association
  --The Arc of the United States
  --United Cerebral Palsy
  --United Spinal Association
  --VetsFirst, United Spinal Association
  --World Institute on Disability

    Senator Harkin. And now, Mr. Dirago, please proceed.
STATEMENT OF JOE DIRAGO, PRESIDENT, NATIONAL COUNCIL OF 
            SOCIAL SECURITY MANAGEMENT ASSOCIATIONS, 
            INC., NEWBURGH, NEW YORK
    Mr. Dirago. Chairman Harkin, Ranking Member Shelby, and 
members of the subcommittee, I am the president of the National 
Council of Social Security Management Associations, NCSSMA, and 
the district manager of the Social Security office in Newburgh, 
New York. I appreciate this opportunity to speak on behalf of 
3,400 Social Security managers in field offices and teleservice 
centers around the country.
    NCSSMA's top priority is a strong and stable Social 
Security Administration, and we have significant concerns about 
funding the agency to maintain service levels vital to millions 
of Americans. Workloads are exploding as a result of the 
economic downturn and the 80 million Baby Boomers who will file 
for benefits by 2030. Even with increases in Internet filing in 
2010, over 45 million customers were served in field offices, 
and Social Security completed 100 million telephone calls last 
year.
    Appropriations for SSA are an excellent investment. With 
the additional funding Congress has provided, tremendous 
progress has been made. Annual productivity has increased an 
average of 4 percent, the last 4 years. In 2010, SSA produced 
approximately $6 billion in savings from our program integrity 
efforts.
    However, the repercussions of the current continuing 
resolution have already been felt. Feedback from our busy urban 
offices indicates many are struggling. The manager of an 
Alabama office indicates, ``Our employees are stretched to the 
limit, trying to keep up with the increased walk-in and 
telephone traffic. I really don't know how much more these 
hardworking people can absorb.''
    Most of SSA has been under a hiring freeze during the 
continuing resolution. If this continues for the rest of the 
year, it could result in the loss of 3,500 employees. A 
Kentucky manager says, ``The American public does not care that 
we are short on staff. They want to be seen quickly, have their 
calls answered, and get their issues resolved.''
    SSA projects that 50 percent of its employees will be 
eligible to retire by 2018. Because it takes 2 years to train a 
claims representative, concerns exist about this loss of 
institutional knowledge. Geographical staffing imbalances will 
occur, leaving some offices severely understaffed. This is 
especially problematic for small and rural offices. A manager 
in Iowa says, ``Our service area includes several counties. 
Last year, we lost two employees, now we find it very difficult 
to handle our telephone traffic and other priority workloads. 
Although the use of the Internet is rising, this is not the 
magic answer.''
    SSA offices provide valuable services to many diverse 
customers. My Newburgh office delivers assistance to the 
Wounded Warrior Transition Unit, at West Point, which has 
soldiers from eight States in the Northeast. Without 
replacement staff, benefits to these soldiers will be delayed.
    We respectfully request Congress consider our 
recommendations. For 2011, we urge you to fund SSA at no less 
than $350 million above the fiscal year 2010 enacted levels, 
with no rescission of funds. This level of funding will cover 
increased fixed costs and is essential to keep up with our 
workloads. We strongly support the President's fiscal year 2012 
budget request, and ask that Congress consider full funding to 
sustain the momentum achieved.
    NCSSMA also endorses additional funding to address program 
integrity workloads. For every $1 invested in medical 
continuing disability reviews and SSI redeterminations, $7 to 
$10 in program savings is realized.
    SSA must also be properly funded so that it may continue to 
invest in user-friendly online services and to allow for IT 
investments to improve service delivery. Any rescission of 
funds could jeopardize initiatives to implement technological 
efficiencies.
    Social Security is the safety net of America, and must be 
maintained as such. If adequate funding is not provided, public 
service will suffer, resulting in significant hardship for 
millions.
    We sincerely appreciate the subcommittee's ongoing support 
to ensure that we have the resources necessary to properly 
serve the American public.
    Thank you for the opportunity to testify at this hearing, 
and I respectfully request that you consider our 
recommendations.
    Senator Harkin. Mr. Dirago, thank you.
    [The statement follows:]
                    Prepared Statement of Joe Dirago
    Chairman Harkin, Ranking Member Shelby, and members of the 
subcommittee, my name is Joe Dirago and I am president of the National 
Council of Social Security Management Associations (NCSSMA). I have 
been the manager of the Social Security Administration (SSA) office in 
Newburgh, New York for 10 years and have worked for the SSA for 31 
years, with 27 years in management. On behalf of our membership, I am 
pleased for the opportunity to submit this written testimony to the 
subcommittee.
    NCSSMA is a membership organization of nearly 3,400 SSA managers 
and supervisors who provide leadership in 1,299 community based field 
offices and teleservice centers throughout the country. We are the 
front-line service providers for SSA in communities all over the 
Nation. We are also the Federal employees with whom many of your staff 
members work to resolve issues for your constituents who receive SSA 
retirement, survivors or disability benefits, or Supplemental Security 
Income (SSI). Since the founding of our organization more than 41 years 
ago, NCSSMA has considered our top priority to be a strong and stable 
SSA, one that delivers quality and prompt service to the American 
public. We also consider it a top priority to be good stewards of the 
taxpayers' moneys.
    Our testimony focuses on the key issues confronting the SSA. We 
have critical concerns about the dramatic growth in our workloads and 
receiving the necessary funding to maintain service levels vital to 
millions of people. Despite agency strategic planning, expansion of 
online services, significant productivity gains, and the best efforts 
of management and employees, SSA is faced with many challenges to 
providing the service that the American public has earned and deserves. 
Our testimony also provides our recommendations for addressing the 
obstacles confronting the SSA, information on the state of SSA 
operations, a review of the funding situation, and our detailed 
assessment of the major agency challenges.
                            recommendations
    The NCSSMA offers the following key recommendations to address the 
challenges confronting the SSA and to provide the service the American 
public has earned and deserves.
  --NCSSMA respectfully urges this subcommittee and Congress to 
        consider funding SSA in fiscal year 2011 at no less than $350 
        million above the fiscal year 2010 enacted levels with no 
        rescission of Carryover Information Technology (IT) funds. 
        Based upon our analysis of the President's proposed budget 
        request, assessment of the current workload situation, and a 
        projection of workloads for fiscal year 2012, we believe that 
        funding SSA below this level would have a devastating impact on 
        the agency's ability to deliver vital services to millions of 
        Americans. This level of funding will cover inflationary 
        increases and is critically necessary to keep up with our 
        growing claims receipts, maintain the progress achieved on 
        reducing the disability hearings backlog, process program 
        integrity workloads, and to meet customer service expectations.
  --We strongly support the President's fiscal year 2012 budget request 
        for the SSA and respectfully request that Congress consider its 
        full funding to sustain the momentum achieved on our key 
        priorities, maintain our front-line staffing levels, and to 
        ensure appropriate levels of service to the American public.
  --NCSSMA strongly encourages Congress to consider providing SSA with 
        additional funding to address program integrity workloads and 
        other quality initiatives to improve the accuracy of payments. 
        This would include the elimination of the medical Continuing 
        Disability Review (CDR) backlog and conducting additional SSI 
        redeterminations. For every $1 invested in program integrity 
        initiatives, $7 to $10 in program savings is realized. 
        Investment in program integrity workloads ensures accurate 
        payments, saves taxpayers' dollars, and is fiscally prudent.
  --SSA must be properly funded so that it may continue to invest in 
        improved user-friendly online services to allow more Internet 
        transactions. This would result in fewer visitors and telephone 
        calls to the field offices and provide relief from increasing 
        claims and other workloads.
  --SSA is confronted with major challenges in managing its IT programs 
        to keep up with rapidly expanding workloads. NCSSMA believes it 
        is critical that SSA be adequately funded to allow for IT 
        investments. This is necessary for SSA to replace our aging 
        National Computer Center (NCC), to maintain systems continuity 
        and availability, and improve IT service delivery. Any 
        rescission of Carryover IT funds could seriously jeopardize 
        SSA's initiatives to implement automation and technological 
        efficiencies that address service delivery demands.
  --NCSSMA recommends consideration of legislative and/or regulatory 
        proposals that can improve the effective administration of the 
        SSA program, with minimal effect on program dollars. We believe 
        these proposals have the potential to reduce operational costs 
        and increase administrative efficiency. This includes enacting 
        the Work Incentives Simplification Program (WISP) pilot, 
        requiring quarterly reporting of wages, requiring that SSA be 
        automatically provided with information on workers compensation 
        cases, and developing an automated system to report State and 
        local pensions affecting the Windfall Elimination Provision and 
        Government Pension Offset (WEP/GPO).
                    current state of ssa operations
Claims Workloads
    Over the last 7 years, the SSA has experienced a huge increase in 
retirement, survivor, dependent, disability, and SSI claims. The 
additional claims receipts are driven by the initial wave of the nearly 
80 million baby boomers who will be filing for SSA benefits by 2030--an 
average of 10,000 per day. Concurrently, there has been a surge in 
claims filed due to the economic downturn, which began in 2008. In 
fiscal year 2010 and fiscal year 2011, disability and retirement 
receipts alone are expected to exceed 1 million more than in fiscal 
year 2008.

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Field Office Visitors and Telephone Service
    While SSA field offices are processing many more claims, we are 
also seeing visitors in much greater numbers. Nationally, visitors to 
SSA field offices increased significantly from fiscal year 2007 through 
fiscal year 2010. In fiscal year 2010, field offices experienced 5 
weeks with more than 1 million visitors.
  --SSA visitors in fiscal year 2007--41,900,000.
  --SSA visitors in fiscal year 2008--44,457,180.
  --SSA visitors in fiscal year 2009--45,082,487.
  --SSA visitors in fiscal year 2010--45,430,364.
    In addition to the increased visitor traffic, SSA is experiencing 
unprecedented telephone call volumes. In fiscal year 2010, SSA 
completed 67 million transactions over the 800 number telephone 
network--the most ever. NCSSMA estimates that field offices received an 
additional 32 million public telephone contacts.
Internet Contacts
    SSA's online electronic services, also known as ``eServices,'' 
offer the public access to SSA services via the Internet. The use of 
SSA's Web site is growing and the American public is accessing it more 
often to receive information and report changes. eServices has helped 
significantly in dealing with the dramatic increases in SSA workloads 
resulting from the baby boomers and the economic downturn.
    SSA has promoted eServices extensively, including national public 
campaigns to promote awareness. The following data illustrates the 
volume and growth in SSA eServices.
  --Social Security Online had 133.6 million unique visitors in fiscal 
        year 2010, an increase of more than 52 million from fiscal year 
        2009. There have been 47 million visitors in the first 4 months 
        of fiscal year 2011.
  --In fiscal year 2010, SSA's Web site had 34.8 million contacts to 
        the Frequently Asked Questions, 11.6 million to the Field 
        Office Locator menu, and 3.7 million contacts to the Retirement 
        Estimator.
  --Online retirement claims increased 9.6 percent more than fiscal 
        year 2009. The percentage of retirement claims filed online in 
        fiscal year 2010 reached 36.8 percent, with 913,473 
        applications taken.
  --Online disability claims usage increased 34.5 percent in fiscal 
        year 2010 with 801,060 applications taken. For the first 4 
        months of fiscal year 2011, 30.3 percent of all disability 
        claims were filed online.
Disability Workloads
    Nationwide, more than 3.2 million new initial disability claims 
were filed and sent to the Disability Determination Service in fiscal 
year 2010, an increase of more than 600,000 as compared to fiscal year 
2008.

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    SSA's largest backlogs are in hearings to appeal initial decisions, 
processed by Administrative Law Judges (ALJs) at the Office of 
Disability Adjudication and Review. The chart below illustrates that 
hearing receipts continue to rise, and reached 721,841 in fiscal year 
2010. However, clearances exceeded receipts beginning in fiscal year 
2009, which helped reduce the backlog of SSA hearings to 705,367 
pending.

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             ssa funding fiscal years 2010, 2011, and 2012
SSA Funding Accomplishments Fiscal Year 2010
    Appropriations to the SSA are an excellent investment and return on 
taxpayer dollars. With the additional funding Congress has provided in 
recent fiscal years and significant increases in employee productivity, 
tremendous progress has been made to enhance service to the public, 
reduce the hearings backlog, and to process additional workloads 
received because of the aging of the baby boomers and the economic 
downturn. In fiscal year 2010, SSA achieved the following:
  --Completed more than 300,000 more initial disability claims than in 
        fiscal year 2009.
  --Served 45 million people who visited our 1,300 field offices.
  --Wait times in field offices for those without an appointment were 
        reduced from 23.3 minutes in fiscal year 2009 to 20.7 minutes 
        in fiscal year 2010.
  --With innovation and automation efforts, along with the hard work 
        and dedication of our staff, SSA's annual productivity increase 
        has averaged about 4 percent over the last 4 years.
  --In fiscal year 2010, SSA completed 67 million transactions over the 
        800 number telephone network--the most ever. The telephone busy 
        rate for the 800 number was reduced by half, from 10 percent in 
        fiscal year 2008 to 4.6 percent in fiscal year 2010. Time spent 
        waiting for an agent was reduced by more than 37 percent, from 
        326 seconds in fiscal year 2008 to 203 seconds in fiscal year 
        2010. Field office busy rates have also dropped dramatically 
        from more than 50 percent to nearly 20 percent.
  --Program integrity efforts to process 2.4 million SSI 
        redeterminations and 325,000 medical Continuing Disability 
        Reviews (CDRs) produced more than $6 billion in estimated 
        savings.
  --SSA expanded the Access to Financial Institutions (AFI) Initiative, 
        which data matches assets of SSI individuals that exceed 
        statutory limits. Expansion is to be completed in fiscal year 
        2011 and SSA projects $900 million in lifetime program savings 
        for each year the AFI process is used.
  --Cooperative Disability Investigation (CDI) units combat disability 
        fraud. Since their inception in fiscal year 1998, the efforts 
        of CDI units have resulted in nearly $2.6 billion in savings: 
        $1.6 billion in disability programs and $967 million in 
        projected savings in programs such as Medicare and Medicaid.
SSA Funding for Fiscal Year 2011
    SSA is facing unprecedented workload challenges due to the economic 
downturn and the demand for SSA services from the baby boomers. We 
greatly appreciate the increased funding that SSA received for fiscal 
year 2009 and fiscal year 2010. This includes the $1 billion SSA 
received from the American Recovery and Reinvestment Act (ARRA). About 
half of that funding was directed to reducing the backlogs in SSA. Had 
SSA not received this funding, the service we provide in SSA would be 
much worse and the disability backlog would be unconscionable.
    For fiscal year 2011, the President requested $12.379 billion for 
SSA's administrative budget. The Limitation on Administrative Expenses 
(LAE) account budget request is an increase of $932 million or 8.1 
percent more than the fiscal year 2010 enacted level. Much of this 
increase is needed to cover inflationary costs for fixed costs such as 
rent, guards, postage, periodic step increases, career ladder 
promotions, and increased health benefit costs. Funding above current 
levels is absolutely necessary to keep up with our growing workloads, 
maintain the progress achieved on reducing the disability hearings 
backlog, process program integrity workloads, including SSI 
redeterminations and medical CDRs, and to meet customer service 
expectations.
    NCSSMA recognizes that there is no simple way to provide the 
necessary resources to SSA. However, we believe that funding SSA for 
fiscal year 2011 at the fiscal year 2010 level without covering 
inflationary increases would have a devastating impact on the agency's 
ability to deliver critical services to millions of Americans. SSA is 
the safety net of America and if adequate funding is not provided, 
public service will deteriorate, with longer waiting times, unanswered 
calls, increased backlogs, and significant hardship on needy 
beneficiaries.
    Funding SSA at the level passed by the House of Representatives 
(H.R. 1) would result in serious negative consequences to public 
service. If enacted in its current form, this legislation would reduce 
SSA's appropriated funding $125 million from the fiscal year 2010 
enacted level, rescind $500 million from the Carryover IT funding, and 
rescind $118 million from the NCC funding as part of an overall 
reduction in unobligated ARRA funding. This would likely result in an 
agency-wide hiring freeze, with no overtime available to address 
critical workloads, and employee furloughs. Drastic cutbacks would be 
necessary that would have a negative impact on operations and 
significant delays in all workloads would result. Disability backlogs 
could grow an additional 160,000 cases. Significant financial hardships 
could be created because of delays in payments. Agency productivity 
would erode significantly. Waiting times and telephone service would 
experience major deterioration. This would necessitate cutbacks in 
other budget areas, such as supplies and training, and in IT 
development expenditures. Spending in these areas would be purely for 
maintenance.
    NCSSMA is very concerned that the agency will be forced to impose 
furloughs if the fiscal year 2011 budget is not adequate. Furloughs 
would have a devastating effect on the public that depends on SSA for 
vital services, as well as our employees. Nationally, the furloughs 
could translate to the following approximate daily impact on SSA's 
operations:
  --180,000 daily visitors might not be seen in the 1,266 SSA field 
        offices across the country;
  --16,000 retirement and survivors claims might not be taken from 
        applicants;
  --12,600 disability applications might not be processed for 
        individuals who are unable to work;
  --385,000 telephone calls to SSA could go unanswered;
  --50,000 individuals could fail to have a SSA card application 
        processed;
  --1,440 medical CDRs, which save $10 for every $1 SSA invests in 
        processing them, might not be processed;
  --10,000 fewer SSI recipients might not have redeterminations of 
        their benefits completed to make sure payments are accurate. 
        These reviews save $7 for each $1 SSA spends performing them.
    If SSA is funded at the fiscal year 2010 level for fiscal year 
2011, without covering inflationary increases of $350 million, this 
could reverse the positive progress that has been achieved in the last 
few years with all of SSA's workloads. Attempting to address the fiscal 
year 2011 workload demands at SSA with fiscal year 2010 resource levels 
is not a prudent course of action and would lead to significant 
cutbacks that would be devastating for members of the public who rely 
on SSA for essential services and assistance.
President's Proposed Fiscal Year 2012 SSA Budget
    NCSSMA strongly supports the President's fiscal year 2012 budget 
request for the SSA. The total SSA budget request is $12.667 billion, 
which includes $12,522,200,000 in administrative funding through the 
LAE account. This is an increase of $143.3 million more than the fiscal 
year 2011 President's proposed SSA budget request.
    The following is a direct quote from the SSA fiscal year 2012 
budget overview:

    ``In fiscal year 2012, we will need a minimum administrative budget 
increase of $300 million just to cover our fixed costs, including rent, 
guards, postage, and employee salaries and benefits. We will need 
funding above that level to keep up with our growing workloads, reduce 
existing backlogs, and meet rising customer service expectations.''

    We respectfully request that Congress consider full funding of the 
President's fiscal year 2012 budget request for SSA to sustain the 
momentum achieved on our key priorities, maintain our front-line 
staffing levels, and to ensure appropriate levels of service to the 
American public. This funding request would allow SSA to do the 
following in fiscal year 2012:
  --Reduce the initial disability claims backlog to 632,000 by 
        processing more than 3 million initial disability claims;
  --Conduct disability hearings for 822,500 cases in 2012 and reduce 
        the waiting time for a hearing decision to below a year (to 326 
        days) for the first time in a decade;
  --Reduce pending disability hearings to 597,000 from the fiscal year 
        2011 level of 668,000 (estimated) and fiscal year 2010 level of 
        705,367;
  --Complete additional program integrity workloads--process 592,000 
        medical CDRs (up from 325,000 completed in fiscal year 2010) 
        and 2.6 million SSI redeterminations (up from 2.4 million in 
        fiscal year 2010). $938 million is dedicated in the fiscal year 
        2012 budget request to continue these reviews that save 
        significant program dollars by avoiding improper payments to 
        beneficiaries. SSA estimates this program integrity funding in 
        fiscal year 2012 will result in nearly $9.3 billion in savings 
        over 10 years, including Medicare and Medicaid savings. The 
        increased funding also improves the savings in fiscal year 2012 
        over fiscal year 2010 by more than $3 billion.
    It is important to note that any backlogs and service deterioration 
related to inadequate fiscal year 2011 funding levels would have a 
collateral negative impact on fiscal year 2012 and beyond. Backlogs 
make SSA much more inefficient. Substantially more dollars are required 
to reduce a backlog than to prevent one because of the reworking of 
cases. Hiring delays also have long-term effects because of the amount 
of time it takes for new employees to gain proficiency.
                review and assessment of ssa challenges
Field Office Service Delivery Challenges
    Despite staff replacements authorized in recent SSA budgets, 
significant overtime hours worked, and increases in the use of Internet 
services, field offices are still struggling with tremendous workload 
demands. SSA field offices vary in terms of size, demographics, and 
location. However, all types of field offices are experiencing 
tremendous stress because of our increased workloads and additional 
visitor traffic. The effect of funding the SSA in fiscal year 2011 at 
fiscal year 2010 levels exacerbates the situation and has already had a 
significant impact on local field offices around the country.
    Frontline feedback from our busiest urban offices indicates that 
some have seen their visitor traffic explode with overflowing reception 
areas and increased waiting times. This can result in standing room 
only, lack of seating availability for disabled clients, and visitors 
waiting in the hallway or even outside. Managers of busy SSA field 
offices recently provided these comments:
  --We handle close to 2,000 visitors a week in my office. Recent 
        losses due to retirement are affecting the service we provide, 
        as we cannot interview the public fast enough. It seems like 
        the more employees we put up to interview, the more the public 
        comes in. Pulling employees from the back creates a backlog and 
        reduction in staffing reduces our ability to handle those 
        backlogs. If we cannot hire to fill losses, the public will 
        wait longer and be disadvantaged. In addition, the safety of 
        the employees becomes at risk as the public becomes frustrated 
        at the long waits. (California)
  --Working in a busy office in Alabama, I can honestly say a yearlong 
        continuing resolution at fiscal year 2010 funding levels would 
        be catastrophic. Our employees are stretched to the limit 
        trying to keep up with the increased walk-in and telephone 
        traffic and I really do not know how much more these hard-
        working people can absorb. They are working at a dangerous 
        level--working overtime to keep up--stress levels are high and 
        this is evident if you spend some time in a field office. They 
        will only be able to continue this pace for so long. Less 
        funding and staffing will mean a decreased level of service to 
        our deserving public. We talk about world-class service in our 
        staff meetings; this will disintegrate into second-class 
        service if we do not have the staff or the funding to handle 
        the increasing workloads.
      We expect our working Americans to dutifully pay their SSA taxes; 
        however, this comes with a promise. We promise to safeguard 
        this money as an investment toward their retirement or the 
        horrible possibility of a career-ending disability--a reward 
        for their hard work and contribution to this great country. 
        Inadequate funding and staffing will mean we have to tell them 
        we appreciate their contribution, but we cannot fulfill our 
        promise to provide timely benefits in their time of need, or 
        when they are eligible for well-deserved retirement. They will 
        just have to wait until we can ``get to their claim''. This is 
        unacceptable. We don't give people the option of ``opting out'' 
        of SSA taxes when they experience financial troubles, but isn't 
        that what we are doing here? We understand budget woes, but 
        does this give us a valid excuse for punishing hard-working 
        Americans? We seem to find funding for important causes and I 
        can't think of a better cause than the public we serve who have 
        spent their lives making a positive contribution to make 
        America what it is today--let's take care of them. (Alabama)
  --On a daily basis, we average between 400 and 500 telephone calls on 
        top of claims and postentitlement interviews. We assign six 
        employees to telephones daily and we cannot handle the calls we 
        receive. Last October we had 1 day in which we received more 
        than 1,100 phone calls. How can we be expected to answer so 
        many phone calls? Because of assignments to phone duty, I am 
        unable to process approximately 240 SSI redetermination 
        clearances a week. We are behind by about 20 percent in SSI 
        redetermination clearances. (Florida)
    Most of SSA has been under a hiring freeze because of the current 
funding situation. A hiring freeze for all of fiscal year 2011 could 
result in a loss of more than 2,500 SSA Federal employees and up to 
1,000 State employees in the Disability Determination Services (DDSs). 
SSA field office managers recently provided the following frontline 
feedback about the effect of the current SSA hiring freeze on their 
offices:
  --A hiring freeze will be detrimental, especially to the processing 
        of our disability workloads. Under the Commissioner's 
        direction, we have made tremendous improvement in the time it 
        takes to get a decision. Every year the bar is set higher and 
        every year SSA staff exceeds expectations. However, in the past 
        6 months alone, our office staff has been reduced from 57 to 53 
        employees. We are anticipating a minimum of 4 more losses and 
        will be down to 49 by the end of the year--a 14 percent decline 
        in staff. SSA employees take pride in their work knowing that 
        the American public depends on us for their financial security. 
        Not having the resources to process workloads in a timely 
        manner undermines the positive morale of the staff as well as 
        undermining the public's trust in our agency. Meeting the 
        demands of the public is a struggle every day. We juggle 
        phones, walk-ins, appointments, and Internet claims daily. 
        Despite the flexibility of our staff, we consistently have wait 
        times of more than an hour. Claims Representatives consistently 
        interview all day and have little time to work through mail or 
        return phone messages. Not getting to mail or messages daily 
        directly influences processing time to pay benefits. (Texas)
    As in-office visitors increase in already busy offices, there has 
also been an increase in the number of reported security incidents. 
Tensions escalate when visitors are in crowded reception areas and many 
become frustrated because of the extensive wait to be served. The 
societal trend of disruptive visitors to offices continues to be a 
challenge. The Office of the Inspector General (OIG) issued a report, 
Threats against SSA Employees or Property, on November 30, 1010. 
According to the report, ``SSA has experienced a dramatic increase in 
the number of reported threats against its employees or property. The 
number of threats increased by more than 50 percent in fiscal year 2009 
and by more than 60 percent in fiscal year 2010.'' This SSA manager 
expresses the connection between staff losses, increased workloads, 
public dissatisfaction and security concerns.
  --A hiring freeze for all of fiscal year 2011 would be devastating. 
        We lost two employees over the past 8 months and could not 
        replace them. As a result, we are seeing our visitor waiting 
        times increase and we are not able to answer telephone calls, 
        as we would like. By going from a staff of 18 to 16 employees, 
        we are barely able to hold the line on our workloads and basic 
        services. Another loss without replacement will undoubtedly 
        cause the dam to break. We must have the resources to do the 
        work. We are already seeing much more stress on our staff 
        members due to assuming the workloads of the employees we lost, 
        and we are seeing higher frustration levels from our callers 
        and visitors. The American public does not care that we are 
        short on staff, they want to be seen quickly, have their call 
        answered quickly and get their issues resolved. I am concerned 
        that this type of frustration will lead to more threats and 
        acts of violence toward our staff members, not only in our own 
        office, but also in field offices across the country. 
        (Kentucky)
    SSA has a highly skilled, but aging workforce with about two-thirds 
of its more than 60,000 employees involved in delivering direct service 
to the public. SSA projects 50 percent of its employees, including 66 
percent of supervisors, will be eligible to retire by fiscal year 2018. 
Serious concerns exist about the agency's ability to sustain service 
levels with the tremendous loss of institutional knowledge from SSA's 
front-line service personnel. This SSA field office manager relates the 
challenges of dealing with staff retirements.
  --A recent article provided staggering statistics--by 2025, nearly 1 
        in 4 Montanans will be older than age 65. This month, a tidal 
        wave of baby boomers, 7,000 Americans each day reach that 
        milestone. By 2015, projections rank Montana fourth in the 
        Nation in percentage of seniors. By 2025, ``mature'' Montanans 
        will number 240,000--up more than 100,000.
      By the end of the month, I will lose two employees--one to 
        another Federal agency and the other cannot take the stress of 
        the job. We ask a lot of our public servants in the SSA and 
        deal daily with people living in stressful times. It is very 
        difficult to please people living through hard economic times. 
        As I lose two trained employees, I wonder what the impact will 
        be on the level of service we provide. I have a very 
        conscientious staff. They like to go the extra mile, and do 
        whatever they can to help people. The impact of losing two 
        staff members in these times of doing more with less will cause 
        great strain to an already strained staff. The number of people 
        that walk through our door and the number of phone calls we 
        answer has risen tremendously. Staff and management alike are 
        already filling in on the phones and at the counter to provide 
        the public with the best possible service.
      It takes at least 2 years to train an individual to work in one 
        of our offices. As we lose two individuals, we are already 2 
        years and two people behind in providing public service to our 
        aging population with a trained staff. A hiring freeze is not 
        only demoralizing to our remaining staff members, but causes 
        more stress to a demoralized public. (Montana)
    Geographical staffing disparities will occur with attrition leaving 
some offices significantly understaffed, which is especially 
problematic for the rural SSA field offices. These offices serve 
customers who often live vast distances away, may have no Internet 
service, and lack access to public transportation. In some rural areas, 
SSA may be one of the only Government agencies with a local office. SSA 
is the face of the Federal Government in many communities and the 
public expects their local SSA field office to help them with all of 
their Government-related issues. This SSA manager relates recent 
service delivery issues in their rural office.
  --We are a small office in Iowa and our service area includes several 
        counties, which include some with the highest poverty rates in 
        the State. For several years, we have had the necessary staff 
        to handle our workloads and been able to provide some 
        assistance to other offices. Last year we lost two employees, 
        leaving us with a depleted staff. Now we are not able to handle 
        our own workloads. Because we have a potential driving distance 
        for claimants of 75 miles to come into the office, we have high 
        telephone traffic. We find it very difficult to handle our 
        telephone traffic and all of the workloads and priorities that 
        should be done. Although use of the Internet is rising, this is 
        not the magic answer. Stress on employees who are dealing with 
        rising workloads, pending cases, priorities, deadlines, and 
        unmet expectations (especially from within themselves) affect 
        their outlook and physical health. (Iowa)
    SSA field offices provide valuable services to many diverse 
customers throughout the country. The service provided to our disabled 
veterans is vitally important. In September 2009, the U.S. Government 
Accountability Office (GAO) reported on SSA disability benefits to 
wounded warriors. The GAO report indicated that from 2001 to 2008, SSA 
processed more than 16,000 applications for disability from wounded 
warriors and their approval rate was about 60 percent. As the manager 
of the office that serves the USMA at West Point, I have concerns about 
our ability to assist our Wounded Warriors.
  --My office delivers vital services to the U.S. Army Wounded Warrior 
        Transition Unit (WWTU) through the Soldier and Family 
        Assistance Center. We visit this facility regularly and provide 
        support and SSA services to soldiers from eight States in the 
        Northeast. There are approximately 150 soldiers in the WWTU on 
        an ongoing basis and we process more than 200 leads per year 
        for SSA-related matters. My office staffing has been reduced 
        from 35 employees in 2005 to 30, despite large increases in 
        workloads. Without sufficient resources and replacement 
        staffing, benefits to these members of our Armed Forces will be 
        delayed or become seriously backlogged (New York)
    SSA workloads are expected to grow exponentially as the baby 
boomers retire. Reducing resources while work is significantly 
increasing is a prescription for substantial service delays and 
resulting inefficiencies as SSA tries to cope with the mounting 
backlogs and recontacts by the public. SSA is a very productive agency 
that efficiently uses the taxpayers' moneys and must be maintained as 
such.
Program Integrity Investments
    SSA takes great pride in its stewardship responsibilities by 
ensuring individuals receive accurate payment of benefits. The agency 
is responsible for issuing more than $700 billion in benefit payments 
annually to approximately 60 million people. Tax dollars must be 
effectively managed to minimize the risk of making improper payments.
    Balancing service commitments with stewardship responsibilities is 
difficult given the complexity of the programs SSA administers, but the 
reduction of improper payments is one of SSA's key strategic 
objectives. The two most powerful tools for reducing improper payments 
are conducting medical CDRs and SSI redeterminations.
  --CDRs are periodic reviews of a disability beneficiary's medical 
        condition to determine whether an individual is still disabled, 
        or if benefits should be ceased because of medical improvement. 
        Medical CDRs yield more than $10 in lifetime program savings 
        for every $1 spent.
  --SSI redeterminations review nonmedical factors of eligibility, such 
        as income and resources, to identify payment errors. SSI 
        redeterminations yield a return on investment of more than $7 
        in program savings over 10 years for each $1 spent, including 
        Medicaid savings accruals.
    Investment in program integrity workloads to ensure accurate 
payments and save taxpayers' dollars is necessary and prudent. Adequate 
final appropriations from fiscal year 2008-fiscal year 2010 allowed SSA 
to address critical program integrity work. SSA invested $759 million 
toward program integrity efforts in fiscal year 2010. The 2.4 million 
SSI redeterminations and 325,000 medical CDRs completed in fiscal year 
2010 produced more than $6 billion in estimated savings (in 
overpayments prevented or projected to be collected).
    The President's fiscal year 2011 SSA budget request proposes SSA 
will accomplish 2.422 million SSI redeterminations and increase the 
number of medical CDRs conducted by 31,000 to 360,000 cases. If SSA is 
able to fulfill its fiscal year 2011 program integrity targets for 
medical CDRs and SSI redeterminations, the estimated program savings 
over the next 10 years is nearly $7 billion, including savings to 
Medicare and Medicaid.
    Program integrity investments have an important impact. Inadequate 
SSA funding in fiscal year 2011 may lead to furloughs or cutbacks that 
would prevent the completion of SSI redeterminations and medical CDRs.

                                                                       LOST PROGRAM INTEGRITY DOLLARS IN FISCAL YEAR 2011
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Total cost
                                                                        SSI            Medical     Cost savings/loss                        savings/loss     FO/DDS estimated
                Fiscal year 2010 workload period                 redeterminations    continuing     redeterminations  Cost savings/loss   redeterminations   employee salary    Long-term gain/
                                                                    and limited      disability       and limited      medical CDRs \4\     and limited            \6\              loss \7\
                                                                    issues \1\       reviews \2\       issues \3\                            issues \5\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year 2011...............................................        2,464,684          360,044     $2,708,687,716     $3,931,680,480     $6,640,368,196     $1,809,240,000     $4,831,128,196
1 work day.....................................................            9,859            1,440        $10,834,751        $15,726,722        $26,561,473         $6,935,276        $19,626,197
10 work days...................................................           98,587           14,402       $108,347,509       $157,267,219       $265,614,728        $69,352,755       $196,261,973
15 work days...................................................          147,881           21,603       $162,521,263       $235,900,829       $398,422,092       $104,029,133       $294,392,959
20 work days...................................................          197,715           28,804       $216,695,017       $314,534,438       $531,229,456       $138,705,510       $392,523,945
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ SSI redeterminations and limited issues represent projected 551 redetermination and limited issue cases for fiscal year 2011.
\2\ Medical CDRs are based on fiscal year 2010 projected to fiscal year 2011 (actual number may be higher).
\3\ Cost savings/loss redeterminations and limited issues fiscal year 2011 projections in administrative costs to process this workload for the year; 1, 10, 15, and 20 work days represent long
  term program savings of $7 saved to $1 administrative dollars spent.
\4\ Cost savings/loss medical CDRs fiscal year 2011 projections is adminstrative costs to process CDRs for the year; 1, 10, 15, and 20 work days represent long-term program savings of $10
  saved to $1 administrative dollars spent.
\5\ Total cost savings/loss redeterminations and medical CDRs is total for this workload.
\6\ FO/DDS estimated employee salary is estimated for FO/DDS employees for fiscal year 2011; 1, 10, 15, and 20 work days.
\7\ Long-term gain/loss is fiscal year 2011 projection of total saved moneys (cost savings by processing SSI redeterminations and limited issues and CDRs minus salary costs); 1, 10, 15, and 20
  work days is total dollars lost (total dollars lost minus salary costs).

    SSA's OIG issued a report dated December 1, 2010, titled ``Top 
Issues Facing Social Security Administration Management--Fiscal Year 
2011.'' This report provides OIG's perspectives on the most serious 
management challenges facing SSA. The full report is available at 
http://www.ssa.gov/oig/ADOBEPDF/mgmt%20challenges%202011.pdf, but in 
part, the OIG report indicates there is a significant need to increase 
the number of medical CDRs conducted by SSA.

    ``From CY 2005 through CY 2010, we estimate SSA will make between 
$1.3 and $2.6 billion in disability benefit payments that could 
potentially have been avoided if full medical CDRs were conducted when 
they became due. Furthermore, although SSA plans to conduct an 
increased number of full medical CDRs in fiscal year 2011, a backlog of 
approximately 1.5 million full medical CDRs will most likely remain.''

    SSA budgetary constraints have caused the shortfall between the 
number of CDRs due and the number conducted each year. Adequate funding 
is needed for SSA to conduct all CDRs when they become due and to save 
program dollars. If SSA completes all of the 1.5 million medical CDRs, 
the lifetime program savings would be more than $15 billion.
    The OIG report also identifies potential cost-savings, which could 
be realized by SSA conducting additional SSI redeterminations:

    ``SSA decreased the number of SSI redeterminations conducted 
between fiscal years 2003 and 2009 by more than 40 percent. We 
estimated in a July 2009 report, SSI redeterminations, that SSA could 
have saved an additional $3.3 billion during fiscal years 2008 and 2009 
by conducting redeterminations at the same level it did in fiscal year 
2003.''

    The President's fiscal year 2012 SSA budget request indicates the 
funding recommended would allow SSA to conduct at least 592,000 medical 
CDRs and at least 2.6 million SSI redeterminations of eligibility in 
2012. SSA estimates that increased program integrity funding in fiscal 
year 2012 will result in nearly $9.3 billion in savings over 10 years, 
including Medicare and Medicaid savings.
    NCSSMA strongly encourages Congress to provide SSA with the 
necessary funding to reduce the medical CDR backlog and to conduct 
additional SSI redeterminations. Investment in program integrity 
workloads ensures accurate payments, saves taxpayers' dollars and is 
fiscally prudent. Failure to process these reviews has adverse 
consequences on the Federal budget and the ongoing administration of 
SSA programs.
Quality Concerns
    With the ever-increasing workloads SSA must handle, concerns exist 
about the accuracy of work being performed. SSA employees are working 
at a high rate of production and their primary focus is on getting work 
processed, oftentimes at the expense of quality. Given the significant 
overall dollars involved in SSA's payments, even the slightest errors 
in the overall process can result in significant improper payments.
    Reduced staffing affects not only the number of employees available 
to complete production work, but also management and review positions 
that ensure quality work is completed. SSA is making efforts to improve 
quality of the work product with its new trainees. Most offices are 
completing proficiency reviews after new employees complete their 
training class. This will help develop a more technically proficient 
employee and improve our quality, but resources are necessary for this.
    SSA places a high priority on meeting workload goals, but meeting 
these goals and maintaining quality requires sufficient resources. The 
core problem relative to addressing quality concerns is the time and 
pressure to complete workloads. NCSSMA believes that conducting process 
reviews of cases is necessary and cannot be sacrificed at the expense 
of production.
  --The complexity of the SSI program makes the redetermination process 
        a significant area of concern relative to accuracy of changes. 
        A targeted assessment review of error-prone areas would be 
        beneficial to ensuring a quality product.
  --Process reviews are necessary to address the accuracy of disability 
        reports referred to the Disability Determination Services 
        (DDSs). Improved report accuracy would result in appropriate 
        decisions rendered in a shorter period of time, a critical 
        factor given the pressure on our disability program.
  --Reviews of retirement and survivor claims are necessary to ensure 
        that entitlement to benefits is not missed and claimants are 
        selecting the most advantageous month of election, whether 
        filing by telephone, in person or via the Internet. Having 
        sufficient time to review a sample of all our work would allow 
        managers to provide proper feedback and mentoring to employees 
        and ensure continuing quality service.
SSA Online eServices To Assist With Service Delivery Challenges
    The expansion of services available to the American public via the 
Internet has helped to alleviate the number of visitors and telephone 
calls to field offices. However, Internet services currently available 
represent only a portion of the total workloads accomplished by SSA. In 
spite of SSA's efforts to educate the public regarding Internet 
services, the willingness and ability of individuals to utilize the 
Internet is not keeping pace with the increasing demand for service.
    The agency goal for fiscal year 2012 is to process 50 percent of 
retirement applications and 38 percent of disability claims via the 
Internet. A study of SSA claims indicates that online claims take less 
time to process on average, with a timesaving for a retirement claim of 
12 minutes and 21 minutes for a disability claim. While eServices has 
assisted significantly with the high number of applications received, 
field office staff must still spend significant time to adjudicate 
these electronically initiated actions.
    Many of the high-volume transactions currently processed in field 
offices are not available on the Internet or are only being used by the 
public to a limited degree. In fiscal year 2010 SSA processed more than 
14.7 million SSA card-related actions and 5.4 million benefit 
verifications. This represents more than 40 percent of the 45.4 million 
visitors to SSA field offices. SSA cards cannot be processed online 
because there are security and authentication issues.
    NCSSMA believes that SSA must be properly funded in fiscal year 
2011 and beyond so that it may continue to invest in improved user-
friendly online services to allow more online transactions. If 
individuals were able to successfully transact their request for 
services online, this would result in fewer contacts with field 
offices, improved efficiencies, and better public service. The agency 
requires the necessary funds for finalizing the authentication process 
to allow more postentitlement transactions to be processed via the 
Internet. With increasing workloads, it is also imperative that SSA 
offers a seamless Internet disability application that is easy to use 
and fully integrated with the medical portion of the claim.
Disability Workload Processes
    Eliminating the disability hearings backlog continues to be SSA's 
top priority, and the agency has made a major resource investment to 
improve this situation. The agency's goal is to eliminate the backlog 
by 2013 and to improve processing time to 270 days. The Commissioner 
has implemented several initiatives to achieve this goal, including 
improving processes, compassionate allowances, improving efficiency 
with automation, and increasing adjudicatory capacity. Achieving these 
goals will depend on the available resources provided by SSA funding 
and the volume of new hearings received.
    It is important to understand that annual appropriated funding 
levels for SSA have a critical impact on the hearings backlog. One of 
the most significant reasons for the increase in disability hearing 
backlogs was the significant underfunding of SSA. From fiscal year 2004 
to fiscal year 2007, the final appropriated funding levels approved by 
Congress totaled $854 million less than the President's requests and 
$3.071 billion less than the Commissioner's requests.
    However, as you can see from the chart below, from fiscal year 2008 
to fiscal year 2010, the cumulative final appropriation level was $203 
million more than the President's requests. In addition, SSA received 
nearly $1 billion in ARRA funding. Half of the ARRA funds were 
designated to replace the aging SSA NCC. Much of the other ARRA funding 
has been utilized to help address the hearings backlog at SSA.

                SSA FUNDING REQUESTS AND FINAL APPROPRIATIONS: FISCAL YEAR 2008-FISCAL YEAR 2010
                                            [In billions of dollars]
----------------------------------------------------------------------------------------------------------------
                                         Commissioner's   President's      Final        Final vs.     Final vs.
                                             request        request    appropriation    President   Commissioner
----------------------------------------------------------------------------------------------------------------
Fiscal year 2008.......................         10.420          9.597          9.745          .148         -.675
Fiscal year 2009.......................         10.395         10.327         10.454          .059          .127
Fiscal year 2010.......................         11.793         11.451         11.447         -.004         -.346
                                        ------------------------------------------------------------------------
      Total............................         32.608         31.375         31.646          .203         -.894
----------------------------------------------------------------------------------------------------------------

    The increased resources for SSA became even more essential as the 
agency's workloads grew at a very rapid pace following the beginning of 
the economic downturn. With the increased funding SSA has received in 
the last 3 fiscal years, the agency has hired 228 ALJs and 1,300 
additional support staff. The agency has also opened or expanded 19 
hearing offices, including a fifth National Hearing Center and 8 more 
hearing offices are to be opened this year.
    SSA's efforts have resulted in significant progress in reducing 
both the number of pending hearings and the amount of time a claimant 
must wait for a hearing decision. At the end of fiscal year 2010, the 
pending hearings were reduced to 705,367 cases nationwide, the lowest 
level in 5 years. In February 2010, the average processing time for a 
hearing was 365 days, the lowest level since December 2003. At its 
peak, it took nearly 18 months for a hearing decision.
    Even though this is positive news, the hearing offices are facing a 
significant wave of new hearings that are being filed, as seen in the 
chart below.

                                   ODAR PERFORMANCE DATA THROUGH FEBRUARY 2011
----------------------------------------------------------------------------------------------------------------
                                                      Hearing
           Fiscal year              Pending SSA     processing    Yearly hearing      Yearly        Average ALJ
                                     hearings          times         receipts      dispositions    dispositions
----------------------------------------------------------------------------------------------------------------
2011 \1\........................     \2\ 722,872             371     \2\ 829,373     \2\ 784,693            2.44
2010............................         705,367             426         721,841         737,616            2.38
2009............................         722,822             491         625,003         660,842            2.37
2008............................         760,813             514         591,888         550,805            2.3
2007............................         746,744             512         581,687         547,951            2.19
2006............................         715,568             483         561,609         558,978            2.2
2005............................         708,164             443         598,726         519,359            2.2
2004............................         635,180             391         634,175         561,461      ( \3\ )
2003............................         556,369             343         662,733         571,928      ( \3\ )
2002............................         463,052             333         596,959         532,106      ( \3\ )
2001............................         392,397             307         554,376         465,228      ( \3\ )
----------------------------------------------------------------------------------------------------------------
\1\ Fiscal year 2011 information is from October 2010 through February 2011.
\2\ Fiscal year 2011 data is projected figure based on October 2010 through February 2011 performance.
\3\ Not applicable.

    This chart projects that approximately 400,000 additional hearings 
will be filed from fiscal year 2009 through fiscal year 2011 than were 
filed in fiscal year 2008. This is attributable to the increased number 
of disability claims being filed since the economic downturn that began 
in 2008.
    The Congressional Budget Office (CBO) released a report July 22, 
2010: ``Social Security Disability Insurance: Participation Trends and 
Fiscal Implications.'' According to this report, disability 
beneficiaries tripled from 2.7 million to 9.7 million people from 1970 
to 2009. The CBO projects the number of disability beneficiaries will 
grow to 11.4 million by 2015. In fiscal year 2010, SSA received 619,306 
more initial disability claims than in fiscal year 2008. In fiscal year 
2011, SSA anticipates receiving 629,000 more initial disability claims 
than in fiscal year 2008.
    The rise in disability claims filings has also created backlogs in 
the State DDSs. At the end of fiscal year 2010, the number of pending 
initial disability claims was at an all-time high of 824,192 cases, 
which was 258,522 more than at the end of fiscal year 2008, a 46 
percent increase. In the first 5 months of fiscal year 2011, the number 
of initial disability claims pending has been reduced to 774,130. This 
foreshadows the second wave of cases coming to the hearing offices.
    To eliminate the hearings backlog in fiscal year 2013, SSA will 
need to adjudicate a record number of cases in fiscal years 2011 and 
2012--more than 800,000 each year. Complicating this monumental task is 
the furloughing of workers in 10 States, including DDS employees, 
despite the fact that SSA provides 100 percent of the funding necessary 
for the DDSs to operate. SSA must also deal with an anticipated 
retirement wave of ALJs, with 59 percent currently eligible for 
optional retirement.
    Despite these unprecedented challenges, SSA continues to utilize 
the additional resources received in the last 3 fiscal years to clear 
more disability claims and hearing cases. Unfortunately, the number of 
claims and hearings pending is still not acceptable to the thousands of 
Americans who depend on the SSA for SSI for their basic income, meeting 
healthcare costs, and support of their families. It is essential that 
adequate funding be provided to SSA to replace lost staff and work 
overtime to maintain the momentum achieved in reducing the number of 
disability cases pending and the time it requires to process these 
cases.
Information Technology Investments
    SSA is confronted with major challenges in managing its Information 
Technology programs to keep up with rapidly expanding workloads. NCSSMA 
believes it is critical that SSA receive adequate funding to allow for 
much-needed IT investments. This is vitally necessary for SSA to 
replace our aging NCC, to maintain systems continuity and availability, 
and to improve IT service delivery. Any rescission of Carryover IT 
funds could seriously jeopardize SSA's initiatives to implement 
automation and technological efficiencies to address service delivery 
demands.
    The agency is in the process of replacing its NCC and has received 
ARRA funding for this purpose. The existing NCC is more than 30 years 
old and has significant structural issues that necessitate its 
replacement. Additionally, the NCC's capacity is severely strained by 
increasing workloads and expanding telecommunication services to 
support the agency's business.
    In the previously referenced OIG report dated December 1, 2010, 
managing the timing of the transition from the existing data center to 
a new center has become a concern.

    ``SSA estimates that by 2012, [its National Computer Center] as a 
stand-alone data center will no longer be able to support this 
expanding environment.''

    SSA has also made a major investment in improving its telephone 
service. The agency is in the midst of replacing telephone equipment 
with Voice over Internet Protocol (VOIP). The VOIP technology telephone 
system integrates SSA's networks and provides faster call routing. The 
agency is approximately 74 percent complete with this initiative, with 
936 of its 1,266 field offices now have the new VOIP equipment. SSA 
anticipates completion of this project by March 2012.
    With SSA's volume of telephone calls increasing, successfully 
implementing VOIP is essential to address growing public service 
demands. While early VOIP installations experienced problems with the 
equipment and services, the agency has made significant strides in 
addressing those concerns. Voice quality, management information data, 
and programming issues are being addressed and resolved, but SSA IT 
funding is critical to the successful completion of this major 
initiative.
Legislative and/or Regulatory Actions To Improve SSA Program Efficiency
    NCSSMA recommends consideration of the following legislative and/or 
regulatory proposals that can improve the effective administration of 
the Social Security Program, with minimal effect on program dollars. 
NCSSMA believes these proposals, which are included in the fiscal year 
2012 budget request, have the potential to increase administrative 
efficiency and lower operational costs.
  --Enact the WISP.--This proposal would replace the complex work 
        provisions in the Social Security Disability Program, including 
        the trial work period, substantial gainful activity 
        determinations, extended period of eligibility and expedited 
        reinstatement, and replace these provisions with an earnings 
        test comparable to that of RSI beneficiaries under full 
        retirement age. This provision would simplify the entire work 
        incentive process for the beneficiary and SSA. Work years saved 
        by SSA currently spent in enforcing the prior provision could 
        be redirected to other priority workloads.
  --Federal Wage Reporting.--This proposal would require employers to 
        report wages quarterly; the proposal would not affect reporting 
        of self-employment. Increasing the timeliness of wage reporting 
        would enhance tax administration and improve program integrity 
        for a range of programs. This program would give SSA more 
        immediate access to earnings information for the SSI program, 
        thereby decreasing underpayments.
  --Require That SSA be Provided With Information on Workers 
        Compensation.--Provision of this information in an electronic 
        fashion would greatly reduce the number of contacts necessary 
        by SSA personnel to State and local governments, along with 
        private insurance providers. Having accurate information at the 
        time of determinations would ensure more accurate decisions, 
        thereby reducing incorrect payments. This proposal would save 
        both administrative and program dollars.
  --WEP/GPO.--NCSSMA supports the proposal to develop automated data 
        exchanges for States and localities to submit useful and timely 
        information on pensions that are based on work not covered by 
        Social Security. These cases are complex and error-prone. 
        Availability of this information would allow for more efficient 
        case processing, as well as prevent future overpayments.
                               conclusion
    The management and staff of the SSA are highly committed to serving 
the American public, but we must have the tools and resources to do so. 
SSA is the safety net of America and if adequate funding is not 
provided, public service will deteriorate, with longer waiting times, 
unanswered calls, increased backlogs, and significant hardship on needy 
individuals. The appropriated funding levels for fiscal year 2004 
through fiscal year 2007 did not adequately fund SSA and contributed to 
a degradation of service to the public. We hope there will be a careful 
assessment of what may be done to provide adequate funding for the SSA 
in fiscal year 2011 and beyond.
    In our view, which is shared by many others, Social Security is the 
most successful Government program in the world. We are a very proud 
and productive agency that efficiently uses the taxpayers' moneys, and 
the SSA must be maintained as such for future generations. NCSSMA 
sincerely appreciates the subcommittee's interest in the vital services 
the SSA provides and the ongoing support to ensure SSA has the 
resources necessary to serve the American public. We remain confident 
this increased investment in SSA will benefit our entire Nation.
    On behalf of the members of NCSSMA, I thank you again for the 
opportunity to submit this written testimony to the subcommittee and 
state our viewpoints. NCSSMA members are not only dedicated SSA 
employees, but are also personally committed to the mission of the 
agency and to public service. We respectfully ask that you consider our 
comments, and would appreciate any assistance you can provide in 
ensuring the American public receives the critical and necessary 
service they deserve from the SSA.

    Senator Harkin. And thank you all very much for your 
testimonies.
    We'll start a round of 5-minute questions, here.
    Mr. Dirago, we'll start with you. I held a field hearing at 
the University of Northern Iowa campus on February 5 this year. 
And we discussed these budget cuts like this, including to the 
Social Security Administration, on communities in Iowa. Jerry 
Nelson, a field office manager from Waterloo field office, 
testified. And he presented a pretty stark picture of the 
impact that budget cuts on Iowan's filing for disability 
benefits and walking through their door for even basic 
services.
    As a field office manager in Newburgh, New York--again, the 
impact--what is the impact of potential cuts like this on those 
who walk through your door and call you on the phone? Again, 
just give me a good example.
    Mr. Dirago. Well, waiting time in our offices is really an 
issue. In terms of the number of people walking into our 
offices on a daily basis, the average waiting time across the 
country is about 21 minutes. If we're not funded properly and 
we don't have replacement staff, those waiting times are going 
to go up significantly.
    The other effect would be the processing of our disability 
claims and the backlogs that would occur. If funding is not 
provided, there would be delays in that. Potentially, the 
hearings backlog progress would be reversed.
    Our telephone calls coming into the offices, there's a 
tremendous volume. Last year, I mentioned, 100 million 
telephone calls that SSA handled. My office alone receives 
about 4,000 telephone calls in a month. It's very difficult to 
get to those folks, and we try to do the best job that we can--
--
    Senator Harkin. Four thousand phone calls. How many 
employees?
    Mr. Dirago. We have 30 employees in Newburgh.
    Senator Harkin. But, not all those would be employees who 
would be representatives that could handle a phone interview, 
are they?
    Mr. Dirago. Well, there's four management employees and the 
rest of the folks are on the front lines.
    Senator Harkin. So, that's 26, yeah?
    Mr. Dirago. Yeah.
    Senator Harkin. For----
    Mr. Dirago. And we do----
    Senator Harkin [continuing]. 3,000 calls.
    Mr. Dirago [continuing]. The best job we can. But, 
sometimes--you know, it--the resources are very short.
    The other impact that I would mention specifically is the 
program-integrity workloads. They're tremendously important. 
Last year, we did about 2.4 million in the agency. And that has 
a huge benefit. We already talked about the potential of $1 to 
$7 savings--$1-$7 in savings for every $1 invested. My office 
does in excess of 2,000 redeterminations. And again, if we 
don't have the resources, and if the staffing is not replaced, 
then we're not going to get to those workloads. And then the 
long-term effect would be negative.
    Senator Harkin. Someone told me also about the phone calls 
coming into your offices, that these are not usually 30-second 
phone conversations.
    Mr. Dirago. No, generally, the phone calls that come in, 
that are to the field offices, are often in regards to claims 
development, which could be to resolve issues on their 
disability applications; could be complex issues in the 
Supplemental Security Income Program, where you have to go into 
development of income and resources. So, oftentimes those 
telephone calls are 5 to 10 minutes, or even more. The 
telephone calls that go into the teleservice center sometimes 
can be resolved very quickly, where they may be just a request 
for location of an office or a request for a benefit 
verification. So, generally when folks call the local field 
office, they want to speak to someone in the local field office 
because they have an issue that needs to be addressed, with a 
particular claims representative, about their claim.
    Senator Harkin. And, while I'm very supportive of 
technology and putting more things online--Commissioner Astrue 
talked about that--as I travel around my State of Iowa, and I 
go to so many small towns and places, where we have a lot of 
elderly people that live by themselves--in many cases, in small 
houses, and the only thing they have is Social Security; that's 
all they've got--they just aren't too proficient online. And a 
lot of them don't even have online services. In rural areas, 
they just don't have it. And so, while technology's okay, it 
just doesn't reach, I think, a big segment of the population 
out there that are elderly. Now, that may change as the Baby 
Boomers start to retire and people who are used to using online 
services retire. But, I'm saying, for the present generation 
out there, I mean, some of them have never used computers 
before, have never gone online.
    Mr. Dirago. Yes. We've--in terms of the agency, right now 
we're at about 34 percent online, in terms of the claims filed, 
between a combination of retirement, survivors, and disability, 
which is very good. It's a significant improvement over prior 
years.
    The Commissioner's fiscal year 2012 goal is 50 percent in 
retirement and 38 percent in disability. But, you are correct, 
there's--rural counties, there's issues, in terms of access to 
the Internet; there's issues, oftentimes, with people's ability 
to handle the difficult process of processing----
    Senator Harkin. Right.
    Mr. Dirago [continuing]. A claim online, particularly 
disability claims. That's the large challenge.
    The one point I'd like to make--the agency is in the 
process of improving its disability online application, and 
that's an important initiative, and would be very helpful, 
because if more claims are taken online the--what we have to 
work on, in terms of the offices--we'd be better able to handle 
that. Because every one of those online claims still has to be 
handled within the office. So, the local field office reviews 
the claim, makes the decision, in terms of any entitlement 
factors, may pursue other development. In terms of the 
disability, they have to basically clean up the entire 
application so that the product that's sent to the disability 
determination services is accurate and so they can make a good 
decision.
    Senator Harkin. All right. Thank you. My time's up.
    Senator Shelby. Thank you, Mr. Chairman.
    Mr. Hammond, I'll direct the first question to you, if I 
could.
    In your testimony, you note that, while funding for Social 
Security Administration administrative expenses is critical, 
AARP has equal concern for many other vital programs. 
Specifically, you note the importance of sufficient funding to 
help seniors afford to pay Medicare premiums, for senior 
nutrition, and job-training programs, and the Low-Income Energy 
Assistance Program. Funding for these initiatives also falls 
within this jurisdiction of this subcommittee.
    As we work to craft a bill in these tough economic times, 
and to balance funding priorities for programs that serve our 
aging population, do you think a 9.4-percent increase for the 
Social Security Administration's administrative expenses is the 
best use of limited resources, especially, given substantial 
buildup of Social Security's reserve funds, which you know that 
this funding may take from other programs you believe are vital 
to seniors?
    Mr. Hammond. Sir, I think--pardon me, I forgot the 
microphone again.
    Senator Shelby. Go ahead.
    Mr. Hammond. I think it's very important for us to 
understand that Social Security is a real safety-net program 
for this country. We have millions of Americans who are now on 
Social Security. We have more millions of Americans who will be 
on Social Security within the next 10 to 15 to 20 years. Unless 
we provide a viable system that can take applicants, process 
their claims, and do it accurately and efficiently and quickly, 
we're going to have longer lists than we have now, waiting for 
some help. And, as Senator Harkin mentioned, many of those 
folks have Social Security as their only means of income. So, 
we need to beef up the Social Security Administration program 
to the point where it can handle these new applicants and the 
other applicants that are coming through SSI and through the 
disability claims department, and give them the resources that 
they need.
    Certainly, those other programs are very important to us. 
But, we think there needs to be bipartisan support to find 
solutions to those programs, too.
    Senator Shelby. Absolutely. What recommendations, 
specifically, would you make to the Social Security 
Administration to attain its goal of improving service to the 
public? That's very important to all of us.
    Mr. Hammond. I'm not here with any specific recommendations 
this morning, Senator, but I'd be happy to have staff----
    Senator Shelby. Could you do----
    Mr. Hammond [continuing]. Talk with you about that.
    Senator Shelby [continuing]. Some for the record? Would 
you----
    Mr. Hammond. Yes.
    Senator Shelby [continuing]. You or AARP----
    Mr. Hammond. Yes, we can do something----
    Senator Shelby [continuing]. So we can consider them.
    But--because we're interested in spending the money wisely, 
being efficient for the people who need assistance. Not to 
waste money, but to do it timely; as you are, I'm sure.
    Mr. Hammond. We can have staff do something on that regard.
    Senator Shelby. Ms. Ford, I've got a question for you, if I 
could.
    Ms. Ford. Sure.
    Senator Shelby. It's my understanding that the majority of 
the Social Security Administration's administrative expenses 
are attributed to the Disability Insurance Program. Given your 
work with the Consortium for Citizens with Disabilities, could 
you discuss briefly the impact of the Social Security 
Administration's efforts, to date, to fast-track disability 
claims? Specifically, has the disability community noted an 
improvement in the time to approve claims of those with severe 
disabilities through Social Security's fast track initiatives, 
known as Compassionate Allowances and Quick Disability 
Determinations? Is that program working? And, if it is, good; 
if it's not, how can we suggest they improve it, if you have 
some suggestions?
    Ms. Ford. Yes, Senator, we have been watching that and have 
worked with the administration, and note that those two 
programs have been working. The Quick Disability Determination, 
I believe that they are still able to decide cases in well 
under the 20 days. I can't cite, chapter and verse, the exact 
number of days. And the Compassionate Allowance Program has 
been able to choose certain types of impairments, where they 
can determine that the evidence is there and the type of 
impairment, and the evidence with it, will lead them to a quick 
decision. And they are----
    Senator Shelby. The right decision, right?
    Ms. Ford. The right decision quickly. And they are moving 
slowly, not too quickly. I think it's important not to move too 
quickly, so that they do it properly. And we believe that that 
is working.
    We want that to work well, because we think it's important 
that it not--I don't think it would be good to move too fast 
and have it work improperly. But, there is good promise there 
that the administration can move cases----
    Senator Shelby. Is it more----
    Ms. Ford [continuing]. Quickly, when the----
    Senator Shelby [continuing]. Efficient than it----
    Ms. Ford [continuing]. Evidence is there.
    Senator Shelby [continuing]. Used to be?
    Ms. Ford. Pardon?
    Senator Shelby. Is it a lot more----
    Ms. Ford. Oh, absolutely.
    Senator Shelby [continuing]. Efficient?
    Ms. Ford. Much more efficient.
    Senator Shelby. That's what I was saying.
    Ms. Ford. I wish I could cite you the----
    Senator Shelby. Okay.
    Ms. Ford [continuing]. The times, but I can't.
    Senator Harkin. If you can get some of that for the 
record----
    Ms. Ford. Yes. I'm sure----
    Senator Harkin [continuing]. It would be good.
    Ms. Ford [continuing]. And I'm sure the administration will 
be able to give that to you----
    Senator Harkin. Okay.
    Ms. Ford [continuing]. But we can get that for you.
    [The information follows:]
       Letter From the Consortium for Citizens With Disabilities
                                                     July 27, 2011.
Hon. Tom Harkin,
Chairman, Senate Appropriations Subcommittee on Labor, Health and Human 
        Services, and Education and Related Agencies, Washington, DC.
Hon. Richard C. Shelby,
Ranking Member, Senate Appropriations Subcommittee on Labor, Health and 
        Human Services, and Education and Related Agencies, Washington, 
        DC.

RE: Information for the record, Senate Committee on Appropriations, 
        Labor-HHS Subcommittee hearing on the Social Security 
        Administration budget, March 9, 2011
    Dear Chairman Harkin and Ranking Member Shelby: Thank you for the 
opportunity to testify on March 9, 2011 on behalf of the Consortium for 
Citizens with Disabilities (CCD) regarding funding for the Social 
Security Administration (SSA) in fiscal years 2011 and 2012. At the 
hearing, the Committee asked for additional information for the record 
regarding three topics.
Compassionate Allowance and Quick Disability Determination
    Senator Shelby asked for additional information on efficiencies 
under SSA's Compassionate Allowance (CAL) and Quick Disability 
Determination (QDD) initiatives. Through CAL and QDD, cases receive 
expedited processing within the context of the existing disability 
determination process. I testified that these programs are working and 
provide an efficient way for SSA to arrive at accurate, timely 
determinations for people with some of the most serious impairments in 
cases where evidence can be quickly and easily obtained, and there is a 
high likelihood that they meet disability eligibility criteria.
    In fiscal year 2010, SSA identified 4.6 percent of all initial 
disability claims as CAL or QDD; SSA reports that it can ``complete 
these disability claims in days compared to months.'' \1\ 
Unfortunately, statistics that quantify this are unavailable: SSA 
collects, but does not report, CAL and QDD processing times. The SSA 
Office of the Inspector General recently recommended adding data on CAL 
and QDD processing times and allowances to SSA's annual Performance and 
Accountability Report, and providing more detailed data on each 
program.\2\ Such data would help policymakers and the public better 
understand the efficiency and effectiveness of the CAL and QDD 
initiatives.
---------------------------------------------------------------------------
    \1\ Social Security Administration (November, 2010). Performance 
and Accountability Report for FY 2010. http://www.ssa.gov/finance.
    \2\ Office of the Inspector General, Social Security Administration 
(April, 2011). Performance Indicator Audit: The Social Security 
Administration's Fiscal Year 2010 Performance Indicators. A-02-10-
11076.
---------------------------------------------------------------------------
Social Security Beneficiaries With Disabilities
    Senator Shelby also asked how many people with disabilities receive 
Social Security. As of May, 2011 approximately 15,611,000 people 
received Social Security Old Age, Survivors, and Disability Insurance 
(OASDI), Supplemental Security Income (SSI), or both, on the basis of 
their own disability.\3\
---------------------------------------------------------------------------
    \3\ Social Security Administration (May, 2011). Monthly Statistical 
Snapshot, May 2011. Accessed July 1, 2011 at http://ssa.gov/policy/
docs/quickfacts/stat_snapshot/index.html.
---------------------------------------------------------------------------
Amendment 195 to H.R. 1
    Senator Harkin asked for additional information regarding Amendment 
195 to H.R. 1. This amendment would prohibit any Federal funds 
appropriated for the rest of fiscal year 2011 from being distributed 
under the Equal Access to Justice Act, 28 U.S.C. Sec.  2412 (``EAJA'').
    The EAJA was signed into law by President Reagan in 1980 after 
receiving broad bipartisan Congressional support. The EAJA provides 
attorneys' fees to individuals, small businesses, and nonprofits who 
prevail in claims against the Federal Government and who can prove that 
the Federal Government was not ``substantially justified'' in bringing 
or defending the case.
    The EAJA allows low-income and middle-income people who cannot 
otherwise afford an attorney to bring their claims. For example, the 
EAJA allows people with disabilities and seniors to appeal denials of 
Social Security benefits to Federal court, and veterans to appeal 
decisions to the Board of Veterans' Appeals and to the Court of Appeals 
for Veterans Claims. The fees paid under the EAJA are assessed against 
the Federal agency involved and, as a result, do not reduce the past 
due benefits received by the plaintiff/claimant.
    As discussed in my written testimony, CCD is concerned that by 
making legal representation less available, Amendment 195 would make it 
more difficult for people whose disability claims have been denied to 
pursue their claims in Federal court. For that reason, my testimony 
urged the Subcommittee to oppose inclusion of similar language in the 
fiscal year 2011 and 2012 spending packages.
    On May 25, 2011, legislation that would have a similar effect as 
Amendment 195 was introduced in both the House and Senate (Government 
Litigation Savings Act; H.R. 1996 and S. 1061). As more information and 
analysis on this legislation becomes available, we will forward it to 
you. Additionally, for more information about how the legislation may 
affect Social Security claimants, you may wish to contact Nancy Shor, 
Executive Director of the National Organization of Social Security 
Claimants' Representatives, at 201-567-4228 or [email protected].
    In closing, thank you for the opportunity to testify and for your 
leadership in considering the needs of people with disabilities. Please 
do not hesitate to contact me if you require any additional 
information.
            Sincerely,
                                        Marty Ford,
                 Consortium for Citizens with Disabilities,
                              Co-Chair, Social Security Task Force.

    Ms. Ford. I think it--they are both good programs. We like 
to watch this carefully, because we want to be sure that the 
cases are being handled properly. But, yes, there is great 
promise there in making----
    Senator Shelby. Good.
    Ms. Ford [continuing]. Sure that cases can move more 
quickly.
    Senator Shelby. I also noted in your testimony that you 
expressed support for the administration's proposed Disability 
Work Incentives Simplification Pilot Program, which would 
provide beneficiaries with the flexibility to return to work 
without fear of losing their benefits. Could you elaborate on 
the concerns that beneficiaries have on trying to return to 
work? And what additional recommendations would you make? 
Because some people are temporarily disabled, and they might 
get better, but they've got to get back in the workforce, and 
it's hard.
    Ms. Ford. There are a lot of concerns that people with 
severe disabilities have about returning to the workforce. One 
is the issue of whether or not they're going to be able to 
maintain the medical care that they need. Once they become 
conditioned to the--you know, their new life with the 
impairment that they may have acquired, do they have the 
medical treatment and support that they need? And will they be 
able to maintain work? Some people find that they will be able 
to, and therefore they won't need the program anymore. Some 
people find that, in attempting to work, they may not be able 
to maintain that. Those experiences are what people are worried 
about. Will they be able to get back into the Social Security--
--
    Senator Shelby. Sure.
    Ms. Ford [continuing]. System if they need it? And----
    Senator Shelby. That's very critical, though----
    Ms. Ford. Yeah.
    Senator Shelby [continuing]. To someone that's been out of 
the workforce. They don't want to use--lose their benefits; 
yet, if they could take a step toward work, and without losing 
them----
    Ms. Ford. Right.
    Senator Shelby [continuing]. It would be helpful, would it 
not?
    Ms. Ford. But--it would. But, if it took you 2 to 3 years 
to get into the program----
    Senator Shelby. I understand.
    Ms. Ford [continuing]. That's one of the problems. And so, 
if you knew that, once you were in the program, you could 
attempt work without having to go back----
    Senator Shelby. Sure.
    Ms. Ford [continuing]. Through that 2- or 3-year process, 
that you could just simply come back in, and that risk of 
having to reenter would----
    Senator Shelby. Sure.
    Ms. Ford [continuing]. Be gone, and you had an easy on-and-
off. You could take those risks and attempt work. And that's 
what we would like to----
    Senator Shelby. Without fear of----
    Ms. Ford [continuing]. See happen.
    Senator Shelby [continuing]. Losing everything at once.
    Ms. Ford. Yes.
    Senator Shelby. To----
    Ms. Ford. Yes.
    Senator Shelby. In other words, try and see if they can 
swim----
    Ms. Ford. Right.
    Senator Shelby [continuing]. In the water, huh?
    Ms. Ford. Have a good connection to the medical--to the 
Medicare. And have a good connection to the----
    Senator Shelby. Sure.
    Ms. Ford [continuing]. Cash benefit, if you need it. And 
those are the things that we think could happen in the work 
incentive simplification (WIS) program, and that's why we would 
like to work with SSA----
    Senator Shelby. Well, that would help----
    Ms. Ford [continuing]. On that.
    Senator Shelby [continuing]. Help the program and help----
    Ms. Ford. Yes.
    Senator Shelby [continuing]. The people, would it not?
    Ms. Ford. I think it would help immensely.
    Senator Shelby. We worked on that.
    Ms. Ford. Yes.
    Senator Shelby. Mr. Dirago--is that right?
    Mr. Dirago. Yes.
    Senator Shelby. Your administration is the frontline 
service provider for the Social Security Administration in 
communities all over the Nation. Would you elaborate on the 
legislative and regulatory actions that you recommend in your 
written testimony, and to--as to simplify the work incentive 
process, to improve the Social Security Administration program 
efficiencies? That's very important.
    Mr. Dirago. Okay.
    Senator Shelby [continuing]. Because we've got a lot of 
people working at this. The Social Security has been a good 
program, but to say we can't improve it, is nonsense. You know? 
You just cited how we could improve it.
    Mr. Dirago. And I would just elaborate on the work 
incentive simplification, as well. That's probably the most 
significant legislative change that's included in the fiscal 
year 2012 budget request.
    The complexity of the--of disability work-incentive 
development is just beyond belief. You have trial work period, 
you have substantial gainful activity, you have extended period 
of eligibility. It's an extremely complex area for our 
technicians to resolve when individuals attempt to return to 
work. The proposal would greatly simplify that and make it more 
of an earnings test, as opposed to these complex decisions. 
And, as Ms. Ford just indicated, we would support it 
significantly, because it would reduce administrative costs, in 
terms of developing these cases.
    It would also overcome the fear that individuals have of 
returning to work, because, as was stated, individuals once--it 
takes them sometimes 2 years to get on the program; and, when 
they're on, they just don't want to try to go back to work, 
because they're fearful of losing the little economic security 
that they have. So, we would strongly encourage that.
    We also encourage--there's some wage matching that we 
encourage, in terms of windfall elimination provisions in 
Government pension offsets, where there could be some kind of 
automatic----
    Senator Shelby. What do you mean by that?
    Mr. Dirago. Well, in terms of if individuals receive some 
form of a public benefit, a Government retirement payment, so 
that there would be matching with Social Security records so 
that we can resolve any payment issues. So, that if there's 
more interfaces----
    Senator Shelby. Well, that's a question of information 
technology, isn't it?
    Mr. Dirago. Yes, it is.
    Senator Shelby. And the database you have----
    Mr. Dirago. Right.
    Senator Shelby. And that can be done.
    Mr. Dirago. Right. And there's also--Federal wage reporting 
would be something else, in terms of reporting wages on a 
quarterly basis; that would help us significantly.
    Senator Shelby. About how many people, roughly, are on 
Social Security disability in the Nation? Just roughly.
    Mr. Dirago. I don't want to misstate the number. I will 
get----
    Senator Shelby. Well, just roughly.
    Mr. Dirago [continuing]. It for you.
    Senator Shelby. Just give a ballpark figure.
    Mr. Dirago. Wow.
    Senator Shelby. Is it in the millions?
    Mr. Dirago. Oh, definitely in the millions.
    Senator Shelby. Is it 5 million, 10 million?
    Mr. Dirago. Hold on----
    Ms. Ford. Is it approximately 11?
    Mr. Dirago [continuing]. One second, here.
    Ms. Ford. I'm thinking 11 million. But, I----
    Senator Shelby. Eleven million? Could you furnish it for 
the record?
    Mr. Dirago. Absolutely.
    [Clerk's Note.--The information was provided in the July 
27, 2011 letter from the Consortium for Citizens With 
Disabilities.]
    Senator Shelby. Let's assume it's just 10 million--that's a 
lot of people.
    Now, in going back to what Ms. Ford said, if some of those 
people, statistically, will get better--some of them have 
different problems; some will never get better, we know that, 
and--but, if we could ferret out who is getting better.
    Mr. Dirago. Yeah, and that's part----
    Senator Shelby [continuing]. Who could work, and would like 
to work--and without throwing them in a ditch, to help them to 
get out, that would help vitalize this program, would it not? 
And for others that maybe are much more in need.
    Ms. Ford. Help--to give them the opportunities to----
    Senator Shelby. You see what I mean, Ms. Ford?
    Ms. Ford [continuing]. To try work and to get a----
    Senator Shelby. Absolutely.
    Ms. Ford [continuing]. Foothold in the workforce, without 
the fear of losing the support system that they've had to 
depend on.
    Senator Shelby. I know it's not a total analogy, but in 
welfare reform, I know, myself, people that were drawing 
benefits, especially single mothers, a lot of them, and dropped 
out of school and we didn't knock out their benefits. And a lot 
of them have gone and finished high school. I know some that 
have gone on--I know one that's an electrical engineer right 
now. But, if we had knocked out their benefits, their props, 
they would never have made that step toward the marketplace. 
And I think--isn't that what we want to do, where people are 
able and want to work again, Ms. Ford?
    Ms. Ford. Yes, absolutely.
    Senator Shelby. Okay.
    Ms. Ford. We need to give them an opportunity.
    Senator Shelby. Absolutely.
    Mr. Chairman, I thank you for your indulgence on your time.
    Senator Harkin. No, it was a good exchange.
    Now, that's what the President's proposal is going to, 
hopefully, going to try to do, is to test a new system out on 
this. And I'm looking forward to working with the 
administration on the implementation of this pilot program, 
starting next year. See if it works.
    I would hasten to add, though, that a lot of this 
information is--mentioned about the information technology, but 
I'm quick to point out that, in addition to the cuts in H.R. 1, 
it rescinds $500 million in reserves that we have for 
information technology upgrades in the Social Security 
Administration. So, on the one hand, we want to use information 
technology to help us do the work better and more efficiently; 
and then we take $500 million from the reserve fund for 
information technology upgrades and expenses. So, I just wanted 
to point that out, that that's another little whack out there 
that might happen.
    I just had one follow up question, Ms. Ford. In your 
testimony, you mention an amendment--an amendment to H.R. 1, I 
guess, was adopted, I guess--that will adversely impact the 
ability of disability claimants to obtain legal representation 
in Federal court. Could you discuss that a little bit more, and 
its impact on people with disabilities?
    Ms. Ford. It was the--let me find my copy, here.
    Senator Harkin. You said--mentioned amendment 195 or 
something? I don't----
    Ms. Ford. Yes, it was the--it would make it difficult for 
people whose claims have been denied to take their claims to 
Federal District Court, since no funds would be available for 
payment of fees or expenses, under the Equal Access to Justice 
Act. And we are fearful that that could make legal 
representation unavailable to claimants who need to pursue 
their claims in Federal court. And so, we just wanted to bring 
that to the subcommittee's and the full committee's attention 
to ensure that no such language would enter into the Senate 
bill.
    Senator Harkin. Do we have any--if you don't have the 
information now, maybe we could get it for the record, about 
how many claimants actually seek to take their cases to Federal 
court. I don't know if we know that, or not.
    Ms. Ford. When you mention Nancy Shor, she might have that.
    Do you have any idea?
    Ms. Shor. About 20,000.
    Ms. Ford. About 20,000 a year.
    Senator Harkin. About 20,000 a year actually seek to go to 
Federal--actually go to Federal court, or--actually go to 
Federal court.
    Ms. Ford. Currently, actually go to Federal court, yes.
    Senator Harkin. And what you're saying is that there's 
something in H.R. 1 that says that we don't provide legal 
representation any longer?
    Ms. Ford. That this would not allow them to receive--have 
their fees paid under the Equal Access to Justice Act, yes.
    Senator Shelby. Can I ask a question?
    Senator Harkin. We can----
    Senator Shelby. Are the fees paid out of the--say, if they 
had a back reward, and it depends on their work----
    Ms. Ford. As----
    Senator Shelby [continuing]. Say, an attorney's work. And 
they have to approve a fee?
    Ms. Ford. That's the case, as long as you're still in the 
administrative----
    Senator Shelby. Okay.
    Ms. Ford [continuing]. System. As long as you're still 
working your way through the Social Security system.
    Senator Shelby. Okay.
    Ms. Ford. But, once you've finished, at the appeals level 
of SSA, and then you head into Federal District Court, you're 
no longer working in that----
    Senator Shelby. Okay.
    Ms. Ford [continuing]. System. Correct?
    Ms. Shor. Close.
    Ms. Ford. Close.
    Nancy knows this better than I do.
    Senator Shelby. Okay.
    Ms. Ford. Should we submit something that describes that in 
more detail?
    Senator Harkin. Well, I might want to get more information 
on that, because I don't think that we ought to be in the 
business of denying access to court for people who have no 
money and they have a legitimate--or they feel they have a 
legitimate reason to go to Federal court to contest an 
administrative decision. I was not aware of that in the--in 
H.R. 1--not aware that that provision was in there.
    Did you have something?
    Senator Shelby. Mr. Chairman, I just want to follow up----
    Senator Harkin. Yes.
    Senator Shelby [continuing]. On that, if I may.
    Senator Harkin. Yes.
    Senator Shelby. Do you have some statistics--and, if you 
don't have it, I'm sure you could get it and furnish it for the 
subcommittee record--on--if 20,000--just roughly, 20,000 cases 
are appealed from the----
    Senator Harkin. ALJ.
    Senator Shelby [continuing]. Is it the--the appeal on the 
Supreme----
    Senator Harkin. Probably ALJ.
    Senator Shelby. Yes.
    Senator Harkin. Yes.
    Senator Shelby [continuing]. To the Federal court--Federal 
District Court--what's the--are the statistics on overturning 
the decision and everything? We'd be curious about that, too.
    Ms. Ford. I think----
    Senator Harkin. Well, you know what?
    Ms. Ford [continuing]. We'd have to get that----
    Senator Harkin. I think----
    Ms. Ford [continuing]. For the record.
    Senator Harkin. I think I'm going to call Ms. Shor up to 
the table. No reason we can't.
    Senator Shelby. Good idea.
    Senator Harkin. What the heck.
    So, we have a new witness here on this panel. Nancy Shor, 
the executive director of the National Organization of Social 
Security Claimants' Representatives.
    So, Ms. Shor, welcome to the subcommittee.
    Ms. Shor. Thank you very much.
    I did want to respond to the question you had, Senator 
Shelby, about the availability of a claimant's past-due 
benefits to pay the attorney's fee. That can be available for 
Federal court cases, as well as fees, pursuant to the Equal 
Access to Justice Act. And there's an offset so that it's not a 
double recovery.
    Senator Shelby. Okay.
    Ms. Shor. In response to your question about the statistics 
for outcome in Federal court, about 40 percent of cases 
annually are--the Commissioner's denial is affirmed--a handful 
are dismissed, a handful are paid outright, about 50 percent of 
the cases go back to the agency on----
    Senator Shelby. Are remanded back for a hearing.
    Ms. Shor. And about two-thirds of those cases--in about 
two-thirds of those cases, the claimant is successful.
    Senator Shelby. Okay. A lot of this could be prevented if 
you had all the information at the initial hearing, where you'd 
save money, but it'd also bring justice if somebody was really 
disabled.
    Ms. Shor. No question about it.
    Senator Shelby. Is that right?
    Ms. Shor. You're absolutely correct.
    Senator Shelby. That's--looks to me like that's where we 
ought to be working.
    Ms. Shor. Absolutely correct.
    Senator Shelby. Either, somebody's got merit or they don't, 
sometimes it's in between. Because the other is costly to the 
person who's denied, also costly to the person who--if the 
person's rewarded and they're really maybe not that disabled. I 
don't--I can't determine that.
    Okay.
    Senator Harkin. So, why do so many cases, 20,000 a year, go 
through this whole system and stuff if--I mean, is it just an 
interpretive question, or is it a question of judgment, how 
disabled a person is? Why is there so much difficulty, at the 
beginning, in ascertaining whether they quality or not, Ms. 
Shor?
    Ms. Shor. Senator, I think there are a variety of reasons. 
Some of it has to do with inadequate development of the case 
throughout the process, that there are impairments that this 
individual presents with that are never really researched and 
never adequately presented.
    I think there are also instances where the improper legal 
standards are applied throughout the process, and it isn't til 
a Federal judge steps in and directs the agency to correct an 
error that they've been making.
    There are people whose conditions worsen. They've got a 
degenerative type of disease so that, at the very beginning of 
the process, they are--their prognosis doesn't look so great, 
but, the day they apply, there could certainly be a contested 
question about whether they're disabled, that day. And, as the 
process proceeds, their conditions will deteriorate and 
additional evidence will become available.
    Senator Harkin. Complicated system.
    Ms. Shor. Complicated system.
    Senator Harkin. Not every case is the same. They're all 
different, and that's why sometimes people have to appeal these 
to ALJs and then on to Federal court, I guess. But, I did not 
know that there was this provision in H.R. 1 that would take 
that away.
    But, I just want to be clear that, with that provision in 
H.R. 1, are you saying that there are still funds available 
through the passthrough?
    Ms. Shor. The Equal Access to Justice Act provides an 
offset so that a claimant doesn't have to pay the entire fee 
that a--that is awarded for the court. In other words, if there 
were a $5,000 attorney fee awarded for the attorney's work, 
there could easily be a $3,000 or $4,000 fee awarded, under the 
Equal Access to Justice Act. That money goes to the claimant, 
the now successful beneficiary. And, of course, is desperately 
needed, because, almost by definition, this person has been out 
of work for probably 5 years, with the pace of processing of 
claims at the Social Security Administration. So, the Equal 
Access to Justice Act is an extremely important statute that 
defrays the cost of legal expenses for claimants who find 
themselves having to go to Federal court.
    Senator Harkin. I don't understand that. Let me rephrase 
it.
    If, in fact, $500 million was rescinded--$500 million was 
taken from the Special Reserve Fund for--no, no. I'm sorry, 
that's not it.
    If, in fact, the language, that was in H.R. 1, that says 
that these funds cannot be used for appeals to District Court--
I don't have the exact language----
    Ms. Shor. No.
    Senator Harkin [continuing]. In front of me.
    Ms. Shor. Senator, the language in amendment 195----
    Senator Harkin. Yes.
    Ms. Shor [continuing]. Would stop the payment of Equal 
Access to Justice Act fees, Government-wide. So, it includes 
Social Security, but it includes all the other Federal agencies 
where plaintiffs are potentially eligible for Equal Access to 
Justice Act fees.
    Senator Harkin. Oh.
    Ms. Shor. So, although Social Security cases are the 
largest number of cases in which Equal Access to Justice Act 
fees are awarded, the per-case fee is tiny, compared to the 
amounts of Equal Access to Justice Act fees that are awarded in 
litigation having to do with a lot of other Federal agencies.
    So, amendment 195 doesn't contain the words, ``Social 
Security,'' it only talks about a prohibition on payment of any 
fees, in any type of case, pursuant to the Equal Access to 
Justice Act.
    Senator Harkin. How much money do we--are we talking about, 
do we know?
    Ms. Shor. I'm sorry, I don't. But, I could certainly supply 
it.
    Senator Harkin. Well, maybe I can get my staff to get it. 
Do we know?
    Senator Shelby. Can you get it for the record, then?
    Ms. Shor. Certainly.
    Senator Shelby. That would be good.
    Ms. Shor. Absolutely.
    Senator Harkin. Okay. Well, we'll get that for the record.
    Senator Shelby. Good.
    [Clerk's Note.--The information was provided in the July 
27, 2011 letter from the Consortium for Citizens With 
Disabilities.]
    Senator Harkin. Anything else?
    Senator Shelby. No, nothing.
    Senator Harkin. Well, listen. Thank you all very much.
    Thank you, Ms. Shor, for adding to our deliberations here.
    Senator Shelby. Our fourth panelist.
    Ms. Shor. Thank you very much.
    Senator Harkin. Yeah, yeah. But again, we wanted to have 
this hearing, to highlight the problems confronting the Social 
Security Administration, that we have jurisdiction over, only 
in terms of the administrative aspect of it. We don't have 
jurisdiction over policies, we don't have jurisdiction over 
solvency, and all that kind of stuff. That's another committee, 
that's not this committee. We just have a responsibility to 
make sure that the Social Security Administration gets enough 
money to fulfill its obligations, and to do so in a timely 
manner, to make sure that, you know, it's efficient and 
effective.
    So, I guess we're going to have votes today, on H.R. 1 and 
the alternative, at 3 p.m. today. And again, I just wanted to 
have this hearing, again, to highlight what might happen if, in 
fact, the H.R. 1 was enacted. And I think we've got some 
interesting testimony on the record.
    I would just state that, in administrative funding--I just 
want to be clear that--here's the data--for fiscal year 2010, 
we enacted $11.447 billion, from this subcommittee. The 
President's budget for fiscal year 2011 is $12.379 billion. The 
House continuing resolution has $11.322 billion. The Senate 
continuing resolution has $11.822 billion. And the fiscal year 
2012 President's budget is $12.522 billion. I just wanted to 
make sure all those figures are out there.
    Anybody else--do you have anything else at all?
    Senator Shelby. No.
    Senator Harkin. Okay.

                          SUBCOMMITTEE RECESS

    Thank you all very much. The subcommittee will stand 
recessed.
    [Whereupon, at 11:15 a.m., Wednesday, March 9, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


              MATERIAL SUBMITTED SUBSEQUENT TO THE HEARING

    [Clerk's Note.--The following testimonies were received 
subsequent to the hearing for inclusion in the record.]
Prepared Statement of the American Federation of Government Employees, 
                                AFL-CIO
    Chairman Harkin, Ranking Member Shelby, and members of the Senate 
Appropriations Subcommittee on Labor, Health and Human Service, 
Education and Related Agencies, I thank you for the opportunity to 
present this statement regarding the Limitation on Administrative 
Expenses (LAE) for the Social Security Administration.
    As the President of the American Federation of Government 
Employees, National Council of SSA Field Operations, AFL-CIO, I speak 
on behalf of approximately 29,000 Social Security Administration (SSA) 
employees in over 1,300 facilities. These employees work in Field 
Offices, and Teleservice Centers throughout the country where 
retirement and disability benefit applications and appeal requests are 
received, processed, and reviewed.
    AFGE thanks the Senate Appropriations Committee for calling this 
important hearing, at a very critical time, to examine the SSA's budget 
needs for this year and next year, in order to support the proper 
administration of our programs. Our employees are very concerned about 
prospects for furloughs, loss of staff and overtime hours needed to 
keep up with rapidly expanding workloads, and general deterioration in 
service delivery. They care deeply about the public they serve, and the 
continuing uncertainty about future staffing and resources is 
generating high levels of stress.
Background
    During the past 3 years, with increased staffing and funding, we 
have substantially reduced disability hearing backlogs and processing 
times, and turned more of our attention to long-neglected program 
integrity workloads. However, working without a budget for the past 5 
months, we have been struggling to keep up with rapidly growing 
requests for face-to-face and telephone service, and we could easily 
slip back. We are constrained by continuing resolutions that have been 
funding SSA operations at fiscal year 2010 levels, with a freeze on 
hiring in most parts of the Agency. Our clients are having more 
difficulty accessing service, waiting times are increasing, and 
backlogs have developed in initial disability benefit applications. 
Field Representatives who serve clients who are mobility-impaired or 
live in remote areas have all but disappeared. SSA Spokesman Mark 
Hinkle recently acknowledged that budget pressures have slowly done 
away with 1,500 of the 2,000 contact stations that existed in the 
1980s.\1\ The recession and the aging of the population have created 
unprecedented demands upon the employees we represent. We are concerned 
that, if there are further cuts in employee work years, we may be 
unable to keep up with record numbers of new claims for retirement, 
survivor, and auxiliary benefits. No matter how people access service, 
whether face-to-face, by telephone, or via the Internet, our employees 
need to be on the job to process new applications for benefits, and to 
ensure that payments are made to the right people, in the right amount, 
and on time.
---------------------------------------------------------------------------
    \1\ ``Social Security ends visits to seniors'', Boston Globe, 
January 12, 2011.
---------------------------------------------------------------------------
Budget Battles
    The President proposed $12.379 billion to fund SSA administrative 
expenses for fiscal year 2011, and $12.522 billion for fiscal year 
2011. AFGE supports both requests.
    The Agency is limited to spending $11.447 billion, the fiscal year 
2010 level with a carryover of $480 million for a total of $11.927 
billion, under the current continuing resolution.
    The House recently passed H.R. 1, which would cut full year funding 
to $11.321 billion. Additionally, H.R. 1 also includes rescissions of 
$500 million from the SSA reserve fund and from a special IT 
appropriation of $118 million for the National Computer Center. This 
would provide SSA with $10.7 billion in overall spending for fiscal 
year 2011. This represents about a 5.5 percent decrease from fiscal 
year 2010 spending levels and would require $743 million in cuts before 
October 1, 2011. Such reductions would most likely cease all hiring at 
the Office of Disability and Adjudicative Review (ODAR), which is 
currently exempt from the present hiring freeze under the continuing 
resolution. Backlogs would escalate very rapidly, improper payments 
would grow, and furloughs of employees could be implemented for up to a 
month per employee. Public service will be devastated.
    The Senate has proposed a fiscal year 2011 budget of $11.822 
billion, which includes rescissions of $400 million of the agency 
reserve fund. This is essentially the same funding level as fiscal year 
2010. This budget would most likely prevent the furloughing of Social 
Security workers and allow SSA ``to keep the lights on.'' However, SSA 
would most likely be forced to operate under an agency wide hiring 
freeze for the remainder of fiscal year 2011, which would result in the 
loss of approximately 3,500 SSA and DDS employees by the end of the 
fiscal year. This will cause understaffing in offices around the 
country. Backlogs will continue to grow and decisions on benefit claims 
will take longer. Access to field offices and the 800 number would take 
much longer and waiting times would be expected to increase.
    SSA Commissioner Astrue and President Obama have determined the 
funding level that is required to maintain service, and to make needed 
improvements. The wide differences between the House and Senate 
proposals for fiscal year 2011 domestic discretionary spending have 
raised the specter of one or more Government shutdowns and budget-
driven employee furloughs during the rest of this fiscal year. The 
adverse impact of a shutdown or furloughs on Social Security's clients, 
and on the hard-working employees dedicated to serving them, would be 
very serious. One week ago today, during their lunch breaks, Social 
Security employees in 96 facilities across the country joined with 
members of their communities to make the public aware of these threats. 
It is imperative that Congress pass a responsible budget for the rest 
of this year that allows SSA workers to continue to provide high 
quality service to the public, and avoid any interruption of services 
caused by shutdowns and/or furloughs.
Penny Wise is Pound Foolish

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Constraints on spending and on front-line staffing have damaged the 
integrity of the programs themselves. Continuing disability reviews are 
not being conducted on schedule, and Supplemental Security Income (SSI) 
eligibility reviews are being done too infrequently. With insufficient 
staff to handle the work, SSA is forced to rely too much on self-
reporting by mail, rather than on a full examination of eligibility 
factors through an interview by a trained SSA employee. Continuing 
disability reviews save about $10 for every $1 spent on them, and SSI 
reviews about $8 for every $1 invested in them. The President's 
requests for 2011 and 2012 would provide dedicated funds to conduct 
more Supplemental Security Income (SSI) eligibility redeterminations, 
and more continuing disability reviews for Social Security and SSI 
beneficiaries. Both the House and Senate are silent regarding this 
targeted funding, and both have rescinded the vast majority of the 
Agency reserves, funds that could have been used to support these 
critical workloads and others.
    Setting the work aside because of insufficient staff and funding is 
penny-wise and pound-foolish, but SSA has little choice because the 
disability claims and appeals crisis demands attention. These neglected 
workloads have contributed to record overpayments, nearly 9 billion in 
fiscal year 2007 \2\, and many of the overpayments are uncollectible, 
which has captured the interest of the Government Accountability 
Office. The last 2 fiscal years, SSA has been successful in reducing 
the overall amount of overpayments. However, with congressional 
proposals to reduce Government agency budgets and staffing, this 
success may be very short lived. Without adequate staff and budget, 
AFGE expects to see a new record number of overpayments, which may 
actually exceed SSA's annual administrative expense budget within the 
next few years. To make matters worse, the amount of funds lost to 
overpayments over the last 10 years exceeded $55 billion. These lost 
funds would have funded SSA's administrative expenses for at least 4 
years.
---------------------------------------------------------------------------
    \2\ Source of verification of all overpayments found in each 
respective OIG Annual Audit and SSA Performance Plans for each fical 
year listed.
---------------------------------------------------------------------------
The Off Budget Solution
    The Omnibus Reconciliation Act of 1990 provided that SSA FICA taxes 
and benefits payments were ``off budget.'' Congress later interpreted 
that SSA's Limitation on Administrative Expenses (LAE) was not covered 
by the Omnibus Reconciliation Act of 1990, although the Social Security 
Act stipulates that administrative costs for the Social Security 
program must be financed by the Social Security Trust Fund. Since the 
SSA LAE (e.g., staffing, office space, supplies, technology, etc.) is 
``on budget,'' Congress decides on a yearly basis the amount that will 
be authorized and appropriated to administer SSA programs. Often SSA is 
left with insufficient staff and limited overtime due to a combination 
of competing interests within the Labor, Health and Human Services, 
Education and Related Agencies appropriation and the congressional 
budget scoring system. These circumstances make it next to impossible 
to appropriate adequate administrative funds to enable SSA to complete 
the tasks assigned by Congress in a timely manner. Such shortages 
adversely affect disability appeals processing time and cause severe 
integrity problems.
    The Social Security Trust Funds, projected to run a $113 billion 
surplus this year, and over $128 billion next year, pay for the great 
majority of the operating costs for the programs we administer. AFGE 
proposes that the Congress take SSA's administrative accounts off 
budget now. We are very efficient, spending just 0.9 percent of income 
in Social Security program administration. The Agency would still be 
required to justify its budget requests to Congress, and receive 
approval to spend money, but there is no reason why SSA should have to 
compete for funding with the many other agencies in the Labor/HHS 
appropriation package, when our source of funding is almost entirely 
off budget.
    In an ``off budget'' environment Congress would continue to 
maintain spending authority but would be unencumbered by artificial 
caps and budgetary scoring rules. However, Congress would continue to 
appropriate SSA administrative expenses to ensure integrity and 
efficiency. Legislation should require SSA's Commissioner to document 
(in performance reports mandated under the Government Performance and 
Results Act) how funds have been and will be used to effectively carry 
out the mission of the Agency, to meet expected levels of performance, 
to achieve modern customer-responsive service, and to protect program 
integrity.
    Most importantly, GAO must annually inform Congress regarding SSA's 
progress in achieving stated goals. Congress should also mandate that 
SSA's Commissioner submit the proposed budget directly to Congress as 
is now only optional in the independent agency legislation (Public Law 
103-296, Sec. 101). This requirement to submit the SSA budget directly 
to Congress may also be a provision of ``off-budget'' legislation and 
would be endorsed by AFGE.
    Without sufficient funding of Social Security, the LAE will not go 
far enough to put the agency on a clear path to provide its mandated 
services at a level expected by the American public. SSA must receive 
enough funding to make disability decisions in a timely manner and to 
carry out other critical workloads. AFGE strongly urges Congress to 
separate SSA's LAE budget authority from the section 302(a) and (b) 
allocations for discretionary spending. The size of SSA's LAE is driven 
by the number of administrative functions it conducts to serve 
beneficiaries and applicants. Congress should remove SSA's 
administrative functions from the discretionary budget that supports 
other important programs.
    AFGE does not believe the American public deserves poor service 
from SSA. Some claimants while waiting for a disability hearings 
decision lose their homes, declare bankruptcy, and die. Their families 
suffer tremendous financial hardships; some lose everything during the 
prolonged wait for a decision. The public deserves efficient, 
expeditious service. Now is the time to make the correction, so that 
there is stability to run SSA programs that are so vital in providing 
family insurance and income security to 54 million beneficiaries.
    In closing, AFGE urges the Senate to do whatever is necessary to 
insure that SSA receives full funding to do the work that Congress 
demands from the Agency.
    AFGE thanks the Subcommittee for its time and consideration of the 
concerns addressed in this statement. AFGE is committed to serve, as we 
always have, as the employees' advocate AND a watchdog for clients, 
taxpayers, and their elected representatives.
                                 ______
                                 
    Prepared Statement of the National Committee to Preserve Social 
                         Security and Medicare
    As President and Chief Executive Officer of the National Committee 
to Preserve Social Security and Medicare, I appreciate the opportunity 
to submit this statement for the record. 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.
    Chairman Harkin, Ranking Member Shelby and members of the 
Subcommittee on Labor, Health and Human Services, Education, and 
Related Agencies, the National Committee appreciates your holding this 
hearing to examine funding for the Social Security Administration in 
fiscal year 2011 and fiscal year 2012.
    The National Committee is committed to preserving and strengthening 
Social Security. This includes ensuring a strong and stable Social 
Security Administration that delivers high-quality, prompt service to 
the public. We are certainly concerned about the tremendous funding 
challenges facing the Social Security Administration for the remainder 
of fiscal year 2011 and for fiscal year 2012. It is crucial that SSA be 
provided with adequate funding so that they are able to provide the 
American people with the level of service they expect and deserve, one 
that also prevents workloads from spiraling out of control.
    As you know, 54 million Americans receive Social Security benefits 
each month. The benefits they receive from this program constitute a 
vital lifeline that is critical to their economic well-being. Given the 
essential nature of Social Security, and the increasing demands of an 
aging population, I believe it is extremely important that the Social 
Security Administration be provided sufficient funds for operating 
expenses so it can meet the needs of the American people.
    In fiscal year 2010, the last time Congress enacted an 
appropriation for SSA, a total of $11.5 billion was made available for 
administering the Social Security program. The President, in his fiscal 
year 2011 budget, requested an appropriation of $12.4 billion. Instead, 
Congress has enacted a series of continuing resolutions that 
essentially freeze the Agency's funding at the fiscal year 2010 level.
    The House of Representatives recently passed a continuing 
resolution for the remainder of the fiscal year that proposes 
significant reductions in funding, including elimination of funds for 
vital systems improvement projects. The fiscal year 2011 continuing 
resolution being considered by the Senate increases funding over the 
House-passed amount, providing needed resources to this important 
Agency. While the President's fiscal year 2011 budget request would 
minimize service reductions and continue the Agency's progress toward 
reducing processing backlogs in the disability program, the Senate 
proposed funding level is a dramatic improvement over the funding cuts 
passed by the House.
    Staying within the reduced spending levels authorized in previously 
enacted continuing resolutions has been challenging for the Social 
Security Administration. The hiring freeze imposed on the Agency's 
field offices has resulted in significant staffing imbalances that have 
stretched the capability of the staff to provide timely and effective 
levels of public service.
    Further cuts would exacerbate these problems, resulting in longer 
waiting times for appointments to file for benefits, or for processing 
address changes or direct deposit information, delays in receiving 
Agency decisions, and busy signals at the Agency's toll-free 800 
number. In addition, we understand that further cuts may mean employee 
furloughs or even office closures, resulting in even greater reductions 
in service to America's seniors.
    While we believe the President's funding request would best serve 
the American people, we believe the funding levels proposed in the 
Senate's continuing resolution would provide the Agency with sufficient 
funding to avoid major service disruptions. We therefore urge all 
Senators to show their commitment to Social Security by providing the 
SSA with the resources it needs to do its job.
    Going forward, in order for SSA to fully meet its multitude of 
responsibilities, the agency will require no less than the $12.667 
billion recommended in the President's budget for its fiscal year 2012 
administrative funding. This level of funding is necessary due to the 
increase in requests for assistance from the American public due in 
large part to the economic downturn. SSA teleservice centers, hearing 
offices, Disability Determination Services (DDSs), and the nearly 1,300 
field offices are in critical need of adequate resources to address 
their growing workloads. Without this level of funding, SSA will be 
unable to cope with the continued increase in demand for services and 
maintain the progress it has already made in providing satisfactory 
service delivery to senior citizens, people with disabilities and 
others who rely on Social Security.
