Social Security Administration: Effective Leadership Needed to Meet
Daunting Challenges (Letter Report, 09/12/96, GAO/HEHS-96-196).

Pursuant to a congressional request, GAO provided information on the
Social Security Administration's (SSA): (1) progress in meeting
challenges; and (2) status as an independent agency.

GAO found that: (1) while SSA is starting to manage for results and
improve financial accountability, it has not taken steps to contribute
to the public debate on the future financing of the Social Security
system; (2) unless changes are made to the system, the Social Security
trust funds will be depleted by 2029; (3) SSA disability caseloads are
growing, and SSA is trying to fundamentally redesign the disability
claims process; (4) SSA has not adequately promoted return-to-work
programs in redesigning its disability processes; (5) SSA should do more
to combat fraud and abuse in the Supplemental Security Income Program;
(6) SSA is reducing its staff, and nearly half of its senior executives
will be eligible to retire in the next 5 years; (7) these workload
challenges will complicate the tasks SSA faces; (8) SSA is working to
modernize its information systems, but this effort will be costly and
complex; and (9) effective leadership is critical to SSA efforts to
modernize and meet future challenges.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-96-196
     TITLE:  Social Security Administration: Effective Leadership Needed 
             to Meet Daunting Challenges
      DATE:  09/12/96
   SUBJECT:  Federal social security programs
             Independent agencies
             Income maintenance programs
             Financial management
             Strategic planning
             Federal agency reorganization
             Claims processing
             Human resources utilization
             Systems conversions
             Program abuses
IDENTIFIER:  Supplemental Security Income Program
             Social Security Program
             National Performance Review
             Social Security Trust Fund
             Social Security Disability Insurance Program
             SSA Plan for Achieving Self-Support Program
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Social Security, Committee on
Ways and Means, House of Representatives

September 1996

SOCIAL SECURITY ADMINISTRATION -
EFFECTIVE LEADERSHIP NEEDED TO
MEET DAUNTING CHALLENGES

GAO/HEHS-96-196

SSA Faces Challenges

(105937)


Abbreviations
=============================================================== ABBREV

  CFO Act - Chief Financial Officers Act of 1990
  DCM - Disability Claim Manager
  DI - Disability Insurance
  FSA - Federal Security Agency
  GMRA - Government Management Reform Act of 1994
  GPRA - Government Performance and Results Act of 1993
  HEW - Department of Health, Education and Welfare
  HHS - Department of Health and Human Services
  NPR - National Performance Review
  OASI - Old Age and Survivors Insurance
  OMB - Office of Management and Budget
  OGC - Office of General Counsel
  OIG - Office of Inspector General
  OPM - Office of Personnel Management
  PASS - Plan for Achieving Self-Support
  SES - Senior Executive Service
  SSA - Social Security Administration
  SSI - Supplemental Security Income

Letter
=============================================================== LETTER


B-271529

September 12, 1996

The Honorable Jim Bunning
Chairman, Subcommittee on Social Security
Committee on Ways and Means
House of Representatives

Dear Mr.  Chairman: 

With a staff of 64,000, the Social Security Administration (SSA)
administers the nation's largest federal program--Social Security--as
well as the largest cash welfare program, Supplemental Security
Income (SSI).  SSA's expenditures totaled $363 billion in fiscal year
1995, nearly one-fourth of this nation's $1.5 trillion federal
budget. 

SSA's programs touch the lives of nearly every individual in this
country.  Social Security\1 provides benefits to retired and disabled
workers and their dependents and survivors; SSI provides assistance
to the needy aged, blind, and disabled.  In 1995, 50 million
beneficiaries--nearly one out of every five individuals in this
country--received benefits from SSA each month.  In addition to
administering benefits, SSA records the wages of nearly every U.S. 
worker and issued almost 17 million Social Security cards in 1995. 
Moreover, SSA maintains a large and visible presence in communities
nationwide.  In 1995 alone, an estimated 24 million people visited
SSA's 1,300 field offices, and SSA received 62 million calls on the
agency's nationwide toll-free 800 number. 

SSA recognizes that the American public depends on SSA to quickly and
accurately provide benefits, properly record workers' earnings, and
effectively safeguard benefit programs from fraud and abuse.  Any
failure to do so seriously undermines the public's confidence in
government and its ability to efficiently and cost-effectively
administer programs and protect taxpayer dollars.  Yet as SSA
acknowledges, public confidence in its programs is low and has been
low for some time.  Although much of this lack of confidence stems
from concerns about the future solvency of the Social Security
system, public confidence is also eroded by reports of fraud and
abuse.  Media accounts of prisoners erroneously receiving disability
checks and allegations that immigrants and children are feigning
mental illness to obtain SSI undermine the public's trust in SSA and
in the federal government. 

To bolster SSA's ability to address critical policy issues and
correct programmatic weaknesses, the Congress enacted legislation
making SSA independent of the Department of Health and Human Services
(HHS) as of March 31, 1995.  In establishing SSA's independence, the
Congress recognized the importance of strong and stable leadership
for the agency.  As we noted in our February 1995 report on SSA's
transition to independence,\2 independence heightens the importance
of SSA's playing a strong leadership role in addressing long-standing
problems and preparing for future challenges. 

In that report, we highlighted the challenges that SSA would face as
an independent agency:  the shortfall in funds to pay future Social
Security benefits, growing and changing disability caseloads, and
public concerns about SSI program growth.  In testimony before the
Subcommittee on July 25, 1996, we discussed SSA's progress in meeting
the challenges of managing for results and accountability; funding
future retirement benefits; rethinking disability programs; combating
SSI fraud, waste, and abuse; handling increasing workloads with
reduced resources; and establishing effective leadership.\3 This
report is based on that testimony.  You also requested additional
information on SSA's status as an independent agency, which appears
in appendix I.  To do our work, we drew from completed and ongoing
GAO work on Social Security issues.  We also reviewed SSA documents
and spoke with SSA officials, selected officials of the Social
Security Advisory Council and Advisory Board, and other experts to
determine SSA's progress so far, what problems remain, and what else
is needed to make SSA a premier agency.  We did our work from March
to July 1996 in accordance with generally accepted government
auditing standards. 


--------------------
\1 The Social Security program has two parts--Old Age and Survivors
Insurance (OASI) and Disability Insurance (DI). 

\2 Social Security Administration:  Leadership Challenges Accompany
Transition to an Independent Agency (GAO/HEHS-95-59, Feb.  15, 1995). 

\3 Social Security Administration:  Effective Leadership Needed to
Meet Daunting Challenges (GAO/T-OCG-96-7, July 25, 1996). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

SSA is ahead of many federal agencies in managing for results and
improving financial accountability.  This gives the agency a sound
base from which to manage its current and future challenges, which
are significant.  SSA, however, has not performed the research,
analysis, and evaluation needed to inform the public debate on the
future financing of Social Security--the most critical long-term
issue facing SSA.  The aging of the baby boom generation, coupled
with increasing life expectancy and the declining ratio of
contributing workers to beneficiaries, will place unprecedented
strains on the Social Security program in the next century.  Unless
the Congress acts, the Social Security trust funds are expected to be
exhausted by 2029.  More than a year after gaining independence, SSA
is just now strengthening its research, policy analysis, and
evaluation capabilities to more actively participate in the financing
debate. 

Also challenging SSA have been disability caseloads that have grown
by nearly 70 percent in the past decade.  To its credit, SSA has
undertaken an important effort to fundamentally redesign its
inefficient disability claims process.  However, while SSA has begun
many of its planned initiatives, none is far enough along for the
agency to know whether specific proposed process changes will achieve
the desired results.  Moreover, SSA has not sufficiently promoted
return-to-work efforts in the administration and design of its
disability programs.  If even an additional 1 percent of the 6.6
million working-age people receiving disability benefits were to
leave SSA's disability rolls by returning to work, lifetime cash
benefits would be reduced by an estimated $3 billion.  In addition,
SSA has not done enough to combat fraud and abuse in the SSI program
and address program weaknesses. 

SSA faces increasing responsibilities in the future and must manage
its growing workloads with reduced resources.  SSA estimates that it
would need over 76,000 workers to handle its growing workloads if it
conducts business as usual.  Instead, SSA expects to do this work
with about 62,000 workers--fewer than it has today.  To successfully
meet its workload challenges, SSA knows that it must increasingly
rely on technology and build a workforce with the flexibility and
skills to operate in a changing environment.  SSA faces significant
challenges, however, in modernizing its information systems--a
complex, multiyear effort that could easily cost billions of dollars. 
Compounding this challenge will be the possible loss of many senior
managers and executives--over the next 5 years, nearly half of SSA's
senior executives will be eligible to retire.  Moreover, SSA faces
difficult decisions on how best to deliver services in the future. 

At this critical juncture, effective leadership is needed so the
agency can take the following actions to better ensure its success in
the 21st century:  inform the national debate on Social Security
financing issues, complete its redesign of the disability claims
process and promote return to work in its disability programs,
enhance efforts to ensure program integrity, and make the technology
enhancements and workforce decisions needed to meet increasing
workloads with fewer resources. 


   BACKGROUND
------------------------------------------------------------ Letter :2

SSA began as an independent agency with a mission of providing
retirement benefits to the elderly.  A three-member, independent
Social Security Board was established in 1935 to administer the
Social Security program.  The Chairman of the Board reported directly
to the President until July 1939, when the Board was placed under the
newly established Federal Security Agency (FSA).  At that time, the
Social Security program was expanded to include Survivors Insurance,
which paid monthly benefits to survivors of insured workers.  In
1946, the Social Security Board was abolished, and its functions were
transferred to the newly established SSA, which was still within FSA. 
The FSA administrator established the position of Commissioner to
head SSA. 

The FSA was abolished in 1953, and its functions were transferred to
the Department of Health, Education and Welfare (HEW).  In addition,
the position of SSA Commissioner was designated a presidential
appointee position requiring Senate confirmation.  The Social
Security program was expanded in 1956 to include the DI program,
providing benefits to covered workers who became unable to work
because of disability. 

In 1965, amendments to the Social Security Act increased SSA's scope
and complexity by establishing the health insurance program known as
Medicare.  The purpose of Medicare was to help the qualified elderly
and disabled pay their medical expenses.  SSA administered the
Medicare program for about 12 years before Medicare was transferred
to a new division within HEW, the Health Care Financing
Administration. 

Further amendments to the Social Security Act created the SSI
program, effective in 1974.  This program was designed to replace
welfare programs for the aged, blind, and disabled administered by
the states.  The SSI program added substantially to SSA's
responsibilities because the agency began dealing directly with SSI
clients by determining recipients' eligibility based on income and
assets.  SSA remained a part of HHS (formerly HEW) from 1953 until
its independence in 1995. 

Since 1984, congressional committees responsible for overseeing SSA's
activities had considered initiatives to make SSA an independent
agency.  Although the reasons for considering independence for SSA
have varied over the years, such legislation was introduced in
several sessions of the Congress.  Statements by committee chairmen
have shown a desire to make SSA more accountable to the public for
its actions and more responsive to the Congress' attempts to address
SSA's management and policy concerns.  As noted earlier, legislation
was enacted that made SSA independent as of March 31, 1995. 


   SSA STEPS AHEAD WITH
   RESULTS-ORIENTED MANAGEMENT AND
   IMPROVED FINANCIAL
   ACCOUNTABILITY
------------------------------------------------------------ Letter :3

At this time of heightened attention to the costs and effectiveness
of all federal programs, the Congress and the administration have
acted to promote a more efficient federal government that stresses
managing for results and accountability.  These efforts include the
Chief Financial Officers Act of 1990 (CFO Act), the Government
Performance and Results Act of 1993 (GPRA), and the Government
Management Reform Act of 1994 (GMRA).  In addition, the
administration has undertaken, under the Vice President's direction,
the National Performance Review (NPR), aimed at making government
work better and cost less.  We strongly support these efforts as
important and necessary steps to improving federal management. 

SSA has surpassed many other federal agencies in these areas.  For
example, as a pilot agency under GPRA, SSA has worked to strengthen
its strategic management process and to identify and develop
performance measures that help its managers, the Congress, and the
public assess its performance.  In addition, for several years now,
it has measured satisfaction levels among some of its customers and
used focus groups to understand its customers' and employees' views,
reflecting the customer service focus promoted by NPR.  SSA is also a
leader among federal agencies in producing complete, accurate, and
timely financial statements as required by the CFO Act and GMRA.  For
example, for fiscal year 1995, SSA issued audited financial
statements 3 months before its legal mandate.  Moreover, SSA was
among the first federal agencies to produce an accountability report,
which is designed to consolidate current reporting requirements under
various laws and provide a comprehensive picture of an agency's
program performance and its financial condition. 

To be most effective, SSA's ongoing efforts in strategic management,
performance measurement, and accountability reporting will need to be
continually improved and integrated into the agency's daily
operations and management.  SSA has a foundation in place on which it
can build to manage the significant policy and program challenges it
faces in the future. 


   LONG-TERM SOLVENCY IS
   THREATENED; SSA IS NOT YET
   ACTIVELY PARTICIPATING IN
   FINANCING DEBATE
------------------------------------------------------------ Letter :4

As the baby boom generation ages, growing numbers of people will
receive Social Security retirement and survivors benefits in the
years to come, as shown in figure 1.  By the year 2015--as baby
boomers begin entering their mid-60s--the numbers of individuals
receiving benefits will reach an estimated 50.4 million:  more than
one-third greater than the 37.4 million people receiving Social
Security retirement and survivors benefits in 1995.  Once on the
rolls, retirees can be expected to receive benefits for longer time
periods than past recipients.  A 65-year-old male who began receiving
Social Security benefits in 1940--the first year SSA began paying
monthly benefits--was expected to live, on average, about an
additional 12 years.  By 2015, a 65-year-old male will have a life
expectancy of 16 years--a 35-percent increase.  During that same time
period, the life expectancy for women aged 65 will increase by almost
50 percent--from an average of over 13 years to an average of nearly
20 years.  Meanwhile, the ratio of contributing workers to
beneficiaries will decline.  By 2015, an estimated 2.6 workers will
be paying taxes into the Social Security system per beneficiary; in
1950, 16.5 workers were paying Social Security taxes per beneficiary. 

   Figure 1:  Growth in Social
   Security Beneficiaries,
   1950-2030

   (See figure in printed
   edition.)

Note:  Includes recipients of OASI only. 

Source:  1996 Annual Report of the Board of Trustees of the Federal
Old-Age and Survivors Insurance and Disability Insurance Trust Funds. 

This retirement explosion threatens the long-term solvency of the
Social Security system.  Beginning in 2012--16 years from now--
program expenditures are projected to exceed tax income.  By 2029,
without corrective legislation, the trust funds are expected to be
depleted, leaving insufficient funds to pay the expected level of
retirement, survivors, and Disability Insurance (DI) benefits. 

Concerns about the long-term solvency of the Social Security system
are fueling a public debate about the fundamental structure of this
system.  The Advisory Council on Social Security,\4 for example, has
put forth three different approaches to addressing the Social
Security system's long-term deficit.  All three approaches call for
some portion of Social Security payroll taxes to be invested in the
stock market.\5 Two of these approaches, however, call for allowing
individuals to invest some portion of their payroll taxes in
individual retirement accounts.  This would be a significant
departure from the original program design, in which all trust fund
monies are invested and managed centrally.  Given the magnitude of
the financial problems facing the Social Security system and the
nature of the proposals for changing the system, we can expect the
debate over the financing and structure of the Social Security system
to continue and intensify in the coming years. 


--------------------
\4 Before the independence legislation (P.L.  103-296), the Social
Security Act provided for the appointment of a nonpartisan Advisory
Council every 4 years to examine issues affecting the OASI, DI, and
Medicare programs.  P.L.  103-296 provided that the current Council
will be the last. 

\5 Social Security payroll taxes that accumulate in the trust fund
reserves are currently invested in U.S.  Treasury bonds. 


      SSA IS NOW TAKING STEPS TO
      BE MORE ACTIVE
---------------------------------------------------------- Letter :4.1

In our report on SSA's transition to independence, we noted that the
agency's independence would heighten the need for it to work with the
Congress in developing options for ensuring that revenues are
adequate to make future Social Security benefit payments.  More than
a year after gaining independence, however, SSA is not yet ready to
fully support policymakers in the current public debate on financing
issues. 

SSA has been involved in financing issues through its Office of the
Actuary, which has provided data and analyses to the Advisory Council
and policymakers developing financing options.  The Office of the
Actuary plays a unique role within the agency because it serves both
the Congress and the administration.\6 SSA will also be providing
assistance to the Social Security Advisory Board, which was
established by the independence legislation to advise the
Commissioner and make recommendations to the Congress and the
President on SSA program policy. 

These supportive roles represent SSA's major activities related to
long-term financing issues.  SSA has acknowledged that it has not
undertaken the policy and research activities it needs to examine
critical issues affecting its programs, including long-term
financing, and to provide additional support to policymakers.  The
agency recognizes the need to be more active in these areas and in
May 1996 took steps to reorganize and strengthen its policy analysis,
research, and evaluation offices.  It believes this reorganization
will better position it to take a leadership role in critical policy
and research issues related to its programs.  At the time of our
review, however, the reorganization had just begun, and the office
responsible for coordinating all policy planning activities was only
partially staffed.  Although SSA did not have a specific time frame
for when the reorganized policy office would be fully staffed and
operational, it did expect to be better prepared to join the public
debate over the next year. 

SSA is in a unique position to inform policymakers and the public
about the critical nature of long-term financing issues.  Focus
groups conducted by SSA have demonstrated that the public's knowledge
of Social Security programs is generally low and the public's
confidence in the Social Security system is undermined by its future
financing problems.  To address these issues, SSA is conducting a
public education campaign that discusses what the current system
offers in disability, retirement, and survivors benefits.  It also
emphasizes that the Social Security system can pay benefits for many
more years and that the Congress has time to act before the trust
funds are depleted.  SSA, however, is not discussing options for
maintaining or changing the current system.  Feedback SSA has
received from its focus groups indicates that addressing the public's
lack of knowledge without also discussing possible options for
ensuring the system's future solvency does not instill confidence and
weakens the agency's credibility with the public. 

We are concerned that SSA has not seized the opportunity as an
independent agency to speak out on the importance of addressing the
long-term financing issues sooner rather than later.  As we have
noted in our previous work,\7 the sooner action is taken to resolve
the future funding shortfall, the smaller the changes to the system
need to be and the more time individuals will have to adjust their
financial and retirement plans. 


--------------------
\6 In recognition of this, in March of this year, the Contract with
America Advancement Act of 1996, P.L.  104-121, established the
Actuary as a permanent position within SSA and required that the
Actuary report directly to the Commissioner.  The Actuary had
previously reported to a Deputy Commissioner; this change is expected
to better ensure the Actuary's objectivity and independence. 

\7 Deficit Reduction:  Opportunities to Address Long-Standing
Government Performance Issues (GAO/T-OCG-95-6, Sept.  13, 1995). 


   SSA IS REDESIGNING ITS
   DISABILITY CLAIMS PROCESS BUT
   HAS PLACED LITTLE PRIORITY ON
   RETURN-TO-WORK EFFORTS
------------------------------------------------------------ Letter :5

In recent years, disability caseloads have faced unprecedented
growth.  To manage this caseload growth and the resulting slow
processing times, SSA plans to redesign and dramatically improve its
disability claims process.  However, SSA's redesign effort has
encountered serious implementation problems.  Moreover, while SSA is
taking steps to improve the process for moving eligible individuals
onto the disability rolls more quickly, it has not sufficiently
emphasized helping beneficiaries return to work and leave the
disability rolls. 


      DISABILITY CASELOADS
      CONTINUE TO GROW
---------------------------------------------------------- Letter :5.1

During the past decade, SSA has faced significant increases in
caseloads and expenditures for its two disability programs--DI and
SSI.  DI, enacted in 1956 and funded through payroll taxes, provides
monthly cash benefits to severely disabled workers and their
families; SSI was enacted in 1972 and provides assistance to needy
individuals with insufficient work histories to qualify for DI. 
Unlike DI, SSI is funded through general revenues.\8 DI and SSI
caseloads and expenditures increased dramatically between 1986 and
1995, and the pace of this growth accelerated in the early 1990s.  In
1986, 4.4 million blind and disabled people under age 65 received DI
or SSI benefits; by 1995, this number had soared to 7.5 million--a
69-percent increase.\9 As the number of DI and SSI beneficiaries
increased, so did the amount paid in cash benefits.  The combined DI
and SSI cash benefits increased from $25 billion to $57 billion in 10
years.\10 Adjusted for inflation, the increase in the value of these
cash benefits was 66 percent. 

As these programs have grown, the characteristics of new
beneficiaries have changed in ways that pose additional challenges
for SSA.  Beneficiaries are, on average, younger and more likely to
have longer lasting impairments.  Increases in beneficiaries with
mental illness or mental retardation, especially, have driven this
trend.  Between 1982 and 1992, for example, mental impairment awards
to younger workers increased by about 500 percent.  This growing
proportion of younger beneficiaries with longer lasting impairments
means that the beneficiary population, on average, is likely to spend
more time on the disability rolls.  In 1992, for example, new DI
awardees were, on average, 48 years old.  Depending on the type of
impairment that qualified them for benefits, these beneficiaries
could spend nearly one-third of their adult lives on disability
before reaching age 65. 


--------------------
\8 Some states supplement federal SSI funds with their own funds. 

\9 This number includes about 900,000 children receiving SSI
disability benefits. 

\10 This includes DI payments to disabled workers aged 18 to 64 and
federal-only SSI payments to all SSI blind and disabled beneficiaries
regardless of age. 


      IMPLEMENTATION OF REDESIGNED
      CLAIMS PROCESS FACES
      PROBLEMS
---------------------------------------------------------- Letter :5.2

As more and more people have filed for disability benefits, SSA has
been slow to process initial claims, and appeals and backlogs have
grown.  To manage the disability caseload growth, increase
efficiency, and improve service to its customers, SSA has started a
massive effort to fundamentally change how disability decisions are
made.  Making disability decisions is one of the agency's most
important tasks; it accounted for more than half of SSA's total
administrative budget--about $3 billion--in fiscal year 1995.  Even
so, claimants face long waits for disability decisions.  As of June
1996, the wait for initial decisions averaged 78 days for DI claims
and 94 days for SSI claims, with an additional 373-day wait for
appealed decisions.  Overall, the current disability claims process
is not meeting the needs of claimants, the agency, or taxpayers. 

To deal with these problems, in 1993 SSA formed a team to
fundamentally rethink and develop a proposal to redesign the
disability claims process.  This labor-intensive and paper-reliant
process has changed little since the DI program began in the
1950s.\11 Efforts like SSA's--business process reengineering--have
been used successfully by leading private-sector organizations to
dramatically improve their operations.  In April 1994, we informed
the Congress that the agency's redesign proposal was its first valid
attempt to address the fundamental changes needed to cope with
disability workloads.  At that time, however, we also acknowledged
that implementing this needed change would be difficult and that we
would be monitoring SSA's progress.\12

During this past year, we have been reviewing various aspects of
SSA's redesign effort for this Subcommittee and have identified
several implementation problems.  SSA's redesign plan includes 83
initiatives to be started during a 6-year period (1995-2000), with 40
of these to be completed or under way in the first 2 years.  On the
basis of our ongoing work, we have found that the scope and
complexity of many initiatives have limited SSA's progress toward its
redesign goals.  Although SSA has begun many of its planned
initiatives, none is far enough along for SSA to know whether
specific proposed process changes will achieve the desired results. 
Moreover, we are concerned that SSA has undertaken too many complex
tasks and has not given sufficient priority to those redesign
initiatives most likely to reduce processing times and administrative
costs. 

Some of its planned initiatives require extensive design and years of
development before full implementation can begin.  For example, a key
initiative of the redesign involves consolidating the duties, skills,
and knowledge of at least two current positions into a new Disability
Claim Manager (DCM) position.  SSA plans to establish over 11,000 DCM
positions in about 1,350 federal and state locations, recruiting
these DCMs from its current workforce of federal claims
representatives and state disability examiners.  SSA is currently
struggling to resolve stakeholder disagreements among representatives
of federal and state employees about how to proceed with testing this
new position.  SSA must also develop training plans, conduct tests at
pilot sites, post vacancy announcements for positions, and select and
train DCMs. 

Developing software designed to allow SSA to move from its current
manual, labor-intensive process to an automated process is critical
to the success of SSA's disability redesign.  The scheduled
implementation of this new software, however, has been delayed by
more than 2 years.  Moreover, although SSA has separate
implementation schedules for its various redesign initiatives and for
its systems development activities, these two schedules are not
linked.  In addition, although SSA has developed individual plans for
its redesign initiatives and for its system development activities,
it has not developed a comprehensive detailed plan that integrates
these two efforts.  Such a plan should reflect priorities, resource
allocations needed, key milestones, and decision points and identify
relationships among ongoing and planned process and systems changes. 
For example, SSA cannot effectively develop software to support its
key DCM position until it has completed a pilot for this position and
determined in more detail what its duties will be and what
information will be needed by the new claims manager.  Although SSA
officials recognize the need to develop such a plan, in June 1996
they noted that the testing of process redesign features involved too
many uncertainties for SSA to develop an integrated plan. 


--------------------
\11 The same disability claims process is used for the SSI program. 

\12 Social Security Administration:  Major Changes in SSA's Business
Processes Are Imperative (GAO/T-AIMD-94-106, Apr.  14, 1994). 


      WEAK RETURN-TO-WORK EFFORTS
---------------------------------------------------------- Letter :5.3

Although SSA has focused on improving its processes for moving
eligible claimants onto the disability rolls, it has placed little
priority on helping them move off the rolls by obtaining employment. 
This spring, we reported that policies guiding SSA's disability
programs are out of sync with today's view of the capabilities of
individuals with disabilities.\13 At one time, the common business
practice was to encourage someone with a disability to leave the
workforce.  Today, however, a growing number of private companies
have been focusing on enabling people with disabilities to return to
work. 

In contrast, SSA's programs lack a focus on providing the support and
assistance that many people with disabilities need to return to work. 
Eligibility requirements, for example, focus on applicants'
inabilities, not their abilities; once on the rolls, beneficiaries
receive little encouragement to use rehabilitation services.  A
greater emphasis on beneficiaries' returning to work is needed to
identify and encourage the productive capacities of those who might
benefit from rehabilitation and employment assistance.  Although the
main reason for emphasizing returning to work is so that people
maximize their productive potential, it is also true that an
estimated $3 billion could be saved in subsequent years if only an
additional 1 percent of the 6.6 million working-age people receiving
disability benefits in 1995 were to leave the rolls by returning to
work. 

SSA needs to develop a comprehensive return-to-work strategy that
includes providing return-to-work assistance to applicants and
beneficiaries and changing the structure of cash and medical
benefits.  As part of an effort to place greater priority on
beneficiaries' returning to work, we recommended that SSA identify
legislative changes required to implement such a strategy.  Although
evaluating any SSA response to our recommendations would be
premature, we will be assessing SSA's efforts to help beneficiaries
return to work. 

SSA has also missed opportunities to promote work among disabled
beneficiaries where it has the legislative authority to do so.  In
1972, the Congress created the Plan for Achieving Self-Support (PASS)
program as part of SSI to help low-income individuals with
disabilities return to work.\14 However, SSA has not translated the
Congress' broad goals for the PASS work incentive into a coherent
program design.  We recently reported that SSA needs to improve PASS
program management, and it has taken steps to better manage the
program in accordance with our recommendations. 


--------------------
\13 See SSA Disability:  Program Redesign Necessary to Encourage
Return to Work (GAO/HEHS-96-62, Apr.  24, 1996) and Social Security: 
Disability Programs Lag in Promoting Return to Work
(GAO/T-HEHS-96-147, June 5, 1996). 

\14 The PASS program provides for work-related expenses, such as
training or transportation, to be excluded when an individual's
eligibility or benefit amount is determined.  In some cases, this
allows DI beneficiaries who would not otherwise be eligible for SSI
to receive SSI benefits in addition to their DI benefits.  See PASS
Program:  SSA Work Incentive for Disabled Beneficiaries Poorly
Managed (GAO/HEHS-96-51, Feb.  28, 1996). 


   INADEQUATE OVERSIGHT OF SSI
   UNDERMINES PUBLIC CONFIDENCE
------------------------------------------------------------ Letter :6

Limiting opportunities for fraud, waste, and abuse in government
programs is an important goal and essential to promoting public
confidence in the government's ability to wisely use taxpayer
dollars.  Moreover, problems in any one of the programs that SSA
administers can undermine confidence in all of its programs.  Recent
media reports on SSI fraud and abuse have focused attention on SSA's
management of this program.  Several of our recent reviews of the SSI
program have shown that SSA's oversight and management of SSI have
been inadequate and that the agency is not aggressively pursuing
opportunities to increase program efficiencies.  Although quantifying
the extent of fraud, waste, and abuse is difficult, we have
repeatedly identified program weaknesses that SSA needs to address
either on its own or with the Congress to better control these
problems. 

For example, the media have reported allegations that some parents
coach their children to fake mental impairments so that they can
qualify for cash benefits.  These benefits can total almost $5,500
per year for each disabled child.  Our review of SSI for children
with disabilities found that part of the process for determining
eligibility is overly subjective and susceptible to manipulation.  We
asked the Congress to consider legislation to improve eligibility
determinations for children with disabilities.\15

Recently enacted legislation incorporates changes addressing this
problem.\16

In addition, in our review of the fraudulent use of translators to
help individuals become eligible for SSI, we reported that SSA could
reduce this type of fraud if it had a more comprehensive, programwide
strategy for keeping ineligible applicants from ever receiving
benefits.\17 Moreover, we have several reviews under way of other
program weaknesses.  For example, in our ongoing work for the
Subcommittees on Human Resources and Oversight of the House Committee
on Ways and Means, we have found that even though prisoners are
ineligible for SSI if they have been in jail for 1 calendar month or
longer, prisoners in many large county and local jail systems have
received millions of dollars in cash benefits.  This means that
taxpayers have been paying twice to support these individuals--both
for SSI benefits and the cost of imprisonment.  SSA has taken steps
to review information on current prisoners to stop inappropriate
payments; however, it is not taking action to develop information
that would allow it to recover benefits paid to those who may have
been incarcerated and received benefits in prior years, although this
information is available. 

SSA acknowledges that it needs to do more to prevent and detect
fraud, waste, and abuse.  It has several initiatives under way to
accomplish this, and we will be monitoring these efforts.  In
addition, the new SSA Inspector General's Office, created when SSA
gained independence from HHS, is increasing its emphasis on fraud and
abuse. 


--------------------
\15 Social Security:  New Functional Assessments for Children Raise
Eligibility Questions (GAO/HEHS-95-66, Mar.  10, 1995). 

\16 See title II of the Personal Responsibility and Work Opportunity
Reconcilliation Act of 1996, enacted on Aug.  22, 1996. 

\17 Supplemental Security Income:  Disability Program Vulnerable to
Applicant Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug.  31,
1995). 


   SSA FACES DIFFICULT CHALLENGES
   IN PREPARING FOR FUTURE
   WORKLOADS
------------------------------------------------------------ Letter :7

In addition to its policy and program challenges, SSA will need to
meet customer expectations in the face of growing workloads and
reduced resources.  SSA expects to redesign inefficient work
processes and modernize its information systems to increase
productivity, knowing that its customer service will deteriorate to
unacceptable levels if it continues to conduct business as in the
past.  In addition, it faces the urgent need to complete year 2000
software conversion to avoid major service disruption at the turn of
the century.  SSA will also need to effectively manage its workforce
and consider what service delivery structure will work best in the
future. 


      SSA MUST MANAGE GROWING
      WORKLOADS WITH REDUCED
      RESOURCES
---------------------------------------------------------- Letter :7.1

As the baby boom generation ages, more and more people will be
applying for and receiving SSA program benefits.  In addition to
increasing retirement and disability caseloads, SSA's other workloads
will grow because of increasing responsibilities.  For example, SSA
must meet a legislative requirement that most workers be mailed
annual statements of their earnings and estimated retirement
benefits,\18 called Personal Earnings and Benefit Estimate
Statements.  The creation and mailing of these annual statements to
all workers aged 60 and older, begun in 1995, must be expanded to
those aged 25 and older--about 123 million individuals--by the year
2000.  We are currently reviewing whether the usefulness of these
statements can be improved and what impact they will have on SSA's
workloads. 

Moreover, SSA has been unable to fully meet legislative requirements
to periodically review the status of disabled beneficiaries to ensure
that those who are no longer disabled are removed from the rolls. 
SSA now has plans to review the status of more than 8 million
beneficiaries in the next 7 years.  To accomplish this, SSA would
have to conduct about twice as many reviews as it has conducted over
the past 20 years combined.\19

SSA knows that it must meet these increasing demands in an era of
federal downsizing and spending reductions.  SSA has estimated that
it would need the equivalent of about 76,400 workers to handle its
workloads by the end of the century if it conducted business as
usual.  Instead, it expects to handle this work with about 62,000
workers--fewer than it has today. 


--------------------
\18 Under the legislation, SSA must provide individuals aged 50 and
over estimates of their potential monthly retirement benefits,
beginning no later than Oct.  1, 1999. 

\19 Special funding has been authorized for 7 years for SSA to
complete these reviews. 


      TECHNOLOGY CRITICAL TO SSA'S
      FUTURE SUCCESS
---------------------------------------------------------- Letter :7.2

To handle increasing workloads and improve public service, SSA has
begun to redesign inefficient work processes and develop supporting
modernized information systems.  SSA is in the process of a
multiyear, multibillion dollar systems modernization effort expected
to support new ways of doing business and improve productivity. 
SSA's Automation Investment Fund of $1.1 billion supports its 5-year
plan, from fiscal years 1994 to 1998, of moving from reliance on
computer terminals hooked to mainframe computers in its Baltimore
headquarters to a state-of-the-art, nationwide network of personal
computers.  The new network is expected to improve productivity and
customer service in field offices and teleservice centers and allow
for further technology enhancements. 

Although this new computer network environment may yield productivity
improvements, it poses significant challenges for SSA.  The
usefulness of new computer systems will depend on the software
developed for them.  Software development has been identified by many
experts as one of the most risky and costly aspects of systems
development.  To mitigate the risk of failing to deliver high-quality
software on time and within budget, SSA must have a disciplined and
consistent process for developing software.  SSA has already
experienced problems, however, in developing its first major software
application for use in its new network.  These problems include (1)
using programmers with insufficient experience, (2) using software
development tools that have not performed effectively, and (3)
developing initial schedules that were too optimistic.  As we noted
earlier, these problems have collectively contributed to a delay of
over 2 years in implementing this new software.  Although SSA has
begun to take steps to better position itself to successfully develop
and maintain its software, it faces many challenges as it works to
develop software in its new computer network environment. 


      YEAR 2000:  CONVERTING
      SOFTWARE TOP PRIORITY TO
      AVOID BENEFITS DISRUPTION
---------------------------------------------------------- Letter :7.3

SSA faces another systems challenge--one of the highest
priority--that affects not only its new network but computer programs
that exist for both its mainframe and personal computers.  Most
computer software in use today is limited to two-digit date fields,
such as 96 for 1996.  Consequently, at the turn of the century,
computer software will be unable to distinguish between 1900 and 2000
because both would be designated "00." By the end of this century,
SSA must review all of its computer software--about 30 million lines
of computer code--and make the changes needed to ensure that its
systems can handle the first change to a new century since the
computer age began. 

This year 2000 software conversion must be completed to avoid major
service disruption such as erroneous payments or failure to process
benefits at the turn of the century.  Errors in SSA programs could
also cause difficulties in determining who is eligible for retirement
benefits.  For example, an individual born in 1920 could be seen as
being 20 years old--not 80--and therefore ineligible for benefits. 
Similarly, someone born in 1980 could be seen as 80 years old--not
20--and therefore entitled to receive Social Security benefits. 

Beginning work on this problem as early as 1989, SSA has reviewed and
corrected about 20 percent of the computer code that must be checked,
according to its Deputy Commissioner for Systems.  To complete the
job, SSA estimates that it will take 500 work-years, the equivalent
of about $30 million.  Agency officials reported that the amount of
resources dedicated to the year 2000 effort could impact staff
availability for lower priority projects and SSA's ability to tackle
new systems development work. 


      DEVELOPING A TRAINED AND
      FLEXIBLE WORKFORCE IS
      ESSENTIAL
---------------------------------------------------------- Letter :7.4

SSA recognizes that to maximize the effectiveness of its reengineered
work processes and investments in technology, it must invest in
ongoing employee training and career development.  Ultimately, SSA
envisions a less specialized workforce with a broader range of
technical skills that can be flexibly used in areas of greatest need. 
In addition, SSA has taken steps to reduce its number of supervisors,
as part of the administration's efforts to eliminate unnecessary
bureaucracy by working with fewer supervisory layers.  To manage
these changes, SSA is training some of its headquarters employees on
the concepts and techniques of teamwork.  To manage with fewer
supervisors in its field operations, SSA also plans to work with its
unions to test a number of team concepts. 

Complicating SSA's efforts is its aging workforce:  47 percent of
SSA's senior executives and 30 percent of its grade 13 to 15
personnel are eligible to retire over the next 5 years.  In the 2
fiscal years ending this September alone, SSA will have lost, and
have needed to replace, two of its seven Deputy Commissioners to
retirement.\20 SSA has acknowledged the importance of having skilled
managers to prepare for the demands of heavier workloads, new
technology, and expected changes in its employee and client base. 
However, it has been 4 years since SSA participated in HHS'
executive-level management development program, and it has not
announced its own program since becoming an independent agency.  SSA
also has not selected candidates for its mid-level management
development program since 1993.  The agency recognizes the need for
management development programs but has not yet scheduled future
programs. 


--------------------
\20 SSA currently has seven Deputy Commissioners who oversee the
following functions:  operations; systems; finance, assessment, and
management; programs and policy; communications; human resources; and
legislation and congressional affairs. 


      DIFFICULT RESTRUCTURING
      DECISIONS LIE AHEAD
---------------------------------------------------------- Letter :7.5

Although SSA has begun to discuss its use of improved technology and
a more flexible workforce to conduct its business in new ways in the
future, it has maintained its traditional service delivery structure,
including 1,300 field offices.  Given the significant changes facing
SSA, it has not adequately considered whether its current service
delivery structure is really what is needed for the future.  This
important issue needs serious consideration. 

According to SSA officials, the agency has not developed specific
plans for restructuring its organization and redeploying staff in
response to demographic and workforce changes and shifting customer
expectations.  The demand for SSA's 800-number telephone service
continues to grow, and SSA's surveys show that callers prefer to use
the telephone for more and more of their business.  Customer feedback
also indicates that customers would like to complete their business
in a single contact.  Over time, SSA will likely need to restructure
how it does business to cost-
effectively meet changing customer preferences; this may ultimately
involve office closures.  Issues of where, how, and by whom work will
be done entail sensitive human resources issues and may have negative
impacts on local communities; to resolve these, SSA will need to work
closely with its unions, employee groups, and the Congress. 

To improve its 800-number service, for example, SSA has many
initiatives under way, which we are reviewing at your request.  SSA
currently has 39 teleservice centers.  Studies indicate that this is
far too many teleservice centers to operate SSA's 800-number system
in the most cost-effective way.  A 1990 report from HHS' Inspector
General, for example, indicates that SSA could operate more
efficiently and cost-effectively with one-third the number of centers
it currently has.  SSA is studying and plans to work with employee
groups on this issue but has not developed specific plans for
reducing the number of teleservice centers. 


   OBSERVATIONS ON LEADERSHIP
   NEEDED TO MANAGE CHALLENGES
------------------------------------------------------------ Letter :8

As the 21st century approaches, SSA faces dramatic challenges: 
funding future retirement benefits, rethinking disability processes
and programs, combating fraud and abuse, and restructuring how work
is performed and services delivered.  How SSA performs in these areas
can have a powerful effect on its success in fulfilling its mission
and on the public's confidence in this agency and the federal
government. 

To help SSA meet these challenges, the Congress took steps through
the independence legislation to build public confidence in and
strengthen the agency.  The independence legislation provides that
SSA's Commissioner be appointed by the President with the advice and
consent of the Senate for a fixed 6-year term, with removal from
office by the President only for a finding of neglect of duty or
malfeasance in office.  As the Congress was considering the
legislation, we testified that a fixed term of several years for
Commissioner would help stabilize and strengthen SSA's leadership. 
We continue to support the need for a fixed term.  The legislation
also calls for a fixed 6-year term for a Deputy Commissioner, also to
be appointed by the President with the Senate's advice and consent. 

The Commissioner and Deputy Commissioner head the leadership team
needed to address the agency's existing problems and manage its
future challenges.  SSA's efforts to maintain an effective cadre of
leaders are complicated by the impending retirement of many of its
executives and managers and by the absence of a Commissioner and
Deputy Commissioner with the stability of fixed terms.\21 This
leadership must be in place for SSA to progress on the four fronts we
have highlighted. 

First, SSA must step up to its role as the nation's expert on Social
Security issues; it is uniquely positioned to inform the public
policy debate on the future financing and structure of Social
Security. 

Second, SSA must redesign the disability claims process and place
greater emphasis on return to work in its disability programs.  To
increase the redesign project's likelihood of success, SSA needs to
ensure that those initiatives most likely to save significant costs
and time are implemented.  Because of the scope and duration of SSA's
redesign, it should report on an annual basis the extent to which it
is meeting its processing time reduction goals.  It must also sustain
its efforts to build and maintain stakeholder support.  In addition,
SSA must develop a comprehensive detailed plan that integrates its
redesign initiatives and systems development activities.  The
Commissioner also needs to act immediately to place greater emphasis
on return to work by changing both the design and the administration
of the disability programs. 

Third, SSA must better protect taxpayer dollars.  As the
administrator of the nation's largest cash welfare program, SSA must
ensure program integrity in SSI.  Reports of fraud and abuse trigger
public perceptions that SSA is not making cost-effective and
efficient use of taxpayer dollars. 

Finally, SSA must manage technology investments and its workforce,
and--when needed--make difficult decisions about handling increasing
workloads with reduced resources.  It must also continue to focus on
and closely manage its year 2000 conversion to help ensure that SSA
will move into the 21st century with systems that function correctly. 
Moreover, as SSA prepares to meet greater demands and changes in its
employee and client base, it may have to make difficult workforce
decisions to better respond to customer needs.  For example, SSA may
need to close offices and move its workers to different locations to
better meet growing demand.  In an environment of shrinking budgets
and increased expectations for government agency performance,
ensuring that agency decisions are based on comprehensive planning
and sound analyses will be even more essential. 

SSA's success in meeting these challenges is critical.  The agency is
all important, accounting for one-fourth of federal spending and
touching the lives of almost all Americans.  How it meets its
challenges as it moves into the next century can make a significant
difference in the well-being of America's vulnerable populations--the
aged, disabled, and poor--and in how the public feels about its
government. 


--------------------
\21 The current Commissioner was appointed by the President and
confirmed by the Senate before the agency gained independence; the
current Deputy Commissioner serves in an acting capacity. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :9

We requested but did not receive comments from SSA on a draft of this
report.  However, in testimony delivered before the Subcommittee,\22
SSA acknowledged the importance of addressing the programmatic
problems we identified.  SSA also agrees that it must be better
prepared for future challenges.  SSA stressed, for example, the
importance of intensifying its focus on policy planning and
development to better enable the agency to develop long-range policy
options.  It also stated that it has made progress in redesigning its
disability claims process and in returning disabled beneficiaries to
work. 

We believe, however, that SSA has overstated its achievements to date
in improving its disability programs.  SSA concluded that it has made
major strides in implementing several initiatives for the redesign of
its disability claims process and setting the stage for future
implementation efforts.  As we noted in this report, however, while
SSA has begun many of its planned initiatives, none is far enough
along for SSA to know whether specific proposed process changes will
achieve the desired results.  SSA also believes it has made major
progress in returning disabled beneficiaries to work.  Our recent
work clearly shows, however, that SSA's disability programs lack a
focus on providing the support and assistance that many people with
disabilities need to return to work. 


--------------------
\22 Statement on SSA as an Independent Agency, Dr.  Shirley S. 
Chater, Commissioner of Social Security, before the Subcommittee on
Social Security, Committee on Ways and Means, House of
Representatives, July 25, 1996. 


---------------------------------------------------------- Letter :9.1

We are sending copies of this report to the Commissioner of the
Social Security Administration and other interested parties.  Copies
also will be available to others on request.  If you or your staff
have any questions concerning this report, please call me on (202)
512-7215 or Cynthia M.  Fagnoni, Assistant Director, at (202)
512-7202.  Other major contributors include Patricia T.  Taylor,
Director, Information Resource Management for Health, Education, and
Human Services, Accounting and Information Management Division, and
Gale C.  Harris and Daniel Bertoni, Senior Evaluators. 

Sincerely yours,

Jane L.  Ross
Director, Income Security Issues


ADDITIONAL INFORMATION ON SSA'S
STATUS AS AN INDEPENDENT AGENCY
=========================================================== Appendix I

In addition to the issues covered in the letter, the Subcommittee
asked us to assess SSA's progress in specific areas related to its
transition to independence.  To function as an independent agency,
SSA has taken several actions, including establishing new offices,
that the independence legislation\23 required or that relate to the
agency's ability to operate independently.  This appendix summarizes
SSA's progress in these areas. 


--------------------
\23 The Social Security Independence and Program Improvements Act of
1994 (P.L.  103-296) created SSA as an independent agency as of March
31, 1995. 


   ADEQUACY OF SENIOR EXECUTIVE
   SERVICE (SES) POSITIONS
--------------------------------------------------------- Appendix I:1

Under the independence legislation, the Office of Personnel
Management (OPM) was to authorize a substantially greater number of
SES positions than authorized for SSA immediately before the
legislation's date of enactment (Aug.  15, 1994).\24 Authorized SES
positions numbered 91 before enactment; they numbered 104 upon SSA's
gaining independence, an increase of 14 percent. 

In May 1995, SSA identified a need for a total of 113--rather than
104--SES positions.  SSA concluded, however, that at this early stage
of its independent status, five additional positions would be
minimally sufficient for successful performance and still in keeping
with the administration's efforts to streamline management and
supervisory positions.  OPM denied the request, citing a firm
commitment to governmentwide SES reduction goals. 


--------------------
\24 More specifically, the legislation required that OPM authorize
additional positions to the extent that the increased number of
positions were specified in a comprehensive workforce plan that the
SSA Commissioner was to establish. 


   ADEQUACY OF RESOURCES FOR
   OFFICE OF THE ACTUARY
--------------------------------------------------------- Appendix I:2

As the result of recent legislation, the Office of the Actuary will
report directly to the Commissioner of Social Security rather than to
a Deputy Commissioner.  The Chief Actuary told us that, although the
office is extremely busy, it will have enough staff and automation
resources to carry out its responsibilities.  He anticipated that
because of the organizational change, the office would have its own
budget in the next fiscal year, providing an opportunity to acquire
additional staff and automation resources to handle its heavy
workloads. 


   PROGRESS IN ESTABLISHING
   OFFICES OF INSPECTOR GENERAL
   AND GENERAL COUNSEL
--------------------------------------------------------- Appendix I:3

In gaining independence from HHS, SSA had to create its own Offices
of Inspector General and General Counsel.  SSA's Office of Inspector
General (OIG), charged with conducting investigations and audits of
SSA's programs and operations, is operational and assessing whether
additional resources are needed to accomplish its mission.  The OIG
is building its capacity to better detect and prevent fraud, waste,
and abuse; it plans to increase by 25 percent the number of criminal
investigators in its office by September 30, 1996.  The OIG is also
studying the need for additional resources and assessing whether OIG
and other SSA offices are duplicating some audit functions, but no
final decisions have been made.  Identifying and eliminating
duplication of audit efforts throughout the agency could free up
resources for other uses. 

Throughout the federal government, Inspectors General play a key role
in ensuring financial accountability and program integrity.  In
addition to investigative staff, it is important that SSA's OIG have
in place a sufficient number of technically qualified personnel to
conduct financial audits and to evaluate computer controls and assess
system development efforts. 

SSA's Office of General Counsel (OGC), charged with providing legal
advice and litigation services for the programs SSA administers, is
also operational and in the process of acquiring additional staff and
organizing its operations.  Since SSA's independence, OGC officials
have noted improved coordination with agency officials and greater
involvement in agency issues, which have improved SSA's ability to
address policy and operational issues. 


   OFFICE OF MANAGEMENT AND
   BUDGET'S (OMB) CONTINUING
   BUDGET, LEGISLATIVE, AND POLICY
   ROLE
--------------------------------------------------------- Appendix I:4

The independence legislation had a provision affecting SSA's annual
budget process; however, OMB continues its budgetary oversight role. 
The legislation states that "the Commissioner shall prepare an annual
budget for the Administration which shall be submitted by the
President to the Congress without revision, together with the
President's annual budget for the Administration."

Traditionally, executive agencies--including SSA--receive budget
guidance from OMB and prepare budget proposals for OMB.  OMB reviews
the proposals, and agencies revise them by incorporating OMB's input
and changes.  Once approved by OMB, the budgets are sent to the
Congress as part of the President's budget for executive agencies. 
Presumably, the new budget provision for SSA was intended to
illuminate differences between the budget SSA proposes and the
President's budget for the agency.  As noted in our report on SSA's
transition to independence,\25 this new budget provision does not
restrict OMB from continuing to exercise its traditional budgetary
oversight role.  SSA and OMB officials have reported no substantive
changes in OMB's oversight role in the budget process under
independence. 

To be in compliance with the new budget provision, the President's
fiscal year 1997 budget included, in addition to OMB's budget totals
for SSA, SSA's budget proposal to OMB.  SSA's budget proposal was for
$6.3 billion; the President's budget proposal for SSA was for $6.6
billion.  According to SSA officials, the difference was due to
additional funds allocated to SSA for handling increasing workloads
associated with welfare reform and required reviews of disabled
beneficiaries' status. 

In addition to its role in SSA's budget process, OMB continues to
review SSA's legislative and policy proposals.  Although OMB's role
in SSA's budget, legislative, and policy matters remains
substantively unchanged, SSA officials noted that as an independent
agency, SSA now works directly with OMB rather than through HHS. 
These officials believe that removing HHS as a layer of approval is
an important outcome of independence, saving time and heightening
attention to SSA issues. 


--------------------
\25 Social Security Administration:  Leadership Challenges Accompany
Transition to an Independent Agency (GAO/HEHS-95-59, Feb.  15, 1995). 


   ADVISORY BOARD OPERATIONS
--------------------------------------------------------- Appendix I:5

The newly established Social Security Advisory Board is in the early
stages of operation.  Created by the independence legislation, the
Board--
composed of four members appointed by the Congress and three members
appointed by the President--will advise the Commissioner of Social
Security on policies concerning OASI, DI, and SSI.  All members of
the Board have been appointed, and a staff director, selected in May
1996, manages its day-to-day operations.  Board members are currently
receiving briefings on SSA program and operational issues.  In
addition to Board members and the staff director, plans call for
Board personnel to include three SES-level professional staff,
clerical personnel, and two SSA employees on detail to the Board. 

Board staff are currently working with the Commissioner's office to
determine the types and levels of resources the Board needs.  SSA has
provided approximately $350,000 to the Board for its expenses from
its 1996 appropriation; the staff director does not believe the Board
will use the entire amount before the end of this fiscal year.  SSA
estimated that funding for the Advisory Board would total $300,000 in
fiscal year 1997.  The staff director noted, however, that in SSA's
1997 legislative appropriation, $1.5 million has been allocated to
the Board.  She believes that this amount will be adequate for the
Board to carry out its responsibilities. 


RELATED GAO PRODUCTS
=========================================================== Appendix 0

Social Security Administration:  Effective Leadership Needed to Meet
Daunting Challenges (GAO/T-OCG-96-7, July 25, 1996). 

Social Security:  Disability Programs Lag in Promoting Return to Work
(GAO/T-HEHS-96-147, June 5, 1996). 

Social Security:  Union Activity at the Social Security
Administration (GAO/T-HEHS-96-150, June 4, 1996). 

Supplemental Security Income:  Some Recipients Transfer Valuable
Resources to Qualify for Benefits (GAO/HEHS-96-79, Apr.  30, 1996). 

SSA Disability:  Program Redesign Necessary to Encourage Return to
Work (GAO/HEHS-96-62, Apr.  24, 1996). 

PASS Program:  SSA Work Incentive for Disabled Beneficiaries Poorly
Managed (GAO/HEHS-96-51, Feb.  28, 1996). 

Deficit Reduction:  Opportunities to Address Long-Standing Government
Performance Issues (GAO/T-OCG-95-6, Sept.  13, 1995). 

Supplemental Security Income:  Disability Program Vulnerable to
Applicant Fraud When Middlemen Are Used (GAO/HEHS-95-116, Aug.  31,
1995). 

The Deficit and the Economy:  An Update of Long-Term Simulations
(GAO/AIMD/OCE-95-119, Apr.  26, 1995). 

Social Security:  New Functional Assessments for Children Raise
Eligibility Questions (GAO/HEHS-95-66, Mar.  10, 1995). 

Social Security Administration:  Leadership Challenges Accompany
Transition to an Independent Agency (GAO/HEHS-95-59, Feb.  15, 1995). 

Social Security Administration:  Major Changes in SSA's Business
Processes Are Imperative (GAO/T-AIMD-94-106, Apr.  14, 1994). 

Social Security:  Sustained Effort Needed to Improve Management and
Prepare for the Future (GAO/HRD-94-22, Oct.  27, 1993). 

The Budget Deficit:  Outlook, Implications, and Choices
(GAO/OCG-90-5,
Sept.  12, 1990). 


*** End of document. ***