[Senate Hearing 115-836]
[From the U.S. Government Publishing Office]
S. Hrg. 115-836
NOMINATIONS OF GORDON HARTOGENSIS
AND GAIL S. ENNIS
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
on the
NOMINATIONS OF
GORDON HARTOGENSIS, TO BE DIRECTOR, PENSION BENEFIT GUARANTY
CORPORATION; AND GAIL S. ENNIS, TO BE INSPECTOR GENERAL, SOCIAL
SECURITY ADMINISTRATION
__________
SEPTEMBER 27, 2018
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
______
U.S. GOVERNMENT PUBLISHING OFFICE
40-861-PDF WASHINGTON : 2020
COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHUCK GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming BILL NELSON, Florida
JOHN CORNYN, Texas ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia SHERROD BROWN, Ohio
ROB PORTMAN, Ohio MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina CLAIRE McCASKILL, Missouri
BILL CASSIDY, Louisiana SHELDON WHITEHOUSE, Rhode Island
Jeffrey Wrase, Staff Director and Chief Economist
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
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OPENING STATEMENTS
Page
Cassidy, Hon. Bill, a U.S. Senator from Louisiana................ 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 3
ADMINISTRATION NOMINEES
Hartogensis, Gordon, nominated to be Director, Pension Benefit
Guaranty Corporation, Washington, DC........................... 6
Ennis, Gail S., nominated to be Inspector General, Social
Security Administration, Baltimore, MD......................... 7
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Blumenthal, Richard:
Prepared statement........................................... 27
Cassidy, Hon. Bill:
Opening statement............................................ 1
Ennis, Gail S.:
Testimony.................................................... 7
Prepared statement........................................... 27
Biographical information..................................... 28
Responses to questions from committee members................ 32
Hartogensis, Gordon:
Testimony.................................................... 6
Prepared statement........................................... 43
Biographical information..................................... 44
Responses to questions from committee members................ 47
Hatch, Hon. Orrin G.:
Prepared statement........................................... 52
Wyden, Hon. Ron:
Opening statement............................................ 3
Prepared statement........................................... 53
(iii)
NOMINATIONS OF GORDON HARTOGENSIS,
TO BE DIRECTOR, PENSION BENEFIT
GUARANTY CORPORATION; AND
GAIL S. ENNIS, TO BE INSPECTOR GENERAL,
SOCIAL SECURITY ADMINISTRATION
----------
THURSDAY, SEPTEMBER 27, 2018
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 10:06
a.m., in room SD-430, Dirksen Senate Office Building, Hon. Bill
Cassidy presiding.
Present: Senators Scott, Wyden, Cantwell, Nelson, Menendez,
Carper, Cardin, Brown, Bennet, and McCaskill.
Also present: Republican staff: Jeffrey Wrase, Staff
Director and Chief Economist; Becky Cole, Policy Director;
Nicholas Wyatt, Tax and Nominations Professional Staff Member;
Chris Allen, Senior Advisor for Benefits and Exempt
Organizations; and David Timmons, Detailee. Democratic staff:
Joshua Sheinkman, Staff Director; Michael Evans, General
Counsel; Ian Nicholson, Investigator; Sam Conchuratt, Assistant
to the Staff Director; Drew Crouch, Senior Tax and ERISA
Counsel; and Tom Klouda, Senior Domestic Policy Advisor.
OPENING STATEMENT OF HON. BILL CASSIDY,
A U.S. SENATOR FROM LOUISIANA
Senator Cassidy. The Senate Finance Committee will please
come to order.
Good morning. I would like to welcome everyone to today's
hearing on the nominations of Mr. Gordon Hartogensis to be the
Director of the Pension Benefit Guaranty Corporation, and Ms.
Gail Ennis to be the Inspector General of the Social Security
Administration. I am pleased to chair this hearing on behalf of
Senator Hatch who has a conflicting obligation in the Judiciary
Committee at this time.
Senator Blumenthal hoped to be here to introduce Mr.
Hartogensis. Unfortunately, his schedule did not permit. But he
has asked me to submit a statement for the record, and I ask
unanimous consent that Senator Blumenthal's statement be
printed in the record of this hearing. Without objection.
[The prepared statement of Senator Blumenthal appears in
the appendix.]
Senator Cassidy. After Senator Wyden and I make opening
statements, we will proceed with our panel nominees. Each will
have 5 minutes to make remarks. After remarks, Senators will
each have 5 minutes to ask questions.
I shall begin. Working families are the core of our social
fabric and economic success. American workers increasingly feel
good about their prospects. Economic optimism is at a 13-year
high.
Yet for many a decade, wages and growth were stagnant.
Health and education costs skyrocketed. Americans rightly
expect more, particularly when it comes to retirement security
and our knowing that those benefits will be available to those
who truly find themselves no longer able to work due to injury
or disability.
Both of our nominees, if confirmed, will play a role in
ensuring that promised benefits continue to be available to
working families when the time comes or if there is a need.
Particularly, we must ensure that programs administered by the
Social Security Administration are free of waste, fraud, and
abuse.
Mr. Hartogensis, if you are confirmed, you will be serving
during one of the most challenging periods in the PBGC history.
Created in 1974, the PBGC protects the pension benefits of
nearly 40 million Americans in private-sector pension plans.
Last year their annual report showed that the deficit in the
insurance program for multiemployer plans rose to $65 billion,
up from $59 billion a year earlier.
Congress recognizes the challenge. In March 2018, Congress
created the Joint Select Committee on Solvency of Multiemployer
Pension Plans in the bipartisan budget act enacted on a broad
bipartisan basis.
This committee was tasked with developing legislative
proposals to improve the solvency of multiemployer pension
plans and the PBGC. Some of my colleagues on the Finance
Committee are also on the joint committee, and we will look
forward to their findings and recommendations.
This is a very difficult problem with no easy answers. In
fact, concerns about the solvency of multiemployer pension
plans are widespread. And some of my constituents have raised
this issue with me and my staff.
After you and I met, I believe that you are a strong
nominee with outside-the-box thinking and a commitment to solve
this very difficult problem. I was a little bit curious that
you would even think about it as deeply as you had. But I am
very pleased that you have. I feel confident that your
management and finance experience will enable you to work with
Congress to solve this problem.
You have received support from such organizations as the
American Benefits Council, the Associated General Contractors
of America, the National Association of Manufacturers, and the
U.S. Chamber of Commerce.
Mr. Hartogensis, if confirmed--and I believe you will be--
you will have a daunting challenge ahead, but I am confident
that you have the experience and fortitude to tackle the
looming pension crisis.
Ms. Ennis, you have been nominated to be the Inspector
General of the Social Security Administration. If confirmed,
you will be responsible for ensuring the programs administered
by the SSA are in compliance with the Office of Inspector
General's mission of promoting economy, efficiency, and
effectiveness as well as detecting and preventing instances of
fraud, waste, and abuse.
Should you be confirmed, you have much work to do. As you
know, the SSA continues to face many challenges, including the
disabilities backlog, issues with the disabilities case
processing system, data security, outdated IT infrastructure,
payment accuracy, and fraud and abuse.
I have particular interest in the Disability Insurance
benefit determination process with the reinstatement of the
reconsideration level of appeal. My State, Louisiana, is one of
ten prototype States for which this effort of reconsideration
will be affected.
While I recognize that you are not a part of this Social
Security administrative action, I raise it today as it will be
an ongoing issue in the coming months. I also raise concerns
with the Social Security Windfall Elimination Provision, or
WEP, and the Government Pension Offset, or GPO.
This is of utmost importance to public-sector workers in
Louisiana who may be whipsawed by outdated formulas and uneven
application of rules. While a broader formula fix is outside
the scope of your responsibilities, I hope you will work with
this committee to ensure WEP and GPO determinations are made
consistently and fairly for all beneficiaries.
Ms. Ennis, if confirmed, you will be in a position to
inform, advise, and make recommendations to the administration
and Congress on how to best begin to reform entitlement
programs, especially on reforming the Social Security
Disability Insurance program. Our meeting a few weeks ago
confirmed to me that you are highly qualified for this position
and that you will bring a fresh perspective to it, along with
your extensive experience in government and independent
investigations.
I look forward to hearing your remarks.
And now, Senator Wyden?
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman.
As you have noted, the Finance Committee is going to
consider two nominations today: Ms. Gail Ennis to serve as
Inspector General of the Social Security Administration, and
Mr. Gordon Hartogensis to serve as the Director of the Pension
Benefit Guaranty Corporation.
I am going to start my brief remarks with the Ennis
nomination. The bottom line on why this is such an important
post is very simple, and you can state it in a sentence. It is
absolutely essential that the Federal Government wring value
out of every single last dollar that goes into Social Security.
And I have felt this way since the days when I was co-director
of the Oregon Gray Panthers, had a full head of hair, and
rugged good looks. I thought it then and I continue to feel it
now.
The Social Security Inspector General plays a major part in
identifying ways that the program can be improved, where there
have been missteps, and how the Congress can strengthen it with
legislative changes. So that is a big agenda, and my own take
is that it ought to be a bipartisan agenda.
Now, it has been more than 2 years since Social Security
has had a confirmed Inspector General, far too long by my take.
So we are fortunate that we have a nominee finally before the
committee.
You come from the world of social insurance. In effect, we
come from the same world, because that was my background. And
you have a significant background in auditing financial
institutions and working with government agencies. In my view,
sometimes it is a good idea to bring in somebody with a fresh
eye for these kinds of jobs.
Now if confirmed, Ms. Ennis, you are going to have a lot of
challenges coming at you right away: certainly the
deterioration of service at SSA, to the disability backlog, to
IT upgrades. The committee will count on you to work very
closely with us to make improvements to the program, and you
and your team--in my view--should make it a special priority to
listen to whistleblowers. Listen to whistleblowers who have had
a real record as it relates to social insurance and coming
forward and talking about these problems.
And by the way, I see my colleague, Senator McCaskill,
here. She has been one of our go-to champions of whistleblowers
in the United States Senate.
Senator McCaskill, I just mentioned the point with Ms.
Ennis of whistleblowers at Social Security, and I am sure both
of us are going to continue to be very interested in that.
Setting aside the specifics of this nomination for a
minute, there is also going to be a challenge for us in the
Congress. The Inspector General's office recently put out what
is really an eye-popping report about the huge increase in work
waiting to be done at these Program Service Centers.
These service centers perform some of the most basic
functions at the agency that are essential to maintaining
beneficiary records. Notably, the report cited that there were
real budget constraints, and said that was a significant part
of the problem.
For several years in our annual Views and Estimates letter,
the chairman and I--as Chairman Cassidy noted, Chairman Hatch
is not able to be here today. We have advocated that the agency
get the budget it needs to be able to responsibly tackle these
challenges and to get the job done. You cannot have world-class
service when the Congress provides a third-class budget.
Now, with respect to Mr. Hartogensis, his nomination is for
the Pension Benefit Guaranty Corporation. This agency, as all
of our colleagues know, faces serious challenges. Chairman
Hatch and Senator Brown have been spending a lot of time on it,
and we are all interested in bipartisan solutions.
As many as 1.5 million Americans are enrolled in
multiemployer pension plans that could become insolvent in the
next few decades. Should that happen, that will bankrupt the
PBGC insurance program for all multiemployer pensions,
affecting everybody who is enrolled.
So we are not talking about some kind of academic matter
that you can ask a bunch of think tanks for their opinions on.
This is a question of whether the Congress is going to work
with the administration so that millions of Americans are going
to be able to get by in their older ages.
Mr. Hartogensis has had a successful career in the private
sector, but he does not have experience in policy dealing with
pensions or retirement security. Certainly, you have the right
connections to be a nominee right now for a Senate-confirmed
position, but this is a nominee with no record which this
committee can draw conclusions about with respect to what he
would do as the head of the agency.
Now, Mr. Hartogensis, as I talked about with you in the
office, I happen to think it often is a big plus to have
somebody come from the private sector for positions like this.
I do not have some kind of rule where, gee, if you have not
been doing this for 10 years in a variety of other fields, that
somehow you are disqualified.
But as we indicated, when somebody does come from the
outside and has not worked in the field, the bar gets a bit
higher, because we have to be able, as we consider your
nomination, to make some judgements about what the heck you
might do when you get there, if confirmed. We talked about it
some yesterday. We are going to talk about it some more today
and focus on how we are going to get a sense of the actual
substance with respect to how you attack all of the challenges
PBGC faces.
Thank you both for being with us. You are going to have
questions from Senators. It, obviously, is a busy day in the
Senate.
We look forward to your opening remarks. And we will have
questions.
Senator Cassidy. Thank you, Senator Wyden.
[The prepared statement of Senator Wyden appears in the
appendix.]
Senator Cassidy. And now I will introduce the nominees.
Mr. Gordon Hartogensis, if confirmed, will serve as the
Director of the Pension Benefit Guaranty Corporation. Mr.
Hartogensis is an entrepreneur, an investor who has launched
multiple startups that were eventually acquired by new owners.
He is also the co-founder and CEO of Auric Technology, an on-
demand customer relationship management software company, among
many other career positions. He earned his bachelor's degree
from Stanford and his master's degree from Columbia University.
Ms. Gail Ennis is nominated to be the Inspector General of
the Social Security Administration. Most recently, Ms. Ennis
has worked at Wilmer, Cutler, Pickering, Hale, and Dorr, LLP,
where she became partner in 2007. Her practice focused on
securities litigation and enforcement and financial
institutions.
Ms. Ennis led large teams that included lawyers, forensic
accountants, and other staff to investigate issues including
financial statement reporting and disclosure errors, accounting
irregularities, and misconduct by current or former officers or
employees.
Ms. Ennis earned her bachelor's degree from the University
of North Carolina, Chapel Hill and a Juris Doctorate from the
Brooklyn School of Law.
Mr. Hartogensis, we will start with your remarks.
STATEMENT OF GORDON HARTOGENSIS, NOMINATED TO BE DIRECTOR,
PENSION BENEFIT GUARANTY CORPORATION, WASHINGTON, DC
Mr. Hartogensis. First of all, I would like to thank
Senator Blumenthal for being willing to give me an
introduction. Even though he could not be here today, he
submitted it for the record.
Thank you, Chairman Cassidy, Ranking Member Wyden, and
distinguished members of the committee. It is an honor to
appear before you today as you consider my nomination as
Director of the Pension Benefit Guaranty Corporation. I want to
thank the President of the United States for nominating me and
Secretary Acosta for recommending me. I am here today with my
wife Grace and my two daughters, Alexia and Penelope, and I
also want to thank them for their support.
My journey to this appointment began when I was a teenager.
I grew up in a middle-class family in Rockville, MD and
attended Montgomery County public schools. My father served on
the Rockville City Council and taught me about the importance
and honor in public service. I have fond and proud memories of
visiting city hall, attending public events, and watching him
solve the city's problems. I hope to have the chance to give my
family that same sense of pride.
If confirmed, I would be honored to dedicate myself to work
towards the goal of retirement security of more than 40 million
Americans. The PBGC is in a difficult financial position today.
While simulations show that the single-employer program is
likely to improve during the next decade, the multiemployer
program continues to decline and has a net deficit of $65
billion. Congress tried to address this multiemployer deficit
by enacting the Multiemployer Pension Reform Act legislation in
2014. However, it has become clear that MPRA is not enough and
further congressional action is necessary.
Additionally, the PBGC has operational issues that must be
addressed. The single-employer program manages a trust fund
with $106 billion that must be strategically invested to offset
the program's liabilities. The agency also administers single-
employer plans and provides financial assistance to insolvent
multiemployer plans that together cover millions of Americans
who count on these pensions.
Finally, challenges with information technology at the PBGC
must be addressed with a particular emphasis on cybersecurity.
The PBGC, as a repository for large amounts of personal
financial data, must be vigilant in protecting this information
that is all too often targeted by hackers seeking financial
gain.
Given the large issues facing the agency, I believe that
the PBGC would benefit from the perspective of an outsider who
can review these issues with fresh eyes and who has a
professional track record of addressing problems with
technological and financial savvy.
The multiemployer deficit will require a consensus-builder
at the head of the PBGC. The various stakeholders involved will
all need to be listened to as we attempt to develop solutions
to the crisis.
During my days of building Petrolsoft with two friends from
Stanford, I worked with stakeholders within major energy
companies to implement our logistics systems. There were many
competing objectives that had to be worked out to make our
projects successful.
The PBGC will require a strong manager who can lead the
various teams within the agency. As an owner of two technology
companies, I have managed teams of salespeople, operations
staff, financial professionals, call centers, and technology
groups. I understand how to motivate and inspire employees as
well as listen to and resolve their concerns.
I have finance and investment experience that will be
useful in running the PBGC from an early career in finance,
from running two companies, and from managing an investment
portfolio. As an owner of two companies that were acquired, I
built financial models to determine valuation and participated
in Q&A sessions with Wall Street analysts. Both companies had
retirement plans that I helped to merge into the plans of their
acquirers.
The PBGC will benefit from an experienced technology leader
at the helm. I have managed teams of developers and applied
best practices from industry standards. I have built systems
that integrated with other enterprise systems. I have worked to
improve data security and to leverage the cost benefits of
cloud computing.
If confirmed as Director of the PBGC, I pledge to work with
Congress to ensure the pension security of all Americans. The
multiemployer plans deficit will require strong action from the
Director of this agency. The perspectives of all stakeholders
in the system will need to be understood.
The growing crisis that is expected to make the
multiemployer program insolvent by 2025 must be handled while,
at the same time, our pension insurance system must be made
sustainable. This will require an active communication strategy
from the Director of the PBGC. Additionally, data must be used
effectively to both educate and uncover opportunities.
If confirmed, I would be honored to dedicate myself to work
towards the goal of retirement security of more than 40 million
Americans. My mother is living on a pension, and I understand
the importance of defined benefit pension plans, as they allow
so many hard-working Americans to retire with dignity and enjoy
the fruits of a lifetime of work. I would like nothing more
than to follow in my father's footsteps by giving back and
applying the skills I have acquired in service to my country.
Thank you for allowing me to appear today. I am happy to
answer any questions.
[The prepared statement of Mr. Hartogensis appears in the
appendix.]
Senator Cassidy. Ms. Ennis?
STATEMENT OF GAIL S. ENNIS, NOMINATED TO BE INSPECTOR GENERAL,
SOCIAL SECURITY ADMINISTRATION, BALTIMORE, MD
Ms. Ennis. Good morning, Mr. Chairman, Ranking Member
Wyden, and members of the committee. Thank you for the
opportunity to appear before you today.
I want to thank the President for nominating me for the
position of Inspector General for the Social Security
Administration. I am honored to appear before this committee as
you consider my nomination.
My sister traveled from Connecticut to be here today, and I
have friends in attendance. My parents and other sister were
unable to make the trip from Connecticut, but I am sure they
are watching.
I am especially passionate about protecting Social Security
benefits for those persons in need. For the last several years,
I cared for my husband as his health declined from the effects
of dementia. I was thankful that I had the financial means to
provide for his care, but came to understand the enormous
financial burden on families caring for sick relatives.
A Social Security check may be the only financial relief
many of these families receive and may make the difference in
their lives and the lives of the people for whom they are
caring. I am aware that individuals wait sometimes for years to
receive a disability determination, which is unacceptable, and
I think we can do better.
I am cognizant of the many challenges facing the Social
Security Administration, including disability hearings
backlogs, payment accuracy, an aging IT infrastructure, issues
with the disability case processing system, data security,
improving customer service, and combating fraud.
Should I be confirmed as the Inspector General for the
Administration, I will work with Congress and the agency to
address these and other challenges; to reduce waste, fraud, and
abuse; and to continue to improve SSA's effectiveness and
efficiency.
I am also keenly aware that an Inspector General must be,
and must be perceived to be, independent of agency management.
A strong, ethical, and independent IG performs an invaluable
oversight role for the Congress and for the people of the
United States.
My professional career has focused on government and
independent investigations, including cases related to
allegations of accounting fraud and violations of government
regulations. I have counseled companies, audit committees, and
boards about corporate governance issues, public disclosures,
and improving processes, procedures, and internal controls.
Many of my representations have involved large teams of
lawyers, forensic accountants, IT and discovery professionals,
and support staff.
This experience demonstrates that I have the legal,
financial, investigative, and management skills to serve as an
effective Inspector General of the Social Security
Administration.
Social Security pays out almost $1 trillion in benefits
annually to seniors, widows and widowers, children who have
lost a parent, and people with disabilities. Supplemental
Security Income pays benefits to elderly, blind, or disabled
people with limited income.
These programs touch the lives of around 70 million people
each year and will touch the lives of most Americans at some
point. For millions of beneficiaries, a Social Security check
is a vital safety net, allowing them basic necessities: a roof
over their heads and food on their tables.
Should I be confirmed as the Inspector General for the
Social Security Administration, I will work diligently to
provide oversight for the efficient management of the agency
and to detect and act on waste, fraud, and abuse so only those
who qualify receive benefits and receive them on time and
without error. It is imperative to protect these valuable
taxpayer dollars so that the American public continues to trust
and count on this safety net.
Thank you again for the opportunity to appear before you.
Senator Cassidy. Thank you.
[The prepared statement of Ms. Ennis appears in the
appendix.]
Senator Cassidy. Now we will begin with questions.
I am here the whole meeting, so I will defer to my
colleagues who may have--well, before I begin with questions by
members of the committee, I am obligated to ask four standard
questions of our nominees.
First, is there anything that you are aware of in your
background that might present a conflict of interest with the
duties of the office to which you have been nominated?
Mr. Hartogensis. No.
Ms. Ennis. No.
Senator Cassidy. Do you know of any reason, personal or
otherwise, that would in any way prevent you from fully and
honorably discharging the responsibilities of the office to
which you have been nominated?
Mr. Hartogensis. No.
Ms. Ennis. No.
Senator Cassidy. Do you agree without reservation to
respond to any reasonable summons to appear and testify before
any duly constituted committee of Congress if you are
confirmed?
Mr. Hartogensis. Yes.
Ms. Ennis. Yes.
Senator Cassidy. Finally, do you commit to provide a prompt
response in writing to any question addressed to you by any
Senator of this committee?
Mr. Hartogensis. Yes.
Ms. Ennis. Yes.
Senator Cassidy. Okay.
And then I think I will now defer to my colleagues.
Senator Wyden. Thank you, Mr. Chairman.
I think what I am going to do is, because I have a number
of colleagues who are interested, I am going to take this one
at a time. We will start with you, Mr. Hartogensis, and then,
Ms. Ennis, we will keep you for the second round.
Mr. Hartogensis, we met for the first time, and I asked you
how you would go about tackling the funding crisis that these
multiemployer pensions are up against. As we talked about, this
is an extraordinary challenge for the agency you want to lead.
One in 5 million workers is in a plan that may become
insolvent in the next 20 years. The insolvency of these plans
is going to bankrupt the programs for all multiemployer pension
plans.
And as we discussed, I asked you for your thoughts. I
appreciate your getting back to me. And for the reason I
described in my opening statement--since you do not have
background in this field, we want to get a sense of how you
would approach it.
Now in response, you have essentially one solution, which
essentially is to alter the PBGC premium structure,
specifically to broaden the base of who pays premiums. Now, I
have to be candid with you. The answer is disappointing, and
what you are going to be up against if that is what you focus
on is, you will have opposition from both workers and from
companies.
The PBGC guarantee for multiemployer pension plans is very
low. So a solution that only involves premium increases is
going to lead really, by my take, to significant benefit cuts
for hundreds of thousands of retirees in pay status now.
So let us see if we can go beyond that and try some other
kinds of areas with respect to how you feel about pension
policy. First, who do you believe should be paying PBGC
multiemployer premiums who is not paying premiums now?
Mr. Hartogensis. Thank you for the question.
I think the point of that idea is the thought that, other
than just the employers, there is a potential to have employers
as well as retirees contribute something to increase the
premium base, rather than just raising the premium rates on the
employers alone.
Senator Wyden. So you are saying the workers and the unions
ought to be paying? I mean, who are we talking about in kind of
plain English?
Mr. Hartogensis. Yes. It would be just the employees and
the employers, both together. These would be the companies as
well as the employees.
Senator Wyden. Well, multiemployer pension plans today are
responsible for paying premiums. But the plans are financed by
contributions from workers' wages. So ultimately, it is already
the workers who are paying the premiums.
Workers also pay union dues so--and I want to give you a
chance to put it in your words. Is your suggestion ultimately
that workers should be responsible for increasing the PBGC
premium base?
Mr. Hartogensis. Thank you, Senator, for that question.
I just want to give a little bit more context and
background for you.
This is a very complicated issue. And, obviously--I have
been asked probably in one form or another by every Senator
whom I have spoken with on this committee as well as the HELP
Committee, ``What would you do with the multiemployer pension
crisis?''
I have watched the hearings of the Joint Select Committee
on Multiemployer Pensions. So I understand what is at stake. I
realize that there are employees who risk losing their pension
checks that they intend to use for things like food and health
care and rent, basic necessities. So it is a critical issue.
At this point, kind of coming from the bubble of being a
nominee, I have looked at and studied the different solutions
that have been proposed. There have been premium increases----
Senator Wyden. Let us do this, because my time is short. I
would like an answer in writing to the question of whether you
believe that ultimately workers should be responsible for
increasing the PBGC premium base. You will get back to me in
writing on that?
Mr. Hartogensis. I will.
Senator Wyden. Great.
Okay. Two other quick questions. I know my colleagues are
waiting.
Do you believe that defined benefit pensions are good for
workers?
Mr. Hartogensis. I do.
Senator Wyden. Okay.
Do you believe that employers should be encouraged to
sponsor defined benefit pension plans?
Mr. Hartogensis. I think it really depends upon the
strategy of the company. There are certain companies where the
workforce that they hire in certain industries tends to stay
for short periods of time, and it makes sense to have defined
contribution plans, because those types of companies--the
employers want that. That is what they need to attract the
workers.
There are other types of businesses where their strategy is
to retain workers for decades--20, 30, 40 years. In that case,
the best way to attract those workers and keep them for that
amount of time is a defined benefit pension plan.
And as far as retirement security goes, there is nothing
better. I will stand by that.
Senator Wyden. Great.
One last question. Obviously a lot of these issues--and
your agency does not expressly set policy for unions and
collective bargaining--but a lot of the issues really speak to
the negotiating process.
As a general proposition, do you believe unions and
collective bargaining are good principles for American workers?
Mr. Hartogensis. I do think they are good principles for
American workers.
Senator Wyden. Thank you, Mr. Chairman.
I will have some additional questions for you, Ms. Ennis,
after my colleagues get their first round.
And if you could get back to me shortly with respect to
that one matter, Mr. Hartogensis, I would really like your
views in writing with respect to that question.
Mr. Hartogensis. Absolutely.
Senator Wyden. Thank you, Mr. Chairman.
Senator Cassidy. Senator Carper?
Senator Carper. Thanks so much.
Welcome to both of you. Ms. Ennis, there is a young lady
sitting over your shoulder in the front row. Who is she?
Ms. Ennis. She is my dear friend Ellen Varn's daughter,
Caroline Varn, who wanted to be here today to see government in
action.
Senator Carper. Caroline, you gave up going to school today
just to be here? Is that right? God bless you. Welcome.
Mr. Hartogensis, how are you?
Mr. Hartogensis. Very good. Thank you for asking.
Senator Carper. Very good.
I used to live in Palo Alto. I understand you spent some
time there. We have a son who is going to graduate school out
there right now.
I was born in West Virginia. Walking around the Capitol
yesterday, I ran into a bunch of mostly guys who were wearing
all of these shirts that said, ``United Mine Workers of
America.'' Do you know why they were here?
My dad was a coal miner for a very short while early in his
life before he went off to serve in World War II. I spent the
first 6 or 7 years of my life just outside of Beckley, WV, a
coal mining town.
My mom used to drag my sister and me to church a lot there.
One of the things that she wanted us to do was to focus on
figuring out the right thing to do, not what was easy or
expedient, but what was the right thing to do. She was a big
golden rule person: treat other people the way we want to be
treated.
I spent about 23 years of my life in the Navy, plus another
4 years as a midshipman. Along with the things I learned there
was to surround myself with the best people I could find and
just rely on people whose judgment I valued in taking on tough
challenges.
The other thing I learned in the Navy is, just do not give
up. If you know you are right, you are sure you are right, do
not give up.
I think we know the right thing to do here is to treat
these folks who are in these pension plans the way we would
want to be treated. If I were in your shoes, do you know what I
would do? I would reach out to other folks who had served in
this capacity previously. I would almost, like, pull them
together.
I gave the same advice to Robert Lighthizer when he was
nominated to be our Trade Ambassador. I said, ``If I were you,
I would put your predecessors on speed dial, especially the one
right before you.'' And I would urge you to maybe consider
doing that.
If I were in your shoes, I would try to build bipartisan
support around the common-sense solution. We have 51 Republican
Senators here, and 49 caucus with the Democrats. If you are
going to get anything done, you have to have bipartisan
support. So I would work to create that bipartisan consensus.
A whole lot of research has been done on this in the past--
I think special committees or subcommittees, a lot of
investigations, a lot of research. This is a big issue. It is
not going to go away. And I think it is--what did Einstein used
to say?: ``In adversity lies opportunity.'' There is real
opportunity here, and there is a lot of adversity.
But I would look at this and say, ``How do we put together
just a great team and go out there and try to solve this once
and for all, and to reach out to people?'' These two fellows
off to my left, they are pretty good at working across the
aisle. I am not too bad either, and I would urge you to take
advantage of that as we try to get to some kind of consensus.
In Delaware we have something we call the Delaware way. It
revolves around the letter ``C.'' Communicate, compromise,
collaborate, and civility in order to get to a fifth ``C,''
consensus, which is what we need here. So you probably do not
need that advice, but it was heartfelt. I hope it will be of
some value.
Ms. Ennis, what do you know about improper payments?
Ms. Ennis. I know payment accuracy has been an issue for
the Social Security Administration for some time and that the
IG's office looks at it on a regular basis. I think that the
most recent semi-annual report to Congress from the IG
determined that, for the last several years, the agency has not
met its own goal of payment accuracy. I think it is 95 percent.
So it is clearly an issue. I think payment accuracy is
probably a government-wide issue for many agencies. So, while I
believe this is an issue that the IG's office has looked at
regularly and most likely will continue to--and should--I
wonder if there is not a way to pull together other IGs and
CIGIE and look at this as a systemic issue that maybe others
have found ways to deal with that could be effective for the
Social Security Administration as well.
Senator Carper. Okay.
Last year, we were told by GAO that improper payments
amounted to about $144 billion--$144 billion. I think a little
more than half of that can be attributed to improper payments
with respect to Medicaid and I think Medicare.
There is something at the Social Security Administration--I
used to call it the ``master death file.''
Ms. Ennis. Yes.
Senator Carper. I just like the sound of that. Then I found
out--people said no, it is not. It is really the death master
file.
Ms. Ennis. Right. That is right.
Senator Carper. And now I have found there is another term
for it, but the idea is, it is a list you do not want your name
to be on because, if it is, you are dead. [Laughter.]
Ms. Ennis. Right. Or, if you are on it improperly, it may
be difficult to get off of that list. [Laughter.]
Senator Carper. I am also told--I think we found out that
there are like, I want to say 5 million people, maybe, on
records at the--of course, I ask Chris Prendergast, who is
sitting behind me, to correct me if I am wrong. I seem to
recall in disclosure last year, maybe this year, that there are
like 5 million people on--I do not know if it is on the master
death file, but on some records at the Social Security
Administration, where they are at or above the age of 112. That
is a lot of people in this country to be over 112. Actually, I
think there are maybe 20 if that.
Ms. Ennis. Right.
Senator Carper. So that would just beg the question of, can
we do better? And I would say, ``What do you think?''
Ms. Ennis. So I understand the importance of the death
master file, not just for Social Security, but other government
agencies that purchase and use it, and even third parties.
I think it is an issue that the IG has looked at as well
over the years. I think there is a tension between the mission
of the agency, in terms of how they use the records, and how
they are utilized by others. But I understand the importance of
the records, and I think that clearly it is an issue that the
IG has looked at, and should probably continue to look at. And
if there are requests from a member, we would consider the
request----
Senator Carper. Like a member from a small State on the
east coast?
Ms. Ennis. Yes.
Senator Carper. All right--well, 10 members from small
States on the east coast.
Ms. Ennis. From my home State, yes. [Laughter.]
Senator Cardin. I am glad to be your neighbor, but we have
some size over you. [Laughter.]
Senator Carper. We like to say in Delaware, we punch above
our weight.
All right. If you get confirmed, and my gut tells me that
you just might, this is something that we would love to work
with you on.
Ms. Ennis. I would love to work with Congress on many
issues.
Senator Carper. And in adversity lies opportunity. There is
adversity here, but also a lot of opportunity for both of you.
Ms. Ennis. Yes.
Senator Carper. I will tell you what it says in the Bible.
What does it say in the Bible? It says, ``In all things, give
thanks.'' So we give thanks for that adversity, because it is
going to give you plenty to work on. And maybe, if we are
smart, we will work on it together.
Ms. Ennis. Thank you, Senator.
Senator Carper. There is an old African proverb. I learned
this from Ron Wyden. There is an African proverb that goes
something like this. ``If you want to go fast, go alone. If you
want to go far, go together.'' So we have to go together.
Senator Cassidy. Senator Cardin, are you ready?
Senator Cardin. Mr. Chairman, thank you very much.
Let me welcome both of our nominees. I had a chance to talk
with both in the anteroom before the hearing started. And we
had a chance to have some conversations before today. So I
thank both of you for your willingness to serve in these two
very important positions.
I want to start with the challenges at the PBGC. I know you
have already been asked questions about the multiemployer
pension system, and obviously, we have a taskforce that we hope
will come up with some recommendations. It is in crisis. It
needs to be dealt with.
You also have a crisis in the single-employer plans, not
quite as urgent, but it still needs to be dealt with. And it is
affecting the viability of defined benefit plans in this
country.
We also have legislation that we are considering here that
would deal with the frozen plans so that they have a better
chance of remaining in existence for those employees who
currently have benefits under those plans.
I asked you that as a preliminary, because Senator Portman
and I have been working together for over 15 years on trying to
improve retirement security for Americans, recognizing that
those covered under defined benefit plans are becoming a
smaller percentage of the coverage for retirement security in
this country. I think this is also relevant to the role of the
Social Security Administration IG, in that Social Security was
never intended to be the sole support for a person's retirement
income, but it is a life-time guaranteed, inflation-proof
annuity.
A defined benefit plan provides a much stronger protection
for life-time income than the defined contribution plans that
more and more employees are relying upon who have retirement
plans in addition to Social Security.
That is a preliminary to the fact that there are many
members of this committee, including the members who are here,
who are working on retirement recommendations. The House is
taking up in the Ways and Means Committee what is known as 2.0.
It has some pension reform in that legislation. We have already
passed some in this committee.
We need your help in looking at how we can give American
employees more security for their retirement, with the reality
that what you do at the PBGC affects a significant number. But
we need to develop policies that make sense so we can protect
more people who may not be in the PBGC world, but are coming
out of the PBGC world.
So my question is, are you prepared to work with this
committee and members of this committee as we come forward with
proposals that may impact PBGC directly or indirectly so that
we achieve our ultimate objective, more Americans having
secured retirements and having income that will be available as
they live longer and longer lives?
Mr. Hartogensis. The short answer is, absolutely. I
definitely will work with this committee. I have met many of
the staff members. I know there is a lot of pension expertise
here. There is a lot of information that can be shared between
the PBGC and this committee.
I also plan to work with the HELP Committee, as well as the
House committees of jurisdiction, and especially the Joint
Select Committee that is focused on the multiemployer pensions.
I do think the pension crisis that you and I talked about
in our personal meeting is part of this big picture that you
are talking about. It needs a bipartisan solution. And I think
one of the things that we came away with was that the sooner
that we address it, the better, because the longer we wait, the
more expensive it will be to deal with.
Senator Cardin. What I am trying to get across is that I
hope you will look beyond just the tunnel vision of the PBGC
and the impact that it has on the PBGC stability, but look also
to help us develop policies that achieve the objective of why
we had the PBGC, and that is to provide retirement security for
Americans.
Mr. Hartogensis. Yes. I realize it is part of the three-
legged stool of retirement security. There is personal savings,
Social Security, and pensions, and we are certainly part of
that. So we would work with you.
Senator Cardin. Thank you.
Ms. Ennis, I want to ask you one question, if I might. I
take particular interest in the Social Security Administration.
Its headquarters are located in Baltimore County, MD. I visit
it frequently. I meet with the workforce.
I had a chance to meet with Mr. Saul yesterday, who is the
nominee to be the Commissioner of the Social Security
Administration.
What I said to him, I am going to say to you, and that is,
it is critically important that we have respect for the working
conditions of the workers, their collective bargaining, their
ability to be respected in those negotiations between
management and worker. And I think it is important that the
Inspector General be able to give independent assessments as to
whether those laws are being carried out the way we intended
for our workforce to have effective collective bargaining
opportunities within the Social Security Administration. Are
you prepared to carry out that responsibility?
Ms. Ennis. Senator, if we were to get a request in the IG's
office from your office to look into that--I do not know what
the process for intake of requests is right now in the IG's
office. I intend to have a well-documented process that we
follow for every request. It certainly sounds like an important
issue, and I understand the concern of you and the workers. So
I would work with your office, should you make a request, to
see what we could do within the scope of our authorization.
Senator Cardin. Thank you.
Thank you, Mr. Chairman.
Senator Cassidy. Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman.
Mr. Hartogensis, you may be aware that 10 years ago this
month much of the American economy was in a freefall. The Great
Recession took most if not all of Americans by surprise. As a
result, the Federal Government spent trillions of dollars to
support the economy so America did not slip into a full-blown
depression.
Now we are facing another crisis that is a direct result of
the Great Recession--but one that has not come as a surprise is
the decline of the multiemployer pension systems. The Federal
entity overseeing the Federal pension system, the Pension
Benefit Guaranty Corporation, has projected that it will be
insolvent by the end of 2025, which would leave hundreds of
thousands destitute, many more with little to no retirement
security, and thousands of small and medium-sized businesses
bankrupt. All of this would surely have ripple effects across
the economy and affect many, many more Americans and
businesses.
So, Mr. Hartogensis, you have been nominated to be the
Director of the PBGC where, as part of your duties, you will
oversee the multiemployer pension system and work with Congress
to put the PBGC on firmer ground. And as you know, this
position is for a term of 5 years. So to say that the next 5
years at the PBGC will be critical is an understatement.
So I have read your bio and I have seen your testimony. I
see that you do not have a background in pensions. You are not
waiting on a pension to vest, and you have never offered a
pension at any of your businesses.
So that concerns me, because your knowledge of pensions and
your actions or inactions over the next 5 years, if you are to
be confirmed, will have a direct impact on either rescuing the
PBGC or contributing to its insolvency.
It is incredibly important to me, as I have thousands of
New Jersey constituents participating in critical and declining
plans who depend on their pension and now the PBGC for their
retirement. And there are many more New Jerseyans in healthy
plans that could be adversely impacted if the PBGC were to
fail.
So I am fully aware that Congress has a role in fixing this
crisis and that the Joint Select Committee is hard at work at
that, but I for one believe the Federal Government has a
responsibility to the working-class men and women who, through
no fault of their own, are facing this crisis. The Federal
Government stepped in 10 years ago to prevent one financial
crisis from expanding, and it should step in once again.
But the action or inaction of Congress, I believe, does not
give you an excuse to be silent or inactive. The Director of
the PBGC needs to be an outspoken supporter of the working-
class men and women who depend on these pensions.
So I need to hear from you. Will you be a forceful advocate
for Americans who have earned and depend upon these pensions? I
need to know that you are going to stand up and ensure that
this last vestige of the Great Recession does not trigger yet
another recession. I need to hear from you that you will come
to Congress to adamantly campaign for reforms to protect
pensioners and not leave them abandoned.
So, can you give me a simple ``yes'' or ``no''? Will you
stand with the working class to protect their pensions?
Mr. Hartogensis. Thank you, Senator, for the question.
So, right off the bat, a simple ``yes.'' I would like to
add to that, that this is an important mission for me. I am
coming from the private sector into Washington. And what makes
this journey for me meaningful and important is the fact that
there is such a crisis and there are people who are extremely
vulnerable, 40 million people total in the system and a subset
of 10 million in the single-
employer system, who are very, very vulnerable to what is going
on with the insolvency of the multiemployer system.
So I see myself as a bipartisan problem-solver who is
coming in with a background and a track record in building
companies and managing companies. I believe that I have other
skills than what you have described that make me a good choice
for this role, including a background in working with
forecasting in my career, working with supply-chain companies.
We would forecast in order to replenish gas stations.
I think a lot of what the PBGC does, it forecasts to figure
out solvency in both single- and multiemployer systems.
Senator Menendez. So I appreciate your short answer
``yes,'' and I understand what you are saying. But what I want
to understand, as I determine whether or not to support your
nomination, is that you can play one of two roles: you can be
the caretaker who says, ``I am just waiting for Congress to
tell me what to do,'' or you can play a proactive role that
seeks to promote the safety and retirement security of all of
those who depend upon this system.
I hope that what you are telling me is that you are going
to be the second one, not just the first one.
Mr. Hartogensis. I plan to be the second one. That is my
goal.
Senator Menendez. All right.
Thank you very much. I appreciate it.
Senator Cassidy. Thank you.
Mr. Hartogensis, I apologize for every now and again
stumbling over your name.
Mr. Hartogensis. That is okay.
Senator Cassidy. I like the way you put it. You have been
in the bubble of confirmation. So you really do not have the
kind of palpable knowledge that would allow you to make more
nuisanced policy decisions--neither of you does. But I was very
impressed with both interviews I had with you.
Senator Wyden mentioned how sometimes coming from a non-
government background is beneficial. So let me just ask, what
in your background prepares you to head this agency? And share
with us how to bring your management expertise--you spoke
about, for example, experience merging two different retirement
plans.
What in your management background gives you the ability to
help this agency go forward in a more positive way?
Mr. Hartogensis. Thank you, Senator, for the question.
First of all, in terms of understanding the retirement
needs of employees, I built two different software companies.
And like I said before in a previous question, we did our
401(k)s in those.
But between those two companies, I created over 100 jobs
and was concerned with the retirement security and the future
of those employees. We also had a stock option plan in both of
those. As both companies were acquired, those plans were rolled
into the plans of the acquirers.
To address your question of what qualifications do I have
that will help with running the agency, number one, I think I
have a really solid management background in leading these two
software companies. And according to a 2013 National Academy of
Public Administration report on the PBGC, one of the most
important criterion for a Director of the PBGC is just
management, because you are managing teams of not just
financial professionals that are managing the portfolio, but
there is also technology. You have to worry about
cybersecurity. There is customer service. You have a whole call
center operation.
I have experience real-time managing mission-critical
systems doing all of this. One other thing--I will take it a
step further. I do plan on becoming an advocate for working
people, an advocate for people who are in these plans,
especially insolvent multiemployer plans that we are taking a
look at now.
To do that, I think my background in consensus-building and
working with--in my days with Petrolsoft, we built supply chain
systems that impacted lots of parts of the company. We had to
get truck drivers, and terminal managers, and dispatchers, and
corporate management, and different actors within the company
that had different agendas to come together to work towards the
goal of making the supply chain more efficient.
I think in the multiemployer scenario--what I see is, there
is a very good effort in the Joint Select Committee to find
solutions. I think there have been structural problems that
have led to this over decades, and I sense there is still some
inertia there, and I think I can be a facilitator in helping
evaluate different solutions and bringing different sides
together.
Senator Cassidy. Let me ask, what would you say the three
most pressing issues are for the Pension Benefit Guaranty
Corporation?
Mr. Hartogensis. Thank you.
Well, the first one is obvious: the multiemployer deficit.
I would say the second thing, the way I see it, is
cybersecurity. I think there is a problem in the urgency,
because it stores a lot of personal financial information which
would be extremely valuable to hackers, and extremely
vulnerable to phishing attacks or attacks where people can come
in and impersonate somebody who maybe has not been found by the
system and just take their pension--tightening up password
policies and trying to improve that.
And then the third, I would say, is just operations of the
agency in general. I have read in the past that there have been
issues, obviously, that the Directors leading up to me may have
been trying to improve--issues with just the call center, the
customer service of the agency, making sure that when people
get their pension, it is timely, and if they have a problem,
they call a call center, the interaction timeline is minimized,
just to make sure that that is as good as it could be.
Senator Cassidy. Best practices from the private sector, if
you will.
Mr. Hartogensis. Yes.
Senator Cassidy. Feeding back into your answer for the
first question.
Senator Brown?
Senator Brown. Thank you, Mr. Chairman. Ranking Member
Wyden, thank you--nice new home, this room.
I appreciate your being here, and thanks for your
willingness to serve. I first of all want to thank the staff,
the committee staff, Jeff and Rebecca and Chris, for the work
they are doing on, sort of, pensions at large.
On our pension committee, we had a good productive meeting
today. And Chris joined us at our hearing in Columbus, our
field hearing on the pension special committee. What really
struck me at that hearing, what struck me all along, is the
pleas of pensioners who are seeing, potentially, their pensions
cut 40 to 50 percent or more, some of the mine worker widows
who were only going to get $400 or $500 a month anyway, and
that just puts them over the edge.
What struck me about the field hearing we did in Ohio--and
Chris and I have talked about this, as has Gideon on my staff--
is the look in the eyes of the small businesses, the two
companies that were represented there: Nickles Bakery from
Navarre, OH and Spangler Candy from Bryan, OH. And they are, I
believe, fourth-generation family businesses, very successful,
employing hundreds of people. And they have a special duty on
their watch as the third or fourth generation family member to
keep this company thriving and going.
If we do not solve this pension issue--the people we think
most about here are the pensioners, as we should. But these
companies and what happens to their employees and what happens
to those communities--because some people say, well, people are
still going to buy bread. People are still going to buy candy;
somebody will make it. But not in those two towns, and not with
those employees, and not with those owners. So I think that is
important.
I want to just go through, if I could, Mr. Hartogensis, the
scope of the multiemployer pension issue to just kind of gauge
your interest and knowledge, as you likely are going to be
confirmed and taking over the position.
Is it true that 130 multiemployer pension plans are in
critical and declining status?
Mr. Hartogensis. That sounds about right.
Senator Brown. Okay.
Is it true that these 130 plans have 1.3 million
participants?
Mr. Hartogensis. That is about the right number as well.
Senator Brown. Okay.
Is it true that a plan designated as in critical and
declining status means that plan will become insolvent in the
near future?
Mr. Hartogensis. Yes, it does mean that.
Senator Brown. Is it true that insolvent plan participants
will then claim insurance from the PBGC?
Mr. Hartogensis. It means that the PBGC will offer
financial assistance to the multiemployer plan.
Senator Brown. Okay.
What is the average guarantee the PBGC provides to
participants in multiemployer programs? Do you know that?
Mr. Hartogensis. I know the maximum is $12,870 a year for
30 years of service.
Senator Brown. And few get the maximum. Well, it will be
very few who get the maximum.
Mr. Hartogensis. So the average is probably something less.
Senator Brown. Considerably less?
Mr. Hartogensis. Probably the average is considerably less.
Senator Brown. Is it true that the PBGC multiemployer
program is running a large deficit?
Mr. Hartogensis. Yes, it is about $65 billion.
Senator Brown. It is $65 billion? That is the net----
Mr. Hartogensis. There is a $67-billion deficit and then $2
billion in assets.
Senator Brown. Right.
When is the PBGC projected to go insolvent?
Mr. Hartogensis. The end of 2025----
Senator Brown. Okay.
Mr. Hartogensis [continuing]. According to the 2017 report.
Senator Brown. So we agree if you are confirmed, as you
move forward and take this job, that more than 100 plans with
1.3 million participants are on the path to insolvency. We also
agree that this will result in steep cuts to pension benefits
workers earned and will result in the PBGC multiemployer
program failing; correct?
Mr. Hartogensis. That is correct.
Senator Brown. Is this a crisis? Would you characterize it
that way?
Mr. Hartogensis. Actually, in one of the conversations I
had with another Senator, he made the comment that this is
probably the largest crisis that people do not know about in
government. So it is very big.
Senator Brown. I would actually--even though I have a
special interest----
Mr. Hartogensis. That the general public does not know
about.
Senator Brown. I would--and this is not really the place
for this--I would argue that there is another public health
crisis. This is a public crisis that reaches these proportions
that is not well known, and that is the number of homes in
every State in America that have highly toxic levels of lead,
and we pay no attention to it, and the public does not. But
that is not really----
Mr. Hartogensis. I am just quoting some conversation----
Senator Brown. No, I appreciate it.
I do not mean to undercut my own argument by saying this.
[Laughter.]
Mr. Hartogensis. That is big. We agree.
Senator Brown. Are you asserting that Congress should act
immediately?
Mr. Hartogensis. What I am asserting is that the sooner the
Congress acts on this, I think the cheaper it will be, the less
painful it will be. So I think it is to our benefit to do
something sooner rather than later.
Senator Brown. And would you assert that inaction is not
just hurtful to those companies and pensioners, but that it is
damaging to the economy?
Mr. Hartogensis. That inaction--I would say it is certainly
damaging to the local economies where there are concentrated
people within multiemployer plans.
Senator Brown. Okay. Thank you.
Senator Wyden. Mr. Chairman, I am beginning my second
round, but Senator Brown is the Democrat who represents us on
the special committee. Would my colleague like to continue with
any additional questions before I go to a second round?
Senator Brown. I wanted to gauge interest and knowledge and
commitment to fix it, and I know that the Hatch committee
staff, and I know Ranking Member Wyden's staff on the
Democratic side, and my staff are committed to this, and it
needs to--I appreciate your comments that if we do not fix it
this year, it gets harder and harder and harder. That is why we
wrote the bill bipartisanly, four Republicans, four Democrats,
each House. We set a deadline on it. It has sort of fast-track
qualities, passes out of the committee, does not come to this
committee--no offense to my colleagues on this committee--but
goes straight to the floor and then to the White House.
The urgency of this is great. I think your comments
illustrated that, and that is what I wanted to hear.
Thank you.
Mr. Hartogensis. I appreciate your commitment to the issue.
Senator Brown. Sure. Thank you.
Senator Wyden. I thank my colleague, and I also want to
note that Senator Brown has made a special effort to try, as we
have gone forward on this special committee, to see if we can
get to common ground. If we can find a place for a bipartisan
bill, we want to take it up as soon as we possibly can,
reflecting the urgencies commented on.
Ms. Ennis, let us go to Social Security for a minute. I
want to give you my perspective about how I come to this and
why it is so important.
I was director of the Oregon Gray Panthers for about 7
years before I came to the Congress. And I ran the legal aid
office for the elderly as well. So I was in a lot of Social
Security offices during those years. And in fact, in those
days, this was the early days, really, of the American
consciousness with respect to the challenges faced by older
people.
Usually if a town had a meal program for older people and a
Social Security office was close, that was considered a big-
time, full-fledged network of senior citizen services. I have
been in a lot of these offices, and I want to tell you about
something that really was eye-opening and I think reflects how
serious and urgent some of your work is going to be.
A few weeks ago, I was in a Social Security field office
because I had some personal kind of issues I had to take up
there. And I arrived before the office opened--big line
stretching all the way around the building. As you know, these
lines are quite common.
According to a February Inspector General report, the
average wait time increased about 42 percent between fiscal
years 2010 and 2016. During the same period, the number of
field office visitors who waited longer than an hour doubled.
It was a 100-percent increase.
Now, despite these alarming statistics, this program, this
VIPr program as it is called, Visitor Intake Process Re-write--
only Washington, DC could concoct a name like that--tracks
field office visitor data. But it does not really capture the
amount of time people wait outside the office while waiting in
line. And there are claims that some field offices attempt to
kind of manipulate the system by ``talking with those who wait
in line'' and then count that as actually taking care of the
older person's needs.
So we understand what the demographics are. Senator Cassidy
and I have been talking about that in the context of health
care as well. Ten thousand Americans are turning 65 every day,
and that is going to be the case for years and years to come.
So more people are going to visit the offices, call the 800
number. We have to have reliable services and customer service
data and the like.
So my question is, if you are confirmed, what are you going
to do to look at these agency strategies to figure out how to
improve the wait times and deal with the 800 number and get us
some recommendations on how to fix this so-called VIPr system?
I guess it is sort of a viper, because it kind of wraps its
neck around you and you do not get your problem solved. But
what are you going to do to fix it?
Ms. Ennis. Senator, I too have been to the field office in
my home area and experienced a little bit of outside-the-
building wait time as well. So I do know what you are
referencing.
I know it is an issue that the IG's office has looked at,
as you have reflected, in prior reports. I can say that I want
to get into the office, take a look at what we have looked at,
make sure that we are looking at the critical issues that you
have expressed here, and then determine whether there are other
things that we can and should look at.
Of course, we would work with any Senator's office that
makes a request to see if the request is something that we can
accomplish.
Senator Wyden. What does your gut tell you, Ms. Ennis,
about whether you have field people manipulating the system to
improve the wait time?
Ms. Ennis. I cannot comment on that specific area. I do
know there have been IG reports about other issues, where there
is some allegation of moving caseloads to national offices for
disability--I think it was--where the report was done to look
at metrics.
So I think it is an interesting question and something that
I would be interested in knowing more about, because I do not
think it is fair to manipulate metrics.
Senator Wyden. You do your homework. I am not asking you to
announce that you find this is going on in 40 percent of the
cases. But you do your homework. You have been to offices. What
does your gut tell you is going on?
Ms. Ennis. I do not want to comment on anything that might
come before the IG's office. What I will say is----
Senator Wyden. Pardon me. You are not talking about
national security here.
Ms. Ennis. Right.
Well that is true. [Laughter.]
Senator Wyden. We are not giving out secrets. I am on the
Intelligence Committee, so I know the difference.
Ms. Ennis. I think it is important to look at how customer
service is measured. And I think there are ways to manipulate
numbers to get a metric goal reached that may not be valid. So
I think your point is well-taken.
And if it is going on, I would certainly want to know about
it, and certainly have my team take a look. I want to
understand what we have already done in that area to see if
more needs to be done, and I would, again, welcome any requests
from your or any other office to look at such an issue.
Delivery of services is critical, and I know the agency is
working on alternative delivery methods. But I know that for a
certain population now, and perhaps into the future, the field
office visit is critical for them because they may not have a
computer. They may not be computer-savvy.
So it is important to have customer service. I know that it
is a goal of the agency to constantly improve that, and it
would be a goal of mine as well.
Senator Wyden. Mr. Chairman, I am over my time on this
round. I have three additional questions. What is your
pleasure? Do you want to take your second round and then I will
wrap up, or what would you like to do?
Senator Cassidy. No, I have a hard-stop roughly at 11:20.
Senator Wyden. What time--I cannot--my eyes are----
Senator Cassidy. It is about 11:15.
Senator Wyden. How many questions do you have?
Senator Cassidy. I just want to really quickly--Ms. Ennis,
similar to the question I asked Mr. Hartogensis, but also
related to that which you are saying now, you have had a varied
background. You have worked in hospitality. You have worked
in--what else did they tell me? You can tell me--advertising--
--
Ms. Ennis. Advertising.
Senator Cassidy. Advertising. And so you speak of that kind
of customer experience, if you will, meeting the customer where
she is or he is.
Can you just elaborate, as did Mr. Hartogensis, with regard
to how your background you think brings you particular insights
into some of the things that Senator Wyden was referring to?
Ms. Ennis. From my background in hospitality and the
advertising industry, understanding the ultimate goal is to
have a good customer experience--I am certainly familiar with
that.
In terms of the broader mandate of the Inspector General, I
have a very strong background. My law firm career focused on
internal investigations and government investigations, with a
focus in many years on accounting fraud investigations, public
disclosure issues, banking, and securities laws. I managed very
large teams of lawyers and other professionals, including
accountants and IT professionals dealing with sort of ``bet
your company'' type cases.
I understand how to manage people. I understand strategy,
budgets, looking at policies and procedures--whether or not
they comply with the law. And basically what our mission always
was on these internal and independent investigations was to
follow the facts--as a partner of mine always used to say--
``without fear or favor'' and go where the facts led us. That
is how my practice was based, and that is how I would plan to
run the IG's office as well.
Senator Cassidy. As a physician, I used to always say,
``The facts are what matters.'' Truth is what matters, not your
advocacy point. So that will be a tremendous gift and skillset
and perspective to bring to the job.
Again, thank you.
Ms. Ennis. Yes, thank you.
Senator Cassidy. Senator Wyden?
Senator Wyden. Thank you, Mr. Chairman. You have been very
gracious, Mr. Chairman. I am going to probably go a minute or
two after your 11:20 hard-stop, and the Hatch team and our team
have said that that is okay with them. And as we all have noted
on these Social Security issues, we are very much a bipartisan
force.
So, Ms. Ennis, let me ask you now about some of the
technology issues, starting with cybersecurity, obviously
important to SSA. In 2017, NIST, the National Institute of
Standards and Technology, released updated password guidance.
And the guidance recommended passwords should only be changed
if there is evidence the password has been compromised, not
after some arbitrary period.
In November of 2017, I sent the agency a letter to
implement NIST's password guidance to eliminate burdensome, in
effect, password change requirements for Americans using--I
guess it is called the My Social Security website. Can you say
this morning that you will investigate the progress, looking at
NIST and other issues relating to the agency's cybersecurity
policy program?
Ms. Ennis. I think cybersecurity is one of the critical
issues facing not just Social Security, but many, many other
government agencies. I do not know where the IG office is now
with their current plans.
I do think it is a critical issue to look at for this
agency. I also think it is important for Inspectors General
generally to work across agencies and with CIGIE, because I
think this is such a global systemic issue, and I want to make
sure that whatever the agency is doing is best practice and
will confer with other IGs to make sure that we all have state-
of-the-art knowledge and hopefully application within the
agency.
Senator Wyden. Okay.
Let us talk authentication, and particularly two-factor
authentication. The agency has taken steps to improve
cybersecurity. In 2016, the agency began to offer multi-factor
authentication to the My Social Security online accounts. It
was an optional security upgrade, and eventually it became
mandatory for all of the My Social Security accounts. The
agency also adopted DMARC.
In our office, Chris DeGrande is really our point person on
attack. And he has spent a lot of time on these DMARC issues.
And DMARC prevents official phishing messages that purport to
come from SSA.
Now, to make sure that we are doing everything to protect
Americans from phishing and other sophisticated cyber-attacks,
I sent a letter to the agency urging them to consider universal
second factor, a form of MA that is really resistant to all
phishing. And should you and your staff want to go into this
further, Chris DeGrande and our tech team can work with you on
it.
SSA responded that the agency is looking at a variety of
ways to improve online authentication. My question to you is,
would you commit this morning to reviewing the cost and
benefits of SSA adopting universal second factor on an opt-in
basis for all of the My Social Security accounts?
Ms. Ennis. You know, I think the IG is not just there to
look at fraud after the fact and find it once it has already
happened. I think it is important for the IG to work closely
with the Congress and with the agency to try to prevent issues.
That sounds like a critical issue to me. I do not know what
they are doing already, so I certainly would like to work with
your staff and with--should I be confirmed--my staff to see
what we can do. It is a huge issue, and it is only going to get
more important for us to deal with it.
Senator Wyden. Good.
With the chair's indulgence, my last question is going to
be about whistleblowers. I think we all understand that they
play an important role in identifying, resolving issues of
waste, fraud, and abuse. And of course, coming forward is
something that can be pretty perilous. You can face
intimidation and retaliation. They are real assets.
And one of the first places whistleblowers go is to the
Inspector General. This committee has--to the credit of,
particularly Senator Grassley, Senator McCaskill, a bunch of us
have joined in this effort to protect whistleblowers. Senator
Grassley and I are co-chairs of the caucus, and Senator
McCaskill and Senator Carper are members of it. The Congress
passed our legislation to permanently reauthorize whistleblower
protection with a coordinated position in all of the IG
offices.
I want to make sure this will be a special priority for
you. Have you had any experience working with whistleblowers?
Ms. Ennis. I have had experience. Often when a law firm is
hired to look at one issue, whistleblowers do reach out to
outside counsel with other issues.
I have had a chance to look at policies and procedures that
clients employ in dealing with whistleblowers, and to recommend
improvements where we think that there may be deficiencies.
I think that whistleblower programs are incredibly
important to Inspectors General, and if I should be confirmed,
one of my first things will be to look at what the IG's office
does now, and what the policies and procedures are for intake,
education, and protection of whistleblowers.
Senator Wyden. I will wrap up with this.
The longer that I have been involved in these whistleblower
issues, the more I am convinced that there are kind of two
areas. There is the law, and around here we huff and puff that
I am among the Intelligence Committee and I work with my
colleagues there, and here we work with our colleagues and the
like. But the bigger issue is how the people at the top
establish a culture, a culture that makes it clear that coming
forward is something you appreciate--it is important to you,
you can be on their side, they are going to get a fair shake.
Close with me, if you would, by telling me how you are
going to promote a culture that is going to allow agency
employees, contractor employees, to say, ``Hey, we can make
these disclosures without being fearful that we are going to
get hammered with retaliation and intimidation and all kinds of
other stuff.''
Ms. Ennis. So I often advise clients, as my law firm did
when there were issues that arose, that ``tone at the top'' is
critical. That is what we always called it: ``tone at the
top.''
If the tone at the top is properly set, it will trickle
down throughout the agency.
Senator Wyden. You are going to set the tone if you are
confirmed.
Ms. Ennis. I am.
Senator Wyden. You are going to bring them in at the
beginning, and you are going to tell them, ``Hey, I want
everybody to know this is a big deal to me.''
Ms. Ennis. Absolutely. It is critical to the work of the
IG, to all IGs, and if I discover that our program is not
state-of-the-art, I plan to work with CIGIE and other
Inspectors General to make sure that we are at the top of the
class.
Senator Wyden. Thank you, Mr. Chairman. Thank you for all
of the time.
Senator Cassidy. I like that term, ``tone at the top.''
Again, thank you all for your attendance and participation.
I, again, thank Mr. Hartogensis and Ms. Ennis for their
willingness to serve in these roles.
The committee recognizes and appreciates the new tasks you
have before you, should you be confirmed. We trust that you
will serve your agencies and our country well.
I ask that members who wish to submit questions for the
record please do so by close of business, Thursday, October
4th.
With that, the hearing is adjourned.
[Whereupon, at 11:20 a.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Richard Blumenthal,
a U.S. Senator From Connecticut
Chairman Hatch, Ranking Member Wyden, members of this distinguished
committee, while my commitments to the Judiciary Committee have
prevented me from appearing before you today, I am pleased to offer
written remarks on behalf of my friend, constituent, and fellow
resident of the great State of Connecticut, Gordon Hartogensis, on his
nomination to be the Director of the Pension Benefit Guaranty
Corporation (PBGC).
The promise of a stable and sustained retirement is a critical part
of the American dream--one that allows dedicated workers to rest easy
knowing that they and their loved ones have achieved a secure financial
future. The PBGC is responsible for protecting pension benefits for
over 40 million hardworking Americans. It also currently pays benefits
for about 1.5 million people in failed pension plans when derelict
companies cannot meet their obligations.
The need for strong leadership at the helm of the PBGC has never
been more important. The system is in crisis. There are more than a
hundred multiemployer pension plans on the brink of disastrous failure,
and more than 1.3 million workers and retirees across the country--from
teamsters to musicians--are all at risk of losing their American dream.
The Central States fund alone, which covers nearly half a million
truckers, expects to be under water within the next few years. By 2025,
the PBGC is expected to be completely insolvent.
I have never questioned Mr. Hartogensis's commitment to his
community, or his unwavering desire and focus. Mr. Hartogensis's
extensive time working in financial equities will undoubtedly have
helped prepare him for the monumental task at hand.
As the PBGC Director, Gordon will have the opportunity to implement
innovative solutions to resolve the current multiemployer pension
crisis, and I expect he will take this task very seriously. I have high
hopes that Gordon will build on the achievements of the current
Director, W. Thomas Reeder Jr., who has overseen marked improvements to
the single-employer pension program. Today, Mr. Hartogensis must
validate this urgent crisis and detail the specific steps that he will
take to restore the promise of retirement for millions of Americans.
I thank the committee for the opportunity to submit introductory
remarks on behalf of Gordon Hartogensis, and I look forward to helping
the Director restore the strength of the multiemployer pension system,
and the PBGC.
______
Prepared Statement of Gail S. Ennis, Nominated to be
Inspector General, Social Security Administration
Good afternoon, Mr. Chairman, Ranking Member Wyden, and members of
the committee. Thank you for the opportunity to appear before you
today.
I want to thank the President for nominating me for the position of
Inspector General for the Social Security Administration. I am honored
to appear before this committee as you consider my nomination.
My sister traveled from Connecticut to be here today, and I have
friends in attendance. My parents and other sister were unable to make
the trip from Connecticut, but I am sure they are watching.
I am especially passionate about protecting Social Security
benefits for those persons in need. For the last several years, I cared
for my husband as his health declined from the effects of dementia. I
was thankful that I had the financial means to provide for his care but
came to understand the enormous financial burden on families caring for
sick relatives. A Social Security check may be the only financial
relief many of these families receive and may make the difference in
their lives and the lives of the people for whom they are caring. I am
aware that individuals wait sometimes for years to receive a disability
determination, which is unacceptable; I think we can do better.
I am cognizant of the many challenges facing the Social Security
Administration, including disability hearings backlogs, payment
accuracy, an aging IT infrastructure, issues with the disability case
processing system, data security, improving customer service, and
combating fraud. Should I be confirmed as the Inspector General for the
Social Security Administration, I will work with Congress and the
agency to address these and other challenges, to reduce waste, fraud,
and abuse, and to continue to improve SSA's effectiveness and
efficiency.
I am also keenly aware that an Inspector General must be, and must
be perceived to be, independent of agency management. A strong,
ethical, and independent IG performs an invaluable oversight role for
the Congress and for the people of the United States.
My professional career has focused on government and independent
investigations, including cases related to allegations of accounting
fraud and violations of government regulations. I have counseled
companies, audit committees, and boards about corporate governance
issues, public disclosures, and improving processes, procedures, and
internal controls. Many of my representations have involved large teams
of lawyers, forensic accountants, IT and discovery professionals, and
support staff. This experience demonstrates that I have the legal,
financial, investigative, and management skills to serve as an
effective Inspector General of the Social Security Administration.
Social Security pays almost $1 trillion in benefits annually to
seniors, widows and widowers, children who have lost a parent, and
people with disabilities. Supplemental Security Income pays benefits to
elderly, blind, or disabled people with limited income. These programs
touch the lives of around 70 million people each year and will touch
the lives of most Americans at some point. For millions of
beneficiaries, a Social Security check is a vital safety net, allowing
them basic necessities: a roof over their heads and food on their
tables.
Should I be confirmed as the Inspector General for the Social
Security Administration, I will work diligently to provide oversight
for the efficient management of the agency and to detect and act on
waste, fraud, and abuse so that only those who qualify receive benefits
and receive them on time and without error. It is imperative to protect
these valuable taxpayer dollars so that the American public continues
to trust and count on this safety net.
Thank you again for the opportunity to appear before you.
______
SENATE FINANCE COMMITTEE
STATEMENT OF INFORMATION REQUESTED
OF NOMINEE
A. BIOGRAPHICAL INFORMATION
1. Name (include any former names used): Gail Susan Ennis.
2. Position to which nominated: Inspector General, Social Security
Administration.
3. Date of nomination: October 16, 2017.
4. Address (list current residence, office, and mailing addresses):
5. Date and place of birth: October 21, 1962, Bridgeport,
Connecticut.
6. Marital status (include maiden name of wife or husband's name):
7. Names and ages of children:
8. Education (list secondary and higher education institutions, dates
attended, degree received and date degree granted):
Frank Scott Bunnell High School, Stratford, CT; attended
September 1977 through June 1980.
University of North Carolina, Chapel Hill, NC; attended August
1980 through May 1984; degree--B.S., business administration
granted May 1986.
Brooklyn Law School, Brooklyn, NY; attended August 1994 through
May 1998; degree--J.D. granted May 1998.
9. Employment record (list all jobs held since college, including the
title or description of job, name of employer, location of work, and
dates of employment):
Assistant chef, Sheraton Hotel, Durham, NC, 1984 though 1985
(approximate).
Assistant chef, NY Hilton, New York, NY, 1985 through 1985
(approximate).
Assistant restaurant manager, Trumbull Marriott, Trumbull, CT,
1985 through 1986 (approximate).
Media planner, Wells, Rich, Greene, New York, NY, January 1987
through September 1988.
Media planner, Levine, Huntley, Schmidt, and Beaver, New York,
NY, September 1988 through June 1989.
Media supervisor, Lintas, New York, NY, June 1989 through
October 1991.
LSAT review instructor, Stanley Kaplan, New York, NY, September
1989 through July 1990.
Associate media director, Avrett, Free, and Ginsberg, New York,
NY, October 1991 through May 1995.
Director of media planning, Paragon Media, New York, NY, May
1995 through May 1998.
Summer associate, Herrick Feinstein LLP, New York, NY, June
1997 through August 1997.
Associate, WilmerHale LLP, Washington, DC, September 1998
through January 2007.
Partner, WilmerHale LLP, Washington, DC, January 2007 through
present.
10. Government experience (list any advisory, consultative, honorary,
or other part-time service or positions with Federal, State, or local
governments, other than those listed above):
N/A.
11. Business relationships (list all positions held as an officer,
director, trustee, partner, proprietor, agent, representative, or
consultant of any corporation, company, firm, partnership, other
business enterprise, or educational or other institution):
Partner, WilmerHale LLP.
12. Memberships (list all memberships and offices held in
professional, fraternal, scholarly, civic, business, charitable, and
other organizations):
Member, Maryland State Bar Association.
Member, District of Columbia Bar.
Director, Gibson Island Corporation.
Director, Gibson Island Club.
Vice president, Gibson Island Club.
13. Political affiliations and activities:
a. List all public offices for which you have been a
candidate.
None.
b. List all memberships and offices held in and services
rendered to all political parties or election committees during
the last 10 years.
Republican Party.
c. Itemize all political contributions to any individual,
campaign organization, political party, political action
committee, or similar entity of $50 or more for the past 10
years.
NRSC: $250, January 20, 2010.
Bob Ehrlich for Maryland Committee: $100, August 10, 2010.
Issa for Congress: $500, May 10, 2011.
Romney for President, Inc.: $250, October 11, 2011.
Fiscal Responsibility PAC: $250, December 9, 2011.
Evans for Mayor: $50, October 2, 2013.
Citizens to Elect Steve Schuh: $150, January 15, 2014.
Friends of Jason Chaffetz: $250, February 14, 2017.
Right to Rise: $1,000, January 29, 2015.
Trump Make America Great Again Committee: $250 on the 20th of
each month from July 2016 through September 2017.
14. Honors and awards (list all scholarships, fellowships, honorary
degrees, honorary society memberships, military medals, and any other
special recognitions for outstanding service or achievement):
Dean's Merit Scholar, Brooklyn Law School 1994-1998.
Dean's list, Brooklyn Law School 1994-1997.
Member, Moot Court Honor Society, Brooklyn Law School.
Senior associate, Journal of Law and Policy, Brooklyn Law
School.
15. Published writings (list the titles, publishers, and dates of all
books, articles, reports, or other published materials you have
written):
``FCIC Commissioners Issue Preliminary Findings on Crisis
Causes,'' WilmerHale, December 15, 2010 (coauthor).
16. Speeches (list all formal speeches you have delivered during the
past 5 years which are on topics relevant to the position for which you
have been nominated):
N/A.
17. Qualifications (state what, in your opinion, qualifies you to
serve in the position to which you have been nominated):
For almost 20 years I have practiced securities and banking law
at WilmerHale. My practice has focused on leading large teams
of lawyers and accountants in complex internal and government
investigations often involving Fortune 100 companies. My
representations have related to allegations of accounting
fraud, tax fraud, insider trading, violations of various
securities and banking statutes, and the adequacy of
disclosures and governance issues, among other issues. Every
investigation has required my team and me to learn the business
of the client, including the structure of the organization and
its operations. In alleged accounting fraud cases, my team and
I worked side by side with forensic accountants, analyzing
books and records, audit plans, and work papers.
I have managed every aspect of these large cases, including
case strategy, budgeting, witness interviews, personnel
management, oversight of contractors, preparation of internal
investigation reports, working with government investigators,
and settlement negotiations. As a result of my experience on
these complex investigations, I believe I have the legal,
financial, investigative, and management skills to serve as an
effective Inspector General of the Social Security
Administration. It would be my great honor to serve the country
and work to eliminate waste, fraud, and abuse in a program upon
which so many Americans rely.
B. FUTURE EMPLOYMENT RELATIONSHIPS
1. Will you sever all connections with your present employers,
business firms, associations, or organizations if you are confirmed by
the Senate? If not, provide details.
Yes.
2. Do you have any plans, commitments, or agreements to pursue
outside employment, with or without compensation, during your service
with the government? If so, provide details.
No.
3. Has any person or entity made a commitment or agreement to employ
your services in any capacity after you leave government service? If
so, provide details.
No.
4. If you are confirmed by the Senate, do you expect to serve out
your full term or until the next presidential election, whichever is
applicable? If not, explain.
Yes.
C. POTENTIAL CONFLICTS OF INTEREST
1. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated.
None.
2. Describe any business relationship, dealing, or financial
transaction which you have had during the last 10 years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated.
None.
3. Describe any activity during the past 10 years in which you have
engaged for the purpose of directly or indirectly influencing the
passage, defeat, or modification of any legislation or affecting the
administration and execution of law or public policy. Activities
performed as an employee of the Federal government need not be listed.
None.
4. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items.
Any potential conflict of interest will be resolved in
accordance with the terms of my ethics agreement, which was
developed in consultation with ethics officials at the Social
Security Administration and the Office of Government Ethics. I
understand that my ethics agreement has been provided to the
committee. I am not aware of any potential conflict other than
those addressed by my ethics agreement.
5. Two copies of written opinions should be provided directly to the
committee by the designated agency ethics officer of the agency to
which you have been nominated and by the Office of Government Ethics
concerning potential conflicts of interest or any legal impediments to
your serving in this position.
See item 4.
D. LEGAL AND OTHER MATTERS
1. Have you ever been the subject of a complaint or been
investigated, disciplined, or otherwise cited for a breach of ethics
for unprofessional conduct before any court, administrative agency,
professional association, disciplinary committee, or other professional
group? If so, provide details.
No.
2. Have you ever been investigated, arrested, charged, or held by any
Federal, State, or other law enforcement authority for a violation of
any Federal, State, county, or municipal law, regulation, or ordinance,
other than a minor traffic offense? If so, provide details.
No.
3. Have you ever been involved as a party in interest in any
administrative agency proceeding or civil litigation? If so, provide
details.
No.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? If so, provide details.
No.
5. Please advise the committee of any additional information,
favorable or unfavorable, which you feel should be considered in
connection with your nomination.
None.
E. TESTIFYING BEFORE CONGRESS
1. If you are confirmed by the Senate, are you willing to appear and
testify before any duly constituted committee of the Congress on such
occasions as you may be reasonably requested to do so?
Yes.
2. If you are confirmed by the Senate, are you willing to provide
such information as is requested by such committees?
Yes.
______
Questions Submitted for the Record to Gail S. Ennis
Questions Submitted by Hon. Chuck Grassley
Question. According to reports in The Des Moines Register and other
news outlets, Cristhian Bahena Rivera, an undocumented immigrant who is
currently on trial for murder in Iowa, began using a fraudulently
obtained Social Security number in 2014 through the time of his arrest
this summer. Reports indicate that the SSN he used belonged to an Ohio
man, John Budd, and that the same number was receiving wages in three
different States all at the same time.
To your knowledge, did the Social Security Administration know that
this SSN was being used in three different States at the same time? If
you don't know, will you find out?
Answer. I do not know whether the SSA knew that this SSN was being
used in different States. If confirmed, I will work with the OIG to
determine whether they have looked at this issue and determine if more
work is warranted.
Question. To your knowledge, did the SSA know that this SSN was
being used fraudulently? If you don't know, will you find out?
Answer. I do not know whether the SSA knew that this SSN was being
used fraudulently. Improper or fraudulent use of SSNs is a great
concern. If confirmed, I will work with the OIG to determine whether
they have looked at this issue and determine if more work is warranted.
Question. What mechanisms does the SSA have in place to flag when
and whether SSNs have been or are being used fraudulently?
Answer. I do not know what mechanisms the SSA may have in place to
detect fraudulent use of SSNs. If confirmed, I will work with the OIG
to determine if any audits or investigative work have been done in this
area and whether the OIG should include any such work in the future.
Question. Will you commit to combating SSN fraud, if confirmed to
the position of Inspector General?
Answer. Yes. The mission of the Inspector General is to, among
other things, combat fraud in the programs of the agency. I consider
SSN fraud to be an important issue and combating such fraud to be part
of the core mission of the IG.
Question. Will you commit to conducting an audit into the
effectiveness of the SSA's current fraud detection and prevention
measures?
Answer. As stated above, I believe that working to eliminate fraud
in the programs of the SSA is part of the core mission of the SSA
Inspector General. If confirmed as the IG for the SSA, I will work with
the OIG to determine what work has been done to look at the SSA's fraud
detection and prevention measures, and I will assess with the OIG
whether more work should be done.
Question. Does the SSA know when an SSN is being used in multiple
jurisdictions--even across State lines?
Answer. I do not know whether the SSA knows when an SSN is being
used in multiple jurisdictions. If confirmed, I will work with the OIG
to determine whether the SSA has safeguards in place to detect SSN
usage in multiple jurisdictions and whether the OIG should look at this
issue.
Question. If so, what does the SSA do when that occurs?
Answer. As stated above, if confirmed, I will work with the OIG to
determine what the SSA does regarding SSN usage and whether the OIG
should conduct inquiries into this issue.
Question. In 2016, the IRS determined that more than 1 million
Americans' SSNs were stolen by undocumented immigrants. On July 11,
2017, I sent a letter to then-IRS Commissioner Koskinen, demanding
answers about undocumented immigrants fraudulently using another's SSN
to gain employment.
Do you know right now how many Americans' SSNs are being used
fraudulently by undocumented immigrant workers?
Answer. I do not know.
Question. To your knowledge, does the SSA keep an account, or
accounting, for all earnings associated with incorrect or fictitious
SSNs? This has at times been referred to as the ``earnings suspense
file.''
Answer. I do not know whether the SSA maintains an earnings
suspense file for this purpose.
Question. Do you know what fraction of the earnings suspense file
corresponds to the earnings of undocumented immigrants?
Answer. I do not know.
Question. In the name of transparency, will you commit to alerting
Congress and the American people of how many SSNs are currently being
used by undocumented immigrants? And will you commit to informing the
American people how much money the SSA receives from those undocumented
immigrants?
Answer. Should I be confirmed, if this request is made by a member
of Congress, I will work with the OIG staff and the requesting member
to determine if the OIG can provide the requested information, and
provide it if at all possible.
Question. Is the SSA legally or statutorily barred from sharing
information about suspect SSN usage with law enforcement, including
Federal immigration authorities? If not, to which section in the U.S.
Code, or to which law, would you or the SSA cite for this prohibition
of information-sharing?
Answer. I have not conducted an analysis of the legality of sharing
information about SSNs with law enforcement, but I know that this
question is governed, at a minimum, by the Social Security Act, the
Internal Revenue Code, and the Privacy Act. Should I be confirmed as
the Inspector General of the SSA, if the OIG receives a request about
sharing SSN information with law enforcement, I will work with my staff
and legal counsel to consider the legal questions presented.
______
Questions Submitted by Hon. John Thune
Question. For fiscal year 2018, I understand that the Office of the
Inspector General has identified seven management challenges faced by
the Social Security Administration. These challenges are wide in range
and include improving customer service, modernizing technology,
protecting data, and preventing overpayments, among other things. If
confirmed, which of these would you prioritize moving forward, or have
you identified other areas you wish to direct your focus on?
Answer. If confirmed, my priority will be on IT modernization,
because I believe that a robust, modernized IT environment will have
implications for many of the other challenges identified by the OIG.
For example, data protection will be strengthened in a modern IT
environment, overpayments will be minimized with IT improvements that
will negate the need for manual actions that sometimes result in
payment inaccuracies, and a modern IT infrastructure will better
support the expected increase in demand for online services as baby
boomers enter retirement.
Question. In 2017, the SSA, OIG, and local partners announced the
formation of a Cooperative Disability Investigations Unit in Sioux
Falls to fight fraud by investigating suspicious disability claims.
It's estimated that the CDI program as a whole has saved Social
Security $3.7 billion since its creation 20 years ago. If confirmed, do
you believe it is important to continue dedicating resources to CDIs,
and complete the expansion of the program to cover all States by 2022,
as required by the Bipartisan Budget Act of 2015?
Answer. CDI units work to detect fraud before disability payments
are made, which is markedly more cost efficient than ``chasing'' monies
that are paid out on fraudulent claims. In addition to generating
billions of dollars in savings for Social Security, the CDI program has
also generated billions of dollars of savings for non-SSA programs like
Medicare and Medicaid. I believe that the CDI program has been an
invaluable tool for the SSA and OIG in detecting and fighting fraud and
abuse in the disability program and therefore I support expanding CDI
unit coverage to all States by 2022.
______
Questions Submitted by Hon. Ron Wyden
service delivery
Question. Unfortunately, long waits at Social Security offices are
a common occurrence. According to a February 2018 SSA Inspector General
report, the average wait time increased about 42 percent between Fiscal
Years 2010 and 2016 from 19 minutes to 27 minutes. During the same
period, the number of field office visitors who waited longer than 1
hour for service ballooned from 2.3 million to 4.8 million, a 109-
percent increase.
Despite these alarming statistics, SSA's Visitor Intake Process Re-
write (VIPr) system, which tracks field office visitor data, does not
fully capture the amount of time people wait outside the offices while
waiting in line. Moreover, there are claims that some field offices are
attempting to manipulate the system by ``talking'' with those waiting
in line and counting that as taking care of that person's needs. At a
time when 10,000 Americans turn 65 each day and more people are
visiting Social Security offices or calling the 800 number, SSA needs
reliable customer service data.
If confirmed, will you investigate SSA's strategies and tools to
improve wait times at field offices and on the 800 number, and make
recommendations about how to improve the VIPr system to provide a more
accurate depiction of the total wait time?
Answer. Accurate customer service data is necessary for the SSA and
Congress to understand how the agency is meeting the needs of the
public. If confirmed, I will work with the OIG and Congress to assess
any request to investigate SSA wait time issues and the VIPr system.
Question. If confirmed, will you commit to investigate SSA's VIPr
system and determine whether SSA field office staff are manipulating
the system to improve the field office's overall average wait time?
Answer. Transparency is critical when evaluating the delivery of
services to the public, and any allegation of manipulating the system
to improve data is troubling. If confirmed, I will work with the OIG
and the Congress to assess any request to investigate the VIPr system
and allegations related to average wait time.
Question. In Fiscal Year 2017, SSA's 1,200 field offices served
about 42 million visitors, completed over 5.6 million new benefit
applications and replaced about 10 million Social Security cards. As
millions of Americans become eligible for benefits from SSA, the agency
has been of closing field offices around the country.
Will you evaluate SSA's process for determining when a field office
should be relocated, consolidated, or closed?
Answer. I understand that many current or prospective Social
Security beneficiaries prefer using field offices to conduct
transactions with the SSA rather than using on-line or other service
delivery methods. I understand from reviewing the SSA OIG materials
that the OIG has conducted reviews related to the recent closings of
certain field offices. If confirmed, I will work with the OIG staff to
determine the scope of the reviews, whether there is ongoing work, and
whether additional work is warranted.
it modernization
Question. Despite the use of electronic health records, SSA mails
paper notices to doctors' offices requesting medical records. SSA
requires DDS adjudicators to only follow up with a doctor's office
once. It seems that these two practices may hamper the ability of SSA
to obtain the medical records needed to make an accurate disability
determination.
If confirmed, will you commit to investigate the efficacy of SSA's
current system to obtain medical evidence and make suggestions for
improvement?
Answer. Timeliness and accuracy in the disability process are
critical to serving the needs of people applying for disability.
Electronic health records aid in the ability of the DDS adjudicators to
evaluate a disability claim more quickly and accurately. The OIG
regularly reviews issues related to the disability process. If
confirmed, I will work with the OIG to assess the work that has been
conducted related to obtaining medical information and whether
additional work is warranted.
Question. In June 2017, the National Institute of Standards and
Technology (NIST) released updated password guidance. The guidance
recommends that passwords should only be changed if there is evidence
that a password has been compromised, not after some arbitrary period.
In November 2017, I sent a letter urging SSA to implement NIST's
password guidance to eliminate burdensome and ineffective password
change requirements for Americans using the ``My Social Security''
website.
Will you investigate SSA's progress implementing the NIST
guidelines and other efforts to bolster the agency's cybersecurity
policies?
Answer. Users of ``My Social Security'' must have confidence that
SSA is doing all it can to protect their private information and at the
same time should not be required to face burdensome and ineffective
barriers to use of the SSA's website. I believe that the OIG regularly
reviews SSA cybersecurity issues. If confirmed, I will work with the
OIG to assess any request to review SSA's progress in implementing the
NIST guidelines and other cybersecurity issues.
Question. SSA has taken important steps to improve cybersecurity.
In 2016, SSA began to offer multi-factor authentication, or MFA, to the
``My Social Security'' online accounts as an optional security upgrade,
later making it mandatory for all ``My Social Security'' accounts. SSA
also adopted DMARC which prevents ``official-looking'' phishing email
messages that purport to come from SSA.
In the interest of protecting Americans from phishing and other
sophisticated cyber-attacks, I sent a letter to SSA urging them to
consider adding Universal Second Factor, or U2F, a form of MFA
resistant to all phishing. SSA responded that the agency is looking at
a variety of ways to improve on-line authentication.
Will you commit to review the cost and benefits of SSA adopting
Universal Second Factor on an opt-in basis for all ``My Social
Security'' accounts?
Answer. If confirmed, I will work with the agency to determine if
any review of the adoption of U2F has been conducted and will work with
the OIG to assess whether it should undertake a review.
Question. In 2017, the General Services Administration (GSA)
released login.gov, a new online portal for the general public and the
private sector to use as a single sign-on solution to access government
services or to conduct business with the government. The portal is
available to all Federal agencies on an opt-in basis. So far, the
Department of Homeland Security's Global Entry Program and USAJobs.gov
site are currently using the login.gov portal. Login.gov employs
security and privacy measures put forward by the National Institute of
Standards and Technology (NIST). GSA recently announced that login.gov
will now accept Universal Second Factor security keys for users to
access its portal in addition to its existing multi-factor
authentication security measures.
In my previous question, I discussed SSA's internal online portal
and the agency's efforts to protect users' identity while using their
portal. However, switching to GSA's login.gov may provide SSA more time
and resources to dedicate to its other IT modernization priorities.
Will you investigate SSA's evaluation of login.gov as a viable
security option and provide a cost-benefit analysis of SSA switching to
login.gov?
Answer. I believe that cybersecurity issues have government-wide
implications and that agencies should work together to develop state-
of-the-art protocols and systems. If confirmed, I will work with SSA to
determine if they have evaluated login.gov as a viable security option
and whether that evaluation included a cost-benefit analysis of SSA
switching to login.gov. I will also work with the OIG to assess whether
it should undertake an evaluation of login.gov and a cost-benefit
analysis of SSA switching to login.gov.
whistleblower protection
Question. Whistleblowers play an essential role in helping the
government identify and resolve issues of waste, fraud, and abuse. They
do this under the threat of intimidation and retaliation.
Whistleblowers are assets and can help us enhance government efficiency
and transparency and save taxpayers billions of dollars. One of the
first places that whistleblowers go to blow the whistle is the Office
of Inspector General.
Supporting and protecting whistleblowers should not be a partisan
issue. My committee colleague, Senator Grassley, and I are co-chairs of
the Senate Whistleblower Protection Caucus, and two of our Finance
Committee colleagues--Senators McCaskill and Carper--are members as
well. In June, Congress passed our legislation to permanently
reauthorize the Whistleblower Protection Coordinator position in all of
the Inspector Generals' offices.
In your previous work, what experience have you had working with
whistleblowers?
Answer. In my work as a lawyer conducting government and internal
investigations, my firm and I have reviewed and investigated
whistleblower complaints. As part of that work, we reviewed client
whistleblower policies and procedures and the outcome of the
complaints. We also recommended changes to strengthen whistleblower
policies and procedures where appropriate.
Question. If confirmed, how do you plan to promote a culture that
will allow SSA and contractor employees to make disclosures while
protecting them from any intimidation, retaliation, or prohibited
personnel practices?
Answer. Whistleblowers are critical to the work of the IG. I
believe that SSA and the SSA OIG must make whistleblowers comfortable
that they will not suffer adverse treatment or retaliation by setting
the appropriate tone at the top. If confirmed, I will analyze past
claims of retaliation to look for systemic issues. I will also review
training and communications programs to ensure they clearly explain the
protections for whistleblowers. Finally, I will make sure that the OIG
has comprehensive, written policies and procedures for the intake and
investigation of whistleblower complaints that conform to ``best
practices'' and include guidance on communications with whistleblowers
and protection of their identity.
role of inspector general
Question. Looking at your background and work history, you do not
have any experience with Social Security or social insurance. That is
not necessarily bad: a fresh set of eyes can provide a new perspective
or see opportunities that insiders might miss.
Please tell me how your background, training, and experience make
you the right person to be the Inspector General of Social Security.
Answer. For almost 20 years, I practiced securities and banking law
with a focus on government and independent investigations, including
cases related to allegations of accounting fraud and violations of
government regulations. Many of the investigations involved large,
multi-national corporations or financial institutions and were often
comprised of large teams of attorneys, forensic accountants, IT and
discovery professional, and support staff. In alleged accounting fraud
cases, my team and I worked side by side with forensic accountants,
analyzing books and records, audit plans, and work papers. I have also
counseled clients on improving processes and procedures, and internal
controls to avoid future violations or to comply with settlement terms
or changes in law or regulations. As a result, I believe I have the
legal, financial, investigative, and management skills to serve as an
effective Inspector General of the Social Security Administration.
Question. Establishing and maintaining independence is a critical
issue for IGs. IGs must maintain a working relationship with the agency
head to successfully perform their duties while simultaneously
remaining independent and accountable to Congress.
If confirmed, what strategies will you use to balance a working
relationship with the Commissioner of Social Security while maintaining
independence?
Answer. I believe that independence is at the core of the IG
mission, particularly as it relates to the accountability of the
agency. I also believe that there are many issues on which agency
leadership and the OIG can and should partner to advance the interest
of the SSA, taxpayers, and beneficiaries. For example, the agency and
the OIG should work closely on combating fraud and abuse in SSA
programs and operations and on strengthening data security. To that
end, I believe it is important that the SSA Commissioner and the IG
have a strong working relationship. If confirmed, I will set a strong
example of independence through transparency and objective and fair
audits and investigations. I will also have regular communications and
meetings with the Commissioner and executive staff, and I will look
into setting up a working group with participants from the OIG and the
SSA to identify issues where the OIG and the SSA can share information,
data, and expertise to fulfill the agency and OIG missions.
oig investigations
Question. As you may be aware, a former Social Security disability
lawyer, Eric Conn, pleaded guilty to 18 counts of conspiracy, mail and
wire fraud, false statements, money laundering, and other related
offenses in connection with a $550-
million Social Security disability fraud scheme. Between 2004 and 2012,
Mr. Conn submitted false and fraudulent medical documentation in more
than 2,000 cases to SSA in order to have SSA pay claimants' retroactive
disability benefits, continue to pay claimants' disability benefits in
the future, award Medicare and Medicaid benefits to claimants, and pay
Conn's attorney fees. While we are grateful for the efforts of SSA-OIG
and the Department of Justice for apprehending him and his
conspirators, his over 2,000 former clients will face a redetermination
hearing and may ultimately lose their benefits.
What information or assistance can the Office of Inspector General
provide to individuals who are the victims of fraud like those hurt by
Eric Conn?
Answer. The OIG plays a role in educating the public about
fraudulent schemes through fraud alerts posted on the OIG website. The
OIG also works with the SSA to detect fraudulent schemes and works to
ensure that the SSA has strong controls to prevent fraud in the SSA's
programs. The OIG may also refer potential cases of fraud to the
Department of Justice for prosecution. During an OIG investigation, the
OIG does not have direct communications with potential victims of
fraud.
dds staff attrition rate
Question. In FY 2017, State Disability Determination Services (DDS)
adjudicated over 2.5 million initial claims, about 600,000
reconsideration claims, and processed about 800,000 continuing
disability reviews (CDRs). Several years of increasing caseloads
without sufficient resources have led to high staff turnover at many
DDSs. In FY 2017, State DDSs lost 1,623 employees, including 1,238
adjudicators. The attrition rate for FY 2018 is expected to be the
same. It takes approximately two to 3 years for a disability
adjudicator to become fully proficient in SSA's rules.
Will you commit to investigate the impact of DDS staff turnover on
quality of disability benefit determinations?
Answer. Employee turnover is an issue at both SSA and DDS offices.
Loss of institutional knowledge can cause inefficiencies and errors. I
understand that the OIG regularly reviews the disability process. If
confirmed, I will review the work the OIG has done to assess DDS staff
turnover issues and whether more work in this area is warranted.
Question. According to September 2017 testimony from the National
Association of Disability Examiners (NADE), the high attrition rate has
forced DDS offices to shift staff and resources from ``training,
quality assurance, professional relations, and even supervision and
management and direct all their resources to claims processing.'' NADE
also stated that despite critical updates to SSA's medical listings of
impairments, many DDSs were unable to undertake proper staff training
about changes. Will you commit to investigate whether DDS staff have
sufficient training to conduct disability determinations efficiently
and according to SSA policy?
Answer. I understand the importance of a thorough training program
to ensure that DDS staff can conduct disability determinations
efficiently and according to SSA policy. If confirmed, I will work with
OIG staff to consider any request for a review of DDS training.
evaluation of medical evidence
Question. Last year, SSA published a final rule regarding the
evaluation of medical evidence (82 FR 5844). Most notably, under the
new rule, SSA adjudicators will give no significant weight to the
medical evidence from the claimant's treating physician. This rule
would give equal weight to medical evidence from one-time Consultative
Examinations arranged by SSA or paper file reviews by SSA consultants.
I am concerned this rule devalues evidence from the claimant's treating
physician or specialist, who generally has an ongoing relationship with
the claimant and is likely to provide a detailed, longitudinal picture
of the claimant's impairment(s).
Will you commit to investigate how this rule changed the evaluation
of medical evidence and whether the change resulted in inaccurate SSDI/
SSI initial claim determinations or a higher reversal rate at the
hearing level?
Answer. I understand that the OIG regularly reviews the disability
process. If confirmed, I will work with the OIG to determine whether it
has investigated issues related to the evaluation of medical evidence
and whether more work in this area is warranted.
______
Questions Submitted by Hon. Maria Cantwell
Question. As you know, Administrative Law Judges (ALJs) perform
essential adjudication of Social Security appeals to determine
benefits. In July, the President issued an executive order to
reclassify ALJs so they can be selected based on their political
views--threatening their impartiality through the current ``competitive
service'' system.
If confirmed, will you commit to respecting the independence of
ALJs at the Social Security Administration?
Answer. I believe it is important that the public have confidence
that decisions made by ALJs are fair and based on an objective review
of the facts of the case. I also believe that the Inspector General and
the OIG must be, and must be perceived to be, independent. If
confirmed, I will be objective and independent and will respect the
independence of ALJs.
Question. Would you use your role as Inspector General to produce
objective program audits if the administration continues trying to
politicize ALJs?
Answer. I believe that impartiality and non-partisanship form the
core of the IG mission. If confirmed, all program audits and
investigations conducted by the OIG will be impartial, non-partisan,
objective, and independent. Should I be confirmed as the Inspector
General of the SSA, if a member requests that the OIG review the SSA
ALJ program, I will work with the OIG staff to consider the request.
______
Questions Submitted by Hon. Benjamin L. Cardin
Question. This August, SSA was slow to comply with Judge Ketanji
Brown Jackson's decision to reverse the executive orders relating to
union collective bargaining agreements. Additionally, SSA had been
particularly harsh among Federal agencies in its enforcement of these
executive orders, having reduced official time, confiscated union
equipment, and locked union members from their spaces.
Should you be confirmed, how will you ensure that SSA will be fair
and balanced in its relations with its Federal employee unions?
Answer. Agency compliance with Federal labor laws and regulations
is essential. If a member requests that the OIG review whether the
agency is in compliance with Federal labor laws, regulations or court
orders, if confirmed, I will work with the OIG staff and the requesting
member to consider the request.
Question. What actions will you take to ensure that the next
collective bargaining agreement is in compliance with Judge Jackson's
ruling?
Answer. If a member requests that the OIG review whether a
collective bargaining agreement is in compliance with laws,
regulations, or court orders, if confirmed, I will work with the OIG
staff and the requesting member to consider the request.
Question. Telework is a well-established and accepted practice
within the Federal Government. SSA management has used telework to
discipline SAA employees by threatening to take away employees' right
to telework.
If confirmed, will you review SSA telework practices and strive to
stop the current practice of using the ability to telework as a way to
discipline employees?
Answer. If requested by a member to review telework practices, if
confirmed I will work with the OIG and the requesting member to
consider the request.
Question. I have been paying close attention to the issue of field
office closures, and particularly that of the Baltimore North office
which occurred in June 2018. SSA has planned to consolidate its
employees and workloads from both the Baltimore North as well as its
Arlington field offices into others in the area. Many beneficiaries
are, however, in a poor physical or mental condition for traveling long
distances, do not possess vehicles, and/or live alone without any
family, friends, or caretakers to assist them.
If confirmed, how would you analyze the impact of each field office
closure?
Answer. I understand that many beneficiaries find it difficult when
their local field office closes and they must travel farther to visit
another field office. I understand from reviewing the SSA OIG materials
that the OIG has conducted reviews related to the recent closings of
certain field offices. If confirmed, I will work with the OIG staff to
determine the scope of the reviews, whether there is on-going work, and
whether additional work is warranted.
Question. What steps would you take to ensure that SSA does not
overburden certain field offices that have to now double their
workloads due to closures?
Answer. Should I be confirmed, if a member requests a review of the
workloads at field offices, I will work with the OIG and the member to
consider the request.
Question. How would you ensure that beneficiaries receive
sufficient notice of any closure or disruption to field office service,
as well as recommendations from SSA?
Answer. It is the responsibility of the agency to notify
beneficiaries of any closures or disruptions to field office services.
I understand that the SSA OIG has reviewed whether SSA followed its own
policies and procedures related to field office closures and whether
notifications were properly provided pursuant to those policies and
procedures. If confirmed, I will work with the OIG staff to determine
whether additional work is warranted related to notifications of field
office closings.
Question. How would you ensure that program beneficiaries who may
not be able to travel longer distances to other offices receive the
support and service they need?
Answer. I believe that IT modernization is an important part of
ensuring the efficiency, effectiveness, and safety of alternative
delivery systems for SSA services. I understand that the SSA OIG
regularly reviews SSA's IT modernization programs and if confirmed, I
will continue to review issues related to IT modernization.
Question. SSA has emphasized its vision for expanded online
services, perhaps as a substitute for field offices. Polling
consistently shows that program beneficiaries, who are often not
technologically savvy, prefer applying for benefits and raising
questions and claims at field offices with staff representatives, or by
voice over the phone. The amount of people entering field offices in
2018 is at a level similar to that of 2000, suggesting that field
offices continue to provide essential services to the public.
What steps would you take to balance SSA's need for IT
modernization and an improved online presence with its field office
activities?
Answer. In order to promote effectiveness and efficiency, I believe
the SSA OIG can work with the agency to develop short-, medium-, and
long-term goals and strategies related to balancing the need for IT
modernization and an improved online presence with field office
activities. I believe the long-term view is that there will be an
increased demand for online and other alternative delivery services,
and therefore visits to field offices may decline. However, in the
short and medium term the balance may be weighted more toward field
office visits, and, if confirmed, I would work with the agency to
identify improvement that can be made in the services provided by field
offices.
Question. The Social Security Administration has endured years of
budget cuts and freezes that have taken their toll on the agency's
service capabilities. Since 2010, the staff has been reduced by 12
percent, approximately 70 field offices have been shuttered, hours of
public operation have been reduced, and there is a record high backlog
in disability appeals. SSA's service delivery has also dipped in
quality. A significant number of callers to SSA's national 1-800 number
do not get their questions resolved. As hold times have risen, nearly
half of callers hang up before connecting and a growing number get busy
signals. Meanwhile, the average wait for a disability appeal has
stretched to 20 months. Further cuts would force the agency to freeze
hiring, furlough employees, shutter more field offices, or further
restrict field office hours, causing yet longer wait times for
taxpayers and beneficiaries. Although the agency received a notable
increase in its budget in FY18, much of those funds went to IT
improvement and reducing the backlog, not front-line service.
How would you prioritize service at field offices and teleservice
centers to ensure that SSA is able to respond to the needs of a growing
beneficiary population?
Answer. Should I be confirmed, if a member requests that the SSA
OIG review agency plans regarding how to best serve beneficiaries, I
will work with the OIG staff and the requesting member to consider the
request.
Question. How do you plan to ensure the levels of staffing needed
for quality service?
Answer. While the agency is responsible for developing staffing
models, if I am confirmed and a request is made, I will work with the
OIG staff to consider a request to review staffing models and service
projections.
Question. What budgetary needs do you anticipate SSA requiring in
your term? Further, what steps would you take to secure those needs?
Answer. The SSA OIG's budget has been static for a number of years,
causing a reduction in the number of investigators and auditors as
costs for salaries and benefits, which account for approximately 86
percent of the OIG's budget, increase. If confirmed, I will work to use
the OIG's budget as efficiently as possible by maximizing the
collection and analysis of data. I will also work with the SSA to try
to increase the OIG's budget in order to ensure adequate staffing
levels.
Question. Earlier this summer, President Trump signed an executive
order that removed Administrative Law Judges (ALJs) from the
competitive civil service, to be selected by agency leadership rather
than being independently vetted by the Office of Personnel Management.
How will you ensure that the independence and integrity of SSA's
ALJs are protected and free from any political influence?
Answer. I understand that the public must have confidence that ALJ
decisions are objective and fair and the ALJs are impartial arbiters.
If confirmed, should a member request that the OIG review ALJ hiring
practices and decisions to determine if they are objective, I will work
with OIG staff to consider the request.
Question. I am very concerned about the disability backlog and the
de facto SSA quota of 500-700 cases per year per ALJ. A judge handling
500 cases per year would take approximately 2.5 hours to adjudicate a
case--2.5 hours to read a file, hold a hearing, make a decision, and
then draft the decision. The ALJs have done the only case time study we
are aware of, and that study indicates it takes an ALJ an average of
7.5 hours to decide a case. My concern is SSA is putting quantity ahead
of quality.
If confirmed, will you work with Congress and other stakeholders to
determine the time required for an SSA ALJ to adjudicate a case and
abandon arbitrary quotas?
Answer. While the SSA OIG does not set quotas, if I am confirmed
and a member requests that the OIG review the time required for an SSA
AJ to adjudicate a case, I will work with the OIG and the member to
consider the request.
Question. The Social Security Act created the SSA as an independent
agency within the Federal Government charged with providing critical
benefits to recipients. Projected solvency and trust fund issues have
prompted many to advocate for privatization, reduction of benefits, and
delayed eligibility.
What does the independence of the agency mean to you?
Answer. Independence is at the core of the IG mission. I believe
that tone at the top is critical to this mission and intend to set a
strong example of personal independence for the SSA OIG. I plan to
ensure organizational independence by maintaining the appropriate
professional rapport with the Commissioner and agency officials while
making it clear that the IG's office must not be, or be perceived to
be, under management's control. I will ensure that the SSA OIG performs
all audits and investigations in compliance with applicable standards.
Question. How do you envision your responsibilities with regards to
Congress?
Answer. I understand the important oversight role of Congress and
believe that timeliness and transparency between the OIG and Congress
is key to helping Congress fulfill its oversight function. My highest
priority if I am confirmed as Inspector General of SSA will be to
ensure that Congress continues to have confidence in the integrity and
independence of the OIG. I will have regular communications with
Congresspersons and their staff, through meetings, telephone calls, and
other written communications.
Question. Can you commit to not taking any actions that, while
within the scope of your authority, would seek to build a case for
privatization and similar policies?
Answer. The Inspector General does not take policy positions and is
non-partisan. Therefore, I can commit that I will not take any position
related to privatization or similar policies.
Question. While provisions in specific retirement security bills do
not always impact the SSA's mission, I believe that we need to consider
retirement policy holistically. Social Security is a critical pillar of
many American's financial security in retirement. It's my hope that we
will be able to agree on helpful changes to retirement policy both in
this Congress and going forward.
Should you be confirmed, will you commit to working with Congress
to help provide expertise and move bipartisan retirement security
legislation?
Answer. If confirmed, I commit to providing expertise to Congress
if requested. While the OIG does not take policy positions, the OIG is
required to review existing and proposed legislation and regulations
for their impact on the economy and efficiency of the SSA's programs
and operations and the prevention of fraud and abuse. If confirmed, the
SSA OIG and I will perform that reviewing function diligently and
comprehensively.
Question. Federal law requires agencies to bargain in good faith
with the unions representing their workforce--an obligation that the
President cannot overturn by executive order. If confirmed, the Senate
expects you to follow the law.
Will you hold SSA to honor its collective bargaining agreements by
rescinding the unilateral changes SSA has made, and not make further
unilateral changes?
Answer. To my knowledge, the SSA OIG was not involved in the
agency's decisions regarding the collective bargaining agreement or any
changes made. If a member requests that the OIG review whether the
agency is in compliance with Federal labor laws, regulations, or court
orders, if confirmed, I will work with the OIG staff and the requesting
member to consider the request.
Question. Will you hold SSA to honor the terms of expired
collective bargaining agreements until reaching a new agreement, by
rescinding unilateral changes and not making further unilateral
changes?
Answer. To my knowledge, the SSA OIG does not get involved in
issues related to the negotiation of collective bargaining agreements.
If a member requests that the OIG review whether the agency is in
compliance with Federal labor laws, regulations, or court orders, if
confirmed, I will work with the OIG staff and the requesting member to
consider the request.
Question. If SSA and its workforce seek to negotiate a new
collective bargaining agreement, will you commit to bargaining in good
faith with the unions representing SSA's workforce, and do everything
in your power to reach an agreement without resorting to the Federal
Service Impasses Panel to impose terms?
Answer. It is my understanding that the SSA OIG does not get
involved in negotiations related to collective bargaining agreements.
If a member requests that the OIG review whether the agency is in
compliance with Federal labor laws, regulations, or court orders, if
confirmed, I will work with the OIG staff and the requesting member to
consider the request.
______
Questions Submitted by Hon. Sheldon Whitehouse
Question. SSA collects sensitive data on nearly every U.S. citizen,
and improper or unauthorized disclosure of this data has the potential
to negatively affect hundreds of millions of Americans.
Do you believe the OIG has the requisite skills and expertise to
perform the assigned tasks related to cybersecurity and information
technology?
Answer. I do not have enough information to know whether the OIG
has the requisite skills and expertise to effectively audit or
investigate cybersecurity and information technology issues at SSA. If
confirmed, I will work to assess the OIG's capabilities in this area as
I believe IT and cybersecurity at SSA are critical issues facing the
agency and the OIG must work with the agency to make improvements in
these areas.
Question. Do you view it as part of the IG's responsibilities to
ensure SSA's networks and data are adequately protected against theft
or breach, or merely to evaluate information security policies?
Answer. While the IG does not have the power to implement changes
at the SSA related to network and data protection, I view the IG's role
as more than merely evaluating security policies. I believe the IG
should assess the strengths and weaknesses of the IT infrastructure to
determine whether data is adequately protected, along with reviewing
data protection policies and procedures and compliance with them.
Question. In your view, is the IG the individual or organization
best suited to evaluate SSA's information security programs and
practices and recommend improvements to the agency, or to conduct
annual Federal Information Security Modernization Act (FISMA) audits?
Answer. I don't have enough information to assess the OIG's ability
to evaluate SSA's information security programs and practices. If
confirmed, I will work to determine if the OIG has the requisite
skillset to review information security programs and practices and the
annual FISMA audits. In order to make such a determination, I will work
with the CIGIE Information Technology Committee and work with other IGs
to evaluate best practices and necessary skillsets.
Question. Would these tasks be more effectively performed by an
outside organization that specialized in information technology and
cybersecurity?
Answer. If confirmed, I will assess whether an outside organization
would have more expertise related to evaluating SSA's information
security programs and practices. I will also evaluate what other IGs
are doing in this area. Because information security is a government-
wide issue, I would also want to consult with CIGIE's Information
Technology Committee and GAO regarding best practices.
Question. Recent FISMA audit reports have found that ``inadequate
access controls allowed programmers to have unmonitored access to
various systems functions, while other users had inappropriate access
to software.''
Do you view correction of these shortcomings as a responsibility of
OIG, or simply of SSA's leadership?
Answer. The OIG has responsibility to evaluate important issues
like this one and report on its findings. Ultimately, agency leadership
has the power and responsibility to implement changes in policy and
operations where warranted.
Question. How will you ensure that shortcomings identified in past
FISMA audits are rectified or mitigated?
Answer. The OIG can press agency management on making the
corrections. The OIG can continue to evaluate the issues and publish
reports to hold agency management accountable. The OIG can also bring
these issues to the attention of Congress to enable it to make
appropriate inquiries of agency management.
______
Prepared Statement of Gordon Hartogensis, Nominated to be
Director, Pension Benefit Guaranty Corporation
Thank you, Chairman Hatch, Ranking Member Wyden, and distinguished
members of the committee. It is an honor to appear before you today as
you consider my nomination to be Director of the Pension Benefit
Guaranty Corporation (PBGC).
I want to thank the President of the United States for nominating
me and Secretary Acosta for recommending me. I am here today with my
wife Grace and my two daughters Alexia and Penelope, and I also want to
thank them for their support.
My journey to this appointment began when I was a teenager. I grew
up in a
middle-class family in Rockville, MD and attended Montgomery County
public schools. My father served on the Rockville City Council and
taught me about the importance and honor in public service. I have fond
and proud memories of visiting city hall, attending public events, and
watching him solve the city's problems. I hope to have the chance to
give my family that same sense of pride.
If confirmed, I would be honored to dedicate myself to work towards
the goal of retirement security of more than 40 million Americans. The
PBGC is in a difficult financial position today. While simulations show
that the single-employer program is likely to improve during the next
decade, the multiemployer program continues to decline and has a net
deficit of $65 billion. Congress tried to address this multiemployer
deficit by enacting the Multiemployer Pension Reform Act (MPRA)
legislation in 2014. However, it has become clear that MPRA is not
enough and further congressional action is necessary.
Additionally, the PBGC has operational issues that must be
addressed. The
single-employer program manages a trust fund with $106 billion that
must be strategically invested to offset the program's liabilities. The
agency also administers
single-employer plans and provides financial assistance to insolvent
multiemployer plans that together cover millions of Americans who count
on these pensions. Finally, challenges with information technology at
the PBGC must be addressed, with a particular emphasis on
cybersecurity. The PBGC, as a repository for large amounts of personal
financial data, must be vigilant in protecting this information that is
all too often targeted by hackers seeking financial gain.
Given the large issues facing the agency, I believe that the PBGC
would benefit from the perspective of an outsider who can review these
issues with fresh eyes and who has a professional track record of
addressing problems with technological and financial savvy.
The multiemployer deficit will require a consensus-builder at the
head of the PBGC. The various stakeholders involved--employees,
retirees, unions, employers, Congress, and taxpayers--will all need to
be listened to as we attempt to develop solutions to the crisis. During
my days of building Petrolsoft with two friends from Stanford, I worked
with stakeholders within major energy companies to implement our
logistics systems. These included bringing together truck drivers,
dispatchers, terminal managers, franchisees, IT professionals, and
corporate management. There were many competing objectives that had to
be worked out to make our projects successful.
The PBGC will require a strong manager who can lead the various
teams within the agency. As an owner of two technology companies, I
have managed teams of salespeople, operations staff, financial
professionals, call centers, and technology groups. I understand how to
motivate and inspire employees as well as listen to and resolve their
concerns.
I have finance and investment experience that will be useful in
running the PBGC from an early career on Wall Street, from running two
companies, and from managing a private equity and angel investment
portfolio. At Credit Suisse, I learned how financial markets work. As
an owner of two companies that were acquired, I built financial models
to determine valuation and participated in Q&A sessions with Wall
Street analysts. Both companies had retirement plans that I helped to
merge into the plans of their acquirers. Managing an investment
portfolio, I evaluated growing companies for investment worthiness and
advised many on raising money or improving operations.
The PBGC will benefit from an experienced technology leader at the
helm. I have managed teams of developers and applied best practices
from industry standards. I have built systems that integrated with
other enterprise systems. I have worked to improve data security and to
leverage the cost benefits of cloud computing.
If confirmed as Director of the PBGC, I pledge to work with
Congress to ensure the pension security of all Americans. The
multiemployer plans deficit will require strong action from the
Director of this agency. The perspectives of all stakeholders in the
system will need to be understood. The growing crisis that is expected
to make the multiemployer program insolvent by 2025 must be handled
while, at the same time, our pension insurance system must be made
sustainable. This will require an active communication strategy from
the Director of the PBGC. Additionally, data must be used effectively
to both educate and uncover opportunities.
If confirmed, I would be honored to dedicate myself to work towards
the goal of retirement security of more than 40 million Americans. My
mother is living on a pension, and I understand the importance of
defined benefit pension plans, as they allow so many hard-working
Americans to retire with dignity and enjoy the fruits of a lifetime of
work. I would like nothing more than to follow in my father's footsteps
by giving back and applying the skills I have acquired in service to my
country.
Thank you for allowing me to appear today. I am happy to answer any
questions.
______
SENATE FINANCE COMMITTEE
STATEMENT OF INFORMATION REQUESTED
OF NOMINEE
A. BIOGRAPHICAL INFORMATION
1. Name (include any former names used): Gordon Hartogensis.
2. Position to which nominated: Director, Pension Benefit Guaranty
Corporation.
3. Date of nomination: May 14, 2018.
4. Address (list current residence, office, and mailing addresses):
5. Date and place of birth: June 17, 1970; Washington, DC.
6. Marital status (include maiden name of wife or husband's name):
7. Names and ages of children:
8. Education (list all secondary and higher education institutions,
dates attended, degree received, and date degree granted):
Thomas S. Wootton High School, September 1984-June 1988; high
school diploma.
Stanford University, September 1988-June 1992; BS computer
science, April 1993.
Columbia University, September 2014-December 2015; MS
technology management, February 2016.
9. Employment record (list all jobs held since college, including the
title or description of job, name of employer, location of work, and
dates of employment for each job):
Hartogensis Family Trust, Greenwich, CT.
Trustee, September 2011-present.
Managed assets, VC, angel investments.
Auric Technology, New York, NY.
CEO and co-founder, January 2004-August 2011.
Ran CRM software company.
Aspen Technology, Del Mar, CA.
Divisional vice president, June 2000-June 2002.
Managed Petrolsoft product line.
Petrolsoft Corporation, Del Mar, CA.
COO and principal, August 1993-June 2000.
Built supply chain software for oil companies.
Credit Suisse, New York, NY.
FX trader, July 1992-July 1993.
Traded USD/Yen.
10. Government experience (list any current and former advisory,
consultative, honorary, or other part-time service or positions with
Federal, State, or local governments held since college, including
dates, other than those listed above):
N/A.
11. Business relationships (list all current and former positions held
as an officer, director, trustee, partner (e.g., limited partners, non-
voting, etc.), proprietor, agent, representative, or consultant of any
corporation, company, firm, partnership, other business enterprise, or
educational or other institution):
N/A.
12. Memberships (list all current and former memberships, as well as
any current and former offices held in professional, fraternal,
scholarly, civic, business, charitable, and other organizations dating
back to college, including dates for these memberships and offices):
Belle Haven Land Company Homeowners Association, Greenwich, CT.
President, June 2013-June 2018 (term ends June 4, 2018).
Council on Foreign Relations, New York, NY.
Term member, June 2004-June 2009.
13. Political affiliations and activities:
a. List all public offices for which you have been a candidate
dating back to the age of 18.
N/A.
b. List all memberships and offices held in and services
rendered to all political parties or election committees,
currently and during the last 10 years prior to the date of
your nomination.
N/A.
c. Itemize all political contributions to any individual,
campaign organization, political party, political action
committee, or similar entity of $50 or more for the past 10
years prior to the date of your nomination.
Georgians for Isakson (Senator Johhny Isakson) $2,700 2015.
Georgians for Isakson (Senator Johhny Isakson) $2,700 2015.
Republican Party of Kentucky $10,000 2014.
Republican Party of Kentucky $10,000 2013.
Connecticut Republican SCC $250 2013.
McConnell Senate Committee '14 $2,500 2012.
McConnell Senate Committee '14 $2,500 2012.
Meek for Congress $2,250 2012.
Meek for Congress $250 2012.
Meek for Congress $250 2012.
Congressional Trust 2010 $2,000 2010.
Connecticut Republican SCC $1,000 2010.
Portman for Senate Committee $2,400 2010.
Tom Foley for Senate $1,000 2009.
Republican Party for Kentucky $10,000 2008.
Republican Party for Kentucky $10,000 2007.
McConnell Majority Committee $4,600 2007.
14. Honors and awards (list all scholarships, fellowships, honorary
degrees, honorary society memberships, military medals, and any other
special recognitions for outstanding service or achievement received
since the age of 18):
Thomas S. Wootton High School valedictorian 1988.
15. Published writings (list the titles, publishers, dates, and
hyperlinks (as applicable) of all books, articles, reports, blog posts,
or other published materials you have written):
N/A.
16. Speeches (list all formal speeches and presentations (e.g.,
PowerPoint) you have delivered during the past 5 years which are on
topics relevant to the position for which you have been nominated,
including dates):
N/A.
17. Qualifications (state what, in your opinion, qualifies you to
serve in the position to which you have been nominated):
For 25 years I have been engaged in business activities that
have included finance management, risk evaluation, problem-
solving, negotiation, foreign exchange, and responsibility for
the management of large investment portfolios. I have started
up successful companies and sold companies. I have done
consensus- and team-building and worked with large
organizations. I believe this experience provides the necessary
background to lead the PBGC, a position that requires sound
financial decision-making and the ability to work with
corporate leaders to provide for the pension security of
American workers.
B. FUTURE EMPLOYMENT RELATIONSHIPS
1. Will you sever all connections (including participation in future
benefit arrangements) with your present employers, business firms,
associations, or organizations if you are confirmed by the Senate? If
not, provide details.
Yes.
2. Do you have any plans, commitments, or agreements to pursue
outside employment, with or without compensation, during your service
with the government? If so, provide details.
No.
3. Has any person or entity made a commitment or agreement to employ
your services in any capacity after you leave government service? If
so, provide details.
No.
4. If you are confirmed by the Senate, do you expect to serve out
your full term or until the next presidential election, whichever is
applicable? If not, explain.
Yes.
C. POTENTIAL CONFLICTS OF INTEREST
1. Indicate any current and former investments, obligations,
liabilities, or other personal relationships, including spousal or
family employment , which could involve potential conflicts of interest
in the position to which you have been nominated.
Please see my ethics agreement accompanying my financial
disclosure report.
2. Describe any business relationship, dealing, or financial
transaction which you have had during the last 10 years (prior to the
date of your nomination), whether for yourself, on behalf of a client,
or acting as an agent, that could in any way constitute or result in a
possible conflict of interest in the position to which you have been
nominated.
N/A.
3. Describe any activity during the past 10 years (prior to the date
of your nomination) in which you have engaged for the purpose of
directly or indirectly influencing the passage, defeat, or modification
of any legislation or affecting the administration and execution of law
or public policy. Activities performed as an employee of the Federal
government need not be listed.
N/A.
4. Explain how you will resolve any potential conflict of interest,
including any that are disclosed by your responses to the above items.
Please see my ethics agreement accompanying my financial
disclosure report. In the event a potential conflict of
interest arises, I would seek out and follow the advice of the
agency ethics counsel.
5. Two copies of written opinions should be provided directly to the
committee by the designated agency ethics officer of the agency to
which you have been nominated and by the Office of Government Ethics
concerning potential conflicts of interest or any legal impediments to
your serving in this position.
See item 4.
D. LEGAL AND OTHER MATTERS
1. Have you ever been the subject of a complaint or been
investigated, disciplined, or otherwise cited for a breach of ethics
for unprofessional conduct before any court, administrative agency
(e.g., an Inspector General's office), professional association,
disciplinary committee, or other ethics enforcement entity at any time?
Have you ever been interviewed regarding your own conduct as part of
any such inquiry or investigation? If so, provide details, regardless
of the outcome.
No.
2. Have you ever been investigated, arrested, charged, or held by any
Federal, State, or other law enforcement authority for a violation of
any Federal, State, county, or municipal law, regulation, or ordinance,
other than a minor traffic offense? Have you ever been interviewed
regarding your own conduct as part of any such inquiry or
investigation? If so, provide details.
No.
3. Have you ever been involved as a party in interest in any
administrative agency proceeding or civil litigation? If so, provide
details.
No.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? If so, provide details.
No.
5. Please advise the committee of any additional information,
favorable or unfavorable, which you feel should be considered in
connection with your nomination.
N/A.
E. TESTIFYING BEFORE CONGRESS
1. If you are confirmed by the Senate, are you willing to appear and
testify before any duly constituted committee of the Congress on such
occasions as you may be reasonably requested to do so?
Yes.
2. If you are confirmed by the Senate, are you willing to provide
such information as is requested by such committees?
Yes.
______
Questions Submitted for the Record to Gordon Hartogensis
Questions Submitted by Hon. Ron Wyden
Question. Do you believe that broadening the PBGC's premium base or
other policies that solely seek to ensure the solvency of the PBGC's
insurance program for multiemployer pension plans by raising premiums
are a complete solution to the solvency crisis that some multiemployer
pension plans--and the workers and retirees who participate in those
plans--are facing?
Answer. I have not proposed a comprehensive solution. There is no
easy solution to insolvent multiemployer plans. Congress has a critical
role to play in the solution to the multiemployer funding crisis. There
are many options that need to be examined. If confirmed, I look forward
to working with the Joint Select Committee on Solvency of Multiemployer
Pension Plans, Congress, and the President as solutions are proposed.
Further, if I am confirmed, I look forward to fully and faithfully
implementing any solution that Congress enacts that is within the
jurisdiction of the PBGC.
Question. Do you believe that workers and retirees currently bear
the economic burden of PBGC premiums? Please explain your answer.
Answer. Under ERISA sections 4006 and 4007, plans covered by title
IV must pay premiums to PBGC. Premium rates are set by law. If
confirmed, I look forward to working with the Joint Select Committee on
Solvency of Multiemployer Pension Plans, Congress, and the President on
proposals regarding PBGC premiums.
Question. If you are confirmed, do you pledge to make PBGC
technical staff available to members of Congress and their staff
(regardless of the political affiliation) for the purpose of
formulating and evaluating pension proposals?
Answer. Yes. If confirmed, I will make PBGC technical staff
available to members of Congress and their staff (regardless of the
political affiliation). PBGC staff have great knowledge, and their
technical expertise will be helpful to members and staff.
______
Questions Submitted by Hon. Chuck Grassley
Question. The next Director of the Pension Benefit Guaranty
Corporation (PBGC) will be coming into a dire situation. More than 100
multiemployer plans are in critical status and expected to become
insolvent within the next 20 years. To make matters worse, the PBGC
multiple employer insurance program is projected to be insolvent by
2025. In such a scenario, many retirees, including many in my home
State, could hope at best to receive pennies on the dollar in terms of
a PBGC benefit should their pension plan fail. No one wants to see this
happen. As PBGC Director, how would you see your role in assisting
Congress in developing solutions to address troubled plans and
strengthen the PBGC multiemployer pension program? Are there any
particular experiences or insights you think you will bring to the job
that will be beneficial to this discussion?
Answer. If confirmed, I will work with the professionals at the
PBGC, the Joint Select Committee on Solvency of Multiemployer Pension
Plans, Congress, the President, the board of directors, and the diverse
array of stakeholders, such as labor unions, employers, and pension
managers, as solutions are proposed. The PBGC's Pension Insurance
Modeling System (PIMS) can produce simulations that can assist the
Joint Select Committee on Solvency of Multiemployer Pension Plans to
evaluate proposals both in isolation and in combination. Ideas can be
evaluated based on cost and sustainability and the data analytics
capability of the PBGC can bring some objectivity to the process. I
will fully and faithfully work to ensure that the PBGC provides any
technical assistance requested.
Question. One plan put forward and supported by many retirees is
the Butch Lewis Act. This plan would provide a combination of low-
interest loans and financial assistance to troubled plans. Some of the
proponents of this plan have suggested it could be implemented at less
cost than shoring up the PBGC's multiemployer pension benefit program
directly. Is your understanding that passage of a proposal like the
Butch Lewis Act would solve the PBGC's solvency issues or would the
PBGC's multiemployer program still require additional funds to remain
solvent over the long term?
Answer. If confirmed, I look forward to being briefed on the
legislation, consulting with PBGC staff, and reviewing the data
analytics to know if this proposal would be sufficient to address the
solvency problem. If confirmed, one of my top priorities would be to
provide objective data to Congress on the cost and sustainability of
all proposed solutions to the multiemployer crisis.
Question. Oversight of pension plans and enforcement of the
Employee Retirement Income Security Act (ERISA) is shared between
multiple agencies and departments, including the PBGC. What is your
understanding of PBGC's role in ensuring pension plan assets are not
put at risk by decisions of an employer sponsor or plan administrator
that may not be in the best interest of the beneficiaries?
Answer. A key tenet of the PBGC's mission is to support defined
benefit pension plans on behalf of the beneficiaries. As an insurer,
the PBGC evaluates decisions by employer sponsors or plan
administrators according to how such decisions impact its overall
liabilities. The PBGC has a responsibility to look after the interests
of the plan beneficiaries regardless of how its liabilities are
impacted and should work with all other regulating agencies and
departments to ensure that workers and retirees are protected.
______
Questions Submitted by Hon. Maria Cantwell
multiemployer plans
Question. Today, the PBGC insures more than 10 million people who
are covered in more than 1,400 multiemployer pension plans. As economic
conditions have improved, the overall health of these plans has also
improved. However, about 10 percent of plans, with about 1 million
participants, are in ``critical and declining'' status.
This includes several multiemployer pension plans with Washington
participants or retirees:
The Bakery and Confectionery Union Pension Fund,
The Western States Office and Professional Employees,
Boilermaker-Blacksmith National Pension Trust, and
International Association of Machinists and Aerospace
workers.
The PBGC currently provides financial assistance to 72
multiemployer plans covering over 63,000 participants currently
receiving benefits, with a maximum benefit of $12,870 per year. This
often amounts to a cut for retirees, compared to their earned pension
benefits.
The PBGC's multiemployer program is likely to run out of money by
the end of fiscal year 2025.
What is your plan to help ensure the solvency of these
multiemployer pension plans and protect the earned retirement benefits
for these workers and retirees?
Answer. Unfortunately, there is no easy solution to insolvent
multiemployer plans. Workers have worked hard for pensions that they
reasonably expect upon retirement. Congress plays a critical role in
reaching a solution. If confirmed, I look forward to working with the
Joint Select Committee on Solvency of Multiemployer Pension Plans and
Congress to provide technical support as requested. If confirmed, I
will fully and faithfully implement any solution enacted by Congress
within the jurisdiction of my leadership.
Please see continuation of answer below.
Question. What is your plan for addressing the financing challenges
faced by the PBGC multiemployer pension program?
Answer. There are many facets to the problems confronting defined
benefit pension plans. Congress plays a critical role in addressing the
financing challenges faced by the PBGC multiemployer pension program.
If confirmed, I intend to provide technical assistance, as requested,
to the Joint Select Committee on Solvency of Multiemployer Pension
Plans and Congress, as Congress works to solve issues regarding
critical and declining plans, and those involving the structural
problems of orphan liabilities and withdrawal liability.
Question. What are the different challenges facing the PBGC
multiemployer pension program compared to the PBGC single-employer
program?
Answer. The PBGC multiemployer program faces many structural
challenges that don't exist within the single-employer program. For
example, the problems of orphan liabilities and withdrawal liabilities
only exist within the multiemployer program. Individual company
bankruptcies impact other companies connected through multiemployer
plans and can create what is called a ``contagion effect.'' Similarly,
downturns in one industry can cause instability in other related
industries. Therefore, solutions to structural problems in the
multiemployer space must be holistic and comprehensive.
pbgc long-term solvency
Question. At the end of Fiscal Year 2017, PBGC had a total deficit
of $76.0 billion. The single-employer program contributes $10.9 billion
to the deficit, and the multiemployer program contributes $65.1 billion
to the deficit. The PBGC multiemployer pension program is projected to
run out of money by 2025. The single-employer plan is projected to
remain solvent over the next 10 years.
Some have suggested raising premiums on employers and cutting
retirement benefits for current and future retirees as a way to address
the multiemployer insolvency issue. Raising premiums on employers will
result in reduced retirement benefits for current employees and
retirees--many of whom may not be able to go back to work and make up
the lost income from the pension benefit cuts. I believe we should
protect earned pension benefits for our workers and retirees.
Given the structural deficits facing the PBGC, what are your plans
for restoring the PBGC to long-term structural solvency?
Answer. Unfortunately, there is no easy solution to insolvent
multiemployer plans. Workers have worked hard for pensions that they
reasonably expect upon retirement. Congress plays a critical role in
reaching a solution. If confirmed, I look forward to working with the
Joint Select Committee on Solvency of Multiemployer Pension Plans and
Congress to provide technical support as requested. If confirmed, I
will fully and faithfully implement any solution enacted by Congress
within the jurisdiction of my leadership.
Question. What other strategies could we use to address the long-
term solvency of our Nation's multiemployer plans and of the PBGC?
Answer. Beyond addressing the structural deficit, I believe we
could look for opportunities to improve the robustness of the data
analytics within the PIMS system.
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Questions Submitted by Hon. John Thune
Question. You stated in your testimony that the MPRA is
insufficient to address the impending multiemployer pension crisis.
What changes would you support, or what direction should the Joint
Select Committee on Solvency of Multiemployer Pension Plans take?
Answer. Proposals to address these problems should be fully
evaluated using appropriate economic modeling and data analysis. I do
not believe there is one easy fix. It is possible that the solution to
this pension crisis will be a combination of things. I also believe
this should be a collaborative process. If confirmed, I will work
closely with the Joint Select Committee on Solvency of Multiemployer
Pension Plans as well as with Congress, the President, and
stakeholders.
Question. You correctly identify the obligation of the PBGC to
protect the financial data of tens of millions of Americans. Can you
expand on your experience with ensuring cybersecurity in the private
sector and how you would apply that if confirmed?
Answer. I have had significant experience in the technology sector,
as an owner of two software companies and as a senior level manager in
a NASDAQ-traded technology firm. In all cases, I had significant
responsibility in overseeing information technology operations.
Cybersecurity was always a critical issue. The PBGC, as in all other
Federal agencies dealing with large amounts of personal data, must be
constantly attuned to cyber-threats as well as to ways to prevent
breaches.
If confirmed, my approach to ensuring proper cybersecurity
procedures at the PBGC would be to first meet with the Chief
Information Officer, the Risk Management Officer, and the PBGC
Inspector General, to better understand the PBGC's specific challenges.
There are other weaknesses that are commonly found across large
organizations. For example, I would ask to review the policies of
password protection and software maintenance. Weak password policies
are often the source of security breaches and can be strengthened by
measures such as requiring two factor authentication, regular password
updates, and strong password character requirements. If it is not
already implemented, it is worth exploring cybersecurity strategies
that are classified by the name ``active defense.'' These are dynamic
strategies that work to significantly raise costs and level of
difficulty for hackers and cyber-adversaries. Software maintenance is
also extremely important since known security flaws in software that
are not patched in a timely manner can often provide easy access for
hackers. Finally, I would make sure that phishing schemes and
impersonation scams are properly anticipated. It is especially true in
the older demographic populations that hackers and criminals will
attempt to gather personal information via falsified emails or fake
phone calls which can be used to withdraw money or to gain access to
online accounts. It often requires a proactive communications strategy
as well as a well-conceived plan for authentication to prevent such
attacks.
Question. The MPRA classifies multiemployer plans into four funding
status categories ranging from the ``deep red'' critical and declining
status to ``green'' status. Are these categories and the data used to
determine them sufficient for PBGC's considerations?
Answer. The accuracy and usefulness of the four categories depends
largely upon the criteria used in the classification. Two factors in
particular have an especially large impact--time horizon and discount
rate. As a general principle, I am a strong proponent of transparency
and believe that the models should reflect reality as closely as
possible. However, changes to these variables will impact funding
requirements, and sudden shocks could destabilize a very fragile
multiemployer pension system. Therefore, if confirmed, I would
recommend moves toward greater transparency in the warning systems but
also advise that any changes be made prudently.
Question. How might you apply your background in data analytics to
uncover new solutions to address the growing number of plans facing
insolvency?
Answer. If confirmed, I would hope to leverage the PIMS forecasting
system to evaluate the current proposals from the Joint Select
Committee on Solvency of Multiemployer Pension Plans based on cost and
sustainability. Also, I would look for ways to evaluate ideas in
combination so that they could be viewed along with existing proposals.
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Questions Submitted by Hon. Tim Scott
credit rating agencies
Question. There is little dispute that the lack of due diligence by
the major credit ratings firms, Standard and Poor's, Moody's, and
Fitch, exacerbated the 2008 financial crisis. One of the few provisions
of the Dodd-Frank Act that had broad bipartisan support was section
939A, which required all Federal agencies to remove credit rating
agency use requirements in their regulations. Many State insurance
regulators have since followed suit.
Unfortunately, there are many large pension funds that continue to
require credit ratings by specific ratings firms by name as a threshold
for fixed-income securities purchases in their investment guidelines.
In some of the more absurd situations, major pension funds were suing a
certain ratings firm for its negligence during the financial crisis and
still requiring the use of ratings from the same firm.
It would seem that when there is better research by a ratings firm
around a specific potential securities offering than that provided by
another named ratings firm, the PBGC should want the pension funds it
guarantees to use the better research and not just check the box with
the firm named in its investor guidelines.
Please answer the following with specificity.
As the guarantor of last resort for the largest pension funds,
shouldn't the PBGC be using all of the authority it has to ensure that
they are operated in a safe and sound manner when it comes to the use
of credit rating agencies?
Answer. If confirmed, I look forward to a briefing regarding PBGC's
authority over the use of credit rating agencies. I agree that PBGC
should be using all of its authority to ensure that pension funds are
being operated in a safe and sound manner.
Question. Will you explore your authority to direct pension funds
to open their investor guidelines to allow investments with ratings
from any SEC-approved Nationally Recognized Statistical Ratings
Organizations?
Answer. Yes. If confirmed, I look forward to a briefing regarding
the PBGC's authority on investor guidelines.
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Questions Submitted by Hon. Sheldon Whitehouse
Question. The Multiemployer Pension Reform Act allows the trustees
of underfunded multiemployer plans to propose cutting retiree benefits
as a way to restore the long-term solvency of these plans. I am very
concerned about efforts to cut retiree benefits as a way to stabilize
pension plans. Retirees have planned for their futures based on these
benefits, and maintaining them seems to me to be a matter of simple
fairness. Do you agree with policies like those in MPRA that allow
plans to cut retiree benefits?
Answer. It is important to support the ability of retirement plans
to honor commitments made to working Americans. I believe early warning
systems to correct funding levels and maintain long-term solvency
before a plan reaches such a dire stage should be in place or improved
if they are failing to prevent the need for benefit cuts.
Question. In your opening statement, you said that the
Multiemployer Pension Reform Act ``is not enough and further
congressional action is necessary.'' Do you believe further
congressional action should include allowing pension plans more
flexible authority to cut retiree benefits, or should this authority be
rolled back and replaced with other stabilizing measures? If the
latter, what types of authorities would you like to see Congress allow?
Answer. It is important to support the ability of retirement plans
to honor commitments made to working Americans. A number of options
should be examined, and their impacts thoroughly considered, especially
the effect on retirees. The best solution may be a combination of ideas
rather than only an extension of current policy.
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Prepared Statement of Hon. Orrin G. Hatch,
a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah)
offered the following opening statement at a hearing to consider Gail
Ennis to be Social Security Administration (SSA) Inspector General and
Gordon Hartogensis to be Director of the Pension Benefit Guaranty
Corporation (PBGC).
This morning we are meeting to discuss the nomination of Gordon
Hartogensis to be the director of the Pension Benefit Guaranty
Corporation and Gail Ennis to be the Inspector General for the Social
Security Administration or the SSA.
Mr. Hartogensis, if confirmed, you will serve during one of the
most challenging periods the PBGC has ever faced. The Congressional
Budget Office projects that the PBGC's multiemployer insurance system
will exceed resources available to pay claims by $45 billion. CBO also
projects that, under current law, the PBGC multiemployer program will
become insolvent by 2025. These sobering statistics clearly understate
the challenges the PBGC faces, particularly in regards to multiemployer
pension plans.
Analyzing pension plans and challenges faced by various plans,
including those that the PBGC deals with or may deal with in the
future, involves often-complicated computational and forecasting
abilities, understanding, and skills. It pleases me to learn that Mr.
Hartogensis has a deep background in many complex analytical skills
that will be useful in the analyses he will, should he be confirmed,
have to review and assess. My understanding is that Mr. Hartogensis, in
his work in the private sector, successfully made use of his analytical
skill set in analyzing industry and economic trends, as well as
industry-specific projections of future possible economic and industry
outcomes. As well, his skill set includes, as I understand it,
abilities to characterize, estimate, and assess uncertainties
surrounding projections of future outcomes. Those skills are critical
for the types of analyses performed in the pension space generally,
performed at the PBGC, and assessed at the PBGC.
Once again, this is a sobering moment for the pension system,
especially multiemployer pensions. Working to help ensure promises of
lifetime retirement income and security in general is challenging, and
those challenges are certainly present at the PBGC.
I have confidence that the analytical skill set possessed by Mr.
Hartogensis will, should he be confirmed, be of high value at the PBGC
in helping ensure secure retirements for a large number of hardworking
Americans.
Ms. Ennis, as I'm sure you know, the Office of the Inspector
General at the Social Security Administration has several
responsibilities, all aimed at promoting economy, efficiency, and
effectiveness within the administration of SSA programs and operations.
The Office of Inspector General is also responsible for preventing and
detecting instances of fraud, waste, and abuse in these programs.
Moving forward, should Ms. Ennis be confirmed, there will be plenty
of work to do. The SSA continues to struggle in its efforts to
modernize its information technology, including a high-cost, multi-year
attempt to update its disability case processing system. And, under the
Obama administration, in apparent attempts to pressure congressional
appropriators, political appointees put forward budget numbers which
neither I nor SSA itself have been able to corroborate, despite years
of trying.
To clarify, that means budget numbers were apparently deliberately
massaged to influence congressional funding decisions. And, until
recently, SSA's responsiveness to Republicans in the Senate left a lot
to be desired. To this day, we still have not received field office
waiting time data from the agency. It sure is hard to have an informed
discussion about how SSA is doing without even knowing how long people
are waiting at SSA offices in Eugene, in Salt Lake City, or anywhere
else for that matter. These, among other issues, require an effective
Inspector General, and I believe that Ms. Ennis is well-equipped to be
just that. Perhaps most relevant to this committee, the Inspector
General is required to inform both SSA and Congress about agency
problems and deficiencies. Once identified, the Inspector General also
recommends corrective action in order to further improve the efficiency
of the agency.
Ms. Ennis's legal skills that she has built over her career
directly relate to the Inspector General position she has been
nominated for. Her experience managing large teams, finding fraud,
building reporting structures, and more will help assist her in this
new role. I believe you will remain committed to acting closely with
both the administration and the Justice Department, but also acting
independently when needed. Thank you for your willingness to serve.
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Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
The Finance Committee meets this morning to consider two
nominations: Gail Ennis to serve as Inspector General of the Social
Security Administration, and Gordon Hartogensis to serve as the
Director of the Pension Benefit Guaranty Corporation.
Let me start my remarks with Ms. Ennis's nomination. Here's the
bottom line on why Social Security's Inspector General is such an
important role: it is absolutely essential that the Federal Government
wring value out of every last dollar that goes into Social Security.
The Social Security Inspector General plays a major part in identifying
ways that the program can be improved, where it has misstepped, and how
the Congress can strengthen it with legislative changes. That, in my
view, ought to be a bipartisan cause.
It has been over 2 years since Social Security has had a confirmed
IG--which is too long, in my book. So we're fortunate to have a nominee
before the committee today.
Ms. Ennis comes from outside the world of social insurance, but she
has a significant background in auditing financial institutions and
working with government agencies. In my view, sometimes it's a good
idea to bring in somebody with a fresh eye to administration jobs like
this one.
If confirmed, Ms. Ennis will face a lot of challenging issues, from
the deterioration of service at SSA, to the disability backlog, to IT
upgrades. This committee will count on her to work with us as we
continue to make improvements to the program, and she and her team will
need to listen closely to whistleblowers who come forward with
information about where problems have come up.
But setting aside the specifics of this nomination for a moment,
there's also going to be a challenge for the Congress in the months and
years ahead. The IG's office recently put out an eye-opening report
about the huge increase in work waiting to be done at SSA's Program
Service Centers. Those centers perform some of the most basic functions
at SSA that are essential to maintaining beneficiary records. Notably,
the IG's report cited budget constraints as part of the problem. For
several years in our annual Views and Estimates letter, the chairman
and I have advocated that SSA receive the budget it needs to get the
job done. We can't expect world-class service when the Congress
provides a third-class budget.
Next, Mr. Hartogensis's nomination to lead the PBGC. In short, the
PBGC is facing serious challenges. This is an issue that Chairman Hatch
and Senator Brown know very well, and they're hard at work on solutions
on a bipartisan basis.
As many as 1.5 million Americans are enrolled in multiemployer
pension plans that could become insolvent in the next few decades. If
that happens, it'll bankrupt the PBGC's insurance program for all
multiemployer pensions, affecting all who are enrolled. So this crisis
is not some academic matter--it's a question of whether millions of
Americans will be able to get by in old age.
Mr. Hartogensis has had a successful career in the private sector,
but he doesn't have experience in policy dealing with pensions or
retirement security. He's got the right political connections to be a
nominee in this particular Senate, but he has no record from which this
committee can draw conclusions about what he'd do as the head of PBGC.
Again, I don't necessarily believe nominees ought to be
disqualified just because they come to administration positions from
the outside. However, Mr. Hartogensis will need to provide answers
today with actual substance about how he wants to tackle the challenges
PBGC is facing.
Let me thank Ms. Ennis and Mr. Hartogensis for joining the
committee today. I'll have questions for both on a variety of issues,
and I look forward to hearing their answers.