[Senate Hearing 118-772]
[From the U.S. Government Publishing Office]
S. Hrg. 118-772
THE PRESIDENT'S FISCAL YEAR 2025
SOCIAL SECURITY ADMINISTRATION BUDGET
=======================================================================
HEARING
before the
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
MARCH 20, 2024
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
______
U.S. GOVERNMENT PUBLISHING OFFICE
62-929--PDF WASHINGTON : 2026
COMMITTEE ON FINANCE
RON WYDEN, Oregon, Chairman
DEBBIE STABENOW, Michigan MIKE CRAPO, Idaho
MARIA CANTWELL, Washington CHUCK GRASSLEY, Iowa
ROBERT MENENDEZ, New Jersey JOHN CORNYN, Texas
THOMAS R. CARPER, Delaware JOHN THUNE, South Dakota
BENJAMIN L. CARDIN, Maryland TIM SCOTT, South Carolina
SHERROD BROWN, Ohio BILL CASSIDY, Louisiana
MICHAEL F. BENNET, Colorado JAMES LANKFORD, Oklahoma
ROBERT P. CASEY, Jr., Pennsylvania STEVE DAINES, Montana
MARK R. WARNER, Virginia TODD YOUNG, Indiana
SHELDON WHITEHOUSE, Rhode Island JOHN BARRASSO, Wyoming
MAGGIE HASSAN, New Hampshire RON JOHNSON, Wisconsin
CATHERINE CORTEZ MASTO, Nevada THOM TILLIS, North Carolina
ELIZABETH WARREN, Massachusetts MARSHA BLACKBURN, Tennessee
Joshua Sheinkman, Staff Director
Gregg Richard, Republican Staff Director
(II)
C O N T E N T S
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OPENING STATEMENTS
Page
Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee
on Finance..................................................... 1
Crapo, Hon. Mike, a U.S. Senator from Idaho...................... 3
ADMINISTRATION WITNESS
O'Malley, Hon. Martin, Commissioner, Social Security
Administration, Baltimore, MD.................................. 5
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Crapo, Hon. Mike:
Opening statement............................................ 3
Prepared statement........................................... 39
O'Malley, Hon. Martin:
Testimony.................................................... 5
Prepared statement........................................... 40
Responses to questions from committee members................ 49
Wyden, Hon. Ron:
Opening statement............................................ 1
Prepared statement........................................... 72
Communications
AARP............................................................. 75
American Federation of Government Employees, AFL-CIO............. 77
Center on Capital & Social Equity................................ 78
Center for Fiscal Equity......................................... 87
Hatcher, Daniel L................................................ 92
National Committee to Preserve Social Security and Medicare...... 99
Social Security Administration Inspector General Gail S. Ennis... 101
(III)
THE PRESIDENT'S FISCAL YEAR 2025
SOCIAL SECURITY ADMINISTRATION BUDGET
----------
WEDNESDAY, MARCH 20, 2024
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 2:35 p.m.,
in Room SD-215, Dirksen Senate Office Building, Hon. Ron Wyden
(chairman of the committee) presiding.
Present: Senators Menendez, Carper, Cardin, Brown, Bennet,
Casey, Whitehouse, Hassan, Cortez Masto, Warren, Crapo,
Grassley, Cassidy, Lankford, Daines, Tillis, and Blackburn.
Also present: Democratic staff: Sam Conchuratt,
Professional Staff Member; Joshua Sheinkman, Staff Director;
and Tiffany Smith, Deputy Staff Director and Chief Counsel.
Republican staff: Becky Cole, Chief Economist; Gregg Richard,
Staff Director; and Lara Rosner, Social Security Policy
Advisor.
OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM
OREGON, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. The Finance Committee will come to order.
Today the Finance Committee meets to discuss the Biden
administration's commitment to protecting and strengthening
Social Security. Commissioner O'Malley, thank you for joining
us.
Commissioner, I think it would be appropriate to begin to
say, you know, you've barely got there, and you are still
finding your way around the offices, and you have taken more
concrete action to help seniors and improve operations in your
early administration than the vast majority of your
predecessors.
At your confirmation hearing, we pressed you on the urgent
need to address this scourge of overpayments. They have been
forcing already struggling seniors and folks of modest income
to pay back thousands, sometimes even tens of thousands of
dollars, because of a mistake that was no fault of their own.
No American who lives on a fixed income, struggling to balance
the grocery bill against rent and utilities, can afford to pay
a large bill back to the government. Now, it's appropriate just
to have a little history of this as we get into talking about
this with you.
A few years ago, I wrote a law requiring the Social
Security Administration to modernize its systems with one kind
of lodestar, and that was to prevent overpayments. For years,
Social Security dragged its feet on implementing these changes
that I mandated by law. Many of the recent problems with
overpayments that we have all been hearing about in our States
could have been prevented if the agency had implemented these
changes sooner.
Now, several weeks after you were confirmed, you said what
you were going to be about was bringing Social Security into
the 21st century, and you said you were going to get these new
systems up and running this year. And, colleagues, what this
does is, it significantly streamlines the Social Security
program for all those folks, all those seniors that we
represent, because the changes allow the agency, for example,
to get wage data quickly and efficiently and accurately, and
that is, front and center, a requirement to prevent
overpayments. You promised swift action, and you are already
starting to show real progress, not only on big pressing
problems like overpayments, but you have not shied away from
diving right into some of the smaller fixes that Social
Security needs to have.
Listening to employees and seniors, you're making concrete
changes that in my view--and, Mr. Commissioner, as you know, I
go back with seniors to my days when I was director of the Gray
Panthers and I had a full head of hair and rugged good looks
and all that. And you are making changes that are going to make
it easier for seniors to sign up for Medicare and improve
customer service.
And you have said that if there is a problem, no matter
what size it is, you are going to go out there and focus on
fixing and improving service, getting checks out the door
faster to the older people who need them.
In my view, when it comes to these challenges, there is a
clear choice to make, and you and I have talked about that. We
either let a broken system just continue to upend the lives of
older people, or you can tackle the problems head-on. As far as
I can tell, you are taking the head-on option, going after
these things aggressively from the start.
Now let's talk for a moment about the President's budget.
He released his budget and reaffirmed his commitment to
protecting seniors and Social Security, and that he would
oppose any cuts to Americans' hard-earned benefits. Now, that
is quite a difference to what the Republican front-runner for
the presidential nomination has said.
On the same day, on national television, the Republican
front-runner said there was a lot that could be done on
Americans' hard-earned Social Security and Medicare benefits
``in terms of cutting.'' So that, I gather, is his platform,
because that is what he said: cut the programs; let everybody
else pick up the pieces. Obviously, Social Security is on top
of everybody's mind, with respect to protecting the program,
and particularly making sure that it is solvent.
I intend to work closely with my colleagues to ensure that
we protect Americans' hard-earned benefits for decades to come.
A piece of that, Mr. Commissioner, will be making sure
billionaires and the ultrawealthy start paying their fair
share.
As we start this discussion, let's be clear on this. I want
everybody to know I am a capitalist. I want people to be
successful. That is the American dream. We want people to do
well; we want people to be successful.
We also believe that it is important that everyone,
including billionaires, pay their fair share. My billionaires
tax proposal has close to 20 Senators as cosponsors now, and it
is going to start that effort to make sure the ultrawealthy pay
the taxes they owe, and help close the gap to ensure seniors
can depend on the lifeline of Social Security.
One last point--just a quick step down memory lane,
colleagues. The Finance Committee has not held a hearing
specifically on oversight of the Social Security budget in over
a decade. We said when you were nominated, Mr. Commissioner, we
were going to change that. You are giving us the opportunity to
do it today.
We can get an update on the Biden administration's efforts
to address ongoing challenges within Social Security, and we
can also hear from you about the changes that you are focused
on making in the program in the days ahead that make for a more
solvent program and protect what we consider to be the Social
Security guarantee.
President Biden's proposed budget for the coming year shows
his commitment to the Social Security guarantee, to protecting
seniors' hard-earned benefits and making sure the program has
the resources it needs to improve customer service and better
serve the American people.
Thanks for helping to get things back on track.
Senator Crapo?
[The prepared statement of Chairman Wyden appears in the
appendix.]
OPENING STATEMENT OF HON. MIKE CRAPO,
A U.S. SENATOR FROM IDAHO
Senator Crapo. Thank you, Senator Wyden, and thank you,
Commissioner O'Malley, for appearing before the committee this
afternoon to discuss the President's Fiscal Year 2025 budget
for the Social Security Administration. I too appreciate your
efforts, the commitment that you made to us, and the efforts
you are undertaking to strengthen and restore our Social
Security Administration.
Commissioner O'Malley, during your nomination hearing, you
committed to making customer service improvements at the SSA a
top priority. During today's hearing, I look forward to hearing
more about that: your approach to addressing SSA's ongoing
challenges with wait times for the national 800 number,
processing times for disability decisions and improper
payments, the data and metrics you are looking at to evaluate
your progress, and how the Biden administration's budget
request for the SSA supports these efforts.
Average wait times for the national 800 number have ticked
down slightly over the last few months, but still remain about
30 minutes. After years of delays, the Social Security
Administration has successfully transitioned its national 800
number to a new phone service platform. While the budget
highlights the expected benefits of this new phone system, the
Social Security Administration must do more to ensure that
future information-technology projects make responsible use of
taxpayer dollars by being delivered on time and on budget.
Americans across the country continue to wait far too long
to receive a disability decision from the SSA. The President's
budget proposes addressing these wait times through hiring and
retaining State Disability Determination Services employees,
and seeking process efficiencies, including improved
technology.
The budget also highlights a proposed rule the agency
claims would improve its disability adjudication process by
reducing the number of years of past relevant work SSA
considers when making disability decisions. While SSA's
disability rules do need revisiting, simplification should not
always result in more mandatory spending.
SSA should also focus on updating the outdated occupations
list used in making disability decisions, to ensure the correct
applicants are receiving benefits. The Social Security
Administration has already spent a substantial amount of time
and resources on this update, and I urge you to stick to your
commitment of making this update a high priority.
During your nomination hearing, Senators on both sides of
the aisle underscored the need for SSA to do more to reduce
improper payments. Last month, the Social Security
Administration took an important step toward implementing the
Payroll Information Exchange provision in the Bipartisan Budget
Act of 2015. Once this new exchange is in place, it is expected
to improve payment accuracy and reduce the self-reporting
burden on beneficiaries.
I also understand that the Social Security Administration
has been reviewing its policies and procedures to identify what
more can be done to help prevent and address overpayments. I
look forward to hearing more about these efforts today. As SSA
continues this work, the agency must be careful to address the
initial errors, not just waive the mistakes after they have
occurred.
While the President's budget includes operational requests
for Congress to consider, it also fails in addressing Social
Security's long-term solvency. The Social Security program
provides benefits to millions of seniors, individuals with
disabilities, and their families. We must ensure current
beneficiaries and future generations will be able to depend on
the program by addressing its financing shortfalls.
The President's budget does not include any legislative
proposals to back up his stated commitment to protect and
strengthen Social Security. The solutions preserving it are
increasingly difficult, as more time is wasted.
Thank you again for being here today, Commissioner
O'Malley, and thank you, Mr. Chairman.
[The prepared statement of Senator Crapo appears in the
appendix.]
The Chairman. Thank you, Senator Crapo. We now turn to you,
Commissioner, for your opening statement. I understand that you
are going to use some slides for members to follow along with
your testimony. Your testimony will be made part of the record,
as well as the slides you provided the members.
[The slides appear in the appendix beginning on p. 47.]
STATEMENT OF HON. MARTIN O'MALLEY, COMMISSIONER, SOCIAL
SECURITY ADMINISTRATION, BALTIMORE, MD
Commissioner O'Malley. Awesome. Mr. Chairman, Ranking
Member Crapo, and members of the committee, thank you for the
honor to be able to appear before you today, and, Mr. Chairman,
thank you for holding this hearing on our budget.
It has been 9 years since we have had any hearing on Social
Security's budget, and it is a great honor to be here with you
to share with you a little bit about what I have learned. I
have been on this job for 90 days, and I have been most
pleasantly surprised by just how anxious the senior executive
service was for a confirmed leader.
They want to do better. People across the country--I have
visited all 9 regions over 16 days in January. The employees
want to do better. They consider themselves to be performing a
sacred mission for all of us, and indeed they do.
So, I have learned a lot, and we have a lot in motion,
including the Payroll Information Exchange, which will be
advertised very shortly. We hope to have that up and going by
July. The 15- to 5-year lookback will hopefully simplify a lot
of the administrative and wait times involved in the disability
program.
But I wanted to share with you right up front--and it is
one of the lead slides I shared with you in the material I gave
out to you--one of the things I have learned--and I see the
symptoms of it and the effects of it every single day--is that
Social Security is now serving more customers than ever before
with fewer staff than Social Security has had in 27 years.
You might be surprised to learn--or perhaps not; I know I
was--that Social Security operates today, now, on less than 1
percent of overhead compared to its annual benefit outlays. And
this operating overhead has been cut effectively by 20 percent
over these last 9 years.
If one were to compare this social insurance agency to the
private-sector companies that are also on those slides like
Allstate, which I believe operates on about--let me make sure I
get it right. Allstate operates on approximately now 13 percent
of its overhead compared to annual outlays. Liberty Mutual,
Liberty Biberty, operates on about 22 percent. The Social
Security Administration, at least up until 2018, operated on
1.2 percent.
So, as I have traveled around the country, I wanted to
share with you--mindful of my time here and how I am wanting to
answer your questions, I wanted to announce to you a few of the
things that we are doing on those key customer service issues,
namely the 800 number wait times; time for disabilities; and
third, the injustice of the overpayments.
We have a new team in place, and within 30 days we launched
SecurityStat. SecurityStat is our new performance management
regimen that operates on an every 2 weeks, every 2 weeks
cadence--eight different meetings focused on one topic. Not
only the 800 number, not only the disability determinations,
but also 1 blessed hour on fraud, the prevention of fraud--and
the OIG is at the table as we strive to get inside the turning
radius of the fraudsters.
We have 1 blessed hour that is committed to reducing those
initial disability determinations as well. We have one entirely
focused on notices. We send out notices that look like the old
Mad Libs, except these are designed by mad lawyers over time.
We cannot blame our seniors when they receive the notice, or
anybody, when they cannot make sense of it.
The only thing you can make sense of on some of our notices
is that if you do not understand it, you should call our 800
number and wait for 39 minutes. So these are all of the things
that we focus on in SecurityStat.
Let me wrap up with the focus of one of these meetings,
which is overpayments and underpayments. Many of us saw that 60
Minutes expose about Americans who, through no fault of their
own, received one of these indecipherable notices, did not
respond, but then found Social Security was intercepting 100
percent of their benefits every month until we recouped the
overpayment.
These stories are shocking to our shared sense of equity
and good conscience, and so today I am announcing some new
reforms on that score. Many of these reforms came from our own
employees on the front lines, and a brilliant woman named
LeeAnn Stuever, who has helped us unpack and get to the root
causes and the true facts underlying this.
First, instead of intercepting 100 percent of benefits in
those instances where beneficiaries fail to call us to work out
an overpayment plan, instead of intercepting 100 percent, we
are going to do as we have long done in title 16 SSI, and
intercept only 10 percent.
Second, we are going to shift the burden away from
insisting that the claimant prove that they were not at fault.
Instead, that burden will be more rightly on the agency in
determining fault.
Third, we will allow repayment plans of up to 60 months.
Traditionally, we only allowed repayments of up to 36. At the
VA, they do 60. We are now going to do 60 as well.
And finally, we are going to make it easier for overpaid
beneficiaries to request a waiver of payment.
In conclusion, we have discovered many things to improve
process, many things to improve technology here and there. But
continuing to reduce staffing while increasing beneficiaries is
only going to lead to more difficulty for all of our customers.
I have every confidence that restoring customer service
levels at Social Security here and now will provide a dividend
of trust for generations to come. The President's budget is a
big step in the right direction on that score. It includes a 9-
percent increase over last year to $15.4 billion, and with
those dollars, we are confident we are going to be able to
reduce the wait time on the 800 number. We are going to reduce
the time to disability determinations, and we are going to do a
much better job on reducing the numbers of overpayments and the
injustices that result from them.
So, I look forward to working with you and diving deeper
into any areas that are of interest to you. Thank you.
[The prepared statement of Commissioner O'Malley appears in
the appendix.]
The Chairman. Commissioner, thank you very much.
And let's go to this Payroll Information Exchange concept
first, because it relates to kind of how you showed up here.
You made some big promises to tackle overpayments head-on, and
I am sure seniors and others kind of hear this stuff coming
from Washington, and they maybe roll their eyes a little bit
and they say, ``We'll see.''
But we are now on our way to having quicker, more efficient
policies to prevent overpayments, because the agency can get
wage data, can get this from employers and others quickly. It
just seems to me that after years and years of waiting--and as
you and I talked about, I worked across the aisle to get this
passed, and then basically nothing happened; nothing. We just
kind of kept pushing the agency, and nobody got serious about
getting this wage data and recognizing the importance of
efficiency and the like, and you took this on.
So tell us, if you would--because you are going to have to
have a comprehensive game plan fighting these overpayments--
what are we going to do for the long term, what are we going to
do right now? And I will ask another question about helping
people who are in a bind right now.
But tell us how this Payroll Information Exchange, the data
exchange, is going to help you prevent overpayments for the
long term, and can we finally get this problem that has harmed
so many seniors under control?
Commissioner O'Malley. Mr. Chairman, thank you for your
question. Thank you for your interest, and thank you for
pushing us on the payroll information data exchange. As I
traveled around the country, visiting all nine regions in the
first week of January, I always found the best ideas came from
people who were on the front lines already doing the work.
One of the constant questions that I received in employee
town hall fashion was, ``When are we finally going to have PIE?
When are you all going to do regulations to finally do the
Payroll Information Exchange, because it will alleviate our
work burdens; it will make for less overpayments.''
In some of our programs--I am thinking of SSI especially--
it is an income-based program. People have to verify that they
are making below a certain amount, and if they have a job, they
have to be careful not to go above a certain amount of
earnings, otherwise, it triggers potentially an overpayment,
adjustments, and things of the like.
And with ever-declining staff over the years, it has taken
us longer to catch up with overpayments, or changes in income,
or living arrangements, or the other things that have to go
into that program. So we have been doing a lot of prep work
that will allow us to use a big data solution, to use a
contract with a company called Equifax. And even as old as our
legacy systems are, we have done the work necessary to
integrate our efforts across all the field offices and
processing centers, with Equifax's data base.
So, if a claimant or customer signs up and gives us
permission to verify their wages through Equifax, we will not
be waiting for somebody to come in with their latest pay stub.
We will not be waiting for somebody in a processing center to
put it through a scanner, to have it connect up with the file.
Instead, it will happen instantaneously. We hope, therefore, we
will be able to, in real time, identify where a situation that
could have led to an overpayment is popping up, and we think it
will be a great relief on both the administrative burden
internally and the administrative burden on customers, and lead
to greater accuracy.
The Chairman. Let me see if I can get two more questions in
quickly. By the way, Mr. Commissioner, I thought you would be
interested. The original idea for the Payroll Information
Exchange came from one of your employees, a Social Security
employee. He took it to our office in Eugene, OR. So, this idea
we are very proud of has roots in our State.
Commissioner O'Malley. I do not doubt it.
The Chairman. So there you are: Payroll Information
Exchange for the long term. What is the most important thing
you can do to help somebody who is clobbered right now by an
overpayment?
Commissioner O'Malley. Well, some of those things we just
announced--and there are more things that will be coming.
Seventy-five percent of overpayments are under $5,000 or less.
Ninety-two percent of people actually call us and work out a
payment plan.
I have sat there with people at Social Security, listening
on the other phone, as clients ask, ``Hey, I cannot make the
$200 every month. Can you allow me to do $100?'' So, we have
good people at Social Security, good people in the field
offices, and my message to people across the country if they
have had an overpayment is, call us, contact us.
I know it is hard with fewer staff, but we do answer the
phones within 5 minutes in the 1,210 field offices across the
country, and they are compassionate people on the other end,
who we now know are receiving clear instructions that we need
to act and be mindful of the damage this can do to individuals.
We have a lot of flexibility as an agency that you have
given us, not to claw back in cruel ways, if that is against
equity and good conscience or defeats the purpose of the very
act that you are sworn to uphold.
The Chairman. Let me get one other question in very
quickly, because I am already over my time. Tell us a little
bit about the funding picture, because I know that you are
looking at ways to beef up the very best possible customer
service for seniors and others. What are you going to try to
put your resources in, and where are you going to need some
additional help?
Commissioner O'Malley. Yes, sir. Having been Mayor of
Baltimore and having been a Governor during a recession, I
honestly was taking with a grain of salt some of the news I was
reading about the agency saying that it was suffering from a
lack of funding and a lack of staffing.
But when I got in there, that has been the most unpleasant
surprise of all, to see the staffing going down now to 27-year
lows, while the number of customers continues to rise. When I
was here before you in October, we were serving 68 million
customers; we are now serving 71 million customers. And so, if
you are able to pass the President's budget, these are the
things that we would do with those dollars.
We would invest in front-line staff, $269 million of that.
We would invest in staffing back up our teleservice centers,
which suffer from a 24-percent attrition rate. We would address
a backlog in the processing centers; that is where $85 million
would go. We would eliminate the hearings backlog with an $89-
million increase.
An area where we are especially suffering, and probably the
largest dollar amount on here honestly, is the initial
disability claims backlog. It is reaching historic highs,
people waiting for their initial disability, and that, as you
know, is a 50-State problem.
In some of your States, you have attrition rates that are
so bad that, in some States, 85 percent of the people who work
in disability examinations are trainees. So our productivity
has taken a hit. Our staffing is low there, and we need to beef
up our DDSs.
And finally, information technology. It is people, it is
process, but it is also technology, and 90 percent of our
technology budget goes to taping together green screens and IBM
systems from 40 years back. We need to modernize with our
technology investments.
The Chairman. Thank you.
Senator Crapo?
Senator Crapo. Thank you very much, Mr. Chairman, and I
want to follow up basically a little bit on the line of what
you were just discussing. I was very interested in your chart
that shows, for example, the wait time on the 1-800 number and
what it could be. It could go from 38 minutes to 5 minutes.
Same thing on disability decisions and hearing decisions.
The question I have is what--this chart says that with 1.2
percent of benefit outlays as a level of funding, that you
could take the wait times on the 800 number from 38 minutes to
5 minutes. Is that just hiring a lot more employees? What are
the actions that you would take with adequate funding to remove
that, to move that number from 38 minutes to 5 minutes?
Commissioner O'Malley. A big, big part of it actually is
the agents taking the calls. There are things we can do with
tactics on either side, deflecting calls, getting more people
to go online, and there are things we can do once we do answer
the call--resolution on the first call rather than making
people call back.
But there is no substitute for all of us Americans who call
and say, ``I want to talk to an agent; I want to talk to an
agent.'' If there are not enough agents, it is going to be a
long wait time.
Senator Crapo. So what is 1.2 percent of funding outlays?
What amount of dollars is that?
Commissioner O'Malley. The President's budget calls for
$15.4 billion. That is about .96 of 1 percent.
Senator Crapo. Okay. So yours is a little--your recommended
budget is a little higher than that?
Commissioner O'Malley. The official recommended budget was
higher than that, and here it is. It was $16.2 billion. The 1.2
percent that I had on that graph was to show that prior to
2018, that was the pretty consistent level of overhead compared
to annual benefit outlays that allowed us to support customer
service at the level that Americans frankly have already paid
for through years of working and their FICA.
Senator Crapo. So again, just so I can understand what it
is that would be needed here, would your $16.2 billion budget
get you to 1.2 percent of funding of benefit outlays?
Commissioner O'Malley. No, sir, not yet.
Senator Crapo. Would it get even close?
Commissioner O'Malley. The President's budget would be a
solid step in that direction. The budget that was my
recommendation, which was honestly kind of in motion before I
was confirmed, is another positive step in that direction. It
would take other successive steps over the years to get us back
to 1.2.
Senator Crapo. All right.
Tell me a little bit about the difference between your
budget proposal and the President's. What are the primary
differences between your request, which is about $0.8 billion
higher, and what areas do you think need additional funding
beyond the President's budget that would have been included in
your number?
Commissioner O'Malley. Yes, sir. It is a matter of scale,
but I think the priorities are the same.
Senator Crapo. Okay.
Commissioner O'Malley. And then I think we have a pretty
good idea of where the backlogs are, where we're failing our
customers, and where we need to restore staff most urgently.
Absent that, we find ourselves playing Whac-A-Mole, shifting
every day, taking trainers off of training and throwing them in
the front office and doing other things that are bad overall
for the productivity and the efficiency of the organization.
Senator Crapo. All right; thank you.
Moving to a different topic: information technology. I
understand that you have been known to say that technology is
the cause of and the solution to all of our problems. I
appreciate your recognition of the critical role that IT plays
in the Social Security Administration's operations, and your
acknowledgment of the challenges that the SSA has had with it
in terms of its projects over the years.
During your nomination hearing, you said that, if
confirmed, you would do a rapid assessment of SSA's IT systems,
with a focus on how these systems serve the agency's customers
and employees. What is the status of this assessment, and what
can you share on your findings today?
Commissioner O'Malley. Yes, sir. That assessment is
underway, and we just hired a new CIO on March 4th. There was
also a modernization plan that was put forward before that by
the outgoing CIO, but we have experienced and insightful people
from MITRE who are doing exactly that assessment.
It is not completed yet. They have only kind of just begun
their work. I would have liked to have hired a CIO before March
4th, but that was her first day. She is very good, Marcela
Escobar-Alava, and all of that is underway.
In fact, we are already shifting things. For example, PIE,
we had to shift things from one aspect of the IT budget in
order to make sure that PIE started on time. But that overall
evaluation is underway, and there will be short-term and long-
term things that we need to do. The longer modernization goal
should be to get to a modern customer relations management
platform that allows the American people the same level of
customer service they get when they are calling other
corporations in the private sector, whether an insurance
company or a bank.
Senator Crapo. Well, thank you. I will be very interested
in that assessment. I would appreciate it if you would give us
some updates as you move along.
Commissioner O'Malley. Yes, sir. Thank you.
The Chairman. Senator Menendez?
Senator Menendez. Thank you, Mr. Chairman. Governor, I hope
you had a good St. Patrick's Day.
When you came before the committee in November, I asked you
about your commitment to improving payment accuracy. As you
know, my office has heard from beneficiaries who have received
letters saying they must pay back thousands or in some cases
tens of thousands of dollars to the government.
I have been pleased to see your demonstrated commitment to
addressing overpayment inequities, but there is more work to be
done. This issue spans from a challenging appeals process, low
staffing that leads to beneficiaries receiving bills that date
back 30 years, and challenges around payroll data.
How will the President's budget help address this
multifaceted problem that leads to overpayments?
Commissioner O'Malley. Yes. Senator, thank you for your
question, and thank you for urging us forward to do even more.
The things that I announced today about moving away from the
100-percent intercepts, the default position, shifting of the
burden--all of those things will make a difference.
There are still other things that we need to untangle and
figure out with regard to administrative finality and the like.
But you kind of put your fingers on one of the problems, and it
is this. You know, we have not seen more citizens being
assessed overpayments, but we have seen the time it takes to
assess the overpayment grow, and therefore the debt itself
grows because of the shortage of staff and the extra length of
time it takes before we discover it, or before we are able to
contact the person and make arrangements.
Senator Menendez. That's simply not fair.
Commissioner O'Malley. Pardon?
Senator Menendez. That's simply not fair.
Commissioner O'Malley. What is not fair, that we should not
have staffing; that it should take us so long?
Senator Menendez. Well, no, that the time frame that it
took to ultimately make those determinations has added to a
cost that otherwise would not have existed.
Commissioner O'Malley. That's true. It's not fair. People
have paid for their customer service. It comes out of the same
trust fund it always has back when it was 1.2 percent. And so
you ask, ``What would the President's budget do for us on
that?'' It would allow us to restore many of the staff losses
that will allow us to narrow that amount of time.
So, as I said before, 75 percent of the debts in the title
II OASDI are $5,000 or less. Ninety-two percent of people get a
hold of us, but in an agency this big, if you are harming 8
percent of the people, that is a lot of people.
Senator Menendez. Well, I will look forward to your work in
this, and to hearing as you go along if there are other things
that need to be done. I would like to know. I am sure members
of the committee would as well.
Commissioner O'Malley. Thank you, Senator.
Senator Menendez. A CBO report from last month has yet
again proven that certain right-wing voices claiming that
immigrants are so-called takers who drain our Nation's
resources are blatantly wrong. Here are a few excerpts from the
report.
Immigrants will grow the entire U.S. labor force by an
extra 5.2 million workers over the next 10 years. Over the next
10 years, our GDP will be about $7 trillion larger, and our
Federal tax revenues $1 trillion greater than they would
otherwise be without these immigrants. The report confirms that
America's prosperity and financial security depend upon the
enormous contributions of hardworking immigrants, and as more
and more Americans retire, new immigrants eager for work
opportunities will help fund our Social Security system for all
Americans.
And so, even though undocumented immigrant workers
contribute billions into our Social Security system to keep it
solvent for U.S. citizens, they do not receive a single dime in
benefits from it. So, do you agree with the CBO's findings,
that immigrant workers continue to be essential to keeping our
Social Security fund solvent?
Commissioner O'Malley. I sure do, Senator.
Senator Menendez. Okay. And that is a point that often goes
unreported in a way that I think is part of the consideration
that we should have.
Finally, when applying for SSDI or SSI disability benefits,
individuals reported they have spent years with little or no
income working through the system, only to see their
application rejected. They also described dehumanizing,
extensive, and highly confusing paperwork.
A recent report from the Center for American Progress notes
that only 33 percent of applicants for SSDI and 32 percent of
applicants for disability benefits with SSI were awarded
benefits at any time in the process, largely due to extreme
administrative burdens and delays.
What can you do as Commissioner to reduce the red tape and
extreme barriers that individuals with disabilities face when
they are trying to collect the benefits to which they are
entitled?
Commissioner O'Malley. Yes, sir. There is rarely a day that
goes by when we are not wrestling with the complexities of this
program, both in disability determinations and especially in
SSI. Supplemental Security Income is about 4 percent of our
benefit outlays, but it is about 40 percent of our
administrative overhead.
This program seems to get in its own way. In other words,
while it purports to be a program of last resort for the
poorest of people, it forces the poorest of people to jump
through hoops, stand on their head, and gargle peanut butter in
order to qualify for it.
So there are things we can do to simplify SSI, and some of
those things are underway. The movement to electronic
signatures in the agency is part of that. But the larger
problem is this: it is a very staff-intensive program to
administer, and it is an income-based program, and our staffing
levels are at a 27-year low. So, in addition to being a complex
program, it is also facing the same sort of understaffing
challenges that the whole agency is facing.
Senator Menendez. I look forward to following up on that.
Commissioner O'Malley. Thank you.
The Chairman. I thank my colleague.
Senator Grassley?
Senator Grassley. Remote work is a problem throughout the
Federal Government, not just with Social Security. But I want
you to know that I hear from Iowans that getting in-person
assistance at field offices is a real challenge. I recently
read about your organization entering into a memorandum of
understanding with the employee union that expands this
episodic telework.
So how are you going--by the way, I think this is something
you and I discussed when you came to my office.
Commissioner O'Malley. Yes, sir.
Senator Grassley. I did not try to get a commitment out of
you on anything on that point, but I did want to point out to
you how I thought that your predecessor probably lost his job
because he was taking on this effort to try to get more people
to come to the office.
So how are you going to serve seniors when there is even
more remote work than there is now?
Commissioner O'Malley. Yes, Senator. Let me share with you
that on February 2nd, we changed our telework balance, and this
is the sum and substance of it. I said, ``Look, I am here on
site 5 days a week, every day of the week, and if I am not
here, I am in one of the regions or catching a dawn's early
light flight.''
The Commissioner's office at headquarters is here 4 days a
week, one of telework. All of the other components, 3 days a
week, 2 of telework. Now, the field offices have been open 5
days a week, 9 to 5, ever since the shutdown ended. That is a
fact.
We also do a pretty decent job of getting people
appointments within a reasonable time. We can debate what
reasonable is, but they also answer the phones in the field
offices between 3 to 5 minutes. But this item that you touched
on, the episodic telework, is simply this.
When I was in--I cannot remember whether I was in Kansas
City or San Francisco, a young dad who worked at our
teleservice centers said, ``My son was really sick. I needed to
get him to emergency care right away, but my wife was coming
home and was going to come off her job and relieve me. I asked
my supervisor could I come in and work the second half of the
day, and she said, `No. We do not allow that sort of episodic
granting of a half-day or something.' ''
And so, when it came time for us to bring everybody back to
the regional headquarters, and everybody back to the Baltimore
headquarters for more days, the question was asked, ``Are we
going to allow them to take a personal half-day and telework on
those days if some calamity happens, sick kid, you know, a flat
tire or something?''
I said, ``Well, sure. We are not monsters; we are human
beings. Life happens.'' They said, ``Well, what about for the
union-
organized workforce?'' I said, ``Don't they already have
that?'' And they said, ``No.'' I said, ``Well, that's not fair.
I mean, don't they have sick kids? Don't they have flat tires?
''
I don't want that to distract you though from the larger
movement, which is to have core collaboration days at the
headquarters, to keep those field offices open 5 days a week, 9
to 5, and to make sure that we see people. We are doing all of
those things, albeit with a lot less staff than before. But we
are not going backward and doing more telework.
Senator Grassley. Both Trump and Biden are running on a
campaign of not cutting Social Security. I think that is a
stupid thing. They are not serving the future generations they
should by running on that sort of a platform, but that is their
platform. Obviously if they do nothing, they are not going to
cut it in the next 4 years.
But we all know that by 2033, based on what your studies
show, that it is going to go from 100 percent down to 77
percent of scheduled benefits. Now, is that a cut to you? I am
not asking what Trump and Biden would say about it. But if you
go from 100 percent to 77 percent, isn't that a cut?
Commissioner O'Malley. Absolutely. If Congress is not able
to avert it, as you all did in 1982, that would be a real hit
to people.
Senator Grassley. Yes. The Social Security Act requires the
Board of Trustees, which includes the Social Security
Commissioner, to report on trust fund financial status by April
1st. It is frequently missed. Can Congress expect that report
April 1st, and if not, why not?
Commissioner O'Malley. We were hopeful that we were going
to be able to get it to you, but there was data from the U.S.
Census that was late arriving. So we will not make it on April
1st, but it will come shortly thereafter. There will be a delay
of a few weeks, but not a few months.
Senator Grassley. Great.
Thank you, Mr. Chairman.
The Chairman. I thank my colleague.
Senator Carper is next.
Senator Carper. Yes, thanks very much. Welcome. It is great
to be with you. Thank you. Thank you for taking this on. And
part of me kind of envies you for taking on a challenge of this
magnitude--and you really jumped right into it--and getting a
running start. So, congratulations.
We are here to help, and we are grateful for your service
in this regard.
Commissioner O'Malley. Thank you.
Senator Carper. I thank the chairman, and I thank the
ranking member for bringing you back before us so soon. I think
it was in 2023 this committee considered your nomination. It
seems longer, but it was 2023. But we're really pleased--I was
pleased to support your nomination, and really pleased to see
the strong bipartisan support that it received.
And for the first time, I think, in close to 10 years, our
committee is meeting to review the budget of the Social
Security Administration, which has responsibility for providing
support for our seniors and individuals with disabilities.
As you mentioned in your testimony, amid historic
underfunding and understaffing, the Social Security
Administration is facing what we call, and you probably do too,
a customer service crisis.
The average call time--we have talked to you, and we have
discussed this already--but the average hold time for an
individual wanting to speak to a staff member at the Social
Security Administration is 38 minutes. The average American
waits about 220 days--that's over 7 months--for an initial
decision about their disability status.
These numbers are more than disappointing; they are
shocking. They are just not acceptable, if they are true, and I
would leave that up to you. The Social Security
Administration's programs cannot succeed without first
delivering gold-standard service to all of our Americans. I am
encouraged that the agency is maybe prioritizing serving those
with greatest need, and ensuring disability applicants with the
most severe conditions are given an initial decision within 30
days or less.
The last time you were good enough to appear before our
committee, I recommended that you talk with Danny Werfel,
Commissioner of the Internal Revenue Service. Like you, he has
inherited an agency with a customer service crisis. While I
know you have a tough job ahead, I'm encouraged that the
President's budget for Fiscal Year 2025 makes critical
investments for customer service at the Social Security
Administration.
My question is, should the President's budget be enacted,
how would you leverage this investment to improve the agency's
customer service? You talked about this a bit already, but
especially for reducing call and disability claim wait times,
can you speak to the unique customer service challenges the
Social Security Administration is facing, and how the agency,
Social Security as you see it, can learn from Danny Werfel's
success at the IRS?
Commissioner O'Malley. Yes sir; thank you, Senator. The
President's budget is a very, very strong step in a better
direction for this agency's customer service. Of the $15.4
billion proposed in the President's budget, our plan is to
increase front-line staff serving our customers by $269
million, to increase the staffing at our teleservice centers.
They have an attrition rate of 24 percent----
Senator Carper. A year?
Commissioner O'Malley [continuing]. In our teleservice
centers. You can only imagine the sort of stress that people
encounter on an under-performing system when people have been
on hold for 45 minutes or an hour--nobody's coming in pleasant
after waiting on hold for benefits they have already earned.
We plan to invest $85 million to bring down the backlogs in
our processing centers. Some of you, no doubt, got calls from
people who said, ``I got a notice from Social Security saying
they should process my claim in 30 days. It has been 90 days. I
have not heard anything from them.''
So we have to get those backlogs down. The biggest
investment would be at the initial disability stage, 50 States.
Delaware, Maryland, Louisiana all have their own DDS offices
that make the initial determinations. Those backlogs have grown
and grown and grown. In fact, in my prepared remarks before
you, I believe I have a map of the United States with the 50
States. That map is supposed to be shaded. The green is
supposed to represent States that get it done in 120 days.
There is no green on the continental United States. Across the
South, particularly, there are acute backlogs. So that is why
we would invest $2.8 billion to staff up the DDSs where
attrition has been great, and where half of their staff seem to
be in training status, and therefore not as productive as they
could or should be if they fully had a grasp of the material.
We are doing some other things with technology, but none of
those things can make up for the yawning gap between having the
highest number of beneficiaries in our history and the lowest
staffing we have had in 27 years.
We are getting a lot of great bunt singles to get on base
in terms of process efficiency and automated Medicare
processing and things like that, but those are bunt singles.
Only Congress can hit the home run of restoring our staffing,
and ideally making quick strides to get us back to that 1.2
percent of average outlays that we always had been before 2018.
The Chairman. I thank my colleague.
Senator Carper. Thanks, Mr. Chairman.
The Chairman. Next is--let's see, Senator Cassidy.
Senator Cassidy. Hey, Mr. O'Malley. At your nomination
hearing, I noted how the Social Security Administration is
relying on a 50-year-old Dictionary of Occupational Titles. I
smile because, when you read some of them, they are clearly
anachronisms. The agency has spent over $500 million paying the
Bureau of Labor Statistics to come up with an updated
occupational data file and spending another $100 million on
staff and contractor time testing the file.
Senator Brown and I introduced a bill requiring SSA to
compile this and submit a report every 3 years. Where are you,
where is the agency, on implementing the updated occupational
titles?
Commissioner O'Malley. Yes. Senator, there seems to be no
end to the ongoing outlays of money proposed for an updating of
the dictionary of titles. I have kind of put the brakes on
this, frankly. It is a lot of money, and I think with the
availability of technology and data sharing and other things
that are out there in the world, I think we need to take a
fresh look at whether we can get from point A, which was last
updated, I guess in 1991, to a more modern system, without
necessarily having to send out giant teams of researchers to do
103 more side-by-side studies for 2 weeks, of cashiers and what
the physical requirements are for them.
There is a level of complexity here, yes. But I think to
continue to put more and more money into doing this the way we
have been doing it and having no results does not make a lot of
sense, given our budget throes. So I have asked them to hit the
``pause'' button on this while we reevaluate and see if there
might be another way to get it done.
Senator Cassidy. Well, it was not under your authority, but
if we spent $600 million and accomplished nothing, it is
incredibly frustrating.
Commissioner O'Malley. Hugely frustrating.
Senator Cassidy. So let me ask you--and that leads me to
the next thing--about modernizing your legacy systems, your
technology systems, et cetera, and specifically, how do you use
AI? In health care, we are trying to use AI; I say that as a
physician.
For example, the National Health Service in England has
used AI to screen people with mental health issues, and they
found a greater degree of satisfaction among the screeners, the
screenees, and they found that when the doctors and nurses
received the record, they were better done than had a human
done them.
Now, this seems ideal for your backlog. You are having a
hard time hiring people. You have a labor shortage. That would
be something that could be done, and perhaps even produce a
better file if it is the same experience as the National Health
Service.
All that as a lead-in, to what degree is the agency
updating their systems with an eye toward AI, not just for that
but for fraud, et cetera? I turn it to you.
Commissioner O'Malley. Yes, sir. There are a lot of areas
ripe for this, and our top, I would say training priority has
actually to do with using an automated system in the disability
determinations.
There is a tool that SSA invented called IMAGEN, and IMAGEN
essentially takes those 1,000 pages of medical records and puts
them in a form that can be searched and be curated, and
compared to past applicants to see, even assess, what is the
percentage likelihood of this one being an allowance? ``Make
sure you take your eyes to page 912 of this report, to page
702, because that is where the parts are about what the
claimant has been experiencing.''
Senator Cassidy. Now, this is an AI system or an algorithm?
Is this something that you developed in-house, or is it
something that you contracted for?
Commissioner O'Malley. Yes, it is something we developed
in-house. Victory has a thousand fathers. Because it works
right and because it reduces the time by about 50 percent that
it takes to examine all of these records, there are people
inside the agency who say the agency invented it, and there is
a contractor who says they invented it.
Senator Cassidy. Okay, let me ask you; I am almost out of
time. But going back to that 1.2, you mentioned that you have a
relatively low overhead. Again, AI has the potential to further
lower that, and so to what degree are you also using AI to look
at fraud, to look at again, having intake of patients with
complaints?
The whole kind of backlog of complaints could be brought
down if it turns out that you use AI to interview the
individual as it is done elsewhere.
Commissioner O'Malley. Yes. As part of our SecurityStat
regimen, one of the hours--in fact, it is the only hour that we
are closed to the public and do not livestream--is about fraud.
One of the things that we have been able to do in fraud is to
use machines to identify patterns, to identify anomalies.
We need to do a constantly better job of that, but we do
have models that do work, and we need to refine those models.
So we are looking for needles in a needlestack instead of
needles in a haystack when we refer cases and flag cases back
for a second review in the field office.
Senator Cassidy. Well, I am out of time, but that is your
aspiration. I guess my question though is, to what degree are
you employing AI or other tech in order to help do that,
because that does seem something, that pattern recognition
seems to be tailor-made for that, which we could use AI for.
Commissioner O'Malley. Yes. We are already doing some of
that. We can do more, and I think we can do more immediately
when it comes to geospatial, and identifying emerging hot spots
on the map, or the impossible medical days and things of that
nature.
Senator Cassidy. Thank you.
Commissioner O'Malley. Thank you.
The Chairman. Senator Lankford is next.
Senator Lankford. Okay, Mr. Chairman, thank you.
Thanks for being here in the conversation. I know you
jumped into the deep end of the pool with a lot of areas to be
able to resolve some things. My State is one of the States that
is working with the Driver's License Data Verification system,
which we have been very behind on. Social Security has been
very helpful to us in the process of going through that, so I
just wanted to give you kudos----
Commissioner O'Malley. I thank you.
Senator Lankford [continuing]. And give you a chance to be
able to hear that, that we are working through that. Some has
been on our State's responsibility and some on yours, but we
seem to be getting very close on that.
We do have a lot of constituent requests that are coming in
on the issue about overpayments. When they get an overpayment
statement and they are asked to be able to go track down work
history and records, and how much they were paid from years
ago, it is difficult, obviously, for them.
They have to be able to work this out, to be able to figure
it out. The challenge has been not that they have to go chase
some of that down. That is part of the process for them to be
able to figure it out. It is the communication on the back side
of that.
It is, do they have a person they are working with? Can
they get in contact with them? Can they maintain communication
with that person consistently, trying to be able to work out
the details? That is still an ongoing issue to try to figure
out.
It is confusing enough for a lot of folks who are trying to
be able to handle an overpayment situation, trying to be able
to chase down the records. It is more confusing when they deal
with different people in the process, to be able to resolve it.
So, as much as we can maintain the consistency of that, an
open line of communication, that would be helpful.
Commissioner O'Malley. Great; well said. And I think the
best thing for people to do is to get to their field office
when they have one of those notices.
Senator Lankford. Right.
Commissioner O'Malley. You can work out a payment plan by
calling the 800 number and eventually getting connected with
the debt collection folks. But the best thing to do is to go to
your field office.
Senator Lankford. Yes. And they maybe will have the
opportunity to be able to do that. We are obviously improving
those options, but it is its own challenge when you are in a
rural area and have difficulty traveling and all those things.
Commissioner O'Malley. Sure.
Senator Lankford. So, a couple of handoff issues I just
want to be able to raise to you. One of them is, years ago--and
I will leave out all the wheres and the whys on this just to
protect her in the process. But I was walking through a Social
Security office--and I think you and I have talked about this
before--in my State, walking to the cubicles, just meeting
people, asking what they do, trying to get some insight from
them on what we could do better. One of my favorite answers was
someone who said to me when I said, ``What do you do?'', she
replied, ``I do something the Federal Government should not do.
That is what I do.'' I said, ``Well, what do you do?'' She
said, ``Well, I spend my days trying to figure out how to pay
attorneys that I did not hire, and someone who hired a
disability attorney, in fact they hired two or three attorneys,
and I have to figure out what percentage to pay each person.''
Somehow, we have got to figure out how to be able to manage
this, because obviously the good staff who are at Social
Security, they do not have any relationship with all these
attorneys. Yet they are having to actually choose which
attorneys to be able to pay what amount, and to be able to
track through all these bundles of records as they fight
through the process on that.
So that is something we have just got to be able to figure
out together, how to be able to resolve that, and to be able to
make that easier.
The other thing is, dealing with some attorneys, not all,
some attorneys who stretch out the length of a process because
they know if they stretch it out to the farthest point, if they
ask for delays, if they show up at hearings and try to submit
one more record, it forces it to go a little bit longer.
There is a maximum amount they can be paid, and if they can
stretch out the whole proceeding, they can get to their maximum
amount. We've got to be able to figure that out as well. I
understand that some people want to be able to hire a counsel,
but those individuals and those counsels that we see
repetitively that are lengthening cases that could be done
quickly to be able to make sure they maximize their payments,
that is wrong in a million ways, especially for that individual
receiving disability.
What ideas have come at this point to be able to identify
consistent law firms that are stretching things out to the
longest possible way, and if we are seeing that pattern for
them, what consequences can we bring to be able to make sure we
are protecting the disability individual, not benefiting the
attorneys?
Commissioner O'Malley. Yes, sir. I had heard that same
story. In further investigation, I am not finding a whole lot
of evidence of that, and perhaps it is because the wait times
have become so horribly long that they----
Senator Lankford. Right. It is assumed it is always there--
--
Commissioner O'Malley [continuing]. Are always going to
reach their maximum just given--they have no need to delay the
case, because it is also a violation of the professional code
of conduct to do such a thing.
Senator Lankford. Sure it is.
Commissioner O'Malley. We have noticed, though--we have
shifted from doing hearings primarily in person before COVID,
and then of course we could not do any in person, so we were
using teleconference and videoconference. Now even after COVID,
the vast majority of our hearings are being done by
teleconference or video, which is allowing us to close a few
hearing offices as well.
We noticed though, in mapping, that there are some regions
of the country where it seems that people, and the law firms in
disproportionate numbers, still insist on their personal
appearance in face-to-face hearings. So we are able to see that
on a map.
We are able to make some calls. We are able to address it.
I think it was less a matter of maximizing fees and more a
matter of not realizing how much more quickly they could get
clients good results. We also looked at the difference between
the two results, in-person or teleconference, and found no
difference in terms of percentage of allowances.
Senator Lankford. Great; thank you.
Let me just make a couple of quick statements here I want
to be able to follow up on the record. One is the difference
between the administrative law judges and the administrative
appeals judges. Obviously, there is a big difference between
the two.
I have some questions, because I understand Social Security
is leaning toward more administrative appeals judges, and I
just want to be able to do some follow-up on that.
The other one is the transition from SSI to SSDI for those
teenagers making that transition. I have talked to several
folks who are talking about the length of time that it takes. I
wonder if there is a way to be able to expedite the hearing
when you are actually making that transition, to be able to
make sure that those who are transitioning from SSI to SSDI--
because obviously there are two different standards there. Many
do not qualify in the next level, and I want to make sure that
we are actually managing that handoff well. We can talk about
that later, or I can try to submit that for the record.
Commissioner O'Malley. Great, thank you.
Senator Lankford. Thank you.
The Chairman. Senator Cardin?
Senator Cardin. Governor O'Malley, Mayor O'Malley,
Commissioner O'Malley, whatever title you are using now,
welcome to our committee. It is good to have you here. I note
that you have visited all the regions. You have commented about
that. I think that is a good thing to do, to really try to
understand the challenges that are out there in the field.
I noticed that the next generation of your ``stats'' is
SecurityStat, and I think that is going to be very helpful for
all of us, including your workforce, to be able to have metrics
in order to judge the progress that they are making.
But I just really want to--this is a hearing on the
President's budget, and if I understand it, the President's
budget would give you 1.2 percent for administering of the
benefits outlays. I just want to go to this one chart that you
presented, and make sure I understand this correctly. If we
fund the President's budget--one of the major complaints we get
is the wait time on the 1-800 number. You are telling us that
with those resources, you can reduce the wait time from 38
minutes to 5 minutes? Am I reading that correctly?
Commissioner O'Malley. I cannot say that. What I can say is
that we believe that we can bring it down. It's currently
roughly over 30 minutes. The last full week of reporting we had
ended March 8th, and it was down to 31, which is a better trend
line. We have been wrestling it down.
I believe that with the President's budget, we could bring
it down another 20 minutes to more like an 11- or 12-minute
wait time.
Senator Cardin. And then long-term, with that support, you
believe you can bring it down to within 5 minutes?
Commissioner O'Malley. I believe with further strides, we
can bring it down to 5 minutes, and in fact in the field
offices--the wait is 3 to 5 minutes for the field offices.
Senator Cardin. And the other issue that we hear about all
the time is the disability determinations, the time from the
initial disability reconsideration decisions, which now go
about two-thirds of the year. You are saying you can bring that
down also? Can you just talk a little bit more about the trend
line there?
Commissioner O'Malley. Yes, sir. That is going to be a
longer task; it involves more training. But in essence, we
would plan to use $2.8 billion to restore the staffing losses
that have happened over the last 9 years, when we have gone
without even having a budget hearing or an appropriation
hearing.
Some of the greatest attrition has happened at our State
DDS offices. So we would use that $2.8 billion to hire up
again. All of these 50 are State employees, as you know, that
our Federal dollars pay for. Each of those offices have
different leaders and face different challenges. But we need to
get their staffing back up.
We have also designated some cadres within the Federal
aspects of the agency that can help bail out those DDSs. But
that is more like emergency work. The longer-term is, we have
to get the staffing back up in those DDSs, and that is the
biggest chunk of the additional dollars in the President's
budget.
Senator Cardin. And then the wait time for a hearing
decision itself--I am not sure how the budget directly impacts
that. Maybe you could explain that a little bit more.
Commissioner O'Malley. Yes, sir.
Senator Cardin. It still is shocking it is a year for those
decisions.
Commissioner O'Malley. Yes; I will do my best. There are,
in essence, three stages to a disability determination. The
first one is the initial stage. That is a process. It begins
with in-person application at the field office. Then it goes
from the field office to the State DDS, and there it can sit,
used to be 120 days. Now the average time is 228 days and has
every indication of rising as their attrition in fact rises.
If you are denied that, your next level of appeal is to go
for a reconsideration in that same State office, which also
takes another 220 days.
Senator Cardin. And how does the President's budget attempt
to address that delay?
Commissioner O'Malley. With greater staffing, we will be
able to process more cases more quickly. It is almost like a
school system, where all of your staffing is in teachers. If
you have rising numbers of students and declining numbers of
teachers, you are going to have greater class sizes.
By way of a metaphor, with fewer staff in the DDSs, the
number of cases per each staff worker goes up, and therefore
the wait times become longer.
Senator Cardin. I just point out 1.2 percent seems like a
rather low amount for an administrative cost for a program. I
do not know too many private sectors that can administer a
program at 1.2 percent. I would also acknowledge that we have a
trust fund, and you have been disadvantaged because you are
counted in the caps that we appropriate for, even though it is
trust funds.
Commissioner O'Malley. Yes, sir.
Senator Cardin. We believe you should be budgeted, you
should have oversight, but why it is included in the domestic
spending caps is somewhat a mystery to many of us.
Commissioner O'Malley. I do not quite understand it either.
I have never served in the Federal service until now, but it
would seem to me for all of those years that I worked, and you
worked, and we were paying our FICA, nobody asked us if paying
into Social Security was a discretionary act on our part.
So I am not sure why suddenly those same FICA dollars that
had always supported a high level of customer service are now
in essence being cut. Before 2018, we operated on about 1.2
percent compared to annual outlays. A company like Allstate
operates on 19.4 percent. Liberty Mutual, Liberty Biberty, is
23.6 percent compared to annual outlays.
Social Security traditionally had been 1.2 percent. We are
headed to a 27-year low, with the highest number of
beneficiaries, and it would also be the lowest year in terms of
that percentage. Now the President's budget gets us back up to
.96 of 1 percent. Over the next couple of years--and it is not
really even an appropriation in the sense that it is an
allowance.
It is allowing us to use the payments that workers have
made over the years, not only for their benefits but for the
customer service to access them. I think 1.2 percent is not
much to pay for a high level of customer service for benefits
we have already earned.
Senator Cardin [presiding]. Thank you.
Senator Bennet?
Senator Bennet. Commissioner, it is great to see you.
Commissioner O'Malley. Great to see you.
Senator Bennet. Thank you for your willingness to serve,
and I know you are new to the job, so what you are hearing
today is not anything that you have been able to address
directly. But just on that point that you are making about
changing demographics--there are more retirees, there are fewer
people to support them.
I mean, what do you think we need to do to--not to surge
more resources at the problem, but use technology and other
kinds of things to be able to address this? I mean, we have in
Colorado, I know, more and more people retiring every day. The
numbers that I have seen are as many as 400 people at a time
waiting in line for 20 appointments in the State.
I know that is true everywhere. You have heard that. How do
we not just throw resources at it, but do it in a targeted way
that actually drives systems change that can make sense here?
Commissioner O'Malley. Senator, you are exactly right in
the role that technology plays. It is people, it is processes,
and it is technology. On all three of those, we have suffered
from a lack of investment. When it comes to technology, our
technology budget is about one-third of the size of what you
appropriate to Veterans Affairs.
In our case, it is one-third of that amount for a much
larger population, and because of our legacy systems--IBM,
COBOL, green screen--you know, it's the layers of Jerusalem
built upon themselves for the last 88 years.
Ninety percent of our technology budget goes to
maintenance, what they call ``keeping the lights on.'' The
other 10 percent goes to product development and modernization.
Some of the best modernizations, really, have bubbled up and
back to Social Security from the regions of Social Security,
rather than something that was done on a nationwide basis. So
we need more staff, but we also need to modernize our
technology.
There are some things that we have discovered that we
brought back from the field. I do not think I mentioned this
one here. When I was in Birmingham, they said, ``Look, we
invented this here. This is a way that, when people apply for
Medicare, we are able to automate a process that used to take a
human technician 8 minutes to go through--yes, that is Mr.
Bennet, that is his mother's maiden name, you know, all of
those sorts of things, and many, many screens.''
They were able to build that on Excel and automate that
process so that it happens in 7 seconds. And if there is an
anomaly, say an election for Part B when you wanted to say D,
it stops and tells the technician there is an anomaly in the
application that needs to be tended to.
Now, that will save 40 work-years. It was all gummed up
from years of not having a confirmed Commissioner who could
drive things through the office of information security and the
lawyers and the policy and all of that.
We got it done quickly, but it is 40 work-years. We are
hitting bunt singles. We are hitting them fast. Some of those
things involve better use of technology and automation. But the
sort of things that are total system changes, we do not have
the money to do. We could, and it would be a good expenditure.
You know, we have a little museum up at Social Security. It
is only about the size of two big rooms. But you go through
there and you see Walter Cronkite interviewing the head of
technology at Social Security in Baltimore in like 1969, and
they are so proud that this agency that serves the American
people is at the forefront of technological innovation and
customer service.
That was then, man. That is not now. This agency, there is
nothing we can--there are no clever tricks of technology that
can cross that yawning gap between beneficiaries going like
this [pointing up] and staffing at a 27-year low. There are
clearly technological improvements, clearly process
improvements, but we need additional staff.
Senator Bennet. Well, I hope you will let the committee
know, as you get into this, how we can be of greater help to
you as well. And I am not surprised, you know, that for
somebody who has worked at the local level as you have and as I
have, there is a lot of skepticism sometimes of whether a
command-and-control approach is going to get the job done.
And the innovation that you are already seeing in the
field, I hope you are able to collect that, bring it here, and
tell us what we need to do, so that together we can provide a
better level of customer service for everybody.
Commissioner O'Malley. Thank you. Please come and see
SecurityStat in Baltimore. You would dig it as a former city
guy.
Senator Bennet. Thank you; thank you.
The Chairman. Thank you, Senator Bennet.
Senator Whitehouse?
Senator Whitehouse. Thank you very much.
Great to have you back with us.
Commissioner O'Malley. Good to be back.
Senator Whitehouse. We are, I think a number of us, working
here on ways to make sure that Social Security stays solvent
essentially indefinitely. I think if the American people knew
that Social Security was going to be solvent into the
indefinite future, that Medicare was going to be solvent into
the indefinite future, it would have a calming and reassuring
effect on folks.
It is just an unnecessary asterisk for them to have to add
to their family's financial planning, to think, uh, maybe, what
is Congress going to do? So I have proposed a pretty simple
bill that kicks in the payment to Social Security back over
$400,000, to honor Joe Biden's promise that he was not going to
raise taxes for people earning under $400,000.
So I would also add that I chair the Budget Committee, and
in our hearing last week on the budget, Shalanda Young, who
heads OMB, came in and said that this bill was absolutely in
line with the principles that President Biden espoused in his
State of the Union address.
So I think we have a real chance to deliver that solvency
and that security for the American people. I want to ask you to
commit to making sure that your team can give us whatever
technical assistance and factual support that we need to make
sure we make the best presentation and are working with the
best factual information as we try to solve this problem, by
basically trying to solve two problems at once.
One is an unfair and rigged tax code that lets high-income
earners off in a way that regular wage earners are not; and
second is the solvency and security indefinitely of Social
Security.
Commissioner O'Malley. Well, Senator, I look forward to
working with you on that. We have an outstanding Chief Actuary
at Social Security, and the work that they do, the analysis
they can do, the permutations, parameters, probabilities--we
would love to be able to work with you on that.
Senator Whitehouse. And it was through your Social Security
Actuary that we reached the determination that this would keep
Social Security solvent indefinitely----
Commissioner O'Malley. The last big----
Senator Whitehouse. Through the entire horizon that the
Social Security Actuary looks, it is solvent and probably
beyond.
Commissioner O'Malley. Yes. Seventy-five years is a long
time.
Senator Whitehouse. It is a long time.
Commissioner O'Malley. The last time this Congress--well,
not this Congress. The last time our Congress wrestled with
this, the depletion of that was only about 2 months off of the
horizon.
Senator Whitehouse. Yes.
Commissioner O'Malley. So hopefully, we will not wait that
long. It can be fixed. I learn something every day up there,
but one of the things I learned was, I asked Steve Goss why is
it, what did we get wrong when we said it was going to be 75
years solvent in 1982, but now we have moved that depletion
event up to 2034?
He said we got two things wrong. We failed to account for
the depth and the breadth of the recession and what that would
do. But he also said the bigger problem was the tax reforms
that followed the 1982 solvency fix, which shoved so much
earned income out of the bracket to which FICA applied, that
instead of it capturing 90 percent of earned dollars, it only
ended up capturing 82 percent as we chose to concentrate at the
very top earners the income growth for the next 40 years.
Senator Whitehouse. Yes, yes. There are two problems. One
is the cap, and the other is the ability of very highly paid
individuals to divert their pay through an LLC or shell
corporation so that it does not come in as taxable wages. And
we are going to try to solve both of those ways around fair
taxation, and do so in a way that takes this worry--is Social
Security going to be there; is Medicare going to be there for
me?--off the list of things Americans have to worry about.
And let me just, in my 40 seconds that remain, commend you
for the emphasis you have put on customer service. Your
colleague over at the IRS has been beefed up with considerable
resources for customer service, and I will tell you that,
sitting down with Rhode Island's Taxpayer Advocate, they are
seeing results. They are seeing wait times reduced. The
Taxpayer Advocate also has to go get in line with IRS central
to get information. So, if they are jammed up at IRS central
for information, even Taxpayer Advocates have to intermediate
between a concern of an irritated taxpayer and the institution.
They are just seeing there like all their decks--they are
just clearing through their backlogs, and it has really been a
very, very big deal for ordinary Americans who have to deal
with the IRS to be able to see that happen. So, make it happen
for Social Security too, and we will have a lot of happy
customers.
Commissioner O'Malley. We can do it.
The Chairman. I thank my colleague
Next is Senator Casey.
Senator Casey. Mr. Chairman, thanks very much. And,
Commissioner, I want to thank you for having two rounds today.
For those who do not know, our Aging Committee had a
hearing with the Commissioner earlier today, and we are
grateful for your service, grateful for your willingness to do
this difficult job, and grateful for your testimony today.
I wanted to try to cover maybe at least two issues. One is
Supplemental Security Income and child applicants. That is the
first issue. It has been well documented that the number of
children receiving so-called SSI is 20-percent below what it
was prior to the pandemic.
SSI benefits, as you know, are especially important for
children with disabilities, and for children of parents who
have disabilities. Families that include a member with a
disability have up to 25 percent more expenses than a family
without a member who has a disability.
So those families obviously have financial burdens that
others do not, and we know that SSI benefits provide a stable,
important source of income to address these additional
expenses. And I am concerned, as I know you and so many others
are, about the 20-percent decrease in child recipients. It
means that hundreds of thousands of families may be struggling
to meet the added expenses that a disability can bring to a
child and that child's family.
In Pennsylvania, SSA and the State disability services
office work to identify children who may be eligible for SSI
and let their families know that their children may be eligible
for SSI. Nationwide however, the child SSI applications are
only slowly increasing.
What is the Social Security Administration doing to address
the decrease in child SSI recipients? That is one question. And
the other is, how is SSA, the Social Security Administration,
reaching out to families who may have a child who is eligible
for SSI benefits so that families can apply for the resources
Congress intended for them to have?
Commissioner O'Malley. Senator, it is my understanding--and
we have been analyzing the results that this campaign might
have yielded--we spent a fair amount of money doing outreach
and doing advertising.
In your own State, as you mentioned, your State government,
the government of the Commonwealth, took it upon themselves to
do outreach and to do mailers. We saw some uptick. Overall, I
am not sure that we can say that it was directly attributable
to that advertising campaign.
It would seem to me that the better approach would be to
work with our brother and sister agencies in HHS to better
target those households, those families, the guardians of those
children or parents, and that would, I think, be the more cost-
effective and better way to go. Also, to reach out to schools
and school systems. There is a network out there of people who
already work with children day in and day out, and I think that
that is the direction into which we will probably pivot. It is
a much more sort of data matching, targeted network approach to
reaching the right households with kids who qualify but are not
applying.
Senator Casey. Yes. Well, we look forward to working with
you on that to get those numbers up. Like a lot of things in
the pandemic, we are still trying to better understand why.
Commissioner O'Malley. Right.
Senator Casey. We look forward to working with you on that.
The other thing I wanted to ask you about is ABLE accounts.
I was able to pass--it is almost 10 years ago, it will be 10
years in December--legislation, with the chairman's help at the
time, so-called ABLE accounts, where we changed the tax code so
you could save for a disability just like you save for college.
We had this anomaly in the tax code where literally, in the
same family, one daughter could have a 529 account for the
family and anyone who wanted to help that child save for higher
education, yet her sister who might have a disability might go
to college or might not. Because her sister has a disability,
there is no way to save for that sister beyond the $2,000 cap.
So we changed the law, and now those families can save up
to $100,000 a year. So it makes it possible, for example, for
SSI recipients to save up to $100,000 a year for disability
expenses, and still maintain SSI benefits. Here is the problem:
the number of people with ABLE accounts in the country is only
about 165,000.
So the eligibility is wide, but the sign-up, or those who
have taken advantage of it, is small. So literally, every
person who is an SSI recipient and who had acquired their
disability before the age of 26 is eligible to open an ABLE
account.
So I want to work with you on that. I just would ask you--
and I can submit it for the record, because I know I am out of
time--but maybe we can work together on that. I will submit
some questions about how we can work together.
Commissioner O'Malley. I would very much like to do that. I
think there might be some interchange here and some play with
the kids aging out of foster care as well, and something the
agency might be able to do more proactively.
I also met recently with the State Treasurers of the
Nation. They were in town 2 weeks ago here, and I met with them
and had a lot of conversations. They take pride in
administering the ABLE accounts and overseeing them, and so I
think we need to do more of the ABLE accounts and less of the
other sort of accounts.
Senator Casey. Commissioner, thanks very much.
Thank you, Mr. Chairman.
Commissioner O'Malley. Thank you.
The Chairman. Thank you, Senator Casey, and good work for
all those disabled kids all these years.
Senator Tillis is next.
Senator Tillis. Thank you, Mr. Chairman. Mr. O'Malley,
Commissioner O'Malley, Martin, thank you. You know I supported
your confirmation process, because you convinced me with the
work that you have done as a public servant that you get it in
terms of transformation.
I have a really quick question for you. It has to do with
funding. You and I talked about a version of this document
[holding up a chart]. I think at one point we were saying maybe
you ought to reverse the order, because this is probably a
trend that bears repeating if you have already talked about it.
This used to be pretty close to the service levels before
you got whacked on funding, right?
Commissioner O'Malley. Yes, sir.
Senator Tillis. Okay.
Commissioner O'Malley. Prior to 2018, we delivered.
Senator Tillis. So, in a way, you kind of want to go back
to the future. Talk a little----
Commissioner O'Malley. Yes, sir. Nostalgia's not everything
it used to be, but in our case it was.
Senator Tillis. Yes. So, I mean--it really is. Are any of
these service levels in the green here, where you want to get
to, substantially different from when you had the funding
streams to actually drive these service level outcomes? Are
they roughly the same?
Commissioner O'Malley. That is roughly where they were in
2018.
Senator Tillis. Okay. Tell me a little bit about--I like
the control room that you have set up. Have you discussed with
anybody what you are trying to do now, in terms of cadence and
trying to affect transformation in Social Security?
Commissioner O'Malley. Not yet here today. I would be glad
to.
Senator Tillis. Yes, could you run through it really
quickly?
Commissioner O'Malley. Yes; sure.
Senator Tillis. And I know you were formerly a politician,
so try to be brief. I've only got 3\1/2\ minutes.
Commissioner O'Malley. Thank you; thank you. We have in
essence, within 30 days of the New Year, actually on February
5th, we launched and had our very first meeting of a new
agency-wide performance management regimen we call
SecurityStat.
It is kind of like a doubleheader Monday, doubleheader
Tuesday, and then the following week, two more meetings on the
Monday, two more meetings on the Tuesday, and then we rinse and
repeat.
So we have created an agile every-2-week cadence, in a room
a little smaller than this one. We have about 15 of the most
relevant Deputy Commissioners around the table, and for 1
blessed hour we lock the whirlwind outside, and we focus on
field operations.
We take a break, go across the hall to the follow-up room.
We memorialize in the after-action report the things people
agreed to get done within the next 2 weeks. One component might
have lead--maybe the legal counsel has an answer she needs to
run to ground in order for Policy to move and make a change.
And then we go back across the hall and resume for the
second hour. That focuses on HR. The next day, one solid hour
on the 800 number, and so on.
Senator Tillis. I like the framework. How have people
reacted to it, because it's probably a little bit different
framework than they have been accustomed to over the past few
years?
Commissioner O'Malley. It is very different in two
respects. One is, we have all kind of fallen in, or maybe we
have never gotten out of, the rut of annual budget cadence. You
know, give me 1 percent improvement every year so we are not
embarrassed at our budget hearing. So this is every 2 weeks--
every 2 weeks.
The other way it is different is, there is a culture of, if
you have an hour with the Commissioner, you want to fill that
hour up with 60 slides. The last one you present in the final
30 seconds, and then it says ``Any questions?'' So instead, we
really use the data, the maps, and the latest emerging
information shared by all.
It's livestreamed to 220 members of the senior executive
service throughout the country, and what we like to do--it is
more like a jury. You know, you have about 15 people who focus
on the latest evidence of how we are doing, what we are doing,
and we ask the question, ``What are the actions we can take to
get a better result by the time we are back here in 2 weeks? ''
Senator Tillis. Give me an idea of what you have done to
get out to the field, and what is the reaction there? I am
assuming you have been out.
Commissioner O'Malley. Yes, sir. Within the first month, in
a 16-day period of time in the winter, I visited all nine
regions. The Social Security Administration is divided into
nine regions. So, every day was spent not only getting to know
the command staffs of that region, not only doing a big town
hall with employees listening, getting ideas, but sitting with
people on the headset on the other end of the call from a
customer or on the other side of the glass divider in the field
office.
I learned a lot, and we hit all of those, like I said, in
the first week of January. It has made a big difference,
because some of the best ideas came from people who have been
doing the job in frustration, who felt like nobody was
listening.
Senator Tillis. That is good to hear.
I am about out of time, but when can we expect going into a
phase where you would present to the members--at least the
Finance Committee, if not the members at large--what you found,
what efficiencies you intend to drive out?
You can provide that for the record if you have a project
plan, and I had another question that I will just submit for
the record in the interest of time.
But thank you, and I believe that you just have to maintain
that continuous feedback--get out there. And I also thank you
for the policy that you have taken on having people come back
to work.
There are some people, I think, who have been misinformed,
thinking that you have not sent that message. Half of success,
or 90 percent of success is showing up, and I appreciate the
fact that you are having your employees show up.
Thank you, Mr. O'Malley.
Commissioner O'Malley. Thank you.
The Chairman. Thank you, Senator Tillis.
Senator Warren?
Senator Warren. Thank you, Mr. Chairman.
So, when American workers pay for Social Security, I think
they deserve to know that they are going to get the benefits
that they earned. That is why President Biden and Democrats in
Congress are fighting to protect and to enhance Social
Security, funded by making the wealthy pay their fair share.
But today I want to focus on an issue that does not get
much attention, and that is State governments seizing Social
Security benefits for foster youth, often with the help of
predatory private contractors. Now, some people might say,
``Wait a minute, you are talking about children getting Social
Security.''
Well, we have to remind people that half a million children
are in the foster system, and some of these are children with
disabilities who need extra care, which makes them eligible for
Supplemental Security Income. And many foster children have
lost a parent who had worked and paid into Social Security,
which would make these kids eligible for survivor's benefits.
Commissioner O'Malley, you have worked in government your
whole life fighting for working families, and now you head up
the Social Security Administration. Do you agree that when a
parent dies, a child deserves and often desperately needs the
Social Security benefits that their parent earned?
Commissioner O'Malley. Absolutely.
Senator Warren. Yes. So the law says that Social Security
survivor's benefits must be used in the child's best interest
for unmet needs, and yet, if that child is in foster care,
their benefits may be seized by State agencies that are
responsible for taking care of them.
States, with a little help from the Federal Government,
fund the foster care system, but dozens of States are now
secretly screening the kids in their care to see if they would
be eligible for Social Security benefits, sometimes even hiring
data mining companies to try to identify targets and then
funneling those Social Security benefits into State coffers to
pay for anything from paper clips to prisons. In 2018 alone,
States took at least $179 million from foster kids, and in many
cases, these children did not even know that they were entitled
to the money.
Commissioner O'Malley, when I heard about this, I nearly
fell out of my chair.
Funneling a foster child's benefits into State coffers and
not directing an additional cent toward improving that child's
life, does that sound like it is meeting the legal requirement
that those benefits be used in that child's best interests?
Commissioner O'Malley. It certainly does not sound like the
sort of policy outcome that any of us would like for kids in
foster care, regardless of whether or not the law says legally
they can.
Senator Warren. All right. Well, I've got even a question
about whether or not the law says they can.
Commissioner O'Malley. Okay.
Senator Warren. The law is very clear that those Social
Security benefits are to be used for that child, you know, and
these kids are not rich. Quite the opposite.
A few hundred bucks a month could make a huge difference in
the life of one of these children, to pay for trauma
counseling, specialized tutoring, saving for college, saving up
money for a down payment on an apartment, because they are
going to get dropped from the system when they turn 18 and have
nothing.
So here is the good news, Commissioner O'Malley. SSA has
the power to ban States from stripping away foster kids' earned
benefits. So let me ask you, what are your plans to ensure that
foster children's Social Security benefits are used for their
own needs, rather than being siphoned off by agencies and for-
profit data mining companies?
Commissioner O'Malley. Yes. We are taking another look at
this policy. There are some 17 States, led by Maryland, that
have either passed laws or are considering laws that would
require a certain amount of those benefits be conserved for the
child.
There are probably a lot of States that would tell you that
if a child is in foster care, they pay more than what the
benefits are that that child is receiving. So they would argue,
with their lawyers, that they are using it for care and
maintenance, as indeed a grandmother or another family member
might, for care and maintenance.
But when we all know what terrible outcomes kids aging out
of foster care have--and we know that at least for this portion
of them who receive benefits, there is a better way--we should
do what we must so that when that kid ages out of foster care
having had benefits, that they are not just given a pat on the
back and their clothes in a plastic bag when they turn 18.
Senator Warren. Well, I appreciate your attitude on this.
You know, seizing the benefits that go to some of our most
vulnerable children, just to finance other parts of State
government, just is not right. And I hope you will pick up all
of the tools available to you at the Federal level to make sure
that those kids get what their parents were promised back when
their parents paid into the Social Security system.
Commissioner O'Malley. I am looking forward to continuing
to work with you on enacting some of this. You know, 34 of the
States claim that they do conserve a portion of it. But we are
about to find out exactly how true that is in the research that
we are doing.
Senator Warren. And remember, you've got the Federal power.
Commissioner O'Malley. Yes.
Senator Warren. Thank you.
The Chairman. Senator Warren, my State, Oregon, has led the
country in protecting these kids, and I understand our staffs
are talking. So, we will follow that up promptly. It is a
serious, serious problem for these kids.
Senator Hassan is next.
Senator Hassan. Well, thank you very much, Mr. Chair. Thank
you, Commissioner O'Malley, for being here today.
During your confirmation hearing in November, we discussed
our shared concern over the high rate of agency error in the
disability benefits determination process. I also understand
that the agency is facing a significant backlog of claims, with
more than a million initial disability claims pending, and the
average claimant is waiting nearly 8 months for a decision. As
you know, agency error and long wait times put already
vulnerable individuals at increased risk.
What actions have you taken to address these challenges
since being confirmed, and what tangible progress can Congress
expect during the coming year?
Commissioner O'Malley. And, Senator, to understand the call
of your question, when you say, ``agency error,'' do you mean
with regard to payments, overpayments, underpayments, or in the
decision itself?
Senator Hassan. In the initial decision itself.
Commissioner O'Malley. The Social Security Administration
runs what I understand to be the largest public administrative
adjudicatory body in the free world. There are several layers
of appeals. The one where we are experiencing the most stress,
the greatest backlog, and where we have suffered the greatest
attrition and the greatest decline in average processing time
is at the State DDSs.
Some of them have as many as 30 percent, 40 percent fewer
staff than they did before, and while we deploy other cadres
from other parts of the agency to try to bail out those DDSs,
it has been a real struggle. That is why, in the President's
budget, we would allocate--I believe it is $2.6 billion to
bring the staffing at those DDSs back up. That is the most
important thing we can do.
We also though have developed some technologies that allow
us to do a much faster job of curating, searching, and making a
determination on the relevant aspects of 1,000 pages of medical
records. That should also shrink the time somewhat.
Those are two of the most important things we are doing. I
spoke before on the overpayment aspect. Maybe that plays in
here, but the main challenge is that we have people just
waiting too long for an initial disability determination. If
you are unsuccessful at that initial determination, there is
another appeal in the same State office for the same 220 days
or more, and then there is an appeal to the ALJ hearing.
Our desire, what we strive to do, is better and more
accurate decisions right up front, rather than having to wade
through the waterfall or have people delayed. If people should
be on, we get them on, or if they should have an allowance, we
should do that as early as possible, not as late as possible.
I want to add just one thing. I know I am carving into time
here, but it is inspiring what this agency does, for all of its
understaffing and high workloads, to do the fast, compassionate
allowances when people are really hurting. They do that and
they take pride, and they do it silently; they do it quickly
though, and they largely do it well for people most in need,
within 30 days.
Senator Hassan. Well, I appreciate that, and I know my
constituent service staff would say that they have had some
really good, constructive conversations and partnerships with
people in your administration. But I do think that initial
claim time is really, really important, and the longer it
delays, the more it puts people who are very vulnerable and
eligible at risk.
I did want to turn to the overpayment and staffing issues,
if I could. The next two questions I have are how your budget
request can further the Social Security Administration's
efforts to prevent those overpayments and improve customer
service? Because compared to 1995, the Social Security
Administration has currently about 50 percent more customers
with fewer staff. This staffing shortage directly impacts
customer service, as well as payment accuracy. How does the
administration's budget request address the staffing needs at
the Social Security Administration, and is there specific
funding dedicated to reducing overpayments?
Commissioner O'Malley. Senator, thank you. Yes. In the
President's budget, we would propose using $269 million to
increase front-line staffing, $79 million at the teleservice
centers that suffer a 24-percent attrition rate, and also $85
million to the processing centers.
I mentioned, and as I said before--I might have misspoken--
the $2.6, $2.8 billion for the State DDSs. All of those, along
with improvements to technology, will help us to do a better
job of catching overpayments. As we have unpacked this issue of
overpayments, we have come to the conclusion, based on the
data, that we have not seen a big increase in the numbers of
people who suffer an overpayment through no fault of their own,
but because of our short staffing, it takes us longer to catch
up with that overpayment, and so the amount they owe is higher
by the time we take care of it. And each of those four areas I
outlined are a piece of getting that time down.
Ninety-two percent of Americans, when they are sent a
notice that they have an overpayment, actually call us or go to
their field office and say, ``People make mistakes; I will
repay it. Let us work out something reasonable.''
But for those 8 percent, we have been treating them in kind
of a very heavy-handed and draconian way, with really bad
consequences.
Senator Hassan. And that needs to change. Thank you.
Mr. Chair, a moment of personal privilege. The staff member
sitting behind me, Abby Bronson, this is her last Finance
hearing. She is going back to New Hampshire to work on housing
policy, and I just want to thank her very much for her
excellent work.
The Chairman. Very good; thank you. Thank you for the good
work as well.
Senator Blackburn is next, and let the word go to the
Democrats and Republicans, we are getting close to the end. The
Commissioner has been very patient, so there may be Democrats
and Republicans who wish to still ask questions.
We will go with Senator Blackburn next, and then I will
have a question or two. But we are going to get this wrapped up
pretty quickly. So, Democrats and Republicans, come if you are
so inclined.
Senator Blackburn?
Senator Blackburn. Well, thank you. Yes, thank you so much,
and we appreciate the opportunity to have you before us, and to
talk about the President's budget.
One thing that I want to go to is the trust fund, and I
know that the Social Security trust fund needs to be shored up.
It is to be exhausted in 2033, and then what we have read is,
CBO estimates that the program will pay a 75-percent benefit in
2033.
So, when you were before us previously, you refused to take
a position regarding what policy options should be explored to
shore up the Social Security trust fund. So I would like to
know if you have settled on something. Have you made
recommendations to the President? Why didn't we see those in
the budget?
Commissioner O'Malley. Well, Senator, I do not know that I
so much refused to take a position, as I deferred to the fact
that you are the power that gets to make that decision, not me.
But the President has said many times that he believes once
people make over $400,000, they should start paying into Social
Security again.
Others have had other times at which they believe that that
should happen, and there are proposals out there. Your
colleague from Rhode Island was just talking, before you came
in, about those things. So I will work, and our Actuary will
work confidentially, with any of you who want to look at the
various dials, as Senator Cassidy describes them, that are
necessary to be adjusted for long-term solvency of the system.
It is true that we face, once again, a depletion event like
we faced in 1982. It is coming on us faster, but that does not
mean that there is not the will in this Congress to come
together and push that out for another 75 years. The Actuary
told me there were two things that messed them up that they did
not account for.
One was the breadth of the 2007 to 2010 recession. And he
said the other thing that we did not account for was this: when
President Reagan and Howard Baker and Tip O'Neill asked us to
set a level for income, they said to capture 90 percent of
earned income. But then tax reforms happened after that 1982
fix, so they ended up only capturing 82 percent of earned
income, because we were going with this notion that if you let
wealth concentrate at the highest levels of our country, that
will make the economy better.
Agree or disagree with that, the mathematic effect on it
was to move that depletion date from 2050 to 2034--2034 is the
combined date. But that can also change. The new Actuary and
trustees' report will come out within the next 30 days, and you
know, we will of course share it with you.
Senator Blackburn. Okay, that is good.
Let me ask you this. Since you sit on the Board of Trustees
for the fund and the discussions with the Board, what has been
their approach to the solvency issue, because I know Senator
Cassidy--he and I have talked a lot.
There are things Congress will need to do. There are things
the administration is going to need to do. So, as the Board of
Trustees has looked at this, what has their approach to the
solvency issue been?
Commissioner O'Malley. Well, this will be my first meeting
of that board. I understand through COVID, they generally got
into a habit of kind of accepting the report on Zoom. That is
not really the deliberative body, as I understand it.
The Actuary is probably your best bet for sure of someone
who can call balls and strikes and score various policy
changes. But I do not believe we would ever meet to try to
pretend that we are the policymaking body on that. That is your
prerogative.
But I really would love--nothing would make me happier
during my time here than to be able to serve the members of
this committee or Congress overall in achieving what Tip
O'Neill and Ronald Reagan did in their own day.
Senator Blackburn. Okay.
There have been a couple of mentions of staffing shortages
and processing times, and we have looked at that. I found it
curious in the President's budget, he has a national paid leave
program that he is planning to have run out of Social Security,
and you have mentioned difficulty in meeting the workload.
You have even had something, episodic telework, whatever
that proposal is. But I would like for you to comment. Do you
have the bandwidth to do a national paid leave program when
your wait times have doubled since 2019?
Commissioner O'Malley. We would have the bandwidth if it
comes with the funding that I understand is in the bill. On our
current staffing, no, we would not be able to do that. But if
the additional funding that comes with that is there to
administer it, we could.
Senator Blackburn. And returning people to in-person work?
Commissioner O'Malley. Yes. Let me talk about that a little
bit. The episodic telework is a bit of a red herring. On
February 2nd, I did an into-the-camera announcement to all of
our staff and said, ``Look, you all, we are shifting now to
core collaboration days.''
What does that mean? In effect, that means I am in at work
5 days a week, and the Commissioner's office is 4 days a week,
1 of telework.
The field offices have been open 5 days a week, 9 to 5,
ever since COVID ended, and their balance is, an individual
person is 3 days a week in the office greeting customers, 2
days telework, where they get oftentimes a lot of their
adjudicatory stuff done, the processing of the claims on the
back end.
And then in all of the regions, we also insisted that we be
3 days in the headquarters, even if you are regional
headquarters, and 2 days of telework. This episodic telework
thing is in essence this. After I made that announcement, they
said, ``Well, what if somebody has a sick kid? Are you saying
that they cannot work from home when they have a sick kid, and
they have to stay home with that child?''
I said, ``Well, we're not monsters. We are human beings.
So, of course they could do that episodic telework for a half-
day.'' Then our labor commissioner said to me, ``You know the
unions, the organized workforce, are going to ask if they have
it.'' ``Yes,'' I said, ``Don't they already?'' They said, ``No,
they do not.'' I said, ``Well, that is silly.''
I had heard--because I traveled all around the country and
in all nine regions did town halls. There was a young dad, I
forget now, in Kansas or San Francisco. He said, ``You know, I
had a sick kid, had to get him to an emergency room, but my
wife was coming off of her job at noon, and all I said to my
boss was, `Could I have the morning off and come and give you a
full shift in the afternoon in the teleservice center,' '' and
she said, ``No, we do not do that.''
And I said, ``Well, that is stupid.'' Don't we want more
people on our phones when we are suffering from a staffing
shortage, our lowest staffing in 27 years, with the highest
number of beneficiaries? But the point of that is--and I'm
unpacking that on your time--that we have shifted to more
people on site, and that is across the country.
The Chairman. This is an important issue, but we are just
going to have to move on. And I look forward to talking with my
colleague and the Commissioner.
Senator Brown?
Senator Brown. Thank you, Mr. Chairman. Commissioner, thank
you for being here, and thank you for your willingness to
serve.
Social Security is a solemn promise, as we know. People
have paid into it all their lives, and deserve to know if the
government will protect that promise. I know that it has been
threatened by efforts to privatize and to raise the retirement
age, and all the things that conservatives have done that don't
serve the American public.
I have heard a lot of concern in Ohio about Social Security
overpayments. Chairman Wyden and Senator Casey and I sent a
letter last fall to the Acting Commissioner, asking why so many
people received overpayment notices in error, and what SSA will
do to fix it. Ohioans should not pay the price, obviously, for
the government's mistakes.
I am pleased to hear about the steps you are taking in your
first 90 days to reduce overpayments. I mentioned that to you
in some of our private discussions. So, thank you for that, and
we will continue to push on that and work on that.
There are steps you, as a Commissioner, can take to reduce
overpayments. There are steps that only Congress can take. I
know you talked about bunt singles or something, as some
Orioles fan might talk about. I know there is interest in both
parties on this committee to work together to address the root
causes of overpayments, so that benefits are administered
accurately and efficiently.
When you were here in November, you called the SSI asset
limit a leading cause of overpayments. You added that it
presented a significant administrative burden for SSA. Tell us
why you think the current asset limit is a burden, both for you
administering it and for beneficiaries?
Commissioner O'Malley. The asset limit has not been raised
for years and years. The asset limit is $2,000. SSI is about 4
percent of our benefit outlays, but it accounts for 40 percent
of our administrative work.
That is because, as a means-tested program, we have to
evaluate every month to make sure that no one in any given
month goes over their allowable amount that they can have as
assets in a savings account, or in earnings. So in essence, in
the short term, if it were raised from $2,000 to $20,000, as
your bill--and compliments and kudos to you and your Republican
colleague, Senator Cassidy, for your efforts both in the Senate
and the House, bicameral, bipartisan, to raise that.
Now, you should be very proud of that. Hopefully it is the
shape of more common-sense things to come. Eventually probably,
as we make it less burdensome for people to apply to the
program, more people will apply closer and closer to that
$20,000-limit edge. But the short term will be that it should
reduce the incidence and numbers of overpayments.
Senator Brown. Thank you. And it is just so important when
you meet--you know, one thing the chairman's really good at is
putting human faces on this. I mean, it is easy to go back home
and talk about statistics and this is not right, and that
number should be here, and that cost-of-living adjustments
should be built into it.
But we did a little event outside the Capitol--back, it was
a hot day, I remember, so it was maybe July or August into
September--with a young woman from my State who wants to work,
and she has worked as a greeter in a restaurant in Athens, OH,
and she keeps bumping up against this asset limit.
It makes no sense, and she is single. Raising it to $10,000
would make a huge difference. I mean, that is why Senators
Cassidy and Lankford and Casey and Hassan have all agreed to
sign on to this. It is just something we've got to commit
ourselves to do.
I'm running over my time. What progress are you making to
simplify the SSI application process?
Commissioner O'Malley. That is kind of a white whale of our
administrative pursuits. People have been saying--in fact, I
wish I had a dime for every time a person said, ``I mean, why
don't you just have TurboTax for SSI?'' It is a complex
problem. There has been a lot of work done on simplifying it.
We were talking earlier about the declining numbers of kids
who apply for SSI. I mean, the end game--the Social Security
Administration has been very slow to embrace digital
technologies, communicating with people via phone and text. As
a result, a lot of our so-called modernization efforts or
simplification efforts are really about taking paper forms and
turning them into online forms, which is not really
simplification. It might be electrification, but it isn't
simplification.
So we need to be building toward the end state of not just
simply putting forms with fewer questions on them online. We
really need to simplify the program, we need to simplify
communications to stay in compliance with the program, and I
think our best bet for that is going to be digital and texting
technologies.
We are working on it. We are not there yet. A lot of the
advocates did not like the first iteration we had because they
thought it was exclusive. They believe we should make it
simpler for everybody, not just for people who are wealthy and
can afford to navigate something like that.
Senator Brown. Well, we are going to keep watching. The
Chair, the President of the Richmond Fed one time said, ``Keep
watching what I am doing, and keep letting me know that you are
watching me.'' And we will let you know regularly, white whale
notwithstanding, that we are watching. Thanks.
Commissioner O'Malley. Thank you, Senator, for your
leadership on this and so many things.
The Chairman. Thank you, Senator Brown. And you really have
put a human face on this question of the asset limit, and I
look forward to working with you to make sure this actually
gets done.
Commissioner, it has been a long afternoon. I want to ask
you about something, the fancy word for it, apparently, is
``effectuation.'' And I am going to kind of walk you through
what we think it is, because when I heard about it, I said, ``I
am going to bring this up with the Commissioner.'' This came
up, you know, after we talked, so this is all kind of brand
new.
It seemed like it had been something more akin to a kind of
secret backlog, and here is how it came to us. So, there is a
period between the point at which Social Security awards
benefits--and in effect gives a thumbs-up to a person--and when
the benefit check is mailed or deposited in their account.
Now, many of these, of course, are done very quickly, with
no kind of fanfare or anything like that. But we have come up
against people who have been waiting for months, and here is
the case in Oregon.
We helped a mom in Medford, OR with three kids who had been
waiting for 8 months for her disability benefits. By the time
she got her first payment, she had basically drained all of her
savings and was at risk of losing her house.
So, we have not gotten into this. I had never really heard
the word ``effectuation,'' and you and I have talked a bunch of
times about how government jargon kind of consumes so much of
this.
Back in the days when I ran the legal aid program for the
elderly, I used to follow all this. But what can be done--and I
recognize this is the first time it has been brought up. What
can be done to get on top of this, so that people like the
person we helped in Medford, OR are not going to be clobbered
this way?
Commissioner O'Malley. Yes, sir. When we talk about the
backlogs at the processing centers--and those aspects of the
President's budget that would allow us to bring down that
backlog at the processing centers--I do believe that that is
what you are hearing from people when they talk about
effectuation, the time it takes to effectuation. They manage to
survive and hang in there all the way through the hearing and
appeals and everything else, and then they are drumming their
fingers for another 5 months waiting for the backlog at the
processing centers to clear.
We have a big backlog at the processing centers, but there
is no denying the fact that we have lost a lot of staff there
as well. And that is why the President's budget is so important
to get us back up to that level of customer service so you do
not have these cases.
The backlog, the processing backlog--we propose putting $85
million to address the processing centers' backlog, which
should help alleviate some of the waits that people experience
in that. I am sure that there is probably more nuance to it,
depending on what sort of effectuation it is.
The effectuation for the retirees, as you mentioned, goes
very quickly. Others are more complex. If it involves making a
calculation in two programs, it can become even more complex
than that. But it is that processing center backlog that we
talked about earlier where the effectuations are most delayed.
The Chairman. Well, with your lead, Mr. Commissioner, I
will have our staff start talking to your staff. And look, you
are making the case that a lot of people would be pretty
skeptical that government can do smart stuff and government can
do it well.
And you have outlined a number of steps for us today, in
response to questions from Democrats and Republicans here on
the committee, that are going to set in motion--and you have
done it in less than 100 days--some very substantial changes.
So I want it understood that I think you are really off to
a strong start in terms of righting wrongs. We have lots of
stuff to do, and clearly trying to show that you are making a
lot of progress is going to strengthen the hand of those of us
who want to make sure you have the resources to do more and to
get these policies up and running as quickly as possible. So we
thank you.
For the Senators, questions for the record have to be
submitted by next Wednesday, March 27th, at 5 p.m.
Commissioner, it has been a long afternoon. Thanks for your
good work. Thanks for your patience in responding to all these
questions.
With that, the Finance Committee is adjourned.
[Whereupon, at 4:39 p.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Hon. Mike Crapo,
a U.S. Senator From Idaho
Thank you, Senator Wyden, and thank you, Commissioner O'Malley, for
appearing before the committee this afternoon to discuss the
President's Fiscal Year 2025 budget for the Social Security
Administration.
Commissioner O'Malley, during your nomination hearing, you
committed to making customer service improvements at the SSA a top
priority. During today's hearing, I look forward to hearing more about
your approach to addressing SSA's ongoing challenges with wait times
for the national 800 number; processing times for disability decisions
and improper payments; the data and metrics you are looking at to
evaluate your progress; and how the Biden administration's budget
request for the SSA supports these efforts.
Average wait times for the national 800 number have ticked down
slightly over the last few months, but still remain above 30 minutes.
After years of delays, the SSA has successfully transitioned its
national 800 number to a new phone service platform. While the budget
highlights the expected benefits of this new phone system, SSA must do
more to ensure that future information technology projects make
responsible use of taxpayer dollars by being delivered on time and on
budget.
Americans across the country continue to wait far too long to
receive a disability decision from SSA. The President's budget proposes
addressing these wait times through hiring and retaining State
Disability Determination Services employees and seeking process
efficiencies, including improved technology.
The budget also highlights a proposed rule the agency claims would
improve its disability adjudication process by reducing the number of
years of past relevant work SSA considers when making disability
decisions. While SSA's disability rules need revisiting, simplification
should not always result in more mandatory spending. SSA should also
focus on updating the outdated occupations list used in making
disability decisions, to ensure the correct applicants are receiving
benefits. SSA has already spent a substantial amount of time and
resources on this update, and I urge you to stick to your commitment of
making this update a high priority.
During your nomination hearing, Senators on both sides of the aisle
underscored the need for SSA to do more to reduce improper payments.
Last month, SSA took an important step toward implementing the Payroll
Information Exchange provision in the Bipartisan Budget Act of 2015.
Once this new exchange is in place, it is expected to improve payment
accuracy and reduce the self-reporting burden on beneficiaries.
I also understand that SSA has been reviewing its policies and
procedures to identify what more can be done to help prevent and
address overpayments. I look forward to hearing more about these
efforts today. As SSA continues this work, the agency must be careful
to address the initial errors, not just waive the mistakes after they
have occurred.
While the President's budget includes operational requests for
Congress to consider, it fails in addressing Social Security's long-
term solvency. The Social Security program provides benefits to
millions of seniors, individuals with disabilities, and their families.
We must ensure current beneficiaries and future generations will be
able to depend on the program by addressing its financing shortfalls.
The President's budget does not include any legislative proposals
to back up his stated commitment to protect and strengthen Social
Security. The solutions to preserving it are increasingly difficult as
more time is wasted.
Thank you again for being here today, Commissioner O'Malley, and
thank you, Mr. Chairman.
______
Prepared Statement of Hon. Martin O'Malley,
Commissioner, Social Security Administration
Chairman Wyden, Ranking Member Crapo, and members of the committee,
thank you for inviting me to discuss the Social Security
Administration's (SSA's) service delivery, customer experience, and
Fiscal Year (FY) 2025 budget request. I am Martin O'Malley,
Commissioner of SSA, and I am deeply honored to be here today on behalf
of the agency's thousands of skilled and dedicated employees.
Social Security is the most far-reaching and important act of
social and economic justice that the people of the United States have
ever enacted, and it is the honor of a lifetime to answer the call to
public service once more by leading SSA towards a better future. In
particular, I pledged before this very committee to make improving
SSA's customer service my top priority. With your consent, I was sworn
in as Commissioner exactly 3 months ago today.
It is my strong belief that the public deserves the highest level
of customer service from their government. We owe it to every American
to improve the customer service and support provided by Social
Security, so people can get answers to their questions and get their
benefit applications decided in a timely manner. These are your
constituents, your neighbors, your friends, and your family. They have
paid into the Social Security system, and that includes paying for
adequate customer service from the agency.
the current state
Social Security Is Serving More Customers Than Ever Before With Fewer
Staff Than Ever Before
By the end of FY 2024, SSA will serve over 7 million more
beneficiaries with about 7,000 fewer full-time permanent staff when
compared to FY 2015 (Figure 1). While modernization and other
efficiencies have helped for some things, there is no way around the
fact that the agency cannot keep doing more with less.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
SSA's budget was essentially level from FY 2018 through FY
2021, while costs continued to increase. We had to make difficult
decisions to cut funding in certain areas, such as staffing and
overtime. As a result, we ended FY 2022 with our lowest staffing level
in 25 years.
With your support, we received a $785 million increase in FY 2023
over FY 2022. We used that funding to begin to rebuild our workforce to
better serve our customers and beneficiaries. Our staffing increased to
nearly 60,000 at the end of FY 2023--still historically low, but better
than the roughly 56,000 at the end of the prior year.
Currently--due to the extended continuing resolution (CR) that we
are under in FY 2024--we have stopped all hiring, and our staffing
levels have already fallen below where they were in April of last year.
If we continue this path of no hiring, we will fall to a new all-time
low of around 55,000 full-time permanent staff by the end of this
fiscal year--nearly 11 percent lower than the roughly 62,000 full-time
permanent staff we averaged from 2010 through 2019.
Similarly, the State Disability Determination Services (DDS) were
able to make some progress increasing their staffing levels in FY 2023,
following years of record-high attrition and a historically low
staffing level in FY 2022. But in FY 2024, the DDS have quickly dropped
below last year's staffing levels due to our pause in hiring given the
funding level, which is leading to a severe setback in addressing a
service delivery crisis.
SSA Has Extremely Low Operating Expenses
Members may be surprised to learn that Social Security has now been
reduced to operate on less than 1 percent of its annual benefit
payments. This is extremely low--much lower than private insurance
companies. For instance, Allstate operates on 19 percent of its annual
benefit payments, and Liberty Mutual operates on nearly 24 percent of
its annual benefit payments.
Please know that I am not suggesting that this was something done
knowingly and willingly to Social Security by members of Congress.
However, Congress has not granted Social Security its own budget or
appropriations hearing in 9 years.
We can and must do better. We want to work with Congress to sustain
the funding increases in the President's FY 2025 budget and beyond, to
enable SSA to improve service levels and reduce wait times.
Under the current system, Social Security's operating overhead, as
a share of benefit outlays, has shrunk by 20 percent over the last 10
years. A decade ago in FY 2015, Congress provided a funding level that
represented 1.26 percent of benefit outlays for operating expenses
(Figure 2). But the proportion has been shrinking over time, as our
appropriated administrative expenses have not kept pace with the growth
in our beneficiaries and benefit outlays. In FY 2023, it was down to
1.01 percent, and under a full-year CR for FY 2024, it will drop under
1.0 percent for the first time ever, to just 0.94 percent.
Our Service and Customers Are Suffering
As a result of this historic underfunding and understaffing, Social
Security faces a service delivery crisis. The situation is dire, and
the public we serve is paying the price as they attempt to access the
benefits that they have already worked their whole lives to earn. For
example:
Backlogs in the States continue to grow. Disability applicants
are waiting on average nearly 8 months (228 days) for an initial
decision and an additional 7 months (223 days) for those who request a
reconsideration. However, for those applicants with the most severe
health conditions, we award benefits in less than 30 days.
People who try to reach us by phone are now waiting on hold for
38 minutes or more on a dysfunctional 800 number system.
And our agency has long strived to get the right amount to the
right person at the right time, but struggles to catch erroneous
overpayments in a timely manner, which can have damaging consequences
for beneficiaries.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
But still, we do our very best every day to serve the highest
number of beneficiaries we have ever served in the face of the lowest
projected staffing levels in 27 years.
how we're addressing the service delivery crisis
As soon as I was sworn in 3 months ago, I announced my intent to
focus the agency on three key service delivery challenges in 2024:
disability determination wait times, national 800 number wait times,
and overpayment and underpayment inequities.
Since then, I have held countless briefings with executives and
staff, met with labor partners and advocates, and most importantly, I
have traveled to SSA's regions across the country to meet with and
learn from the dedicated employees who are tirelessly serving members
of the public each day in our offices and on our phones. I conducted 10
town halls in headquarters and the regions where I was able to interact
with about 2,000 employees. I visited field offices, hearing offices,
processing centers, and teleservice centers. I sat in with call center
representatives taking calls and sat side by side with claims
specialists interacting with the public. I heard countless suggestions
for improvements both big and small, some of which we are already
beginning to implement. I also made an open call for employees to
submit their ideas and insights for improving customer service, and so
far, we have received nearly 3,000 submissions and counting. I am
grateful to the dedicated SSA employees who took the time to submit
their ideas, and I have begun to personally review and respond to as
many as I can each week.
Based on what I have learned from inside and outside of the agency,
including conversations with employees and customers, I have
implemented numerous changes to improve both our employees' experience
and our customers' experience with us. I like to call these quick wins
or low-hanging fruit--that is, things where we have the authority and
the ability to act quickly and make immediate improvements, no matter
how seemingly small.
For example:
During my visit, one employee in Boston identified the need
for a simple technology fix to create a ``no to all'' button
(similar to ``select all'') within the claims-taking process on
Supplemental Security Income (SSI) applications. By doing so,
we could reduce staff time in collecting information on
applicants' financial resources. We were able to implement this
fix within 4 weeks of first hearing the idea.
Also based on an employee suggestion--this one from
Birmingham--we rolled out a nationwide expansion of a new
Automated Medicare Process (AMP) to improve back-end processing
for online Medicare claims. This will reduce processing time
from 7 minutes to 7 seconds, freeing up the equivalent of
around 40 people to do other critical pending work. In 1 week,
we implemented a fix that had been stalled since 2011.
To further increase our ability to collaborate, engage, and
innovate across the agency, I announced an increase in on-site
presence at SSA's headquarters and regional offices, starting
April 7th. (SSA's field offices have been fully open to the
public since early 2022 and are not affected by this change.)
Last month, we published formal notice of our plans to
access and use information from payroll data providers.\1\ This
long-awaited automated payroll information exchange (PIE) will
reduce wage-related overpayments by ensuring we receive timely
and accurate wage data. The notice is open for public comment
until April 15, 2024, and we encourage all interested parties
to submit comments.
---------------------------------------------------------------------------
\1\ SSA, ``Use of Electronic Payroll Data To Improve Program
Administration.'' Federal Register, 89 FR 11773. February 15, 2024,
https://www.federalregister.gov/documents/2024/02/15/2024-02961/use-of-
electronic-payroll-data-to-improve-program-administration. See also:
SSA, ``Social Security Publishes Proposed Rule for Payroll Information
Exchange to Reduce Improper Payments,'' February 15, 2024, https://
www.ssa.gov/news/press/releases/2024/#2-2024-2.
We are also working on three final rules that will simplify
and streamline the consideration of non-cash assistance within
the SSI program. By taking these actions, we will increase the
accessibility of this vital needs-based assistance, while also
decreasing overall processing time.
SecurityStat
On February 5, 2024, we launched SecurityStat, standing biweekly
leadership meetings to track and align on key performance outcomes
across rotating challenges. Many of you have kindly sent your staff to
observe this new way of doing business at SSA. Your attention, your
interest, and the presence of your staff at our side have been more
deeply appreciated than you can know.
SecurityStat is based on the successes I had with CitiStat and
StateStat in my prior roles. I have found in my past experience that a
focus on data for all, combined with regular accountability and
collaboration, helps to create a winnable game for employees and
improve performance across the board, especially in large agencies.
That is precisely what SecurityStat is about.
The four central tenets of SecurityStat are: timely, accurate
information shared by all; rapid deployment of resources; effective
tactics and strategies; and relentless follow-up and assessment.
SecurityStat is critical because the service delivery challenges
that we face are cross-cutting. No one component of SSA, no matter how
well-led, can solve any one of these problems by itself. Rather, we
must work together across the agency in timely, agile, and
collaborative ways as never before. SecurityStat provides a systematic
and recurring method of doing that, by gathering the top leaders in a
room together and engaging in data-driven performance management.
So, every 2 weeks, in a rotating fashion, we gather together and
focus intensely on the most important things SSA is charged with
accomplishing for the American people and for you, their members of
Congress. For 1 blessed hour every 2 weeks we focus, together, on each
of eight key challenges:
Field operations.
Human Resources.
National 800 number.
Overpayments and underpayments.
Disability determinations.
Disability hearings.
Fraud.
Notices.
On an encouraging note, I have found that there is a certain muscle
memory at SSA. The senior executives and front-line managers have
responded very positively to this newer, faster cadence of
collaboration and accountability.
On the first Monday of the SecurityStat rotation, we begin by
focusing on field operations--the more than 1,200 field offices, 8
processing centers, and 24 teleservice centers that make this agency
go. We discuss ways to reduce the attrition rates that plague the
agency, currently 10 percent in the field offices and 22 percent among
the staff answering the phones on the national 800 number. We discuss
ways to improve performance and service delivery even in a reality
where customers keep increasing and staffing keeps declining. Then, we
focus on the flip side of service delivery--the human resources of the
skilled and trained employees necessary for us to serve the American
people even as we labor under a total hiring freeze.
On Tuesday mornings in the first weekly rotation, we turn first to
Social Security's national 800 number. Average wait times for customers
trying to reach us by phone have skyrocketed to 38 minutes today,
nearly double the FY 2019 wait time of 20 minutes. Five to 7 million
people call our 800 number every month, and about 4 million of them
hang up in disgust after waiting far too long. This year was the 35th
anniversary of our 800 number, and it was a challenging one thanks to a
woefully underperforming phone system that has fallen far short of our
expectations. Under the current technology, our managers have no
visibility into the work being done, and call-takers have no view into
the customers who pop up onto their screen. In addition to the
technology shortcomings, we are struggling now with a 22-
percent attrition rate in our teleservice centers and among other staff
answering the phones. All options are on the table as we do everything
in our power to reduce unacceptably long wait times being endured by
our customers.
Overpayments and Underpayments
In the second topic of our first Tuesday rotation, we turn to
overpayments and underpayments. For 88 years, the hardworking employees
of the Social Security Administration have strived to pay the right
amount, to the right person, at the right time. And the agency has done
this with a high degree of accuracy over a massive scale of
beneficiaries; our overall accuracy rates are 99.34 percent for Social
Security and 90.80 percent for SSI based on our stewardship reviews.\2\
In fact, one of the unsung stories of heroism in our Nation's battle
against the COVID-19 pandemic was SSA's Herculean accomplishment of
cranking out those checks to protect beneficiaries' income and health
care during a critical time in the pandemic.
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\2\ See PaymentAccuracy.gov. These overall accuracy figures
consider both overpayments and underpayments for FY 2022, the most
recent data available.
But despite our best efforts, we sometimes get it wrong and pay
---------------------------------------------------------------------------
beneficiaries more than they are due, creating an overpayment.
When that happens, Congress requires that we make every effort to
recover those overpaid benefits. But doing so without regard to the
larger purpose of the program can result in grave injustices to
individuals, as we see from the stories of people losing their homes or
being put in dire financial straits when they suddenly see their
benefits cut off to recover a decades-old overpayment, or disability
beneficiaries attempting to work and finding their efforts rewarded
with large overpayments. Innocent people can be badly hurt. And these
injustices shock our shared sense of equity and good conscience as
Americans.
We are continually improving how we serve the millions of people
who depend on our programs, although we have room for improvement, as
media reports last fall revealed. We have also embarked upon a deep
dive into the extent of the overpayment problem at Social Security, the
root causes of these administrative errors, and the steps we can take
as an agency to address these individual injustices.
Our deeper understanding of the complexities of this problem has
set us on the following course of action:
1. Starting next Monday, March 25th, we will be ceasing the
heavy-handed practice of intercepting 100 percent of an
overpaid beneficiary's monthly Social Security benefit by
default if they fail to respond to our demand for repayment.
Moving forward, we will now use a much more reasonable default
withholding rate of 10 percent of monthly benefits (but not
less than $10 per month)--similar to the current rate in the
SSI program.
2. We will be reframing our guidance and procedures so that
the burden of proof shifts away from the claimant in
determining whether there is any evidence that the claimant was
at fault in causing the overpayment.
3. For the vast majority of beneficiaries who request to work
out a repayment plan, we recently changed our policy so that we
will approve repayment plans of up to 60 months. To qualify,
Social Security beneficiaries would only need to provide a
verbal summary of their income, resources, and expenses, and
recipients of the means-tested SSI program would not need to
provide even this summary. This change extended this easier
repayment option by an additional 2 years (from 36 to 60
months).
4. And finally, we will be making it much easier for overpaid
beneficiaries to request a waiver of repayment, in the event
they believe themselves to have been without any fault and/or
without the ability to repay.
Implementing these policy changes--with proper education and
training across the people, policies, and systems of the agency--is an
important but complex shift. And we are undertaking that shift with
urgency, diligence, and speed.
There are some changes that can only be effectuated by the will and
good judgment of Congress. I look forward to working with members to
discuss ideas that could address the root causes of overpayments.
In addition to our focus on overpayments, we are also working to
increase our processing of SSI underpayments, particularly for the
oldest and highest-priority cases. As of March 11th, we have processed
46,319 underpayments and released approximately $120 million this
fiscal year to our customers with these aged and priority
underpayments. And we are on track to complete 98 percent of these
underpayments by the end of FY 2025.
SecurityStat, Continued
As we continue our SecurityStat rotation into the second week, on
Mondays we focus first on the shamefully long time that it now takes
for State DDSs to make an average initial disability determination. Ten
years ago, when our appropriations represented a larger share of our
annual outlays, we were able to make these needed determinations in 110
days. But today, operating on less than 1 percent of annual outlays, it
takes our DDSs an average of 228 days to make the same initial
determinations (Figure 3). We have the longest average processing time
and the highest number of pending cases ever in the history of our
disability program for initial claims.
In other words, disability applicants are waiting on average nearly
8 months (228 days) for an initial decision and an additional 7 months
(223 days) for those who request a reconsideration. We must do better,
and our long-term goal is to reduce those waits to 4 months (120 days)
each.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
At the next level of appeal, disability applicants who have
requested a hearing with an administrative law judge (ALJ) currently
face an average wait time of 365 days--a whole year--to get a decision.
We continue to work toward our goal of issuing hearings decisions
within 9 months (270 days) on average.
On Tuesdays of the second week of the SecurityStat rotation, we
focus with the Office of Inspector General at the table on fraud and
the tactics and strategies we can take, together, to get inside the
turning radius of the bad actors. Following the fraud stat, we focus
for 1 hour, as a group, on what we can do to reduce the number,
expense, and confusion we inflict upon our customers through long and
impossible-to-understand notices.
So that is how we spend our weeks fighting to serve an all-time
high number of customers with a 27-year low in staffing. Our duty is to
serve the people who depend on the benefits they have earned through
Social Security.
I remain encouraged that the overwhelmed, hardworking, exhausted
men and women on the frontlines of this agency--those who haven't quit
to find less stressful or higher paying jobs elsewhere in the Federal
Government or beyond--still wake up every day to serve their country by
serving their neighbors.
Our FY 2025 Budget
I am confident that with the rapid cadence of accountability and
collaboration that SecurityStat provides, and continuous solicitation
of areas for improvement from employees and customers, we will begin to
make forward progress. But we cannot do it alone; we need your help to
ensure we have the necessary funding and staffing.
As the Mayor of a cash-strapped city and then a recession-era
Governor, I'm quite familiar with operating on tight budgets. I also
spent nearly a year intensely studying SSA materials from the outside
before my confirmation. Even with all of that, SSA's budget is far more
dire than I thought. Years of underfunding have decimated our staffing
levels and therefore also our ability to serve the public.
Coming off a challenging budget year in FY 2024, it is critical
that we receive adequate funding in FY 2025. Approval of the FY 2025
President's budget request of $15.4 billion for SSA would allow us to
begin making progress toward improving customer service.
We know that additional funding makes a difference. The U.S.
Department of Veterans Affairs (VA) received an infusion of funding and
increased its satisfaction and trust among veterans from 50 percent to
nearly 80 percent. The Internal Revenue Service (IRS) used additional
funding to reduce its call wait times from 30 minutes to 4 minutes. SSA
was able to dig out of the initial disability claims backlog during the
Great Recession with significant funding provided through the American
Recovery and Reinvestment Act of 2009. I am confident we can do it
again, but it will take sufficient funding, just as it did for IRS and
VA.
Under the FY 2025 President's budget, we would be able to restore
staffing to FY 2023 levels and begin to improve our service delivery.
The budget supports an infusion of staff in our teleservice centers to
significantly reduce 800 number wait times, to 12 minutes in FY 2025.
The budget will also expand staffing and overtime in the DDSs, yielding
an expected 185,000 more initial disability claims processed and over
100,000 more reconsiderations than we estimate processing in FY 2024.
We will focus on those customers waiting the longest for a decision,
which will pave the way for dramatic improvements in average processing
time. The budget also includes the resources needed to reduce the
hearings backlog and prevent its recurrence as we work down the initial
claims backlog.
in conclusion
The American people worked their whole lives to earn the benefits
of Social Security--and those benefits include the right to an
appropriate level of customer service. I have every confidence that a
restoration of service levels at Social Security--here and now--will
produce a dividend of trust for generations to come.
Let me say, finally, on behalf of the agency, how grateful I am for
the funding level proposed in the FY 2025 President's budget. This
additional funding will be a huge help in our mission to provide the
American people with a level of customer service for which they've
already paid, but have in recent years consistently been denied.
I look forward to answering your questions.
And it is my great honor to serve the people of our republic in my
capacity as their Commissioner of Social Security.
______
Social Security Administration
A Path to Improve Customer Service
Today and Into the Future
March 2024
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Questions Submitted for the Record to Hon. Martin O'Malley
Questions Submitted by Hon. Ron Wyden
Question. At the time of this hearing, SSA was operating under a
hiring freeze due to flat funding and was at risk of losing 5,000
employees by the end of FY 2024.
How do hiring freezes or hiring restrictions impact customer
service?
Answer. The inability to hire degrades our customer service in key
areas such as telephone service, the time it takes to get an
appointment, and claims processing times.
Question. Unfortunately, it is not the first time Congress was
unable to pass a full-year spending bill and instead enacted continuing
resolutions with little or no changes to funding levels.
Please provide all instances of SSA or government-wide hiring
freezes or restrictions due to insufficient funding. For each instance,
please include impacted components and positions and their respective
role in customer service.
Answer. For each of the last 12 fiscal years, we had either a
hiring freeze or restricted hiring. For each year from FY 2013 through
FY 2018, the freezes were mainly related to starting each fiscal year
under a continuing resolution (CR), which restricts our ability to hire
and often results in a full or partial hiring freeze. Additionally, in
FY 2017, there was a government-wide hiring freeze, which was
implemented by the President, which lasted from January through April.
From FY 2019 to FY 2022, our staff components were frozen to
dedicate all hiring to front-line positions.
In FY 2023, while we had significant hiring due to a $785-million
increase in our appropriation, we had to significantly reduce these
efforts starting in June due to spending limits prescribed in the
Fiscal Responsibility Act of 2023. Although we did not have a freeze in
FY 2023, there was a significant reduction in the number of hires that
were authorized.
These limitations impact all of SSA's components. However, the
biggest impact generally affects our front-line operational positions
who provide direct public service.
Question. As you may know, the Social Security Advisory Board
published a report in February 2024 examining the agency's effectuation
process, focusing on SSDI and SSI awards. The report found significant
variances in processing time based on the type of benefit and the stage
in which the claim was awarded. The report also noted data limitations
in SSA's 2020 public use file version of the Disability Analysis File
which restricted further investigation.
In its October 2022 report to Congress, SSA did not distinguish
among SSI-only, SSDI-only, and concurrent claims. Please provide a
table of effectuation time by claim title and award level (initial,
reconsideration, ALJ, appeals council, Federal court) for each fiscal
year from 2019-2023 and FY 2024 year to date.
Answer. We do not have the requested information due to systems
limitations that do not allow for that type of analysis.
Question. Please describe any differences in the effectuation
process between claims awarded after Federal court remand are
effectuated and other claims. How does SSA track effectuation time for
Federal court remands? Does SSA have any plans for improving the speed
of effectuation for these cases?
Answer. Our analysis finds there are generally no differences in
the effectuation process between claims awarded after Federal court
remand and other disability claims. Once federally remanded claims are
approved by SSA's Appeals Council or an administrative law judge, they
are transferred to the effectuation component (field office or
processing center depending on claim type) and tracked locally to
develop the nonmedical factors and determine eligibility and payment
amounts.
In addition to our recent agency accomplishments,\1\ and as
outlined in our FY 2024 SSA Action Plan,\2\ we are continuing to
identify ways to optimize our internal and external processes, which
would improve claims effectuation. For example, we are working to
strengthen employee training, streamline technician tools, expand
digital submission channels, and improve our notice clarity.
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\1\ https://www.ssa.gov/agency/commissioner/100-days-
accomplishments.html.
\2\ https://www.ssa.gov/agency/materials/ssa-action-plan-2024.pdf.
Question. When considering cases that take a long time to
effectuate, are there any patterns by case characteristics? Has SSA
analyzed its case flow to identify potential sources of process
backlogs or inefficiencies? What is SSA doing to improve effectuation
---------------------------------------------------------------------------
time and accuracy for those claims?
Answer. Cases that take longer to effectuate generally have a
longer look-back period--say, the preceding 24 instead of 12 months--
for our employees to obtain and review necessary evidence from the
beneficiary and other sources, as appropriate. Some claims are complex
requiring manual actions like windfall offset calculations, multiple
systems inputs and coordination across field offices and processing
centers to determine eligibility and payment amounts. Additionally, the
claimant may have moved making it difficult to reach them.
As noted in our response to the previous question, we are working
to strengthen employee training, streamline technician tools, expand
digital submission channels, and improve our notice clarity.
Question. What information does SSA collect about the time it takes
different processing centers to effectuate claims? Please share any
information for the past 3 fiscal years.
Answer. We track the percentage of disability claims processed
timely meaning they were effectuated prior to the first payment being
due or within 16 days of receipt by the processing centers (PCs). Below
is a table reflecting PC timeliness for the past 3 fiscal years.
SSA Disability Claims Timeliness
------------------------------------------------------------------------
SSA Processing Center (PC) FY 2021 FY 2022 FY 2023
------------------------------------------------------------------------
PC 1 Northeastern 92.2 92.2 92.0
------------------------------------------------------------------------
PC 2 Mid-Atlantic 94.8 96.2 95.4
------------------------------------------------------------------------
PC 3 Southeastern 94.3 93.0 91.8
------------------------------------------------------------------------
PC 4 Great Lakes 91.6 90.3 89.7
------------------------------------------------------------------------
PC 5 Western 91.5 92.3 91.9
------------------------------------------------------------------------
PC 6 Mid-America 93.3 94.1 94.0
------------------------------------------------------------------------
PC 7 Disability Operations 90.4 93.1 92.2
------------------------------------------------------------------------
PC 8 Earnings and International 93.1 87.0 91.7
Operations
------------------------------------------------------------------------
All PCs 92.4 93.0 92.4
------------------------------------------------------------------------
Question. SSA's October 2022 report to Congress and the FO2 time
metric both measure from the date of the award of benefits to when the
awardee is put into pay for monthly benefits. What management
information does SSA have on when awardees receive lump-sum retroactive
benefits (or, in the case of large underpayments of SSI, the first
installment of retroactive benefits)? Does SSA have plans to collect or
publish more data on payment of retroactive benefits?
Answer. We track how long SSI underpayments are pending. Our
underpayment accuracy rates are high: our internal quality reviews,
which a third-party auditor validates, indicate that 91.98 percent of
all SSI payments were free of overpayments, and 98.82 percent were free
of underpayments in FY 2022. For FY 2024-2025, we have established a
new priority goal to increase underpayment processing of our oldest and
highest priority cases,\3\ including those disproportionately impacted
by poverty. Through August, we processed 93,000 underpayments and
released approximately $245 million this fiscal year to our customers
with these aged and priority underpayments. We are on track to complete
our goal of 98 percent of these underpayments by the end of FY 2025.
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\3\ Per our Updated 2023 Agency Equity Action Plan (https://
www.ssa.gov/equity/assets/materials/2023.pdf), these priority cases
fall into one of the following categories: dedicated accounts with
pending payments on a current or prior record, uncashed checks, pending
payments over $5,000, and pending payments on a prior record including
potential payments to an authorized representative.
We are also working to improve our data on underpayments to inform
additional opportunities to expedite processing. For example, we are
focusing on processing SSI underpayments that meet our criteria for
exceptions to installment payments such as individuals who are
terminally ill. As we improve the quality of our underpayment data, we
will assess opportunities to collect and publish data on payment of
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retroactive benefits.
Question. Is SSA considering adding Representative Call Centers at
PCs that currently do not have them? What factors are involved in SSA's
decision-making on this topic?
Answer. Yes, we are exploring the feasibility of adding
Representative Call Centers at PCs that do not currently have them, and
considering key factors like staffing availability and workload
considerations.
Additionally, we updated our Appointed Representatives Services
(ARS)\4\ application to allow appointed representatives to access a
list of all their pending cases, electronically, in real time, and to
know if their SSA Form--1696 (Claimant's Appointment of
Representative)\5\ was processed without having to resubmit the form or
contact our offices for status.
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\4\ https://www.ssa.gov/ar/.
\5\ https://www.ssa.gov/forms/ssa-1696.pdf.
Question. Please provide data for each of the past 3 fiscal years
on the number and percentage of SSI claims where a full claim was taken
(also called ``simultaneous development'') that were awarded in 120
days or less, 121-150 days, 151-180 days, and 181 days or more. If
possible, please provide both national figures and data for each DDS.
Does SSA have any initiatives or plans to identify claims that
underwent simultaneous development and are approaching 120 days since
application in hopes of obtaining a decision quickly enough that a Pre-
Effectuation Review Contact (PERC) is unnecessary? Has SSA considered
whether 120 days is an appropriate threshold, or are there any plans to
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do so?
Answer. We do not have the requested data, due to systems
limitations. However, we want to note that SSI claims that require
simultaneous development (i.e., a full claim), such as claims involving
Quick Disability Determinations and Compassionate Allowances, are fast-
tracked for expedited effectuation.
Additionally, we are evaluating what the appropriate threshold
should be.
Question. Is SSA familiar with the issue of ``phantom'' windfall
offsets, described by the SSAB as ``situations where the SSI portion of
a concurrent claim was denied, but the DI effectuator does not act
because they are waiting for SSI effectuation''? What information does
SSA have about the extent of this issue, and what plans does the agency
have to improve effectuation of such claims? Has SSA considered
returning to the agency's previous policy of allowing staff to delete
offset coding in MCS before adjudicating claims, and what
considerations would be needed to ensure payment accuracy if this were
permitted?
Answer. Yes, we are familiar with situations when the SSI portion
of a concurrent claim was denied, and technicians must update the
record indicating windfall offset does not apply. We have updated our
systems so technicians can make inputs to delete the offset coding in
the Modernized Claims System (MCS) before adjudicating the claim to
release the title II retroactive benefits when windfall offset does not
apply. We also have mechanisms in place to alert our employees to
update the record. However, this process may involve coordination
across our field office and PC jurisdictions. We will continue to work
to improve complex workloads like windfall offset though training and
automation, wherever possible.
Question. Does SSA plan to update its Fiscal Year 2024 and/or FY
2025 Agency Priority Goals to include improvements to the disability
effectuation process? If so, what are those goals?
Answer. We do not plan to update our FYs 2024-2025 Agency Priority
Goals (APG) \6\ to include improvements to the disability effectuation
process.
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\6\ https://www.performance.gov/agencies/ssa/apg/fy-24-25/.
However, one of our current APGs focuses on improving initial
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disability processing time, and to help achieve our goal we are:
Implementing the Past Relevant Work rule \7\ to reduce from
15 to 5 the years of work we consider in making disability
determinations;
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\7\ Federal Register: Intermediate Improvement to the Disability
Adjudication Process, Including How We Consider Past Work, https://
www.federalregister.gov/documents/2024/04/18/2024-08150/intermediate-
improvement-to-the-disability-adjudication-process-including-how-we-
consider-past-work.
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Restoring a pre-2018 policy, known as Collateral Estoppel,
to allow technicians in local offices to apply a prior
determination of disability;
Implementing regulations to streamline what we count as
income for calculating SSI eligibility and payments;
Raising the fee cap for claimants' representatives to remove
a potential barrier for people looking for quality
representation; \8\ and
---------------------------------------------------------------------------
\8\ Federal Register: Maximum Dollar Limit in the Fee Agreement
Process, https://www.federalregister.gov/documents/2024/05/10/2024-
10248/maximum-dollar-limit-in-the-fee-agreement-process.
---------------------------------------------------------------------------
Implementing a final rule,\9\ which provides a reliable
method for us to directly pay authorized appointed
representative fees to affiliated entities.
---------------------------------------------------------------------------
\9\ Federal Register: Changes to the Administrative Rules for
Claimant Representation and Provisions for Direct Payment to Entities,
https://www.federalregister.gov/documents/2024/08/21/2024-18497/
changes-to-the-administrative-rules-for-claimant-representation-and-
provisions-for-direct-payment-to.
These improvements will help lessen the administrative burden for
claimants, representatives, and SSA employees, and reduce the time it
---------------------------------------------------------------------------
takes to process disability claims.
Question. The report identified document submission and processing
as a particular pain point of the effectuation process is collecting
similar or the same type of information during the claims process. It
seems that SSA's eSubmit program would help reduce some of the
administrative burden for SSA and its customers. Has SSA considered
expanding eSubmit's use to allow awardees and their representatives to
submit documents electronically during the effectuation process?
Answer. Yes, we plan to expand Upload Documents (formerly eSubmit)
to allow claimants and third parties to initiate submissions. We are
also reviewing additional forms for inclusion, which could account for
over 3 million form submissions each year.
Currently, Upload Documents is available to local offices and
Workload Support Units nationwide (about 28,000 employees). Upload
Documents allows claimants to upload 50 forms \10\ and 77 different
types of evidence, upon technician request--allowing us to more
efficiently develop the claim. Additionally, this year, we also removed
the signature requirement entirely for 13 of our most commonly used
forms, totaling about 1 million submissions annually.
---------------------------------------------------------------------------
\10\ We also released three fillable webforms: the SSA-827
(Authorization to Disclose Information to the Social Security
Administration); the SSA-25 (Certificate of Election for Reduced
Spouse's Benefits); and the SSA-795 (Statement of Claimant or Other
Person).
Question. In 2017, SSA revised its rules related to the submission
of medical evidence (Revisions to Rules Regarding the Evaluation of
Medical Evidence, 82 FR 5844). Among several changes, the Final Rule
eliminated SSA's longstanding recognition that evidence provided by
medical providers who have examined and treated the claimant is
generally of a higher value than medical opinions issued by those who
have never examined the claimant or have only examined them briefly. In
an October 28, 2016 public comment letter to SSA, I warned that the
rule would ``increase delays, as claimants and their representatives
would be forced to file additional appeals in order to have the
evidence appropriately considered.'' Rather than recognizing the
probative value of evidence by the claimant's treating physician, DDS
examiners may deem the evidence insufficient and instead request a
consultative examination, increasing processing costs and further delay
the claim's processing time. At a time when over 1.1 million cases are
pending at the initial level and staffing shortages at the DDS level,
---------------------------------------------------------------------------
it may be appropriate to revisit this rule.
Has SSA studied to determine whether these rules increased the
quality and completeness of disability claims, and whether it
contributed to processing times? If so, what were study's findings?
Answer. We have not conducted a study, like you describe, at the
initial and reconsideration levels of disability claims. However, we
are currently studying how administrative law judges apply this rule at
the hearing level.
Question. In 2018, SSA announced that it would end the 20-year-long
pilot of eliminating the reconsideration step in the 10 ``prototype''
States. At the time, SSA stated it was reinstating the step to provide
policy uniformity and cost savings. It also noted that reinstating
reconsideration would increase wait times for five times more claimants
than it will help, extending wait times by an average of 100 days. At
the time, SSA provided my office data that in 2017, approximately
106,000 Americans were denied at the reconsideration step. Of those,
7,500--or 7 percent--would have been awarded benefits had they not
given up on the process. With an average agree rate of nearly 90
percent, it appears that the step does not provide additional value to
the claimant by adding an additional 200 days before it can appear
before an administrative law judge.
It is also unclear whether restoring reconsideration improved
processing times or generated cost savings in the protype States. In
2018, then-Acting Commissioner Kilolo Kijakazi notified Congress that
she was putting together an executive-led cross-agency work group
charged with identifying and testing processes designed to enhance the
reconsideration step. To date, SSA has not provided a report on
agency's findings regarding the elimination of the reconsideration
step, or the work group's recommendations to enhance or otherwise
reform reconsideration.
Please provide a report to the committee of SSA's findings on
eliminating the reconsideration step. The report should include average
processing times for initial claims for States in which the
reconsideration step was eliminated, and processing times in States
that kept the reconsideration appeals step.
Answer. See table.
Initial Overall Average Processing Time, FY 2017-FY 2023 (Days)
------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023
------------------------------------------------------------------------
National 110.5 111.4 120.2 131.0 165.0 184.3 217.5
------------------------------------------------------------------------
Non-Prototype * 111.4 111.8 120.5 130.5 166.7 189.8 225.9
------------------------------------------------------------------------
Prototype * 107.6 106.7 115.3 127.8 157.2 161.6 183.3
------------------------------------------------------------------------
* Please note the above numbers breaking out prototype from non-
prototype States do not include the State of California. Two offices
in California participated in the prototype, but they also continued
to assist other California DDS offices and conducted many
reconsiderations. Our data does not capture assistance provided within
a given State, so including the California data in those categories
could skew the data.
Question. Please provide the number of claims in which a DDS
examiner requested additional medical evidence or requested a CE, or
the claimant submitted additional medical evidenced.
Answer. In general terms, approximately 88 percent of initial
disability claims processed in a given year require at least one piece
of medical evidence (MER), and 39 percent of them require at least one
CE, in addition to any evidence applicants provided with their initial
claims. Last year there were approximately 1.7 million initial claims
requiring MER and 739,000 claims requiring a CE.
At the reconsideration level, approximately 80 percent of
reconsiderations processed in a given year require at least one piece
of MER and 24 percent of them has at least one CE request. Last year,
there were approximately 387,000 reconsideration cases requiring MER
and 113,000 claims requiring a CE.
Our data do not capture whether additional medical evidence is
submitted without a specific request from the DDS, so we cannot provide
that information.
Question. Please provide the number and percentage of claimants who
chose not to pursue further appeals after the reconsideration level of
appeal.
Answer. From FY 2020 to FY 2023, approximately 176,000 (10 percent)
of reconsideration-level denials were not appealed to the hearing
level.
Question. Please provide the estimated cost.
Answer. At my confirmation hearing, I promised to conduct a deep
dive on the disability programs and agreed to release a report on the
reconsideration step after 6 months in office. We shared this report
with your committee on July 2, 2024, which provided these cost
estimates.
The report did not include the other items you requested above.
Therefore, we addressed those items above.
Question. Today, over 1 million Americans are waiting for a
decision from Social Security on their disability benefit application.
I know there are several factors that contribute to the backlog, but
there are things the agency can do to cut red tape so Americans won't
have to wait eons for a decision.
If SSA receives the President's requested funding levels, what
changes would we see to reduce the current backlog and prevent future
backlogs from occurring?
Answer. The President's requested funding would allow us to
increase staffing in our field offices (FOs), processing centers (PCs),
and State Disability Determination Services (DDSs). The compounding,
synergistic effect of the multiple tactics now deployed and planned to
attack the DDS backlog cannot be calculated with probabilistic
accuracy. But the anticipated increase in staffing would reduce our
initial disability claims wait times to an average of 215 days, thereby
reducing our claims backlog by 15 percent. For example:
$2.8 billion of the proposed funding would be used for
payroll, hiring, workload processing costs, and other expenses
in the State DDSs to support reducing the initial disability
claims backlog. To address the large backlog of initial
disability claims in FY 2025, the proposed funding expands
processing capacity at the DDS offices by allowing DDSs to hire
about 2,900 people.
$269 million of the proposed funding would restore staffing
in our FOs to our Fiscal Year 2023 levels. This would allow the
FOs to deliver quicker decisions on disability and retirement
claims, shorter wait times for an appointment, and improved FO
telephone service.
$85 million of the proposed funding would be allocated to
our PCs to handle more complex benefit decisions and address
the PC backlogs.
$1.7 billion of the proposed funding would be allocated to
our IT services. This funding would allow us to maintain and
continue to modernize our large IT infrastructure and increase
our suite of digital and automated services.
Question. The Vulnerable Population Liaisons (VPL) initiative was
developed to serve as the bridge between SSA and underserved
communities, partnering with local community organizations and legal
aid groups as they assist their clients apply for Social Security and
SSI benefits. However, I have heard from legal aid groups in my home
State and around the country who have had difficulty accessing contact
information for their respective VPL. This raises questions of whether
SSA's VPL initiative will only be utilized by those ``in the know.''
How do local field office management and/or regional offices raise
awareness among service providers, community organizations, and legal
aid groups on the VPL initiative as a resource?
Answer. The Vulnerable Population Liaisons (VPLs) role is
voluntary, as part of an employee's routine claim processing functions,
and is not in every field office.
Initially, while our offices were closed to walk-in service, local
Public Affairs Specialists (PASs) provided partner community-based
organizations (CBOs) with contact information for their local servicing
VPLs to help people apply for SSI benefits.
Currently, local practices for raising awareness of VPLs vary. The
local PASs continue to engage CBOs to provide resources like our
Outreach Toolkit \11\ and provide VPL contact information.
Additionally, our Regional Communications Directors \12\ serve as local
ombudspersons to help facilitate any further support needs.
---------------------------------------------------------------------------
\11\ https://www.ssa.gov/thirdparty/materials/pdfs/SSA_Faith-
Based_and_Community_Group
_Outreach_Toolkit.pdf.
\12\ https://www.ssa.gov/agency/rcds.html.
Question. How do local field office management or regional offices
share VPL's contact information? Is it done proactively or only when
---------------------------------------------------------------------------
individuals or organizations reach out to SSA's regional offices?
Answer. As noted in our response above, local practices may vary.
______
Questions Submitted by Hon. Thomas R. Carper
Question. Stolen Social Security numbers have become the linchpin
of identity fraud. Perpetrators misuse Social Security numbers to apply
for credit cards, and fraudulently claim or redirect government
benefits. The misuse of Social Security numbers is an issue that
affects Americans of all ages. Older Americans, newborns, and children
are especially vulnerable as these groups are less likely to monitor
their credit or use their Social Security number, therefore, less
likely to notice fraud.
How will the Social Security Administration leverage the
President's budget request to improve agency coordination and customer
service, specifically for victims of Social Security number misuse?
Answer. The FY 2025 President's budget would allow us to restore
staffing levels in field offices. Our frontline staff help people
facing misuse to correct SSA program-related issues and provide
information on steps they can take with credit bureaus, law
enforcement, and other government agencies. Additionally, our employees
refer allegations of misuse to our OIG for investigation.
Question. The Social Security Administration is facing a 27-year
staffing shortage. This shortage is only exasperated by Federal hiring
freezes since October of last year, due to the uncertainty of funding
for Fiscal Year 2024.
How will the Social Security Administration work to not only hire
new staff, but also retain existing staff and ensure they have the
tools they need to thrive?
Answer. Starting Day One, I visited SSA offices across the country
and encouraged front-line employees to identify ideas for improving the
customer and employee experience. We received over 3,500 employee
ideas. So far, we implemented dozens of quick wins to reduce time-
consuming, administrative burdens on the public and make employee
workloads more manageable. These changes are available on our recent
agency accomplishments webpage. Based on all the input, we also
developed our FY 2024 SSA Action Plan, which boils down the most
impactful things we can accomplish into 27 strategic initiatives.
Action on each of the initiatives has already begun; many will take
more than just the year to fully accomplish. However, these efforts
will also require important investments, including enactment of the FY
2025 President's budget.
With our FY 2024 enacted appropriation, we are providing limited
targeted hiring and overtime to frontline operations. Through our HR
SecurityStat--which meets every 2 weeks--we are working to improving
employee training to better equip new hires, and strengthen retention.
For example, we recently aligned our Domestic Employees Teleworking
Overseas policy with section 6202 of the FY 2022 National Defense
Authorization Act to better support military spouse employees.
Additionally, on this year's Federal Employee Viewpoint Survey, we
increased our participation or response rate by over 50 percent since
last year--the highest year-over-year increase of any agency in the
Federal Government. So our staff are most definitely reengaging.
However, we know that morale still has a long way to go in light of the
heavy weight of shrinking staff and growing workloads.
I am proud of these accomplishments and the hard work SSA is doing.
But these improvements will only go so far--our budget directly drives
our staffing levels. We need a budget every year that allows us to
continue hiring and fund needed service improvements.
Question. Despite the Social Security Administration's best
efforts, even the slightest error in calculating benefit payments can
be costly to the taxpayer. In 2022, the agency issued an estimated
$13.6 billion in improper payments. After reporting an overpayment to
the Social Security Administration, several of my constituents have not
received a monthly benefit while the agency reviews the overpayment
issue. One constituent in particular, did not receive a single benefit
payment for 3 months after reporting an overpayment.
How will the agency ensure that no American who reports an under or
over payment is penalized and left without any benefits during a review
period?
Answer. On March 25, 2024, we changed our procedure for recovering
overpayments from Social Security benefits. We now collect 10 percent
(but not less than $10 per month) of the total monthly Social Security
benefit, rather than 100 percent, which was our prior procedure. There
are limited exceptions, such as when an overpayment resulted from
fraud.
We also recently changed our policy so that we can approve a
beneficiary's request to repay their overpayment at a lower rate over a
longer period of time (up to 60 months) more efficiently. To qualify, a
Social Security beneficiary needs only to provide a verbal summary of
their income, resources, and expenses. Supplemental Security Income
recipients do not need to provide this summary.
______
Questions Submitted by Hon. Sherrod Brown
Question. I appreciate the actions you outlined in your testimony
to reduce overpayments. These are necessary first steps. Does SSA have
a plan to implement a statute of limitations on collecting
overpayments?
Answer. We are exploring options generally to improve our
administrative processes to reduce burden on our customers.
Question. You have named the current SSI asset limit as an
administrative burden for SSA. Please describe this in greater detail,
and estimate what you think would happen to this administrative burden
if Congress enacted legislation that moved the asset limit to $10,000
single/$20,000 married, indexed moving forward. Would such a change
result in savings for SSA?
Answer. As you saw in the budget, the President is committed to
protecting and strengthening Social Security, including supporting
efforts to improve Social Security benefits, as well as Supplemental
Security Income benefits, for seniors and people with disabilities,
especially for those who face the greatest challenges making ends meet.
We would be glad to provide your office with technical assistance
on the potential impacts of the change you reference, including any
administrative savings.
______
Questions Submitted by Hon. Robert P. Casey, Jr.
Question. During the hearing, you discussed wait times for
determination of eligibility for SSI or SSDI benefits. In the case of
people who have developed a disease or condition that threatens their
life, quick determination of eligibility is critical. According to a
GAO report from 2020, over the period from 2008 to 2019 almost 110,000
people died waiting for determination of eligibility for benefits.
In the cases when a person has developed a condition, such as
amyotrophic lateral sclerosis (ALS) or Huntington's disease, what does
SSA do to expediate determination of eligibility and get benefits to
recipients as soon as possible?
Answer. Our two fast-track processes, Quick Disability
Determinations (QDD) and Compassionate Allowances (CAL), identify
claimants with the most severe impairments, like those you reference,
so we can expedite decisions and reduce the wait time. For FY 2024, our
average processing time for QDD cases was about 25 days and about 38
days for CAL cases. Regarding ALS, we also note that the Disability
Insurance Benefit 5-month waiting period no longer applies to claimants
with ALS who have a Notice of Award dated on or after July 23, 2020.
Question. The Compassionate Allowances listing is a valuable tool
for addressing applicants who have a fast-moving condition or disease
such as bladder cancer. SSA also works to identify new diseases or
conditions that meet the Compassionate Allowance criteria, such as
trisomy 9 or genetic deletion conditions such as 1p36 deletion
syndrome.
If an applicate for SSDI or SSI has a Compassionate Allowance
condition, but their application is not receiving quick attention, what
recourse do they have to expediate a decision regarding their
eligibility?
Answer. Claims involving Compassionate Allowance conditions are
generally awarded benefits in about 38 days.
For claims that extend beyond this timeframe, the local servicing
field office can intervene, and if needed, Regional Communications
Directors can facilitate additional support.
Question. The ABLE Act, which I sponsored, passed in 2014 and makes
it possible for SSI recipients to save up to $100,000 for disability
expenses and still maintain SSI benefits. However, the number of people
with ABLE accounts is only approximately 165,000, despite the ABLE Act
allowing every person who is an SSI recipient and became disabled
before the age of 26 is eligible to open an ABLE account.
What can you and the leadership at SSA do to ensure that local
Social Security offices know about the benefits of ABLE accounts for
SSI recipients, and that accurate information about the effect on SSI
benefits is being accurately conveyed to beneficiaries, especially
families of child SSI recipients?
Answer. ABLE accounts are a vital program that we continue to
support by publishing and updating materials for our employees and the
public, like a recent ABLE Programs Blog Post.\13\ We also make sure
front-line staff know about ABLE accounts and share ABLE information
with SSI recipients. I am also working with my Communications Team on
expanding outreach efforts in this area.
---------------------------------------------------------------------------
\13\ https://blog.ssa.gov/able-programs-prepare-for-expanded-
eligibility/?utm_medium=email&
utm_source=govdelivery.
Question. I introduced the Making ABLE a Tool to Combat Hardship,
or the ABLE MATCH Act, which would provide a dollar-for-dollar match to
---------------------------------------------------------------------------
anyone who earns less than 200 percent of the Federal poverty limit.
For those who are SSI recipients, how would this type of match
incentivize savings and help them to become economically self-
sufficient?
Answer. We would be glad to provide your office with technical
assistance.
______
Questions Submitted by Hon. Mike Crapo
Question. The Social Security Administration's long wait times for
disability decisions, particularly those for Supplemental Security
Income, not only affect applicants but also affect health-care
providers who serve a large number of low-income patients. To help
provide more clarity on SSA's wait times for disability decisions,
please provide the latest national-level and Idaho-specific data
available for the:
Average processing time for initial disability claims for:
all claims; title II only; title XVI only; and concurrent
claims.
Average processing time for disability reconsiderations for:
all claims; title II only; title XVI only; and concurrent
claims.
Annual average processing time for hearings decisions for:
all claims; title II only; title XVI only; and concurrent
claims.
Answer. We do not have the average processing times for the three
levels of disability decisions by type of application. However, below
we provided the average processing times through FY 2024 Q2--both
national and those for Idaho.
------------------------------------------------------------------------
Average Processing Time
All Disability ---------------------------------------------------
Claims Nationally (days) Idaho (days)
------------------------------------------------------------------------
Initial Claims 229 163
------------------------------------------------------------------------
Reconsiderations 224 123
------------------------------------------------------------------------
ALJ Hearings 361 421 *
------------------------------------------------------------------------
* The Boise hearing office (which hears all Idaho cases) is a satellite
office of the Billings, MT hearing office. The average processing time
is for the full Billings hearing office.
Question. Please also describe the specific actions the SSA is
planning to implement to reduce processing times for SSI applications.
Answer. We are taking actions to streamline SSI processing by
implementing program simplifications with process and technology
improvements. For example, we recently:
Published three regulations to streamline what we count as
income for calculating SSI eligibility and payments. First, SSA
no longer counts food assistance when it calculates SSI payment
amounts or eligibility.\14\ Second, a simpler rental subsidy
calculation is now SSA's nationwide policy, instead of applying
in only seven States.\15\ Third, SSA revised the definition of
a public assistance household \16\ to include the Supplemental
Nutrition Assistance Program and households where not all
members receive public assistance. These rules, which became
effective September 30, 2024, reduce the administrative burden
for applicants, recipients, and SSA.
---------------------------------------------------------------------------
\14\ https://www.ssa.gov/news/press/releases/2024/#3-2024-4.
\15\ https://www.ssa.gov/news/press/releases/2024/#4-2024-1.
\16\ https://www.ssa.gov/news/press/releases/2024/#5-2024-3.
Launched first-party eSignature and document upload to local
offices and Workload Support Units nationwide (about 28,000
employees). So far, we approved the removal of wet signatures
on 13 forms, accounting for over 1 million submissions per
year. We are reviewing other forms that account for over 3
---------------------------------------------------------------------------
million submissions per year.
Implemented a ``no to all'' button (similar to ``select
all'') within the claims-taking process on SSI applications.
This new feature, based on employee feedback, saves employees
and your constituents time during the application process.
Additional information on our initiatives to improve access to SSI
is available on page 11 of our SSA Equity Action Plan 2023 Update.
Question. On March 1, 2024, the Social Security Administration
signed a memorandum of understanding (MOU) that expands certain
employees' ability to participate in ``episodic'' telework on top of
their existing telework arrangement. According to the MOU, it is
anticipated that instances of episodic telework will be ``infrequent''
and ``limited in duration.''
Are there any specific limitations on the total amount of episodic
telework a front-line employee can request? If so, what are these
limits?
Answer. Telework is subject to supervisory approval based on
business needs, and episodic telework is, by definition, infrequent or
due to some sort of extenuating circumstance.
Question. The President's budget outlines principles for protecting
and strengthening Social Security but does not include a legislative
proposal for improving Social Security's solvency.
Under the President's budget, Social Security payroll taxes would
actually decline by $17 billion over 10 years. What accounts for this
decline in Social Security payroll taxes?
Answer. Some of the budget's revenue proposals have effects on wage
and salary income, which result in small changes to payroll taxes.
However, these effects are minimal relative to total Social Security
payroll tax collections, which are $15.7 trillion over the 10-year
budget window.
Question. The President's budget notes that the Social Security
Administration is interested in renewal of section 234 demonstration
project authority, which expired on December 31, 2022.
Are there specific demonstration projects for which the agency is
seeking this authority? If so, please provide the purpose, expected
duration, and evaluation metrics for each potential demonstration
project.
Answer. As noted, we are interested in working with Congress to
renew section 234 authority. What we would test would depend on the
parameters of the authority, which have differed across previous
renewals.
We would be glad to work with your office to discuss potential
projects, and provide you with further information regarding
interventions, data collection and evaluation metrics, duration of the
projects, contracts, and cost estimates.
Question. The materials accompanying the President's budget project
that the Social Security Administration's information technology (IT)
modernization efforts yielded nearly $430 million in cost avoidance and
efficiencies from fiscal year 2018 to 2023.
What is the total IT investment that went into achieving these cost
efficiencies?
Answer. See table.
Table 3.25--Modernization Cost Avoidance and Efficiencies
(in millions)
----------------------------------------------------------------------------------------------------------------
Cumulative * FY 2018-FY
Domain FY 2018-FY 2022 FY 2023 Benefits Benefits 2023 Actual
Benefits (projected) (projected) Costs
----------------------------------------------------------------------------------------------------------------
Benefits $20.70 $0.05 $21.20 $183.51
Communications $17.20 $0.00 $17.20 $41.89
Disability $43.30 $26.90 $70.20 $279.42
Earnings $15.20 $0.00 $15.20 $75.42
Enumeration $212.10 $67.00 $279.10 $58.46
Infrastructure $0.00 $0.65 $0.65 $0.00
Service Delivery $24.70 $0.02 $24.70 $122.00
----------------------------------------------------------------------------------------------------------------
Totals $333.20 $95.00 $428.20 $760.70
----------------------------------------------------------------------------------------------------------------
* Represents the actual costs for the IT investments that achieved the FYs 2018-2022 actual and FY 2023
projected cost efficiencies.
Note: The first three columns in this table are from SSA's FY 2025 Congressional Justification, https://
www.ssa.gov/budget/assets/materials/2025/FY25-JEAC.pdf.
Question. What are the work year savings associated with these cost
efficiencies?
Answer. We estimate approximately 3,400 work year savings are
associated with these cost efficiencies, which enabled us to redirect
frontline staff to other workloads.
Question. Multiple President's budgets have discussed the Social
Security Administration's plans to replace its three separate legacy
phone systems for the national 800 number, field offices, and
headquarters with a unified telephone system. According to SSA,
creating a unified telephone system through its Next Generation
Telephony Project (NGTP) would improve the quality and efficiency of
its telephone service.
Now that SSA has transitioned the national 800 number to NGTP, does
SSA still plan to transition its field offices and headquarters to this
platform?
If yes, what is the timeline for this transition?
If not, why not?
Answer. We are no longer using the Next Generation Telephony
Project (NGTP) platform for our 800 number, and we do not plan to
transition any other phone systems to that platform because it fell far
short of our expectations.
Instead, on August 22, 2024, we transitioned our 800 Number to a
better-
performing phone system with certain advantages like call-back assist.
We have begun to turn the tide in the right direction. In October, we
answered calls in an average of 12.8 minutes--still nothing to write
home about, but significantly improved from 42 minutes last November.
We estimate this move will save the agency up to $25 million in
operating costs over 5 years.
______
Questions Submitted by Hon. Tim Scott
Question. A priority issue for me and my constituents is the Social
Security Administration's work to prevent synthetic identity fraud.
This fraud, perpetrated by criminals who typically steal a child's
Social Security number, create a synthetic identity, and rack up
thousands in debt, often goes undetected for years. SSA holds the key
to preventing this fraud. Legislation I previously authored created the
SSA's electronic consent-based SSN verification (eCBSV) system to allow
financial institutions and their service providers the ability to get a
real-time response as to whether the name, SSN, and date of birth
submitted to the financial institution matches SSA's records. If it is
not a match, that's an indication that there may be synthetic identity
fraud at play. SSA built and operationalized this system per my
legislation, and it is also a requirement that financial institutions
pay for the system. What I have heard and seen is that the cost of the
build and operations of the system are astronomical, and in trying to
recover the costs, SSA has increased the fees for the use of the
system. These increases, leading to some institutions paying 22 times
as much as they did originally, for the same service, are causing
financial institutions to use the system less. The only people who
benefit from this result are the criminals perpetrating synthetic
identity fraud.
What is SSA doing under your leadership to ensure that the pricing
of the system does not deter use of it? What is the current status of
the eCBSV?
Answer. We understand that cost is one of several factors that may
have contributed to less-than-expected participation in the service. As
of October 2024, we have 20 direct customers and 2,916 indirect
customers \17\ using the eCBSV service. We processed more than 54
million transactions in FY 2024 and over 225 million transactions since
initial rollout in FY 2020.
---------------------------------------------------------------------------
\17\ Direct customers pay SSA a subscription to connect directly to
SSA's eCBSV. Indirect customers go through a service provider to use
SSA's eCBSV.
The Economic Growth, Regulatory Relief, and Consumer Protection Act
requires that we fully offset the cost to administer eCBSV. We remain
committed to reviewing costs annually and are monitoring our progress
towards collecting enough eCBSV fees to breakeven on the system's build
and ongoing costs. As we get closer to breaking even during FY 2027, we
will evaluate lowering eCBSV fees. Once we have recouped our costs, the
fee structure will be lower as it will only need to cover the ongoing
---------------------------------------------------------------------------
costs of eCBSV.
Question. The recent pricing structure for the use of the eCBSV
released in the Federal Register will continue to hamstring the program
by effectively funneling all eCBSV requests through one mega provider.
The top tier of the pricing structure would allow someone to make
essentially unlimited requests when just 55 million requests were made
last year. This would allow whichever firm purchases that tier to
outprice their competitor, creating, in effect, a government-sanctioned
monopoly. This was not congressional intent. With only one provider
setting pricing for the entire market and forcing other eCBSV providers
to exit, they will be able to set their pricing to whatever level they
want and likely cool demand, in turn raising the number of new accounts
that have not been vetted for synthetic identity fraud.
Will SSA commit to restructuring their eCBSV prices in a way that
encourages competition and expands the program's use?
Answer. Yes, as noted in our response to the question above, we
remain committed to reviewing costs annually and are monitoring our
progress towards collecting enough eCBSV fees to breakeven on the
system's build and ongoing costs. Once we have recouped our costs, the
fee structure will be lower as it will only need to cover the ongoing
costs of eCBSV.
______
Questions Submitted by Hon. Bill Cassidy
Question. SSA has historically been quite risk averse in its
approach to technology adoption, and this has sometimes served the
agency well. The agency has suffered fewer breaches than other
similarly sized agencies, and I appreciate that. Also, the complexity
and scale of the agency's legacy systems, combined with burdensome
Federal contracting and hiring practices, make it difficult for SSA to
modernize its technology. However, I am interested in learning more
about how the agency is taking advantage of recent advancements in AI
and other advancements to improve its service while achieving cost
savings. Federal Government-wide, we need to learn from the private
sector and find ways to do more with limited resources, and it seems AI
could really help with this.
Are there specific tasks where SSA plans to integrate AI? For
example, is SSA going to use AI to identify cases of Social Security
Disability Insurance (SSDI) fraud or overpayments?
Answer. We recognize the benefits of leveraging AI technologies,
like virtual assistants, to enhance the customer and employee
experience. We use AI to support various processes, while remaining
committed to preserving the rights and privacy of the public and
ensuring compliance with applicable Federal legal authorities.
For example, we are increasing use of our Intelligent Medical
Language Analysis Generation (IMAGEN) tool, which helps employees
complete disability determinations by identifying and organizing
medical evidence. Since I started, the share of DDS cases that use
IMAGEN has nearly doubled from 28 percent to over 50 percent. We are
now training all new employees to use IMAGEN. We also expanded the
types of cases for which DDS employees can use IMAGEN, and we expanded
IMAGEN for use at the hearing level.
SSA also uses AI to support program integrity, including
overpayment trends. For example, we use a scoring model to profile
Supplemental Security Income cases for technician review based on the
likelihood and magnitude of an overpayment. We are also considering
ways to leverage AI to help us detect potential fraud in our programs.
Additional information on our outreach with industry experts about
how AI may affect the landscape of Social Security is available on our
National Disability Forum webpage.\18\
---------------------------------------------------------------------------
\18\ https://www.ssa.gov/ndf/ndf_outreach.htm?tl=0.
Question. The SSA operates with many outdated legacy systems that
were developed decades ago and have become increasingly difficult and
expensive to maintain and integrate with modern technology. These
systems often lack interoperability, scalability, and security features
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required for efficient and effective operations in today's digital age.
What is the SSA's current strategy for modernizing its legacy
systems, and how does it prioritize which systems to upgrade first?
Answer. Our modernization strategy focuses on providing more
digital services to the public, improving the employee experience, and
expanding access to digital data at SSA. Our IT Investment Review Board
determines the budget allocations for our IT investments based on
current agency priorities and goals.
Prioritizing our investments to modernize our legacy systems is
increasingly difficult as costs continue to rise, and we do not receive
our full budget request. Information about our current accomplishments
and major initiatives can be found on pages 33-34 of the agency's FY
2025 Budget Overview.\19\
---------------------------------------------------------------------------
\19\ https://www.ssa.gov/budget/assets/materials/2025/2025BO.pdf.
Question. Can you provide an overview of the challenges encountered
in modernizing these legacy IT systems, and what specific steps are
---------------------------------------------------------------------------
being taken to overcome these obstacles?
Answer. Our biggest challenge is the size and complexity of our
systems. Continuing daily operations while we update our systems is a
balancing act, and integrating new systems to work with our outdated
legacy systems requires specialized knowledge and resources. We
continue to experience attrition and loss of staff with this
specialized knowledge.
Completing our IT modernization work requires sustained investment
to decrease dependency on legacy software before institutional staff
knowledge is gone. While we received an IT budget of $2.1 billion in
2024, we had to use almost 90 percent ($1.9 billion) to operate and
maintain current services. Only 10% ($212 million) was left for us to
modernize IT and expand our digital services. For example, with that
remaining IT funding in FY 2024, we expanded Upload Document
capabilities so the public can upload and sign (when a signature is
required) certain documents electronically. Customer experience surveys
indicate 86.8 percent customer satisfaction and 87.7 percent trust
ratings with this service.
We are doing what we can to consolidate and modernize our systems
to help us adapt to future needs and automated process as outlined in
our FY 2025 Budget Overview referenced above. However, we need help
from Congress to ensure we have the necessary funding and staffing to
provide the type of service Americans deserve.
Question. How is SSA currently using AI in program administration
tasks like identifying overpayment trends, and the prevention and
detection of fraud?
Answer. As noted in our response above, we use AI to support
program integrity, which includes identifying overpayment trends. We
use AI in the form of machine learning models to screen for anomalies
and profile cases for employees to further review and then make
determinations. We are also considering ways to leverage AI to help
detect fraud in other areas of our programs.
Question. With regard to software projects more generally, they
seem to be most successful when a focus is kept on user needs. A major
problem with past projects in a variety of agencies has been a tendency
to collect all the requirements up front, and then fail to adapt to
change. This results in systems that fail to center user needs.
As you modernize legacy systems, can you please provide details as
to who is responsible for developing new systems, and how are they
being held accountable to ensure that the resulting product effectively
addresses the requisite needs? Are software development best practices
being following, like focusing on users, regular deliverables, and
constant communication between teams?
Answer. Our Chief Information Officer (CIO) is responsible for all
software development and is accountable to me. The CIO is an active
participant at SecurityStat, a performance management tool I stood up
to address our customer service crisis. I require the attendance of all
deputy commissioners, including the CIO, to collaborate on solutions to
our key challenges and to report on their progress in the next meeting.
When modernizing our systems or developing new software, we
incorporate a quality assurance process. For example, we conduct user
acceptance testing to obtain feedback from users, which helps us to
determine whether a product is functioning as intended. This best
practice also helps us to identify any potential improvements for
future releases.
Question. Many SSA systems are built on old mainframes that have
not been upgraded in decades. This increases risk for issues such as
insider threat and leads to ineffective citizen services. What is SSA's
plan to modernize old systems, implement enhanced cybersecurity
features, and increase payment integrity by decreasing fraud?
Answer. Our technology modernization investments focus on simple,
seamless, and secure service, while maintaining rigorous stewardship
and oversight of our programs. For detailed information about how we
are modernizing our information technology, enhancing cybersecurity,
and increasing payment integrity, please refer to our accomplishments
and major initiatives on pages 33-34 of our FY 2025 Budget Overview.
Question. Thank you for responding to the letter that Senator
Hassan and I sent back in November, urging the agency to reduce
overpayments and prevent undue harm to the most vulnerable Social
Security recipients when recovering overpayments. In that letter, you
noted a series of administrative improvements that SSA has done to help
reduce the incidence of these overpayment issues. However, my staff in
Louisiana have sent me a report regarding a constituent of mine from
down in Denham Springs that I wanted to run by you. Back in 2021, she
received a letter from SSA noting that she has received over $67,000 in
overpayments covering a period of over 10 years! SSA noted that it was
a mistake made by them in their retirement calculations. Due to her age
and disability status, and due to the fact that she faced severe losses
from the 2016 floods in my State, she is in no position to pay back
this overpayment. This issue has caused her great mental stress, and
she is now seeking counseling for it.
Can you please share what steps you are taking to address SSA's
overpayments to beneficiaries?
Answer. We have been taking a hard look at overpayments and have
taken meaningful steps to improve the process through the following
initiatives:
1. Lower Withholding Rate--In March, we ceased the heavy-
handed practice of intercepting 100 percent of an overpaid
beneficiary's monthly Social Security benefit by default if
they fail to respond to our repayment notices. We now use a
much more reasonable default withholding rate of 10 percent of
total monthly benefits (but not less than $10 per month)--
similar to the current rate in the SSI program.
2. Less Burdensome Repayment Process--We now approve repayment
plans of up to 60 months without requesting proof of income and
assets for the vast majority of beneficiaries who request to
work out a repayment plan. This change extended this easier
repayment option by an additional 2 years (from 36 to 60
months).
3. Payroll Information Exchange (PIE)--In February, we
published formal notice of our plans to access and use
information from payroll data providers. This long-awaited
system will reduce wage-related overpayments by ensuring we
receive timely and accurate wage data. We plan to use PIE data
to automatically adjust SSI benefits before they are paid--
preventing overpayments from occurring--and to administer the
SSDI program more efficiently. The agency is carefully
reviewing and analyzing the public comments we received.
4. Waiver Process Simplification--We are making it much easier
for overpaid beneficiaries to request a waiver of repayment,
when they believe they are without any fault and cannot repay.
To do this, we are streamlining forms and simplifying
processes, as well as shifting the burden of proof where
applicable away from the beneficiary in determining whether
there is any evidence that the beneficiary was at fault in
causing the overpayment.
5. Notice Improvements--We have taken actions to reduce the
confusion our customers frequently have in understanding the
complexities of our notices. As we develop solutions, we will
focus on how we can clarify and simplify our overpayment
notices.
Question. Thank you again for agreeing to work with us at your
nomination on helping get my bipartisan claiming nomenclature bill
through Congress. The same bipartisan group of Senators (Collins,
Coons, Kaine) also introduced a bill to try to bring back the Social
Security Statement. While millions of Americans have created My SSA
online accounts, very few log in more than once, and I am concerned
that the exact groups that either have not created an account or have
not logged in regularly are the same ones that need the most help to
better understand their future retirement benefits.
Can I ask you to work my staff to help revise our current bill into
one that SSA could support?
Answer. We would be happy to provide your staff with technical
assistance on your current bill.
______
Questions Submitted by Hon. Steve Daines
Question. Thousands of Montanans rely on Social Security payments,
and while I commend your efforts to improve the national 800 number, we
still hear from folks having trouble getting assistance from the Social
Security Administration and facing long wait times to speak to a
representative.
What steps are you taking to decrease wait times and ensure callers
can connect with an agent?
Answer. Reducing wait times is one of my top priorities, and we
address it every 2 weeks in our 800 number SecurityStat session. We
also have a new executive with extensive experience managing high-
volume call centers who reports directly to me. I've tasked her with
conducting a full review of our 800 number services to make
recommendations to improve the employee and customer experience.
On August 22, 2024, we transitioned our 800 number to a better-
performing phone system with certain advantages like call-back assist.
We have begun to turn the tide in the right direction. In October, we
answered calls in an average of 12.8 minutes--still nothing to write
home about, but significantly improved from 42 minutes last November.
We estimate this move will save the agency up to $25 million in
operating costs over 5 years.
We are also looking at expanding automated features like
Interactive Voice Response. We are considering increasing self-service
options for those who prefer them, reducing wait times for individuals
who need to speak with an agent. Additionally, we are addressing the
root causes of why people are being driven to our 800 number by
simplifying complex and confusing notices and completing customers'
needs on the first contact, and through redesigned webpages.
We are doing everything we can with the current funding
environment, but meaningful improvements simply require technology and
funding for enough trained staff. With our FY 2024 enacted
appropriation, we are providing limited targeted hiring and overtime to
our front-line operations. The FY 2025 President's budget would allow
us to devote an additional $79 million to our teleservice centers, who
answer our 800 number calls, to increase staffing and reduce wait times
by approximately 20 minutes.
Question. You recently signed a memorandum of understanding
allowing episodic telework.
Can you provide information on what constitutes ``episodic'' and
whether there are required minimum hours employees must work in person?
Answer. The memorandum of understanding defines ``episodic''
telework as work that is infrequent, based upon the unique workload
needs of the agency or due to the personal circumstances of the
requesting employee, and limited in duration. For example, an employee
might request episodic telework to work onsite for the second half of
the day and use personal leave in the first half to fix a flat tire. As
noted in our response to the question below, employees at our local
offices work in the office at least 3 days a week. However, when life
happens, episodic telework is a useful workplace flexibility, which we
use to support recruitment and retention, while also being mindful of
fulfilling our mission requirements.
Question. What are the in-person requirements for employees working
in the seven field offices in Montana to ensure constituents are able
to get appointments all 5 days of the work week?
Answer. Employees at our local Social Security offices work in the
office at least 3 days a week. Schedules alternate within the office so
that employees are present all 5 days of the week to serve the public.
Whether they are in the office or teleworking, employees take calls or
appointments over the phone and process applications for benefits.
______
Questions Submitted by Hon. Todd Young
Question. Given the important role the SSA plays, it is imperative
the agency fosters public trust by ensuring proper protocols are in
place to protect beneficiaries. Notably, in September of last year, the
Social Security Office of the Inspector General (OIG) issued a report
titled ``Digital Identity in My Social Security'' that found the
Administration's identity verification portal does not comply with
current Federal requirements related to identity assurance.\20\
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\20\ https://oig.ssa.gov/assets/uploads/142307.pdf.
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Do you agree with OIG's findings in this report, why or why not?
Answer. Yes, we agreed with OIG's recommendations in this report.
We remain committed to aligning our digital identity program with
Federal requirements while ensuring that our electronic services are
accessible to all segments of the public.
Question. What are you and your team doing to ensure American
beneficiaries are not put at further risk of fraud due to incompliant
identity verification protocols?
Answer. We are continuing to make improvements that align our
digital identity program with emerging guidelines, including emerging
National Institute of Standards and Technology digital identity
guidelines, and best practices. For example, we started a multiphase
effort to transition all our customers to a federated credential
service provider (Login.gov or ID.me) to meet current standards for
security and credentialing. In addition to providing a greater level of
security, this transition will streamline the customer experience
allowing access online services across transaction types.
Question. During your nominations process, you committed to
providing this committee with an assessment of the performance of
credential service providers at the SSA.
Do you commit to sharing that information with both the majority
and minority staff of this committee by May 31, 2024, ``yes'' or
``no''?
Please note that by this date, you will have been confirmed to your
position for over 5 months.
Answer. We recently completed this assessment and shared it with
the committee.
Question. When you came before this committee in advance of your
confirmation, I asked you both during the hearing and in the proceeding
questions for the record to discuss your views on telework. You
emphasized that, if confirmed, you would ``examine in detail what the
problems are'' with the availability of in-person appointments and
``develop a comprehensive plan to improve customer service, including
the ability to schedule face-to-face appointments in a timely manner.''
In your time as Commissioner thus far, what have you discovered
regarding the availability of in-person appointments to beneficiaries
needing assistance?
Answer. Many times customers are waiting too long for appointments,
and we meet to tackle this issue every 2 weeks during our Operations
SecurityStat. In February 2024, we shared best practices with all field
office managers to ensure appointment calendar availability. We are
also looking at additional opportunities for workload sharing to
improve our appointment time frames.
Question. How can the SSA continue to improve its in-person service
to beneficiaries in Indiana and across the country?
Answer. Please see our response to the question above on the
actions we are taking to improve service for your constituents and
members of the public nationwide.
We also need sufficient and sustained funding to optimize service
delivery. With our FY 2024 enacted appropriation, we are providing
limited targeted hiring and overtime to our frontline operations. We
encourage you to support the President's budget request for FY 2025.
Question. What percentage of SSA employees telework full time? What
percentage work a hybrid schedule? What percentage work in-person full
time?
Answer. As of April 19, 2024, approximately:
Ninety percent of SSA employees are recurring teleworkers,
teleworking one or more days a week based on an agreement with
management. For instance, field office employees and most
headquarters employees report onsite at least 3 days a week.
One percent of SSA employees are working remotely.
Nine percent of SSA employees are working in-person full
time.
Question. Over the past year, I have partnered with several of my
colleagues on both sides of the aisle to gain a better understanding of
the potential opportunities, and areas of concern, for AI
implementation.
As you evaluate budgetary needs for the SSA for Fiscal Year 2025,
what role do you see artificial intelligence playing in improving
customer service at the SSA?
Answer. We recognize the benefits of leveraging AI technologies,
like virtual assistants, to enhance the customer and employee
experience. We use AI to support various processes, while remaining
committed to preserving the rights and privacy of the public.
For example, we are increasing use of our Intelligent Medical
Language Analysis Generation (IMAGEN) tool, which helps employees
complete disability determinations by identifying and organizing
medical evidence. Since I started, the share of DDS cases that use
IMAGEN has nearly doubled from 28 percent to over 50 percent. We are
now training all new employees to use IMAGEN. We also expanded the
types of cases for which DDS employees can use IMAGEN, and we expanded
IMAGEN for use at the hearing level.
SSA also uses AI to support program integrity such as identifying
overpayment trends. For example, we use a scoring model to profile
Supplemental Security Income cases for technician review of nonmedical
eligibility based on the likelihood and magnitude of an overpayment. We
are also considering ways to leverage AI to help us detect potential
fraud in our programs.
Additional information on our outreach with industry experts about
how AI may affect the landscape of Social Security is available on our
National Disability Forum webpage.
Question. You have stated the SSA has a goal of reaching a 12-
minute wait time for the national 800 call line for Fiscal Year 2025, a
20-minute decrease from Fiscal Year 2024 estimated call wait times.
What steps do you intend to take to accomplish that goal?
Answer. Reducing telephone wait times is one of my top priorities,
and we address it every 2 weeks in our 800 number SecurityStat \21\
session. We also have a new executive with extensive experience
managing high-volume call centers who reports directly to me. I've
tasked her with conducting a full review of our 800 number services to
make recommendations to improve the employee and customer experience.
---------------------------------------------------------------------------
\21\ https://www.ssa.gov/securitystat/800-number-performance.
Through the agile SecurityStat process, we sprang into action and
identified quick wins to reduce unnecessary calls on the front end, and
improve first call resolution on the back end. Among those quick wins
---------------------------------------------------------------------------
on the 800 number, we:
Secured approval from the Internal Revenue Service (IRS) to
accept phone attestations--instead of having to mail a paper
copy for wet signature--from beneficiaries wanting to change
their voluntary tax withholding from their benefits. This lets
us process and resolve the action on the first phone call.
Enhanced our online system to automatically provide more
detailed claim status updates to the people representing
disability applicants, eliminating their need to call us for
frequent status updates.
Transitioned to a better-performing phone system and rolled
out call-back assist, so customers can receive a call back when
an agent is available instead of waiting on hold. These data-
driven decisions have yielded immediate benefits for both
callers and employees, including reduced wait times and more
self-service options.
Revamped the training for new hires at our teleservice
centers to improve employee engagement and reduce attrition of
new hires.
As a result of these quick actions and many more, we have begun to
turn the tide in the right direction. In October we answered calls in
an average of 12.8 minutes--still nothing to write home about, but
significantly improved from 42 minutes last November. Having
transitioned on August 22nd to a more modern and higher-
performing phone system, our FY 2025 goal is to keep average wait times
on our 800 number under 12 minutes on average for the entire fiscal
year.
We are doing everything we can within the current funding
environment. For example, we are looking at expanding automated
features like Interactive Voice Response. We are also considering
increasing self-service options for those who prefer them, reducing
wait times for individuals who need to speak with an agent.
Additionally, we are addressing the root causes of why people are being
driven to call our 800 number by simplifying complex and confusing
notices and completing customers' needs on the first contact.
However, meaningful improvements simply require technology and
funding for enough trained staff. With our FY 2024 enacted
appropriation, we are providing limited targeted hiring and overtime to
our frontline operations. The FY 2025 President's budget would allow us
to devote an additional $79 million to our teleservice centers to
increase staffing and reduce wait times by approximately 20 minutes.
Question. While the metric of phone call wait times is helpful in
assessing the level of customer service, a more complete metric is the
number of individuals that are able to actually receive the assistance
they need via the phone.
Of the beneficiaries that call the national 800 number, what is the
success rate of individuals that are actually able to get in touch with
a live representative?
Answer. In September 2024, our answer rate is approximately 64
percent. Please refer to our SecurityStat webpage, which tracks our 800
number performance including a chart on the percentage of callers that
reach a representative. Additionally, based on survey data as of
September 2024, customers reported 87 percent satisfaction with their
experience once they reached an agent.
Question. What is the success rate of beneficiaries that call the
national 800 number and are able to have their issue resolved?
Answer. We are committed to making sure customers can resolve their
issues at the first point of contact, which as of September 2024, 84
percent of surveyed 800 number customers reported we achieved.
Question. SSA employees in my State have shared with me concerns
about the SSA's attrition rates. They have witnessed challenges with
retaining employees who are frustrated by a lack of training, poor IT
support, and other hindrances.
Please provide attrition rates for current SSA employees, not
including retirements. Include clear explanations of the data and
timeframes used in your response.
Answer. The pie chart below shows SSA's separation data by type and
category as of April 25, 2024. Nonretirement separation continues to
outpace retirements. Additionally, resignations are the leading type of
separations. Additional information about our separation trends is
available in our Human Capital Operating Plan: FY 2023-2026.\22\
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\22\ https://www.ssa.gov/open/materials/SSA-Human-Capital-
Operating-Plan-FY2024-FY2026.pdf.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
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Question. What do you believe leads to attrition at SSA?
Answer. Staffing levels that are too low are the primary driver of
attrition because they result in unsustainable workloads. According to
exit surveys, employees report feeling exhausted and overworked.
Employees leaving the agency have reported low morale, insufficient
training and development, and high workloads as the top three areas for
improvement. Additionally, attracting and retaining new hires has been
a challenge. Our direct service structure hampers our ability to
compete with the workplace flexibilities of other similar agencies.
Question. What can the SSA do to improve its employee retention
rates? Please provide concrete steps on how you plan to address
employee attrition, including benchmarks with dates and measurable
goals.
Answer. We are listening to our employees. On this year's Federal
Employee Viewpoint Survey, we increased our participation or response
rate by over 50 percent since last year--the highest year-over-year
increase of any agency in the Federal Government. So our staff are most
definitely reengaging. However, we know that morale still has a long
way to go in light of the heavy weight of shrinking staff and growing
workloads.
Starting Day One, I visited SSA offices across the country and
encouraged front-line employees to identify ideas for improving the
customer and employee experience. We received over 3,500 employee
submissions. So far, we implemented dozens of quick wins to reduce
time-consuming, administrative burdens on the public and make employee
workloads more manageable. These changes are available on our recent
agency accomplishments webpage. Based on all the input, we also
developed our FY 2024 SSA Action Plan, which boils down the most
impactful things we can accomplish into 27 strategic initiatives.
Action on each of the initiatives has already begun; many will take
more than just the year to fully accomplish. However, these efforts
will also require important investments, including enactment of the FY
2025 President's budget.
Additionally, with our FY 2024 enacted appropriation, we are
providing limited targeted hiring and overtime to front-line
operations. Through our HR Security
Stat--which meets every 2 weeks--we are working to improving employee
training to better equip new hires, and strengthen retention. For
example, we recently aligned our Domestic Employees Teleworking
Overseas policy with section 6202 of the FY 2022 National Defense
Authorization Act to better support military spouse employees.
I am proud of these accomplishments and the hard work SSA is doing.
But, these improvements will only go so far--our budget directly drives
our staffing levels. We need a budget every year that allows us to
continue hiring and fund needed service improvements.
______
Questions Submitted by Hon. John Barrasso
Question. I appreciate your recognition of the many issues facing
the Social Security Administration. In comparison to pre-COVID
performance metrics, wait times for phone calls and in-person services
approximately doubled. The time frame for disability determinations has
also doubled, alongside the disability claims backlog.
How do you account for the poor performance outcomes described
above?
Answer. SSA's budget was essentially level from FY 2018 through FY
2021, while costs continued to increase. We had to make difficult
decisions to cut funding in certain areas, such as staffing and
overtime. As a result, we ended FY 2022 with our lowest staffing level
in more than 50 years. At the end of FY 2024, we served over 7 million
more beneficiaries with about 6,300 fewer full-time permanent staff
when compared to FY 2015.
Modernization and other efficiencies helped for some things, but we
cannot keep doing more with less. With funding we received in our FY
2024 enacted appropriation, we are providing limited targeted hiring
and overtime to our front-line operations. We need your help to ensure
we have sufficient and sustained funding. I encourage you to support
the President's budget request for FY 2025.
Question. What is your strategy to decrease the time frame for
disability determinations?
Answer. One of our FYs 2024-2025 Agency Priority Goals is to
improve the customer experience by reducing the wait time for an
initial disability claim decision. By September 30, 2025, our goal is
to achieve an average processing time for initial disability claims of
215 days and decide 92 percent of pending initial disability claims
that begin the fiscal year 180 days old or older.
So far, we implemented many recent agency accomplishments to reduce
administrative burdens and improve access for people with disabilities.
Additionally, our FY 2024 SSA Action Plan boils down the most impactful
things we can accomplish into 27 strategic initiatives. Including to
reduce disability wait times. Action on each of the initiatives has
already begun; many will take more than just the year to fully
accomplish. However, these efforts will also require important
investments, including enactment of the FY 2025 President's budget. Our
ongoing progress can be tracked on SecurityStat, which is a performance
measurement tool to help us set goals, choose actions, and monitor
progress in meeting these challenges.
Question. What is your plan to reduce wait times for phone calls
and in-person appointments?
Answer. Reducing telephone wait times is one of my top priorities,
and we address it every 2 weeks in our 800 number SecurityStat session.
We also have a new executive who reports directly to me with
extensive experience managing high-volume call centers. I've tasked her
with conducting a full review of our 800 number services to make
recommendations to improve the employee and customer experience.
On August 22, 2024, we transitioned our 800 number to a better-
performing phone system with certain advantages like call-back assist.
We have begun to turn the tide in the right direction. In October, we
answered calls in an average of 12.8 minutes--still nothing to write
home about, but significantly improved from 42 minutes last November.
We estimate this move will save the agency up to $25 million in
operating costs over 5 years.
As outlined in our FY 24 SSA Action Plan, we are looking at
expanding automated features like Interactive Voice Response. We are
also considering increasing self-service options for those who prefer
them, reducing wait times for individuals who need to speak with an
agent. Additionally, we are addressing the root causes of why people
are being driven to our 800 number by simplifying complex and confusing
notices and completing customers' needs on the first contact.
We recognize that customers are waiting far too long for
appointments, and we meet to tackle this issue every 2 weeks during our
Operations SecurityStat. In February 2024, we shared best practices
with all field office managers to ensure appointment calendar
availability. We are also looking at additional opportunities for
workload sharing to improve our appointment timeframes.
As noted in response to your first question, modernization and
other efficiencies helped for some things, but we cannot keep doing
more with less. We are doing everything we can within the current
funding environment, but meaningful improvements simply require
technology and funding for enough trained staff.
Question. What is your solution to addressing the disability claims
backlog?
Answer. As noted in our responses to your first two questions,
improving the disability claims process is one of my top priorities.
Our recent accomplishments and FY 2024 limited targeted hiring can help
us address the backlog, but ultimately, we need funding for technology
and enough trained staff. With the FY 2025 President's budget, we plan
to get processing times down to 215 days for initial disability claims.
Our long-term goal is to reduce those waits to 4 months (120 days).
Question. Since COVID, the SSA has relied heavily on telework. I
believe this is a massive factor in the poor performance outcomes
described above. You have made changes to teleworking policies, which
have yet to take effect. But they fall far short of a quick and
immediate return to pre-COVID norms.
Do you believe a stronger on-site presence will improve customer
service?
Answer. Yes, I believe a stronger on-site presence enhances
collaboration, engagement, and innovation. Our primary goal is to
ensure we deliver on our mission to provide the level of service our
customers expect and deserve. We know that many people rely on our in-
person services, and we strive to provide people with the benefits and
services they have earned and need.
Question. Why is your agency not requiring employees to fully
return to the office?
Answer. Like most agencies, we have had telework to some degree at
our agency for over 20 years, and our approach to our telework policy
is the same now as it was before the pandemic. We use telework where it
supports our mission. In accordance with the Telework Act of 2010, our
telework program, which we have had for over 20 years, provides
workplace flexibility and continuity of operations during emergencies.
Before the pandemic, it was not unusual for employees to telework or
for employees to bring laptops home in anticipation of weather or other
emergency-required telework days.
The hybrid work environment is important to our recruitment and
retention efforts in today's labor market. It helps us compete with
other private employers and other Federal agencies that offer flexible
work arrangements. In addition to supporting recruitment and retention,
the hybrid work environment enables us to institute space sharing or
hoteling when it makes business sense.
Question. Do you have an expected timeline for a full-return to the
office? If not, when will you have one?
Answer. We do not anticipate discontinuing our use of telework in
the foreseeable future. In April, we significantly increased our on-
site presence to ensure we gain the benefits of working together, face-
to-face, while maintaining hybrid work benefits as well. Currently,
Ninety percent of SSA employees are recurring teleworkers,
teleworking 1 or more days a week based on a signed agreement
with management. For instance, field office employees and most
headquarters employees report onsite at least 3 days a week.
One percent of SSA employees work remotely.
Nine percent of SSA employees work in-person full time.
Question. The Social Security number is the centerpiece of American
identity. Whether you are obtaining employment, opening a bank account,
establishing credit, or countless other purposes, you need a Social
Security number. This is also the case for receiving government
benefits. As a result, there are numerous reasons someone would attempt
to steal another person's Social Security number.
Massive data breaches have left American citizens vulnerable to
identity theft. Criminal networks are dangerously sophisticated in
stealing these numbers and selling them to bad actors. Now, pair these
risks with the influx of 9 million illegal immigrants in the last 3
years alone. We know that many illegal immigrants obtain stolen Social
Security numbers of U.S. citizens to receive benefits and obtain jobs.
Past projections, according to the Center for Immigration Studies,
indicate 75 percent of illegal immigrants are using fake or stolen
numbers. Another study from the Social Security Administration in 2013
estimated that some 700,000 illegal immigrants were using stolen Social
Security numbers.
Do high levels of illegal immigration pose greater risks for
widespread identity theft, in terms of citizens having their Social
Security Numbers stolen?
Answer. We recognize the challenges of identity theft. As the White
House has said,\23\ it is clear that reliance on historic knowledge-
based verification (e.g., Social Security number, date of birth), is
more and more susceptible to attacks given the widespread ease of
access by criminal syndicates to individuals' personal information,
which can be bought on the dark web for pennies.
---------------------------------------------------------------------------
\23\ Fact Sheet: President Biden's Sweeping Pandemic Anti-Fraud
Proposal: Going After Systemic Fraud, Taking on Identity Theft, Helping
Victims, The White House. https://www.white
house.gov/briefing-room/statements-releases/2023/03/02/fact-sheet-
president-bidens-sweeping-pandemic-anti-fraud-proposal-going-after-
systemic-fraud-taking-on-identity-theft-helping-vic-
tims/.
Regarding the SSA study you referenced, we believe you are
referring to SSA's April 2013 Actuarial Note: Effects on Unauthorized
Immigrants on the Social Security Trust Funds.\24\ However, the study
notes that the majority of the SSNs in the figure you cite were not
stolen from citizens but were obtained from SSA, often decades earlier,
by using fraudulent documents. To address this, we successfully
strengthened identity verification for the SSN application process over
time. Today, we use a robust application process requiring SSN
applicants to submit evidence of age, identity, and United States
citizenship or current work-authorized immigration status. We also
coordinate with other government agencies--the custodians of the
records we use to assign SSNs--to obtain the information they collect
and verify electronically. Our estimates made use of data and estimates
from the Census Bureau and Department of Homeland Security.
---------------------------------------------------------------------------
\24\ https://www.ssa.gov/OACT/NOTES/pdf_notes/note151.pdf.
From SSA's perspective, when we come across any evidence of misuse
of an SSN, we refer the matter to our Office of Inspector General to
investigate. Our OIG is responsible for investigating allegations of
---------------------------------------------------------------------------
SSN misuse and fraud.
We refer the public to the Federal Trade Commission, which provides
public resources at Federal Trade Commission, Protecting America's
Consumers,\25\ and publishes fraud trend data at Explore Data, Federal
Trade Commission.\26\
---------------------------------------------------------------------------
\25\ https://www.ftc.gov/.
\26\ https://www.ftc.gov/news-events/data-visualizations/explore-
data.
Question. What is the agency doing to stop identity theft, and how
---------------------------------------------------------------------------
are you working to protect U.S. citizens from being victims?
Answer. We use various strategies to educate the public and our
employees about how best to protect their sensitive information from
fraudsters. For example, we:
Released public service announcements, worked with external
groups and agencies to raise awareness, and partnered with the
United States Postal Service to display identity scam
prevention posters in Post Offices around the country.
Provide our employees with the latest information to ensure
they can help the public, including their friends, families,
and communities.
Use social media to reach individuals, advising them to
``guard their card'' and sensitive information.
Collaborate closely with our OIG to keep our customers and
employees informed of developing threats against their personal
information, like our annual Slam the Scam.
Perform over 2 billion legally authorized automated SSN
verifications annually through more than 3,500 data
exchanges.\27\
---------------------------------------------------------------------------
\27\ Our verification services verify that the name, SSN, and other
information presented match our records. We cannot verify that the
individual presenting that information is the correct individual.
Question. What services are you providing U.S. citizens who have
---------------------------------------------------------------------------
had their Social Security number stolen and misused?
Answer. We understand the frustration, distress, and economic
hardship that SSN misuse and identity theft cause victims. If an
individual suspects their identity has been stolen, they can contact us
directly and we can correct SSA program-related issues.
We develop cases of possible SSA-program related fraud and refer
them to our OIG for investigation as appropriate. Individuals who
suspect their identities have been stolen can place a block on their
online SSA account to prevent anyone from viewing their record or being
able to change direct deposit information online or by phone without
contacting us.
As a matter of practice, we also provide individuals who suspect
their identities have been stolen with up-to-date information about
steps they can take to work with credit bureaus, law enforcement
agencies, and the Federal Trade Commission. We encourage individuals to
consider contacting the IRS because an identity thief might use a
stolen SSN to file a tax return.
Question. How many illegal immigrants used stolen Social Security
numbers and fraudulent Social Security cards last year?
Answer. Please refer to our previous response.
Question. Has there been an increase in fraud over the last 5 and
10 years?
Answer. Please refer to our previous response.
Question. Please provide any additional data the Social Security
Administration has on the current use of Social Security number by
illegal immigrants.
Answer. Please refer to our previous response.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
Today, the Finance Committee meets to discuss the Biden
administration's commitment to protecting and strengthening Social
Security. Thank you, Commissioner O'Malley, for joining us.
Commissioner, you're not even 100 days into your time in office, and
already, you've taken more concrete action to help seniors and improve
operations in your administration than most of your predecessors.
At your confirmation hearing back in November, I pressed you on the
urgent need to address the scourge of overpayments, which are forcing
already struggling beneficiaries to pay back thousands--sometimes even
tens of thousands--of dollars because of a mistake that was no fault of
their own. No American living on a fixed income, struggling to balance
the grocery bill against rent and utilities, can afford to pay a large
bill back to the government.
A few years ago, I wrote a law requiring the Social Security
Administration to modernize its systems to prevent overpayments. For
years, SSA dragged its feet on implementing those changes. Many of the
recent problems with overpayments could have been prevented if the
agency had implemented these changes sooner.
Just 3 weeks after you were confirmed, Commissioner, you committed
to bringing the SSA into the 21st century, and promised to get these
new systems up and running this year. This will significantly
streamline Social Security's process so the agency can get wage data
quickly, efficiently, and accurately to prevent overpayments.
You promised swift action, and you've already been delivering, and
exceeding expectations--not only on big, pressing problems like
overpayments, but you haven't shied away from diving right in to fix
some of the smaller challenges the SSA is facing. Listening to
employees and seniors, you are also making concrete changes that will
make it easier for seniors to sign up for Medicare and improve customer
service.
You've shown that no problem is too small to fix if it means
improving service and getting checks out the door faster to seniors who
need them.
In my view, when it comes to these challenges, there's a clear
choice to make: we can either let a broken system continue to upend the
lives of Americans, or you can tackle these problems head-on.
Commissioner, as far as I can tell, you've made the right choice.
To build off of that, last week President Biden released his
administration's budget and reaffirmed his commitment to protecting
Social Security and his opposition to any cuts to Americans' hard-
earned benefits. That's a sharp contrast to the Republican front-runner
for the presidential nomination, who that same day said on national
television that there was a lot that can be done on Americans' hard-
earned Social Security and Medicare benefits, quote ``in terms of
cutting.'' That, in a nutshell, is his platform when it comes to this
issue: cut programs, and let everyone else pick up the pieces.
Obviously, solvency is top of everyone's minds with regard to
protecting Social Security, and I will continue working alongside my
colleagues to ensure we protect Americans' hard-earned benefits for
decades to come. A key piece of that puzzle will be finally making sure
billionaires and the ultrawealthy start paying their fair share. My
billionaires income tax would ensure the ultrawealthy start paying the
taxes they owe and help close the gap to ensure seniors can depend on
the lifeline of Social Security for years to come.
I'll close with this: today's hearing is a bit out of the ordinary
for us, as the Finance Committee has not held a hearing specifically to
perform oversight on the Social Security Administration's budget in
over a decade. But today's hearing is further evidence of momentum
under Commissioner O'Malley and President Biden's leadership to deliver
for seniors. I convened today's hearing not only to get an update on
the Biden administration's efforts to address ongoing challenges within
Social Security, but to also underscore exactly what's at stake with
this bedrock program that millions of seniors and Americans with
disabilities rely on.
President Biden's proposed budget for the coming year shows his
commitment to protecting seniors' hard-earned benefits and ensuring the
Social Security Administration has the resources it needs to improve
customer service and better serve the American people.
Commissioner, as discussed, you've been hard at work to get things
back on track. I look forward to hearing more today about your ongoing
efforts to protect Americans' hard-earned Social Security benefits.
______
Communications
----------
AARP
March 20, 2024
The Honorable Ron Wyden The Honorable Mike Crapo
Chairman Ranking Member
Committee on Finance Committee on Finance
United States Senate United States Senate
219 Dirksen Senate Office Building 219 Dirksen Senate Office Building
Washington, DC 20510 Washington, DC 20510
Dear Chairman Wyden and Ranking Member Crapo:
AARP, which advocates for the more than 100 million Americans age 50
and older, thanks you for holding today's important hearing on ``The
President's Fiscal Year 2025 Social Security Administration Budget.''
Social Security has an unparalleled nearly 90-year track record of
success, is incredibly popular with the American people, and serves as
a lifeline for millions of older Americans and their families. Congress
should and must do more, therefore, not only to protect Social
Security, but also to improve the vital services provided by the
agency.
The Importance of Social Security
According to the Social Security Administration (SSA), more than 67
million Americans are currently receiving the money they have earned
from Social Security after a lifetime of hard work and contributions.
Social Security is the principal source of income for over 40 percent
of older American households, and roughly one in six older households
depend on it for nearly all of their income. Despite its critical
importance, people's average checks are modest. Nonetheless, Social
Security lifts approximately 16.5 million older Americans out of
poverty and allows millions more to live their retirement years
independently, without fear of outliving their income.
Increased Funding for SSA Customer Service
AARP believes that older Americans and their families have earned not
only their Social Security, but the right to receive timely and
accurate services from SSA. Unfortunately, service at the agency has
been declining for many years, largely as the result of underfunding
from Congress. This trend must end now.
SSA simply does not have the resources it requires to provide all
services promptly and properly to its customers. Between 2010 and 2023,
SSA's operating budget shrank by 17 percent, even as the number of
beneficiaries grew by 22 percent. SSA is also currently experiencing
historic lows in staffing. It is not realistic to expect SSA to provide
the necessary level of service to a growing customer base with a
shrinking workforce and the continued failure of Congress to approve
adequate funding. These failures are having very real consequences for
the American people.
AARP often hears from our members who are frustrated, or worse, when
interacting with the agency. Callers to SSA's National 1-800 number
wait an average of 35 minutes for their call to be answered, with many
hanging up long before then. American workers filing for disability
benefits are experiencing the longest wait time ever for an initial
determination. For those who are originally denied and seek a decision
from an Administrative Law Judge, they must wait an additional year on
average. Shockingly, more than 10,000 people die every year while
waiting for a final decision on their disability claims.
To help SSA make necessary improvements to its customer service,
Congress must make available increased funding for the agency. As such,
AARP urges Congress to approve, at a minimum, the Administration's
$15.5 billion request for SSA administrative expenses for the 2025
fiscal year. With this additional funding, which comes not from general
revenue but from the Social Security Trust Funds, we expect the agency
to make long-overdue improvements in service and hire top-quality staff
to meet the needs of the American public.
Social Security has a responsibility and a duty to provide timely and
quality service to the public, and Congress has a duty to ensure the
agency has the resources necessary for SSA to fulfill its mission. We
are already nearly halfway through the 2024 fiscal year, but Congress
has lurched from one funding crisis to another, paralyzing agencies
like SSA who need to hire staff and make long-term investments for the
future. Given that this agency's dollars come mostly from the Social
Security Trust Funds, not general revenue, Congress is effectively
denying the American people the customer service they deserve and have
already paid for via their payroll taxes.
We strongly urge Congress to reverse the trend of denying SSA the
funding it needs, and to ensure those additional dollars are spent to
improve customer service.
Social Security Deserves a Full and Open Debate
Congress must act to ensure Social Security remains strong for
generations to come. According to the most recent Social Security
Trustees' report, Social Security can continue to pay 100 percent of
earned benefits until 2034. After that, and without action from
Congress, Social Security can continue to pay about 80 percent of
promised benefits for generations, falling to 74 percent in 2097.
Social Security is not ``going broke'' as some have argued, but
Congress does need to take action sooner rather than later to shore up
the program's long-term finances and to ensure the future adequacy of
Social Security.
At the same time, AARP calls on Congress to take up this important work
in an open, transparent way. AARP believes the Senate Finance
Committee, which has deep expertise and jurisdiction over Social
Security, should be the lead on such efforts, not a new commission or
``super committee.'' We strongly object to proposals to create new
commissions or committees to address Social Security. If regular order
is the gold standard for routine legislative matters, it certainly
should be the standard for Social Security.
Moreover, let us be clear that debt and deficits in the general budget
are not the correct lens through which to view changes to Social
Security. Instead, any changes should focus on the financial and
retirement security of the American people. Social Security is not a
driver of the annual deficits or current national debt. It is not
funded by general revenue but is instead self-financed. In fact, more
than 90 percent of Social Security is financed by payroll tax
contributions from American workers and employers; around 4 percent is
from federal income taxes on some Social Security benefits; and around
6 percent comes from interest earned on U.S. Treasury bonds held by the
Social Security Trust Funds. Any argument that claims Social Security
is a driver of the national debt--simply because it receives interest
from the U.S. Treasury bonds it has purchased--is disingenuous at best.
Older Americans agree that Social Security should be protected in any
discussion about the debt or deficit. According to AARP research,\1\ 85
percent of older Americans oppose targeting Social Security to reduce
federal budget deficits. And this is consistent across political
affiliation: 88 percent of Republicans, 79 percent of Independents, and
87 percent of Democrats strongly oppose cutting Social Security to
reduce the debt.
---------------------------------------------------------------------------
\1\ https://www.aarp.org/pri/topics/work-finances-retirement/
social-security/social-security-medicare-budget-deficit/.
---------------------------------------------------------------------------
Conclusion
Once again, thank you for holding today's important hearing. We look
forward to working with you to ensure millions of older Americans and
their families receive the high-quality service they deserve from SSA
and to protect their hard-earned Social Security. If you have any
questions, please feel free to contact me, or have your staff contact
Tom Nicholls on our Government Affairs staff at tnicholls@aarp.org or
(202) 434-3765.
Sincerely,
Bill Sweeney
Senior Vice President
Government Affairs
______
American Federation of Government Employees, AFL-CIO
80 F Street, NW
Washington, DC 20001
(202) 737-8700
www.afge.org
Chairman Wyden, Ranking Member Crapo and Members of the Committee:
On behalf of the American Federation of Government Employees, AFL-CIO
(AFGE) which represents over 750,000 federal employees at over 70
different agencies, we thank you for holding this important hearing on
Social Security Administration's (SSA) FY 2025 budget proposal.
With offices in every state, AFGE represents over 44,500 SSA employees.
AFGE employees at SSA help more than 67 million elderly, disabled,
widows and orphaned children access the insurance benefits earned from
working. These benefits, which only average $1,773 a month,\1\ help
these families survive when they can no longer work because of age,
disability or death of a family member. For about 40% of elderly
beneficiaries, Social Security is their largest source of income in
retirement.\2\ While 10% of seniors over the age of 65 are currently in
poverty, without Social Security a whopping 39% of seniors would be in
poverty.\3\ Social Security is also the largest and most successful
children's anti-poverty program; nearly 4 million children of a
disabled, retired, or deceased parent are helped by the program.
---------------------------------------------------------------------------
\1\ SSA Monthly Statistical Snapshot, February 2024. Available at:
www.ssa.gov/policy/docs/quickfacts/stat_snapshot/.
\2\ SSA Fact Sheet. Available at: www.ssa.gov/news/press/
factsheets/basicfact-alt.pdf.
\3\ ``President's Budget Strengthens Social Security,'' CBPP, March
11, 2024. Available at www.cbpp.org/blog/analyzing-president-bidens-
2025-budget#Kathleen-Romig-311150PM.
With the baby boom generation entering retirement years at a rate of
10,000 a day Social Security beneficiaries have increased by 22% from
2010 to 2023.\4\ However, SSA's operating budgets have not only failed
to keep up, they have decreased by 17%.\5\ This has led to a loss of
16% of SSA's workforce, nearly 10,000 workers, going from 66,989 full
time equivalent employees (FTE) in FY 2010 to only 58,201 FTEs in FY22.
For the public, this means long wait times for individuals in need to
get the help they need. For example, average phone wait times were 35
minutes in February 2024, and disability claims wait on average 7.5
months for an initial claim and 2.5 years through the hearing level.
---------------------------------------------------------------------------
\4\ ``Social Security Administration Needs Additional Funding to
Avoid Exacerbating Customer Service Crisis,'' CBPP, September 22, 2023.
Available at: www.cbpp.org/blog/social-security-administration-needs-
additional-funding-to-avoid-exacerbating-customer-service.
\5\ ``Social Security Administration Needs Additional Funding to
Avoid Exacerbating Customer Service Crisis,'' CBPP, September 22, 2023.
Available at: www.cbpp.org/blog/social-security-administration-needs-
additional-funding-to-avoid-exacerbating-customer-service.
To better serve the public, the agency needs more front-line staff to
process claims and to retain its experienced workforce. According to
agency data, SSA only has 18,500 Claims Specialists in Field
Operations. Yet in FY23, it would have taken 29,300 work years to
complete the existing Retirement, Survivor, and Disability claims. SSA
needs thousands of additional Claims Specialists to process claims and
prevent the backlog of cases from continuing to grow. Due to high
attrition in the Customer Service Representative position (FY 2023
shows 15% attrition with Customer Service Rep positions in field
offices, 21% attrition with Customer Service Representative positions
in the SSA Tele-Service Centers), Claims Specialists are doing four
different jobs. They are not only given claims cases at increasingly
rapid rates, but now also answering general phone inquiries, serving
walk-in customers at field offices, processing card applications and
taking more complex cases. This results in employee fatigue and burn
out and is the driving cause of higher than normal attrition (10% for
employees in SSA Field Operations FY 2023, 4 points higher than
---------------------------------------------------------------------------
historic averages).
Years of underfunding has left SSA employee benefits far behind those
offered by other agencies. SSA is one of the only federal agencies that
does not offer a student loan repayment benefit or childcare subsidies
to its workforce. AFGE surveyed its members and found 76% believe their
compensation does not reflect the importance, complexity, or volume of
the work they perform. Employees frequently leave SSA for other federal
agencies with better benefits and less stressful working conditions. An
AFGE internal survey of SSA employees found that 54% of the workforce
is considering leaving the agency in the next year. This is especially
devastating to public service because many SSA positions require years
of training and experience to become efficient. To improve public
service, it is vital that SSA be able to compete with other federal
agencies for the best workers. AFGE recommends recruitment and
retention pay for employees to incentivize them to stay in their SSA
career. AFGE also recommends bilingual differential pay to recruit and
retain bilingual workers that offer undeniable cost savings and
efficiency to SSA and on par with the private sector that offers 5-20%
of base pay to multilingual employees after testing criteria are met.
Commissioner Martin O'Malley's confirmation has been a shot in the arm
at the agency, where he has already enacted common sense reforms to
improve efficiency and employee morale. He identified ways to afford
employees more flexibility to stay productive on the job while also
allowing managers to have more employees on hand to serve the public.
But he can only do so much without the support of Congress. Last
December, the Senate overwhelmingly confirmed Martin O'Malley to be
SSA' Commissioner. It is now vital for you to support him and the
public SSA serves by supporting the funding needed to modernize the
agency.
Many of our older workers remember when SSA used to be one of the best
places to work in the federal government and was properly resourced. If
funding kept up with inflation since FY 2010, SSA's current budget
would be nearly $16.5 billion.\6\
---------------------------------------------------------------------------
\6\ Calculated using $11,447 (million) in FY 2010 Funding
(www.ssa.gov/budget/assets/materials/2011/2011FullJustification.pdf)
then using DOL's inflation adjustment calculator (https://data.bls.gov/
cgi-bin/cpicalc.pl).
President Biden requested $15.4 billion for SSA for FY 2025, an
increase of $1.3 billion or 9% over the 2-year period since FY 2023.
This investment would improve public service and is an important first
step in restoring the agency's staffing levels, which have reached
record lows. However, even this increase barely keeps up with
inflation. For example, Social Security found inflation to be 9.1
percent over the most recent 2-year period (5.9% in 2022 + 3.2% in
2023). At a minimum, Congress must meet the President's modest proposed
---------------------------------------------------------------------------
increase or else service at the agency will continue to deteriorate.
Not only should Congress fully fund the President's budget request; it
should explore other ways to increase agency efficiency. In the
Inflation Reduction Act, Congress gave the Internal Revenue Service
(IRS) a much needed injection of funding through the creation of an $80
billion fund that could be spent down over the next 10 years. A $20
billion fund could allow Commissioner O'Malley to modernize SSA and
restore the agency's ability to serve the public. SSA also suffers by
being subject to budget spending caps, despite the fact it has a
dedicated revenue stream from FICA taxes and is supposed to be funded
from the Trust Fund. Using the trust fund to bolster service could be
done without any budgetary impact.
AFGE thanks you for holding this hearing on the Social Security
Administration's budget and for considering our recommendations on
behalf of this dedicated workforce. We urge you to fully fund SSA and
look forward to working with the Committee to best serve the American
public. If you have further questions about any of these issues, please
contact Jeff Cruz at jeff.cruz@afge.org.
______
Center on Capital & Social Equity
https://inequalityink.org/
Statement of Karl Polzer
_______________________________________________________________________
Could long-term Treasury bonds and Fed financing help close Social
Security's funding gap? \1\
---------------------------------------------------------------------------
\1\ https://inequalityink.org/wp-content/uploads/2024/03/Fed-and-
debt-financing-could-they-help-Social-Security-March-12-2024-.pdf.
---------------------------------------------------------------------------
Summary
Besides facing a major long-term funding shortfall, Social Security is
putting increased pressure on federal spending and pushing up annual
deficits. Spending down Social Security reserves requires the Treasury
to sell bonds. As the program moves toward debt financing organically,
the paper below explores the possibility of adding long-term public
debt and assistance from the Federal Reserve Bank as tools to deal with
Social Security's financial shortfall. Experts differ widely on whether
increased debt or general fund financing would be a positive change.
Findings include:
- A related and deeper problem than how to structure Social
Security's funding is demographic. The U.S. is not producing enough
children or allowing sufficient immigration to build the type of
workforce needed to sustain Social Security's current level of
benefits.
- Bonds with longer terms than currently issued could help finance
Social Security while benefiting private pension plans and insurance
products under certain conditions. But the market for them may be
limited.
- There are several ways Congress could provide liquidity or
short-term funding for Social Security if needed.
- Increased levels of debt financing could affect legal and
procedural protections for Social Security beneficiaries now receiving
"entitlements" under the budget rules for mandatory spending.
- Proposals to channel Social Security funds into the stock market
would significantly increase the amount of money Congress would have to
raise through debt or taxes. One pot of funds would be needed to deal
with the current Social Security shortfall, and another needed for
stock purchases to fund the program in the future.
- The longer policymakers wait to deal with Social Security's
funding problem, the more likely some kind of debt financing may be
needed to maintain the program in the future.
Contact: kpolzer1@verizon.net
Could long-term Treasury bonds and Fed financing help close Social
Security's funding gap?
Karl Polzer, Center on Capital & Social Equity
The author would like to thank Stephen Goss, William Emmons, Henry
Aaron, Desmond Lachman, John Lowell, and Rusty Toler for comments and
suggestions. They are in no way responsible for the paper's
shortcomings.
The upcoming annual 2024 Social Security Trustees Report will likely
echo previous warnings. The trustees last report,\2\ released almost a
year ago, cautioned that, unless Congress changes the law, Social
Security will only have enough money to pay about 80% of current
benefits by 2034. That is when the program's reserves run dry, and it
can only pay out what Social Security taxes bring in.
---------------------------------------------------------------------------
\2\ https://www.ssa.gov/oact/TR/2023/index.html.
The program's actuaries calculate that long-term solvency will require
raising Social Security tax revenues by one-third or reducing benefits
\3\ by one-fourth--or negotiating a combination of the two approaches.
They project Social Security's 75-year deficit is about 1.3% of GDP.
When the 2023 report was released, U.S. GDP was $24 trillion, 1.3% of
which equaled about $388 billion. Multiply by 75 years and you get
about $30 trillion as a rough estimate of the long-term funding gap.
Social Security's annual cost is forecast to increase from 5.2% of GDP
in 2023 to 6.3% in 2076--after the Baby Boom generation \4\ has passed
away--and then decline to 6.0% by 2097.
---------------------------------------------------------------------------
\3\ https://www.msn.com/en-us/news/politics/social-security-cuts-
proposals-from-3-politicians-could-slash-your-benefits/ar-
BB1igSIM?ocid=msedgntp&pc=HCTS&cvid=0fe558e4cc614c40a1c75
ea2d1b1dafe&ei=29.
\4\ https://www.census.gov/content/dam/Census/library/publications/
2014/demo/p25-1141.pdf.
This paper explores the possibility of adding long-term public debt and
assistance from the Federal Reserve Bank as tools to deal with Social
Security's financial shortfall for several reasons. Though falling
``outside the box'' of conventional policy analysis, long-term debt
could lessen the short-run pain of payroll tax increases or benefit
cuts otherwise needed to balance its books. This policy approach is not
a personal preference.\5\ I am not advocating for it. In order to
evaluate it, I sought comments from experts in Social Security policy,
actuarial science, economics, and the Fed and include some below.
---------------------------------------------------------------------------
\5\ https://inequalityink.org/wp-content/uploads/2024/02/CCSE-work-
on-Social-Security-and-retirement-savings-updated-Jan-2024.pdf.
One motivation for exploring debt financing was trying to push some of
the cost of what is generally believed to be a ``bulge'' in Baby Boomer
retirees to later generations. As discussed below, expert review of the
article proved this assumption to be questionable at best. The number
---------------------------------------------------------------------------
of Boomer births turns out to be more of a blip than a bulge.
Perhaps the strongest reason to explore debt financing is that it is
already under way in an operational sense. As a result of the mechanics
of spending down its reserves, Social Security already is moving toward
financing its shortfall with bond sales. As I pointed out \6\ last
year, after almost 40 years of rendering a surplus, Social Security's
revenues dropped below expenditures in 2021. As a result, the federal
government has had to raise an additional $56 billion in 2021, $22
billion in 2022, and an estimated $53 billion in 2023 to pay promised
benefits. Social Security's annual funding shortfall is projected to
reach $378 billion in 2032 (unadjusted for inflation) just before
reserves run dry. (A thorough description of trust fund's history and
function can be found in ``Social Security Cash Flows and Reserves''\7\
by David Pattison, and a brief one here.\8\)
---------------------------------------------------------------------------
\6\ https://inequalityink.org/wp-content/uploads/2023/07/Senate-
Budget-Committee-Social-Security-hearing-statement-7-12-2023.pdf.
\7\ https://www.ssa.gov/policy/docs/ssb/v75n1/v75n1p1.html.
\8\ https://www.ssa.gov/OACT/ProgData/fundFAQ.html.
Because the entire federal government is spending more than it takes
in, drawing down Social Security reserves adds to current budget
deficits. The government needs to raise additional funds to use Social
Security reserves because they are, in effect, legally binding IOUs
from one part of the government to another not backed up by marketable
assets. Once the reserves are depleted, the government will need
---------------------------------------------------------------------------
Congressional authority to tap new sources of revenue.
I hypothesized that long-term bonds might be able to help Social
Security in many ways. If Congress, for some reason, waited until the
last minute to act on the shortfall, they could help provide short-term
funding and liquidity to prevent a sudden drop in benefits. Bonds could
also be a significant part of a long-term financing solution.
For the sake of experiment, assuming U.S. GDP averages $30 trillion
over the next 75 years, Social Security would need roughly $400 billion
a year in additional funding. What would be the impact if the
government financed about half of that amount ($200 billion) a year
through long-term debt?
While financing experts no doubt could come up with better ways to
engineer this, I offered a couple of options. Congress could authorize
the Treasury to sell special 50-year to 100-year bonds to raise $200
billion (or whatever amount decided) each year and send the cash to the
Social Security trust fund, which, in turn, would carry an obligation
to repay the rest of the government when the bonds matured. In this
way, the rest of the federal government would be loaning Social
Security money, just as the social insurance program provided cheap
financing to the rest of the government for decades as it generated a
surplus during a period when the ratio of workers to beneficiaries \9\
was higher.
---------------------------------------------------------------------------
\9\ https://www.pgpf.org/blog/2022/08/the-ratio-of-workers-to-
social-security-beneficiaries-is-at-a-low-and-projected-to-decline-
further.
The longest-term US bond now issued by the US matures in 30 years.
Already, fourteen OECD countries,\10\ most with slowing population
growth and increasing life spans, have issued sovereign debt with
maturities ranging from 40 to 100 years. A handful of large private-
sector organizations including wealthy U.S. universities and health
care networks have issued century-long debt. Buyers include pension
funds and insurance companies managing long-term risk. Could long-term
Social Security debt financing dovetail with future needs of private-
sector retirement funds?
---------------------------------------------------------------------------
\10\ https://fortune.com/2019/08/23/ultra-long-century-bonds/.
The Federal Reserve Bank could play a role in this. Much as the Fed has
helped salvage financially distressed and insolvent banks, hedge funds,
airlines, and insurance companies, Congress could authorize and direct
it to acquire long-term Treasury bonds providing cash to Social
Security as assets on its balance sheet. Under the current legal
framework,\11\ the central bank cannot purchase Treasuries directly
from the government. It can work with the Treasury to facilitate
government spending. For example, through the 2020 CARES Act,\12\
Congress authorized sending $1,200 checks to individuals in families
earning less than a certain amount while the Fed made sure that the
government could finance that spending on favorable terms by buying
large amounts of government bonds in the secondary market.\13\
---------------------------------------------------------------------------
\11\ https://www.federalreserve.gov/faqs/money_12851.htm.
\12\ https://www.thebalancemoney.com/2020-stimulus-coronavirus-
relief-law-cares-act-4801184#
::text=The%20CARES%20Act%20sends%20a%20%241%2C200%20stimulus%20check,fo
r%20each
%20child%20under%20the%20age%20of%2017.
\13\ https://inequalityink.org/wp-content/uploads/2023/07/fed-
helicopter-money-latest-9-01-20.pdf.
Asset purchases including these increased the Fed's balance sheet by
$7.8 trillion \14\ between September 2008, just before the acute phase
of the financial crisis, and the end of 2022 after the central bank
stimulated the Covid-impaired economy, according to the St. Louis Fed.
Would adding $200 billion a year in Social Security debt to its balance
sheet be on a scale \15\ to pose significant risk to bank and financial
system? How much would not pose a risk? Social Security debt could be
separated from other Fed assets to minimize the impact on other
reserves and potential risk shouldered by Fed member banks. The
Treasury could work with the Fed to buy and sell bonds in its Social
Security account in a way that facilitated monetary and fiscal policy
goals as needed.
---------------------------------------------------------------------------
\14\ https://www.stlouisfed.org/on-the-economy/2022/january/have-
fed-asset-purchases-reshaped-bank-balance-sheets-part-1.
\15\ https://markets.businessinsider.com/news/bonds/us-debt-
maturing-bond-yields-treasury-bills-federal-reserve-qt-2023-9.
As the US economy recovered from the effects of the COVID epidemic, the
central bank began reducing its balance sheet gradually (quantitative
tightening) in June 2022 by not reinvesting all the proceeds of
maturing securities, according to the Brookings Institute.\16\ By early
January 2024, the Fed had reduced its assets from a peak of nearly $9
trillion to $7.7 trillion. Unless its reserves fall to much lower
levels, their magnitude may have less of an impact on the economy than
movements of assets on and off its balance sheet, which indirectly
impact economic growth and interest rates.
---------------------------------------------------------------------------
\16\ https://www.stlouisfed.org/on-the-economy/2022/january/have-
fed-asset-purchases-reshaped-bank-balance-sheets-part-1.
One might argue that pumping billions of dollars in debt financing to
Social Security beneficiaries each year instead of raising payroll
taxes could have inflationary effects. On the other hand, macroeconomic
effects might be muted because beneficiaries are expecting to receive
benefits at that level. Most of the new money in the system would be
used by low- and middle-income retirees and disabled persons to
maintain current levels of consumption. Unlike loans to businesses, not
much of it would be saved and invested in enterprises stimulating
expansion of the money supply and resulting inflation. Minimizing the
---------------------------------------------------------------------------
need to raise taxes could be helpful if there is risk of a recession.
While the Social Security trustees frame financial solvency in terms of
pre-funding the program for 75 years, Social Security already is
operating on a pay-as-you-go basis relying, along with the rest of the
federal government, on increasing levels of debt financing. Though
policymakers could shore up Social Security financing \17\ without it,
long-term debt could be a useful tool in helping break deadlocks to
reach compromise over a package of tax increases and benefit cuts.
---------------------------------------------------------------------------
\17\ https://www.washingtonexaminer.com/?p=967219.
If Congress does not act, in about 10 years benefits for more than
eighty million people will drop by 20%. In 2023, Social Security
payments averaged $1,827 a month. The economic disruption of an average
monthly cut of $365 would be enormous, not only for tens of millions of
elder and disabled people and family members who could no longer pay
all their bills, but also for food stores, landlords, medical
---------------------------------------------------------------------------
providers, nursing homes, and others receiving their money downstream.
The longer policymakers temporize, the more jarring the economic and
political impacts of re-financing the program are likely to be. So, why
not use the leading institutions providing capital to the international
economic engine to help stabilize the nation's most valued social
insurance program?
Reviewer Comments
Debt timing, birth rates, immigration, and size of the future work
force
The most important criticism of the proposal is that its widely held
assumption that the Baby Boomers constitute a generational ``bulge'' is
incorrect. Social Security's chief actuary pointed out: ``Births in the
boom period (1946-65) were not extraordinary as the birth rate (per
woman) averaged 3.3 in that period versus about 3.0 prior. Those births
are perceived as a boom only because that generation has since led to
much lower birth rates (2.0 or lower). The change in the age
distribution of the population starting in 2008 is an increasing level
shift in the population age distribution, and not a transient bulge.
Given this is an apparent permanent shift, borrowing will not be an
effective answer.''
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
In light of this and other comments, it would make sense to
decrease the amount of debt in this financing ``experiment'' from 50%
of the shortfall to somewhere in the range of 10%-25%. Baby Boomer
parents had about 10% more children than preceding generations. We
cannot be sure that the US birth rate will remain below two in the
future though government actuaries and economists may be building that
rate into their models. A complementary variable contributing to the
size of the future workforce is the rate (and type) of immigration,
which recently has been driving US population growth, according to new
San Francisco Fed paper.\18\
---------------------------------------------------------------------------
\18\ https://www.frbsf.org/research-and-insights/publications/
economic-letter/2023/02/role-of-immigration-in-us-labor-market-
tightness/.
---------------------------------------------------------------------------
Annual U.S. population change, 2015-22
Uncertainty about whether the workforce can grow sufficiently to
provide the revenue to fund Social Security obligations may be the most
significant finding in this exercise. To what degree can the native US
population produce enough children, or its politics allow sufficient
inflow of workers,\19\ to get the job done?
---------------------------------------------------------------------------
\19\ https://www.brookings.edu/articles/new-immigration-estimates-
help-make-sense-of-the-pace-of-employment/
?utm_campaign=Economic%20Studies%20Bulletin&utm_medium=email
&utm_content=297899672&utm_source=hs_email.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Could long-term bonds help?
Assuming debt plays a future role in Social Security's financing, one
economist commented that long-term bonds might be helpful under certain
conditions: ``If the new bonds--call them SS bonds--were issued at
maturities that overlap regular Treasury issuance, I suspect they would
be expensive relative to simply issuing more Treasury debt. So your
proposal would be a money-loser. If, however, SS bonds are issued only
as super-long bonds, with 50 years to maturity or more, it becomes a
question of whether their uniqueness would elicit sufficient
specialized demand--mostly from pension funds and insurance companies,
I suspect--to overcome their inevitable illiquidity and a hefty term
premium. My intuition is that SS bonds of this type would be very
expensive to issue. If there were a large demand for 50- to 100-year
bonds, why wouldn't the Treasury have issued them already? In fact, the
US Treasury has considered this and decided not to do it, even though
some other countries have issued at those maturities.''
At a national retirement security conference \20\ in late February, I
asked an actuary whose firm manages several pension plans to weigh in.
He said that there is a market for debt instruments that can spread
risk and manage cash flow over 75 years among pension plans, and that
US bonds would offer more security than foreign issuance. However,
pension fund managers already have developed a work-around using
``derivatives'' as a substitute. It's unclear whether they would turn
away from existing products if the US Treasury were to offer new very-
long-term bonds.
---------------------------------------------------------------------------
\20\ https://www.nirsonline.org/events/previous-conferences/2023-
conference-highlights/.
---------------------------------------------------------------------------
The Fed and other sources of relief
Social Security could borrow money from other federal trust funds to
deal with liquidity issues as it did from Medicare's beginning in 1982
as Congress worked on reforms establishing its current financing
scheme. If a similar scenario recurred, it is unclear whether inter-
trust-fund borrowing would be available or could provide the amount of
money needed.
There is also precedent for Congress setting up a separate federal
corporation to issue bonds to repay the debts of a trust fund. In 1989,
Congress enacted \21\ such a scheme to bail out savings and loan (S&L)
institutions that failed during the S&L crisis of the late 1980s and
early 1990s. REFCORP issued bonds between 1989 and 1991. Over the
course of more than 6 years, the Resolution Trust Corporation
liquidated, bailed-out, or otherwise resolved, 747 insolvent S&Ls, and
thrift institutions. This cost taxpayers almost $500 billion.
---------------------------------------------------------------------------
\21\ https://www.investopedia.com/terms/r/refcorp.asp.
Responding to a scenario involving the Federal Reserve as a potential
market maker and long-term holder of Social Security bonds, a former
---------------------------------------------------------------------------
Fed economist provided these comments:
``Even though this flies in the face of the Fed's preferred
operating procedures--hold only Treasury debt that mirrors the
Treasury's outstanding issuance by maturity--you should mention
that there is precedent for what you propose. Large-scale asset
purchases of federal agency debt and agency mortgage-backed
securities made no sense from the traditional Fed perspective.
But (former fed chairman) Ben Bernanke made the case that the
Fed should prevent the mortgage market from collapsing, rather
than waiting for Congress to do it. If a similar emergency
occurred for Social Security beneficiaries, the Fed might well
step in again. But a much better plan would be to pay for the
shortfall out of government resources raised in regular
Treasury auctions.''
Is debt financing of any kind a good idea for Social Security?
Reviewer reactions to using debt as a future funding source for Social
Security ranged from strong objection to acceptance, in part stemming
from the state of the federal budget writ large. According to an
economist from a conservative think tank:
``My main reservation with your paper is that it is proposing
added government debt financing to be bought by the Federal
Reserve at a time when our public finances are already on a
dangerously unsustainable path. At a time of cyclical strength
and full employment, we are running a 6% of budget deficit.
According to the Congressional Budget Office, on present
policies we will continue to run deficits of that size for as
far as the eye can see. That will soon take our debt level to a
higher level in relation to GDP than that which we reached in
1945. This would seem to be inviting both a dollar crisis and a
move to higher inflation that would constitute an unfair tax on
the poor. Rather than adding to the debt problem, I think that
a more appropriate way to address the social security crisis is
through an equitable way to increase social security revenues
and reduce expenditures.''
Another economist predicted that Social Security would survive more or
less intact with its shortfall covered by regular Treasury issuance. A
third (from a left-to-center think tank) commented: ``When you refer to
long-term borrowing, that is simply general revenues by another name,
but under whatever name it flies, some of it would be a good idea in my
opinion. All good, but keep in mind that depositing funds borrowed
today is nothing more than general revenues today rather than general
revenues tomorrow.'' In the current fiscal situation of recurring
budget deficits, tapping into general revenues means generating more
debt.
Funding structure, legal and procedural protections
Many economists characterize Social Security's trust fund as a
``fiction'' obscuring that its benefit payments are ``just another line
item'' in the federal budget. The trust fund, however, is part of a
matrix of legal and procedural protections for Social Security
beneficiaries receiving ``entitlements''\22\ under the budget rules for
mandatory spending.\23\ Unlike federal discretionary programs where
spending levels are determined annually through appropriations,
mandatory spending for entitlements like Social Security is open-ended,
guaranteeing that eligible individuals receive benefits according to a
pre-set formula. The government must allocate funds to meet the needs
of all qualified individuals, even if spending exceeds overall
budgetary limits \24\ set by Congress and the President. (The Social
Security Administration's operating budget, however, is set by Congress
in its annual appropriations process.)
---------------------------------------------------------------------------
\22\ https://en.wikipedia.org/wiki/
Mandatory_spending#::text=The%20bulk%20of%20
mandatory%20spending%20is%20for%20entitlement,specific%20mandatory%20pro
gram
%2C%20outlays%20are%20made%20automatically.%20.
\23\ https://crsreports.congress.gov/product/pdf/R/R44582.
\24\ https://policyvspolitics.org/what-is-the-debt-ceiling/.
If Congress includes general revenue in Social Security financing
reforms, questions arise concerning whether, and to what extent, Social
Security might retain its status as an entitlement and mandatory
spending: Would the portion of benefits paid for by general funds
retain this status? The portion covered by dedicated Social Security
taxes? Could entitlement and mandatory spending status disappear
altogether?
Could investing in equities help Social Security?
Over the years, there have been several proposals to invest trust fund
dollars in the stock market in order to generate higher long-term gains
than what lending to the rest of the government can yield. Sen. Bill
Cassidy (R-LA) recently presented \25\ the latest iteration of a Senate
study group proposal that would both close Social Security's current
financing gap while also setting up a separate equity fund to help
finance Social Security decades in the future. Aside from the higher
risk posed by equity value fluctuation, because trust fund outflow now
exceeds inflow, this proposal would significantly increase the amount
of money Congress would have to raise through taxes or borrow. One pot
of funds would be needed to deal with the current shortfall, and
another needed for stock purchases to fund Social Security in the
future. Pre-funding Social Security is more difficult than it has been
in the past. Before putting Social Security funds at risk in the stock
market, proponents might consider trying it with a dedicated funding
stream of an agency with a much smaller budget. For example, what about
a trial run with the Securities and Exchange Commission?\26\
---------------------------------------------------------------------------
\25\ https://www.nirsonline.org/events/previous-conferences/2023-
conference-highlights/.
\26\ https://rpc.cfainstitute.org/en/policy/positions/sec-funding.
---------------------------------------------------------------------------
Final observations
While I do not necessarily favor debt financing to help close Social
Security's financing gap, the program's current structure is putting
increased pressure on federal spending and pushing up annual federal
deficits. The longer policy makers wait to deal with Social Security's
funding problem, the more likely some kind of debt financing may be
needed to maintain the program in the future. Long-term bonds could be
part of that solution under certain conditions but probably could not
play a major role. A related and deeper problem facing the US than how
to structure Social Security's funding is demographic. The country is
not producing enough children or allowing sufficient immigration to
build the type of workforce needed to sustain Social Security's
promised benefits.
Karl Polzer is founder of the Center on Capital & Social Equity.
Contact: kpolzer1@verizon.net
Sources and references:
The Ratio of Workers to Social Security Beneficiaries Is at a Low and
Projected to Decline Further--Peterson Foundation, https://
www.pgpf.org/blog/2022/08/the-ratio-of-workers-to-social-security-
beneficiaries-is-at-a-low-and-projected-to-decline-further.
Birth rate--Wikipedia, https://en.wikipedia.org/wiki/Birth_rate.
The 2023 OASDI Trustees Report, https://www.ssa.gov/oact/TR/2023/
index.html.
The Federal Reserve's Balance Sheet: What It Is and Why It Matters |
Bankrate, https://www.bankrate.com/banking/federal-reserve/federal-
reserve-balance-sheet/.
FRB: Why doesn't the Federal Reserve just buy Treasury securities
directly from the U.S. Treasury?, https://www.federalreserve.gov/faqs/
money_12851.htm.
Have Fed Asset Purchases Reshaped Bank Balance Sheets? Part 1--St.
Louis Fed, https://www.stlouisfed.org/on-the-economy/2022/january/have-
fed-asset-purchases-reshaped-bank-balance-sheets-part-1.
Understanding the Federal Reserve Balance Sheet--Investopedia, https://
www.
investopedia.com/articles/economics/10/understanding-the-fed-balance-
sheet.asp#::
text=Traditionally%2C%20the%20Fed%27s%20assets%20have%20mainly%20consist
ed%20of,bonds%20have%20maturities%20of%20more%20than%2010%20years.
How Does the Fed Reduce Its Balance Sheet?--Investopedia, https://
www.investo
pedia.com/insights/how-will-fed-reduce-balance-sheet/.
U.S. Senate Budget Committee hearing, ``Protecting Social Security for
All: Making the Wealthy Pay Their Fair Share,'' July 12, 2023,
statement of Karl Polzer, https://inequalityink.org/wp-content/uploads/
2023/07/Senate-Budget-Committee-Social-Security-hearing-statement-7-12-
2023.pdf.
The Fed is bankrupt--The Hill, https://thehill.com/opinion/finance/
3955889-the-fed-is-bankrupt/.
How will the Federal Reserve decide when to end ``quantitative
tightening''?--Brookings, https://www.brookings.edu/articles/how-will-
the-federal-reserve-decide-when-to-end-quantitative-tightening/
#::text=It%20began%20reducing%20its%20balance,
%249%20trillion%20to%20%247.7%20trillion.
U.S. Population Projected to Begin Declining in Second Half of
Century--U.S. Census, https://www.census.gov/newsroom/press-releases/
2023/population-projec
tions.html.
The Baby Boom Cohort in the United States: 2012 to 2060--U.S. Census,
https://www.census.gov/content/dam/Census/library/publications/2014/
demo/p25-1141.pdf.
The Role of Immigration in U.S. Labor Market Tightness--San Francisco
Fed, https://www.frbsf.org/research-and-insights/publications/economic-
letter/2023/02/role-of-immigration-in-us-labor-market-tightness/.
New immigration estimates help make sense of the pace of employment |
Brookings, https://www.brookings.edu/articles/new-immigration-
estimates-help-make-sense-of-the-pace-of-employment/
?utm_campaign=Economic%20Studies%20Bulletin&utm_
medium=email&utm_content=297899672&utm_source=hs_email.
100 Year Bonds? Here's Why ``Ultra-Long'' Bonds Have Caught on in 14
Countries and Counting--Fortune, https://fortune.com/2019/08/23/ultra-
long-century-bonds/.
What's in the 2020 Coronavirus Relief Law (CARES Act)?--The Balance,
https://www.thebalancemoney.com/2020-stimulus-coronavirus-relief-law-
cares-act-4801184#
::text=The%20CARES%20Act%20sends%20a%20%241%2C200%20stimulus%20check
,for%20each%20child%20under%20the%20age%20of%2017.
US Debt: $7.6 Trillion Will Mature in Next Year--a Third of the Total--
Business Insider, https://markets.businessinsider.com/news/bonds/us-
debt-maturing-bond-yields-treasury-bills-federal-reserve-qt-2023-9.
Social Security Cuts: Proposals from 3 Politicians Could Slash Your
Benefits--MSN, https://www.msn.com/en-us/news/politics/social-security-
cuts-proposals-from-3-politicians-could-slash-your-benefits/ar-
BB1igSIM?ocid=msedgntp&pc=HCTS&cvid=
0fe558e4cc614c40a1c75ea2d1b1dafe&ei=29.
Fed helicopter money: Could new tools allowing the Fed to pump money
through ``the people'' make U.S. monetary policy more equitable and
effective?--Karl Polzer, https://inequalityink.org/wp-content/uploads/
2023/07/fed-helicopter-money-latest-9-01-20.pdf.
There's a way to save Social Security, but it involves taxing the
rich--Washington Examiner op-ed, https://www.washingtonexaminer.com/
?p=967219.
A Widening Gap in Life Expectancy Makes Raising Social Security's
Retirement Age a Particularly Bad Deal for Low-Wage Earners--Karl
Polzer--Society of Actuaries, https://inequalityink.org/wp-content/
uploads/2023/07/ITPI0820_hi-Res_polzer_
modified.pdf.
2023 Conference Highlights--National Institute on Retirement Security,
https://www.nirsonline.org/events/previous-conferences/2023-conference-
highlights/.
Resolution Funding Corporation (REFCORP): Overview, https://www.investo
pedia.com/terms/r/refcorp.asp.
The world's drowning in debt--brace yourself for economic turbulence,
https://nypost.com/2024/02/21/opinion/the-worlds-drowning-in-debt-
brace-yourself-for-economic-turbulence/.
National Deficit | U.S. Treasury Fiscal Data, https://
fiscaldata.treasury.gov/americas-finance-guide/national-deficit/.
Central Banks Need to Be Honest About Their Losses, by Willem H.
Buiter--Project Syndicate, https://www.project-syndicate.org/
commentary/ecb-fed-deferred-asset-fudge-to-mask-excessive-losses-by-
willem-h-buiter-2024-03.
The Role of Entitlement Programs in the U.S. Federal Budget, https://
policyvspolitics.org/the-role-of-entitlement-programs-in-the-u-s-
federal-budget/.
Overview of Funding Mechanisms in the Federal Budget Process, and
Selected Examples, https://crsreports.congress.gov/product/pdf/R/
R44582.
SEC Funding, https://rpc.cfainstitute.org/en/policy/positions/sec-
funding.
Mandatory spending--Wikipedia, https://en.wikipedia.org/wiki/
Mandatory_spend
ing#::text=The%20bulk%20of%20mandatory%20spending%20is%20for%20entitle
ment,specific%20mandatory%20program%2C%20outlays%20are%20made%20
automatically.%20.
Center on Capital & Social Equity work on Social Security and
retirement savings (updated January 2024), https://inequalityink.org/
wp-content/uploads/2024/02/CCSE-work-on-Social-Security-and-retirement-
savings-updated-Jan-2024.pdf.
______
Center for Fiscal Equity
14448 Parkvale Road, Suite 6
Rockville, MD 20853
fiscalequitycenter@yahoo.com
mbinder@umd.edu
Statement of Michael Bindner
Chairman Wyden and Ranking Member Crapo, thank you for the opportunity
to address Administrator 's testimony.
General Approach
For obvious reasons, this year will be more hectic than the last. The
budget and appropriations process need to be simple. To do this, please
just pass a consensus caretaker budget with two draft partisan
supplemental bills, one of which can be enacted during the Lame Duck
Session or at the beginning of the next Congress for the president-
elect to sign upon taking office, depending on who wins. Details are
provided in our comments to the full Ways and Means Committee on the
HHS budget.
If such a budget is enacted, use it as the basis for spending caps for
a new Budget Control Act. Make the targets realistic and self-enforcing
for purposes of Appropriations Committee allocations.
Contingencies
In the event the majority in the House shifts due to early retirements
or insurrection indictments, the Senate majority and the House minority
should have legislation ready to enact a Public Option, including
reconciliation instructions for the FY24 budget year. Details are
provided in our comments to the full Ways and Means Committee on the
HHS budget.
Any change in control will only last through the special election
cycle; this should be the second priority. The first must be amending
the Electoral Count Act and the jurisdiction of the Ethics Committees
to provide for the enforcement of the Fourteenth and Twentieth
Amendments, including provisions for removing any such disability for
members and/or the president-elect.
The President's Budget
The submitted budget strengthens Social Security in a way that ensures
no benefit cuts; extends solvency by asking the highest-income
Americans to pay their fair share; and improves financial security for
seniors and people with disabilities. These priorities have not changed
to a great extent. We will address these proposals in the order
presented by OMB.
Social Security 2100 is the current ``school solution'' proposed by the
Democrats. I hope that it clears both chambers, preferably on a
bipartisan basis. However, as I mentioned in my 2019 comments to the
Social Security Subcommittee, we cannot stop because we have made the
numbers work.
America Needs a Raise
Too many of the retired and disabled Americans (myself included) find
it hard to make ends meet. The savaging of pension rights has made a
decent retirement a rarity, as it is impossible for workers to both
save and feed their families.
More is needed than simply reinforcing the status quo. Work must pay
enough for workers to put money away, as the three-tooled retirement
model requires. Note that an employee-ownership model would restore
pensions and end the need for such furniture.
The President's proposal to restore the Child Tax Credit, which has
already been passed by the House, is a major step in that direction. It
is one of the two things that must be continued to meet our sacred
trust for their retirement, as well as their present well-being.
So that no one will simply use fecundity for their incomes, minimum
wages must be increased for present workers. Current retirement,
survivors, disability, and unemployment insurance and minimum wage
levels are inadequate. America needs a raise, which should be adjusted
for inflation on an annual basis. Twice the current level, but with a
shorter work week (and work day) would eliminate the incentive to cut
work hours for lower wage employees to avoid paying benefits (as well
as improvements to how healthcare is funded, which is a whole other
subject).
Unemployment, retirement, and disability insurance should at least
match increased minimum wage levels on a full-time basis (but assuming
26-hour work week). This means that the minimum benefit, not the
average, should be at least $1,600 per month.
The median benefit needs to be high enough so that no one who is
disabled or retired requires either Food Stamps or housing subsidies to
meet basic needs. Upwards of $2,000 per month is necessary, especially
as the vast majority of retirees do not bring large retirement funds
with them into old age, and certainly not into disability.
Payments to dependent children for survivors and the disabled should be
abolished and replaced with an enhanced CTC at the $1,000 per month
level.
To increase benefits for retirees and the disabled, consider the higher
minimum wage rates as wage inflation and readjust all prior work
experience by this inflation. Combined with some of the tax rate
adjustments in the proposed Act, raising the minimum wage will increase
future revenues enough to pay for higher benefits.
The Federal Role in Causing Inflation and Inequality
Households making under the 90th percentile have been losing ground for
almost half a century, while incomes above that amount have increased
on a regular basis.
The source of inequality, aside from abandoning the 91% top marginal
tax rate, is granting raises at an equal percentage rather than by an
equal amount. When the 91% rate was repealed, incomes were fairly
equal, so it was not an issue.
The federal government plays an outsized role in how salaries are
determined through percentage-based cost of living adjustments to
government workers, beneficiaries, government contractors. The
government can change this with the stroke of a pen. The private sector
will follow suit with a higher minimum wage, adequate child tax credits
(as described below) and paying individuals in training from ESL to
community college the minimum wage to pursue their studies.
From here on in, adjust for cost of living for federal employees and
contractors on a per dollar an hour rather than on a percentage basis
(or dollars per month or week for federal beneficiaries). Calculate the
dollar amount based on inflation at the median income level. No one
gets more dollars an hour raises, no one gets less dollars per hour in
increases. Increase the minimum wage as above and consider decreasing
high end salaries paid to government employees and contractors. Even
without decreases, simply equalizing raises will soon reduce
inequality. Why is this necessary?
Prices chaise the median dollar. The median dollar of income is
actually at the 90th percentile, rather than the 77th percentile (which
is about where the median is). This strategy will reduce inflation in
both the long and short terms as prices adjust to decreases in higher
salaried income. Let me repeat this--prices chase income dollars, not
income earners.
Raising Adequate Revenue
The President proposes that we raise the income ceiling to collect more
money even though this would increase benefits to the wealthy. I
propose that Congress lower the OASI tax ceiling so as to lower
benefits with less drastic bend points, move Survivors Insurance for
non-retirees, Health/Affordable Care Act payroll taxes and Disability
Insurance entirely to a Subtraction VAT or Credit Invoice VAT as
described in Attachment One--Tax Reform. A floor is also added so that
EITC payments are no longer necessary.
The S-VAT will pay for increasing the Child Tax Credit beyond what the
President proposes, to be distributed with pay rather than at the end
of the year, and the higher minimum wage will end the need to subsidize
low wage employers at the public trough.
The most important points are that, rather than raising income caps on
payroll taxes, all value added for an employer is taxed, both labor and
profit and, because there is no way to separate out individual income
contributions to the tax, each employee will be credited the same
amount--which allows for higher benefits without bend points. Such
taxes also have no ceilings, so the S-VAT rate can be lower than both
current law and the proposed legislation.
In 1998, when I participated in on-line discussions on Social Security
personal accounts, I brought up the necessity of doing this. This idea
raised the hackles of the privatizers much more than their desire to
take advantage of riskier investment strategies. The best way to kill
talk of private accounts is to introduce redistribution on the front
end and give organized labor proxies to vote worker shares.
Finally, a word on Section 204 of Social Security 2100 regarding the
Social Security Trust Fund. This is simply window dressing. The reality
is that any trust fund balances must still be loaned to the Treasury
and reimbursed with general income tax revenues or additional
borrowing.
In our first submission to Congress in May of 2010, we addressed Trust
Fund reimbursement issues. They are particularly applicable given the
proposed funding increases in the subject legislation (which, if
passed, would continue to have workers subsidize lower income tax rates
for the few). They remain especially true today.
When Social Security was saved in the early 1980s, payroll taxes were
increased to build up a Trust Fund for the retirement of the Baby Boom
generation. The building of this allowed the government to use these
revenues to finance current operations, allowing the President and his
allies in Congress to honor their commitment to preserving the last
increment of his signature tax cut.
This trust fund is now coming due, so it is entirely appropriate to
rely on increased income tax revenue to redeem them. It would be
entirely inappropriate to renege on these promises by further extending
the retirement age, cutting promised Medicare benefits or by enacting
an across the board increase to the OASI payroll tax as a way to
subsidize current spending or tax cuts.
Increasing Affordable Housing Supply to Reduce Housing Costs
We disagree with the President's proposed subsidies. The best cure for
housing affordability is higher income. The President's budget is on
the right track regarding the Child Tax Credit. I would treble down on
his amounts and distribute these funds through Old-Age, Survivors,
Disability and Unemployment Insurance payouts or with wages.
Urban renewal, which relocates poor and largely non-white people, leads
to redevelopment that chases the 90th percentile. The tax incentives in
the President's budget are exactly the wrong approach. Instead, reform
the entire tax system so that most families do not have to file income
taxes. By most, I mean 99%.
A Radical Change to Entitlement Spending
This is a new idea that deserves mention, just to think about for the
future. There are many proposals to maintain incomes as technology eats
jobs (although ChatGPT is not the demon we thought it was). Among them
are a social credit payment, Kelso and Adler's Two Factor theory and
Len Burman's proposal for a Universal Earned Income Tax Credit. The
last makes the second-tier economy permanent where now it is simply an
ad hoc affair. It also does nothing for those with inadequate training.
Disability Insurance is hard to get and this dissuades getting off,
regardless of programs such as the Ticket to Work. Making it easier to
get some kind of benefit after normal unemployment without a disability
filing and the associated lawsuit will encourage work and end reporting
requirements to claim extra income. When income appears in the system
above a certain level, give notice that benefits will stop--and an
added bonus for doing so.
There is a large leaky bucket in social services at large and for
disability insurance in particular, employing an army of social workers
who would rather be doing client care than pushing paper and making
determinations of whether the employer or employer was responsible for
job loss and whether a family is entitled to benefits or not. There is
another army of lawyers who fight disability claim denials and tax
preparers (and revenue agents) that process earned income tax credit
claims.
There is another army of tax avoidance professionals whose main product
is tax minimization for upper middle class and wealthy families by
selling retirement accounts and whole life policies (on commission).
There is yet another army fighting a losing battle against homelessness
with public housing and hard to get subsidies, with another who
capitalize on these programs by offering substandard housing.
These armies include taxpayers in their battle plans. We can redirect
these efforts with a few simple changes.
Unemployment and disability insurance can be ``no fault'' and paid
automatically with a few simple steps to minimize fraud (multiple
collections). They also need to pay more, as does baseline Social
Security (which 80 percent of retirees rely on as their soul income).
Children can be provided for without Food Stamps or EITC paperwork or a
parent on disability, or by being diagnosed themselves.
The system can also end the exploitation of the ``working poor'' who,
with remedial education can learn themselves out of poverty to the
extent that they are able, and who require a low tier economy that
provides cheap goods and convenience food. The thing that gets in the
way is the opportunity cost of not working to go to school. Including
taking ESL.
Long-term unemployment insurance is offered as an option. There should
not be an end date and should equal what is paid for a full-time,
minimum wage job. This rate can be set at the level paid to retirees,
as this level of income is at about that level anyway.
A stipend at this level can also be paid to students who are old enough
to work through college or technical training--with all such training
and education provided free of charge, ending the need for student
loans and other grants and the process for administering them.
A refundable child tax credit, paid with wages, stipends or benefits
ends the need for the EITC, SNAP, TANF and disability and survivor
payments funded through Social Security.
Unemployment benefits are intended as an incentive to keep staff,
although avoiding them has resulted in a wasteful system of punitive
human resource policies to fire people for cause. Giving employers a
refundable offset mitigates these incentives and results in their
referral to other payers, especially schools, who would take over plan
administration (rather than having government do so).
The main question is always how to pay for high Social Security,
disability and unemployment benefits? The most appropriate way to pay
some of it is an employer-paid subtraction VAT or net business receipts
tax at the federal and state levels, with offsets to fund education and
stipends for current and potential employees, as well as their children
and the children of current employees. Ideally, what is collected by
the government and redistributed will be zero.
The other part of the funding is a goods and services (value added) tax
to take over funding the employer contribution for Social Security, as
well as long-term unemployment insurance.
The state-level S-VAT would fund education and related stipends and
child credits (again, with offsets).
Individual employee FICA taxes will fund additional payments to
retirees over and above long-term unemployment insurance levels.
Personal and corporate income taxes will be abolished for all but the
top 1% as part of the deal. To replace capital gains taxes, an asset
value-added tax will be levied for each transaction (explained
elsewhere).
To avoid the abuse of keeping people on payroll who do nothing,
refundable portions (paid by government) of offsets will be limited to
S-VAT + GST collections.
To review the bidding, the list of government functions abolished in a
radical reform include punitive (rather than no-fault) unemployment
insurance, temporary assistance to needy families (and its replacement
with real education), disability insurance, the complicated earned
income tax credit, supplemental nutrition assistance, inheritance
taxes, employer paid FICA and personal and corporate taxation, as well
as the associated private sector costs, housing subsidies and the need
to lobby for services for the poor.
Thank you for the opportunity to address the committee. We are, of
course, available for direct testimony or to answer questions by
members and staff.
Attachment--Tax Reform, Center for Fiscal Equity, March 24, 2023
Synergy: The President's Budget for 2024 proposes a 25% minimum tax on
high incomes. Because most high-income households make their money on
capital gains, rather than salaries, an asset value-added tax replacing
capital gains taxes (both long and short term) would be set to that
rate. The top rate for a subtraction VAT surtax on high incomes (wages,
dividends and interest paid) would be set to 25%, as would the top rate
for income surtaxes paid by very high-income earners. Surtaxes
collected by businesses would begin for any individual payee receiving
$75,000 from any source at a 6.25% rate and top out at 25% at all such
income over $375,000. At $450,000, individuals would pay an additional
6.25% on the next $75,000 with brackets increasing until a top rate of
25% on income over $750,000. This structure assures that no one games
the system by changing how income is earned to lower their tax burden.
Individual payroll taxes. A floor of $20,000 would be instituted for
paying these taxes, with a ceiling of $75,000. This lower ceiling
reduces the amount of benefits received in retirement for higher-income
individuals. The logic of the $20,000 floor reflects full-time work at
a $10 per hour minimum wage offered by the Republican caucus in
response to proposals for a $15 wage. The majority needs to take the
deal. Doing so in relation to a floor on contributions makes adopting
the minimum wage germane in the Senate for purposes of Reconciliation.
The rate would be set at 6.25%.
Employer payroll taxes. Unless taxes are diverted to a personal
retirement account holding voting and preferred stock in the employer,
the employer levy would be replaced by a goods and receipts tax of
6.25%. Every worker who meets a minimum hour threshold would be
credited for having paid into the system, regardless of wage level. All
employees would be credited on an equal dollar basis, rather than as a
match to their individual payroll tax. The tax rate would be adjusted
to assure adequacy of benefits for all program beneficiaries.
High-income Surtaxes. As above, taxes would be collected on all
individual income taxes from salaries, income and dividends, which
exclude business taxes filed separately, starting at $400,00 per year.
This tax will fund net interest on the debt (which will no longer be
rolled over into new borrowing), redemption of the Social Security
Trust Fund, strategic, sea and non-continental U.S. military
deployments, veterans' health benefits as the result of battlefield
injuries, including mental health and addiction and eventual debt
reduction.
Asset Value-Added Tax (A-VAT). A replacement for capital gains taxes
and the estate tax. It will apply to asset sales, exercised options,
inherited and gifted assets and the profits from short sales. Tax
payments for option exercises, IPOs, inherited, gifted and donated
assets will be marked to market, with prior tax payments for that asset
eliminated so that the seller gets no benefit from them. In this
perspective, it is the owner's increase in value that is taxed. As with
any sale of liquid or real assets, sales to a qualified broad-based
Employee Stock Ownership Plan will be tax free. These taxes will fund
the same spending items as high income and subtraction VAT surtaxes.
There will be no requirement to hold assets for a year to use this
rate. This also implies that this tax will be levied on all eligible
transactions.
The 3.8% ACA-SM tax will be repealed as a separate tax, with health
care funding coming through a subtraction value-added tax levied on all
employment and other gross profit. The 25% rate is meant to be a
permanent compromise, as above. Any changes to this rate would be used
to adjust subtraction VAT surtax and high-
income surtax rates accordingly. This rate would be negotiated on a
world-wide basis to prevent venue seeking for stock trading.
Subtraction Value-Added Tax (S-VAT). Corporate income taxes and
collection of business and farm income taxes will be replaced by this
tax, which is an employer paid Net Business Receipts Tax. S-VAT is a
vehicle for tax benefits, including:
Health insurance or direct care, including veterans' health care
for non-
battlefield injuries and long-term care.
Employer-paid educational costs in lieu of taxes are provided as
either
employee-directed contributions to the public or private unionized
school of their choice or direct tuition payments for employee children
or for workers (including ESL and remedial skills). Wages will be paid
to students to meet opportunity costs.
Most importantly, a refundable child tax credit at median income
levels (with inflation adjustments) distributed with pay.
Subsistence-level benefits force the poor into servile labor. Wages and
benefits must be high enough to provide justice and human dignity. This
allows the ending of state administered subsidy programs and
discourages abortions, and as such enactment must be scored as a must
pass in voting rankings by pro-life organizations (and feminist
organizations as well). To assure child subsidies are distributed, S-
VAT will not be border-adjustable.
As above, S-VAT surtaxes are collected on all income distributed over
$75,000, with a beginning rate of 6.25%. replace income tax levies
collected on the first surtaxes in the same range. Some will use
corporations to avoid these taxes, but that corporation would then pay
all invoice and subtraction VAT payments (which would distribute tax
benefits). Distributions from such corporations will be considered
salary, not dividends.
Credit Invoice Value-Added Tax (CI-VAT). Border-adjustable taxes will
appear on purchase invoices. The rate varies according to what is being
financed. If Medicare for All does not contain offsets for employers
who fund their own medical personnel or for personal retirement
accounts, both of which would otherwise be funded by an S-VAT, then
they would be funded by the I-VAT to take advantage of border
adjustability.
CI-VAT forces everyone, from the working poor to the beneficiaries of
inherited wealth, to pay taxes and share in the cost of government. As
part of enactment, gross wages will be reduced to take into account the
shift to S-VAT and CI-VAT, however net income will be increased by the
same percentage as the CI-VAT. Inherited assets will be taxed under A-
VAT when sold. Any inherited cash, or funds borrowed against the value
of shares, will face the I-VAT when sold or the A-VAT if invested.
CI-VAT will fund domestic discretionary spending, equal dollar employer
OASI contributions, and non-nuclear, non-deployed military spending,
possibly on a regional basis. Regional CI-VAT would both require a
constitutional amendment to change the requirement that all excises be
national and to discourage unnecessary spending, especially when
allocated for electoral reasons rather than program needs. The latter
could also be funded by the asset VAT (decreasing the rate by from
19.25% to 13%).
Carbon Added Tax (C-AT). A Carbon tax with receipt visibility, which
allows comparison shopping based on carbon content, even if it means a
more expensive item with lower carbon is purchased. C-AT would also
replace fuel taxes. It will fund transportation costs, including mass
transit, and research into alternative fuels. This tax would not be
border-adjustable unless it is in other nations, however in this case
the imposition of this tax at the border will be noted, with the U.S.
tax applied to the overseas base.
______
Statement Submitted by Daniel L. Hatcher
University of Baltimore School of Law
Saul Ewing Civil Advocacy Clinic
1420 N. Charles St.
Baltimore, MD 21201-5779
T: 410-837-5706
F: 410-837-4776
Thank you to the Chair and Members of the Committee for holding
this hearing regarding the Social Security Administration's budget and
practices. I submit this statement for the record regarding questions
raised to the new Commissioner of the Social Security Administration
(SSA), addressing harmful state agency practices of taking foster
children's SSI and OASDI (survivor) benefits.
Across the country, child welfare agencies have been misusing SSA's
representative payee program to take resources from vulnerable foster
youth. Often with the assistance of private contractors, the agencies
search for children who may be disabled or have deceased parents and
therefore potentially eligible for SSI or survivor benefits. The
agencies apply on the children's behalf and then take control of the
funds by applying to become the children's representative payee. Then,
although the agencies' core purpose is to serve and promote the welfare
of children, the agencies divert the children's money to government
revenue rather than using the funds for the children's individualized
needs and best interests as intended. The agency rationale is to pay
back the cost of foster care, but children have no legal obligation to
pay for their own care. And all of this is usually done without telling
the children or the children's legal advocates. Disabled children
desperately needing more help are never told they have SSI benefits
that the agencies are taking. Foster children traumatized by their
parents' deaths are not told their parents were able to leave them
survivor benefits, as the agencies take the funds--depriving the
children of using their own money to help themselves and stripping the
children of the invaluable emotional connection the benefits could have
provided to their deceased parents.
For over 20 years, I have been engaged in research, scholarship,
and advocacy regarding this and interrelated poverty issues.\1\ I was
encouraged to hear SSA's Commissioner, Martin O'Malley, respond to
excellent questions from Senator Elizabeth Warren--indicating he wants
SSA to better protect foster children's benefits. Similarly, in his
testimony before the House's Joint Social Security and Work & Welfare
Subcommittee Hearing held on March 21, 2024, Commissioner O'Malley
indicated he wants SSA to use its existing powers to better protect
foster children's benefits--so they actually help the children.
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\1\ E.g, Daniel L. Hatcher, Foster Children Paying for Foster Care
(https://scholarworks.law.ubalt.edu/all_fac/283/), 27 Cardozo L. Rev.
1797 (2006); Purpose vs. Power: Parens Patriae and Agency Self-Interest
(https://scholarworks.law.ubalt.edu/all_fac/285/), 42 N. Mex. L. Rev.
159 (2012); The Poverty Industry: The Exploitation of America's Most
Vulnerable Citizens, NYU Press (June 21, 2016); Stop Foster Care
Agencies from Taking Children's Resources (https://
www.floridalawreview.com/article/89240-stop-foster-care-agencies-from-
taking-children-s-resources/stats/all/pageviews), 71 Florida Law Rev.
Forum 104 (2019).
In support of Commissioner O'Malley's indicated efforts, I am
attaching legal memorandums that I previously provided to leadership at
SSA and the Administration for Children and Families--at their
request--summarizing existing authority of both agencies to stop state
agencies from taking foster children's SSA benefits. Again, thank you
for your attention to these important matters.
Memorandum in Support
To: Social Security Administration
From: Daniel Hatcher, Professor of Law, University of Baltimore
School of Law
Re: POMS Clarification of Representative Payee Fiduciary Role
Date: October 27, 2021
Thank you for the opportunity to discuss concerns regarding how
state and county child welfare agencies are misusing foster children's
Social Security benefits (including SSI and OASDI). During our meeting
on October 21, 2021, SSA requested a memorandum in support of suggested
clarification in POMS regarding representative payees' fiduciary role.
The following provides the needed clarification and summarizes the
legal framework necessitating the clarification.
Suggested Clarification:
Add the following or similar language to POMS GN 00602.001 (Use of
Benefits): ``When a child has been placed in foster care or other out-
of-home care in the custody or care of a child welfare agency, the
child's current maintenance needs are provided and paid for by the
agency. Thus, the representative payee may not use the child's benefits
to pay or reimburse the costs of care, and, consistent with the
fiduciary role, the represented payee must conserve or invest benefits
on behalf of the beneficiary (using available savings mechanisms that
are exempt from relevant asset limits) or use the benefits for other
existing and foreseeable needs that are not already provided by the
child welfare agency.''
Why Clarification is Necessary:
Under current practices, state foster care agencies seek out
children who are disabled or have deceased parents, apply for Social
Security SSI or OASDI benefits and apply to take control of the
children's benefits as representative payee--all usually without
notifying the children or their legal representatives. Then, once the
agencies assume the fiduciary obligation as representative payee, the
agencies use the children's benefits to reimburse themselves for agency
costs that children have no legal obligation to reimburse (and that the
state agencies are legally obligated to provide and pay for). Often,
revenue maximization contractors help with the entire process.
The child welfare agencies' appropriation of children's SSI and
OASDI benefits could not be a clearer violation of their fiduciary
oblations. ``There is no equitable principle more firmly established in
our jurisprudence than that a fiduciary is under a duty of loyalty to
his beneficiaries and cannot use the property of a beneficiary for his
own purposes.'' Gianakos, Ex'r v. Magiros, 238 Md. 178, 185-86 (1965).
The agencies incorrectly rationalize their breach of fiduciary
obligation by claiming they can use foster children's SSI and OASDI
benefits to reimburse ``current maintenance'' costs that the state
agencies have paid for. As summarized below, the child welfare agencies
are purposefully misinterpreting federal law.
The Social Security Act requires representative payees to act as
fiduciaries, to use SSI and OASDI funds for the beneficiary's ``use and
benefit'' and in a manner that they determine is in the beneficiary's
best interest. 42 U.S.C. Sec. 405(j); 20 CFR Sec. 404.2035(a)
(``representative payee has a responsibility to [u]se the benefits
received on your behalf only for your use and benefit in a manner and
for the purposes he or she determines . . . to be in your best
interests . . .''). This requirement is reiterated in the Social
Security Administration's policy manual, the Program Operations Manual
System (``POMS''). According to the POMS, a representative payee must
exercise individualized discretion for each child beneficiary and apply
the benefits ``in the best interests of the beneficiary, according to
his/her best judgment. . . .'' (POMS GN 00602.001 (Use of Benefits).
Within this framework, the payee/fiduciary can use the benefits to
pay for current maintenance needs if those needs are not being provided
for elsewhere. However, if current maintenance costs are already paid
for, as in the circumstance of children in the custody of child welfare
agencies, then the payee must either conserve the benefits or use the
benefits for other foreseeable needs not already paid for by the
agency. POMS GN 00602.001 (Use of Benefits) (``A payee must use
benefits to provide for the beneficiary's current needs such as food,
clothing, housing, medical care and personal comfort items, or for
reasonably foreseeable needs. If not needed for these purposes . . .
the payee must conserve or invest benefits on behalf of the
beneficiary . . .'') (emphasis added). See also, POMS GN 00602.001 (Payee
Responsibilities and Duties) (``The representative payee
responsibilities and duties are to: meet with the beneficiary on a
regular basis to ascertain his or her current and foreseeable needs;
use funds in the beneficiary's best interest; conserve benefits not
needed for the beneficiary's current needs . . .'') (emphasis added).
The obligations of a representative payee are therefore clear. The
payee is a fiduciary and must exercise individualized fiduciary
discretion in determining how to use a beneficiary's OASDI funds. The
over-arching principle governing the exercise of discretion is to serve
the best interests of the beneficiary. And, because the beneficiary's
best interest is paramount, the payee's self-interests cannot be
considered. POMS GN 00602.001 (Use of Benefits) (directing Social
Security Administration staff to ensure that ``the payee understands
the fiduciary nature of the relationship, and that benefits belong to
the beneficiary and are not the property of the payee.'') (emphasis
added).
Foster children do not have a debt obligation to pay for their own
care. Rather, state and federal law explicitly requires the state
foster care agencies to pay the costs of foster care services. E.g.,
Md. FL Sec. 5-527(b)-(c) (requiring that the ``Department shall pay for
foster care'' for all foster children). Like state laws, Title IV-E of
the Social Security Act requires state child welfare agencies to
provide and pay for the current maintenance costs of foster children.
Title IV-E mandates that states ``shall make foster care maintenance
payments on behalf of each child . . .'' 42 U.S.C. Sec. 672(a)(1)
(emphasis added). The foster care maintenance payments must include
``payments to cover the cost of (and the cost of providing) food,
clothing, shelter, daily supervision, school supplies, a child's
personal incidentals, liability insurance . . . and reasonable
travel. . . .'' 42 U.S.C. Sec. 675(4)(A). Thus, Title IV E requires state
agencies to pay for the current maintenance costs that the agencies are
wrongly reimbursing with children's SSI and OASDI benefits.
Further, Title IV-E requires states to pay their share of the costs
of care with state funds, and Title IV-E specifically prohibits states
from using other federal funds (including SSI and OASDI benefits) to
defray or replace the required state expenditures. 45 CFR Sec. 75.306
explicitly prohibits state agencies from using money other than state
funds to pay the cost of care. The regulation even specifically
prohibits the use of other (non-IV-E) federal funds (which includes
Social Security Benefits) for the state costs. See also, OFFICE OF
INSPECTOR GEN., SOC. SEC. ADMIN., HAWAII DEPT. OF HUM. SERVICES--AN
ORG. REP. PAYEE FOR THE SOC. SEC. ADMIN., A-09-08-28045 at 5 (2008)
(citing then 45 CFR Sec. 92.24) (concluding that a foster care agency
``must pay its share of the foster care costs with State funds,'' that
Federal regulations prohibit the agency ``from using a child's OASDI
benefits to reimburse itself for the State's share of Title IV-E
costs . . .'').
Such structure is consistent with court decisions holding that
foster children, as the direct beneficiaries of this federal mandate,
have privately enforceable rights to force states to pay the foster
care maintenance payments on their behalf:
Each of the cited provisions similarly discusses how the state
must distribute benefits to each child. . . . 42 U.S.C.
Sec. 672(a)(1) (requiring that ``each State with a plan
approved under this part shall make foster care maintenance
payments on behalf of each child'') (emphasis added). Plainly,
these directives are both couched in mandatory terms and are
unmistakably focused on the benefitted class, i.e., foster
children.
Connor B. v. Patrick, 771 F. Supp. 2d 142 (D. Mass. Jan. 4, 2011). See
also, e.g., C.H. v. Payne, 683 F.Supp.2d 865 (S.D. Ind 2010)(same).
Given this enforceable right of foster children to force state agencies
to pay foster care maintenance payments on their behalf, the state
agencies cannot possibly have a countervailing ability to force the
children to reimburse those same payments. As even further support for
this obvious conclusion, in its training manual for organizational
representative payees, the SSA explains that ``paying legal
guardianship fees would not constitute proper use of benefits'' if the
``[g]uardianship costs and fees are included as part of a state's
support obligation to the beneficiary . . .'' SOCIAL SECURITY
ADMINISTRATION, TRAINING ORGANIZATIONAL REPRESENTATIVE PAYEES, Unit 6,
available at http://www.ssa.gov/payee/LessonPlan-2005-2.htm.
In addition to misinterpreting federal law, child welfare agencies
have also wrongly relied on the Supreme Court's decision in Washington
State Dep't of Social & Health Services v. Guardianship Estate of
Keffeler, 537 U.S. 371 (2003). (E. 67). In Keffeler, the Court's sole
holding is that a state agency did not violate the anti-
attachment provision of the Social Security Act by applying children's
Social Security benefits to state foster care costs. The Court
concluded the anti-attachment provision was not applicable, because the
state agencies are not creditors to the children--because the children
owe no debt for the cost of care. The Court noted that it was not
addressing other legal concerns with the agency practices, including
constitutional concerns and that the agency payees are acting
inconsistently with their fiduciary obligations under Sec. 405(j) of
the Social Security Act. In fact, the Supreme Court explicitly
indicated that such fiduciary concerns should be addressed by the SSA:
Respondents also go beyond the Sec. 407(a) [anti-attachment
provision] issue to argue that the department violates
Sec. 405(j) itself, by, for example, failing to exercise
discretion in how it uses benefits, periodically ``sweeping''
beneficiaries' accounts to pay for past care, and ``double
dipping'' by using benefits to reimburse the State for costs
previously recouped from other sources. These allegations, and
respondents' Sec. 405(j) stand-alone arguments more generally,
are far afield of the question on which we granted
certiorari. . . . Accordingly, we decline to reach respondents' Sec. 405(j)
arguments here, except insofar as they relate to the proper
interpretation of Sec. 407(a). Respondents are free to press
their stand-alone Sec. 405(j) arguments before the
Commissioner, who bears responsibility for overseeing
representative payees, or elsewhere as appropriate.
Id. at 390, n.12 (emphasis added).
Thus, current child welfare agency practices of taking children's
benefits to reimburse agency costs violates their fiduciary obligations
and conflicts with the entire intended structure of the representative
payee system. The practices necessitate clarification by the SSA in the
POMS or elsewhere, that child welfare agencies acting as payees cannot
use children's benefits to reimburse themselves for the costs of care.
cc: Amy Harfeld, Jill Hunter-Williams
Memorandum
To: Assistant Secretary January Contreras, US Dept. Of Health &
Human Services, Administration of Children and Families; Associate
Commissioner Aysha Schomburg, US Dept. Of Health & Human Services,
Administration of Children and Families, Children's Bureau.
From: Daniel Hatcher, Professor of Law, University of Baltimore
School of Law, Civil Advocacy Clinic.
Re: ACF Oversight Authority and Suggested Guidance regarding
Child Welfare Agencies' Fiduciary Role and Protecting Foster Children's
Resources (including Social Security, VA benefits, and other
resources).
Date: September 5, 2022
Thank you for the opportunity to meet on August 18, 2022, for the
purpose of additional discussion regarding ACF's role in addressing
ongoing concerns of how state child welfare agencies are misusing
foster children's resources. For over 20 years, I have been engaging in
research, scholarship, and advocacy regarding this and interrelated
poverty issues--while simultaneously serving as an attorney and
clinical law professor directly representing impoverished children and
adults.
This memorandum is consistent and supportive of requested
administrative actions in the document provided by Amy Harfeld dated
August 10, 2022, which was in preparation for our meeting. As we
discussed in the meeting, the core issue of those administrative
requests is the urgent need for ACF guidance to indicate that child
welfare agencies must protect foster children's resources rather than
taking them. This memorandum therefore addresses that core issue,
outlining ACF authority and providing suggested new guidance.
Additional support may also be provided soon regarding the related
administrative requests in Amy Harfeld's August 10, 2022 document.
This issue goes to the very heart of the purpose of state child
welfare agencies--and the purpose of ACF--serving and protecting the
best interests of children in need of care. In their current practices,
child welfare agencies are abdicating this mission and directly harming
children in their care by seeking out vulnerable foster youth and then
taking their resources. Disabled children desperately needing more help
are never told they have disability benefits that the agencies are
taking. Foster children traumatized by their parents' deaths are not
told their parents were able to leave them survivor benefits, as the
agencies secretly take the funds--depriving the children of using their
own money to help themselves and stripping the children of the
invaluable emotional connection the benefits could have provided to
their deceased parents. Further, the agencies in many states are also
taking other resources from foster children, including VA benefits,
cash assets, insurance, the children's own income, and more. For
example, the Nebraska agency crafted a regulation so it can take
virtually everything from foster children--even burial plots.\1\
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\1\ Neb. Admin. Code, 479 NAC 2-001.08 [redacted for space].
Almost 1 year ago, during our last meeting on this issue on
September 28, 2021, ACF asked for a summary of authority to exercise
oversight over child welfare agencies regarding these issues. In
response, I provided a memorandum dated October 4, 2021, explaining the
authority. In our recent August 18, 2022 meeting, I was encouraged to
hear Assistant Secretary Contreras indicate support for exercising
oversight authority to appropriately address this harmful practice. In
response to requests and discussion during the meeting, this updated
memorandum provides suggested new guidance and further outlines ACF
---------------------------------------------------------------------------
authority.
ACF authority and duty to ensure that state child welfare agencies
serve children's best interests.
Throughout the numerous federal laws and regulations regarding
state child welfare agencies, the paramount purpose is unwavering:
protecting and serving the best interests of children in need of care.
And ACF in turn is the federal agency created with the purpose and
authority to monitor and ensure that the child welfare agencies adhere
to that mission.
For example, 42 U.S.C. Sec. 622 requires that ``a State must have a
plan for child welfare services which has been developed jointly by the
Secretary and the State agency . . .'' The requirements for state plans
focus on serving the children's best interests. And one section of plan
requirements, for which ACF is intended to provide guidance and
oversight, requires that the plan must ``include a description of the
services and activities which the State will fund under the State
program carried out pursuant to this subpart, and how the services and
activities will achieve the purpose of this subpart.'' The ``purpose of
this subpart'' is provided in 42 U.S. Code Sec. 621, and the very first
listed purpose is ``protecting and promoting the welfare of all
children.'' Similarly, in 45 CFR Sec. 1355.25 (``Principles of child
and family services''), ACF provides clear principles that must guide
state child welfare agencies. Below are just a few of the principles,
directly indicating child welfare agencies should only act in the best
interests of children and families:
(a) The safety and well-being of children and of all family members
is paramount . . . [redacted for space].
As listed above, one of the principles specifically requires the
agencies to help youth in ways that improve their future self-
sufficiency--but when the agencies take the children's own resources,
such actions directly conflict with these required principles.
Further, additional federal law set out in 42 U.S.C. Sec. 675--
again for which ACF is intended to provide oversight and guidance--
requires child welfare agencies to develop individualized case plans
for each child, again focused on serving the best interests of foster
children and specifically requiring the agency to provide planning and
services designed to help children in their future struggle for self-
sufficiency: ``services which will help such child prepare for the
transition from foster care to a successful adulthood.'' In fact, the
entire Chafee Foster Care Program for Successful Transition to
Adulthood is intended to serve children's best interests in supporting
their efforts for future self-sufficiency, but the child welfare
agencies' actions in taking the children's resources directly undercuts
the purpose of the program.
Further still, though guidance regarding permanency planning and
child well-being dated January 5, 2021 (ACYF-CB-IM-21-01), ACF
recognizes that ``the best interests of the child is paramount''
[redacted for space].
Moreover, federal agencies have stepped in repeatedly to curtail
the racial disproportionality in the child welfare system. For example,
a guidance letter was provided by the Department of Justice, Office of
Civil Rights, and the Administration for Children and Families
Compliance Section, indicating the importance ``to ensure that child
welfare agencies are aware of their responsibilities to protect the
civil rights of children and families in the child welfare system.''
Thus, the paramount purpose of child welfare agencies to protect
and serve children's best interests--and not engage in actions that are
harmful to the children--is clear. And ACF was created with clear
authority and purpose to provide guidance and oversight to ensure that
child welfare agency actions do not conflict with their core mission.
ACF has authority and obligation to provide oversight to clarify that
child welfare agencies must protect foster children's resources rather
than taking the resources to pay agency costs.
Appropriately addressing child welfare agencies' misuse of foster
children's resources falls directly within ACF's authority and
obligation to provide oversight and guidance to ensure the agencies
serve children's best interests. To begin, all child welfare
protections built into the federal statutory framework apply to all
children in foster care, whether IV-E eligible or not. As ACF explains
in existing guidance, federal law ``requires that all of the
protections set forth therein be provided to all children in foster
care.'' \2\ Then, 42 U.S. Code Sec. 676 provides ACF with authority and
obligation to provide guidance and oversight to ensure child welfare
agencies adhere to their purpose, explaining HHS/ACF ``may provide
technical assistance to the States to assist them to develop the
programs authorized under this part and shall periodically (1) evaluate
the programs authorized under this part and part B of this
subchapter . . .'' (emphasis added).
---------------------------------------------------------------------------
\2\ ACF Child Welfare Policy Manual, 8.3C, TITLE IV-E, Foster Care
Maintenance Payments Program, State Plan/Procedural Requirements,
Question 1.
Specifically addressing children's resources, 42 U.S. Code
Sec. 672(a) sets out a structure where the agencies are required to
provide and pay for ``foster care maintenance payments.'' Under the
fundamental requirement, ``[e]ach State with a plan approved under this
part shall make foster care maintenance payments on behalf of each
child who has been removed from the home of a relative . . .''
(emphasis added). Foster care maintenance is defined in 42 U.S. Code
Sec. 675 as ``payments to cover the cost of (and the cost of providing)
food, clothing, shelter, daily supervision, school supplies, a child's
personal incidentals, liability insurance with respect to a child,
reasonable travel to the child's home for visitation, and reasonable
travel for the child to remain in the school in which the child is
enrolled at the time of placement . . .'' As further evidence of this
requirement, 42 U.S.C. Sec. 622 indicates agency plans must ``include a
description of the services and activities which the State will fund
under the State program . . . and how the services and activities will
achieve the purpose of this subpart'' (emphasis added). So, when child
welfare agencies take resources from children to pay state foster care
costs, the agencies are breaching their fiduciary role in conflict with
federal law that requires the states to provide and pay for those
costs--with state money, not by taking the children's resources.
Further, the agencies' harmful practice does not even provide more
revenue to the agencies, but rather supplants required state funding
---------------------------------------------------------------------------
with the children's funds.
Thus, the structure requires that states pay for the foster care
maintenance for all foster children, and then the states can claim a
federal match for children who are IV-E eligible (42 U.S. Code
Sec. 674). In fact, 45 CFR Sec. 75.306 explicitly prohibits agencies
from using money other than state funds to pay the cost of care. The
regulation prohibits the use of other (non-IV-E) federal funds
(including Social Security Benefits) for state costs. And the
regulation also requires that the funds used to pay the state share
must be consistent with the program objectives. If an agency takes
children's resources for state costs, such actions are directly
contrary to the agency's core objectives of serving children's best
interests, including agency services that are supposed to aid the
children in their future transition to self-sufficiency after leaving
care (45 CFR Sec. 75.306 (3) & (5)). Further, the regulation also
requires that the funding states use for state costs must be ``provided
for in the approved budget when required by the HHS awarding agency.''
Thus, ACF has authority to provide direction/clarification that
state agencies must protect children's resources (including but not
limited to Social Security) in a way that serves the children's best
interests.
The authority of the Social Security Administration regarding
representative payees does not restrict the authority of ACF to ensure
child welfare agencies act in children's best interests and in
compliance with federal law governing child welfare.
SSA's authority to provide guidance regarding representative payees
does not restrict the authority and obligation of ACF to provide
oversight and guidance ensuring that child welfare agencies act in
children's best interests and in compliance with federal law governing
child welfare [redacted for space].
I previously provided another memorandum dated October 27, 2021 to
SSA leadership in response to their request after a meeting on October
21, 2021. That memo provided analysis of how SSA can also issue
clarified guidance specific to representative payees [redacted for
space].
Recommended guidance
ACF's Child Welfare Policy Manual provides interpretations and
directives to agencies in all child welfare related issues. For
example, in 8.4D question 2, ACF provides a directive regarding ``How
should the decision to apply for SSI or title IV-E benefits be made?''
ACF explains that agencies must decide between seeking SSI or IV-E
based on the child's best interests: ``Information regarding the
benefits available under each program should be made available by the
title IV-E agency so that an informed choice can be made in the child's
best interest.''.
To provide policy guidance consistent with federal law and the
mission of ACF and child welfare agencies, ACF should consider the
following additions and clarifications to the manual:
1. [redacted for space].
2. Additional guidance in response to 8.4D, question 2. The suggested
language is in bold in the excerpted answer below. The reason for this
necessary language is to clarify that child welfare agencies must not
use foster children's Social Security benefits or other children's
resources to pay or reimburse the state share of foster care costs.
Question 2. How should the decision to apply for SSI or title
IV-E benefits be made?
Answer
The difference between title XVI (SSI) and title IV-E should be
considered carefully by the decision maker when choosing
whether to apply for either or both title IV-E or SSI benefits
on behalf of the child. Information regarding the benefits
available under each program should be made available by the
title IV-E agency so that an informed choice can be made in the
child's best interest. To achieve this goal, title IV-E
agencies should exchange information regarding eligibility
requirements and benefits with local Social Security district
offices and establish formal procedures to refer clients and
their representatives to the local Social Security district
office for consultation and/or application when appropriate.
To comply with their role of serving children's best interests,
title IV-E agencies must not use a child's SSI or other
resources to pay or reimburse foster care maintenance costs (as
defined in 42 U.S. Code Sec. 675) or state foster care costs.
3. Additional guidance in 8.1F TITLE IV-E, Administrative Functions/
Costs, Match Requirements. The following new question and answer
provided in bold below is necessary to clarify that child welfare
agencies must not use foster children's Social Security benefits or
other children's resources to pay or reimburse the state share of
foster care costs.
Question 6. May children's resources be used to pay the state
share of foster care costs?
Answer
No. Consistent with cost sharing requirements in 45 CFR
Sec. 75.306 and children's best interests, a child's resources
(including Social Security Benefits, VA benefits, cash assets,
trust accounts, insurance, inherited resources, the child's own
income, or any other resource or asset belonging to the child)
may not be used by the IV-E agency to pay or reimburse foster
care maintenance costs (as defined in 42 U.S. Code Sec. 675) or
state foster care costs, whether or not a child is eligible for
title IV-E.
[redacted for space].
Again, I sincerely thank you for your leadership at ACF, for the
opportunity to meet, and for your indicated desire to address this
important issue. Also, as we discussed in the meeting, I applaud ACF's
recent improved guidance regarding child support enforcement in child
welfare cases--which is a perfect complement to the suggested guidance
in this memorandum. I am more than willing to talk further if helpful
and can provide additional resources upon request.\3\
---------------------------------------------------------------------------
\3\ Some of my past scholarship addresses more details of this and
related issues. E.g, Daniel L. Hatcher, Foster Children Paying for
Foster Care (https://scholarworks.law.ubalt.edu/all_fac/283/), 27
Cardozo L. Rev. 1797 (2006); Collateral Children: Consequence and
Illegality at
the Intersection of Foster Care and Child Support (https://
scholarworks.law.ubalt.edu/all_fac/288/), 74 Brooklyn L. Rev. 1333
(2009); Purpose vs. Power: Parens Patriae and Agency Self-
Interest (https://scholarworks.law.ubalt.edu/all_fac/285/), 42 N. Mex.
L. Rev. 159 (2012); The Poverty Industry: The Exploitation of America's
Most Vulnerable Citizens, NYU Press (June 21, 2016); Book Chapter,
States Diverting Funds from the Poor (https://
scholarworks.law.ubalt.edu/all_fac/1100/), in Holes in the Safety Net:
Federalism and Poverty (Ezra Rosser, ed., Cambridge University Press
2019); Stop Foster Care Agencies from Taking Children's Resources
(https://www.floridalawreview.com/article/89240-stop-foster-care-
agencies-from-taking-children-s-resources/stats/all/pageviews), 71
Florida Law Rev. Forum 104 (2019).
---------------------------------------------------------------------------
cc: Amy Harfeld, Jill Hunter-Williams, Ian Marx
______
National Committee to Preserve Social Security and Medicare
111 K Street, NE, Suite 700
Washington, DC 20002
202-216-0420
www.ncpssm.org
Statement of Max Richtman, President and CEO
On behalf of the millions of members and supporters of the National
Committee to Preserve Social Security and Medicare, I am pleased to
submit this testimony for the record in support of robust funding for
the Social Security Administration in Fiscal Year 2025. Members of the
National Committee come from all walks of life and every political
persuasion. What unites them is their passion for protecting and
strengthening Social Security, Medicare, Medicaid, and the other
programs that are so vitally important to older Americans.
The fiscal year (FY) 2025 budget recommendations submitted by President
Biden to Congress on March 11, 2024, affirm his commitment to America's
seniors in major ways. The budget provides funding to improve customer
service for Social Security beneficiaries as the Social Security
Administration (SSA) continues to grapple with service delivery
challenges. And the President supports legislation that extends the
solvency of the Medicare Part A Hospital Insurance trust fund, broadens
the number of prescription drugs subject to price negotiation and
expands Medicaid home and community-based services (HCBS). With 10,000
baby boomers turning 65 every day--and the number of seniors projected
to double by 2050--it's clear that this budget is mindful of the need
to safeguard our older Americans now and into the future.
Social Security represents the foundation of income security for the
American people. Without a solid foundation, other programs designed to
protect workers and their families from the ravages of death,
disability and old age simply will not be able to adequately fulfill
their missions. The activities of the Social Security Administration
(SSA) are at the heart of the administration of the Social Security
program. Adequate funding for SSA is vitally important to millions of
Americans across the country who either are receiving Social Security
or expect to do so in the future, both to ensure that they receive the
benefits they have earned and to maintain the public's support for this
essential program.
Unlike most other agencies, the Social Security Administration's
operations are not funded by general tax revenues but through Social
Security's Trust Funds. As a result, although the money used to fund
the agency is technically ``on budget'' for budget scoring purposes,
SSA's operations are actually paid for by American workers and their
employers when they make their payroll tax contributions. Rather than
appropriating funds from the general Treasury, Congress limits the
amount the agency can spend annually from the Trust Funds through the
appropriations process. The long history of Agency underfunding is
therefore especially frustrating when one considers that contributions
from American workers have built up an almost $2.8 trillion surplus in
the Trust Fund accounts, in addition to over $1 trillion received in
Federal Insurance Contributions Act (FICA) contributions each year.
In 2025, SSA anticipates delivering about $1.6 trillion in direct
payments to beneficiaries, at a remarkably low administrative cost of
about 1 percent. The President proposes $15.402 billion for SSA's FY
2025 appropriation for administrative expenses. This is an increase of
$1.3 billion--9 percent--over the level enacted for the 2023 Fiscal
Year.
At the time this testimony was written, Congress had not enacted a
permanent appropriations' bill for SSA for FY 2024. During
Congressional consideration of the FY 2024 Continuing Resolution, the
Administration requested a $727 million anomaly for FY 2024, which
would have brought SSA to an annualized funding level of $14.854
billion. The anomaly level of funding would have helped prevent further
service deterioration by maintaining staffing levels, increasing
processing capacity through overtime, and funding critical information
technology enhancements.
Unfortunately, this anomaly request was not provided by Congress. As a
result, since October 1, 2023, SSA has been operating on essentially
flat funding, which if made permanent, would have a severely
detrimental effect on service and would halt the progress SSA made to
begin improving service in FY 2023. Level funding has not covered the
over $600 million increase in SSA's annual fixed costs such as salaries
and rent on more than 1,500 field and hearing offices across the
country. SSA was forced to freeze hiring during the extended Continuing
Resolution, which has caused the agency's staffing levels to fall back
to where they were in April 2023. SSA also significantly reduced
overtime levels in FY 2024 compared to FY 2023, limiting one of the
agency's most important tools for increasing processing capacity and
supporting offices.
If SSA is forced to continue the hiring freeze and overtime limits
throughout FY 2024, the agency anticipates it will lose over 4,500
full-time permanent staff this fiscal year, resulting in SSA's lowest
staffing since 1972 (55,000 staff), including about 750 fewer employees
in National 800 Number call centers and about 2,100 fewer employees in
field offices across the country. This loss of staff will negatively
impact call wait times, disability timelines, and other key performance
metrics and be felt by the people SSA serves.
SSA has approximately 500 million interactions with the public each
year through field office visits, call centers, and other engagements.
While they have exceptional employees dedicated to serving millions of
people, SSA is serving 50 percent more customers with less staff than
they had in 1995. Since FY 2010, Social Security's customer service
budget has declined in inflation-adjusted terms by 17 percent and its
staffing by 16 percent, while at the same time the number of SSA's
beneficiaries has grown by 22 percent.
The long history of disinvestment in the agency's core public services
must be reversed if the American public is to receive the services they
have already paid for through their monthly payroll contributions. The
solution to this growing problem is for Congress to embark on a multi-
year effort to restore adequate funding levels for SSA's operating
budget, beginning with, at a minimum, providing the full level of
funding requested by the President for FY 2025. If the President's
budget request is approved by Congress, SSA intends to continue ongoing
efforts to re-build its workforce, thus allowing SSA to process
increasing numbers of disability claims, reduce wait times on the
national toll-free number and begin to address the pending backlogs.
This funding request represents a solid first step toward what will
need to be a multi-year effort to rebuild the agency's ability to
provide the customer service America's workers and retirees deserve and
expect.
We support the Administration's proposal to provide additional funding
to improve the level of service provided by SSA's toll-free telephone
service which has suffered a decline in service delivery due to
misguided underfunding. Perversely, over the years SSA's national toll-
free telephone service staff has declined substantially, even as call
volume grew. The results, predictably, were more busy signals, more
hang-ups, longer wait times and fewer calls handled. The President's
budget provides additional resources that should enable SSA to
significantly improve its telephone service, with a projected reduction
in wait times on SSA's 800 Number by over 20 minutes to 12 minutes. We
thank the Administration for proposing to strengthen the adequacy of
this vital service which must be available as a critical lifeline for
those who have difficulty visiting a field office in person due to age
or disability.
Providing adequate funding is also essential to resume the process of
eliminating the backlogs that have developed in both the Disability
Determination Services and the Offices of Hearings Operations and is
clearly necessary to expedite the processing of the current backlog.
Relative to level staffing, a hiring freeze and loss of 4,500 staff in
2024 would add an estimated 20 more days and 175,000 more cases in the
disability backlog. The President's FY 2025 Budget request is projected
to reduce initial disability claims wait times to an average of 215
days, and reduce the claims backlog by 15 percent.
While the National Committee applauds the Administration's budget
proposal, we feel compelled to point out the request is well below the
$16.45 billion request submitted by the SSA to the Office of Management
and Budget. We firmly believe the agency itself is better positioned to
anticipate the funding it will need to provide the level of service the
American people deserve from SSA than the Office of Management and
Budget. We therefore hope Congress will provide the full requested
level of $16.45 billion when formulating its own appropriations
legislation for FY 2025. This is especially true considering the
seriously insufficient funding we anticipate the agency will receive
for FY 2024. Fully funding the agency's original request will represent
a major step toward restoring SSA's ability to fulfill its mission.
Lastly, we applaud the President's commitment to improve and strengthen
Social Security, and his support for raising the payroll tax cap for
those earning over $400,000 annually. The President has made clear his
commitment to ensuring the wealthy pay their fair share throughout his
FY 2025 budget and we hope Congress will support his efforts. However,
we note the absence of any specific Social Security legislative
proposals in the President's FY 2025 budget. To address this omission,
we urge the Congress to consider the Social Security 2100 Act,
introduced as H.R. 4583 in the House by Representative John Larson (D-
CT) and in the Senate as S. 2280 by Senator Richard Blumenthal (D-CT),
and the Social Security Expansion Act, S. 393 (H.R. 1046 in the House),
legislation developed by Senator Bernie Sanders (I-VT) and
Representative Jan Schakowsky (D-IL). These bills make important, long
overdue improvements to the Social Security program, as well as
strengthening the program's finances. We look forward to working with
the Administration in enacting this important legislation.
Social Security, a critical lifeline for millions of Americans, must
not be allowed to wither on the vine. Congress must provide adequate
funding for this foundation of support for workers and their families.
Accordingly, we strongly urge Congress to provide, at minimum, the
President's budget request of $15.402 billion for FY 2025.
______
Social Security Administration
Statement of Inspector General Gail S. Ennis
Introduction
Chairman Wyden, Ranking Member Crapo, and Members of the Committee on
Finance, the Social Security Administration (SSA) faces numerous
challenges, and the Office of the Inspector General (OIG) is committed
to addressing those challenges through diligence and innovation to
protect and preserve SSA's vital programs for the American people. It
is critical for the committee to understand these challenges and how
the President's Budget for Fiscal Year (FY) 2025 will address them.
The mission of SSA OIG is to serve the public through independent
oversight of SSA's programs and operations. SSA OIG accomplishes that
mission by conducting independent and objective audits, investigations,
and reviews. Our oversight work significantly impacts the integrity,
effectiveness, and efficiency of SSA's programs and operations.
While SSA focuses on administering programs and operations, SSA OIG
searches for and reports systemic weaknesses in SSA's programs and
operations and provides recommendations for program, operations, and
management improvements. SSA OIG has consistently delivered valuable
oversight information to SSA, the U.S. Congress, other stakeholders,
and the public.
SSA OIG has identified and is responding to new and emerging challenges
and threats, including pervasive imposter scams, challenges and fraud
schemes caused by the Coronavirus (COVID-19) pandemic, and the rise of
the latest threats and opportunities associated with cybersecurity and
artificial intelligence (AI). In FY 2025, SSA OIG will address these
issues timely using our available resources, all while continuing to
meet our core mission.
President's Budget for Fiscal Year 2025
The President's FY 2025 Budget for SSA OIG requests $121.3 million in
direct appropriations, which includes $2 million to remain available
until expended for information technology (IT) modernization efforts.
In addition, the budget requests that SSA transfer $19.6 million to SSA
OIG for the direct costs of leading the jointly operated anti-fraud
Cooperative Disability Investigations (CDI) program. These increases
would help offset rising fixed costs; however, we continue to make
tradeoff decisions with our resources to address emerging challenges.
The President's budget request will allow SSA OIG to perform its core
mission of auditing and investigating SSA programs and operations.
Further, the requested funding will allow us to take innovative steps
forward by building our data analytics capacity, increasing data-driven
decision-making, investing in IT and automation tools, and
strengthening and building our workforce. These improvements will lead
to a more nimble and responsive organization.
The Committee on Finance should be aware SSA OIG received our first
increase in base funding in FY 2022 after receiving no increases since
FY 2016. The recent increases by the U.S. Congress have maintained SSA
OIG's ability meet our core responsibilities.
In FY 2023, our auditors identified $1.9 billion in questioned costs
and $565 million in funds that could be put to better use at SSA. In FY
2023, our investigators contributed to investigations that generated
$179 million in monetary accomplishments through court-ordered
restitution and recoveries, as well as projected future savings for
SSA. Most importantly, our Return on Investment was 21-to-1 for the
last several FYs, generating $21 in savings for every dollar the U.S.
Congress provides SSA OIG.
Audit
As the Committee on Finance knows, SSA's workforce consists of
approximately 60,000 people, with over 1,500 offices nationwide and
worldwide. These employees serve millions of customers annually.
Over the last several FYs SSA OIG has moved away from the historical
practice in the Office of Audit (OA), which required each auditor to
complete one annual audit. Audits were scoped accordingly. After
examining this method and reviewing previous audits, SSA OIG concluded
the status quo approach aimed to fix errors rather than get to the root
cause of issues identified by our auditors. SSA OIG decided to change
that approach.
OA leadership determined SSA OIG needed to produce larger and more
complex audits to address the root cause of the issues facing SSA.
Rather than having auditors work on individual audits, we restructured
the process into audit teams to allow dedicated resources for each
audit. The revised audits engage with the Agency and focus on actual
results. Leadership recognized the team approach would reduce the
number of audits per year but was confident it would increase the
quality and impact of our work. This approach was correct. For several
FYs, while we adapted to this new approach, our auditors produced fewer
but also more complex audits. And, today, OA has increased its
productivity while producing more impactful audits, issuing 43
comprehensive audit reports in FY 2023 that identified $1.9 billion in
questioned costs and $565 million in funds that could have been put to
better use.
OA continues working on impactful audits during FY 2024. As of January
2024, OA has 15 reports in process related to improving the prevention,
detection, and recovery of improper payments.
Audits Addressing Vulnerable Populations
Since October 1, 2020, OA has completed seven audits identifying
underpayments, potential underpayments, or untimely payments of funds
due or benefits to vulnerable populations, such as child beneficiaries,
widows, Supplemental Security Income recipients, surviving spouses, and
beneficiaries whose medical condition was not expected to improve.
Potential underpayments identified in these reports totaled almost $640
million.
OA has additional ongoing work that focuses on services provided to
vulnerable populations. Specifically, we have work in progress to
determine whether SSA implemented planned actions to reduce barriers to
accessing its services. We are also looking at whether SSA follows
policies and procedures to identify and expedite initial disability
applications that qualify as priority cases, such as Quick Disability
Determination, Compassionate Allowance, Terminal Illness, Military
Casualty/Wounded Warrior/100% Permanent & Total Disability, Homeless,
Presumptive Disability/Blindness, and Hardship cases, among others.
Some individuals cannot manage or direct the management of their
finances because of their age and/or mental and/or physical condition.
The U.S. Congress granted SSA the authority to appoint representative
payees to receive and manage these beneficiaries' payments. A
representative payee can be an individual or an organization. In
September 2023, we reported that SSA did not take appropriate and
timely action in response to alleged individual and organizational
representative payees' misuse of benefits and made six recommendations
to SSA. We continue to review issues impacting these vulnerable
populations through in-progress work looking at the effectiveness of
SSA controls and procedures for monitoring representative payees.
Cooperative Disability Investigation Program
SSA OIG has innovated processes to maximize our impact by expanding and
realigning the CDI program to provide more coverage at a lower cost.
Presently, SSA OIG has 50 CDI units across the country, and we provide
an SSA OIG investigator to run these anti-fraud units. CDI units,
consisting of personnel from SSA, SSA OIG, state disability
determination agencies, and state or local law enforcement, investigate
disability fraud in SSA programs. SSA OIG worked with SSA to provide
nationwide CDI coverage by October 2022, as the Bipartisan Budget Act
of 2015 intended.
In areas where we could not secure a local law enforcement partner,
such as New Hampshire, Vermont, and Maine, SSA OIG and SSA collaborated
on two approaches to provide CDI coverage and increase investigative
capacity. First, we created CDI Hubs by consolidating SSA OIG and SSA
personnel to cover multiple states. In instances when a local law
enforcement partner is not present, the SSA OIG team leader covers that
workload until a law enforcement partner can be secured. Second, SSA
OIG harnessed the skill sets and institutional knowledge of reemployed
annuitants to serve as CDI investigators. For example, the South New
England Hub, which covers Connecticut and Rhode Island, has a
reemployed annuitant serving as an investigator to help provide CDI
coverage for Connecticut. A total of four hub models operate across the
country to ensure CDI coverage.
In FY 2023, CDI efforts contributed over $75 million in projected
savings and recoveries for Social Security programs and approximately
$94 million for other Federal and state programs. Since the program's
inception, CDI efforts have contributed to projected savings of over $8
billion.
The President's Budget provides $19.6 million for the CDI program. In
previous FYs, SSA OIG has had to assign existing investigative
personnel to the CDI program, at the expense of other non-CDI
investigative work. SSA's appropriations language provides the
authority for SSA to transfer a portion of its Limitation on
Administrative Expenses funding to SSA OIG to cover the costs
associated with operating the CDI program.
While the additional CDI funding to date has supported a higher overall
Full Time Employee (FTE) count for our office, our count of FTEs
dedicated to our primary mission is still lower than in FY 2015. This
is due to increased fixed costs, such as statutory employee pay raises.
The FY 2025 budget request provides additional flexibility within SSA
OIG's base appropriation and allows us to restore historical staffing
levels for critical non-CDI hires.
Finally, with the FY 2025 Budget, SSA OIG will continue to conduct
complex and large-scale investigations, develop and leverage
partnerships and collaborations to accomplish investigative priorities
to permit more effective investigative efforts.
IT Modernization
The $2 million set-aside for IT Modernization is critical in SSA OIG's
efforts to modernizing administrative applications with business
process management solutions. This account provides for the continued
enhancement of SSA OIG's critical administrative systems, and the
integration of internal applications with SSA systems, which will
enhance data sharing capabilities with external partners. This includes
SSA's Allegation Referral Intake System and SSA OIG's Case Management
System. Further, the account will provide for modernizing cybersecurity
functions and enhancing SSA OIG's cybersecurity posture in response to
evolving cybersecurity mandates and vulnerability remediation. Further,
it will increase staffing to fill software development, project
management, and systems security needs.
Some of the modernization projects SSA OIG is undertaking will
facilitate
increased/enhanced use of analytics capability. SSA OIG established the
Business Intelligence and Analytics Division within our Office of
Information Technology in FY 2021. This division is undertaking several
initiatives to maximize the available resources--both human and
technical--to enhance its data maturation for SSA OIG. This division
possesses analytical skills in the initial phases of data analytics and
has supported SSA OIG investigative and audit efforts by expediting
data analyses that used to take months to complete manually. Finally,
in FY 2023, SSA OIG established an AI Task Force to conduct a critical
study and review on how AI will assist the work of the Office of Audit
and the Office of Investigations, but also to look at the challenges
posed with more sophisticated AI-generated scams.
Examining and Leveraging AI
Public and private sector entities will continue to explore using AI
technology as a tool to improve operations. As AI advances,
governmental agencies, including SSA, will seek to leverage this
emerging technology. While the use of AI has the potential to improve
customer service and create efficiencies, AI could also be used to
create and exploit synthetic identities to direct millions of dollars
away from deserving SSA beneficiaries and recipients, similar to
pandemic and imposter schemes.
In FY 2023, SSA OIG established an internal AI task force comprised of
investigators, auditors, IT specialists, and lawyers to confront these
issues. In FY 2025, SSA OIG's oversight responsibilities will increase
significantly in this area to help identify and minimize
vulnerabilities in agency systems, security, and programs. Significant
investments will be required in hardware, software, and training to
ensure SSA OIG personnel have the appropriate tradecraft to investigate
AI-enabled criminal activity, protect vulnerable persons, and provide
Federal and state prosecutors with the forensic data needed to
successfully prosecute fraud against SSA.
In recent years, SSA OIG identified best practices and lessons learned
from analytical and investigative work done combatting pandemic- and
imposter-related fraud. These will serve as the foundation for
developing additional tools and investigative techniques.
Coronavirus (COVID-19) Pandemic Fraud
One of the issues that has been of interest to the United States
Congress is combating Coronavirus (COVID-19) pandemic fraud. SSA OIG's
Office of Investigations has played a critical role in Federal
investigations related to the misuse of Federal pandemic relief funds.
Using stolen identities and Social Security numbers was critical to
pandemic relief-related fraud. The misuse of SSNs and identity theft in
furtherance of fraud schemes related to Coronavirus Aid, Relief, and
Economic Security Act programs, including the Paycheck Protection
Program, Pandemic Unemployment Assistance, and Economic Injury and
Disaster Loans, is no exception.
Addressing pandemic fraud required SSA OIG to shift workloads within
our base appropriations. In FY 2023, SSA OIG contributed to 100
investigations related to COVID-19 pandemic relief programs, funds, and
scams. Further, SSA OIG participates on the National COVID-19 Fraud
Enforcement Task Force led by the U.S. Deputy Attorney General, and as
many as 21 pandemic-related task forces and workgroups across the
country. In FY 2024, SSA OIG anticipates expending $1.1 million on
pandemic-related investigative workloads and audits. Further, SSA OIG
has not received supplemental funding to address pandemic fraud.
Federal agencies that administered pandemic relief programs did receive
these types of additional funding.
Social Security Scams
SSA OIG has established a multidisciplinary team of professionals who
develop and implement innovative approaches to combat Social Security-
related and other government imposter scams through investigations,
enforcement actions, and public outreach and education. SSA OIG's
multipronged approach has helped significantly disrupt these scams. Our
efforts have resulted in multiple arrests and convictions and
eliminated many scam calls to potential victims.
Further, although SSA OIG has achieved remarkable results in the drop
of SSA imposter scam-related complaints, according to the Federal Trade
Commission (FTC), SSA imposter scams are still the number one
government-related imposter scam and, with a recent increase in
complaints, continue to be a challenge requiring the devotion of
significant SSA OIG resources. Earlier this month, SSA OIG and SSA
combined efforts on our fifth annual National Slam the Scam Day. The
United States Senate passed a resolution supporting National Slam the
Scam Day, sponsored by Senators Susan Collins and Mark Kelly, with
original cosponsors Senators Mike Braun, Richard Blumenthal, Kyrsten
Sinema, Marco Rubio, and Rick Scott.
SSA OIG remains engaged and committed to maintaining institutional
knowledge to investigate these scams by working with Federal, state,
and local partners, as well as consumer advocacy groups, to protect
people from becoming victims. In FY 2024, SSA OIG expects to dedicate
an estimated $3 million to combatting imposter scams, including funding
for human capital resources and allegations management. In FY 2025, SSA
OIG will continue to commit staff to analyze imposter scam allegations,
develop investigative leads, and deploy effective investigative
strategies to combat these fraud schemes. The FY 2025 Budget will allow
SSA OIG to better anticipate, recognize, and efficiently mitigate new
and emerging fraud schemes, including those related to pandemic relief
and government imposter scams.
SSA OIG plans to work year-round on scam education. In addition, SSA
OIG will continue to track scam allegations submitted to SSA OIG, issue
scam alerts, and increase its social media presence by posting new scam
tactics and anti-fraud reminders. In FY 2025, SSA OIG will deploy
advanced data analytics and generative AI tools to expeditiously
identify and flag clusters of the most egregious cases of fraud for
immediate investigation.
Conclusion
Chairman Wyden and Ranking Member Crapo, thank you for the opportunity
to submit a written statement on the President's Budget for FY 2025. I
believe it is essential for the Committee on Finance to understand the
breadth of issues SSA OIG will be focusing on in FY 2025. The dedicated
employees of SSA OIG work each day to ensure the integrity of SSA
programs and the funding provided by the U.S. Congress ensures the
integrity of these programs.
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